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Woolfson v Queensland Building and Construction Commission[2019] QCAT 412

Woolfson v Queensland Building and Construction Commission[2019] QCAT 412

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Woolfson v Queensland Building and Construction Commission & Anor [2019] QCAT 412

PARTIES:

IAN ANTHONY WOOLFSON

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

and

KIRAN SHARMA AND ASHMAN SHARMA

(respondents)

APPLICATION NO/S:

GAR189-18

MATTER TYPE:

General administrative review matters

DELIVERED ON:

26 April 2019

HEARING DATE:

19 February 2019; 20 February 2019

HEARD AT:

Brisbane

DECISION OF:

Member Browne

ORDERS:

The decision of the Queensland Building and Construction Commission of 9 May 2018 that the contract has been validly terminated at the default of the licensee and therefore to allow the claim under the Queensland Home Warranty Scheme is confirmed.

CATCHWORDS:

PROFESSIONS AND TRADES – BUILDERS –  STATUTORY POWER TO REQUIRE RECTIFICATION OF DEFECTIVE OR INCOMPLETE BUILDING WORK – Home Warranty insurance – where decision made that the contract had been validly terminated at the default of the licensee and therefore the claim made by the homeowner under the Queensland Home Warranty Scheme is accepted – whether the contract has been validly terminated by the homeowner

Queensland Building and Construction Commission Act 1991 (Qld), s 3, s 20J, s 72, Schedule 1B s 34

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20, s 24

Briginshaw v Briginshaw (1938) 60 CLR 336

Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58

Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359

Minion v Graystone Pty Ltd [1990] 1 Qd R 157

APPEARANCES & REPRESENTATION:

Applicant:

Self-represented

Respondents:

Queensland Building and Construction Commission:
S Monaghan, in-house Solicitor

Kiran Sharma and Ashan Sharma: Self-represented

REASONS FOR DECISION

  1. [1]
    Ian Woolfson entered into a contract with Rabin Sharma, Kiran Sharma and Ashan Sharma for the completion of certain renovation works to a residential property in Brisbane, Queensland
  2. [2]
    During completion of the renovation work, a dispute arose between Mr Woolfson and the Sharmas about the building work performed and money paid under the contract. One of the disputed issues concerned progress payment 6 (‘PP6’) issued by
    Mr Woolfson and alleged by him to be owing under the contract.
  3. [3]
    Following attempts made by the parties to resolve the disputed issues, the Sharmas exercised their rights to terminate the contract by issuing to Mr Woolfson a notice of intention to terminate followed by a notice of termination. The Sharmas later complained to the Queensland Building and Construction Commission (‘QBCC’) about the building work performed by Mr Woolfson. Relevantly, the Sharmas alleged that some items of building work were defective and or incomplete.
  4. [4]
    The QBCC inspected the building work and reviewed the correspondence exchanged between Mr Woolfson and the Sharmas. The QBCC determined that the contract had been validly terminated by the Sharmas and referred the matter to its insurance branch for assessment. An independent report was prepared following an inspection of the building work by Sergon Building Consultants (‘Sergon’).
  5. [5]
    Following an internal review of the QBCC’s decision to accept the Sharmas’ claim under the insurance scheme, the QBCC confirmed its decision dated 9 May 2018 that the contract has been validly terminated at the default of the licensee.
  6. [6]
    Mr Woolfson wants to review the QBCC’s decision dated 9 May 2018. Mr Woolfson says that the contract has not been properly terminated by the Sharmas. Mr Woolfson says that there was a delay to the commencement of the building work because of a change in the plans by the Sharmas. Mr Woolfson submits that there were many variations to the contract and he did not get paid for all of the work performed by him. Mr Woolfson submits that the Sharmas did not terminate the contract correctly and did not identify the specific items of substantial breach in the notice of intention to terminate. Mr Woolfson says that the Sharmas did not pay PP6 in the full amount as invoiced by him. Further, Mr Woolfson says that the building works were never stopped or suspended by him and that practical completion was reached but the Sharmas refused to meet with him to enable all of the forms to be signed and completed.
  7. [7]
    Further, Mr Woolfson says that he did everything he could to give the Sharmas a beautiful home referring to extra work performed by him that he says he did not claim for from the Sharmas. Mr Woolfson says that after the Sharmas complained to the QBCC he requested a site meeting that was refused. Mr Woolfson says that he was always prepared to attend to any alleged defective work, after practical completion was signed by the Sharmas.

What is the Tribunal’s power on review and the issues to be determined?

  1. [8]
    The Tribunal effectively stands in the shoes of the QBCC decision-maker exercising the same powers to produce the correct and preferable decision.[1] The Tribunal decides the review by way of a fresh hearing on the merits. It is not necessary to establish any error in either the process or the reasoning that led to the decision and there is no presumption that the reviewable decision is correct.[2]
  1. [9]
    In exercising its review function the Tribunal considers all of the material including the material that was before the decision-maker (commonly referred to as the ‘section 21 material’) and fresh material presented by the parties comprising of statements of evidence and oral evidence given at the hearing.
  1. [10]
    The QBCC decision-maker has a duty to assist the Tribunal to arrive at the correct and preferable decision.[3] This may include, for example, asking Mr Woolfson as the applicant and Kiran Sharma who gave evidence on behalf of the second respondents, questions about the contracted works and the issues now in dispute between the parties.
  1. [11]
    In assessing the evidence, the Tribunal on review must be satisfied to the required civil standard on the balance of probabilities that certain factual matters are proven. In Briginshaw’s case, (commonly referred to as the ‘Briginshaw principle’[4]) Dixon J (as he then was) said that the proof of any fact must be made out to the reasonable satisfaction of the Tribunal and should not be ‘produced by inexact proofs, indefinite testimony, or indirect inferences’.[5] In conducting a proceeding, the Tribunal on review is not bound by the rules of evidence,[6] but must observe the rules of natural justice and, amongst others, ‘ensure, so far as is practicable, all relevant material is disclosed to the tribunal to enable it to decide the proceeding with all the relevant facts.[7]
  2. [12]
    In this matter a ‘reviewable decision’ was made by the QBCC that a building contract has been validly terminated having the consequences of allowing a claim for non-completion under the statutory insurance scheme.[8] The insurance policy conditions applicable to residential construction work covered by the statutory insurance scheme applies. Relevantly, Part 1 of the Policy concerns non-completion of building work and provides as follows:

1.2 Termination of contract

The QBCC is only liable to pay for loss under this Part when the contract is for a fixed price and the insured has properly terminated the contract with the contractor.

  1. [13]
    The Policy defines ‘properly terminated’ under Part 11 as follows:

“properly terminated” means lawfully under the contract or otherwise at law, upon the contractor’s default which extends to, but is not limited to:

The cancellation or suspension of the contractor’s licence; or

  1. (b)
     The death or legal incapacity of the contractor; or
  1. (c)
     The insolvency of the contractor; or
  1. (d)
     Any breach of the contract by the contractor.
  1. [14]
    The policy also provides that if the QBCC admits a claim under the policy, it may, at its own discretion, and in full discharge of its liability, do a number of things, for example, pay the amount of the claim to the insured.
  1. [15]
    A payment by the QBCC under the insurance scheme has potential ramifications for a builder to whom a direction to rectify has been issued because the QBCC may recover the amount of the payment as a debt.[9]
  1. [16]
    In this matter, Kiran Sharma and Ashan Sharma have been joined as a party to the review proceeding.[10] In conducting a review of the decision, the Tribunal is required to consider a number of contentions raised by both the QBCC, Mr Woolfson and the Sharmas relevant to the issue of whether the contract has been validly terminated by the Sharmas as the homeowners.  The issues identified at the hearing are now set out below:
  1. (a)
    Was the contract validly terminated at the default of the contractor?
  2. (b)
    Did the right to terminate arise?
  3. (c)
    Did Mr Woolfson suspend the works and, if so, was he entitled to suspend the works?
  4. (d)
    Was PP6 due and owing by the Sharmas when issued by Mr Woolfson?
  5. (e)
    Was the practical completion stage reached?
  1. [17]
    Mr Woolfson denies that the contract has been validly terminated by the Sharmas.
    Mr Woolfson contends that the works reached practical completion and he had time to complete any alleged defective items of work. Mr Woolfson further contends that the works were never stopped by him and the notice of intention to terminate by the Sharmas did not adequately describe the items of work alleged to be defective or incomplete to enable him to properly address any alleged default. Mr Woolfson says that the work for stage 6 was completed and the Sharmas did not pay PP6 in full.

Was the contract validly terminated?

  1. [18]
    The contract signed by Mr Woolfson and the Sharmas is dated 30 August 2016 and provides critical time frames for the completion of the building work.  The date for commencement of the work is 14 November 2016 and the completion period to complete the works is 195 ‘calendar days’ from the starting date of 14 November 2016 with 10 days for ‘likely delays’.[11] Under Item 8, the practical completion stage is described as being 95% of the work and the total amount of the progress payments is $797,335.
  1. [19]
    The payment schedule included in the contract titled ‘progress payments’ details each stage of work to be performed together with a description of the work to be performed under Item 8. Relevantly Stage number 6 is described as being 5% of the contract price in the amount of $41,965 and is described as follows:

Paint, 2nd fix carpentry, joinery, kitchen plumbing and electrics, fencing completion.[12] 

  1. [20]
    The contract also includes a ‘prime cost items schedule’ and relevantly includes, such items as ‘kitchen & appliances’ in the amount of $30,800.
  1. [21]
    The general conditions of the contract include, amongst other things, when payment is due for the works performed under the contract and when the contractor is entitled to claim a progress payment. Further, the general conditions provide for how work under the contract may be varied by way of an increase, decrease or substitution of work and how the contractor may claim and is entitled to a reasonable extension of the date of practical completion. The contract also provides for how and when the works may reach practical completion. More importantly, the general conditions provide for when a party is in substantial breach and when the right to terminate arises.
  1. [22]
    The general conditions in particular clause 26 is relevant in this matter because the Sharmas have purported to exercise their rights to terminate the contract. Relevantly clause 26 provides that when a party is in substantial breach of the contract the other party may give a notice to the party in breach. Clause 26.1 provides as follows:

26.1 If:

  1. (a)
    a party is in substantial breach of this Contract

and

  1. (b)
    the other party gives a notice to the party in breach identifying and describing the breach and stating the intention of the party giving notice to terminate the Contract if the breach is not remedied within 10 business days from the giving of the notice; and
  1. (c)
    the breach is not remedied,

then, the party giving that notice may terminate this Contract by a further written notice given to the party in breach and may recover from the party in breach all damages, loss, cost or expense occasioned to the party so terminating by or in connection with the breach or that termination and may set off such claim against payment otherwise due by the party so terminating.[13]

  1. [23]
    It is settled law that a party can rely on any ground of termination to justify the giving of a notice of breach or intention to terminate under the contract that is now known to have been then available to it, even if it was only much later that it was discovered. In Shepherd v Felt and Textiles of Australia Ltd,[14] Dixon J said:

But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulation to rely upon a breach of conditions, committed before he so failed or so refused, by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition whether he was aware of it or note when he himself failed or refused to perform the stipulation of the contract. “It is a long established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not”…[15]

  1. [24]
    In this matter the critical documents relied upon by the Sharmas relevant to their submission that the contract has been validly terminated include, amongst other things, the correspondence exchanged between the Sharmas’ legal representative and Mr Woolfson.
  2. [25]
    On 31 October 2017, the Sharmas’ legal representative, Craig Ray & Associates, wrote to Mr Woolfson identifying a number of items of work described as ‘defects and/or not completed works’.[16] By letter dated 20 November 2017 Craig Ray & Associates provided further particulars of some of the items identified as being incomplete or defective.[17] Further, the letter dated 20 November 2017 referred to invoices issued for payment by Mr Woolfson and money paid by the Sharmas for the building work.
  3. [26]
    By letter dated 28 November 2017, the Sharmas gave Mr Woolfson written notice pursuant to clause 26 of the contract that he was in substantial breach of the contract in that he failed to complete the works under the contract with ‘appropriate diligence’ and that there has been ‘unreasonable delay and suspension of works’ by him where he is not ‘legally entitled to do so’.[18] In the letter dated 28 November 2017, Craig Ray & Associates refer to its letter dated 20 November 2017 and state that Mr Woolfson is required to remedy the breach within ten (10) days. The relevant extract from the letter dated 20 November 2017 is as follows:

You are put on notice that you are required to remedy the breach by completing the works under the Contract and issuing the Certificate of Practical Completion. If the same is not issued within ten (10) business days from the date of giving of this notice, then we reserve our Client’s right under clause 26 of the Contract to terminate the same.[19]

  1. [27]
    On 12 December 2017, Craig Ray & Associates wrote to Mr Woolfson referring to its letter dated 28 November 2017.[20] The letter states that Mr Woolfson is in substantial breach of the contract, the Sharmas having given Mr Woolfson ten (10) business days’ notice to remedy the breach. The Sharmas state that they ‘hereby terminate this contract’ and reserve their rights to recover all damages, loss, costs or expense occasioned by the breach. The letter states that the Sharmas intend to re-take possession of the building site ad remove any materials or tools that remain on site.[21]

Did the right to terminate under the contract arise?

  1. [28]
    Mr Woolfson disputes that the contract has been properly terminated by the Sharmas. Mr Woolfson says, amongst other things, that the Sharmas failed to pay PP6 in full. It is non-contentions that Mr Woolfson issued PP6 to the Sharmas for payment in the full amount of $41,965 on 22 July 2017.[22] The PP6 was for work, as provided in the contract as ‘paint, 2nd fix carpentry, joinery, kitchen plumbing and electrics, fencing completion’.[23] 
  2. [29]
    Prior to issuing the invoice for payment for PP6, Mr Woolfson wrote to the Sharmas by email dated 21 July 2017 stating that ‘the site will be closed’ until ‘this has been paid’ meaning PP6.[24] Mr Woolfson states in his email:

you made it very clear you will not pay the progress payment due. This is not a final payment, simply a progress payment as per the contract. You also made it clear you will not pay because you THINK you’ve paid enough disregarding the contract in place.

I’m happy to make adjustments to position of downpipes and ac units once the progress has been paid and clear instructions in writing is received as to the new position.

Until this has been paid the site will be closed, as you know we would have been finished in 7 days if the payments were made as per the contract. It seems a shame to stop completion because of this.

As you also know I fly [to] the UK next week for 4 weeks so completion won’t be for at least eight weeks due to your decision not to pay the agreed amount through the contract.

I sincerely hope an agreement can be made.

I will be letting all relevant sub contractors know you no longer want us on site due to funding…[25]

  1. [30]
    The Sharmas responded by email dated 22 July 2017, referring Mr Woolfson to some items of work that they say require his attention. For example, the Sharmas refer to the tiles in the main bedroom as being ‘uneven’, the walk in robes as not being completed and requested that Mr Woolfson look at the drawings that indicate the concrete path and the carport should have Epoxy coloured additive. The Sharmas also requested that Mr Woolfson provide all paid receipts for the last progress payment and the variation amount.[26]
  2. [31]
    In the email to the Sharmas dated 22 July 2017 attaching the invoice for payment for PP6, Mr Woolfson states:

As you know we are very near completion, with only this week to go.

By Saturday 30th July everything on the drawings including the variation will be complete and the house will be cleaned. This is known as Practical Completion and the final payment will be due on that date minus the kitchen and tiling items listed in the prime cost page of the contract, this total $39,400.

Once all moneys are finalised and completion is signed off then I will give you all the keys handover will then be complete.

[C]ertification can be done any time after we have settled.

I am then bound by law to remedy any defects within six months of completion.

As you can appreciate there are a lot of subcontractors to pay this week, to ensure a smooth completion and stress-free hand over to you on 30 July please pay the attached invoice by Monday 24th July.

I am very excited to have been given the opportunity to build your new home.[27]

  1. [32]
    On 24 July 2017, the Sharmas paid $30,000 for PP6. The Sharmas say this is because the kitchen works listed in the contract for stage 6 work were not carried out by Mr Woolfson. The evidence of Mrs Sharma is that she paid the contractor Focus Kitchen directly for the installation of the kitchen.[28] I accept Mrs Sharma’s evidence about the kitchen work to be performed that is supported by the contract. The contract identifies the ‘kitchen and appliances’ as a prime cost item for which an amount of $30,800 has been allowed.[29] Further, there is evidence before me such as invoices and banks statements to support Mrs Sharma’s contention that she paid the money for the kitchen.[30]

Was the stage 6 work including the kitchen completed by Mr Woolfson?

  1. [33]
    Mr Woolfson’s evidence is that the work for stage 6 was completed and PP6 was not paid in full by the Sharmas. Mr Woolfson says the costs for installation of the kitchen was to be deducted from the final stage as agreed between the parties.
  2. [34]
    Mr Woolfson gave evidence at the hearing about the stage 6 work performed by him that is relevant to PP6 in particular the kitchen work. When asked if he had completed all of the tasks for stage 6, Mr Woolfson said ‘yes’, and stated that the kitchen was ‘not in’. Mr Woolfson’s evidence is that it was not his place to complete the kitchen and the homeowners took it upon themselves to do this. Mr Woolfson accepted when questioned about the kitchen that it was a PC item and that the homeowners engaged another party to install it. Mr Woolfson stated that ‘they [the Sharmas] were given the money for that’. When questioned about why the Sharmas were invoiced for the full amount for PP6 including the cost of the kitchen, Mr Woolfson said that the money for it (the kitchen) was simply deducted from the contract. Mr Woolfson’s evidence is that he did not receive all of the money for the work performed by him. Mr Woolfson’s evidence is that there were many changes to the contract referring to variations.
  3. [35]
    I have considered the evidence before me relevant to PP6 and the kitchen work. Mr Woolfson does not dispute Mrs Sharma’s evidence given about the kitchen work and the payments made by her directly to Focus Kitchen. Further, Mr Woolfson does not dispute the assertion made by the Sharmas that relevant documents necessary for practical completion have not been signed by them.
  4. [36]
    I accept Mrs Sharma’s evidence that separate payments for the kitchen and the bathroom cabinetry work were made by her directly to Focus Kitchen on 26 July 2017, 26 September 2017 and 3 October 2017, respectively.[31] Further Mrs Sharma’s evidence is that the kitchen was not installed until September 2017 and that as at 22 July 2017 there was still work to be done. In giving her evidence Mrs Sharma referred to painting, ‘bathroom not done’, ‘electrical not done’. The Sharmas’ email to Mr Woolfson dated 6 September 2017 also refers to ‘outstanding’ items of work.[32] I accept Mrs Sharma’s evidence that there was outstanding or incomplete work to be performed by Mr Woolfson as at 22 July 2017 including kitchen work. I also accept Mrs Sharma’s evidence that they (the Sharmas) have not been provided with any certification documents by Mr Woolfson to support his contention that the works had reached practical completion.
  5. [37]
    It is open for me to find on the evidence before me that PP6 issued to the Sharmas in the full amount was in breach of clause 19.1(b) of the contract. This is because Mr Woolfson as the contractor had not completed stage 6 of the work as provided under item 8 of the contract. In particular clause 19.1(b) of the contract provides that the contractor is entitled to claim a progress payment when the contractor has ‘achieved completion of each of the stages set out in schedule item 8’ subject to any adjustment including, amongst other things, an adjustment for any prime cost item. Further, under the contract the contractor must not claim an amount unless the work has been carried out.[33] Mr Woolfson has claimed the full amount for the stage 6 work that was not completed. I find that the issuing of PP6 in full to the Sharmas was in breach of the contract.[34]

Where variations put in writing and was the date for practical completion extended under the contract?

  1. [38]
    Mr Woolfson contends that there were delays with the work generally and in particular with the commencement of the work due to changes made by the Sharmas. When questioned about any variations or changes to the work as requested by the Sharmas, Mr Woolfson accepted that not all of the variations were put in writing by him. Further, Mr Woolfson accepted that he did not extend the date for practical completion under the contract. Mr Woolfson’s evidence is that the Sharmas could have moved into the property at the end of August 2017.
  2. [39]
    Mr Woolfson’s evidence is that commencement of the work was delayed because the Sharmas made changes to the drawings referring to the blockwork design. Mr Woolfson’s evidence is that there was a change to blockwork that resulted in a delay in the completion of the work. This is disputed by the Sharmas. Mrs Sharma’s evidence is that any change was as a result of Mr Woolfson’s request. The email from Mr Woolfson to the Sharmas dated 30 November 2016, refers to the changes in the plans and building design.[35] Mr Woolfson refers in the email to the blockwork as being a ‘superior construction method’ for this ‘particular job’ and states that, if that method is chosen, the slab will be done at the earliest in ‘mid-January causing a 6 week delay’.[36] Mr Woolfson does not dispute that the change in building design (to blockwork) was not put in writing as required under clause 21.3(d) of the contract and further, there was no adjustment of the date for practical completion under the contract as provided under clause 23.1(b) of the general conditions.
  3. [40]
    It is open for me to find that Mr Woolfson was aware as at 30 November 2016 of the possible change in the plans to blockwork design and that such a change in design would result in delays to the construction work and the date of practical completion. I also find that any variation or change to the design resulting in a delay to the construction work was not put in writing by Mr Woolfson as required under the contract.
  4. [41]
    I am not satisfied based on the evidence before me that even if there was a delay to the work caused by a change to the plans by the Sharmas that such delay was reasonable in all of the circumstances. As I have said Mr Woolfson was aware as at 30 November 2016 that the works would be delayed if there was a change in the design to blockwork and the evidence shows that Mr Woolfson recognised the change in design as being a ‘superior construction method’.[37] It is open for me to find on the evidence that Mr Woolfson did not, with respect to the blockwork design, put any necessary variation in writing and did not adjust the date for practical completion under the contract as required by the general conditions of the contract.[38]

When was practical completion reached?

  1. [42]
    Practical completion is defined under the contract as:

Practical completion means the date upon which the works are completed in accordance with the requirements of this Contract, including Condition 3 and Condition 28, apart from minor omissions or minor defects.[39]

  1. [43]
    Clause 23 of the contract provides that the contractor must achieve practical completion of the works by the date of practical completion stated in or calculated in accordance with schedule item 7 or any extended date under condition 23 of the contract. Further, there are rights and obligations that each party must comply with as provided under clause 28 of the contract. Under general condition 23 the date for practical completion may be extended in certain circumstances. For example, the need for the extension of time arises because of a delay caused by a variation complying with condition 21; or a delay caused by the owner; or a delay event stated in the schedule item 6B. Further, the delay is not reasonably foreseeable and is beyond the reasonable control of the contractor; and the claim is made to the owner in writing; and the claim is given to the owner within ten (10) business days of the contractor becoming aware of the cause; and the owner approves the claim in writing. The contractor must take all reasonable steps to ‘lesson the effect and duration of any delay’.[40]
  2. [44]
    Mr Woolfson’s evidence is that practical completion was reached on or about 1 August 2017. Mr Woolfson initially gave evidence at the hearing that work commenced on or about 14 January 2017. Mr Woolfson said that the Sharmas changed the drawings after the contract was signed and he did not get the drawings until 16 January 2017. Mr Woolfson accepted, however, when questioned at the hearing about an email dated 28 November 2016, that works did in fact commence on 28 November 2016. Mr Woolfson’s evidence is that he cleared the site prior to Christmas 2016 and started construction of the superstructure in January 2017. The email dated 28 November 2016 from Mr Woolfson to the Sharmas refers to the demolition as being completed and states ‘we are now ready to do the foundations and slab’.[41] It is open for me to find that the contract works commenced on 28 November 2016.
  3. [45]
    Mr Woolfson was questioned at the hearing about whether he provided documents to the Sharmas in relation to practical completion. Mr Woolfson stated ‘No’. Mr Woolfson’s evidence is that he tried to do a ‘walk-through’ of the property but Mrs Sharma refused to do this.
  4. [46]
    In the absence of any evidence as to the proper notice being given under clause 23 of the contract in relation to an adjustment of the date for practical completion, I find that the date for practical completion under the contract was on or about 11 June 2017. This is based on 195 calendar days as provided under the contract from the date of commencement of the work that I have found as being 28 November 2016 and allowing a number of days for ‘likely delays’.[42]
  5. [47]
    In this matter I have also considered the independent evidence before me as to the stage of works reached under the contract. In the report prepared by Sergon Building Consultants dated 9 March 2018, the works are reported as being ‘medium quality' and have reached the ‘2nd fixing stage’.[43] There are a number of items identified in the report as incomplete and defective work. Based on the inspection of the building work, the build is reported as being 98% complete which is not consistent with the contract payments made that total 99% of the total building contract amount of $836,703.95. I accept the independent evidence about the building work as reported by Sergon. I find that the works had not reached practical completion in accordance with the contract. Further, I find that as at early August 2017 there was incomplete and defective work.

Did Mr Woolfson suspend the works and, if so, was he entitled to suspend the works?

  1. [48]
    Mr Woolfson accepts that he wrote to the Sharmas stating that he would suspend the works but denies that the works were stopped by him. Mr Woolfson’s evidence is that the works continued up to the date of practical completion. Mr Woolfson’s evidence is that there were subcontractors at the site working in the middle of the job and stated at the hearing that he ‘wanted to get the job finished’.
  2. [49]
    Mrs Sharma’s evidence is that the works were suspended by Mr Woolfson. Mrs Sharma says that all of the contractors left the site after 4 August 2017. Mrs Sharma’s evidence is that contractors including the kitchen people and the tiler were working at the property between 22 July 2017 and 4 August 2017. Mrs Sharma accepted, however, when questioned at the hearing about the work performed that contractors including the plumber came back to do work at the property in early September 2017.
  1. [50]
    Mrs Sharma’s evidence is that a list of incomplete and defective work was given to Mr Woolfson and he did not complete the work. Mrs Sharma’s evidence is that the list was given to Mr Woolfson on 31 October 2017. I accept Mrs Sharma’s evidence that there were incomplete and defective work as at 31 October 2017. Mrs Sharma’s evidence about the incomplete and defective work is supported by the independent evidence contained in the Sergon report. Further it is not disputed by Mr Woolfson that he was issued with a direction to rectify certain items of work by the QBCC that he subsequently attended to and completed in or about May 2018.
  1. [51]
    Mr Woolfson’s evidence is that all certifications were prepared in late July 2017 but practical completion had not been signed off. Mr Woolfson accepted, however, when questioned that there was still contractors on-site such as the plumber in September 2017. Mr Woolfson’s evidence is that this ‘work’ was requested by the Sharmas.  I do not accept Mr Woolfson’s contention that works continued at the request of the Sharmas having read the email dated 21 February 2018 from All Pipes Plumbing and Gas Pty Ltd to Mr Woolfson. In the email dated 21 February 2018, the Director of the company states ‘I am contracted through you [i.e. Mr Woolfson] to do the job and will not go on site until you approve’.[44] There is also an email relied upon by the Sharmas from the electrician who performed work at the property that refers to electrical work as being completed in July 2018 and this was work to be performed as provided under the contract.[45] I find that work was still being done at the property up to and including September 2017 as contended by the Sharmas.
  1. [52]
    I find that the evidence given by Mr Woolfson in relation to suspending or stopping work is unreliable. Mr Woolfson’s evidence is that he did not suspend the work and that he continued the work up until practical completion was reached. Mr Woolfson has, however, indicated a contrary position in relation to whether the works were in fact stopped by him, in emails and correspondence sent to the Sharmas and the QBCC.
  1. [53]
    In an email dated 21 July 2017 Mr Woolfson told the Sharmas that ‘until this [referring to PP6] has been paid the site will be closed’.[46]  The email dated 21 July 2017 refers to a telephone conversation on 22 July 2017 with the Sharmas in relation to payment of the progress claim. The relevant extract from the email is as follows (emphasis added):

You made it very clear you will not pay the progress payment due. This is not a final payment, simply a progress payment as per the contract.…

Until this has been paid the site will be closed, as you know we would have been finished in seven days’ time if the payments were made as per the contract. It seems a shame to stop completion because of this.

  1. [54]
    In the email dated 13 December 2017 Mr Woolfson wrote to the Sharmas’ legal representative referring to the Sharmas being in breach of the contract since August 2017 for failure to pay the remainder of PP6.[47]
  1. [55]
    There was a further email dated 9 September 2017 from Mr Woolfson to the Sharmas stating ‘it’s very strange that you are stopping the completion of your home, what is the point? (emphasis added)’.[48] Further, by email dated 6 December 2017 Mr Woolfson wrote to the Sharmas’ legal representatives stating that he is not ‘obliged by any Australian laws to continue work until the money has been paid (emphasis added)’.[49]
  1. [56]
    By letter dated 3 May 2018 Mr Woolfson wrote to the QBCC referring to the alleged termination of contract by the Sharmas. It is clear from reading the email that Mr Woolfson maintains his position that the full amount was owing for PP6 and refers to having ‘no choice’ but to ‘shut down the site’. Mr Woolfson states (emphasis added):

As the Sharma’s (sic) refuse to honour the agreement between us, I had no choice but to shut down the site.[50]

  1. [57]
    It is open for me to prefer the evidence of Mrs Sharma to Mr Woolfson  in relation to whether the works were stopped  by him or more importantly whether he failed to complete the works with due diligence as required under the contract. I accept Mrs Sharma’s evidence that Mr Woolfson was absent from the building site for a period of four weeks from early August 2017. Mr Wilson does not dispute that he went overseas in early August 2017.
  1. [58]
    I accept Mrs Sharma’s evidence that the subcontractors ceased work at the site on or about 6 September 2017. I am satisfied based on the evidence before me that Mr Woolfson failed to complete the works with due diligence from early August 2017 when he left Australia to travel overseas for a period of time.

Conclusion

  1. [59]
    I have found that Mr Woolfson failed to complete the works with due diligence from early August 2017. Further, I have found that the works did not reach practical completion as required under the contract. I have also found that as at September 2017 there was a number of defective and incomplete items of work and this finding is supported by the independent evidence of Sergon.
  1. [60]
    It is open for me to find that the contract was lawfully terminated by the Sharmas on 13 December 2017. The notice issued by the Sharmas’ undercover of letter dated 28 November 2017 did comply with clause 26 of the general conditions of the contract in that it identified the breach such as completing the work with ‘appropriate diligence’, completing the incomplete and defective work and bringing the works to practical completion. The Sharmas gave Mr Woolfson a list of defects and non-completion items prior to issuing the notice on 28 November 2017.[51] Further, the notice gave Mr Woolfson time to remedy the breach as required under the general conditions of the contract.
  1. [61]
    I have found that Mr Woolfson was in breach of the contract by issuing and demanding payment for PP6 for stage 6 work that was not completed. Relevantly, I have found that Mr Woolfson was not entitled under the contract to issue PP6 because the stage 6 work was not completed by him. In particular, the kitchen work was a prime cost item, the amount for which that should have been reduced from the claim at the time of issue.
  1. [62]
    It is open for me to find that the Sharmas are entitled to rely on the notice dated 28 November 2017 and their right to terminate by notice dated 13 December 2017 by reason of Mr Woolfson’s issuing of PP6 in breach of the contract.[52]
  1. [63]
    The correct and preferable decision is that the decision of the QBCC of 9 May 2018 that the contract has been validly terminated at the default of the licensee and therefore to allow the claim under the Queensland Home Warranty Scheme is confirmed. I order accordingly.

Footnotes

[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘the QCAT Act’), s 20.

[2]Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58, [9].

[3]QCAT Act, s 21.

[4]Briginshaw v Briginshaw (1938) 60 CLR 336, 361-362.

[5]Ibid.

[6]Section 28(b) of the QCAT Act provides that the rules of evidence do not apply other than to the extent that the tribunal adopts them.

[7]QCAT Act, s 28.

[8]See s 86(1)(i) of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’).

[9]See s 71(1) of the QBCC Act.

[10]Direction by consent dated 15 February 2019.

[11]Exhibit 1, Tab 8.

[12]Ibid.

[13]Exhibit 1, Tab 9.

[14](1931) 45 CLR 359.

[15]Ibid, 377-378 and see Minion v Graystone Pty Ltd 1 Qd R 157, 162.

[16]Exhibit 1, Tab 10.

[17]Ibid, Tab 11.

[18]Ibid, Tab 12.

[19]Exhibit 1.

[20]Ibid, Tab 13.

[21]Ibid.

[22]Ibid, Tab 14.

[23]Ibid, Tab 8.

[24]Ibid, Tab 4, p 120-121.

[25]Exhibit 1.

[26]Ibid.

[27]Ibid, Tab 14.

[28]Ibid, Tab 5, p 6.

[29]Ibid, Tab 4.

[30]Ibid, Tab 5.

[31]Exhibit 1, Tab 5.

[32]Exhibit 4.

[33]QBCC Act, s 34.

[34]See clause 19 of the contract. Also see the QBCC Act, schedule 1, s 34.

[35]Exhibit 4.

[36]Ibid.

[37]Ibid.

[38]See clause 21 and 23 of the general conditions of the contract, exhibit 1.

[39]Exhibit 1, Tab 9.

[40]General condition 23.

[41]Exhibit 3.

[42]Exhibit 1, Tab 8.

[43]Ibid, Tab 16.

[44]Exhibit 6.

[45]Exhibit 8.

[46]Exhibit 1, Tab 4, p 120.

[47]Exhibit 1, Tab 4, p 241.

[48]Exhibit 5.

[49]Exhibit 2.

[50]Exhibit 2, p 385.

[51]By letter dated 31 October 2017 and 20 November 2017, Exhibit 1, Tab 10 and 11.

[52]See Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 and Minion v Graystone Pty Ltd [1986] 1 Qd R 157.

Close

Editorial Notes

  • Published Case Name:

    Ian Anthony Woolfson v Queensland Building and Construction Commission, Kiran Sharma and Ashman Sharma

  • Shortened Case Name:

    Woolfson v Queensland Building and Construction Commission

  • MNC:

    [2019] QCAT 412

  • Court:

    QCAT

  • Judge(s):

    Member Browne

  • Date:

    26 Apr 2019

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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