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Hookham v Queensland Building and Construction Commission[2021] QCAT 246

Hookham v Queensland Building and Construction Commission[2021] QCAT 246

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Hookham v Queensland Building and Construction Commission & Ors [2021] QCAT 246

PARTIES:

HUGH CHARLES HOOKHAM

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

MELISA LEANNE SPOOR

(respondent)

TREVOR ROBERT SPOOR

(respondent)

APPLICATION NO/S:

GAR367-17

GAR368-17

MATTER TYPE:

General administrative review matters

DELIVERED ON:

7 April 2021

HEARING DATES:

20 March 202121 March 2021

HEARD AT:

Mackay

DECISION OF:

Member Ellis

ORDERS:

  1. That the decision of the First Respondent dated 8 November 2017 that a domestic building contract had been validly terminated by the Second Respondents is set aside.
  2. It is declared that the contract entered into between the Applicant and Second Respondents on 3 February 2017 was not validly terminated by the Second Respondents.
  3. That the decision of the First Respondent dated 9 November 2017 that a domestic building contract had been validly terminated by the Second Respondents is set aside.
  4. It is declared that the contract entered into between the Applicant and Second Respondents on 22 May 2017 was not validly terminated by the Second Respondents.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – whether a building contract properly terminated – breach of contract by Owner – breach of contract by Contractor – termination notices – Master Builders Residential Building Contract

Queensland Building and Construction Commission Act 1991 s 86, s 87 (Qld)

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 19, s 20, s 24

Briginshaw v Briginshaw (1938) 60 CLR 336

Budge v JMK Building Pty Ltd [2018] QCAT 174

Byrnes v Jokona Pty Ltd [2002] FCA 41

Hoenig v Isaacs [1952] 2 All ER 176

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115

Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268

Zahedpur v Idameneo (No 123) Pty Ltd [2016] QCA 134

APPEARANCES &

REPRESENTATION:

Applicant:

S McLennan, instructed by Kelly Legal

Respondents:

C Hill, in-house solicitor at Queensland Building and Construction Commission

MT De Waard, Macrossan & Amiet for Melisa Leanne Spoor and Trevor Robert Spoor

REASONS FOR DECISION

  1. [1]
    This is an Application by Mr Hugh Charles Hookham (the Applicant) commenced on 6 December 2017, such application being made pursuant to sections 86(1)(i) and 87 of the Queensland Building and Construction Commission Act 1991 (Qld). The Applicant seeks a review of two decisions made by the First Respondent, the Queensland Building and Construction Commission (QBCC), as follows:
    1. (a)
      On 8 November 2017 the QBCC made a decision that a domestic building contract had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme. This decision related to a contract entered into between the Applicant and Second Respondents on 3 February 2017.
    2. (b)
      By decision dated 9 November 2017 the QBCC made a decision that a domestic building contract had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme. This decision related to a contract entered into between the Applicant and Second Respondents on 22 May 2017.
  2. [2]
    The Second Respondents were joined as parties to the proceedings after it had commenced.

Background

  1. [3]
    The Applicant is a licensed builder QBCC Lic 44893. He was at the relevant time an asbestos removal licence holder.
  2. [4]
    The Second Respondents are Trevor and Melisa Spoor. At the relevant time the Second Respondents owned and resided at an address at Moranbah with their three children and au pair.
  3. [5]
    The Applicant and Second Respondents entered into two relevant contracts being QBCC Level 2 Renovation, Extension and Repair contracts:
    1. (a)
      On 3 February 2017 they entered into a contract for the Applicant to undertake certain construction on the Second Respondents’ property, such contract being a Stage 1 Contract. This contract was for the “construction of bedroom, ensuite, laundry and deck to rear of existing house”. The contract price for this contract was $121,382.21 (the Stage 1 Contract). The contract allowed 175 business days for construction (including estimate of delay days). A form 1 Commencement Notice was signed on 22 February 2017 indicating a commencement date of 21 February 2017 and a date for practical completion being 15 August 2017.
    2. (b)
      On 22 May 2017 they entered into a Stage 2 contract for the Applicant to undertake “remodel kitchen, living, dining, main bath and hall to plans provided”, being works to be undertaken on the existing premises. The contract price for this contract was $117,363.75 (the Stage 2 Contract). The contract allowed 175 business days for construction (including estimate of delay days). The contract specified a start date of 19 June 2017.
  4. [6]
    The Applicant held public indemnity insurance and statutory insurance scheme insurance, though had no specific asbestos insurance.
  5. [7]
    Work commenced and was undertaken substantially in relation to the Stage 1 contract and work had commenced in relation to the Stage 2 contract. The Second Respondents made progress payments under the terms of the contract, save for invoices due once a dispute arose totalling $23,472.75.
  6. [8]
    It is not disputed that work ceased on 21 July 2017 due to concerns that the Second Respondents had for the works being completed. Whether the Applicant was ‘locked out’ by the Second Respondents as at that date is disputed and will be returned to later.
  7. [9]
    On 28 July 2017 the Second Respondents sent an email detailing 39 complaints about the building work.
  8. [10]
    On 15 August 2017 the Second Respondents via their solicitors wrote to the Applicant alleging a ‘substantial breach’ of the contract due to the roof pitch. This related to the Stage 1 contract. This letter was asserted to be written pursuant to clause 26.1 of the contract which effectively provided the Applicant 10 days to remedy and failing remedy, it provided a right to terminate.
  9. [11]
    On 16 August 2017, the Second Respondent made an Early Dispute Resolution complaint to QBCC.
  10. [12]
    On 21 August 2017 the Applicant and Second Respondents participated in an Early Dispute Resolution Process (EDRP) with QBCC.
  11. [13]
    On 28 August 2017 QBCC sent a letter to the parties confirming the terms of agreement reached at the EDRP.
  12. [14]
    On or around 1 September 2017 the Second Respondents engaged Marlee Constructions to undertake a review of the works. The possible existence of asbestos was identified.
  13. [15]
    On 13 September 2017 a test result confirmed the existence of asbestos which had been released into the house as a result of the construction / renovation work.
  14. [16]
    On 18 September 2017 the Applicant sent a letter to the Second Respondents alleging that they were in breach of the contracts for failing to pay progress payments and failure to provide access to the work site.
  15. [17]
    On 21 September 2017 via the Second Respondents’ lawyer the Second Respondents caused a letter to be sent to the Applicant as follows:

In addition to the matters raised in our letter of 15 August 2017, our clients note the following additional facts that have now come to light:-

  1. In breach of clause 15.2 of the General Conditions and further in breach of the obligations imposed on you under the Work, Health and Safety Act 2011 you have failed to comply with your Workplace Health & Safety obligations.
  2. In breach of clause 15.2(e) of the General Conditions you failed to notify the owner that you had encountered material at the site containing asbestos or which might contain asbestos.
  3. In breach of your obligations under the Contract, and further in breach of your general law obligations to our clients and your obligations under the Work, Health and Safety Act, you have inappropriately dealt with asbestos material on site …
  1. [18]
    On 25 September 2017 via their lawyer, the Second Respondents caused a letter to be sent to the Applicant in which, inter alia, they sought confirmation of lodgement of insurance with respect to the asbestos.
  2. [19]
    On 29 September 2017 the Applicant was issued with a Queensland Government Improvement Notice issued under the Work Health and Safety Act 2011 (Qld), alleging contravention of asbestos obligations in containment and disposal. It is not disputed that the Applicant complied with that notice and that at his own cost the site was cleaned up by 2 November 2017.
  3. [20]
    On 10 October 2017 the Second Respondents, via their solicitor, allegedly terminated the contract by letter which stated:

your conduct as set out in our letter of 21 September 2017 constitutes a substantial breach of both the building contract dated 3 February 2017 and the building contract dated 22 May 2017.

….

Your ongoing failure and refusal to discharge your obligations under the building contracts evidences your intention not to be bound by the contracts…

….

Our clients now elect to accept your repudiation and terminate the Building Contract dated 3 February 2017 and… 22 May 2017

Alternatively, our clients elect to terminate the Contracts because of your substantial breach of each Contract, details of which have previously been supplied. …. Our clients give notice of termination under clause 26 of the General Conditions and also rely on their general law right.

  1. [21]
    On 8 November 2017 QBCC made a decision that a domestic building contract had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme. This was in relation to the Stage 1 Contract.
  2. [22]
    On 9 November 2017 QBCC made a decision that a domestic building contract had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme. This was in relation to the Stage 2 Contract.

The law

  1. [23]
    The review is decided in accordance with the Queensland Civil and Administrative Tribunal Act 2009 (Qld) and the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).[1] Section 24 of the Queensland Civil and Administrative Tribunal Act (QCAT Act) outlines what the Tribunal may do on review. The Tribunal must hear and decide the matter by way of a fresh hearing on the merits, to produce the correct and preferable decision.[2]
  2. [24]
    Section 24(1) of the QCAT Act says that in proceedings for a review of a reviewable decision, the Tribunal may:
    1. (a)
      Confirm or amend the decision;
    2. (b)
      Set aside the decision and substitute its own decision; or
    3. (c)
      Set aside the decision and return the matter for reconsideration to the decision-maker for the decision with the directions the tribunal considers appropriate.
  3. [25]
    The findings of fact by the Tribunal is that the Tribunal must be “comfortably satisfied” having regard to the nature and consequence of the facts to be proved: Briginshaw v Briginshaw (1938) 60 CLR 336.
  4. [26]
    This is a review of a QBCC decision, specifics of which are outlined earlier. The decision being reviewed is one undertaken under the QBCC Act and its related framework. Under that Act a Statutory Insurance Scheme is established. Under that scheme, cover is provided for a number of events, including non-completion of residential construction work.
  5. [27]
    A non-completion claim can only be accepted where the contract is for a fixed price and the insured has properly terminated the contract with the contractor.[3]
  6. [28]
    Properly terminated refers to the contract being lawfully terminated either pursuant to the contract or at common law, and upon the contractor’s default.

Question to determine

  1. [29]
    The question for the Tribunal is whether the Second Respondents properly terminated either or both of the contracts upon the Applicant’s default.

Did the Second Respondents terminate pursuant to the contractual provisions?

  1. [30]
    Clause 26 of the Contract states as follows:

26.1 if:

  1. (a)
    a party is in substantial breach of this contract; and
  1. (b)
    the other party gives 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

If the breach is not so remedied, then the party giving that notice may terminate this Contract by a further written notice given to the party…

…

  1. [31]
    Substantial breach is defined in the contract to include for the Applicant:

26.4 … substantial breach includes

  1. (a)
    failing to perform work under the Contract competently;
  1. (b)
    failing to replace defective work; and
  1. (c)
    failing to maintain insurance required by this contract
  1. [32]
    Substantial breach is defined in Clause 26.3 of the contract to include for the Second Respondents failing to pay money when due and owing within five days after the due date and substantially or persistently obstructing the Contractor.
  2. [33]
    The Second Respondents, via their solicitor, did give such notice by way of a letter in compliance with clause 26 of the contract on 15 August 2017, specifically in relation to the construction or pitch of the roof. This defect relates to work undertaken pursuant to the Stage 1 Contract. That letter states:

Our clients consider that you are in substantial breach of the Contract and place you on notice that our clients may exercise their right to terminate the Contract unless the breach is appropriately remedied. Pursuant to General Condition 26 you are entitled to 10 business days to remedy the breach.

  1. [34]
    No other letter in compliance with Clause 26 was given by either the Applicant or Second Respondents.
  2. [35]
    It is not disputed that the pitch of the roof was 20 degrees instead of the requisite 15 degrees.
  3. [36]
    The QBCC original decision-maker, Mr William Ravel Piper (Mr Piper), gave oral evidence as to his investigation into the pitch defect. He said that the work was defective in that, upon obtaining an independent assessment, it did not meet the structural wind loading for a building in order to be compliant to the Building Code of Australia. His evidence was that this could be remedied by requiring more bracing at a cost of approximately $500.
  4. [37]
    The issue of the roof pitch was discussed at the EDRP and an agreement reached, though Mrs Spoor gave evidence that she was pressured into the agreement. The agreement reached was that the Applicant was to:
    1. (a)
      Provide a detailed breakdown of the remaining work to be completed under the contract;
    2. (b)
      Provide a detailed schedule for when the remaining work would be completed;
    3. (c)
      Obtain and exchange an engineer’s report or revised plan.
  5. [38]
    Such report was obtained and the Applicant’s wife requested, by email, to recommence work on 4 September 2017 and to include remedial work for this defect.
  6. [39]
    The Applicant did not commence work he says because he was effectively locked out of the property. I will return to this issue shortly.
  7. [40]
    By 10 October 2017 this defect had not been remedied and the alleged termination notice was given.
  8. [41]
    On 19 October 2017, the Second Respondents lodged a Residential Building Complaint with QBCC.

Was the Applicant locked out of the property?

  1. [42]
    It is not disputed that as from 22 July 2017 the Applicant did not continue his work on the property.
  2. [43]
    The Tribunal finds on the balance of probabilities that the Second Respondents denied access to the property. This is based on the following evidence:
    1. (a)
      On 22 July 2017 the Second Respondents sent an email outlining their concerns (as outlined earlier) and included this:

“Until these issues are sorted, we have secured our premises and you will have no access. We will be in touch with the QBCC and our solicitor, to see what our options are”. (page 390)

  1. (b)
    On 28 July 2017 the Second Respondents sent an email which stated “we wanted all work to cease until all issues …. with the job were sorted out..”
  2. (c)
    There were a number of other emails over the period before and after the QBCC mediation process with a similar flair including on 4 September 2017 in response to a specific request for confirmation of access from the Applicant.
  3. (d)
    Mr Spoor conceded in cross examination that access was denied.
  4. (e)
    Whilst Mrs Spoor in cross examination maintained that they did not deny access to the property, Mrs Spoor did concede that they had not asked the Applicant to return to the site to perform contractual obligations.
  5. (f)
    A number of other contractors were engaged by the Second Respondents, though I accept that the nature and scope of those engagements was not always clear on the evidence.
  1. [44]
    Mr Spoor acknowledged that the Applicant was not permitted onto the property to remedy any defective work or to continue to meet contractual obligations. In cross examination Mr Spoor said as follow:

MR McLENNAN: Mr [Spoor], from the 22nd of July 2017 onwards you refused to allow my client access to the site in order to perform the contract works, didn’t you?---Yes.

  1. [45]
    Whilst Mrs Spoor agreed that the Second Respondents had sent the emails as described earlier, she did not concede that these meant the Applicant was ‘locked out’. At the hearing Mrs Spoor was cross examined about what she meant by ‘secured the premises’ in her email of 22 July 2017 and the following conversation with counsel took place:

So when you say we have secured our premises, and you’ll have no access – so what you meant by that is that he was not allowed back onto your property ‑ ‑ ‑?‑‑‑No.

‑ ‑ ‑ to do construction work. Is that ‑ ‑ ‑?‑‑‑No, that’s not correct.

Okay. What did that mean?‑‑‑We had repeatedly, on several occasions, tried to speak to Mr Hookham about issues we were having.

No, I’m just asking you what you meant by that comment. Was – were you saying he was not permitted back onto your property?‑‑‑No. We – we were asking him for a meeting. We wanted him to come back before anymore building work was done ‑ ‑ ‑

‑‑‑ ‑ ‑ ‑ so we could discuss the issues that we thought we had.

So if he turned up the next day, would you have allowed him in to do work on your property?‑‑‑We would’ve wanted to discuss it with him first, yes.

So the answer is no, you wouldn’t have allowed him back in do work on the property, at that point, until you’d had a discussion?‑‑‑Correct. Because of the hostile nature that was happening.

  1. [46]
    Mrs Spoor in evidence conceded that the Applicant was not requested back to the property after her email of 28 July 2017.
  2. [47]
    It seems that the Second Respondents’ position was that a pre-requisite to a return to the property was for the Applicant and Second Respondents to have a meeting and discuss the issues. Despite the Applicant attending the property on at least two occasions to collect his belongings, no effort was made by either party to discuss the dispute.
  3. [48]
    I accept that both the Applicant and Second Respondents made attempts to resolve the impasse, by for example attending the Early Dispute Resolution process, obtaining external reports that might deal with the dispute and the Second Respondents in particular sent a number of emails offering to meet and discuss. It remains unclear to me why a meeting between the Applicant and Second Respondents, outside of the EDR process, never took place. I suggest that quite possibly the Applicant had received a very long list of complaints in the email of 22 July 2017 and was working through them so that he could adequately respond and then having lack of a response the Second Respondents commenced the EDR process.
  4. [49]
    It was the Second Respondents who took the action to lock out the Applicant. I find that the Applicant was not given an opportunity to remedy defective or incomplete work. I find that effectively he was locked out of the property from 22 July 2017. The Applicant was unable to rectify work as a consequence of the Second Respondents’ lock out.
  5. [50]
    The Contract defines a substantial breach to include “substantially or persistently obstructing the Contractor in the performance of the work under the contract” (see Clause 26.3). Access to the worksite is clearly an essential term of the contract and where persistent could be a substantial breach of the contract pursuant to Clause 26.3.
  6. [51]
    Furthermore there was a causal relationship between the Second Respondents’ breach and the Applicant’s breach of Clause 26.4 of the Contract.
  7. [52]
    Being in breach of a contract does not necessarily preclude a party from terminating for the other party’s breach.[4] However in this case the causal relationship between the Second Respondents’ actions in refusing access and the Applicant’s failure to remedy his defect is direct. The Second Respondents’ actions specifically prevented the Applicant from being able to remedy any defect.
  8. [53]
    Accordingly and what follows from that is that the contract could not have been validly terminated in accordance with Clause 26.

Was the Contract terminated in accordance with the common law?

  1. [54]
    The contract provided that Clause 26 is to operate in addition to, and not replace, common law rights to terminate.
  2. [55]
    The Second Respondents assert four grounds upon which the Second Respondents were entitled to terminate the Contracts:
    1. (a)
      Right pursuant to contract as a result of breach of Clause 15 – failure to comply with Workplace Health and Safety.
    2. (b)
      Right at common law as a result of breach of Clause 15 – failure to comply with Workplace Health and Safety.
    3. (c)
      Breach of Clause 12 – failure to have insurance for asbestos.
    4. (d)
      Breach of Clause 3.1 – work not completed competently.
  3. [56]
    In relation to failure to have specific asbestos insurance, it was not contested that the Applicant had the appropriate Public Liability and statutory insurances. It was not contested that he did not have further insurance pertaining to asbestos.
  4. [57]
    There was no evidence that there was any requirement to have additional to that insurance specific to asbestos loss, either within Clause 12 of the Contract or otherwise. The evidence given by the Applicant under cross examination seems to imply he normally would take out asbestos insurance if he deemed that a building had asbestos, but could not be interpreted as a concession that he was contractually obliged to do so.
  5. [58]
    In any event, the Applicant bore the costs of clean up and on that basis the Second Respondents suffered no loss by the Applicant’s insurance status. I find therefore that that ground must fail.
  6. [59]
    The other three issues are dealt with separately below

Clause 15 Workplace Health and Safety – The Finding of Asbestos

  1. [60]
    On 30 January 2017 the Applicant completed an asbestos removal plan wherein he concluded that there was no asbestos in the property owned by the Second Respondents.
  2. [61]
    Somewhere between 31 August and 2 September 2017 Lee Booth of Marlee Construction identified the possible existence of asbestos.
  3. [62]
    On 6 September Mr Booth took samples for asbestos testing.
  4. [63]
    On 13 September 2017 a report, obtained by Marlee Construction, confirmed the presence of asbestos.
  5. [64]
    The Second Respondents remained in the property ‘until a week later’.
  6. [65]
    The investigation undertaken by the Asbestos and Occupational Hygiene Manager – Asbestos Unit found that the work undertaken on each of the Stage 1 and Stage 2 contracts resulted in asbestos release. An investigation report was prepared by them (the Investigation Report). Specifically the Investigation Report said:

Stage 1: Sometime between 22 February and 2 March 2017 Hugh Charles HOOKHAM removed asbestos sheeting inappropriately and used power tool (grinder) without appropriate controls on asbestos containing material (ACM) at [the Second Respondents address at] Moranbah

….

Stage 2: On 5 June 2017, Stage 2 was started for the internal parts of the residence…. On 28 June 2017 SPOOR found the ceiling from the bedroom, lounge and hallway had been removed and film of dust had been covering everything.

  1. [66]
    The release of asbestos covered a significant distance including being found in the bedrooms and on council land adjoining the property.
  2. [67]
    It is not contested that the Applicant failed to identify asbestos and that as a result of his work, asbestos was released into the house. The Applicant attended to the clean up of that and met the costs of that. He was also issued with an infringement notice for breaching Workplace Health and Safety Regulation.
  3. [68]
    The issue for the Tribunal’s consideration is whether this failure to identify asbestos was sufficient to enable the Second Respondents to properly terminate the contract at common law.
  4. [69]
    A second issue that arises from that is whether the Second Respondents knew of the presence of the asbestos and if they did so know, whether that impacts on their ability to terminate.
  5. [70]
    The Tribunal heard no expert evidence regarding the likely impact of this particular exposure of asbestos.
  6. [71]
    The Investigation Report on page 21 did state as follows:

Insufficient information exists to quantify the risk of exposure from asbestos to the occupants of the house and workers during the period the asbestos was disturbed.

Did the Second Respondents Know that the Home Contained Asbestos?

  1. [72]
    The Second Respondents both denied they were aware of the existence of asbestos in their home.
  2. [73]
    The Second Respondents had received previous quotes for work on the property both of which referred to asbestos removal costs as follows:
    1. (a)
      SJM Builders provided a quote dated 13 August 2016, which referred to asbestos removal and disposal in two places.
    2. (b)
      Mr Lemkin from Busby Contracting provided a quote on 31 January 2016. The quote, which was in its sixth revision, referred in four places to dealing with and removal of asbestos.
  3. [74]
    In addition Mrs Spoor acknowledged in cross examination that she had the kitchen renovated sometime prior to 2017 by another company and when asked whether asbestos was located during that renovation she said “I’m not quite sure”.
  4. [75]
    Negotiations between the Second Respondents and the Applicant began in November 2016.
  5. [76]
    Mr Lemkin gave evidence at the hearing of having various conversations with the Second Respondents about the existence of asbestos as follows:

Your quote on page 4 of the quote, right down the - - -?---Yeah.

Right down the bottom you’ve got:

Asbestos removal, label 1, hours 1, unit 1, days 1, 1,875 bucks.

Do you see that?---Yeah.

And that’s for a very small amount of asbestos, isn’t it?---Yeah, because all that we had to do was actually contain the asbestos where they wanted a skylight and where the new addition to their house was getting joined on, so the roof, wherever we had to come across the asbestos and actually go near it, we had to sort that out and remove that from that section.

So you never warned Mrs [Spoor] that there was asbestos in the ceiling above bedroom 1?---I told her that from Adrian there was asbestos in the house and through the ceiling, and that I didn’t know how far it went without scratching it all away and actually finding it.

---But I knew that there was asbestos in there and I did tell her that there was asbestos, because we discussed how, when we were doing the work, she would have to be out of the house, kids out of the house, family out of the house while we did it all, just so there was no [indistinct] or any dramas with it.

I suggest that you didn’t in fact have that conversation with my client?---You suggest? Did you say you suggest that?

Yes. Yes?---You can suggest what you like, mate. That’s what we had. We had that conversation. She was there when I was with Adrian. We then had that conversation again afterwards, and then we had another conversation about it out behind her office with her husband and her sitting on the new patio or new decking that they were doing at the Dominos across the road from where they were.

Well - - -?---Three. Sorry. I suggest I did tell her, thank you very much.

…..…

Yeah, because I went through the whole quote with them again. We went through every line of it, the whole lot, because the whole time I was doing it I was mainly just talking with Melissa [sic], so –and there seemed to be a few issues arising from only talking to Melissa [sic], so I had to sit down with her and her husband, so that everyone was on the same page.

MR DE WAARD: But you didn’t advise them of the extent of the asbestos in the house - - -?---Yes, I did.

- - - because you weren’t fully aware of the extent?---Yes, I – no. Yes, I did advise them of the asbestos, because that was after Adrian had come up and confirmed that there was asbestos. I 100 per cent told them that there was asbestos in that house. One hundred per cent.

  1. [77]
    When Mrs Spoor was cross examined about a meeting with Mr Lemkin her evidence was vague as to what was discussed. When Mrs Spoor was cross examined about the contract with Busby Contracting she said:

There’s reference to asbestos removal on the bottom of page 95; do you see that?---There is, with a very small value, I would have thought, but I’m a layperson. I don’t know how much it costs to remove asbestos and I didn’t know how much asbestos there was. I didn’t even know that there was asbestos.

  1. [78]
    Mr Spoor was cross examined regarding the contract with Mr Lemkin. He initially said he had read the specific reference to an entry on asbestos, noted it was for $1,800 and did not think it was significant. He later stated he ‘didn’t even know it was on the quote’ as it was a small component of the cost.
  2. [79]
    I find Mr Lemkin’s evidence credible and reliable. He was clear and unwavering under cross examination that he had advised of the presence of asbestos.
  3. [80]
    The Second Respondents’ evidence was often vague, inconsistent (both in terms of with one another and also of themselves) and inconclusive. I found their respective evidence lacking in credibility.
  4. [81]
    Following on from Mr Booth’s communication to the Second Respondents of the existence of asbestos (suspected on sometime between 31 August and 2 September 2017, tests undertaken on 6 September and confirmed asbestos on 13 September 2017) the Second Respondents remained in their home until around 18 September 2017. The issue remains as to what the Tribunal should make of the fact that the Second Respondents remained in the property and whether this is evidence that they did not know of the existence of asbestos. There are three possible scenarios open on the evidence:
    1. (a)
      That the Second Respondents did not ever know of the existence of asbestos. As I have found above Mr Lemkin’s evidence was preferred and on that basis on the balance of probabilities, I find that the Second Respondents were informed of the likelihood of the existence of asbestos.
    2. (b)
      That the Second Respondents were told of the existence of asbestos in January 2016 by Mr Lemkin, but then had not retained that knowledge in January 2017 when negotiating a contract with the Applicant (in other words, they forgot).
    3. (c)
      That they did know of the likely existence of asbestos but did not, for whatever reason, see that as an obstacle to remaining in the house.
    4. (d)
      I note that it was not raised on the evidence the scenario that the Second Respondents were aware of the likely existence of asbestos but accepted the Applicant’s expert assessment in place of the assessment of Mr Lemkin, though I will return to the Applicant’s assessment later.
  5. [82]
    Mr Lee Booth from Marlee Constructions provided a statement referred to in the Investigation Report which was produced to the Tribunal within Notice to Produce material. Relevant extracts of that statement are below:

21. At the end of our meeting we were standing on the rear patio at which time Melisa Spoor advised me of the asbestos removal works that had been carried out by Hugh HOOKHAM (Bert) at which time I asked the SPOOR’s [sic] if they had any necessary asbestos removal paperwork relating to the building.

22. They said no, they had not received any asbestos removal documentation from Hugh Hookham…..

23. … I advised them due to the age of their property, …., it is highly likely asbestos containing material is in and around the building structure.

…….

27. At the time I could see that Melisa and Trevor did not have any idea of asbestos or the potential asbestos dust risk within their home.

……

  1. [83]
    During cross-examination the Second Respondents provided conflicting evidence as to why they did not immediately move out of the house on discovering the existence of asbestos with Mrs Spoor providing evidence that Mr Booth told her not to move out at that time and to await direction from the investigating body and Mr Spoor providing evidence that they tried to move out immediately but had nowhere to go.
  2. [84]
    On this point I find the Second Respondents’ evidence less than satisfactory. I find that Mrs Spoor was quick to deflect responsibility for decision making.
  3. [85]
    On the balance of probabilities I find that the Second Respondents were aware of the existence of asbestos in the building.
  4. [86]
    It is important to clarify what the Respondents knew. It is important to distinguish between having expert knowledge (being an expert) or having knowledge confirmed by testings (receiving a scientific test) or having been told by experts of their assessment unconfirmed by formal testing. It is the last category of knowledge which the Second Respondents held.

What are the effects of the knowledge of the Second Respondents with respect to asbestos?

  1. [87]
    Does it matter that the Second Respondents knew of the likely existence of asbestos?
  2. [88]
    The plan, attached to the statement of the Applicant, identified the Applicant as the licensed contractor as the person responsible for ‘identification of ACM’ (or asbestos containing material).[5]
  3. [89]
    The Applicant conceded that he failed to identify the existence of asbestos and indeed that it was his responsibly to do so. The Applicant said in evidence that he is highly experienced, indicating that he started building when he was just 15 years of age and his “association with asbestos is massive”.[6]
  4. [90]
    Conversely the Second Respondents had no expertise in this area. They are entitled to rely upon an expert they engage.
  5. [91]
    The Second Respondents could however have highlighted to the Applicant that a previous expert disagreed with his assessment and that they were of the expert opinion that the building did indeed contain asbestos. The question is whether they were obliged to do so, in circumstances where they were not experts and had clearly received two expert opinions that did not mesh.
  6. [92]
    The Applicant submits that the implied obligation of good faith required the Second Respondents to so raise this issue. Reference was made to Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service[7] where the content of the obligation of good faith was discussed and included the obligation to act honestly, to not act dishonestly and to undermine the bargain entered or substance of the contract, and to act reasonably and with fair dealings having regard to the interests of the parties and provisions of the contract.
  7. [93]
    Whilst there are findings of credit in relation to the Second Respondents I am not satisfied the evidence is such as to prove on balance of probabilities that the Second Respondents failed to act honestly or acted dishonestly in failing to disclose asbestos, when balancing their level of knowledge with the Applicant’s position as an expert. It may well be that they did not see it as an issue of importance at that particular time when entering into the contract and / or were happy to defer to the Applicant’s expertise. These are all possibilities open on the evidence to some degree.
  8. [94]
    Acting reasonably is an objective test. It seems more often than not the duty to act in good faith is one assessed at the time of termination of the contract rather than formation. However as noted in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service[8] in insurance contracts it can be implied as requiring “the (pre-contractual) disclosure of material information in order that the risk can be assessed and priced on a sound footing and with appropriate despatch”. The court did caution transposing this obligation in the context of insurance to other commercial contexts. Of course insurance contracts can be distinguished from the contract between the Applicant and the Second Respondents in that an insurer will rely upon that disclosure, and not independently investigate at the time of contract entrance. In the current case, the Applicant was responsible for investigating asbestos, did investigate, had expertise and failed to identify its existence.
  9. [95]
    Accordingly I find that the Second Respondents did not breach any implied term or obligation, should there be one.

Was the failure to identify asbestos sufficient to enable the Second Respondents to properly terminate the contract at common law?

  1. [96]
    I accept submissions of the First Respondent that a WH&S breach is an intermediate term. The contract does not include it in Clause 15 as being a substantial breach (in Clause 26.4) and there are certainly different extents of a breach some of which may go to the heart of the contract and others which may not.
  2. [97]
    The Second Respondents invite me to conclude that the breach is not capable of remedy and no amount of damages is adequate (quoting the High Court’s decision in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd[9]). Such a finding is not open on the evidence. The impacts on the Second Respondents are as follows:
    1. (a)
      The property was exposed to asbestos dust. From a physical perspective indeed the asbestos exposure was remedied by the Applicant at a cost to the Applicant of $62,378.36.
    2. (b)
      There was a requirement to relocate for a period of time. Should the asbestos have been discovered earlier and absent a breach of WH&S requirements, then the Second Respondents would have had to relocate for a period of time. It may be that that time period would have been shorter, but certainly costs associated with a longer period of sourcing alternative accommodation if that is the case, can be quantified.
    3. (c)
      The issue that is of concern is the health impacts upon the family of exposure to asbestos. I will deal with this below.
  3. [98]
    No party led appropriate evidence as to the likely impacts on the family of exposure of this nature of asbestos. The Second Respondents cross examined the Applicant at some length, however he is not an expert appropriately qualified to give such evidence. It is common knowledge and there is legislative recognition that asbestos exposure can be extremely harmful. However whether the impacts on this particular family, of this particular exposure in these particular circumstances and for this period of time can be remedied by damages is not entirely clear on the evidence.
  4. [99]
    The Investigation Report provides us with some information in this regard, and included the following statements as follows:
    1. (a)
      “Airborne fibre monitoring was conducted by David CORBETT, Asbestos assessor statement of attainment No A123112. Results of any control or clearance monitoring indicate that at no time for control monitoring did airborne asbestos fibre concentrations outside the bounds of the ACM removal/decontamination area, or for clearance monitoring within the former ACM removal/decontamination area, exceed the <0.01Fb/ml control/clearance threshold”.[10]
    2. (b)
      “Insufficient information exists to quantify the risk of exposure from asbestos to the occupants of the house and workers during the period the asbestos was disturbed”.[11]
    3. (c)
      It did not recommend further prosecution action under s 446(3) of the Work Health and Safety Regulation 2011 (Qld) for failure to comply with a health and safety duty.[12]
    4. (d)
      It recommended that the only action that ought to be taken (following the fine and clean up) could be to place an extra condition on the Applicant’s asbestos removal licence requiring that the Applicant undertake additional asbestos identification training within three months.[13]
  5. [100]
    Without more, I am unable to conclude on the balance of probabilities that the breach was so serious to provide an ability to terminate and/or that the Second Respondents cannot be adequately compensated either in a contractual claim for damages or a tortious claim.

Clause 14 - Failure to Complete Work Satisfactorily

  1. [101]
    It is not disputed that there was incomplete and defective work by the Applicant on the Second Respondents’ Property.
  2. [102]
    Phillip Slade, QBCC inspector, completed an initial non-completion inspection report on 7 November 2017 which deemed six items to be defective work.[14] The remainder of the items listed were largely deemed incomplete. The defects were, in summary, as follows:

3 – Water stop not compliant as is not stopping water from flowing into the door cavity

5 – Guides on the sliding door were installed in the opposite position and the top was not painted

7 – Two areas where fixing from the decking board in to the joist are not fixed and are loose.

8 – Wire Balustrading is not compliant

9 - Hand rails less than 865mm from nosing to handrail.

17 – Toilet roll holder out of level

  1. [103]
    The roof pitch was also identified as not complying with the specifications pursuant to the contract. It was not identified as a breach per se but as a contractual issue. There are two issues associated with the roof: one is the inadequate ply bracing and the other is that the roof was a different height than specified in the contract.
  2. [104]
    Whether the incomplete and defective works provide a common law right to terminate ought to be considered in light of the fact that the contracts were not alleged to have been completed and that the Second Respondents had locked out the Applicant such that he was unable to complete. If the Applicant had been permitted to continue, the defects and/or incomplete items may well have been remedied.
  3. [105]
    The Applicant in his submissions referred to a decision of this Tribunal where, in obiter, the Member referenced where a contractual right to rectify a defect is breached, and the owner cannot claim general damages for the breach. The reference in that case was to a defect detected during a defect liability period.[15] This would seem to apply even more so to an ongoing workplace. The Applicant in his evidence when asked about the ply bracing on the roof said to a direct question from me, “you’re saying that it was still an ongoing project..?...Yes… and you were dealing with it?... Yeah”.[16]
  4. [106]
    Further, a breach consisting of mere negligent omissions or bad workmanship where the work is substantially completed does not go to the root of the contract in the ordinary lump sum contract.[17]
  5. [107]
    In Byrnes v Jokona Pty Ltd[18] Allsop J enunciated, as relevant to determining seriousness of a breach permitting the ability to terminate, the following non-exhaustive list:
    1. (a)
      Adequacy of damages and ability to quantify;
    2. (b)
      Unjust enrichment of the innocent party;
    3. (c)
      Uncertainty or not surrounding future compliance with the contract and the history of compliance;
    4. (d)
      Attitude of party in breach;
    5. (e)
      Ability to cure the breach;
    6. (f)
      Behaviour of the party in breach comports with standards of good faith.
  6. [108]
    In assessing the factors that warranted this breach I note that:
    1. (a)
      There was an ability to cure the breaches and the Applicant had expressed a desire to do so, but was prevented in doing so by not being permitted back onto the property.
    2. (b)
      This was the first substantial dispute which had occurred in the history of these contracts. In that history the Stage 1 contract had been largely completed.
    3. (c)
      The Applicant I accept was focused on resolving the dispute and therefore demonstrated a positive attitude to remedying the breach including positively attending EDR and thereafter undertaking agreed preparatory work in anticipation of a return to work[19] (noting perhaps a not so positive attitude to the failure of the Second Respondents to inform him of the existence of asbestos).
    4. (d)
      Damages were quantifiable.
  7. [109]
    The issue of the roof pitch has been discussed earlier in these reasons. However I did wish to address this further briefly. The Tribunal heard evidence that the insufficiency of ply bracing was able to be remedied for approximately $500. Furthermore the Applicant sent an email on 31 August 2017 which said as follows:

Can you please advise whether we will be returning to the building site on Monday 4th September as Bert will need to organise materials (ply bracing) in the next two days.

  1. [110]
    I accept that this is a demonstration of the Applicant being ready and willing to remedy that breach.
  2. [111]
    In relation to the pitch of the roof being 20 rather than 15 degrees , this is a contractual breach that it seems was difficult to remedy and the Second Respondents gave evidence that the roof remains and is a source of unhappiness for them. The Applicant submits that the Second Respondents accepted a variation to the contract. Mrs Spoor in cross examination stated that “Mr Hookham sold us on the fact that the .. space up there would be good for storage”. Alternatively, the Applicant argues that as the pitch raised the apex of the roof by just 80 millimetres (evidence provided by Mr Spoor for the Second Respondents) that it was not a sufficient departure from the contract.
  3. [112]
    I am not convinced that there was an agreed variation to the contract. However, when balancing the evidence of Mr Spoor that it raised the roof by 80 millimetres along with the ability to assess damages for this, I am not satisfied it enlivens a common law right to terminate.
  4. [113]
    Consequentially I am not satisfied on balance of probabilities that any of the defects were sufficient to amount to a substantial breach to terminate at common law, especially when balancing the above factors with the fact that the job remained incomplete and the Second Respondents had not permitted the Applicant to attend to repair.
  5. [114]
    I find on the balance of probabilities that the Second Respondents were not entitled to terminate at common law.

Repudiation

  1. [115]
    The evidence before the Tribunal does not demonstrate that the Applicant had shown an unwillingness or inability to substantially perform his obligations pursuant to the contracts. He may have been initially slow to agree to a meeting but participated in the EDR process and sought to recommence work shortly thereafter.
  2. [116]
    It could be said that the Second Respondents had repudiated and were in breach of the contract by locking the Applicant out, failing to pay progress payments when due, and engaging third party contractors.

Conclusion

  1. [117]
    For the above reasons the Tribunal finds:
    1. (a)
      That the Second Respondents had not validly terminated the contract with the Applicant dated 3 February 2017;
    2. (b)
      That the Second Respondents had not validly terminated the contract with the Applicant dated 22 May 2017.

Footnotes

[1]  QCAT Act, s 19.

[2]  Ibid, s 20.

[3]  See Clause 1.2 of the Insurance Policy conditions in force at the relevant time being Edition 8, effective from 1 July 2009.

[4]  See for example Zahedpur v Idameneo (No 123) Pty Ltd [2016] QCA 134.

[5]  See Exhibit pages 78-79 of Affidavit of Hugh Hookham.

[6]  See T2-84, 30.

[7]  [2010] NSWCA 268.

[8]  Ibid, [18].

[9]  (2007) 233 CLR 115.

[10]  See page 19.

[11]  See page 21.

[12]  See page 21.

[13]  See page 22.

[14]  See Affidavit Phillip Slade sworn on 11 March 2019 annexing his report.

[15]Budge v JMK Building Pty Ltd [2018] QCAT 174, [111].

[16]  T2-130, 2-5.

[17]Hoenig v Isaacs [1952] 2 All ER 176.

[18]  [2002] FCA 41.

[19]  Noting here that there is some dispute around the adequacy of that and whether an agreement was reached but with a focus in these comments on the attitude of the Applicant.

Close

Editorial Notes

  • Published Case Name:

    Hookham v Queensland Building and Construction Commission & Ors

  • Shortened Case Name:

    Hookham v Queensland Building and Construction Commission

  • MNC:

    [2021] QCAT 246

  • Court:

    QCAT

  • Judge(s):

    Member Ellis

  • Date:

    07 Apr 2021

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Briginshaw v Briginshaw (1938) 60 C.L.R 336
2 citations
Jump To
Cite 1 - (1938) 60 C.L.R 336
Cite 2 - (1938) 60 C.L.R 336
Budge v JMK Building Pty Ltd [2018] QCAT 174
2 citations
Jump To
Cite 1 - [2018] QCAT 174
Cite 2 - [2018] QCAT 174
Byrnes v Jokona Pty Ltd [2002] FCA 41
2 citations
Jump To
Cite 1 - [2002] FCA 41
Cite 2 - [2002] FCA 41
Hoening -v- Isaacs (1952) 2 All E.R. 176
2 citations
Jump To
Cite 1 - (1952) 2 All E.R. 176
Cite 2 - (1952) 2 All E.R. 176
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
2 citations
Jump To
Cite 1 - (2007) 233 CLR 115
Cite 2 - (2007) 233 CLR 115
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268
3 citations
Jump To
Cite 1 - [2010] NSWCA 268
Cite 2 - [2010] NSWCA 268
Cite 3 - [2010] NSWCA 268
Zahedpur v Idameneo (No 123) Pty Ltd [2016] QCA 134
2 citations
Jump To
Cite 1 - [2016] QCA 134
Cite 2 - [2016] QCA 134

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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