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Hampton Home Builders Pty Ltd v Queensland Building and Construction Commission[2023] QCAT 21

Hampton Home Builders Pty Ltd v Queensland Building and Construction Commission[2023] QCAT 21

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Hampton Home Builders Pty Ltd v Queensland Building and Construction Commission [2023] QCAT 21

PARTIES:

HAMPTON HOME BUILDERS PTY LTD

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO/S:

GAR101-21

MATTER TYPE:

General administrative review matters

DELIVERED ON:

19 January 2023

HEARING DATE:

22 August 2022

HEARD AT:

Brisbane

DECISION OF:

A/Member Katter

ORDERS:

The decision of the Respondent dated 19 January 2021 is confirmed.

CATCHWORDS:

ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – General Administrative Review – application by builder to review a decision by the Queensland Building and Construction Commission regarding termination of a building contract – whether the building owner validly terminated a building contract – whether termination notice must specify the breach relied upon for termination

Queensland Building and Construction Commission Act 1991 (Qld) s 86(1)(i), s 86C(3)s 86E(b), s 87

Queensland Building and Construction Commission Regulation 2018 (Qld) Sch 6

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

Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600

Downer EDI Ltd v Gillies (2012) 229 IR 214

Ericksson v Whalley [1971] 1 NSWLR 397

MacDonald v Australian Wool Innovation Ltd [2005] FCA 105

Matthews v Brodie (unreported, Sup Ct (Vic), 2 April 1980)

Re Stewardson Stubbs & Collett Pty Ltd and Bankstown Municipal Council Arbitration Between [1965] NSWLR 1671

Parsons v Lloyd (1772) 3 Wils 341

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

Wilson v Kirk Contractors Pty Ltd (1990) 7 BCL 284

APPEARANCES &

REPRESENTATION:

Applicant:

C. H. Matthews of Counsel instructed by All Building Law

Respondent:

S. E. Seefeld of Counsel for the Queensland Building and Construction Commission

REASONS FOR DECISION

  1. [1]
    By application filed 12 February 2021, Hampton Home Builders Pty Ltd (“the Applicant”) seeks review of the internal decision of the Queensland Building and Construction Commission (“the Respondent”) dated 19 January 2021 that the domestic building contract between the Applicant and the owners, Andrew and Beata Szczesniak (“the Owners”) for building work at 18 Dubbos Road, Fishermans Pocket (“the Property”) was validly terminated. The Applicant seeks an order from the Tribunal that the decision be set aside and substituted with a decision that the contract was not validly terminated by the Owners.

Background

  1. [2]
    On 10 January 2020, a representative of the Applicant met with the Owners at the Property and sent contractual documentation to the Owners along with an invoice for a deposit. That contractual documentation sent on 10 January 2020 was signed by the Applicant but not by the owner. The Owners paid the deposit amount of $59,974.00 on 15 January 2020.[1]
  2. [3]
    On 17 March 2020, the parties did execute a contract in the form of a HIA Queensland New Homes Construction Contract for the construction of a new low-rise premises at the Property for the agreed price of $330,240.00.[2] It is agreed by the parties that the 17 March 2020 contract (“the Contract”) is the relevant contract for consideration by the Tribunal in these proceedings.
  3. [4]
    During January 2020 work commenced at the Property and the Base Stage was completed on or about 1 July 2020.[3]
  4. [5]
    On Thursday, 27 August 2020, the Applicant issued the Owners a progress claim for the Frame Stage in the amount of $82,500.00.[4]
  5. [6]
    On Monday, 31 August 2020, the Applicant issued a notice to the Owners suspending work from 28 August 2020 pursuant to clause 19.1 of the Contract for failure to pay the progress claim for the Frame Stage.[5]
  6. [7]
    Later in the day on Monday, 31 August 2020, a notice to remedy breach was issued to the Applicant citing the Applicant’s suspension of works, the incomplete work regarding the frame stage and the position of the building.
  7. [8]
    On 15 October 2020, a termination notice was issued to the Applicant.

The Evidence

  1. [9]
    The Tribunal heard the application on 22 August 2022. The Applicant called the following witnesses and tendered the following statements:
    1. (a)
      John Paul David. Statement dated 28 March 2022 (including the Statutory Declaration made on 18 December 2020). Mr David is a director of the Applicant. A colour photograph marked as “3 June 2020” identifying pegs marking was tendered.
    2. (b)
      John Berney Middlemiss. Statement dated 23 March 2022. Mr Middlemiss is a licensed building certifier who provided certification in relation to the works.
    3. (c)
      Adrian Victor Da Ros. Statement dated 31 March 2022. Mr Da Ros was previously employed by the Applicant as Site Supervisor.
    4. (d)
      Karen Michelle Robinson. Statement dated 28 March 2022. Ms Robinson has been a director of the Applicant and was a Sales Manager for the Applicant at material times.
  2. [10]
    The Commission called and tendered:
    1. (a)
      Andrew Zbigniew Szczesniak. Statement dated 31 May 2022. Mr Szczesniak is an owner of the Property.
    2. (b)
      The Commission’s Statement of Reasons for the Decision dated 22 July 2021.

Relevant statutory provisions

  1. [11]
    The Queensland Building and Construction Commission Act 1991 (Qld) (“the QBCC Act”) provides at section 86(1)(i) that a decision that a domestic building contract has been validly terminated (having the consequence of allowing a claim for non-completion under the statutory insurance scheme) is a reviewable decision for the purposes of an internal review. Section 86E(b) sets out that an internal review decision is a reviewable decision for the purposes of an external review by the Tribunal.
  2. [12]
    The QBCC Act at section 87 provides that a person affected by a reviewable decision may apply to the Tribunal to review a decision.
  3. [13]
    The decision of 19 January 2021 was, by operation of section 86C(3) of the QBCC Act, deemed to be an internal review decision in that the Commission did not undertake an internal review within 28 days from the date of receiving the application for internal review. The Tribunal is, therefore, empowered to consider the application for review.
  4. [14]
    In reviewing the decision, the Tribunal is to produce the correct and preferrable decision by way of fresh hearing on the merits pursuant to section 20 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”).
  5. [15]
    Section 24 of the QCAT Act sets out that the Tribunal may:
    1. (a)
      Confirm or amend the decision; or
    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.
  6. [16]
    Relevant provisions are set out in Schedule 6 of the Queensland Building and Construction Commission Regulation 2018 (Qld) (“the QBCC Regulation”) regarding when a fixed price residential contract ends. Section 4(1)(a) of the Schedule sets out that a fixed price residential contract ends if “the contract is validly terminated on the default of the licenced contractor”.
  7. [17]
    The relevant question for the Tribunal is whether the contract was validly terminated by or on the default of the Applicant.

The notice to remedy breach

  1. [18]
    Clause 28.1 of the Contract sets out that a “substantial breach” occurs when the builder: 
    1. (a)
      Suspends the carryout of the works, other than under clause 19;
    2. (b)
      Has the builder’s licence cancelled or suspended; or
    3. (c)
      Is otherwise in substantial breach of this contract.
  2. [19]
    The notice to remedy breach issued to the Applicant on 31 August 2021 refers to clause 28 of the Contract and requires “the following substantial breaches to be remedied:

“Recommence work to complete the building work to the completion of the framing stage by;

  1. a)
    fixing the patio columns to the foundations by means of stirrups, exposed steel as tie downs or other approved and appropriate methods;
  1. b)
    Inserting ceiling battens for bracing of internal walls;
  1. c)
    Inserting all necessary cyclone bolts;
  1. d)
    securing internal frame to roof struts where necessary; and
  1. e)
    Completing the building work require [sic] to provide a complete frame.

The building is not situated on the site in the location as detailed in the plans and required by the owner. It is approximately 10-11 metres from the correct site and the owner requires this breach rectified.”

  1. [20]
    In assessing whether the breaches set out in the notice to remedy breach were “substantial breaches” that permitted termination of the contract, the following questions require consideration:
    1. (a)
      Was the suspension by the Applicant in accordance with clause 19? The breach notice contains the wording “recommence work” in circumstances where a suspension notice had been issued. The Tribunal is satisfied that an objective assessment of the wording in the circumstances indicates that the suspension was identified in the notice as a breach.
    2. (b)
      Was the frame stage finished thereby permitting the delivery of an invoice to the Owners for the Frame stage?
    3. (c)
      Was the positioning of the building a breach?

The suspension of works by the Applicant

  1. [21]
    The suspension notice issued by the Applicant to the Owners on 31 August 2020 relied on Clause 19.1(a) of the Contract and the non-payment for the frame stage claim. The frame stage claim was issued 27 August 2020. Clause 19.1(a) of the Contract provides that the builder may by written notice to the owner suspend the carrying out of the works if the owner does not pay a progress claim as required by Clause 4. Clause 4.5 provides that the owner must pay a progress claim to the builder within 5 working days of receiving the progress claim.
  2. [22]
    It is not contentious that the written suspension notice of 31 August 2020 was prematurely issued having regard to the date of the frame stage invoice. Noting the date of the frame stage invoice, the right to suspend would only have arisen on 3 September 2020. The mere passage of time that would enliven the right to issue a suspension notice as at 3 September 2020 does not render the prematurely issued notice of 31 August 2020 effective from 3 September onwards.[6] The notice of suspension as delivered was not a valid exercise of the right to suspend pursuant to clause 19.1(a) of the Contract.
  3. [23]
    Clause 28.1(a) of the Contract sets out that “The builder is in substantial breach of this contract if the builder “suspends the carrying out of works, other than under Clause 19”. The suspension that was stated to take “effect from 28 August 2020” was not in accordance with Clause 19 and therefore would, pursuant to clause 28(1)(a) of the Contract, amount to a substantial breach for which a notice to remedy breach could be issued.
  4. [24]
    As described above, the Applicant was in substantial breach for suspending the works not in accordance with the requirements of Clause 19 of the Contract. Did that substantial breach remain after the Notice to Remedy Breach was issued on behalf of the Owners on 31 August 2020? As noted, the Contract requires written notice for suspension to be effective. Clause 31(d) of the Contract provides that notice is deemed to be given and received if the notice is “emailed to the party’s current email address”. The Contract does not specify any other form requirements in relation to notice of suspension. There are no prescriptive requirements in the Contract regarding the title, the style or the wording of the notice of suspension. There is no requirement that a suspension notice be sent on any approved form or in any particular format. In an email from Karen Robinson, a Sales Manager from the Applicant to the Owners dated 10 September 2020 the first sentence of the email states “We are still waiting on payment and the job is still suspended”. The meaning of that sentence in the circumstances is unequivocal – the work is suspended because there is an outstanding amount unpaid. The written words in the email as sent satisfy the basic requirements regarding notice of suspension. An objective onlooker could not possibly misconstrue the meaning or intent of the wording in the email, notwithstanding the prior, albeit invalid, notice that had already set out the intentions of the Applicant regarding suspension for non-payment. To imply any requirement as to the form of the notice of suspension that goes beyond the requirements stipulated in the Contract, there would need to be some basis for implying such a requirement or term. There is no evidence before the Tribunal to support the implying of any further requirement regarding notice of suspension. Moreover, would it be fair and equitable to imply some further requirement regarding the notice of suspension. Despite the earlier purported suspension notice of 31 August 2020 not according with the contractual requirements for suspension, the Owners were, in practicality, already on notice that the works would be suspended for failure to pay the frame stage invoice. The 31 August 2020 notice was indeed premature but, nonetheless, payment remained outstanding for the frame invoice when the 10 September 2020 email was sent. With payment outstanding, prior (albeit invalid) notice being given regarding suspension and the communication by email on 10 September 2020 satisfying the requirements of the Contract regarding suspension, would it be fair and equitable for a term to be implied into the contract to require a particular form for the written notice of suspension? Any such implied requirement would be a requirement that preferences some uncertain or asserted form requirement over the patently clear substance of the notification that was given and to do so would not, in the circumstances, be fair and equitable.
  5. [25]
    The due date for payment of the frame stage invoice was 3 September 2020. Accordingly, any written notice of suspension after 3 September 2020 on the basis of non-payment would permit suspension of works from the date of any such written notice in accordance with Clause 19.1(a) of the Contract. Therefore, from 10 September 2020, the Applicant ceased being in substantial breach pursuant to Clause 28.1(a) of the Contract regarding the suspension.
  6. [26]
    The email of 10 September 2020 regarding suspension was sent within 10 working days of the receipt of the notice to remedy breach that was issued to the Applicant on 31 August 2020. In that the breach regarding the suspension was rectified (or ceased) within the requisite timeframe as stipulated by Clause 28.3(b) of the Contract, termination of the Contract could not be supported on the basis of incorrect timing of the suspension notification alone.

Completion of Frame Stage

  1. [27]
    The issue regarding completion of the frame stage is linked with the issue regarding suspension. If it is the case that the frame stage was not complete, then the issuing of the invoice by the Applicant for the frame stage would not be in accordance with the Contract and the validity of suspension notice on the basis of non-payment would (despite the analysis above on the question of timing of the notice) remain impugned. So was the frame stage complete or “finished” to use the wording in Schedule 2 of the Contract?
  2. [28]
    Schedule 2 of the Contract provides that:

‘frame stage’ means the stage when a building’s frame is finished:

  1. (a)
    wall frames are fixed;
  1. (b)
    roof frames are fixed; and
  1. (c)
    all tie downs and bracing are complete.
  1. [29]
    The Applicant states that the frame stage was complete prior to the issuing of the frame stage invoice on 27 August 2020.[7] A licenced building certifier, John Berney Middlemiss, inspected the works on 4 September 2020 and confirmed that “… the works did meet the requirement of the “Frame Stage” as it is defined in the Contract…”.[8] The Applicant states that the works were “in the same state/condition as at the date the Applicant issued the frame stage invoice to the Owners, as it was in when the certifier, John Middlemiss, inspected the works on 4 September 2020”.[9]
  2. [30]
    The Owners state that the frame stage was not complete at the time of the frame stage invoice being issued and the notice to remedy breach dated 31 August 2020 required completion and identified items remaining incomplete.[10]
  3. [31]
    Mr Middlemiss did identify outstanding items to be completed in relation to the frame. At the first page of the certifier documentation under the heading “Notes” there is a note that says “works to be done – see page 13”. This wording is repeated on the second page under the heading “See Stage of Inspection”. On page 13 of the documentation under the heading “Inspections” the following notes appear:

“Frame inspection 2.9.20 OK

Frame certificate issued on following basis

Nail plate internal brace wall to external wall appear all installed – Aaron carpenter states additional shear blocks will be installed at these locations

No roof or roof battens and ceiling battons

No metal partition wall brackets installed

No transfer blocks/noggins – internal brace walls to roof frame

Top plates are 2/70 x35 – OK as tie down generally 900 c/cs

Photo 8 – stud and tie down within girder location – OK

Photo 9 brace bolt within 150 – OK

I have wall and roof frame certification

Bushfire: request another inspection when roof installed – EE says you are not using a roof blanket so I don’t know how you are sealing roof.”

  1. [32]
    In oral evidence Mr Middlemiss clarified that items 2-5 were the only further works required and that the certificate of completion was issued on the basis that these items would be completed post issue of the certificate.
  2. [33]
    Mr David in his oral evidence at the hearing confirmed that some very minor work regarding the frame was attended to by the Applicant on 4 September 2020 but that those items attended to did not match precisely with the items identified by Mr Middlemiss as outstanding. Mr David explained that the requirements for certification differed from contractual requirements and that the contractual requirements regarding the frame stage were met.
  3. [34]
    In assessing whether the contractual requirements for the frame stage were met, each outstanding item identified by Mr Middlemiss will be considered. Item 2 contains the words “appear all installed” in relation to nail plate internal bracing. There is reference to additional “shear blocks” to be installed. The wording used “appear all installed” does not permit the Tribunal to be satisfied that frame stage is not finished having regard to the schedule 2 definition in the Contract.
  4. [35]
    Item 3 refers to roof and ceiling battens. There is no reference to a requirement for battens to be fixed in the schedule 2 definition of frame stage in the Contract and nor is there evidence before the Tribunal that would permit a finding that battens fall within the contractual definition of frame stage.
  5. [36]
    Item 4 refers to metal partition wall brackets not installed. In his oral evidence provided at the hearing, Mr Middlemiss explained that the installation of these “L” shaped brackets ensures that walls are “in line, perpendicular, not leaning over, straight walls”. In circumstances where a certifier has given evidence that brackets are to be installed to ensure that walls are straight, the Tribunal cannot be satisfied that the requirement that “all tie downs and bracing are complete” has been met and nor can the Tribunal find that installation of the subject brackets could properly construed as a minor or trivial matter that would permit payment to be claimed in the absence of strict and complete compliance.
  6. [37]
    Item 5 refers to the absence of “blocks/noggins” with the note “internal brace walls roof to frame”. In his oral evidence at hearing Mr Middlemiss explained that these items “transfer bracing loads from the roof to the wall frame to the floor”. Again, the Tribunal cannot be satisfied that the requirement that “all tie downs and bracing are complete” has been met having regard to this item and nor can the Tribunal find that installation of this item, intended to facilitate load transfer, could properly be construed as a minor or trivial matter that would permit payment to be claimed in the absence of strict and complete compliance.
  7. [38]
    Despite Mr Middlemiss providing a written statement that confirms the frame stage was finished in accordance with the contractual definition, the oral evidence from Mr Middlemiss in combination with the notations contained in the certification documentation confirms that all “bracing” was not complete. The bracing required was not minor nor trivial in nature. Therefore, the Tribunal must find that the frame stage had not been achieved which impacts the validity of the issuing of the frame stage invoice. Clause 4.1 requires the Owner to pay progressively at each stage. “Stage” means the relevant stage as defined in schedule 2. Frame stage means the stage when the building’s frame is finished as specified previously. The right for payment for the frame stage did not accrue to the Applicant because the stage was not finished.
  8. [39]
    The effect of finding that the frame stage was not finished is that any purported suspension by the Applicant remained premature not because of a failure to allow 5 working days for payment but because the frame stage was not finished.
  9. [40]
    The failure to finish the frame stage does not, in and of itself, give rise to a substantial breach. Instead, the failure to finish means that payment was not due for the frame stage and the issued invoice for the frame stage was not valid and, therefore, the failure by the Owner to make the payment could not be relied upon as a ground under the Contract to suspend works. In the circumstance, the suspension of works was not in accordance with Clause 19 and was therefore a substantial breach that remained (even after 10 September 2020) giving the Owner a right to issue a termination notice pursuant to clause 28.4 in that the substantial breach was not remedied within the requisite remedy period.

Location of the building on the site

  1. [41]
    The failure to locate the slab in accordance with plans and instructions from the Owner is the final breach relied upon in the notice to remedy. The Contract encloses a site plan that sets out the “approx” location of the north-west corner of the house as 23,087mm from the northern boundary of the Property. The approved plans endorsed by a certifier show the “approx” location of the north-west corner of the house as 26,852mm from the northern boundary. A notation on the approved plan states “RL to be confirmed in consultation between the Owner and the Builder on site at time of construction”.
  2. [42]
    A site supervisor, Mr Adrien Da Ros gave evidence that a meeting occurred with Mr Szczesniak in June 2020 to “peg out the location for the house”.[11] Mr Da Ros stated:[12]

“In Mr Szczesniak’s presence, Mr David and I moved the pegs several time at Mr Szczesniak’s request, to position the house exactly where he wanted it.”

  1. [43]
    Mr Da Ros continued[13]:

“Mr Szczesniak was on site after the site pinning was done and he was also present for the footings and for the slab stage.”

  1. [44]
    Mr Szczesniak denies that he was involved with positioning pegs at the site.[14]
  2. [45]
    It was not controversial that the actual location of the slab for the building was 26100mm from the northern boundary of the property.[15] There was a dispute as to which plans should be considered for the purpose of determining breach in relation to the location of the slab. The Applicant submits that clause 1.1 of the Contract requiring the builder to comply with statutory requirements along with section 164 of the Planning Act 2016 (Qld) has the effect that the amended plans submitted for certification should be the plans considered by the Tribunal in assessing breach.[16] Having regard to the location of the house on the set of plans submitted for development approval, the location of the house was to be “approx.” 26852mm from the northern boundary. The difference between the slab location on the certified plans and the actual slab location is approximately 75cm.
  3. [46]
    The question as to whether there has been breach of what was agreed between the parties is a separate question from whether there has been non-compliance with a provision of the Planning Act 2016 (Qld). The location of the slab on the plans annexed to the Contract were part of the agreement at the time of formation of the Contract. There was insufficient evidence before the Tribunal to satisfy the Tribunal as to the necessity for changing the precise location of the slab from the agreed location to the location in the approved plans. Whilst there may have been a statutory obligation to locate the building in accordance with the location in the approved plans, there was no satisfactory explanation as to why the location in the approved plans changed from the location in the agreement between the parties. The statutory obligation requires the construction to be in accordance with plans, not the repositioning necessarily. Therefore, in considering whether there has been a breach, the Tribunal should consider the difference between the location in the agreed plans and the actual location of the slab with the difference being approximately 3 metres.
  4. [47]
    In considering this difference and whether it amounts to a breach, it may reasonably be suggested that the inclusion of the wording “approx” in the plan gives rise to an uncertainty that could raise concern as to enforceability. Alternatively, it may be suggested that the inclusion of the word “approx” gives rise to an incomplete agreement and contemplates a deferred agreement as to location. If found to be uncertain or incomplete, it would be open for the Tribunal to find that there is no breach whatsoever regarding location.
  5. [48]
    However, a court or tribunal should, where reasonable to do so, uphold a contract despite potential uncertainty.[17] It would be reasonable to suggest that the inclusion of the wording “approx” simply means that the building will be located in the vicinity of the identified location on the plans and will only be removed from the identified location so far as is necessary for practical purposes. This interpretation does permit some discretion for the builder and also some discretion for a decision maker in the event of dispute.
  6. [49]
    If the Tribunal found that the breach was a failure to strictly locate the building in accordance with the approved plans then the discrepancy would have been a mere 75cm. A 75cm difference, having regard to the use of the wording “approx” and the large size of the parcel of land upon which the building is located, does not give rise to a breach.
  7. [50]
    There is, however, a real question to be considered as to whether the 3 metre differential between the building location in the agreed plans and the actual building location amounts to a breach. For the purposes of these proceedings, the Tribunal must consider whether the 3 metre differential amounts to “substantial breach” which would permit termination of the Contract pursuant to Clause 28 of the Contract. Whilst some categories of substantial breach are identified in Clause 28, there is no definition of substantial breach contained in the Contract. Locating the slab in accordance with plans (or in the vicinity of the identified location having regard to the use of the word “approx”) is an obligation that can be breached in a minor way or in a major way. The term regarding location of the building, can therefore be correctly identified as an intermediate or innominate term. For an intermediate or innominate term, a minor breach could, at common law, be described effectively as akin to breach of warranty. A major breach could, at common law, be described effectively as akin to breach of a condition. In the absence of any further guidance contained in the Contract or any reason to find otherwise, the Tribunal should consider the expression “substantial breach” in the context of clause 28.1(c) to be analogous to a breach of a condition or alternatively, a major breach of an intermediate or innominate term.
  8. [51]
    Mr Szczesniak stated that,[18]

“… I was concerned that the house was in the wrong position because the house was not supposed to be entirely visible past the treeline on the road but standing on the road, I could clearly see the entire house.”

If the Tribunal were satisfied that the importance of the precise position of the house was communicated to or reasonably made known to the Applicant then the character of the breach in relation to location may be such that the Tribunal could find that the breach was substantial or akin to breach of a condition. However, having regard to the totality of evidence before the Tribunal, there was insufficient evidence to comfortably find that the importance of the precise location was reasonably communicated to the Applicant. 

  1. [52]
    The Tribunal is not satisfied that there is sufficient weight of evidence to permit a finding that the 3 metre differential between the location of the building on the agreed plans and the actual location of the building is a substantial or major breach. The Where the agreed plans use the wording “approx” and having regard to the size of the relatively large parcel of land vis-à-vis the 3 metre discrepancy, any breach would, at its highest, be a minor breach and not a substantial breach. Therefore, the location of the slab is not an effective ground pursuant to the Contract or pursuant to common law upon which to terminate the contract.

The termination notice

  1. [53]
    Clause 28.4 of the contract states:

“If the party in substantial breach does not rectify or commence to substantially rectify the substantial breach stated in the notice to remedy breach within 10 working days of receiving that notice, the other party may end this contract by giving a separate notice to that effect.”

  1. [54]
    For reasons set out above, the Tribunal is satisfied that the Applicant was not in substantial breach having regard to the location of the building. The Tribunal has, however, found that the Applicant was in substantial breach according to the Contract for suspending the work prior to finishing the frame stage.
  2. [55]
    Further issues were raised by the Applicant in relation to the validity of termination pursuant to clause 28 of the Contract.

The Owners abandoned or waived their right to rely on the Suspension Ground

  1. [56]
    The ground identified in the termination notice as the “substantial breach” was the location of the building. The location breach is, for reasons set out above, an ineffective ground to rely upon for termination. However, the termination notice does communicate that the Contract is terminated, irrespective of the ground identified therein. Clause 28.4 of the Contract does not expressly require a description of the substantial breach but rather a notice “to the effect” that a party in substantial breach has not remedied the substantial breach within 10 working days. The phrase “to the effect” merely requires a summary or general form of what is set out in the clause to be conveyed by the notice. The failure to set out the suspension ground, the correct ground, does not mean that the Owners have failed to meet the requirements of Clause 28.4.
  2. [57]
    However, the question remains whether the failure to set out the suspension ground on the termination notice is a sufficient basis for the Tribunal to find that owners have abandoned or waived their right to rely upon that ground. The ground identified in the termination notice was not a breach that permitted termination of the Contract. However, there is no requirement in the Contract to actually identify any ground in the termination notice and there is authority that confirms that notification of termination, even if erroneous grounds are provided in the notice itself, remains effective if other effective grounds existed but were not identified in the notice.[19]
  3. [58]
    In Matthews v Brodie (unreported, Sup Ct (Vic), 2 April 1980), McGarvie J set out the following, at 14:

“The considerations which led the common law to adopt the principle that an innocent party who purported to discharge a contract in reliance on a specified breach by the defaulting party may later rely on another breach which then existed as justifying the discharge … lead me to the conclusion that the owners here may rely on the builder failing to proceed with the works in a competent manner to justify their purported determination of the contract although the notice specified the other ground.”

  1. [59]
    In Downer EDI Ltd v Gillies (2012) 229 IR 214 at Allsop P stated:[20]

“a contracting party who gives a reason for contractual position being taken (such as termination) does not by the giving of that reason (which may be wrong) deprive itself of a justification which existed, whether know of or not at the time.”

  1. [60]
    There is no evidence of express abandonment or waiver by the Owners of the right to rely upon the suspension ground (beyond the inference that might be drawn from the failure to cite that ground in the notification of termination) and case law confirms that the Owners may continue to rely on the suspension ground despite communication of the invalid location ground in the termination notice.

The Breach notice did not specify the correct remedy period

  1. [61]
    The breach notice referred to “10 days” rather than “10 working days”. The notice does not specify whether days are “working days” or “calendar days”. However, the breach notice contained the wording “pursuant to Clause 28 of the contract”. Whatever is “amiss” or potentially uncertain in a notice may be made certain by reference to the clause of the contract upon which the notice relies.[21] All references to “days” in Clause 28 of the Contract were references to “working days”. The Tribunal is, therefore, not satisfied that the failure to specify “working days” in the breach notice is sufficient to invalidate the notice.

The Breach notice was not issued personally by the Owners

  1. [62]
    A solicitor is an agent for the client with authority granted pursuant to the retainer. A solicitor’s acts, within the scope of the retainer, are attributable to the client. Whilst it is not expressly stated in the Contract that a legal representative can stand in the shoes of a party to the Contract for the purpose of issuing notices under the Contract, there is likewise nothing to displace the long established presumption that “the act of the attorney is the act of his client”.[22] Adopting an interpretation that a solicitor is excluded from issuing notices on behalf of a client would not give business efficacy to the Contract. In addition, there is nothing to indicate to the Tribunal that any prejudice is suffered by the Applicant as a result of notices being issued by a solicitor.
  2. [63]
    The issue of the breach notice by the solicitor for the Owners does not invalidate the notice.

Right to terminate to be exercised reasonably or in good faith

  1. [64]
    The Tribunal has found that the suspension ground provided a valid basis for the Owner to terminate the Contract. Also, the Tribunal is satisfied that the identification of the invalid ground in the termination notice did not make termination invalid. In that the Owners were exercising their right to terminate in accordance with the mechanisms set out in the Contract, the Tribunal cannot be otherwise satisfied that there is anything before the Tribunal that would indicate that the Owners have acted in bad faith or unreasonably. As set out above, payment for frame stage was not yet due, suspension was not therefore in accordance with Clause 19.1 and the breach was, accordingly, valid. The frame stage remained incomplete at the time of termination which was in excess of 6 weeks after the breach notice was issued. Having regard to the findings of the Tribunal, the termination could not be aptly described as dishonest, unreasonable, without fidelity to the bargain, unfair or contrary to the objects of the Contract.

Owners were in substantial breach at the time of issuing the Termination Notice

  1. [65]
    Clause 28.6 of the contract sets out that:

“Neither party is entitled to give a notice remedy breach while that party is in substantial breach of this contract. A notice given by a party in substantial breach is ineffective.”

  1. [66]
    Clause 28.2(f) sets out that the Owners are in substantial breach if they enter the site in breach of clause 10 of the Contract. There is evidence regarding the Owners entering to the site in breach of clause 10 of the Contract. However, there is no evidence before the Tribunal that would permit a finding that the Owners remained in breach of clause 10 at the time when the notice to remedy breach was issued.

Repudiation of Contract at Common Law

  1. [67]
    The Tribunal has found that termination has occurred validly in accordance with the mechanisms prescribed by the Contract. Therefore, it is not necessary nor prudent for the Tribunal to make comment or findings beyond those necessary to decide this proceeding, noting the potential for associated proceedings and conflicting findings.
  2. [68]
    For the reasons stated, the appropriate order is that the decision of the Respondent dated 19 January 2021 is confirmed.

Footnotes

[1]Statement of Andrew Zbigniew Szczesniak dated 31 May 2022 at paragraphs 5 to 14.

[2]Statement of Karen Michelle Robinson dated 28 March 2022 at paragraph 14. 

[3]Ibid at paragraphs 17 and 18.

[4]Ibid at paragraphs 21 to 23.

[5]Ibid at paragraph 50 and Attachment J.1.

[6]See Ericksson v Whalley [1971] 1 NSWLR 397; Wilson v Kirk Contractors Pty Ltd (1990) 7 BCL 284.

[7]Statement of Karen Michelle Robinson 28 March 2022 at paragraph 56 and 57;

Statement of John Paul David 28 March 2022 at paragraph 5 and 6.

[8]Statement of John Berney Middlemiss 23 March 2022 at paragraph 6.

[9]Statement of John Paul David 28 March 2022 at paragraph 6.

[10]Statement of Andrew Zbigniew Szczesniak 31 May 2022 at paragraph 40 and Exhibit 14.

[11]Statement of Adrian Victor Da Ros dated 31 March 2022 at paragraph 3.

[12]Ibid at paragraph 4.

[13]Ibid at paragraph 8.

[14]Statement of Andrew Zbigniew Szczesniak 31 May 2022 at paragraph 44(c).

[15]Applicant’s written submissions 5 September 2022 at paragraph 63; and

Respondent’s written submissions 21 September 2022 at paragraph 63.

[16]Applicant’s written Submission 5 September 2022 at paragraph 57.

[17]See Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 616 per Brennan J;

MacDonald v Australian Wool Innovation Ltd [2005] FCA 105 at [227] per Weinberg J.

[18]Statement of Andrew Zbigniew Szczesniak 31 May 2022 at paragraph 27.

[19]Shepherd v Felt and Textiles of Australia (1931) 45 CLR 359.

[20]at paragraph 131.

[21]See Re Stewardson Stubbs & Collett Pty Ltd and Bankstown Municipal Council Arbitration Between [1965] NSWLR 1671.

[22]See Parsons v Lloyd (1772) 3 Wils 341 per De Gray CJ.

Close

Editorial Notes

  • Published Case Name:

    Hampton Home Builders Pty Ltd v Queensland Building and Construction Commission

  • Shortened Case Name:

    Hampton Home Builders Pty Ltd v Queensland Building and Construction Commission

  • MNC:

    [2023] QCAT 21

  • Court:

    QCAT

  • Judge(s):

    A/Member Katter

  • Date:

    19 Jan 2023

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
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600
2 citations
Jump To
Cite 1 - (1982) 149 CLR 600
Cite 2 - (1982) 149 CLR 600
Downer EDI Ltd v Gillies (2012) 229 IR 214
2 citations
Jump To
Cite 1 - (2012) 229 IR 214
Cite 2 - (2012) 229 IR 214
Eriksson v Whalley (1971) 1 NSWLR 397
2 citations
Jump To
Cite 1 - (1971) 1 NSWLR 397
Cite 2 - (1971) 1 NSWLR 397
McDonald v Australian Wool Innovation Ltd [2005] FCA 105
2 citations
Jump To
Cite 1 - [2005] FCA 105
Cite 2 - [2005] FCA 105
Parsons v Lloyd (1772) 3 Wils 341
2 citations
Jump To
Cite 1 - (1772) 3 Wils 341
Cite 2 - (1772) 3 Wils 341
Re Stewardson Stubbs and Collett Pty Ltd v Bankstown Municipal Council [1965] NSWLR 1671
2 citations
Jump To
Cite 1 - [1965] NSWLR 1671
Cite 2 - [1965] NSWLR 1671
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359
2 citations
Jump To
Cite 1 - (1931) 45 CLR 359
Cite 2 - (1931) 45 CLR 359
Wilson v Kirk Contractors Pty Ltd (1990) 7 BCL 284
2 citations
Jump To
Cite 1 - (1990) 7 BCL 284
Cite 2 - (1990) 7 BCL 284

Cases Citing

Case NameFull CitationFrequency
Haimes v Queensland Building and Construction Commission [2024] QCAT 3262 citations
1

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