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Elite Home Builders Pty Ltd v Gould[2023] QCAT 232

Elite Home Builders Pty Ltd v Gould[2023] QCAT 232

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Elite Home Builders Pty Ltd v Gould [2023] QCAT 232

PARTIES:

ELIte home builders pty ltd

aBn 34 163 123 377

(applicant)

v

julie gould

(respondent)

APPLICATION NO/S:

BDL 029-22

MATTER TYPE:

Building matters

DELIVERED ON:

26 June 2023

HEARING DATE:

10 November 2022

23 January 2023

HEARD AT:

Cairns

DECISION OF:

Member Taylor

ORDERS:

  1. The applicant’s claim is dismissed.
  2. The respondent’s claim by her counter-application is dismissed.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – where builder claimed payment of an asserted designated stage under the contract – where the owner refused to pay the claim – where the amount claimed exceeded the permitted value entitled to be claimed – where the builder purported to terminate the contract for the owner’s asserted breach – where the builder terminated the contract for the owner’s repudiation – where the builder did not have an accrued right to payment under the contract at the time of termination – where the builder did not press any claim outside of the contract

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – where the builder claimed payment of an asserted designated stage under the contract – where the owner refused to pay the claim – where the owner asserted the work was defective and/or incomplete – where the owner asserted the builder was in breach of the contract – where the owner purported to terminate the contract – where the owner repudiated the contract in a purported act of termination

Queensland Building and Construction Commission Act 1991 (Qld), s 77, sch 1B s 4, s 34

Koompahtoo Council v Sanpine P/L (2007) 233 CLR 115

Laurinda Pty Ltd v Capalaba Shopping Centre Pty Ltd (1988) 166 CLR 623

McDonald & Anor v Dennys Lascelles Limited (1933) 48 CLR 457

William George Carlsen t/as W& E Carlsen Builders v Tressider [2015] QCAT 260

APPEARANCES & REPRESENTATION:

 

Applicant:

W. Mawer – Director

Respondent:

A. Lima

REASONS FOR DECISION

Overview

  1. [1]
    The applicant presses a claim for payment of what it says is effectively the ‘enclosed stage’ payment in its contract with the respondent. It does so in the confines of what it says is a terminated contract, that termination have been effected by itself.
  2. [2]
    The respondent argues the applicant is not, and has never been, entitled to that payment in that the work never reached the completion of the ‘enclosed stage’. In contrast to the applicant’s assertion of termination, she asserts that she was the terminating party and accordingly she presses a claim for damages. That claim is the cost to her of completing the construction, alternatively that cost less the unpaid balance of the contract.
  3. [3]
    Both parties fail in this proceeding to obtain the relief they each seek. The reason for this is that, whilst I have found the applicant was the party which lawfully terminated the contract thus denying the respondent her claim in damages, at the time of termination the applicant did not have an accrued right to payment of the progress payment claim which is the foundation of this proceeding. Thus, it was not a claim it could press after termination, any such right to payment only arising upon performance of further work which it did not perform and could not perform upon it having elected to terminate the contract. Nor did the applicant press any claim outside of the contract to which it might have become entitled after termination, such as a claim on a quantum meruit basis for the reasonable value of the work performed for which it was not paid.
  4. [4]
    For the reasons I have given herein in the discussion that follows, the outcome of this proceeding is that the applicant’s claim is dismissed, and the respondent’s claim via her counter-application is also dismissed.

Background

  1. [5]
    On 28 October 2020, the parties entered into a contract under which the applicant, as builder, would construct for the respondent, as owner, a house on the owner’s land at Daradgee Queensland, a small town just north of Innisfail. It was to be a kit house supplied by Kitome.[1] The form of contract document was a Queensland Master Builder’s ‘Residential Building Contract – Level 2’. The contract price was $85,647.12 inclusive of GST. It included the cost of purchasing the kit from Kitome.
  2. [6]
    Ultimately the contract price was varied down to $77,353.21 due to changes made by the respondent in selections with Kitome totalling $4,737.00 and a deposit on the kit that the respondent paid directly to Kitome of $3,557.00.[2] Work progressed under the contract with progress payments being made totalling $39,086.30 said to be for the ‘deposit’, the ‘footing stage’, and the ‘frame stage’.[3] It was common ground that this left an unpaid amount under the contract of $38,266.91 incl GST.[4]
  3. [7]
    On 7 May 2021, the applicant made a progress claim in the amount of $34,939.00, said to be for the ‘lock-up stage’, also referred to in the evidence as the ‘enclosed stage’, and said to be due for payment on 14 May 2021. That was Invoice 0581. (the Progress Payment Claim)[5]
  4. [8]
    On 12 May 2021, Mr Sean Edwards, described as a ‘qualified building engineer’, at the respondent’s request undertook an inspection of the works performed by the applicant at that time, and reported back to the respondent that the works had not reached the ‘footing stage’ or the ‘frame stage’ because remedial work was required to works within both stages.[6] (the First Edward’s Report)
  5. [9]
    On 21 May 2021, the respondent wrote to the applicant via e-mail. She asserted that the work constructed at that time was defective or incomplete, and that notwithstanding the earlier payment had been made for the frame stage in fact that stage had not been reached and accordingly the enclosed stage could not be reached. She also requested a Form 16 Inspection Certificate for the frame stage.[7]
  6. [10]
    On 1 June 2021, the applicant obtained a Form 16 Inspection Certificate from Mr Harald Weber of All Construction Approvals (ACA), a building certifier, for the frame stage inspection shown thereon to have been done that day, although in evidence it was suggested the inspection was done earlier.(Frame Stage Inspection Certificate)
  7. [11]
    On 24 June 2021, the respondent sent an e-mail to the applicant, informing it that she had approved payment of $34,309, however requested a corrected invoice “to reflect the Kitomes (sic) price reduction, so that correct payment can be made” asserting that the Progress Payment Claim should be $33,439.49.[8]
  8. [12]
    On 9 July 2021, the applicant, via its solicitor, made a demand for payment of the Progress Payment Claim by 16 July 2021, and simultaneously suspended work as a consequence of non-payment.[9] (the Suspension)
  9. [13]
    On 16 July 2021, the respondent sent an e-mail to the applicant’s solicitor, informing the applicant that she had lodged a complaint with the Queensland Building and Construction Commission, also saying she was “happy to proceed to payment upon receipt of amended invoice from [the applicant], referring to her earlier e-mail of 24 June 2021.[10]
  10. [14]
    On 23 July 2021, the applicant, again via its solicitor, sent another letter to the respondent noting payment of the Progress Payment Claim had still not been made, repeating the demand for payment, on this occasion plus interest, and giving notice under clause 21.1 of the contract that the applicant intends to terminate the contract unless the payment with interest is made within 10 business days.[11] (Notice of Intention to Terminate)
  11. [15]
    On 26 July 2021, Mr Edwards undertook a second inspection of the works, and provided a second report, in which he identified what he asserted to be further incomplete and defective works.[12](the Second Edward’s Report)
  12. [16]
    On 3 August 2021, the respondent, on this occasion via her solicitor, responded to the 23 July 2021 letter asserting that the work had not reached practical completion although without specifying what work had not been done, that the work was defective although without specifying the defects, and asserting the applicant was in breach of the contract although without specifying the breach, and purported to terminate the contract “as of todays (sic) date”.[13] (Respondent’s Termination)
  13. [17]
    On 10 August 2021, the applicant, again via its solicitor, sent a third letter to the respondent noting that payment had still not been made thus the Notice of Intention to Terminate had not been satisfied, also asserting that the Respondent’s Termination was a repudiation of the contract, and on the basis of both the applicant then terminated the contract.[14] (the Applicant’s Termination).
  14. [18]
    On 31 August 2021, Mr Webber issued to the applicant a Form 61 Non-compliance Notice, effectively cancelling the Frame Stage Inspection Certificate, stating therein the non-compliant work was “No bracing to roof” and “No tie down point in far/back right corner looking at house street view.” (the Non-compliance Notice)
  15. [19]
    On 11 October 2021, the QBCC undertook an inspection of the work constructed, and subsequently produced an ‘Inspection Report’. The inspector opined that the asserted non-compliant work as referred to in the Non-compliance Notice was satisfactory and thus compliant.[15] (the QBCC Inspection Report)
  16. [20]
    In January 2022, the respondent engaged Mr John Crothers of AM Quality Homes to rectify the defective work and complete the remaining works to construct her house.[16]
  17. [21]
    On 24 January 2022, the applicant commenced this proceeding claiming against the respondent:
    1. (a)
      $34,939.00 plus interest as an amount owing under the contract; and
    2. (b)
      $3,467.70 as ‘costs’ plus the QCAT filing fee.
  18. [22]
    By an amended response and counter-application dated 4 July 2022, the respondent:
    1. (a)
      asserted that the Progress Payment Claim was not due for payment because the works had not reached the enclosed at that time, and was still not due for payment at the time of her termination because of the substantially defective and incomplete works identified in the First Edward’s Report and the Second Edward’s Report;
    2. (b)
      asserted that the Suspension was invalid;
    3. (c)
      defended the claim asserting that she had validly terminated the contract on 3 August 2021;
    4. (d)
      sought orders that the applicant’s claim be dismissed; and
    5. (e)
      counterclaimed seeking payment of damages, namely:
      1. that the applicant pay her $40,803.13 for rectification and completion of works;

in the alternative

  1. (ii)
    if this Tribunal decides the applicant is entitled to be paid the Progress Payment Claim, that amount be set off against the damages claimed such that the applicant pay her $5,864.13;

in the further alternative

  1. (iii)
    if this Tribunal decides the applicant is entitled to be paid the Progress Payment Claim plus the costs its claims in this proceeding, that amount be set off against the damages claimed such that the applicant pay her $2,396.43.

The Issues

  1. [23]
    The material from both parties before me in this proceeding was confused and confusing. Their respective cases were not set out in a clear manner in their respective application / response – counterapplication documents nor their statements filed. Much of it was repetitive across the various documents they each filed. As well, what would ordinarily be expected as supporting documents exhibited with statements of evidence appeared as part of the original application and the response documents filed.
  2. [24]
    In order to get some clarity in all of this confusion I have laid out herein under the heading ‘Background’ the chronology of key events as I saw them to be, cross referenced where I could to that confused material.
  3. [25]
    There were many issues raised in the material that I have not touched on in this Background, such as the respondent’s assertion that the deposit paid was in excess of the applicant’s lawful entitlement to such, her apparent assertion to an entitlement to be paid by the applicant liquidated damages for late completion of the house, the existence of an earlier contract between the parties, and an asserted remaining valid contract between the respondent and Kitome for the supply of the kit house. None of these issues were relevant to the relief that either party sought in this proceeding for these reasons, and accordingly I did not have further regard to them:
    1. (a)
      whatever deposit was paid it was consumed within the calculation of the total paid and claimed vs the total value of the works performed, and no issue arose that required determination as to whether the amount the applicant received as the deposit exceeded its lawful entitlement to such;
    2. (b)
      whilst the respondent had raised the issue of liquidated damages in her communications with the applicant, she did not rely on same in her response to the claim against her, nor seek any payment of same in her counter-application in this proceeding;
    3. (c)
      it is common ground that the relevant contract between the parties is that entered into on 28 October 2021;
    4. (d)
      to the extent the respondent might have entered into a contract with Kitome for the supply of the kit, that supply was ultimately included in the contract between her and the applicant although there is no evidence nor suggestion of a formal novation.
  4. [26]
    The issues as I saw them to be on the material and evidence before me were:
    1. (a)
      whether the applicant was entitled to claim and be paid for the Enclosed Stage Payment;
    2. (b)
      which party validly terminated the contract, and
    3. (c)
      the consequences of termination to each party?

The Relevant Statutory Law

This Tribunal’s Jurisdiction

  1. [27]
    The work in question is the construction of a house. Thus, it is ‘domestic building work’ as that term is used in the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act),[17] and in turn is ‘reviewable domestic work’ as that term is defined in Schedule 2 of that Act. The proceeding concerns a claim or dispute arising between a building owner and a building contractor relating to the performance of reviewable domestic work, and accordingly it is a ‘domestic building dispute’, which in turn is a ‘building dispute’, as those terms are defined in Schedule 2 of that Act. This Tribunal is given jurisdiction to hear and decide a domestic building dispute under s 77 of that Act.

The regulation of progress payments

  1. [28]
    The QBCC Act Schedule 1B contains this relevant provision:

34  Progress payments for regulated contracts[18]

  1. (1)
    The building contractor under a regulated contract must not claim an amount under the contract, other than a deposit, unless the amount—
  1. (a)
    is directly related to the progress of carrying out the subject work at the building site; and
  1. (b)
    is proportionate to the value of the subject work that relates to the claim, or less than that value.
  1. (2)
    …
  1. (3)
    For subsection (1), a building contractor is taken to claim an amount if the contractor demands or receives the amount.

The Evidence

Wayne Mawer

  1. [29]
    Mr Mawer is the applicant’s director. Save only for the Building Certifier Mr Webber also called for the applicant, he was the applicant’s only other witness.
  2. [30]
    His evidence in chief was confused. In his written material he at times mixed up his statements of what he knew first hand with mere allegations of fact, asserted conclusions of law, and a prayer for relief which are more properly contained in an originating application or a response to one. Such a confusion was evident in his second statement which was in effect his company’s response to the respondent’s counter-application. He also confused his evidence with his allegations when he first filed his company’s application, much of the ‘annexure’ to that document containing what would ordinarily later be within the content of a witness statement. For that reason, his ‘annexure’ document became a ‘statement’.[19]
  3. [31]
    He responded at some length to the report of the respondent’s engineer Mr Edwards, and to the respondent’s allegations in her counter-application in terms of alleged defective work. In doing so he relied on the QBCC Inspection and the findings therein that the work was not defective in the manner alleged by the respondent.[20]
  4. [32]
    As to the issue of the Non-Compliance Notice and the respondent’s assertion that the work had not reached the frame stage, thus could not have reached the lock up stage:
    1. (a)
      he said he sent the Frame Stage Inspection Certificate to the respondent on 1 June 2021;[21]
    2. (b)
      he said the work in question had been constructed in accordance with the plans prepared by the truss manufacturer, Parkside Timber and Hardware Co’, (the Parkside Plans) which when produced superseded the relevant details on the Kitome plans;[22] and
    3. (c)
      he said that Mr Edwards was in error in opining this work was defective because he was not referring to the Parkside Plans.
  5. [33]
    As to the respondent’s allegation the Progress Payment Claim was invalid as a result of the frame stage not having been reached because the Frame Stage Inspection Certificate was invalid, he made these statements:

The Invoice has been raised validly to the extent the building work has been performed according to clause 10.1 of the contract and with reliance upon mandatory stage inspection certificates to continue the building work and issue progress payments accordingly.[23]

The building contract … is divided into stages which must be performed before moving on to the next stage. My company relied on mandatory stage inspections to continue the work through to the next stage. This made the job ongoing and may appear to the Respondent to be incomplete. It is the usual process to follow under a construction contract with stage payments.[24]

The contract … provides a definition for the enclosed stage. [Definition then extracted] The Invoice that is in dispute refers to the lock-up stage. According to the definition, my company has met these requirements.[25]

  1. [34]
    He also made these statements:
    1. (a)
      many of the allegedly defective work items are work in progress, thus merely incomplete;[26]
    2. (b)
      his company suspended work from 9 June 2021 as a consequence of the respondent’s failure to have paid the Progress Payment Claim.[27]
    3. (c)
      as to the Progress Payment Claim, he said:[28]

The amount claim under the Invoice is a true representation of the value of the building works performed by my company.

  1. (d)
    his company decided to terminate the contract following his attendance on site on 9 August 2021 at which time he observed the respondent to be on site and standing in the front door way, although he also asserted that it looked like she was cleaning and that she had moved in, and when he asked her whether he could inspect the house and take some photos, she replied “I don’t think so, you can leave my property please, the contract is terminated please leave my property”. He asserted that this was conduct by her taking possession of the site.[29]
  1. [35]
    However, after stating that the respondent failed to make payment as she decided the invoice for the Progress Payment Claim was incorrect, he said:[30]

The contract was then terminated after all efforts my company made to work with her. It became obvious that the Respondent did not trust my building process and continued to withhold payment. This resulted in work that was done or being done has failed to be completed.

  1. [36]
    Mr Mawer also responded to the statement given by Mr Crothers for the respondent. He once again denied the work referred to therein was defective, although accepting that some of the work was incomplete, such to have been completed.[31] He did not however respond in any way to the cost to complete and given by Mr Crothers providing any form of alternative costing.
  2. [37]
    Mr Mawer was cross-examined at length by Mr Lima for the respondent. As I understood it Mr Lima is not legally trained. That being so, whilst he did an admirable job in conducting the cross-examination, which was extensive, there was little of it that assisted me. Once aspect of it however did assist me which I note here.
  3. [38]
    He queried Mr Mawer about the manner in which the contract document records the progress payment arrangement for ‘designated stages’ noting the absence of any reference in ‘Method A’ therein which set out each of the designated stages as ‘Deposit’, ‘Base Stage’, ‘Frame Stage’, ‘Enclosed Stage’, ‘Fixing Stage’ and ‘Practical Completion’ relative to a stated ‘% of Contract Price’ and in turn the ‘$ Value incl GST’ of each stage but that ‘Method B’ had been selected and whilst there is no description of each ‘stage’ inserted therein, the columns ‘% of Contract Price’ and ‘$ Value incl GST’ have been filled out. When asked what stages the lines in Method B refer to, Mr Mawer answered:[32]

Deposit 15.6364113%              $13,392.15

Foundations 9.9999988%              $8,564.72

Framing 24.3635841%              $20,866.73

Enclosed 44.3636051%              $37,996.19

Practical Completion 5.6364007%                            $4,827.42

  1. [39]
    When then asked what the % complete was at the lock up / enclosed stage, Mr Mawer stated it to be 95%.
  2. [40]
    Mr Mawer was then asked whether, when his company sent the Lockup Stage Claim, the house was almost ready to move in, Mr Mawer’s answer was no because there was still work to do in terms of tiling, the kitchen and bathroom fitouts, and electrical fit-off. On this basis it was then put to Mr Mawer that the work was not 95% complete, Mr Mawer disagreed and said it was because it included the Kitome value.
  3. [41]
    Mr Lima then put it to Mr Mawer that on this basis there was only about $4,800 in value of work remaining to be completed, to which Mr Mawer disagreed saying it was about $8,000.[33]
  4. [42]
    Later the cross-examination turned to the question of the frame stage claim and payment and the date of issue of the Frame Stage Inspection Certificate. The following was generally the words of the exchange:[34]

Mr Lima What must be completed to issue an invoice?

Mr Mawer When frames are up and finished, then we call the certifier to check.

Mr Lima When did you call the certifier for the frame stage

Mr Mawer 7 May 2021

Mr Lima When did you get the Form 16 from the certifier

Mr Mawer 1 June 2021

Mr Lima But you need the Form to issue the invoice

Mr Mawer No

Mr Lima How does Ms Gould know you have completed the work

Mr Mawer Julie Gould trusts me

Mr Lima The bank needs a Form 16 to release payment

Mr Mawer No – not the banks I have dealt with

  1. [43]
    After the cross-examination of Mr Mawer by Mr Lima had concluded, I then asked Mr Mawer some questions. In response to those questions:
    1. (a)
      In respect of his company’s solicitor’s letters, he asserted:
      1. The letter of 9 July 2021 is a ‘notice to remedy breach’ under the contract;
      2. The letter of 23 July 2021 is a ‘notice to remedy breach and a notice of intention to terminate’.
    2. (b)
      As to the Progress Payment Claim, he agreed with me that:
      1. Under Method B of the contract terms, the fourth line therein, which he had previously stated represented the ‘enclosed stage’ required 94.4% of the value of the work to have been completed;[35]
      2. At the time his company made the Lock Up Stage Claim, 94.4% of the value of the work had not been completed.
  2. [44]
    Finally, it should be noted that there was no assertion of, nor evidence from Mr Mawer, as to work, if any, that the applicant performed in construction of the house after the date of the Progress Payment Claim up to the date of the Suspension, nor after the Suspension up to the date of the Applicant’s Termination.

Harald Webber

  1. [45]
    Mr Weber was the building certifier who gave the approval for the building works to the applicant. He stated that:[36]
    1. (a)
      On 22 April 2021, an employee of his company, under his supervision, conducted an inspection of the works for the frame stage, notifying the applicant “ of a few issues to correct which were performed satisfactorily”;
    2. (b)
      On 1 June 2021, his company issued the Frame State Inspection Certificate;
    3. (c)
      On 9 August 2021 he received an e-mail from Mr Sean Edwards containing the Second Edward’s Report;
    4. (d)
      On 11 August 2021 he responded to Mr Edwards and:

… advised that the Form 16 was issued in error due to an administrative failure and that we will rescind the Form 16 and work with the builder to ensure that the matters are resolved.

  1. (e)
    On 31 August 2021 issued the Non-compliance Notice.
  1. [46]
    He then referred to a conversation with Mr Mawer, purportedly about the content of the Non-compliance Notice, and having received from Mr Mawer a copy of the QBCC Inspection report, the Parkside Plans and the accompanying Form 15 designer’s certificates, and made this statement:[37]

After reviewing the new documentation, I realised that I had issued the [Non-compliance Notice] in error because I had initially read the engineer report at face value.

I also overlooked the manufacturer’s plans. I then conducted an in-house check on the manufacturer, Parkside Timber and Hardware Company. My records show that the frame design by Parkside Timber and Hardware Company is compliant.

In conclusion, Elite Home Builders had satisfactorily performed all the mandatory requirements for my company to issue [the Frame Stage Inspection Certificate] on 1 June 2021 and the [Non-compliance Notice] was issued in error.

Julie Gould

  1. [47]
    Similar to Mr Mawer’s evidence in chief, Ms Gould’s evidence was also confused. It was also at times repetitive.
  2. [48]
    She described the extent of allegedly defective work, however recognised that some had been subsequently rectified by the applicant. On the issue of an absence of roof bracing, she referred to the Kitome drawings, but at no time appeared to have referred to the Parkside Drawings.[38]
  3. [49]
    As to the issue of the work being defective or incomplete:
    1. (a)
      such that the footing or the framing stage had been completed, thus the enclosed/lock up stage could not have been completed, she referred to and was reliant on the First Edward’s Report, her discussions with Mr Edwards, and the Second Edward’s Report;[39]
    2. (b)
      she relied on the quote she had received from Mr Crothers to complete the works, having given him a copy of the Kitome drawings.[40]
  4. [50]
    As to the Lock Up Stage Claim, she made these statements:

… because of the Incomplete Works and Defects and Omissions identified by Mr Edwards of TEG and Mr Crothers of AMQH, the Applicant Elite was not legally entitled to submit the Enclosed Stage Invoice, because it had not done that Work yet and wasn’t entitled under the Contract to submit and claim for it.

My position is that submitting the Enclosed Stage Invoice was dishonest and unlawful by Elite, and in breach of s. 34 Schedule 1B of the QBCC Act, because by submitting the invoice Elite was certifying that the Works had been completed to that stage, when Elite and its director Wayne knew that was untrue.[41]

The incorrect amount of $34,959 raised under Invoice 0581 as stated is illegally presented. The foundation stage/frame stages were not completed as confirmed by affidavit of Sean Edwards / John Crothers and ACA directions to correct. The invoice is unable to be raised without a satisfactory Form 16, which was originally revoked due to defects (not rectified) and it was not issued prior to invoice 0581 being sent. The amended contract dated 28 October 2020 detailed stage payment and lock up stage is as p[er Master Builders “enclosed stage”.[42]

  1. [51]
    She acknowledged having received the Frame Stage Inspection Certificate on 1 June 2021, but notes that it “was rescinded shortly after.”[43]
  2. [52]
    As to the issue of termination, the was no evidence from her that she relied on anything other than her solicitor’s letter of 3 August 2021 as being the basis upon which she purports to have terminated the contract. Moreover, on questioning from me during closing submissions as to whether the respondent has complied with clause 20.1 of the contract terms, Mr Lima confirmed that there is not any such evidence.

Sean Edwards

  1. [53]
    In his Affidavit, Mr Edwards explained the background to his engagement by the respondent, and what he observed during his inspections of the works in question on 12 May 2021 and 26 July 2021, confirming and exhibiting his reports on those inspections, and expressing his opinion that:[44]
    1. (a)
      the works had not received ‘lock up stage’ by 26 July 2021;
    2. (b)
      the applicant was not entitled to claim for lock up state at 94% of the work being completed because the work was defective or incomplete; and
    3. (c)
      commenting on the QBCC Inspection Report, disagreeing with the content therein in terms of work not being defective.
  2. [54]
    Under cross-examination by Mr Mawer, Mr Edwards confirmed that his inspection, opinions formed, and his reports given, were premised on the Kitomes drawings, not the Parkside drawings in that he has never seen the latter. He did however agree that when the framing plans are engineered and prepared subsequent to the original plans then they should be the prevailing drawings, however on further questioning from me following conclusion of the re-examination by Mr Lima he stated that any change by Parkside to Kitome’s design should have been referred back to Kitome to ensure that the integrity of its design had not been compromised.

John Crothers

  1. [55]
    Mr Crothers is the builder the respondent engaged to complete the works.
  2. [56]
    In his statement he stated he conducted an inspection of the works on 3 October 2021, and based on what he observed at that time in his opinion the works constructed by the applicant had not reached ‘frame stage’ and thus there was no basis upon which the applicant could have made a claim for ‘lock up stage’ because of what he described as extensive defective or incomplete works. It was on this basis he produced his quotation for completion of the works at $40,803.13 including GST, against which he then completed the works and was paid that amount by the respondent.[45]
  3. [57]
    In cross-examination of Mr Crothers by Mr Mawer, he too confirmed his evidence was based on the Kitome’s drawings not on the Parkside drawings because he had never seen the latter.
  4. [58]
    Whilst he was cross-examined in terms of his cost to carry out the work, it was not in any way substantive to test him on the accuracy of the costing. On some further questioning from me, at its highest the examination of Mr Crothers established that approximately $6-7,000 of what he charged was to undertake remedial work, whereas approximately $19-20,000 was to carry out the incomplete work.

Discussion on the Evidence

  1. [59]
    As Mr Lima appropriately and properly put it in his opening for the respondent, there are two critical items in this proceeding, namely
    1. (a)
      Who lawfully terminated the contract?, and
    2. (b)
      Is the applicant entitled to the payment that it seeks?.
  2. [60]
    I agree, but with the addition of one more item, namely – is the respondent entitled to the payment she seeks from the applicant, in whole or in part?.
  3. [61]
    The outcome of determination of this proceeding falls to be determined within the ambit of those three questions. Whilst there were many other issues canvassed in the presentation of each parties’ respective cases, such as to delays in progress of the works, the extent of allegedly defective and/or incomplete work (in particular whether the roof bracing and/or tie downs were properly constructed), whether the deposit claimed and paid was lawful, and whether the framing stage had been reached or not including the question whether the relevant drawings were the Parkside Drawings or the Kitome drawings, much of what I have summarised in the earlier paragraphs herein on the evidence that was presented, in my opinion ultimately none of these issues mattered. As I will explain in the paragraphs that follow here, the outcome of this proceeding, and those three questions turn solely on three relevant factual circumstances.

Findings of Fact

The extent of work completed

  1. [62]
    This particular issue, whilst not expressed as a separate issue, arises in terms of the next issue discussed herein. As I noted it in paragraph [44] herein, there was no assertion and no evidence of any work having been performed beyond the date of the Progress Payment Claim. In the absence of same, I infer that none was undertaken thus the work encompassed in that claim and the earlier claims made and paid is the complete extent of work performed by the applicant under the contract.

The Progress Payment Claim

  1. [63]
    It was common ground that the respondent had paid $39,086.30 to the applicant. It was also common ground that the Progress Payment Claim was made in the amount of $34,939.00. This brought the total claimed by the applicant to $74,025.30. This was against an adjusted contract price at the time of $77,353.21. Thus, it means that when the applicant made the Progress Payment Claim, it was seeking payment of 95.697% of the contract price.
  2. [64]
    However, under the terms of the contract, Method B as agreed to between the parties, and acknowledged and accepted by Mr Mawer during the giving of evidence as I noted it in paragraph [43](b) herein the contract permitted a maximum claim of 94.4 %, or more precisely 94.3635966%.
  3. [65]
    Moreover, and critically, whilst Mr Mawer had stated in his evidence-in-chief as I have noted it in paragraph [34](c) herein that the amount claimed is a true representation of the value of the building work performed by his company, as acknowledged and readily accepted by him:
    1. (a)
      On cross-examination by Mr Lima, as I have noted it in paragraph [41] herein at that time there remained approximately $8,000 worth of work remaining; and
    2. (b)
      On questioning from me, as I have noted it in paragraph [43](b)(ii)herein at the time his company issued the Progress Payment Claim, only 94.4 % of the value of the work had been completed.
  4. [66]
    Thus, on his own admission, Mr Mawer accepts that the value of the work performed, in terms of the adjusted contract price, was at least $8,000 less than the adjusted contract value of $77,353.21, such equating to $69,353.21, or 89.6578% of the adjusted contract price. On that evidence, I find this to be a fact.

The Termination

  1. [67]
    In my opinion, there can be no doubt, and I find such to be fact, that the following letters were issued between the parties:
    1. (a)
      The applicant’s solicitor’s letter of 9 July 2021 whereby the applicant made a demand for payment of the Progress Payment Claim;[46]
    2. (b)
      The applicant’s solicitor’s letter of 23 July 2021, being the Notice of Intention to Terminate issued to the respondent giving her 10 business days to remedy the asserted breach, being non-payment of the Progress Payment Claim;
    3. (c)
      The respondent’s solicitor’s letter of 3 August 2021 being the Respondent’s Termination purportedly on the basis of the applicant’s breach; and
    4. (d)
      The applicant’s solicitor’s letter of 10 August 2021 being the Applicant’s Termination on the basis of the respondent’s failure to have remedied the breach in the Notice of Intention to Terminate, being to pay the Progress Payment Claim, but also on the basis of the Respondent’s Termination being a repudiation of the contract.
  2. [68]
    Whilst Mr Mawer asserted that his company’s solicitor’s letter of 9 July 2021 was also a notice to remedy breach, I do not agree. It did not provide the requisite period of time to remedy the asserted breach as required under clause 21.1(h) of the contract terms.
  3. [69]
    As to notices issues by the respondent on which she could rely to support her purported termination of the contract, there was no other letter from the respondent, nor was it pleaded in her response or her counter-application, in any way averted to by the respondent, that she relied on any of the applicant’s conduct, particularly the Suspension, or its claiming for payment in excess of its contractual and statutory entitlements and then asserting the respondent’s failure to pay to be a breach of contract entitling the applicant to terminate, was a repudiation of the contract. In the absence of same I find as a fact that no such communication was raised by or for the respondent.

Application of the Relevant Law to the Facts

  1. [70]
    In proceeding as the applicant has done here, that being reliant on the Progress Payment Claim as a claim under the contract, it has done so contrary to the provisions of s34 of Schedule 1B to the QBCC Act. Such is to its peril.
  2. [71]
    Whilst the applicant purportedly proceeded on the premise of the claim being for the ‘lock-up stage’ referred to in the contract terms as the ‘enclosed stage’, the agreement between the parties was not that payment would be made in accordance with specified stages and agreed amounts subject only to change by way of variations. Thus any reliance the applicant has placed on the definition of ‘enclosed stage’ in the contract terms and Mr Mawer’s assertion in his evidence that such stage was reached, was entirely misguided and without substance or effect.
  3. [72]
    If such were to have been the agreement, it would have required the adoption by the parties of Method A in the Part D to the Appendix of the Contract Schedule. In that instance, providing the ‘Enclosed Stage’ had been met, the claim would then have been permissible given that it would have been compliant with s 34(1)(a) of Schedule 1B to the QBCC Act. But in the absence of that being the agreed ‘Method’, notwithstanding the extent to which the parties went in the written statements and the evidence presented during the hearing arguing the point whether the ‘enclosed stage’ had been met, including whether and when the ‘frame stage’ had been met, none of it mattered. It was entirely irrelevant.
  4. [73]
    The issue in this proceeding arose relevant to the second paragraph of that subsection. Given the ‘Method’ adopted by the parties was that the applicant’s entitlement to payment of a progress claim was to be governed by the % of the contract price reached, such enlivened the operation of s 34(1)(b) of Schedule 1B to the QBCC Act. That is, the applicant was limited to claiming, and thus in turn receiving, payment that is proportionate to the value of the subject work that relates to the claim, or less than that value.
  5. [74]
    Yet, that is not what the applicant did when it raised, and maintained its asserted entitlement to payment of, the Progress Payment Claim. Not only did the total value claimed at that time, being 95.697%, exceed the maximum permissible under the contract as agreed between the parties, namely 94.3635966%., it critically exceeded the permissible value as provided for under s 34(1)(b) of Schedule 1B to the QBCC Act because, as accepted by Mr Mawer in his oral evidence it was not proportionate to, or less than, the value of the subject work. The Progress Payment Claim brought the total value of the work being claimed to $77,353.21 whereas the value of the work as performed was only $69,353.21. Notwithstanding the assertion by Mr Mawer, as I have noted it in paragraph [34](c) herein, that the amount claimed in the Progress Payment Claim might very well have been a true representation of the value of the building work his company had performed, such is not the relevant factor.
  6. [75]
    The issue of ‘value’ as it is referred to in s 34(1)(b) of Schedule 1B to the QBCC Act is in terms of the value of work relative to the contract sum, in this instance that contract sum being not the original contract price but the contract price as adjusted under the contract by way of variations.[47] To determine the relevant ‘value’ for the purposes of a progress payment claim at a point in time, it requires the value of incomplete work at the relevant time plus the estimated cost to remedy any defective work, to be deducted from the then prevailing contract sum.[48] Applying this formulae to the present circumstances, even leaving to one side the question of the extent to which it is alleged work was defective and thus requiring rectification, on Mr Mawer’s own evidence as the cost to complete, as discussed a few paragraphs back, the value of the work completed at the time the Progress Payment Claim was raised was less than the gross value claimed at that time. That being so, put simply, the applicant was never entitled to payment of the Progress Payment Claim at the time it made that claim.
  7. [76]
    This then has the consequence that the respondent’s failure to have made payment of that claim was not a breach of the contract by her. What of course then follows is that the Notice of Intention to Terminate premised on this asserted breach, no other breach being relied on, was without substance. There was no breach to be remedied.
  8. [77]
    Accordingly a failure by the respondent to have paid the Progress Payment Claim could not be the foundation for the applicant subsequently terminating the contract.
  9. [78]
    That then leads to a consideration of the question – who lawfully terminated the contract given that each party purports to have done so. In that regard it is apposite to start with the first in time, being the Respondent’s Termination.
  10. [79]
    Clause 20 of the contract terms prescribes the mechanism to be engaged for the respondent to have terminated the contract for breach by the applicant. It requires first a notice of intention to terminate in which the respondent would have described the alleged breach by the applicant and, critically, given the applicant 10 business days to have remedied that breach, and only in the absence of such remedy could the respondent have proceeded to terminate.
  11. [80]
    As confirmed by Mr Lima in his closing submissions for the respondent, she did not engage this regime. Rather, the Respondent’s Termination was premised solely on the content of her solicitor’s letter which, whilst it asserted a breach by the applicant, the breach requiring to be remedied was not clearly articulated to the extent necessary for compliance with a notice of intention to terminate, and critically at no time did the respondent afford the applicant the requisite period of time to remedy a breach nor put the applicant on notice of her intention to terminate should the breach not be remedied.
  12. [81]
    Whilst the contractual mechanism was not the only method of termination open to the respondent, the alternative being to terminate for repudiation of the contract by the applicant, such which might have been open to her following the Suspension having had occurred without any express entitlement afforded the applicant under the contract or otherwise at law, that is not a means she engaged in to terminate the contract. The letter from her solicitor was entirely silent in that regard. Rather, she purported to simply terminate the contract with immediate effect, but without identifying a lawful basis for doing so. For this reason, the Respondent’s Termination was invalid and of no effect in bringing the contract to an end.
  13. [82]
    Appropriately, and not to be unexpected, the applicant’s solicitor properly identified this action by the respondent to be, of itself, a repudiation of the contract be her. What of course then followed is the applicant conduct in terminating the contract. Whilst he sought to terminate the contract for breach, which I have already discussed and found to be without substance and so that act of purported termination was ineffective to terminate the contract, the applicant’s solicitor also referred to the respondent’s conduct of purporting to terminate the contract to be of itself a repudiation of the contract, which whilst not expressed but implied by conduct in issuing the letter the applicant accepted and then terminated the contract.
  14. [83]
    As was observed in Laurinda Pty Ltd v Capalaba Shopping Centre Pty Ltd by Deane and Dawson JJ:

Lord Wrights oft-quoted admonition that “repudiation or a contract is a serious matter, not to be lightly found or inferred” is, no doubt, a wise one. It should not, however, be allowed to cloud the fact that an allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations.

…

An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. … It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it..[49]

  1. [84]
    As was later explained by Gleeson CJ, Gummow, Heydon and Crennan JJ in Koompahtoo Council v Sanpine P/L (2007):

The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It may be terms renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation of the contract as a whole or of a fundamental obligation under it. … Secondly, it may refer to any breach of contract which justifies termination by the other party.[50]

  1. [85]
    The relevant facts before me to which I have just referred fall squarely within the ambit of those judicial statements on the law of repudiation.
  2. [86]
    In all respects, I accept the position taken by the applicant as being a correct open to it at law to take. The respondent’s conduct in purporting to terminate the contract with immediate effect, that is without having followed the contractual regime for her right to terminate the contract in certain circumstances, and in the absence of any expression of any other legal right to terminate the contract in the manner she sought to do, was a repudiation of the contract and one properly accepted by the applicant in terminating the contract.
  3. [87]
    For this reason I find that the contract was lawfully terminated by the applicant.

The parties’ entitlements to be paid their claims

  1. [88]
    That then leads to the question of the parties’ entitlements to be paid that which they seek relief for in this proceeding.
  2. [89]
    It is convenient to dispose firstly of the respondent’s claim for damages in her counterapplication, such being that which she asserts she paid Mr Crothers to remedy the defective work and complete the construction. Given she was not the terminating party, there is no premise for her to seek damages against the applicant. For this reason, her counterapplication fails.
  3. [90]
    Turning then to the claimant’s claim, such being that which he presses in this proceeding, namely the claim for payment of the Progress Payment Claim, plus interest and costs, for the reasons I give in the following paragraphs that claim also fails.
  4. [91]
    Upon lawfully terminating the contract, the applicant became entitled to be paid damages by the respondent. However, he has not pressed a claim for damages. Rather his claim is for payment of the Progress Payment Claim being a payment due under the contract said to have accrued to him prior to termination. Whilst a right to payment having accrued before termination survives termination,[51] as I have already discussed it earlier in these reasons the applicant was never entitled to be paid that which he claimed under the contract. Accordingly, no such right to payment accrued and it is not an entitlement he can press after termination, that entitlement would only have arisen upon performance of further work such which did not occur and a right to perform was lost on the applicant’s election to terminate the contract as a consequence of repudiation by the respondent.[52]
  5. [92]
    What however was possibly open to the applicant to have pursued in this proceeding was a claim outside of contract for payment of work done but for which it was not paid, such arising under the doctrine of substantial performance and a claim in restitution on a quantum meruit basis. But that is not to say that any such claim might have been successful, although nothing more needs be said because such is not a claim that was pressed by the applicant nor was the evidence presented in any way sufficient to support any such claim, such claim requiring independent expert evidence of the value of the work performed with the resulting claim being that value less that which was paid subject to any cap that may be found relevant in terms of the contract price.
  6. [93]
    All that being said, as I have found, the applicant did not have a right to payment under the contract for the Progress Payment Claim, and as such was not a right that had accrued prior to termination that could be pressed in this proceeding. Nor did the applicant press a claim in this proceeding premised on a cause of action open to it that would have arisen post termination. Accordingly its efforts to press its claim, together with interest on the unpaid Progress Payment Claim, in this proceeding fails.

The claim for costs

  1. [94]
    The applicant also sought relief in this proceeding that the respondent be ordered to pay its legal costs of $3,467.70, said to be:

… for legal advice obtained to provide a written offer to settle the dispute.

  1. [95]
    Put simply, this claim fails. There is no legal basis averted to, nor otherwise available, for the applicant to get the relief it seeks. To the extent it sought, obtained, and was required to pay for, legal advice in its dealings with the respondent, save only for the costs of this proceeding which could in some respects be recoverable, such costs are a cost to the applicant of being in business.
  2. [96]
    To the extent it may have been entitled to any costs of this proceeding, the only costs it seeks is that the respondent pays to it the filing fee it incurred in commencing this proceeding. However, given my finding that it has failed in its efforts to press its claim against the respondent, I see no reason to grant that relief.
  3. [97]
    As such, the applicant fails in its claim for costs.

Conclusion

  1. [98]
    The outcome of this proceeding is that neither party succeeds against the other in terms of the relief each sought.
  2. [99]
    The applicant has pressed a claim to which it did not have any contractual right, that claim also going beyond the limits of that which it was entitled under the QBCC Act Schedule 1B. Nor did it press a claim outside of contract. For these reasons it failed.
  3. [100]
    The respondent’s claim was pressed on the premise she lawfully terminated the contract. However, as I have discussed, she did not do so. Her conduct was unlawful, correctly accepted at its election by the applicant as a repudiation so as to entitle it to lawfully terminate the contract. For these reasons she failed.
  4. [101]
    Whilst both have failed in pressing their respective claims, as will undoubtedly be questioned by the applicant the ultimate outcome is that the respondent has not been required to pay the balance of the unpaid portion of the contract sum to it, and accordingly has been left to be able to use those funds in the completion of the construction. That is correct, and thus seemingly a windfall to the respondent. However, it is a windfall that has occurred effectively by the applicant’s own making. It could have elected not to have terminated the contract and so kept it on foot so as to progress the works to a point where a right to payment under the contract could have arisen, or it could have pressed a claim in this proceeding outside the restrictive ambit of the contract. It did neither. The outcome reflects that.
  5. [102]
    For all the reasons I have discussed herein, the outcome of this proceeding is that the applicant’s claim is dismissed, and the respondent’s counterapplication is also dismissed. My decision reflects that.

Footnotes

[1]Ex 3 para 1; Ex 4 para 11.

[2]Ex 5 para 4.

[3]Ex 4.

[4]Ex 14.

[5]Ex 3 para 2.

[6]Ex 4 para 25.

[7]Ex 2 Anx 9.

[8]Ex 3 para 2.

[9]Ex 3 para 3.

[10]Ex 3 para 4.

[11]Ex 3 para 5.

[12]Ex 4 para 27.

[13]Ex 3 para’s 5 & 6.

[14]Ex 3 para 9.

[15]Ex 3 – see Item 21 and 29 in the QBCC Inspection Report.

[16]Amended Response and Counter-application para’s 46 to 49.

[17]QBCC Act - Schedule 1B – s 4(1)(d).

[18]Subsection (2) provides for a regulation to prescribe when an amount is proportionate to the value of subject work under a regulated contract, however no such regulation has been enacted.

[19]Ex’s 1, 2 and 3. Ex 3 is the applicant’s ‘Annexure’ document which formed part of its Application for Domestic Building Dispute by which it commenced this proceeding. Much of what is shown in the ‘Background’ section of these reasons is sourced from that document.

[20]Ex 1 para 18. Ex 2 para 12.

[21]Ex 2 para 38

[22]Ex 1 para’s 13 and 14(c) & (e). Ex 2 para 11.

[23]Ex 1 para 15.

[24]Ex 2 para 13.

[25]Ex 2 para 24.

[26]Ex 1 para 15.

[27]Ex 1 para 21.

[28]Ex 1 para 23. Ex 2 para 2.

[29]Ex 2 para 16. Ex 3 para’s 8 and 9.

[30]Ex 2 para 32.

[31]Ex 1 para’s 17 to 23.

[32]Note that this totals the original contract price of $85,647.21

[33]As I will discuss later in these reasons, that meant the value, relative to the adjusted contract sum, of the works constructed at the time the Progress Payment Claim was made calculates to be $69,353.21.

[34]These words are not taken from a transcript, rather they are as noted by me during the hearing.

[35]Whilst the discussion with Mr Mawer used the figure at 94.4%, to be more precise on the addition of the percentages as they are expressed in the contract document, the precise figure is 94.3635966%.

[36]Ex 6.

[37]Ex 6 para’s 14 to 18. There is confusion in Mr Webber’s statement as to the dates of the Non-compliance Notice and this conversation, the date of the latter being before the former, however no issue was taken with this during cross-examination and thus I have not considered it further. In my opinion nothing turns on it.

[38]Ex 4 para’s 19 and 20.

[39]Ex 4 para’s 25 to 29.

[40]Ex 4 para’s 35 to 43.

[41]Ex 4 para’s 50 and 51.

[42]Ex 5 para 1

[43]Ex 5 para 39

[44]Ex 12.

[45]Ex 13.

[46]Whilst Mr Mawer asserted that this was a ‘Notice to Remedy Breach’, whilst its content was directed to such, it did not fall within the ambit of such a notice under the contract because it did not provide the respondent the requisite 10 business days to remedy such any such breach.

[47]See the definition of ‘Contract Price’ in the contract terms.

[48]See the discussion by Member Gordon on the interpretation of the predecessor to s 34 in the now repealed Domestic Contract Act 2000 (Qld) and the manner in which the learned Member considered that s 34 will resolve the difficulties in interpretation of the earlier version, in William George Carlsen t/as W& E Carlsen Builders v Tressider [2015] QCAT 260, [200] and [201.

[49]Laurinda Pty Ltd v Capalaba Shopping Centre Pty Ltd (1988) 166 CLR 623, 658. Citations omitted. Emphasis added.

[50]Koompahtoo Council v Sanpine P/L (2007) 233 CLR 115, 135-136, [44]. Citations omitted. Emphasis added.

[51]See McDonald & Anor v Dennys Lascelles Limited (1933) 48 CLR 457, 476-477.

[52]I pause here to observe that the applicant could have elected to affirm the contract, notwithstanding the respondent’s purported termination, thus keeping it on foot and so entitling it to continue with construction work.

Close

Editorial Notes

  • Published Case Name:

    Elite Home Builders Pty Ltd v Gould

  • Shortened Case Name:

    Elite Home Builders Pty Ltd v Gould

  • MNC:

    [2023] QCAT 232

  • Court:

    QCAT

  • Judge(s):

    Member Taylor

  • Date:

    26 Jun 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
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
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1988) 166 CLR 623
2 citations
Jump To
Cite 1 - (1988) 166 CLR 623
Cite 2 - (1988) 166 CLR 623
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
2 citations
Jump To
Cite 1 - (1933) 48 CLR 457
Cite 2 - (1933) 48 CLR 457
William George Carlsen t/as W & E Carlsen Builders v Tresidder [2015] QCAT 260
2 citations
Jump To
Cite 1 - [2015] QCAT 260
Cite 2 - [2015] QCAT 260

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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