Krikowa v Greene[2023] QCAT 361

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   The Applicant, Damien Krikowa, has requested that the matter be listed for a summary judgement application with regards to his claim relating to a domestic building dispute. This application was filed on 31 January 2022 and is alleged to have been served personally on the Respondent, Martin Greene, on that date.

Background

2. [2]
   On 8 September 2016, the Applicant, as owner of a property at 9/29 Bell Street Kangaroo Point (“the property”), and the Respondent, as builder, entered into a written building contract (“the building contract”) for building works to be carried out in accordance with a quotation provided by the Respondent on 28 January 2016.
3. [3]
   The quotation for $100,000.00 related to works referred to as “roof space project”. The building works, set out in the quotation and the subsequent written building contract, included a main room including timber flooring and electrical works, a bathroom and a balcony with associated works.
4. [4]
   In mid 2017, the Respondent commenced construction works on the property.
5. [5]
   In April 2018, towards the end of a substantial part of the works, the parties disagreed upon the works required to complete the contract works.
6. [6]
   On 25 July 2018, the Applicant’s solicitors demanded that the Respondent complete the contract works for the contract price.
7. [7]
   By letter dated 9 August 2018, the Respondent refused to comply with the demand.
8. [8]
   On 13 August 2018, the Applicant, through his solicitors, terminated the contract relying upon the Respondent’s alleged breach of the building contract.
9. [9]
   Subsequently, the Applicant engaged engineers to inspect and report upon the state of the works.
10. [10]
    The Applicant alleges that he incurred the sum of $85,896.44, being the following costs of $89,589.97 in rectifying and completing the works performed by the Respondent less the unpaid balance of the contract price of $3,693.53:

    1. Engineer’s fees - $5,500.00
    2. Rectification costs - $45,533.11; and
    3. Completion of the works - $38,556.86.
11. [11]
    The Applicant further alleges that the Respondent was unlicensed and thus, pursuant to s 42 of the Queensland Building and Construction Commission Act 1991 (“QBCC Act”) the Respondent is not entitled to any monetary or other consideration for the works performed. The Applicant claims the sum of $111,684.27 being the amount allegedly paid by the Applicant for which the Respondent was not entitled.
12. [12]
    The Respondent held a QBCC trade contractor licence from 8 July 2015 to 15 February 2019 except for the periods 22 June 2016 to 14 August 2016, 22 July 2017 to 1 September 2017 and 22 June 2018 to 24 June 2018. The licence was suspended during these periods as a result of non-payment of licence fees.
13. [13]
    The Applicant has provided the details of the works which are considered to be included in the scope of work of a carpentry licence and the technical qualifications and financial requirements applicable to such a licence.^[1] The financial limitation on incidental work, not covered by a particular licence but required to be carried out to finish a particular project, is $3,300.00. Therefore, in the event that minor work in excess of this limit is required an appropriate class of licence must be held by the contractor.

Decision by Default for Debt or Liquidated Demand of Money

14. [14]
    Section 50 of the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”) provides that an applicant may apply to the Tribunal for a decision by default in circumstances where an applicant has made an application to the Tribunal to recover a debt or liquidated demand of money and the respondent has not responded to the application within the stated period provided by an enabling Act or the applicable rules.
15. [15]
    Section 50(2) of the QCAT Act sets out an applicant’s entitlement to recovery by way of an application for a decision by default.
16. [16]
    Pursuant to s 50(4), the applicant must prove the respondent has been given a copy of the application before a decision by default may be made under this section.

Directions of the Tribunal

17. [17]
    An application for a domestic building dispute was filed by the Applicant on 15 December 2021.
18. [18]
    On 13 January 2021, the Tribunal made the following directions:

    1. service of documents on the Respondent may be effected at 62 Kawana Crescent Logandale Qld 4130;
    2. the Applicant must file an affidavit of service or other evidence that the application was served on the Respondent in accordance with QCAT Practice Direction 8 and direction 1 above by 1 February 2022;
    3. the Applicant must file and give to the Respondent a copy of the contract in respect of the building works the subject of the dispute by 15 February 2022;
    4. the Respondent must file a response and provide a copy to the Applicant by 1 March 2022;
    5. the application is to be listed for a compulsory conference on a date to be fixed.
19. [19]
    On 2 February 2022, the Tribunal made further directions in relation to the application for an interim order filed by the Applicant on 31 January 2022:

    1. the Applicant must file evidence that the application for an interim order has been served on the Respondent by 8 February 2022;
    2. the Respondent must file and give to the Applicant a copy of any submission in response to the application for an interim order by 15 February 2022;
    3. the Applicant must file and give to the Respondent a copy of any submissions in reply by 22 February 2022;
    4. the application for an interim order will be determined on the papers without an oral hearing and on the basis of the written submissions of the parties not before 22 February 2022.
20. [20]
    On 21 March 2022, the following directions were delivered by the Tribunal:

    1. the Respondent must file a response to the application for a domestic building dispute by 21 April 2022;
    2. the Applicant must file and provide to the Respondent by 22 April 2022 a statement addressing, inter alia, the following:
       1. the agreement and its terms;
       2. any alleged defects in the works the subject of the agreement;
       3. a statement of evidence of cost of rectification works;
       4. evidence of incomplete works;
       5. identification of orders sought including amount of claim and calculation of the claim;
       6. licensing details of the Respondent;
    3. in the event that the Applicant alleges that the Respondent was unlicensed and a claim is made pursuant to s 42(4) of the QBCC Act, the Respondent must file a copy of a statement of the evidence setting out any claim made by the Respondent for reasonable remuneration for carrying out the building work by 22 April 2022;
    4. any claim made by the Respondent pursuant to s 42(4) of the QBCC Act must set out the amounts paid by the Respondent for supply of materials and labour used in carrying out the building works together with evidence of the amounts paid;
    5. if the Respondent fails to comply with the Tribunal’s directions, the Tribunal will proceed to make a final decision in the proceedings on the papers after 26 April 2022;
    6. any request for an oral hearing in respect of the final decision in the proceeding must be communicated in writing to the Tribunal and the other party by 26 April 2022.

Compliance with Directions of Tribunal

21. [21]
    The Applicant has complied with the directions of the Tribunal, in particular directions 1 and 2 of the directions dated 13 January 2022, direction 1 of the directions dated 2 February 2022 and direction 2 of the directions dated 21 March 2022.
22. [22]
    The Respondent has:

    1. failed to deliver a response to the Applicant’s application by 1 March 2022 in accordance with the directions dated 13 January 2022;
    2. failed to deliver any submissions regarding the application for an interim order by 15 February 2022 in accordance with the directions dated 2 February 2022;
    3. delivered a response to the application for a domestic building dispute by 21 April 2022 in accordance with the directions dated 21 March 2022;
    4. failed to deliver the material required by directions 4 and 5 of the directions dated 21 March 2022.
23. [23]
    The Applicant has provided an affidavit of service of documents by Risk and Security Management on 31 January 2022 attesting that the agent served Martin Greene personally with the relevant documents.
24. [24]
    The documents named in the service report are stated to be:

    1. application for domestic building dispute;
    2. application to extend or shorten time limit or for waiver of compliance with procedural requirements;
    3. minor works contract schedule;
    4. response and/or counter application.
25. [25]
    A further affidavit of service dated 7 February is sworn by Dean Andrew Sawyer, a licensed field agent, affirming that on Saturday 5 February 2022 the following documents were served on the Respondent:

    1. the application for interim order;
    2. the Queensland Civil and Administrative Tribunal Directions made before Senior Member Brown dated 2 February 2022.
26. [26]
    By letter dated 20 April 2022, the Respondent delivered to the Tribunal a response to the application for an interim order stating in particular his response to Part C.
27. [27]
    The Respondent’s response addresses possible reasons for his absence from Australia during 2020 and 2021 to 17 January 2022 but it does not address the other matters required by the Tribunal’s directions dated 13 January, 2 February and 21 March 2022. It is obvious that the directions, at least those dated 22 March 2022, were received by the Respondent as they are referred to in his response dated 20 April 2022.
28. [28]
    Given that the Respondent has failed to comply with the Tribunal’s directions, it is open to the Tribunal to make a decision in relation to the Applicant’s interim order and in accordance with the Tribunal’s directions dated 22 March 2022.
29. [29]
    The Tribunal thus proceeds to make a final decision in relation to the Applicant’s claim.

Applicant’s Claim

30. [30]
    The Applicant claims the sum of $111,684.27, being the amount to which he is alleged to be entitled as a result of the Respondent carrying out building work as an unlicensed contractor.
31. [31]
    Alternatively, the Applicant claims the sum of $85,896.44 as damages for breach of contract, such sum being the rectification costs incurred and the costs incurred to complete the works the subject of the building contract.
32. [32]
    In addition, the Applicant seeks costs in the sum of $1,111.50 as identified in his statement dated 20 April 2022.

Unlicensed Contractor

33. [33]
    The Respondent held a trade licence intermittently during the contract period. The Applicant submits that the works the subject of the building contract required that the Respondent hold a builder’s licence.
34. [34]
    The Applicant alleges that the Respondent carried out the contract works without the appropriate licence.
35. [35]
    The rights and liabilities of the parties to a contract which involves the performance of building work carried out whilst a builder is unlicensed have been addressed fully in Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd) [2009] QCA 75.
36. [36]
    The statutory framework of s 42 of the QCAT Act is clear. Section 42(1) specifically provides that a person must not carry out, or undertake to carry out, building work unless the person holds a contractor’s licence of the appropriate class under the Act.
37. [37]
    Section 42(3) is said to sterilise any claim which might otherwise be made under the contract or under common law by an unlicensed builder. It provides that a person who carries out building work in contravention of s 42 is not entitled to any monetary or other consideration for doing so.
38. [38]
    Subsection (4) of s 42 provides that a person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed is not more than the amount paid by the person in supplying material and labour for carrying out the building work and does not include allowance for the following:

    1. the supply of the person’s own labour;
    2. the making of a profit by the person for carrying out the building work;
    3. costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred.
39. [39]
    Further, subsection (3) of s 42 provides that the amount claimed by an unlicensed builder must not be more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work.
40. [40]
    Section 42(4) imposes a limitation upon the right of action at common law which it preserves against the sterilising effect of s 42(3). Without s 42(4), an unlicensed builder’s right to payment of any amount is defeated by sections 42(1) and 42(3). In other words, s 42(4) provides some compensation to the unlicensed builder for works which have been performed under the contract. Without s 42(4), the entitlement to an unlicensed builder to payment for performance of the work would be defeated by sections 42(1) and 42(3).
41. [41]
    The onus of proving any entitlement to payment under s 42(4) rests entirely upon the builder. Keane JA (as he then was) in Cook’s Construction canvasses in detail the legislative history of s 42 of the Act and confirms at paragraph [40] that “the language of s 42(3) and s 42(4) is a clear statement of legislative intention that an unlicensed builder may recover payment for building work carried out in contravention of s 42(1) and contrary to s 42(3), but only to the extent that it proves a claim in conformity with s 42(4)”.
42. [42]
    Keane JA further says at paragraphs [40] and  [42]:

33. “[40]
    …………Rather, s 42(4) assumes the existence of a common law right to remuneration which it preserves against the operation of s 42(3) while at the same time imposing conditions upon the availability and extent of that right. Unless the builder has a good claim conforming to these conditions, the builder’s right to reasonable remuneration cannot avail the builder against the operation of s 42(3).
34. [42]
    In my respectful opinion, it is important that the concern of the courts to avoid an unjust outcome in a particular case should not distort the operation of a statute intended to encourage the licensing of builders by disadvantaging unlicensed builders and advantaging consumers of building services at their expense. It is hardly surprising that the legislature should have left the burden of proving a claim for reasonable remuneration on the builder. What would have been surprising would have been a provision which cast the burden of proof of an unlicensed builder’s claim on the consumer of building services. What is most surprising, of course, is the failure of the builder in this case to adduce evidence capable of proving a claim for an amount of reasonable remuneration in conformity with s 42(4) of the Act.”

43. [43]
    The entitlement of the Applicant to recover moneys paid by him by virtue of s 42(3) was circumscribed only insofar as the Respondent was able to make a right to recover an amount for reasonable remuneration in conformity with s 42(4) of the Act. The onus of proving the amount of a claim in conformity with s 42(4) is upon the unlicensed builder who claims the entitlement.^[2]
44. [44]
    In the absence of evidence from the Respondent detailing any entitlement to the amounts identified in s 42(4) of the Act, it is not possible for this Tribunal to assess any amount owing to the Respondent to defeat the disentitlement to any monetary or other consideration by the operation of ss 42(1) and 42(3).
45. [45]
    In the present instance, however, the first issue to determine is whether the Respondent carried out work without the required licence. There is no dispute that the Respondent only held a carpenter’s licence. This fact is acknowledged by the Respondent.
46. [46]
    The quotation dated 28 January 2016, which formed the basis of the building contract entered into between the parties, sets out in detail the scope of works as follows:-

    1. Firewalls on side walls;
    2. Roof securing points for external roof and gutter cleaning use;
    3. Engineer, architect and certifiers approval;
    4. All rubbish removes from site;
    5. Main room
       1. plasterboards, partitioning and ceiling installed with insulation;
       2. stairway with doorway entrance;
       3. enclosed under stairway with door/storage access;
       4. side wall cupboards, back wall inbuilt;
       5. 4 velux double-glazed tinted ceiling windows;
       6. stairs – timber stairs with open string or closed string;
       7. flooring – timber flooring;
       8. 6 power points;
    6. Bathroom
       1. space for toilet, vanity and shower;
       2. separated from main room by sliding door;
       3. two sides of shower to be glass panel and shower door;
       4. exhaust fan;
       5. plumbing – all plumbing to ensuite – tiles to be provided by owner;
    7. Balcony
       1. balcony accessed by side wall;
       2. roof guttering;
       3. weather board separation between sloping roof cavity space and balcony space;
       4. weatherboard finish to external side of wall separating main room and balcony;
       5. weather sealed and tiled (tiles provided by owner);
       6. metal railing painted grey;
       7. 1 power point.
47. [47]
    The Applicant has provided evidence of the scope of works included in a carpentry licence, relying on such details supplied by the QBCC. The works include:

    1. install timber and sheet flooring;
    2. install exterior cladding, fascias, soffits;
    3. install metal roofing;
    4. construct timber stairs;
    5. fix internal linings, panelling and mouldings;
    6. install door and window locks and furniture;
    7. restore and renovate floors, windows and frames;
    8. install fitments;
    9. concreting;
    10. erect and strip formwork;
    11. incidental work of another class.
48. [48]
    I have taken into consideration the letters provided by the Respondent attached to his response dated 20 April 2022 and I accept the Respondent’s version that it was known to all parties that the Respondent’s licence was a carpenter’s licence only. It appears that the Applicant was heavily involved in the management of the project and the choice of contractors for the various trades.
49. [49]
    There is no evidence that the works undertaken, other than carpentry works, amount to works in value in excess of $3,300.00 and there is no evidence that tradesmen or contractors engaged by the Respondent (or the Applicant) did not have the appropriate licence for the works carried out.
50. [50]
    I am not satisfied that the Respondent carried out works for which he did not hold the appropriate licence.
51. [51]
    Accordingly, whilst the records of the QBCC indicate that the Respondent’s carpentry licence was suspended for short periods of time during the contract works, I am not satisfied that the Applicant has satisfied the onus of proving that the Respondent carried out works for which he was not licenced.
52. [52]
    It follows that the failure of the Respondent to provide the details required by the directions dated 21 March 2022 and referred to in paragraph [20](c) and (d) hereof is not relevant to determining the Applicant’s claim.
53. [53]
    For these reasons, I conclude the Applicant’s claim for the reimbursement of the moneys paid to the Respondent on the basis that the Respondent was an unlicensed builder has not been sufficiently proved.

Damages for Breach of Contract

54. [54]
    The Applicant claims that on 13 August 2018 the contract between the parties was terminated on the basis that the Respondent refused to complete the works unless he was paid a further $20,000.00 in addition to the contract price.
55. [55]
    At the time of the termination of the contract a substantial part of the works had been complete but there was the necessity for a significant redesign of the structural work to accommodate the balcony.
56. [56]
    The Applicant engaged Corella Construction to inspect and report on the works. It was determined that all foundation and structural works completed by the Respondent were required to be removed and reinstalled.
57. [57]
    The Applicant claims that it incurred costs of $89,589.97 as follows:

    1. Engineers fees - $5,500.00
    2. Rectification costs - $45,533.11
    3. Completion of the works - $38,556.86
58. [58]
    The Applicant claims that the amount due is $85,896.44, being the amount to rectify and complete the contract works less the unpaid balance under the building contract of $3,693.53.
59. [59]
    The report from Corella Construction on completion of the works identified the works carried out between 4 March 2019 and 30 June 2019 which included the following:

    1. rectification of works carried out by the Respondent;
    2. completion of the sundeck which had not been commenced by the Respondent;
    3. additional works not included in the contract with the Respondent.
60. [60]
    The scope of works undertaken by Corella Construction to rectify the works carried out by the Respondent is set out in detail in the report identified as attachment 116 to the Applicant’s statement filed 18 May 2022.
61. [61]
    In the absence of any evidence to dispute the report provided by Corella Construction, I am unable to assess whether the rectification works were not necessary or whether the costs incurred were unreasonable.
62. [62]
    I accept that the Applicant incurred the amount claimed in rectifying the works carried out by the Respondent and in completing the contract works.
63. [63]
    Accordingly, the only conclusion is that the Applicant is entitled to be placed in the same position he would have been in had the works been properly carried out under the contract.
64. [64]
    The Applicant’s claim for the costs incurred to rectify the works and complete the contract works in the sum of $85,896.44 is allowed.

Orders

65. [65]
    Based on the reasons provided above, the Tribunal determines that the following orders should be made: -

    1. The Applicant’s application for an interim order is allowed.
    2. The Respondent is to make payment to the Applicant the sum of $85,896.44 being the amount owed to the Applicant by the Respondent for rectification costs and the cost to complete the contract works.
    3. The Applicant’s claim for the costs of the proceedings in the sum of $1,111.50 is allowed.