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  4. Limbu & Limbu v Austyle Building Pty Ltd - [2023] QCAT 89

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Limbu & Limbu v Austyle Building Pty Ltd[2023] QCAT 89

Limbu & Limbu v Austyle Building Pty Ltd[2023] QCAT 89

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Limbu & Limbu v Austyle Building Pty Ltd [2023] QCAT 89

PARTIES:

Tika limbu and indira limbu

(Applicants)

v

austyle building pty ltd

(Respondent)

APPLICATION NO/S:

BDL027-22

MATTER TYPE:

Building matters

DELIVERED ON:

14 March 2023

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Younger

ORDERS:

  1. Austyle Building Pty Ltd must pay Tika Limbu and Indira Limbu the amount of FOUR HUNDRED AND SEVEN THOUSAND, TWO HUNDRED AND NINETEEN DOLLARS ($407,219), within 28 days of this decision.
  2. Austyle Building Pty Ltd must pay Tika Limbu and Indira Limbu interest, on the sum of $407,219, at the rate of 10% from the date after this order until and including the day the amount is paid, within 28 days of this decision.
  3. Austyle Building Pty Ltd must pay Tika Limbu and Indira Limbu costs in the amount of THREE HUNDRED AND FIFTY-EIGHT DOLLARS ($358), within 28 days of this decision.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURES OF – where contract entered into for the performance of building work – where builder becomes unlicensed after entering into contract and after money paid by the owner – where builder does not perform any building work under the contract – assessment of damages – whether owner entitled to recover money paid to builder under the contract – whether the applicant’s claim to contractually prescribed liquidated damages succeeds – whether owner entitled to recover damages to complete works

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 32, s 48

Queensland Building and Construction Commission Act 1991 (Qld), s 42, s 43, s 77, Schedule 1B, Schedule 2

Queensland Building and Construction Commission Regulation 2018, s 54

Bartlett v Contrast Constructions Pty Ltd [2016] QCA 119

Blake v Burrows [2021] QCAT 115, considered

CG and HG Windsor Pty Ltd v Waterman [2013] QCAT 618 at [56] referring to Bellgrove v Eldridge (1954) 90 CLR 613 at [5], applied

Cook’s Construction P/L v SFS 007.298.633 P / L (formerly trading as Stork Food Systems Australasia P/L) [2009] QCA 75 (3 April 2009), cited

Harrison & Anor v Meehan [2017] QCA 315 at [55], referring to Miller v Lida Build Pty Ltd [2015] QCATA 137, applied

Kalkamoning Pty Ltd v Zuch & Anor [2021] QCAT 269 at [238], cited

Olindaridge Pty Ltd & Anor v Tracey & Anor [2014] QCATA 207 at [41], considered

Robinson v Harman (1848) 1 Ex 850; 154 ER 363, cited;

Singh v The Dirt Guys Pty Ltd [2019] QCAT 85 at [32]-[33], referring to Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196, applied

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at [15], cited

Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228 at [45], referring to Mertens v Home Freeholds Co. [1921] 2 KB 526, 535, applied

APPEARANCES &

REPRESENTATION:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

  1. [1]
    Mr Tiku Limbu and Ms Indira Limbu contracted with Austyle Building Pty Ltd (‘Austyle’) to complete building works, consisting of renovations to an existing property and house raise, at 33 Colville Street, Highgate Hill, Qld (the ‘site’), owned by Mr and Ms Limbu.[1]
  2. [2]
    Mr and Ms Limbu paid an initial deposit and later, at the request of Austyle’s representative, Mr and Ms Limbu paid a “one off cash flow advance” to Austyle. Austyle failed to complete any of the work under the contract.
  3. [3]
    Mr and Ms Limbu filed in the Tribunal an application for a domestic building dispute. Austyle have not complied with any Tribunal directions including filing a response to the application.
  4. [4]
    In the Affidavit of Mr Limbu,[2] Mr and Ms Limbu submit that they have suffered the following loss and damage:[3]
    1. (a)
      Repayment of $182,219 being the total amount paid under the contract;
    2. (b)
      Damages of $225,000 being the increased costs to complete the contracted works;
    3. (c)
      Interest on damages;
    4. (d)
      Legal costs incurred.[4]
  5. [5]
    In the application,[5] Mr and Ms Limbu claim the above amounts, and additionally claim liquidated damages in the amount of $100 per day from 17 January 2022.[6]

Issues

  1. [6]
    The issues which arise in this matter include:
    1. (a)
      What is the effect of Austyle’s builder licence being cancelled during the contract period?
    2. (b)
      Was there a breach of contract / repudiation by Austyle entitling Mr and Ms Limbu to terminate the contract?
    3. (c)
      What measure of damages are Mr and Ms Limbu entitled to?

Background

  1. [7]
    On 4 August 2020, Mr Limbu signed a Preliminary Quote with Austyle, which outlined the scope of works to obtain building approval drawings, prior to construction work being agreed upon.[7] The value of the quote was $12,200[8] and Mr Limbu paid a 50% deposit of $6,100 on the same date.[9] This amount does not form part of Mr and Ms Limbu’s claim in the tribunal.

Contract

  1. [8]
    Following this, representatives of Austyle and Mr Limbu negotiated as to a contract price for building works and on 26 July 2021, the parties entered into a domestic building contract.[10] The works described under the contract were “renovation to existing Property and house raise as per Builder supplied plan and the DA reviews”, and it was stipulated that Austyle were to obtain and pay for all planning and building approvals. The anticipated start date was 21 days from building approvals, or 60 days from the date of the contract,[11] and the building period was 150 days after commencement,[12] subject to clause 17.[13] The contract sum was $704,545.45 plus GST, with two deposits – amounting to 10% of the contract price – payable initially, and progress payments then due at various stages of the contract.

Deposit & advance paid by the applicants

  1. [9]
    On 26 July 2021, Mr and Ms Limbu paid Austyle a deposit totalling $77,500, or 10% of the contract price, comprised of a 5% initial deposit and a 5% contract signing / BA works deposit payment.[14]
  2. [10]
    On 10 August 2021, during a videoconference, a representative of Austyle requested that Mr and Ms Limbu pay an advance to Austyle so they could purchase timber and other materials from their suppliers. The representative said words to the effect that if the money was paid, Austyle could have the work done within five months, otherwise it was looking difficult, and that the further advances could be applied to the progress payments.[15]
  3. [11]
    Austyle sent a revised payment schedule to Mr Limbu by email during the videoconference.[16] Mr Limbu agreed to pay an advance of $104,719 to be deducted from the progress payments claimed, and sent an email to Austyle on 10 August 2021 confirming the discussions that day.[17]
  4. [12]
    On 11 August 2021, Austyle’s representative sent an email to Mr Limbu titled “Special request for one off cash flow advance” and attached a tax invoice for $104,719, which charged a percentage for timber materials and certain works to be performed, and a progress payment schedule.[18]
  5. [13]
    Mr Limbu deposes that the works were never subsequently performed, that he does not know whether any timber was purchased for the construction, and that there were no materials moved by Austyle onto the property.[19]
  6. [14]
    Between 11 August and 13 August 2021, Mr and Ms Limbu paid the advance totalling $104,719 to Austyle.[20]

Dispute re commencement date & extensions of time

  1. [15]
    The building approval for the works was obtained on 19 September 2021.[21] Given this, Mr Limbu believes that the commencement date of the contract was 10 October 2021, being 21 days from obtaining building approval.[22]
  2. [16]
    Between late September and late October 2021, Austyle exchanged emails with Mr Limbu to the effect that the works could not be commenced until the power to the property was disconnected and powerlines, gas lines and meters were abolished. There was some confusion by Mr Limbu as to this issue, as he thought this work had already occurred, but subsequently found out in February 2022 that it had not when he visited the property.
  3. [17]
    On 1 November 2021, Austyle emailed Mr and Ms Limbu stating that “an extension of time is required to the contract” and provided a Qld Extension of Time Notice (the ‘Extension Notice’), seeking to revise the building period to 180 days.[23] The revised start date was specified as approximately 30 November 2021 “pending final certification needs from da process being conducted currently. . .and subsequent need for ba approvals”, and the last day of building period specified as 30 April 2022.[24]
  4. [18]
    The cause of the delay in the Extension Notice was cited to be “architectural/structural drawings and site cut and fill due to da requirements. . .”, and “delays from client in relation to documents. . .” and was “not the builders fault”.[25]
  5. [19]
    Mr Limbu deposes that at the time of receipt of the Extension Notice he believed the contract had commenced on 10 October 2021, and was not aware of any conditions in clauses 2.1(a)-(f) of the contract[26] that had not been satisfied.[27] Mr Limbu submits that the Extension Notice shows that the parties were acting on the basis of the commencement date being either 10 October 2021 or at least prior to 1 November 2021.[28] Mr Limbu submits that the reason for the delays cited in the Extension Notice had no merit, as these issues had all been satisfied prior to 19 September 2021, and no extensions were sought by Austyle prior to 1 November 2021.[29]
  6. [20]
    Mr Limbu detailed his and Ms Limbu’s communications with Austyle, including provision of documents at Austyle’s request, between 4 August 2021 and 21 October 2021.[30] Mr Limbu disputes that any delays were caused by him or Ms Limbu, as they had provided all information requested by Austyle in a timely manner.[31]
  7. [21]
    With respect to the revised start date referred to above, Mr Limbu deposes that after building approval was obtained on 19 September 2021, he and Ms Limbu were not made aware by Austyle that there was any further requirement for building approvals or certification.[32]
  8. [22]
    On 4 November 2021, Austyle sent Mr and Ms Limbu ‘Variations 1 to 8’ dated 2 November 2021 providing for increased costs in the stages of the works “due to Pandemic Increase Cost - cost of materials suppliers and subcontractors”, and specifying that further amounts were required to be paid “upfront”.[33]
  9. [23]
    Mr Limbu deposes that he was not aware of any grounds for extension or increase of the contract price pursuant to clauses 2.2(b) and 16.[34] Mr Limbu believes the reason for Austyle’s requests for variations and payment of further monies, totalling $172,437.50, was “to compel [him] to make further payments before the work commenced in circumstances where the Respondent never intended to undertake the work or return the payments I made”.[35]

Correspondence from applicant’s lawyers & Abandonment

  1. [24]
    On 8 November 2021, Morgan Mac Lawyers on behalf of Mr and Ms Limbu, sent a letter to Austyle,[36] disputing the basis of the Extension Notice and the variations to the contract price (the ‘First Letter’).[37] In the First Letter, Mr and Ms Limbu indicated they were willing to accept a short extension on certain terms, subject to acceptance by Austyle.
  2. [25]
    On 25 November 2021, as Austyle had not responded to the First Letter, Morgan Mac Lawyers sent a subsequent letter to Austyle which stated the grounds on which Austyle had breached the contract (the ‘Second Letter’),[38] including:
    1. (a)
      Austyle was seeking variations to the contract price to which it was not entitled, showing an intention not to be bound by the terms of the contract and impose a different interpretation, and amounting to a repudiation of the contract;
    2. (b)
      Austyle had continued not to undertake work pursuant to the contract, also constituting a repudiation of the contract;
    3. (c)
      Austyle sought an extension of the start date, and whilst Mr and Ms Limbu was prepared to agree to an extension in the terms of the First Letter, as Austyle did not respond to the First Letter, there was no extension of the start date agreed upon and Austyle was in breach of the Contract, including clause 2.1, by not starting work.
  3. [26]
    The Second Letter further stated that subject to an agreed extension, Austyle would be liable for late completion damages in accordance with Item 15 of Schedule 1 and clause 32 of the contract in the sum of $100 per day, and that if Austyle again failed to respond within three business days, Mr and Ms Limbu would proceed to the early dispute resolution process[39].[40]
  4. [27]
    On 10 December 2021, Mr Limbu attended Austyle’s office during their stated opening hours, and it was “clear” to Mr Limbu that the office was not attended as the front gate and parking fence were shut and locked, which was just over 5 weeks since Austyle had sought further advance payments.[41]
  5. [28]
    Mr Limbu made enquiries with the Queensland Building and Construction Commission (‘QBCC’) on 22 December 2021 about Austyle’s building licence and obtained a search result which showed that it had previously held five licences which had all been cancelled.[42]
  6. [29]
    On 17 January 2022, as Austyle had not responded to either the First or Second Letters, Morgan Mac Lawyers sent a subsequent letter giving notice in writing that as a result of Austyle’s breaches of the contract and repudiation and abandonment of the contract, Mr and Ms Limbu terminated the contract and would repossess the construction site and property at Highgate Hill effective immediately (the ‘Third Letter’).[43]
  7. [30]
    The Third Letter was sent to several Austyle email addresses and the Gmail account address of the sole director and secretary, and the email bounced back from all Austyle email addresses.[44]
  8. [31]
    An ASIC Current Company Extract for Austyle Building Pty Ltd undertaken on 5 April 2022 showed that the company was still registered and specified the registered address for the company, and the listed address for the director.[45] On 17 January 2022, Morgan Mac Lawyers posted copies of the Third Letter to Austyle at their registered address and to the director’s listed address.[46]
  9. [32]
    On 20 January 2022, the Application for a domestic building dispute was filed in the Tribunal. The Applicants attempted to serve the Application on the Respondents by post to the registered address, however it was returned by Australia Post.[47] They were also unable to effect service on the director at her listed address after two unsuccessful attempts by a process server. The process server provided information to Mr Limbu that the telephone number for Austyle was disconnected, and the registered address was readvertised for rent on 25 January 2022.[48]
  10. [33]
    Mr Limbu deposes that because of the above, that he believes Austyle abandoned their office and the contract.[49]

Breaches of contract

  1. [34]
    Mr Limbu deposes that Austyle has not returned any of the monies to him or Ms Limbu which were paid by them for the deposit and advance, nor have they commenced the work pursuant to the contract.[50]
  2. [35]
    Mr Limbu submits that Austyle has breached the contract in the following ways:
    1. (a)
      In breach of clauses 2.1 and 2.8, Austyle failed to commence work on the commencement date or at all;
    2. (b)
      By failing to commence work on the commencement date or at all, and stating that an extension was required to complete the contract,[51] Austyle committed an anticipatory breach of clause 3.1;
    3. (c)
      In breach of clause 14.1, Mr Limbu believes that Austyle failed to obtain insurance based on a letter from QBCC dated 6 December 2021 stating that they could not locate any insurance for the property.[52]

Increased cost of works since abandonment

  1. [36]
    Mr Limbu deposes that he sought a “quote” from Mr Lewis of JDL Construction for the cost of completing the building work for the property, and that he (Mr Limbu) provided Mr Lewis with the quotation and drawings from Austyle.[53]
  2. [37]
    On 15 January 2022, Mr Lewis provided an initial estimate by email in which he stated that he anticipated the work would cost approximately $1,400,000 to complete.[54]
  3. [38]
    On 25 January 2022, Mr Limbu deposes that he attended the property with Mr Lewis “who inspected the site to provide a more accurate quote”.[55]
  4. [39]
    On 29 January 2022, Mr Lewis provided an SMS message to Mr Limbu stating he “had a look through the revised plans” and his “indicative pricing” for the “whole scope of work” was between $1,000,000 and $1,100,000.[56]
  5. [40]
    Mr Limbu deposes that the difference between the Austyle contract price of $775,000 including GST and the lower limit of Mr Lewis’ estimate of $1,000,000.00 is $225,000.[57]

Statutory framework

  1. [41]
    The relevant enabling Act is the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’).
  2. [42]
    The tribunal has jurisdiction to hear and decide building disputes, pursuant to s 77 of the QBCC Act. A building dispute includes a domestic building dispute, which is defined to include a dispute between a building owner and a building contractor relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work. [58]
  3. [43]
    The terms, “building owner” and “building contractor” are also defined in the QBCC Act.[59]
  4. [44]
    Reviewable domestic work means domestic building work under Schedule 1B, s 4 of the QBCC Act. Domestic building work includes the renovation, alteration, extension, improvement or repair of a home.[60] A home is a building or portion of a building that is designed, constructed or adapted for use as a residence.[61]
  5. [45]
    Pursuant to s 77(3) QBCC Act, in deciding a building dispute the tribunal may award damages, interest, restitution, rectification or completion of defective or incomplete tribunal work, and costs.
  6. [46]
    Section 48 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) provides that where the tribunal considers a respondent in a proceeding is acting in a way that unnecessarily disadvantages the applicant by not complying with a tribunal order or direction without reasonable excuse, the tribunal may make its final decision in the proceeding in the applicant’s favour.[62] It may also make an order against the respondent, to compensate the applicant for any reasonable costs incurred unnecessarily.[63]

Consideration

Jurisdiction

  1. [47]
    As Austyle has not filed any documents in these proceedings, the evidence of Mr Limbu is uncontested.
  2. [48]
    I am satisfied that at all material times, Mr and Ms Limbu were building owners of the site where building work was to be completed, and that Austyle was a building contractor who carried on a business that consisted of or included carrying out building work.
  3. [49]
    I am satisfied that Austyle was contracted to perform domestic building work for Mr and Ms Limbu, and specifically, that the parties entered into a contract, which was in writing, dated and signed by both parties.[64] I find that this was a level 2 contract which has effect pursuant to Schedule 1B, s 14(10) of the QBCC Act.
  4. [50]
    I am satisfied that the Tribunal has jurisdiction to decide the dispute under s 77(1) of the QBCC Act, and that the process established by the QBCC to attempt to resolve the dispute has been complied with[65] because Mr and Ms Limbu filed a letter from QBCC to that effect.[66]
  5. [51]
    On the basis of the Affidavit of Service filed by Mr and Ms Limbu on 10 May 2022, I am satisfied and I find that the service of the application for domestic building disputes has been properly effected on Austyle by email. Substituted service of the application was permitted by direction 2 of the Directions of Senior Member Brown made on 4 May 2022.
  6. [52]
    Austyle has failed to comply with all directions made by the Tribunal, including failing to file and serve a response to the application.[67]
  7. [53]
    I am satisfied that Mr and Ms Limbu have materially complied with the directions of the Tribunal, including filing the Affidavit of Service and a statement of evidence addressing the matters specified in direction 7 of the Directions made on 4 May 2022.
  8. [54]
    I am satisfied and I find that Austyle has not returned any of the monies to Mr or Ms Limbu which were paid by them for the deposit and advance, and I am further satisfied and find that Austyle did not commence the work pursuant to the contract.[68]
  9. [55]
    I am satisfied and find that in failing to comply with all Tribunal directions, Austyle has unnecessarily disadvantaged Mr and Ms Limbu, primarily in having the matter heard and finally determined. As a result, I am satisfied that it is appropriate to exercise my discretion and make a final decision in this proceeding in favour of Mr and Ms Limbu.[69]

What is the effect of Austyle’s builder licence being cancelled during the contract period?

  1. [56]
    I find that:
    1. (a)
      At the time the parties entered into the contract, 26 July 2021, Austyle held an appropriate builder licence, namely an open builder licence, to undertake the work.
    1. (b)
      At the time Mr and Ms Limbu paid the initial deposit of $77,500, on 26 July 2021, and advance to Austyle of $104,719 between 11 and 13 August 2021, Austyle continued to hold an appropriate builder licence to undertake the work.
    1. (c)
      Austyle had been the holder of five builder licences at various stages in 2019 to 2021, however these were all cancelled by late 2021, namely:
    1. (i)
      low rise builder licence issued on 20 December 2019 was cancelled on 28 August 2020;
    1. (ii)
      carpentry builder licence issued on 20 December 2019 was cancelled on 28 August 2020;
    1. (iii)
      wall and floor tiling builder licence issued on 20 December 2019 was cancelled on 28 August 2020;
    1. (iv)
      open builder licence issued on 6 August 2020 was cancelled on 5 October 2021;
    1. (v)
      medium rise builder licence issued on 5 October 2021 was cancelled on 9 November 2021.[70]
    1. (d)
      The commencement date of the contract was 10 October 2021, which was 21 days from obtaining building approval,[71] and by this time four of Austyle’s builder licences including their open licence had been cancelled.
    1. (e)
      At the time Austyle requested:
    1. (i)
      an extension of the contract on 1 November 2021;
    1. (ii)
      variations increasing the contract price on 4 November 2021; and
    1. (iii)
      further upfront payments totalling $172,437.50 on 4 November 2021,
    1. four of Austyle’s builder licences, including their open builder licence, had been cancelled.
    1. (f)
      Austyle failed to perform any building work under the contract with Mr and Ms Limbu at any stage.
    1. [57]
      Pursuant to s 42(1) of the QBCC Act, 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. Section 42(3) of the QBCC Act provides that a person who performs unlicensed building work is not entitled to any monetary or other consideration for doing so. Any monetary or other consideration paid to an unlicensed builder must be repaid.[72]
    2. [58]
      Whilst a builder is not estopped from claiming reasonable renumeration for carrying out building work subject to certain restrictions,[73] the respondent in this proceeding has not sought renumeration, and such a claim would not be reasonable where no building work has been carried out.
    3. [59]
      Although Austyle’s builder licence was cancelled during the building period, as Austyle were initially licenced I find that Austyle was not in breach of s 42(1) of the QBCC Act when it entered into the contract with Mr and Ms Limbu and when Austyle received the deposit and advance from Mr and Ms Limbu. The issue then remains for consideration as to whether there is another basis for Mr and Ms Limbu to recover their deposit and advance monies, as discussed below.

    Was there a breach of contract / repudiation by the respondents entitling the applicants to terminate the contract?

    1. [60]
      On the basis of Mr Limbu’s uncontested evidence, I find that Austyle was in breach of the following provisions of the contract:
      1. (a)
        clauses 1.1, 2.1 and 2.8 - Austyle failed to commence work on the commencement date of 10 October 2021, and failed to commence work at all;
      2. (b)
        clauses 3.1 and 28.1 - Austyle had their builder’s licence cancelled prior to the commencement date, and therefore was in substantial breach of the contract entitling the owner to give a notice to remedy breach and amounting to termination by default under clause 28.1 of the contract. Austyle could not legally commence or complete the works on or before the end of the building period, and therefore this amounted to an anticipatory breach of the contract under clause 3.1; and
      3. (c)
        clause 14.1 – Austyle failed to obtain insurance for the building work prior to the commencement date, based on the letter from QBCC dated 6 December 2021 stating that they could not locate any insurance for the property.[74]
    2. [61]
      I accept Mr Limbu’s evidence, in summary, that there was no reasonable basis for Austyle to request the extension, variations and further upfront payments. There is clear evidence provided of Mr and Ms Limbu’s compliance with requests for information and documentation to Austyle in a timely manner, demonstrating that the applicants had not caused the alleged delays leading to the extension and variation requests. Austyle had not kept Mr and Ms Limbu informed of any impediments to the commencement date after building approval had been obtained.
    3. [62]
      Importantly, Austyle’s open building licence was cancelled in early October 2021, prior to the commencement date of 10 October 2021, and therefore Austyle would not have legally been able to commence work under the contract. There was no legitimate basis to make the variation, extension and upfront payments requests.
    4. [63]
      Pursuant to clause 28.1 of the contract, the owner is entitled to give a notice to remedy breach[75] if the builder is in substantial breach of the contract, including if the builder suspends the carrying out of the works, has their builder’s licence cancelled or is otherwise in substantial breach of the contract.
    5. [64]
      After the issue of a notice to remedy breach giving 10 days’ notice to rectify the breach,[76] the owner may terminate the contract if the breach is not remedied by giving a separate notice to this effect.[77]
    6. [65]
      Clause 28.8 of the contract provides that if a party breaches, including repudiates, the contract, nothing in the clause prejudices the right of the other party to recover damages or exercise any other right or remedy.
    7. [66]
      All of the circumstances must be considered in ascertaining whether there has been repudiation by the respondent.[78] A failure to perform obligations under the contract may amount to repudiation even if not in breach of an essential term, if that failure manifests unwillingness or inability to perform in circumstances where the other party is entitled to conclude that the contract will not be performed substantially according to its requirements.[79]
    8. [67]
      I accept Mr Limbu’s evidence that Austyle did not commence work, and the further circumstances which led him to the view that Austyle had abandoned the contract, including the abandonment of their office and cessation of communication with Mr and Ms Limbu, and the information obtained as to the cancellation of their builder licences.
    9. [68]
      I am satisfied that clause 28 of the contract amounts to an express right to terminate under the contract where one party is in breach.
    10. [69]
      I am satisfied that Austyle suspended the works under the contract and had their builders licence cancelled, amounting to repudiation by Austyle.
    11. [70]
      I find that Mr and Ms Limbu effectively put Austyle on notice of the alleged breaches, in both the First Letter dated 6 November 2021 and the Second Letter dated 25 November 2021, giving them the opportunity to rectify the breaches. In the Second Letter, it was noted that Austyle had breached the contract by seeking variations to the contract price which it was not entitled to, and by continuing to not undertake work pursuant to the contract, actions which both amounting to repudiation of the contract.[80]
    12. [71]
      I consider that the contents of the First and Second letters effectively amounted to a notice to remedy breach under clause 28.3 of the contract. Given this, I find that Mr and Ms Limbu had an express right to terminate the contract under clause 28.4. I further find that the contract was properly terminated by notice given by Morgan Mac Lawyers to Austyle on 15 January 2022.

    Assessment of damages

    1. [72]
      In the circumstances where there have been substantial breaches by Austyle, amounting to repudiation of the contract and giving rise to valid termination of the contract by Mr and Ms Limbu, they are entitled to claim damages for the builder’s breach. Where a building owner sustains a loss by reason of a breach of contract by a builder, the building owner is, so far as money can do it, entitled to be placed in the same situation, with respect to damages, as if the contract had been performed.[81]
    2. [73]
      Mr and Ms Limbu paid Austyle for a deposit and advance in relation to the contract, in accordance with the contract terms,[82] and as further agreed by the parties in relation to the advance payment. Austyle did not commence or complete the works in accordance with the contract,[83]  and therefore did not gain the contractual right to payment under clause 1.2.

    Liquidated damages

    1. [74]
      The parties’ contract provided for liquidated damages, in the event the works did not reach practical completion by the end of the building period.[84]
    2. [75]
      A liquidated damages clause can survive even in circumstances where the innocent party does not take a step to avoid loss which a reasonably prudent person in the same position would have taken, affecting their recovery of damages for breach of contract.[85]
    3. [76]
      In Bartlett v Contrast Constructions Pty Ltd,[86] the Queensland Court of Appeal (‘QCA’) overturned a QCAT appeal decision confirming the disallowance of the applicant’s claim for liquidated damages. The QCA found that the liquidated damages clause survived in circumstances where the builder abandoned the works and repudiated the contract, and the owner delayed a number of months in issuing a notice to remedy breach.[87]
    4. [77]
      As specified in clause 32.1 of the parties’ contract:
    1. If the works do not reach practical completion by the end of the building period the owner is entitled to liquidated damages in the sum specified in item 15 for each day after the end of the building period to and including the earlier of:
    1. (a)
      the date of practical completion;
    1. (b)
      the date this contract is ended; or
    1. (c)
      the date that the owner takes control of, possession of, or use of the site or any part of the site.
    1. The owner may set off or deduct its claim for LD from the final claim payment to the builder
    1. (emphasis added).
    1. [78]
      Item 15, schedule 1 of the contract states the late completion damages in clause 32 are $100 per day and note:

    The late completion damages should be a genuine pre-estimate of the costs the parties anticipate an owner will incur in the event the builder does not reach practical completion by the end of the building period. Such costs may include additional interest paid on borrowed funds and additional rent paid for alternative accommodation.

    1. [79]
      In the Third Letter, Morgan Mac Lawyers referred to the liquidated damages starting from the date of the notice of termination, which was emailed on 15 January 2022. In the application,[88] Mr and Ms Limbu revised the start date for the liquidated damages to 17 January 2022, but no basis is provided for this change. I note that this start date does not reflect clause 32.1 which effectively states the liquidated damages commence from the end of the building period.
    2. [80]
      Clause 38 of the contract[89] states the building period means the number of days stated in item 13 as extended by clause 17. Item 13 states the works must reach practical completion within 150 days after commencement, subject to clause 17.[90]
    3. [81]
      I have previously found that commencement of the contract occurred on 10 October 2021, and that no extension of time was permitted under the contract. Therefore, 150 days after 10 October 2021 was 9 March 2022.
    4. [82]
      I find that the works did not reach practical completion by 9 March 2022, and they were not commenced at all during the building period of 10 October 2021 to 9 March 2022.
    5. [83]
      Referring to clause 32.1 above, each day after the end of the building period would be from 10 March 2022 until the earlier of the events mentioned in (a), (b) and (c).
    6. [84]
      I find that the notice of termination on 15 January 2022 was the date the contract ended and it was the earliest date referred to in (a), (b) and (c) of clause 32.1. In doing so, I have considered the meaning of practical completion,[91] that the work was not completed, and the date the owner took control of / possession of the site was after that notice was given.[92]
    7. [85]
      I further find that given the notice of termination was given on 15 January 2022, before the end of the building period on 9 March 2022, there is no basis for the applicants to be awarded liquidated damages or interest on that amount. 

    Claim for repayment & increase in costs to complete the work

    1. [86]
      In assessing damages, the innocent party is entitled to be restored to the position which they would have been in had the wrongful act not occurred, and damages are the loss which they suffered by the failure of the other party to perform its obligations under the contract.[93]
    2. [87]
      Where a building contractor is in breach of contract, a claim by a building owner is the cost incurred in bringing the works into conformity with the terms of the contract.[94]  Where there is defective work, damages can be assessed by determining the amount required to rectify defects caused by the other party’s breaches.[95] If the works are incomplete, the usual remedy will be the cost incurred in having the works completed in accordance with the contract.[96]
    3. [88]
      Generally, the assessment of damages for breach of a building contract requires any amount that would have been due and payable to the builder by the owner, had the builder completed the building works in accordance with the contract, to be deducted.[97]
    4. [89]
      In these proceedings, no work has been performed under the contract and therefore there is no defective work to be rectified. Rather, Mr and Ms Limbu are claiming the difference between Austyle’s contract cost and the estimated cost of now completing the work, as the work will cost more.
    5. [90]
      Mr and Ms Limbu also seek repayment of the $182,219 paid under the contract, which appears to be a claim in restitution on the basis of unjust enrichment. The applicants’ position is that Austyle did not complete the work and therefore should not be entitled to retain the benefit of the monies paid.
    6. [91]
      In another Tribunal decision with similar circumstances, the owner sought repayment of monies paid because the builder failed to complete the work.[98] The Tribunal determined damages on the basis that amounts paid by the owner to the original builder represented costs likely to be incurred to complete the work with another builder.[99]
    7. [92]
      Mr and Ms Limbu’s claim for the increased costs to complete the work is based upon Mr Limbu’s affidavit as to his attendances with Mr Lewis, and the estimates provided by Mr Lewis in an email and SMS messages. The information provided is a general range, namely between $1,000,000 and $1,100,000, and not in the form of a detailed quotation.
    8. [93]
      In Olindaridge Pty Ltd & Anor v Tracey & Anor,[100] QCAT’s Appeal Tribunal determined that reliance upon quotes as evidence of a party’s loss and the absence of the authors of those quotes being called to give evidence may result in a failure to give procedural fairness to the other party.
    9. [94]
      Austyle has failed to engage in the proceedings, so fairness to them is not an issue which arises here. Mr and Ms Limbu were directed by the Tribunal to file a statement of evidence of the anticipated cost of the rectification work. I am satisfied that they were given the opportunity to obtain evidence as to this issue, and they did comply with this direction.
    10. [95]
      As this matter has proceeded on the papers, without either party giving or calling evidence, I must consider the weight to be given to Mr Limbu’s evidence as to his conversations and communications with Mr Lewis, and the contents of those communications.
    11. [96]
      I accept that Mr Lewis did inspect the site and that he was provided with Austyle’s plans, and provided an overall estimate based upon this. However, Mr Lewis has only provided “indicative pricing” to complete the works in an email and SMS messages, rather than a detailed quote or contract. It is therefore not directly comparable to the Austyle contract amount. Given its generality, the evidence of limited assistance in assessing damages.
    12. [97]
      As the parties entered into a legally enforceable contract, the amount due and payable under the contract between the parties is the relevant consideration in assessing damages. [101]Whilst Austyle are now unlicensed and have no entitlement to monetary or other consideration in performing building work, this fact is irrelevant to determining damages.[102]
    13. [98]
      Austyle’s contract price was $775,000 including GST,[103] and in the absence of any agreed variations, $592,781 would have been the cost for Mr and Ms Limbu to have the work completed under the contract.
    14. [99]
      Mr and Ms Limbu have paid a total of $182,219 in respect of the contract price, leaving a balance payable of $592,781. An allowance for this amount must be made in assessing the entitlement of Mr and Ms Limbu to recover the costs of having the work performed in accordance with the contract.
    15. [100]
      In relation to further costs to have the work completed, Mr and Ms Limbu claim the difference between the contract price and the lower limit of Mr Lewis’ estimate range of $1,000,000, being $225,000.
    16. [101]
      I am satisfied that it is reasonable and necessary that the works be completed, and that these will at least cost Mr and Ms Limbu the amount of $775,000 as stipulated in Austyle’s contract. I consider the claim of $225,000 to have the work completed is reasonable.
    17. [102]
      I assess damages as follows:
      1. (a)
        Costs in completing the building work: $775,000
      2. (b)
        LESS balance payable under the contract:[104]$592,781($182,219)
      3. (c)
        PLUS costs in having the work completed:$225,000
      4. (d)
        Damages payable to Mr & Ms Limbu: $407,219

    Interest

    1. [103]
      Mr and Ms Limbu claim interest, but have made no specific submissions about how this should be awarded.
    2. [104]
      The tribunal may award interest on damages at the rate and calculated in the way prescribed under a regulation, pursuant to s 77(3)(c) of the QBCC Act. Regulation 54(1) of the Queensland Building and Construction Commission Regulation 2018 (the ‘QBCC Regulation’) provides that the interest rate is the rate provided under the contract, or as agreed between the parties, or 10%.
    3. [105]
      The contract in the present circumstances does not provide a specific amount for interest on late completion damages or otherwise, and there is no evidence of an agreement between the parties about interest. Therefore, the third category of an interest rate of 10% applies.[105]
    4. [106]
      As further specified in regulation 54(2), the interest is payable on and from the day after the day the amount becomes payable, until and including the day the amount is paid.
    5. [107]
      This being a claim for unliquidated damages, an amount becomes “payable” only when there is an amount which has been fixed by an assessment of damages.[106]
    6. [108]
      On that basis, Austyle are to pay interest on the unliquidated damages of $407,219, to be determined at the rate of 10% from the day after this order until and including the day the amount is paid.

    Costs

    1. [109]
      The tribunal may award costs in building disputes, pursuant to s 77(3)(h) of the QBCC Act, and this is a broad discretion which must be exercised judicially. As this proceeding has been determined on the papers, there has not been a contested hearing, and there has been no evidence filed by the applicants as to their legal costs, these are matters which I take into account in determining what award of costs is appropriate.
    2. [110]
      I find that Mr and Ms Limbu are entitled to recover the filing fees of the application in the amount of $358, which were costs they had to incur in pursuing this matter before the Tribunal.

    Orders

    1. [111]
      There will be a final decision for Mr and Ms Limbu as follows: 
      1. (a)
        Damages: $407,219;
      2. (b)
        Interest:To be determined at the rate of 10% from the day after this order  until the amount is paid;
      3. (c)
        Costs: $358.

    Footnotes

    [1]  Affidavit of Evidence of Mr Limbu filed 5 July 2022 at [7] and “TL-6”.

    [2]  Ibid.

    [3]  Ibid at [77].

    [4]  An amount has not been specified. The cost of filing the application for domestic building disputes was $358.

    [5]  For domestic building disputes, filed by the applicant on 20 January 2022.

    [6]  Given there was no reference in the Affidavit of Mr Limbu, it is unclear whether liquidated damages are still sought by the applicants.

    [7]  Mr Limbu referred to this as the “Preliminary Building Contract”, which provided that Austyle would conduct the necessary work to obtain the required building approval for the works: ibid at [2] and “TL-1”.

    [8]  As deposed by Mr Timbu in his Affidavit of Evidence filed 5 July 2022 at [3], although the second page of the Preliminary Building Contract is not attached to “Tl-1”.

    [9]  Ibid at “TL-2”.

    [10]  Ibid at “TL-5”.

    [11]  Clause 2.1 and Item 14, schedule 1 of the contract.

    [12]  Item 13, schedule 1 of the contract.

    [13]  ‘Delays and extensions of time’.

    [14]  As specified in Schedule 2, Part B of the contract.

    [15]  Ibid at [10] and [11].

    [16]  Ibid at “TL-8”.

    [17]  Ibid at “TL-9”.

    [18]  Ibid at “TL-10”.

    [19]  Ibid at [14].

    [20]  Ibid at “TL-11”.

    [21]  Ibid at “TL-12”.

    [22]  Ibid at [20]. Clause 2.1 of the contract.

    [23]  Ibid at [22] and “TL-14”, “TL-15”.

    [24]  Ibid at “TL-15”.

    [25]  Ibid at “TL-15”.

    [26]  Which, in summary, related to documents to be given to the builders by the owners and approval documents.

    [27]  Ibid at [24].

    [28]  Ibid at [24].

    [29]  Ibid at [27].

    [30]  Ibid at [28]-[37].

    [31]  Ibid at [38].

    [32]  Ibid at [40] and “TL-13”

    [33]  Ibid at [41] and “TL-21”.

    [34]  Ibid at [43].

    [35]  Ibid at [45].

    [36]  pursuant to clause 37 of the contract.

    [37]  Ibid at [46]-[49] and “TL-22”.

    [38]  Ibid at [50]-[51] and “TL-23”.

    [39]  Pursuant to the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’).

    [40]  Ibid at “TL-23”.

    [41]  Ibid at [52] and “TL-24”.

    [42]  Ibid at [53] and “TL-24A”.

    [43]  Ibid at [54] and “TL-25”.

    [44]  Ibid at [54] and “TL-25A”

    [45]  Ibid at [55] and “TL-26”.

    [46]  Ibid at [56].

    [47]  Ibid at [58]-[59] and “TL-28”.

    [48]  Ibid at [60]-[63] and “TL-30”, “TL-31”.

    [49]  Ibid at [66].

    [50]  Ibid at [65].

    [51]  Ibid at “TL-14”.

    [52]  The property is the address listed in the contract. Ibid at [69] and “TL-32”.

    [53]  Ibid at [70]-[72].

    [54]  Ibid at [70]-[73] and “TL-35”.

    [55]  Ibid at [74].

    [56]  Ibid at [75] and “TL-36”.

    [57]  Ibid at [76].

    [58]  QBCC Act, Schedule 2.

    [59]  Ibid.

    [60]  QBCC Act, Schedule 1B, s 4(b).

    [61]  Ibid, Schedule 1B, s 9(1).

    [62]  QCAT Act, s 48(2)(b)(i).

    [63]  QCAT Act, s 48(2)(c).

    [64]  In compliance with s 14(2) of Schedule 1B QBCC Act.

    [65]  As required by s 77(2) QBCC Act.

    [66]  The letter from QBCC dated 23 December 2021, filed with the Application for domestic building disputes on 20 January 2022.

    [67]  As required by direction 4 of the Directions made by Senior Member Brown on 4 May 2022.

    [68]  Affidavit of Mr Limbu at [65].

    [69]  Section 48(2)(b)(i) QCAT Act and direction 5 of the Directions made by Senior Member Brown on 4 May 2022.

    [70]  Affidavit of Mr Limbu at “TL-24A”.

    [71]  Based on clause 2.1 of the contract and the information provided in Affidavit of Mr Limbu at [20].

    [72]  Cook’s Construction P/L v SFS 007.298.633 P / L (formerly trading as Stork Food Systems Australasia P/L) [2009] QCA 75 (3 April 2009).

    [73]Section 42(4) QBCC Act.

    [74]  The property is the address listed in the contract. Affidavit of Mr Limbu at [69] and “TL-32”.

    [75]  Referring to clause 28.3 of the contract.

    [76]  Clause 28.3 of the contract.

    [77]  Clause 28.4 of the contract.

    [78]Blake v Burrows [2021] QCAT 115 at [13] citing Wilson v Kirk Contractors Pty Ltd (1991) 7 BCL 284.

    [79]Blake v Burrows [2021] QCAT 115 at [13] citing Roo Roofing Pty Ltd v Commonwealth of Australia [2019] VSC 331.

    [80]  ‘TL-23’ to Affidavit of Mr Limbu.

    [81]Robinson v Harman (1848) 1 Ex 850; 154 ER 363.

    [82]  In particular, clause 1.2.

    [83]  In particular, clause 1.1.

    [84]  Clause 32.1 of the contract.

    [85]Bartlett v Contrast Constructions Pty Ltd [2016] QCA 119 at [35]-[36].

    [86]  [2016] QCA 119 at [36] and [103].

    [87]  Ibid at [103].

    [88]  For domestic building disputes, filed 20 January 2022.

    [89]  ‘Interpretation’ clause.

    [90]  ‘Delays and extensions of time’ clause.

    [91]  Schedule 2 of the contract.

    [92]  The Third Letter indicated that Mr and Ms Limbu were to take possession effective immediately.

    [93]Robinson v Harman (1848) 1 Ex 850; 154 ER 363 and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272.

    [94]Blake v Burrows [2021] QCAT 115 at [22].

    [95]Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at [15].

    [96]CG and HG Windsor Pty Ltd v Waterman [2013] QCAT 618 at [56] referring to Bellgrove v Eldridge (1954) 90 CLR 613 at [5].

    [97]Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228 at [45], referring to Mertens v Home Freeholds Co. [1921] 2 KB 526, 535.

    [98]Blake v Burrows [2021] QCAT 115.

    [99]  Ibid at [22] and [25] per Senior Member Brown.

    [100]  [2014] QCATA 207 at [41].

    [101]Singh v The Dirt Guys Pty Ltd [2019] QCAT 85 at [32]-[33], referring to Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196, applied.

    [102]  Ibid at [33].

    [103]  Schedule 1, Item 2 of the contract.

    [104]  Had the work been completed in accordance with the contract.

    [105]  Section 54(1)(c) of the Regulation.

    [106]Harrison & Anor v Meehan [2017] QCA 315 at [55], referring to Miller v Lida Build Pty Ltd [2015] QCATA 137

Close

Editorial Notes

  • Published Case Name:

    Limbu & Limbu v Austyle Building Pty Ltd

  • Shortened Case Name:

    Limbu & Limbu v Austyle Building Pty Ltd

  • MNC:

    [2023] QCAT 89

  • Court:

    QCAT

  • Judge(s):

    Member Younger

  • Date:

    14 Mar 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
Bartlett v Contrast Constructions Pty Ltd [2016] QCA 119
4 citations
Jump To
Cite 1 - [2016] QCA 119
Cite 2 - [2016] QCA 119
Cite 3 - [2016] QCA 119
Cite 4 - [2016] QCA 119
Bellgrove v Eldridge (1954) 90 CLR 613
2 citations
Jump To
Cite 1 - (1954) 90 CLR 613
Cite 2 - (1954) 90 CLR 613
Blake v Burrows [2021] QCAT 115
6 citations
Jump To
Cite 1 - [2021] QCAT 115
Cite 2 - [2021] QCAT 115
Cite 3 - [2021] QCAT 115
Cite 4 - [2021] QCAT 115
Cite 5 - [2021] QCAT 115
Cite 6 - [2021] QCAT 115
CG and HG Windsor Pty Ltd v Waterman [2013] QCAT 618
2 citations
Jump To
Cite 1 - [2013] QCAT 618
Cite 2 - [2013] QCAT 618
Cook's Construction Pty Ltd v SFS 007.298.633 Pty Ltd [2009] QCA 75
2 citations
Jump To
Cite 1 - [2009] QCA 75
Cite 2 - [2009] QCA 75
Greer v Mt Cotton Constructions Pty Ltd [2018] QCATA 196
2 citations
Jump To
Cite 1 - [2018] QCATA 196
Cite 2 - [2018] QCATA 196
Harrison v Meehan [2017] QCA 315
2 citations
Jump To
Cite 1 - [2017] QCA 315
Cite 2 - [2017] QCA 315
Kalkamoning Pty Ltd v Zuch [2021] QCAT 269
1 citation
Jump To
Cite 1 - [2021] QCAT 269
Mertens v Home Freehold (1921) 2 KB 526
2 citations
Jump To
Cite 1 - (1921) 2 KB 526
Cite 2 - (1921) 2 KB 526
Miller v Lida Build Pty Ltd [2015] QCATA 137
2 citations
Jump To
Cite 1 - [2015] QCATA 137
Cite 2 - [2015] QCATA 137
Olindaridge Pty Ltd & Anor v Tracey & Anor [2014] QCATA 207
2 citations
Jump To
Cite 1 - [2014] QCATA 207
Cite 2 - [2014] QCATA 207
Robinson v Harman (1848) 1 Ex 850
3 citations
Jump To
Cite 1 - (1848) 1 Ex 850
Cite 2 - (1848) 1 Ex 850
Cite 3 - (1848) 1 Ex 850
Robinson v Harman (1848) 154 ER 363
3 citations
Jump To
Cite 1 - (1848) 154 ER 363
Cite 2 - (1848) 154 ER 363
Cite 3 - (1848) 154 ER 363
Roo Roofing Pty Ltd v Commonwealth of Australia [2019] VSC 331
1 citation
Jump To
Cite 1 - [2019] VSC 331
Singh v The Dirt Guys Pty Ltd [2019] QCAT 85
3 citations
Jump To
Cite 1 - [2019] QCAT 85
Cite 2 - [2019] QCAT 85
Cite 3 - [2019] QCAT 85
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272
3 citations
Jump To
Cite 1 - (2009) 236 CLR 272
Cite 2 - (2009) 236 CLR 272
Cite 3 - (2009) 236 CLR 272
Wilson v Kirk Contractors Pty Ltd (1991) 7 BCL 284
1 citation
Jump To
Cite 1 - (1991) 7 BCL 284
Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228
2 citations
Jump To
Cite 1 - [2017] QCAT 228
Cite 2 - [2017] QCAT 228

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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