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Kline Industries International Pty Ltd v Henwood[2024] QCAT 135

Kline Industries International Pty Ltd v Henwood[2024] QCAT 135

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Kline Industries International Pty Ltd v Henwood [2024] QCAT 135

PARTIES:

KLINE INDUSTRIES INTERNATIONAL PTY LTD

(applicant)

v

KAREN HENWOOD

(respondent)

APPLICATION NO/S:

BDL078-23

MATTER TYPE:

Building matters

DELIVERED ON:

25 March 2024

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

Proceeding dismissed.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY – Where applicant performed building work under a contract – Where applicant alleged respondent had failed to pay balance of invoice for variation work – Where applicant says parties agreed to defer payment of the balance of the invoice to a future, unspecified date – Whether agreement unenforceable for lack of certainty

LIMITATION OF ACTIONS – LIMITATION OF PARTICULAR ACTIONS – SIMPLE CONTRACTS, QUASI-CONTRACTS AND TORTS – Where applicant performed building work under a contract – Where applicant alleged monies remain due and owing under the contract – Where applicant brought claim for payment of outstanding invoice more than six years after payment of the invoice fell due – Whether applicant’s claim statute barred

CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – where applicant’s claim statute barred – where applicant’s claim without prospects of success

Limitations of Actions Act 1974 (Qld) ss 10,

Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 47

Brice v Chambers [2014] QCA 310

Kruse v Sunland Homes Pty Ltd [2023] QCAT 331

Upper Hunter County District Council v Australia Chilling and Freezing Co Ltd [1968] HCA 8

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

What is this proceeding about?

  1. [1]
    This is a proceeding about a building dispute. Kline Industries International Pty Ltd (Kline) constructed a house for Karen Henwood. Kline says that Ms Henwood owes $4,092.95 being the balance of an agreed variation of the building contract. Ms Henwood says that Kline’s claim is statute barred.

What are the issues for determination?

  1. [2]
    The following issues are to be determined:
    1. When did Kline’s claim for breach of contract accrue;
    2. Is Kline’s claim statute barred by operation of s 10(1)(a) of the Limitation of Actions Act 1974 (Qld) (LAA);
    3. Should the proceeding be dismissed pursuant to s 47 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
  2. [3]
    Section 10(1) of the LAA provides:

10 Actions of contract and tort and certain other actions

  1. The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—
  1. subject to section 10AA, an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person;
  1. an action to enforce a recognisance;
  1. an action to enforce an award, where the agreement to arbitrate is not by an instrument under seal;
  1. an action to recover a sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of a penalty or forfeiture.

What do the parties say?

  1. [4]
    In the originating application Kline claims $4,092.95 ‘as outlined in GK 1 Builders Margin being a total of $4,092.95’. Kline also sets out a claim for interest ‘as per the contract clause 33 at 18% per annum total of $5,157.11’. The originating application is otherwise devoid of meaningful particulars of the claim.
  2. [5]
    Ms Henwood says in her response:
    1. The parties entered in a written contract for the construction of a new home on 12 December 2015;
    2. The works were completed on or about 7 July 2016;
    3. In or about July 2016 Kline gave Ms Henwood possession of the property;
    4. On 20 March 2016 Kline issued to Ms Henwood invoice 244 in the amount of $24,557.74;
    5. The invoice was payable to Kline by 20 March 2016 or, at the latest, 25 March 2016;
    6. On the basis that the invoice was payable by 20 March 2016, Kline’s cause of action arose on 20 March 2016;
    7. The proceeding was commenced by Kline on 22 March 2023, 7 years and 2 days following the accrual of Kline’s cause of action;
    8. By operation of s 10(1)(a) of the Limitation of Actions Act 1974 (Qld) (LA Act), Kline’s claim is statute barred.
  3. [6]
    After directions were made for the determination of the preliminary issue the parties filed submissions.
  4. [7]
    Kline says:
    1. The parties entered into a domestic building contract on 12 December 2015;
    2. The contract included prime cost and provisional sums items and allowances;
    3. Ms Henwood paid for the materials at cost price plus the net labour content in accordance with the contract;
    4. There was a builder’s margin which is unique to the building industry;
    5. The builder’s margin permits an uplift in the price of materials. This is characterised as a ‘speciality’ (sic) in accordance with a transparent transaction which satisfies the requirements of the finance process;
    6. Section 10(3) of the LA Act provides that ‘An action for a specialty shall not be brought after the expiration of 12 years from the date on which the cause of action accrued.’;
    7. Kline was aware that Ms Henwood was under financial pressure and ‘was lenient with the monies owing and expected to be paid once the financial pressure was relieved. (Kline) recently became aware that (Ms Henwood) sole a commercial property … which would (mean that Ms Henwood would) be in a position to finalise the debt.’;
    8. The proceeding was commenced within time;
    9. Kline sent an email to Ms Henwood on 6 December 2016 ‘mentioning the owed monies’;
    10. Kline commenced the complaint process with the Queensland Building and Construction Commission (QBCC) on 6 March 2023 which was only 3 months beyond the 6 year period.
  5. [8]
    Ms Henwood filed no submissions, relying upon the response.
  6. [9]
    The Tribunal made directions for the parties to file further written submissions addressing the date it was said by Kline the parties entered into an agreement whereby Kline deferred payment of the builder’s margin claimed in the invoice and the date to which payment was deferred.
  7. [10]
    In response to the further directions Kline says:
    1. Invoice 244 was sent to Ms Henwood on 20 March 2016;
    2. Ms Henwood paid an amount of $20,464.79 on 18 April 2016;
    3. A short time after noticing the short payment by Ms Henwood of the builder’s margin, Kline’s principal, Mr Graydon Kline, spoke with Ms Henwood and queried why invoice number 244 had not been paid in full. Ms Henwood asked if she could pay the balance at a later date and agreed to defer the payment to a later date when Ms Henwood was in a position to do so;
    4. No specific date was agreed by which the balance of the invoice would be paid by Ms Henwood and Ms Henwood would pay the outstanding amount ‘once in a financial position to do so’.
  8. [11]
    In response, Ms Henwood says:
    1. she has no recollection of any conversation with Mr Kline regarding the payment of the balance of invoice 244;
    2. the first she was aware of the short payment was on 25 January 2023 when Kline forwarded to her an email claiming to have ‘found an outstanding invoice’;
    3. On the basis of Kline’s submissions, there was no enforceable contract entered into in relation to the payment of the balance of invoice number 244. Even if there was an agreement, which Ms Henwood denies, there was no certainty of terms and it could not be inferred that payment was deferred until 22 March 2017 (which would mean the proceeding was commenced within the relevant limitation period);
    4. The proceeding should be dismissed pursuant to s 47 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) on the basis that the claim by Kline is frivolous and vexatious.

Consideration

  1. [12]
    I make the following findings as to jurisdiction:
    1. Kline is a building contractor;
    2. Ms Henwood is a building owner;
    3. The dispute relates to a contract for the performance of domestic building work;
    4. The dispute is a domestic building dispute;
    5. The Tribunal has jurisdiction to decide the proceeding.
  2. [13]
    The summary dismissal of a proceeding pursuant to s 47 of the QCAT Act should only be ordered in circumstances where the applicant has no reasonable prospects of success.
  3. [14]
    In Kruse v Sunland Homes Pty Ltd[1] I said the following about s 47:

[3] By s 47 of the Queensland Civil and Administrative Act 2011 (Qld) (‘QCAT Act'), the Tribunal may dismiss a proceeding, or part of a proceeding, if the Tribunal is satisfied that the proceeding or part thereof is frivolous, vexatious or misconceived; lacking in substance; or otherwise an abuse of process.

[4] As the Tribunal has observed on numerous occasions, the power to dismiss a proceeding found in s 47 is akin to a summary judgement power. Judicial Member, the Hon Peter Lyons QC, explained the operation of s 47 in Simons & Ors v Dowd Lawyers Pty Ltd:

[33] The focus of s 47 of the QCAT Act is (at least for the most part) the case put forward by a party to a proceeding, whereas the focus of s 48 is the conduct of a party to a proceeding. The respondent particularly relied upon the provisions of s 47, which require the Tribunal to consider whether the applicants’ application is frivolous, vexatious, or misconceived; or lacking in substance. The respondent, in essence, contended that the applicants’ case had too low a prospect of success to warrant its continuance.

[34] Section 47 is found in Division 1 of Chapter 2, Part 5 of the QCAT Act. That division is headed “Early End to Proceeding”. Its purpose seems to me to be broadly similar to rr 292 and 293 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), found in Chapter 9, which is entitled “Ending Proceedings Early”. With respect to those rules, in Deputy Commissioner of Taxation v Salcedo McMurdo P said:

Nothing in the UCPR ... detracts from the well established principle that issues raised in proceedings will be determined summarily only in the clearest of cases.

[35] In that context, her Honour quoted the following passage from the judgment of Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde:

Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.

[36] The language used in s 47 is not identical to the language used in the UCPR. However, the expressions “frivolous, vexatious or misconceived” suggest a high threshold must be crossed before the Tribunal can exercise its powers under this section. No doubt the expression “lacking in substance” is not to be confined in its operation to cases which are frivolous, vexatious or misconceived. However, it is to be read with the expression “otherwise an abuse of process” found in s 47(1)(c). In my view, the language of s 47 of the QCAT Act indicates that a party who invokes it on the basis that the opponent’s case is weak, faces at least as high a hurdle as a party applying for summary judgment under rr 292 and 293 of the UCPR; and that the principles in the passages quoted above are accordingly relevant. (footnotes omitted)

[5] I respectfully adopt the approach of Judicial Member Lyons. I would add the additional observation. It is not appropriate to summarily dismiss a proceeding in circumstances where there is dispute as to the true facts of the case particularly in circumstances where the relevant factual findings will be central to the determination of the dispute between the parties.

  1. [15]
    The Tribunal may of its own initiative determine whether a proceeding should be dismissed pursuant to s 47.
  2. [16]
    I approach the determination of whether the proceeding should be summarily dismissed cautiously, noting that the parties have not yet filed their statements of evidence.
  3. [17]
    A cause of action founded on contract accrues when the contract is breached. In this case, the alleged breach occurred when Ms Henwood failed to pay Kline invoice no. 244.
  4. [18]
    Kline has filed a copy of invoice no. 244 dated 20 March 2016. The invoice refers to ‘Approved Variation’ and is for an amount of $24,557.74. Attached to the invoice is a typed document, presumably prepared by Kline, detailing the calculation of the variation. Nine items are set out with corresponding dates, the first of which is ‘John Burrows site clean’ dated 18 January 2016 and an amount of $1,787.50 and the last being ‘Adbri Masonary (sic) Blocks’ dated 1 March 2016 and an amount of $5,606.10. The total of these various items is $48,764.79. There is a deduction of $28,300.00 for ‘Allowance’ leaving a sub-total of $20,464.79 to which is added $4,092.95 for ‘Builders Margin’. The total invoice amount is $24,557.74.  It is therefore reasonably readily apparent that the claim by Kline, the subject of this proceeding, is the builder’s margin amount claimed in invoice no. 244.
  5. [19]
    Accepting for present purposes that Mr Kline and Ms Henwood discussed the shortfall in the payment of invoice 244 in or about April 2016, there is significant doubt cast over whether an enforceable agreement was reached to defer payment of the balance sum. I make this observation notwithstanding that the parties are yet to file their statements of evidence. The parties have had ample opportunity to file submissions addressing the circumstances in which it is said that agreement was made between the parties to defer payment of invoice 244 or, as Ms Henwood says, that no such agreement was entered into. Kline concedes in its submissions that no date was agreed between the parties by which the balance of invoice 244 would be paid.
  6. [20]
    It does not appear to be contentious as between the parties that invoice 244 represented an agreed variation. By clause 20.7 of the contract the price of a variation was payable at the next progress payment after it was carried out unless a different time was agreed.
  7. [21]
    Assuming that Kline is successful in establishing that there remains a balance payable in respect of invoice 244, on Kline’s best case the date by which the balance was payable by Ms Henwood was not fixed. On Kline’s best case no agreement was reached as to the date by which Ms Henwood was required to pay the outstanding amount. Again, on Kline’s best case, the balance was payable by Ms Henwood when she was financially able to do so.
  8. [22]
    The fact that there may be a lack of clarity in what parties say and difficulty in defining the extent of the parties’ rights and obligations under a contractual term does not lead, necessarily, to the conclusion that the term is uncertain.[2] Courts and tribunals strive to uphold commercial bargains wherever possible. The job of the tribunal in a case such as this is to construe the contract, to ascertain the intention of the parties and to apply it.[3]
  9. [23]
    Accepting Kline’s submissions that there were discussions between the parties regarding the payment of the balance of the invoice, the fundamental difficulty facing Kline is that no date was agreed by which the balance would be paid. What was meant by Ms Henwood paying the balance ‘once in a financial position to do so’ is entirely unclear. Was it when Kline considered Ms Henwood was in a position to pay? Was it when Ms Henwood considered she was in a position to pay? How was the adequacy of Ms Henwood’s financial position to be determined, objectively, subjectively, or by reference to some unstated criteria? How did the parties intend such an agreement to operate in respect of any obligation imposed upon Ms Henwood to inform Kline that she was in a financial position to pay the balance of the invoice? It is, in my view, unlikely that after a hearing it will be possible to construe the purported variation to the contract with the requisite degree of certainty. No amount of evidence is likely to address the issues to which I have referred. In my view the alleged agreement to defer payment of the balance of the invoice is unenforceable for uncertainty.
  10. [24]
    That leaves Kline’s claim subject to the written contract entered into by the parties. There is no evidence before the Tribunal about the timing of the payments for the various stages of the works under the contract. It does not appear to be contentious that the works were completed on or about 7 July 2016. I infer that the practical completion stage payment was due at or about this time. Invoice 244 was payable, at the very latest, at the time the practical completion stage payment was due. Kline commenced the proceeding on 22 March 2023. Kline does not submit that the final stage payment was due after 22 March 2017. It is clear that payment of the outstanding amount, at the very latest, fell due more than 6 years before the commencement of the proceeding. The claim is state barred by operation of s 10(1)(a) of the LAA. As to Kline’s submission that the claim is for a specialty, this argument is without substance. A ‘specialty’ is a written document, signed and delivered, exhibiting the characteristics of a deed, given as security for payment of a specifically identified debt. There is no such written document relied upon by Kline.
  11. [25]
    I am satisfied that the claim as articulated by Kline has no realistic prospects of success. As I have observed, those prospects will not, in my view, improve with the filing of statements of evidence and further ventilation of the issues. The proceeding lacks substance and, if permitted to proceed, would be vexatious.

Conclusion

  1. [26]
    The proceeding is dismissed.

Footnotes

[1]  [2023] QCAT 331.

[2] Brice v Chambers [2014] QCA 310.

[3] Upper Hunter County District Council v Australia Chilling and Freezing Co Ltd [1968] HCA 8.

Close

Editorial Notes

  • Published Case Name:

    Kline Industries International Pty Ltd v Henwood

  • Shortened Case Name:

    Kline Industries International Pty Ltd v Henwood

  • MNC:

    [2024] QCAT 135

  • Court:

    QCAT

  • Judge(s):

    Senior Member Brown

  • Date:

    25 Mar 2024

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
Brice v Chambers [2014] QCA 310
2 citations
Jump To
Cite 1 - [2014] QCA 310
Cite 2 - [2014] QCA 310
Kruse v Sunland Homes Pty Ltd [2023] QCAT 331
2 citations
Jump To
Cite 1 - [2023] QCAT 331
Cite 2 - [2023] QCAT 331
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8
2 citations
Jump To
Cite 1 - [1968] HCA 8
Cite 2 - [1968] HCA 8

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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