Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment
  • Appeal Determined - Special Leave Refused (HCA)

Pivovarova v Michelsen[2015] QCATA 73

Pivovarova v Michelsen[2015] QCATA 73

CITATION:

Pivovarova v Michelsen [2015] QCATA 73

PARTIES:

Tatiana Pivovarova

(Applicant/Appellant)

v

Peter B. Michelsen trading as Peter Michelsen Building Service ABN 84003506297     

(Respondent)

APPLICATION NUMBER:

APL337-13

MATTER TYPE:

Appeals

HEARING DATE:

26 March 2014

HEARD AT:

Brisbane 

DECISION OF:

Justice David Thomas, President

Member Deane

DELIVERED ON:

10 June 2015

DELIVERED AT:

Brisbane 

ORDERS MADE:

  1. The appeal is allowed.
  2. The decision of 24 July 2013 is set aside.
  3. The name of the party is corrected and changed to Peter B. Michelsen trading as Peter Michelsen Building Service ABN 84003506297.
  4. The matter is remitted to the Tribunal for determination according to law.
  5. Tatiana Pivovarova is to file in the Tribunal two (2) copies and provide to Peter B. Michelsen trading as Peter Michelsen Building Service ABN 84003506297 one (1) copy of any further submissions and evidence as to costs by 4:00pm on 1 July 2015.
  6. Peter B. Michelsen trading as Peter Michelsen Building Service ABN 84003506297 is to file in the Tribunal two (2) copies and provide to Tatiana Pivovarova one (1) copy of any submissions and evidence as to costs (if any) in response by 4:00pm on 22 July 2015.
  7. The application for costs will be determined on the papers without an oral hearing, unless a party requests an oral hearing, not before 22 July 2015.
  8. The proceeding BDL245-12 is listed for a directions hearing on a date to be fixed.
  9. The proceeding BDL245-12 is listed for a further hearing on a date to be fixed.

CATCHWORDS:

APPEALS – DOMESTIC BUILDING DISPUTE – whether leave to appeal required – whether  Practical Completion reached – whether builder entitled to Practical Completion Stage Payment  less deductions – whether sufficient or adequate reasons provided

Queensland Civil & Administrative Tribunal Act 2009 (Qld) ss 3(b), 135, 142, 146, 147 

Domestic Building Contracts Act 2000 (Qld) ss 67, 84

Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37

Chambers v Jobling (1986) 7 NSWLR 1

Combined Building Services Pty Ltd v Springall and Anor [2011] QCAT 674

Commissioner for Children and Young People and Child Guardian v Eales [2013] QCATA 303

Commissioner for Children and Young People and Child Guardian v FGC [2011] QCATA 291

Dearman v Dearman (1908) 7 CLR 549

Ericson v Queensland Building Services Authority [2013] QCA 391

Fraser v The Irish Restaurant & Bar Company Pty Ltd [2008] QCA 270

Fox v Percy (2003) 214 CLR 118

Go & MJ Nominees Pty Ltd v Hollywells Homewares Pty Ltd [2010] QSC 169

Hoenig v Isaacs [1952] 2 All ER 176

Homewares Pty Ltd [2010] QSC 169

Kurnnan & Anor v Pivovarova [2012] NTSC 48

Minister for Immigration and Ethnic Affairs v Baker (1997) 45 ALD 136

Pickering v McArthur [2005] QCA 294

Radcliff and Anor v Walker [2011] QCAT 435

Ricchetti v Lanbuilt Pty Ltd [2011] QCATA 266

Rocci & Anor v Diploma Construction Pty Ltd [2004] WASC 18

Seymour v Racing Queensland [2013] QCATA 139

Sumpter v Hedges [1898] 1 QB 673

Tan Hung Nguyen v Luxury Design Homes Pty Limited & Ors [2004] NSWCA 178

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Tatiana Pivovarova in person

RESPONDENT:

Peter Michelsen in person

REASONS FOR DECISION

Justice David Thomas, President

  1. [1]
    I have had the advantage of reading the reasons of Ms Deane in draft.  I agree with them, and with the orders she proposes.

Ms Sandra Deane, Member

  1. [2]
    Mr Michelsen is a licensed building contractor.  Ms Pivovarova contracted with him to build a new house.  A dispute arose as to whether practical completion had been achieved and whether Mr Michelsen was entitled to the final/practical completion stage payment under the contract. The Tribunal decided in Mr Michelsen’s favour and ordered that Ms Pivovarova pay $47,800 plus interest and costs of $275.  Ms Pivovarova appeals that decision.  The grounds relied upon are set out in her outline.[1]
  2. [3]
    Ms Pivovarova contends that all of the grounds relied upon are errors of law and, therefore, she has a right to appeal. It is appropriate, in my findings in relation to whether the grounds of appeal raise questions of law, or fact, or mixed law and fact, to apply the distinction articulated by the Deputy President in Seymour v Racing Queensland:

In a case in which the grounds of appeal raise both a question (or questions) of fact or mixed law and fact, and leave to appeal in respect of the latter is granted, then the distinction between the nature of the appeal and powers exercisable by the Appeal Tribunal will lose significance. However, in a case in which leave to appeal on the grounds involving fact is refused, it is important that the category of the appeal as of right on the question of law alone is preserved. That integrity will not be preserved, and the right to appeal on a question of law will be lost if the Appeal Tribunal impermissibly subjects those grounds to a requirement to obtain leave when the statute does not impose it.[2]

  1. [4]
    Where grounds of appeal raise questions of mixed law and fact, leave to appeal is necessary.[3]  Leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.[4] Where leave is granted the appeal is to be decided by way of rehearing.[5]
  2. [5]
    Section 146 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) sets out the Appeal Tribunal’s powers on appeal where the appeal is on a question of law. It does not provide for rehearing as compared to section 147 which relates to appeals on questions of fact or mixed law and fact.[6] If the question of law resolves the matter as a whole then the Appeal Tribunal may substitute its decision, otherwise it is to remit the matter for further consideration.
  3. [6]
    Ground 1 relates to the name of the builder. Through a series of errors by Mr Michelsen’s lawyers and the Tribunal, the name of the builder has not been correctly represented in the Tribunal proceedings[7]. The application was originally commenced in the business name, Peter Michelsen Building Service, but the Tribunal registry appears to have entered the name as ‘Services’. The application should have been commenced in Mr Michelsen’s name trading as Peter Michelsen Building Service. 
  4. [7]
    It is common ground that Mr Michelsen is a sole trader, who conducts his business under a business name, Peter Michelsen Building Service.  It is also common ground between the parties that the name and ABN set out in the contract is the name of the builder, which ought to be used in the proceedings. 
  5. [8]
    The Tribunal has power to correct a decision if the decision contains a clerical mistake, or an error arising from an accidental slip or omission.[8]  Accordingly, the name of the party should be corrected and changed to Peter B. Michelsen trading as Peter Michelsen Building Service ABN 84003506297.
  6. [9]
    Four of Ms Pivovarova’s remaining 10 grounds relate to the learned Member’s findings in relation to Practical Completion, namely that Practical Completion had been reached either in fact[9] or as a consequence of Ms Pivovarova taking possession[10].
  7. [10]
    Practical Completion stage under the contract[11] is defined to mean:

That stage of the Works when the Works are completed in accordance with the Contract and all relevant statutory requirements, apart from minor omissions or minor defects, and the Works are reasonably suitable for habitation.

  1. [11]
    Practical Completion stage is similarly defined in the Domestic Building Contracts Act 2000 (Qld) (DBC Act) [12] to mean the stage when:
    1. (a)
      the subject work has been completed in accordance with the contract and all relevant statutory requirements, either –
      1. (i)
        without any omissions or defects; or
      1. (ii)
        apart from minor omissions or minor defects; and
    2. (b)
      the detached dwelling or home is reasonably suitable for habitation.
  2. [12]
    Grounds 2 and 3 relate to the finding that by taking possession,               Ms Pivovarova had waived the right to contend practical completion had not been achieved.
  3. [13]
    I am satisfied that there is a demonstrated error in respect of ground 2 but not ground 3.
  4. [14]
    The contract provided:

The Owner must not take Possession of the Works.....prior to payment to the Contractor of the final progress claim unless the Owner has obtained the Contractor’s written consent[13]...

If the Owner takes Possession of the Works, or any part of the Works, when not entitled to do so under the Contract, the Works are deemed to have reached Practical Completion Stage on the date of Possession.[14]

  1. [15]
    Ms Pivovarova contends that the learned Member erred in law in making such findings because:
    1. a)
      there was evidence that Mr Michelsen had consented in writing to her taking possession on 5 April 2012 such that the deeming provision did not apply;[15]
    2. b)
      this point, and others set out later in her grounds, were not pleaded by Mr Michelsen and that she was therefore disadvantaged in presenting her case.[16]
  2. [16]
    Ms Pivovarova refers to a statement in the catchwords on page one of the decision, ‘decision that stage was reached as owner had taken possession.’ Catchwords are intended as a research aid to describe the case but are not strictly part of the reasons.  In this instance they are consistent with some observations about the usual consequence of taking possession contained in the reasons,[17] however they are inconsistent with the substance of the decision which consists of a finding that in fact practical completion was reached. 
  3. [17]
    In terms of the order made nothing flows from the observations about taking possession because the decision relied upon a finding that practical completion was actually reached.
  4. [18]
    To the extent that the observations amount to findings I am satisfied that an error of law is substantiated. The learned Member’s reasons do not refer to or take into account the evidence of consent to taking possession and the consequences of such evidence.  
  5. [19]
    The Appeal Tribunal[18] has recognised that reasons:

must contain three essential elements: appropriate and sufficient reference to the relevant evidence; the material findings of fact that were made (and the reasons for making those findings); and, the applicable law and the reasons for applying it..... the crucial requirement is for the Tribunal to give reasons which disclose what has been taken into account in a way that means that any error is revealed.

  1. [20]
    It has also been accepted by the Appeal Tribunal that the adequacy of the Tribunal’s reasons is to be considered ‘in light of the simpler, expedited procedures it is obliged to adopt under the QCAT Act’.[19]
  2. [21]
    To the extent that there was a finding that practical completion was reached as Ms Pivovarova had taken possession, even considering the simpler and expedited procedures of the Tribunal, I find that the reasons are inadequate as they do not disclose why the written consent given prior to Ms Pivovarova taking possession did not satisfy clauses 17.8 and 17.9 of the contract so that Practical Completion was not deemed to have been reached.
  3. [22]
    A failure to provide sufficient or adequate reasons for a decision is an error of law.[20]  The appeal on this point is allowed. 
  4. [23]
    As to ground 2 I set aside the decision and return the matter to the learned Member for a fresh determination to be made according to law.
  5. [24]
    Ms Pivovarova also relied upon Kurnnan & Anor v Pivovarova[21] in support of her contention that to decide a case on a matter not pleaded was an error of law.  The case involved a decision by a court. 
  6. [25]
    The Tribunal does not conduct cases in the same way as courts conduct cases.  There is no provision for formal pleadings in the QCAT Act or Rules. In Go & MJ Nominees Pty Ltd v Hollywells Homewares Pty Ltd,[22] it was held that the rules about a party being bound by the pleaded case do not strictly apply in a tribunal. 
  7. [26]
    In this tribunal, the application and response documents are usually brief and the tribunal relies upon statements of evidence supplemented in this case by an oral hearing.  This manner of conducting cases is consistent with the tribunal’s objects to deal with matters in a just, economical and informal manner.[23]     
  8. [27]
    The question for this Appeal Tribunal is whether or not the relevant finding was open on the evidence. An Appeal Tribunal will not usually disturb findings of fact on appeal if it considers the conclusions of the decision maker below were able to be made on the evidence before them,[24] however may interfere if the conclusion is ‘contrary to compelling inferences’ in the case.[25]
  9. [28]
    There was evidence from which it was open for the learned Member to find that Ms Pivovarova had taken possession prior to payment of the final progress claim.  The evidence was that Ms Pivovarova had informed Mr Michelsen that she had cancelled her house lease and had nowhere to go such that Mr Michelsen agreed to her taking possession.  I am not satisfied that there is a substantiated error in making findings about the consequences of possession in the absence of specific pleading of this point by Mr Michelsen.    
  10. [29]
    Both grounds 5 and 8 relate to the finding that practical completion was reached.  Ground 5 relates to the failure to find that practical completion was not reached.  Ground 8 relates to a failure to find the practical completion notice was not valid.
  11. [30]
    I am satisfied that there is a demonstrated error of law in respect of ground 5 and consequently ground 8.
  12. [31]
    The learned Member observed that:

It does not follow that the contract has been breached if there is no quantifiable loss.[26]

  1. [32]
    Ms Pivovarova, in her Application for leave to appeal or appeal, relied upon this statement as a ground[27].  In her outline she did not pursue this as a separate ground but referred to it in respect of ground 5.
  2. [33]
    While nothing flowed from that statement in terms of the order made, I note that the learned Member’s statement is not in fact a correct statement of the law.  A party may establish a breach of contract in the absence of evidence of loss. Whether the party is awarded damages will be dependent upon evidence of loss either in terms of the costs of rectification or completion of the work or in certain cases the diminution of the value of the property.  
  3. [34]
    The learned Member found that practical completion was actually reached.[28] She found that the premises were habitable, and considered and made findings in respect of each item of alleged defective or incomplete work and work not performed strictly in accordance with the contract, plans and specification, as raised by Ms Pivovarova. 
  4. [35]
    There were a number of factors relied upon by Ms Pivovarova to challenge the finding of practical completion having been reached, and an entitlement to payment arising under the contract. 
  5. [36]
    She contends that in order for practical completion to be reached there cannot be both minor defects and minor omissions in the work; because the learned Member found some of each, it was not open to find that practical completion had been reached under the contract or under the DBC Act.
  6. [37]
    Legal drafting commentators have noted that the word ‘or’ is ambiguous as it may be used in an inclusive sense meaning ‘A or B or both’ or can be used in an exclusive sense meaning ‘A or B but not both’.[29]  The courts have recognised that the word ‘or’ is not necessarily wholly exclusive or to describe it another way, disjunctive.  It depends upon the context in which it is used.[30]  The context here is whether the items are minor rather than major. The context does not require a wholly disjunctive interpretation.  Whether the items were minor in nature involves questions of fact. Such findings as the learned Member made were open on the evidence. 
  7. [38]
    Ms Pivovarova submitted that because the works had not been completed strictly in accordance with the plans and specifications and there were no agreed variations which complied with the contract,[31] it was not open to find that the works were performed in accordance with the contract, so that practical completion could be reached. 
  8. [39]
    A particular matter raised was that the bamboo flooring installed did not comply with the contract as it was contended that bamboo is not timber.  The issue was raised before the learned Member. There was evidence before her that bamboo is a hardwood and therefore can be correctly classified as timber.  The learned Member did not accept Ms Pivovarova’s contention that this work did not comply with the terms of the contract.  Such a finding was open on the evidence and the Appeal Tribunal will not disturb that finding. 
  9. [40]
    Ms Pivovarova relies upon Radcliff and Anor v Walker.[32]  The case turns on its own facts.  The learned Member in that case found that some of the items of incomplete or defective work were not minor in nature, but were defective to the extent that practical completion could not have been reached.[33] There was no similar finding by the learned Member in this case. 
  10. [41]
    There was no evidence before the learned Member that any of the matters raised by Ms Pivovarova were structural in nature or significant so as to not be properly classified as minor.    
  11. [42]
    It was open on the evidence for the learned Member to find, as a matter of fact, that the defects, incomplete work and deviations from the contract, plans and specification were all minor in nature.  The learned Member had the advantage of hearing evidence from Mr Trohear,[34] and being addressed by both parties. She was well placed to make such a finding.  The Appeal Tribunal will not disturb those findings by the learned Member. 
  12. [43]
    In relation to the finding that the matters were minor there is no demonstrated error.
  13. [44]
    The learned Member found that there were some minor deviations from the plans and specification and that strict compliance was not necessary, and that the minor deviations did not necessarily constitute defective work or work in breach of the contract.[35] 
  14. [45]
    I am satisfied that there is a demonstrated error of law in relation to this finding.  The learned Member’s reasons do not clearly indicate why strict compliance with the plans and specification was not required in order to reach practical completion and are inadequate in this respect. 
  15. [46]
    Neither the contract nor the DBC Act define what is meant by ‘minor defects’ and whether this includes not only work that fails to meet the necessary standards (e.g. under applicable legislation) but whether this includes work that is not in compliance with the contract plans and specifications.  It is not clear whether the learned Member found that the deviations from the plans and specification were ‘defects’ such that they constituted ‘minor defects’.
  16. [47]
    Mr Michelsen contends that whether or not the Tribunal found practical completion was reached, he is:

entitled to recover any money owning(sic) for the works completed, less any claim for defective or incomplete works.[36]

  1. [48]
    He relies upon Combined Building Services Pty Ltd v Springall and Anor[37] which in turn relies upon Nguyen v Luxury Design Homes Pty Ltd[38]Those cases set out the doctrine of substantial performance. 
  2. [49]
    This is the principle that even if the builder does not strictly comply with the provisions of the contract to enliven the entitlement to payment, substantial performance of the builder’s obligations under a contract gives rise to the corresponding obligation to pay the price subject to a deduction for the costs of rectifying defects or completing the work.[39] What constitutes substantial performance is a question of fact.[40] 
  3. [50]
    Einstein J in Nguyen[41] stated:

The phrase “completed according to its terms” requires some qualification and this concerns the rule referred to as the doctrine of substantial performance under which a substantial performance may be               treated, not as fulfilling the condition, but as enabling the party in default to recover the stipulated price or other consideration, less a reduction in respect of the incompleteness of his performance: Corio Guarantee Corporation Ltd v McCallum [1956] VLR 755 at 760.    

  1. [51]
    The concepts of Practical Completion, an expression found in building contracts, and substantial performance, a common law doctrine, are similar but different.[42]
  2. [52]
    The learned Member’s findings, particularly that strict compliance was not necessary and that a deduction for the costs of rectifying minor defective and incomplete work should be made[43], are consistent with the doctrine of substantial performance. 
  3. [53]
    The learned Member’s reasons do not clearly indicate whether she considered the doctrine of substantial performance in making her findings and it appears that the parties were not afforded an opportunity to make submissions to the learned Member about the applicability of that doctrine.  Those matters constitute errors of law.    
  4. [54]
    I allow the appeal in respect of ground 5 and set aside the decision that practical completion was reached, and return the matter to the learned Member for a fresh determination.
  5. [55]
    Ground 8 relates to the failure to find that the Practical Completion Stage Notice was not valid.  Ms Pivovarova contends that Practical Completion had not been reached and that Mr Michelsen failed to provide all necessary certificates, warranties and instruction brochures so that an entitlement to be paid had not arisen under the contract.
  6. [56]
    I am satisfied that there is a demonstrated error of law. 
  7. [57]
    This ground is dependent upon a proper finding as to whether Practical Completion was reached.  If the failure to strictly comply with all of the contractual provisions in the circumstances of this contract means that it is not possible to reach Practical Completion, then the notice could not, as a matter of law, be valid. 
  8. [58]
    Clause 17.1 set out the requirements of the notice to be given upon reaching practical completion.
  9. [59]
    In relation to whether all necessary certificates had been provided as required by clause 17.1(b)(iii), the evidence before the learned Member was that:
    1. a)
      the Form 21 Final Inspection Certificate had been provided;
    2. b)
      other certificates were required to be provided to the building certifier to permit the final inspection certificate to be issued.[44]
  10. [60]
    In the circumstances it was open for the learned Member to find that all required certificates had been provided. Clause 17.1 does not clearly impose an obligation upon the contractor to provide to the owner copies of any certificates and approvals obtained and which are required to be provided to the building certifier.       
  11. [61]
    Ms Pivovarova also relies upon clause 1.23 of the specification which provides that

The building is to be constructed to practical completion stage..... collect all certificates, warranties and instruction brochures, are to be provided to the Owner prior to occupation.

  1. [62]
    The learned Member’s reasons do not clearly address whether or not there was compliance with this aspect of the contract and the consequences.  There was conflicting evidence in that Ms Pivovarova’s evidence[45] was that these were not supplied, whereas Mr Michelsen’s evidence[46] was that some warranty documents were left with the owner.
  2. [63]
    The failure to provide all warranty documents may be a breach of the contract, but because warranty documents are not referred to in clause 17.1 a failure to comply with clause 1.23 of the specification does not, in my view, affect whether there has been compliance with clause 17.1(b)(iii) (which refers to certificates and approvals and not warranties and instruction brochures).
  3. [64]
    I allow the appeal on ground 8 to the extent that the validity of the Practical Completion Notice is dependent upon a finding that practical completion has been reached, which has been set aside.  I set aside the decision that the Practical Completion Notice was valid and return the matter to the learned Member for a fresh determination.
  4. [65]
    Ground 6 relates to claims for variations and amounts for Prime Cost items.  I am satisfied that there is a demonstrated error of law in respect of this ground.
  5. [66]
    Ms Pivovarova contends that the learned Member’s finding in relation to the amount owing failed to take into account adjustments which ought to have been made in relation to amounts paid by Ms Pivovarova in respect of Prime Cost items. 
  6. [67]
    The contract provides:

If the actual cost of a Prime Cost Item ...is less than the amount allowed for that item, the difference is deducted from the Contract Price and is to be allowed by the Contractor in the next progress claim[47]....

The Contractor must give to the Owner a copy of any invoice, receipt or               other document relating to the actual cost incurred by the Contractor for any Prime Cost Item… prior to or when seeking payment for the relevant               item or work.[48]

The Owner must pay the Contractor the Contract Price in accordance with this Contract.[49]

Contract Price means the amount stated in Item 6 of the Schedule as adjusted under this Contract.[50]

  1. [68]
    Mr Michelsen contends that it is open to infer that the learned Member took Prime Cost item adjustments into account by having regard to the reconciliation document dated 12 June 2012, where some amounts for variations offset the Prime Cost adjustments. 
  2. [69]
    The learned Member’s reasons do not clearly indicate whether she took into account Prime Cost adjustments and other variations set out in Mr Michelsen’s reconciliation document in finding the amount owing.  On the face of the reasons it appears the only adjustment from the amount set out in respect of the Practical Completion Stage was to deduct amounts found in respect of minor defects or minor omissions, although having regard to the amount claimed and the deductions allowed the resulting amount would be $47,820 rather than the $47,800 ordered. There is no explanation for this minor difference.
  3. [70]
    The contract price is set out in Item 6 of the Schedule to the contract.  The contract price is subject to change including for Prime Cost and Provisional Sum items.[51]
  4. [71]
    Appendix Part A of the contract set out the description and allowances for certain Prime Cost and Provisional Sum items.  The Schedule to the Residential Building Specification sets out a more extensive list of Prime Cost and Provisional Sum items which includes most but not all of the items in the Appendix Part A of the contract.  The remaining item appears at A – Schedule of Fittings & Finishes Addendum to Specification and Schedule of Fittings and Finishes.
  5. [72]
    There was no evidence before the learned Member that Mr Michelsen produced invoices of the underlying costs to support prime cost or provisional sum item adjustments to Ms Pivovarova[52] and they were not produced to the learned Member.
  6. [73]
    Ms Pivovarova asserts an adjustment of $8,430 ought to be made. 
  7. [74]
    Mr Michelsen acknowledges that Ms Pivovarova paid $6,830 for Prime Cost items supplied by her.  The contract price ought to be reduced by this amount.
  8. [75]
    Having regard to the Progress Payment Certificates and the tax invoices issued by Mr Michelsen which were in evidence before the learned Member, the only claim which sought to adjust Prime Cost and Provisional Sum Items and claim variations was that contained in the reconciliation document and associated tax invoice 308/7 (both dated 12 June 2012) pursuant to which Mr Michelsen claimed $16.60.  All other progress claims were for the unadjusted stage payment.  Mr Michelsen did not expressly pursue this variation claim.  He applied for an order that he was entitled to the Practical Completion Stage Claim of $49,500.
  9. [76]
    It is not disputed that there were no written variations which complied with the terms of the contract and the DBC Act.  The DBC Act limits a builder’s entitlement to recover amounts for variations. 
  10. [77]
    The Tribunal may approve recovery if the Tribunal is satisfied either that there are exceptional circumstances or the builder would suffer unreasonable hardship and in addition to either of those matters it would not be unfair to the owner.[53] The Appeal Tribunal has previously considered the operation of this provision and accepted that:[54]

the fact a builder incurred, and cannot recover, the costs of a non-compliant variation could not, alone, constitute unreasonable hardship.  That outcome is consistent with the evident purpose of providing an effective incentive to comply with the requirements of the Act.

  1. [78]
    The DBC Act also sets out the amount entitled to be recovered.[55] There was no evidence upon which the learned Member could find that Mr Michelsen brought himself within the exceptions in section 84(4) of the DBC Act and in any event there was no sufficient evidence upon which the learned Member could rely to determine the amount entitled to be recovered.   
  2. [79]
    To the extent that Mr Michelsen’s evidence[56] was that the cost of the Prime Cost item was less than the amount allowed in the contract sum, Ms Pivovarova ought to have been given the benefit of the conceded credit.  To the extent that Mr Michelsen claimed an adjustment in his favour, he failed to establish any entitlement to such an adjustment because there was no evidence as to the underlying costs incurred to justify an adjustment to a Prime Cost or Provisional Sum item and he did not establish an entitlement to claim amounts for variations. 
  3. [80]
    Mr Michelsen claims interest on the outstanding amount at the rate of 15% per annum from the time payment was due until the date of payment.[57]   There are a number of relevant provisions as to when the amount was due. The amount owing was due within 5 Business Days of receiving the practical completion stage claim.[58] 
  4. [81]
    It is not disputed that:
    1. a)
      the claim was dated 15 June 2012.
    2. b)
      the claim was sent to Ms Pivovarova by Mr Michelsen’s lawyers under cover of a letter dated 5 July 2012 together with the Form 21 Final Inspection Certificate.
    3. c)
      the final inspection was conducted on 12 July 2012 at which time the contract contemplates if the owner claims defects or claims that the work is incomplete the contractor is to give to the owner a defects document. 
    4. d)
      no defects document was provided by Mr Michelsen to Ms Pivovarova on or soon after 12 July 2012. 
    5. d)
      from April 2012 there had been a number of communications in relation to defects which passed between the parties. 
  5. [82]
    The learned Member found that interest was payable from ‘the time of the final inspection on 15 June 2012’.[59]  As stated above it is common ground that the final inspection occurred on 12 July 2012.  The decision should be corrected to reflect the obvious error.[60]     
  6. [83]
    The learned Member’s reasons did not address the issue of adjustments to the contract price.  A failure to provide sufficient or adequate reasons for a decision is an error of law.[61]  In this respect I allow the appeal.
  7. [84]
    I set aside the decision as to the amount payable and return the matter to the learned Member for a fresh determination to be made according to law.
  8. [85]
    Ground 7 relates to the finding that the amount found to be owing to Mr Michelsen should be reduced by the sum of $1,680 when Ms Pivovarova had not made a counterclaim, no pleadings claimed loss or damage, the Contract had not been terminated and no evidence had been provided by Ms Pivovarova about her possible loss or damage.
  9. [86]
    I am satisfied that there is a demonstrated error of law.
  10. [87]
    As set out earlier, the rules about a party being bound by the pleaded case do not strictly apply.  There was evidence before the learned Member that there was some minor defective or incomplete works and evidence of the estimated time to rectify or complete those items. The learned Member found that the reasonable costs of rectifying and completing minor defective and incomplete work was $1,680. It was open for the learned Member to make such a finding of fact.  
  11. [88]
    As set out earlier in these reasons, the deduction of this amount is consistent with a finding of substantial performance however the learned Member did not expressly refer to this doctrine.  Accordingly the reasons are inadequate in this respect.  The appeal is allowed and the decision set aside.  For the reasons set out earlier the matter should be remitted for a further determination.
  12. [89]
    Ground 11 asserts a failure to find that Mr Michelsen was not entitled to be paid for unpaid completed work when the Contract had not been terminated. 
  13. [90]
    I am satisfied that there is a demonstrated error of law.
  14. [91]
    Ms Pivovarova contends that the contract remains on foot and that no entitlement under clause 20.5 of the contract arose.  
  15. [92]
    Ms Pivovarova relies upon Rocci & Anor v Diploma Construction Pty Ltd[62]  and Tan Hung Nguyen v Luxury Design Homes Pty Limited & Ors[63] to support her contention that because the contract remained on foot she had an election available to her.  Ms Pivovarova contends that she elected not to sue Mr Michelsen for damages and is therefore entitled to withhold the final payment because the contract is an entire contract and the works are not complete.
  16. [93]
    The learned Member’s reasons do not make any findings as to whether the contract is an entire contract, nor whether the findings that any defects, incomplete work or deviations were minor give rise to an entitlement to be paid the final payment less a deduction as a consequence of substantial performance.  The reasons are inadequate in this respect. For the reasons set out earlier the decision should be set aside and the matter remitted for a further determination.
  17. [94]
    The learned Member made a number of observations in her reasons which do not appear to be supported by the evidence before her.  Nothing flowed from these observations in terms of the order made but they gave rise to a number of Ms Pivovarova’s grounds of appeal.[64] The learned Member also made some comments about Ms Pivovarova and her expectations which were unnecessary and therefore unfortunate.
  18. [95]
    Ground 4 relates to a finding that Ms Pivovarova did not allow Mr Michelsen access to the property, when this was not pleaded nor the subject of evidence. 
  19. [96]
    I am not satisfied that there is a demonstrated error.
  20. [97]
    I am not satisfied that any consequence follows from the finding in terms of the order made.  The learned Member made an observation[65] but proceeded to allow a set off against the amount claimed.  It is not clear from the learned Member’s reasons what evidence was before her to support the contention that he was denied access.  
  21. [98]
    Ground 9 relates to the finding that Ms Pivovarova refused to sign, complete or accept a defects document which is said to be contrary to the evidence. 
  22. [99]
    I am not satisfied that there is a demonstrated error.
  23. [100]
    No consequence flows from the finding in terms of the order made.  It is not clear from the learned Member’s reasons what evidence was before her to support the contention, as it appears to be common ground that Mr Michelsen did not provide a defects list to Ms Pivovarova contrary to clause 17.5 at or after the final inspection. 
  24. [101]
    To the extent that failing to provide the defects list goes to an allegation of failing to strictly comply with the contract so the obligation to pay does not arise under clause 17.7, this matter is related to whether the learned Member relied upon the doctrine of substantial performance without providing reasons. This matter is addressed earlier in my reasons in respect of ground 5.
  25. [102]
    Ground 10 relates to a failure to find that liquidated damages ought to have been paid or allowed by Mr Michelsen at the rate of $40 per day from 4 June 2012. 
  26. [103]
    I am not satisfied that there is a demonstrated error.
  27. [104]
    Ms Pivovarova did not make a counterclaim in the proceedings before the learned Member.  The terms of the contract are unclear. There was no other evidence before the learned Member about when Practical Completion was to be achieved. 
  28. [105]
    Item 10 of the contract schedule which relates to Date for Practical Completion Stage does not appear to have been completed properly.  There is no date in the box based on the Date for Commencement and the total Construction Period and the box for the number of Days from the Date for Commencement has a date inserted rather than the number of days and is the same date as the Date for Commencement in item 9. 
  29. [106]
    In those circumstances it is not surprising that the learned Member did not expressly refer in her reasons to whether liquidated damages ought to be allowed.  There was no clear evidence for the learned Member to rely upon to make a finding that liquidated damages were payable.
  30. [107]
    Ms Pivovarova seeks an order for the following costs:
    1. a)
      Appeal Application fees $285
    2. b)
      Transcript costs $2,360.16
    3. c)
      Postage fee to serve transcript $13.50
  31. [108]
    Ms Pivovarova has submitted copies of invoices in respect of transcript and postage costs but no evidence of payment.   It is appropriate to make directions as to submissions on costs. 

Footnotes

[1]  Filed 16 October 2013.

[2] Seymour v Racing Queensland [2013] QCATA 179 at [18].

[3]  QCAT Act s 142(3)(b).

[4] Pickering v McArthur [2005] QCA 294 at [3].

[5]  QCAT Act s 147(2).

[6] Ericson v Queensland Building Services Authority [2013] QCA 391 at [13].

[7] Peter Michelsen Building Services v Pivovarova [2012] QCAT 401 at [4]. Tribunal order dated 2 April 2013 attempted to correct the name of the builder but did not set out the correct name because it carried forward ‘Services’ and despite this order the final decision did not update the name of the builder from that originally entered by the registry. 

[8]  QCAT Act s 135.

[9]  Grounds 5 and 8.

[10]  Grounds 2 and 3.

[11]  Clause 1, Definitions.

[12]  DBC Act s 67(6).

[13]  Clause 17.8.

[14]  Clause 17.9.

[15]  Ground 2.

[16]  Ground 3.

[17]  Reasons at [2].

[18] Commissioner for Children and Young People and Child Guardian v FGC [2011] QCATA 291 at [47].

[19] Ricchetti v Lanbuilt Pty Ltd [2011] QCATA 266 at [3]; Commissioner for Children and Young People and Child Guardian v Eales [2013] QCATA 303 at [44].

[20] Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37 at [22].

[21]  [2012] NTSC 48.

[22]  [2010] QSC 169.

[23]  Ibid, s 3(b).

[24] Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at 125-126.

[25] Chambers v Jobling (1986) 7 NSWLR 1 at 10.

[26]  Reasons at [13].

[27]  Application filed 8 August 2013, Part C paragraph 4.

[28]  Reasons at [5].

[29]  Revisiting the Ambiguity of “And” and “Or” in Legal Drafting by K.A. Adams & A.S. Kaye (2006) Vol 80 St John’s Law Review 1167 at 1181.

[30] Minister for Immigration and Ethnic Affairs v Baker (1997) 45 ALD 136.

[31]  Clause 12.

[32]  [2011] QCAT 435.

[33]  Ibid, at [53].

[34]  An inspector employed by the Queensland Building Services Authority, now known as the Queensland Building and Construction Commission.

[35]  Reasons [6]-[8].

[36]  Submissions filed 14 November 2013 at [20].

[37]  [2011] QCAT 674 at [29].

[38]  [2004] NSWCA 178.

[39] Sumpter v Hedges [1898] 1 QB 673; Hoenig v Isaacs [1952] 2 All ER 176; Fraser v The Irish Restaurant & Bar Company Pty Ltd [2008] QCA 270; Rocci & Anor v Diploma Construction Pty Ltd [2004] WASC 18.

[40] Tan Hung Nguyen v Luxury Design Homes Pty Limited & Ors [2004] NSWCA 178 at [70].

[41]  [2004] NSWCA 178 at [69].

[42] Rocci & Anor v Diploma Construction Pty Ltd [2004] WASC 18 at [19].

[43]  Ground 7.

[44]  Mr Michelsen’s Statement of Evidence dated 6 March 2013 at page 64, paragraph 10.

[45]  Ms Pivovarova’s Statement of Evidence dated 22 March 2013 at page 4, paragraph 19.

[46]  Mr Michelsen’s Statement of Evidence dated 6 March 2013 at page 112.

[47]  Clause 9.4.

[48]  Clause 9.7.

[49]  Clause 11.4.

[50]  Clause 1.

[51]  Clause 9.

[52]  Clause 9.7.

[53]  DBC Act s 84(4).

[54] Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37 at [28].

[55]  DBC Act s 84(6).

[56]  Reconciliation document 12 June 2012.

[57]  Clause 11.9; Item 19.

[58]  Clause 11.7; Item 20.

[59]  At [32].

[60]  QCAT Act s 135(1)(b).

[61] Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37 at [22].

[62]  [2004] WASC 18.

[63]  [2004] NSWCA 178.

[64]  Grounds 4 and 9.

[65]  Reasons at [34].

Close

Editorial Notes

  • Published Case Name:

    Tatiana Pivovarova v Peter B Michelsen trading as Peter Michelsen Building Service

  • Shortened Case Name:

    Pivovarova v Michelsen

  • MNC:

    [2015] QCATA 73

  • Court:

    QCATA

  • Judge(s):

    Thomas P, Member Deane

  • Date:

    10 Jun 2015

Litigation History

EventCitation or FileDateNotes
Primary JudgmentQCAT (No Citation)24 Jul 2013Domestic building dispute: application by builder that the respondent pay final/practical completion stage payment; application granted: respondent to pay the sum of $49,500 with interest to the builder: Member Cullen
Primary Judgment[2015] QCATA 7310 Jun 2015Appeal allowed; decision made 24 July 2013 set aside; matter remitted for determination according to law: Thomas J and Member Deane.
Primary Judgment[2017] QCAT 23510 Jul 2017Domestic building dispute: application by builder that the respondent pay final/practical completion stage payment; application granted: respondent to pay the sum of $40,990 with interest to the builder: Member Cullen.
Primary Judgment[2019] QCATA 5410 May 2019Appeal Dismissed: Daubney J and Member King-Scott.
Appeal Determined (QCA)[2019] QCA 256 (2019) 2 QR 50819 Nov 2019Application for leave to appeal dismissed: Fraser JA, Boddice and Crow JJ.
Special Leave Refused (HCA)[2020] HCASL 4111 Mar 2020Special leave refused: Nettle and Gordon JJ.

Appeal Status

Appeal Determined - Special Leave Refused (HCA)

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.