Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Dunmoor Pty Ltd v Queensland Building and Construction Commission[2016] QCATA 39

Dunmoor Pty Ltd v Queensland Building and Construction Commission[2016] QCATA 39

CITATION:

Dunmoor Pty Ltd v Queensland Building and Construction Commission & Anor [2016] QCATA 39

PARTIES:

Dunmoor Pty Ltd ATF Tiny Turtle Trust Fund

(Applicant/Appellant)

v

Queensland Building and Construction Commission

Mainz Development Pty Ltd (In Liquidation)

(Respondent)

APPLICATION NUMBER:

APL084-15

MATTER TYPE:

Appeals

HEARING DATE:

20 November 2015

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

Member Howard

DELIVERED ON:

29 April 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The appeal is allowed;
  2. The Tribunal’s orders dated 5 February 2015 are set aside;
  3. The proceedings are returned to the Tribunal for reconsideration according to law;
  4. The Tribunal must determine the building dispute proceeding BDL 073-14, before determining the review proceeding in GAR371-13;
  5. The Tribunal may make such orders for the filing of further evidence by the parties as it sees fit;
  6. The Tribunal convene a directions hearing for BDL073-14 and GAR371-13 to make directions as it considers appropriate for the filing of further evidence and listing of the proceedings for further hearing; and
  7. It is directed that APL084-15 travel with BDL073-14 and GAR371-13 until those proceedings are concluded.

CATCHWORDS:

APPEAL – BUILDING DISPUTE AND GENERAL ADMINISTRATIVE REVIEW – DIRECTION TO RECTIFY – whether error – whether cost plus contract under s 55 of the Domestic Building Contracts Act – proper construction of s 55(1)(b) – whether breach of procedural fairness – whether error in considering that fraud was alleged – whether error in dealing with conflicting evidence

Domestic Building Contracts Act 2000 (Qld), s 55

Queensland Building and Construction Commission Act 1991 (Qld), s 72

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20, s 142

Briginshaw v Briginshaw (1938) 60 CLR 336

Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748

Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389

CMF Projects Pty v Ltd v Rigall & Anor [2014] QCA 318

Ericson v Queensland Building and Construction Commission [2014] QCA 297

Laidlaw v Queensland Building and Construction Commission [2010] QCAT 70

Lovell v Lovell (1950) 81 CLR 513

Pickering v McArthur [2005] QCA 294

Queensland Building and Construction Commission v Mudri [2015] QCATA 78

REPRESENTATIVES:

APPLICANT:

Represented by Mr C Tam of Counsel, instructed by Hickey Lawyers

RESPONDENT:

Ms M Guiney, In-House Lawyer, represented the Queensland Building and Construction Commission

Mr M Dillman, Solicitor, from M&K Lawyers represented Mainz Development Pty Ltd

REASONS FOR DECISION

  1. [1]
    In late 2008, Dunmoor Pty Ltd as trustee for Tiny Turtle Trust Fund (‘Dunmoor’), entered into a contract with Mainz Development Pty Ltd (‘Mainz’) to carry out renovations and extensions to a home. The parties signed a Master Builders residential building contract. The contract nominated the price of $215,000. Dunmoor operates a family trust for Dr Chris Leat, a cosmetic surgeon, and his family. Mainz had undertaken work at Dr Leat’s surgery prior to the contract in relation to the home. Mr Mainsdonald is the director of Mainz and a builder.
  2. [2]
    In April 2012, Dunmoor lodged a complaint with the Queensland Building and Construction Commission (‘QBCC’) claiming that the works carried out by Mainz at the home were defective in some respects. The QBCC investigated. It refused to issue a direction to rectify to Mainz for some alleged defective works. Subsequently in April 2013, Dunmoor lodged another complaint with the QBCC about the works. A QBCC inspector subsequently determined that there were several items which were Category 1 building defects as follows:
    • Items 1 & 2: timber floor boards in the hallways adjacent to the sliding windows and the living room adjacent to the sliding doors;
    • Item 3: timber floor near the rear right hand side corner of the living room behind the TV cabinet; and
    • Item 7: cracking to the tiles on the rear external deck.
  3. [3]
    The QBCC did not issue a direction to rectify because the QBCC concluded that approximately $45,000 remained outstanding from Dunmoor to Mainz. Dunmoor filed an application for review of the QBCC’s decision by the Tribunal (GAR371-13).
  4. [4]
    In March 2014, Mainz filed an application in the Tribunal seeking orders that Dunmoor pay an amount alleged to be owing under what it says is a cost plus contract, together with interest, at the contractual rate of 15% set out in the contract (BDL073-14).
  5. [5]
    Both applications required the determination of the nature of the contract (in particular whether it was a fixed price or cost plus contract). The Tribunal ordered that the applications GAR371-13 and BDL073-14 remain separate proceedings but be heard and determined together. The Tribunal heard the proceedings over two days, then subsequently made the following orders:
  1. That the Queensland Building and Construction Commission’s decision of 26 September 2013, to not issue a direction to rectify to (sic) pursuant to s 72(1) of the Queensland Building and Construction Commission Act 1991 to Mainz Developments Pty Ltd be confirmed.
  2. Dunmoor Pty Ltd ATF Tiny Turtle Trust Fund to pay Mainz Developments Pty Ltd the sum of $40,981.34, inclusive of GST, plus interest at the contractual rate of 15% from the time of invoicing on 2 October 2008, until the date of decision.

Dunmoor’s application for leave to appeal and appeal

  1. [6]
    Dunmoor filed an application for leave to appeal and appeal in respect of the Tribunal’s decision.
  2. [7]
    The grounds of appeal are lengthy, each Ground containing a number of components of alleged error. They may be conveniently summarised as follows:
    1. The Tribunal impermissibly elevated the evidentiary and legal burden on Dunmoor by treating an allegation made by Dr Leat that Mr Mainsdonald had altered the contract executed by the parties after execution as ‘fraud’ (notwithstanding that Dunmoor’s documents do not refer to it as fraud and without seeking clarification about whether fraud was alleged), thereby denying the parties procedural fairness;
    2. The Tribunal Member, infected by viewing the allegations through the prism of fraud, placed undue weight on the version of the Master Builders contract provided by Mainz, disregarding that there is no requirement at law for corroboration of contrary evidence and disregarding the conflicting evidence (including invoices and other evidence) which she did not consider;
    3. Following on from the error in a), the Tribunal disregarded evidence that supports a finding that the contract was for a fixed price;
    4. In the alternative, if the parties had a cost plus contract, the Tribunal erred in concluding that the contract was not in breach of s 55 of the Domestic Building Contracts Act 2000 (Qld) (‘DBC Act’) by misapplying s 55(1)(b) of the DBC Act; by concluding that the scoping document satisfied s 55(1)(b); and because under s 55(3), the contract is not enforceable by Mainz;
    5. In allowing the full amount of Mainz’s claim the Tribunal failed to take into account inconsistencies in invoices and progress claims from Mainz to Dunmoor (In particular, in some instances, invoices pre-date the signing of the contract and commencement of the work; do not indicate whether payment has been made; and do not refer to the property. Further, the progress claims Mainz relies upon are on different letterhead to those delivered to Dunmoor; and employed a different and inconsistent numbering system than the progress claims delivered to Dunmoor).
    6. If the Member was correct in awarding judgment to Mainz, it erred in not ordering it to rectify the works conditional upon the payment.
  3. [8]
    A decision of a non-judicial Member may be appealed on a question of law without leave of the Tribunal.[1] However, leave to appeal is required in respect of questions of mixed law and fact, and questions of fact.[2] The distinction between questions of law, questions of fact and questions of mixed law and fact is not always clear, and courts have not found it easy to formulate a satisfactory test of universal application.[3]  A concise and helpful summary appears in a decision of the Supreme Court of Canada:[4]

Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.[5]

  1. [9]
    It seems to be common ground amongst the parties that all alleged errors involve questions of mixed fact and law. We do not agree. A breach of procedural fairness, if established, is an error of law: therefore, (in part) Ground A involves an alleged error of law. Likewise, (in part) Ground D includes an alleged error of law in that the learned Tribunal Member is alleged to have applied the wrong legal test. Therefore, leave to appeal is required in respect of all grounds of appeal relied upon by Dunmoor, save for the two alleged errors of law in Grounds A and D.
  2. [10]
    Leave to appeal will usually only be granted where there is a reasonable argument that the decision of the Tribunal was attended by error, and it is necessary to correct a substantial injustice to the applicant caused by that error.[6] It is not enough that the Appeal Tribunal comes to the view that had its Members been sitting in the matter originally, they may have reached a different conclusion. It must be demonstrated that there has been a mistake in either assessing the factual evidence, like a failure to take some material evidence into account,[7] or that the Tribunal misapplied the facts to the legal test.

The Tribunal’s reasons for decision

  1. [11]
    The Tribunal’s reasons for decision include the following:

[22]  Considering the nature of the dispute between the parties, one would think that the parties had entered into an oral contract. That is not the case, however. Mr Mainsdonald has provided his copy of the contract, which is the only copy of the contract in evidence before the Tribunal.1

[23] The contract is the standard ‘Master Builders’ contract. On the face of it, at ‘Item 3 Description of Services’, the following words have been written in by Mr Maindonald [sic]:

 “Renovation of House at 14 Selkirk Ave Benowa is a Cost Plus Contract Because there are No Plans or specifications as owner Do Not want to Pay Council fees” [sic]

[24] Dr Leat admits that his signature appears on the contract, but alleges that a fraud has occurred in relation to the words contained at ‘Item 3’ as set out above. Dr Leat claims that the words were inserted after he signed the contract.

[25] At Item 11 of the contract, Dr Leat says he cannot recall whether he told Mr Mainsdonald that the ‘Bank of Queensland’ was his financer. He has not offered any explanation as to why Mr Mainsdonald would have entered this information on the contract on his own volition. Rather, he argues that Mr Mainsdonald filled the contract out before he arrived at Dr Leat’s office to sign it. Mr Mainsdonald denies this.

[26] In relation to the signing of the contract, Dr Leat’s evidence was that it was done hurriedly at his office. He claimed that the ticks which appear in the boxes of the only copy of the contract before the Tribunal (at Items 22 and 26) must have been added later. Dr Leat told the Tribunal that he ‘doesn’t do contracts’ and that these items were left blank on the contract at the time of his signing.

[27] Mr Mainsdonald says that he gave Dr Leat a copy of the contract, which Dr Leat denies. In line with his evidence in this respect, Dr Leat has been unable to provide the Tribunal with his copy of the contract, which he says does not include the words written at Item 3. Although there is a third copy of the contract that would have been given to the lending institution (the pink copy), neither party has obtained the pink copy by way of a Notice to Produce.

1 Statement of Reasons, 321-332.

  1. [12]
    The Tribunal considered that on Dr Leat’s version of events, it would have to accept that Mr Mainsdonald engaged in conduct that Dr Leat had referred to as ‘fraud’ in inserting that the contract was cost plus contract after Dr Leat had signed it. The learned Member, referring to the seriousness of an allegation of fraud, observed that the standard of proof required by Briginshaw v Briginshaw[8] would need to be met by Dr Leat, given his reliance upon this allegation as a defence to the debt claimed. In relation to the QBCC review, the learned Member said that it would be difficult for the Tribunal to reach the conclusion that the QBCC had not made the correct and preferable decision where there was no information capable of satisfying the Tribunal that the contract was not a cost plus contract ‘save for Dr Leat’s own assertions’.[9]
  2. [13]
    The Tribunal found that the version of the written contract before it was consistent with the evidence given by Mr Mainsdonald. In particular, the learned Member found ‘[f]aced with conflicting evidence, and Dr Leat’s bare assertions that Mr Maindonald [sic] has behaved fraudulently, the Tribunal prefers the evidence that is corroborated by the only copy of the contract before it.
  3. [14]
    Having made that finding, the Tribunal then considered the matters for determination on the application for review of the QBCC decision. The Tribunal said as follows:[10]

[34] In an administrative review by a homeowner in relation to a decision by the QBCC to not issue a builder with a direction to rectify, the Tribunal must consider 3 issues:

 a) Was the work ‘building work’ and was it ‘defective’?

 b) Was the Applicant responsible for the defective work? And

c) Was the Commission’s direction to direct the Applicant to rectify the defective building work reasonable in the circumstances?

  1. [15]
    The learned Member then noted that there was no dispute amongst the parties that the work was building work. She also referred to some of the work being rectified by another contractor, but that there was ‘no serious argument’ that the work was performed by Mainz.[11] The Tribunal then said that the real issue in the proceedings was whether it would have been reasonable for the QBCC to issue Mainz with a direction to rectify.
  2. [16]
    The Tribunal concluded that the QBCC had correctly decided not to issue a direction to rectify because money was owed pursuant to the contract. She notes that Mainz raises an issue of timeliness in relation to the making of the complaint, but says that the Tribunal has not addressed the argument because the finding that the contract was a cost plus contract was ‘determinative of the issues’.[12] The learned Member then says that:[13]

In all of the circumstance, the QBCC’s decision not to issue a direction to rectify to Mainz Developments, due to the monies owing by Dunmoor under the contract, was the correct and preferable decision.

  1. [17]
    The learned Member then proceeded to determine the application by Mainz for the monies claimed to be outstanding in the following terms:

[41] The Tribunal considers it just in the circumstance that Mainz Developments now be paid for the work it has performed. Mr Mainsdonald has satisfied the Tribunal that the work invoiced for was performed for the benefit of Dunmoor pursuant to the contract.

[42] Mainz Developments claim $40,981.34, inclusive of GST, plus interest at the contractual rate of 15% from the time of invoicing on 2 October 2008, until the time of decision. As there is no real dispute that the work was performed, this is the amount that the Tribunal orders be paid by Dunmoor to Mainz Developments.

Ground A: Did the Tribunal err in characterising Dunmoor’s allegations against Mr Mainsdonald as fraud? In doing so, did it deny the parties procedural fairness?

  1. [18]
    Dunmoor’s position is that Mr Mainsdonald altered the contract without Dr Leat’s knowledge. It acknowledges that under cross-examination, Dr Leat (a non-lawyer) agreed with a proposition which described the alleged conduct as fraud. However, it contends that an allegation of fraud was not of itself made (or necessary) in the circumstances of Dunmoor’s case. In this regard, Dunmoor submits that there are various causes of action in contract (for mistake or misrepresentation), tort (for deceit) and breach of statutory duty (eg for unconscionable conduct), which do not require the allegation of fraud or the onerous legal burden of establishing it.
  2. [19]
    By proceeding on the basis that fraud was alleged, Dunmoor argues that the learned Member ‘impermissibly reasoned that Dr Leat’s ‘assertions (reasons [29]) that the contract was for a fixed price, in the absence of any corroboration other than his own testimony, was insufficient to discharge Dunmoor’s burdens of proof.’[14] It accepts that the standard of proof is correctly identified by the Tribunal, but submits that the Tribunal’s reasoning, in not referring to Dr Leat’s competing evidence when considering Mr Mainsdonald’s evidence and the written copy of the contract he presented, was tainted by the perceived seriousness of the alleged fraud, when, in fact, it was not alleged. In doing so, Dunmoor argues that the learned Member failed to analyse the conflicting evidence or draw conclusions about the credit of Dr Leat and Mr Mainsdonald.
  3. [20]
    Mainz argues that the various other causes of action Dunmoor refers to are irrelevant, because they relate to recording agreement rather than the formation of the agreement which is relevant here. Mainz submits that it is difficult to construe the allegations made by Dr Leat as something other than fraud, whatever he prefers to call it. Further, it argues that the Tribunal could not accept Dr Leat’s evidence without finding that Mr Mainsdonald engaged in the conduct alleged and in the absence of evidence that he did so. It submits that Dunmoor ‘failed to prove’ the allegation and therefore, the contract document had to prevail. [15]
  4. [21]
    QBCC says that it submitted to the learned Member that the building dispute should be determined before the decision was made on the review application. As discussed above, the Tribunal did not proceed in the manner QBCC submitted was appropriate. The reasons for decision, read fairly, suggest that it determined first whether there was a cost plus contract, then determined the review application and finally (and briefly) the contract dispute.
  5. [22]
    There were two proceedings before the Tribunal which remained separate, but which were required to be heard together. The issue about whether there was a fixed price contract or a cost plus contract was relevant to the determinations of both proceedings. In the building dispute, that determination is essential to determining what, if any, monies are outstanding. On the review, the question of monies outstanding goes to the fairness of issuing a direction to rectify.
  6. [23]
    In the review proceeding (absent a contrary legislative provision in the enabling Act, namely the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’)), there is no onus of proof, although in the absence of evidence which supports the facts a party contends,  the Tribunal will be unable to be reasonably satisfied of those facts.[16]  In a civil proceeding such as a building dispute, although the Tribunal is not bound by the rules of evidence except to the extent which it adopts them, the Tribunal draws on the established common law in determining claims. Although some of the evidence allowed in QCAT may not be admissible in a court, much of it will be, and a claimant must nevertheless present evidence which establishes its claim. Otherwise, the claim will fail. Once the case is established against a respondent, the respondent must establish its defence.
  7. [24]
    The learned Member did not clearly articulate a distinction, although on a fair reading of paragraph [29] of her reasons, she was cognisant of it. She refers there to the standard of proof if the allegation is relied upon as a defence to the debt claimed by Mainz, and then goes on to discuss the review.
  8. [25]
    In respect of the review, the Tribunal said that ‘it is mighty difficult for the Tribunal to reach the conclusion that the QBCC has not made the correct and preferable decision where there is no information capable of satisfying the Tribunal that the contract was not a costs-plus contract, save for Dr Leat’s own assertions.’[17]  A review application requires a fresh hearing,[18]  with the purpose of reaching the correct and preferable decision. [19]  We make the observation that, as framed, to the extent that the learned Member’s comments appear to suggest that in a review proceeding, the applicant has an onus to show that a decision-maker has not made the correct and preferable decision, the Tribunal misstated the law. [20] This issue is not raised by the grounds of appeal. In any event, it would not have assisted Dunmoor to succeed on the appeal, as the discussion in the following paragraphs reveals.
  9. [26]
    The Tribunal’s consideration of the evidence about the allegations made by Dr Leat is brief and devoid of detail and references to the particular evidence relied upon to support its conclusions, except for reference to the written contract. It summarises the effect of aspects of Dr Leat’s and Mr Mainsdonald’s evidence which it considered important.[21] In doing so, it did not provide specific analysis of the evidence. It is a serious allegation and in our view, it is perhaps surprising that the evidence did not receive a more detailed consideration.
  10. [27]
    Dr Leat gave evidence to the effect that, the contract was for the fixed price of $215,000;[22] that he was never advised that the contract was a cost plus contract;[23] that he had never seen the original contract until the proceedings;[24] and that he believed the contract must have been altered because it was not filled out completely in his presence and he did not recall various items inserted in it.[25] He confirmed the inference that his allegations alleged fraud.[26]
  11. [28]
    However, he also said that he could not recall the detail of the discussions he had with Mr Mainsdonald in the lead-up to signing the contract.[27] He could not recall whether he told Mr Mainsdonald that Bank of Queensland was the financier on the day of signing the contract[28] (and if not then, when he provided this information) and told the Tribunal that he ‘didn’t do contracts’.[29] He also acknowledged that he prepared a scoping document so a quote or ‘something’ else could be prepared from it,[30] and that the quote from Mainz for $215,000 prepared in response was uncertain in some respects and did not line up perfectly with the scoping document.[31] He conceded that this preceded the written contract.[32]
  12. [29]
    Mr Mainsdonald’s evidence was inconsistent with Dr Leat’s evidence. It was consistent with the written contract. He said that he and Dr Leat went through all the items and ticked boxes together on the contract which was fully completed and signed in Dr Leat’s presence; that the Master Builder’s contract which he used was contained in a booklet (consisting of an owner’s copy the builder’s copy and the finance copy); and that he would have given Dr Leat the booklet containing the owners and the finance copy;[33]  that the contract cannot later be altered because of the carbon copies. [34]
  13. [30]
    The Tribunal noted at [28] that it could not tell who was telling the truth, but noted that accepting Dr Leat’s version would require accepting that Mr Mainsdonald engaged in fraud. Having regard to the allegation of ‘fraud’ or dishonest later alteration of the contract, and the burden of proof which applied, (and although she did not articulate it in these words, on a fair reading, the learned Member) preferred Mr Mainsdonald’s evidence and gave more weight to Mr Mainsdonald’s evidence, because it was consistent with the contemporaneously prepared written contract. 
  14. [31]
    Dunmoor complains that the Tribunal discussed the allegations that the contract had been changed or added to after Dr Leat signed it as an invitation by him to find fraud on the part of Mr Mainsdonald. The other causes of action, which Dr Leat submits may arise, which do not require an allegation of fraud as such, are irrelevant. It seems to us that whatever the allegation is called, and irrespective of whether the word fraud is used, they can only be characterised as serious allegations that Mr Mainsdonald did something dishonest, that is, by changing or adding to the contract after it was executed.
  15. [32]
    There is no direct evidence that Mr Mainsdonald altered the contract. Dr Leat’s case was to the effect that he believed it had been altered because he did not recall it being fully completed. Despite asserting that it was already completed at the time it was shown to him, [35] at odds with his own statement, he also said (internally inconsistently with the evidence that it was already completed) that a lot of the information was left blank.[36]
  16. [33]
    Could the Tribunal have properly drawn the inference that Mr Mainsdonald altered the contract? Only if there was compelling basis to prefer Dr Leat’s evidence over Mr Mainsdonald’s evidence. On our analysis, there is no such compelling basis. Indeed, it is sufficiently clear from the evidence of Dr Leat that his recollection of the execution of the contract was limited (for example, he did not recall its booklet format, [37] and where Mr Mainsdonald obtained the finance details if it was not in there at the time of execution[38]). As the learned Member observed, he said that he did not ‘do’ contracts.[39]
  17. [34]
    From his overall description, reading and signing the contract seems to have been a small part of his busy day, about which he recalls little. Although it would be surprising if he recalled every written word inserted in to the standard pages of the written contract, it seems, from his sketchy recollection, that he paid little attention to the contents of the contract. It would be reasonable to infer, and we would, if leave was granted (and we were rehearing the proceeding), draw the inference that he simply did not pay close attention to the contents of the contract he signed and did not know what terms it contained at the time he signed it.
  18. [35]
    Dunmoor refers to inconsistencies in the invoices and progress claims rendered to Dr Leat and those provided to the Tribunal by Mr Mainsdonald. Even if this was accepted, this does not of itself lend weight to an inference that  Mr Mainsdonald altered the contract (or as this allegation seems intended to suggest, was in the habit of acting in a dishonest manner).
  19. [36]
    We would, if leave to appeal was granted, draw similar conclusions as the Tribunal did having regard to the conflicting evidence of the parties and the contents of the written contract. Having regard to the Briginshaw standard and the seriousness of the allegations, we would, if leave to appeal was granted and the proceedings reheard, conclude that Dr Leat had not established his allegations in defence in the building dispute, and that in the review proceeding, they were not established on the evidence before the Tribunal. The weight of evidence favoured a finding that the parties entered into a cost plus contract in the terms of the written document.
  20. [37]
    We consider it is inherently improbable that Dr Leat did not provide the details about the bank (BOQ) from which finance was to be obtained at the time the contract was completed, as asserted by Mr Mainsdonald. Dr Leat was vague on the detail of what occurred in the lead-up to the contract and on the day of execution of the contract and somewhat dismissive of the significance of entering into the contract for a substantial amount of money. In light of his vagueness and the consistency of Mr Mainsdonald’s evidence with the written contract, it seems more probable that events occurred on that day, as Mr Mainsdonald alleges them.
  21. [38]
    No error of mixed fact and law is established. In any event, even if we were wrong about that, there is no substantial injustice because if leave to appeal was granted in respect of the matters of mixed fact and law or fact, although we would make more extensive findings and draw additional inferences, the result would be unchanged. We conclude that leave to appeal should be refused in respect of these matters raised in Ground A.

The alleged breach of procedural fairness

  1. [39]
    Dunmoor further submits that the Tribunal did not seek clarification as to whether fraud was alleged by it. Dunmoor, as part of this ground of appeal, alleges a breach of procedural fairness in that an opportunity was not afforded to it to respond to the characterisation of the behaviour alleged as ‘fraud’. Admittedly, the Tribunal referred to Dr Leat as inviting it to find fraud. However, on a fair reading, it is sufficiently clear that the Tribunal suggests that the invitation to find fraud arises on Dr Leat’s evidence in the Tribunal.[40] Dr Leat was cross-examined about the alleged ‘fraud’ (characterised in precisely that manner), which Dr Leat accepted, and it cannot have been a surprise to Dunmoor, that it was so characterised by the Tribunal. Despite legal representation, it did not object to the questions characterising it as fraud. It made submissions after the evidence had concluded, and apparently did not urge the Tribunal to reject that characterisation. It cannot be said that Dunmoor was unaware of the manner in which Mainz viewed the allegations.
  2. [40]
    Accordingly, Dunmoor was aware of the case against it and on notice of Mainz’s characterisation of its allegations. It did not specifically make submissions in response to this characterisation. It was not denied the opportunity to do so, it simply did not do so. Had the characterisation not been raised and put to Dr Leat before the Tribunal adopted it, or had the Tribunal declined to hear submissions about the point, the complaint may have some basis. But that is not so here. In the circumstances, procedural fairness does not require the Tribunal to specifically ask for submissions about the issue, apparently not cavilled with by Dunmoor. There is no breach of procedural fairness established.

Ground B: Did the Tribunal err by placing undue weight on the written copy of the contract provided by Mainz, despite no requirement at law for corroboration of conflicting evidence and disregarding conflicting evidence?

  1. [41]
    On a fair reading of the learned Member’s reasons for decision, she did not suggest that there is a requirement at law for evidence which conflicts with a written contract to be corroborated. On a fair reading and having regard to the Briginshaw standard, faced with conflicting evidence from Dr Leat and Mr Mainsdonald, she gave greater weight to the contemporaneously signed contract and the evidence which was consistent with it. Although she does not clearly articulate it, she considered that the weight of evidence did not support a finding that the written document had been altered or changed by Mr Mainsdonald. For the reasons set out above, we agree.
  2. [42]
    Although the learned Member could have expressed her reasons more clearly, it is sufficiently clear that she did not err as alleged by Ground 2. In any event, even if we are incorrect and she did err, if leave to appeal was granted, we would reach similar conclusions for the reasons already explained. There would be no substantial injustice.

Ground C: Did the Tribunal err by disregarding evidence that supported a finding that the contract was for a fixed price?

  1. [43]
    As discussed above, we do not consider the learned Member disregarded the evidence, notwithstanding that she did not provide a detailed written analysis of it. She was cognisant of the inconsistencies between Dr Leat’s and Mr Mainsdonald’s evidence. She resolved that conflict by giving greater weight to the written contract and the consistent evidence of Mr Mainsdonald as discussed in earlier paragraphs.
  2. [44]
    In any event if we are wrong, we would reach the conclusion, for the reasons discussed above, that the contract was a cost-plus contract. There would be no substantial injustice.

Ground D: If the parties had a cost plus contract, did the Tribunal err in constructing s 55 of the DBC Act, and/or applying it to the facts as found?

  1. [45]
    Dunmoor submits that the Tribunal misstated the test in s 55(1)(b) of the DBC Act in paragraph [17] of her reasons (the first alleged error). Further, it argues that she failed to consider the evidence that the scoping document was the basis for the stated price, and that Dr Leat said the work scope did not substantially change (the second alleged error).[41]  The first alleged error involves a potential error of law, and the second involves a potential error of mixed fact and law.
  2. [46]
    Section 55 of the DBC Act is as follows:

55 Cost plus contracts

  1. A building contractor must not enter into a cost plus contract that would be a regulated contract unless—
  1. the contract is included in a class of contracts prescribed under a regulation; or
  2. the cost of a substantial part of the subject work can not reasonably be calculated without some of the work being carried out.

Maximum penalty—100 penalty units.

  1. A building contractor must not enter into a cost plus contract that would be a regulated contract unless the contract contains a fair and reasonable estimate by the building contractor of the total amount the building contractor is likely to receive under the contract.

Maximum penalty—100 penalty units.

  1. If a building contractor enters into a cost plus contract in contravention of this section, the building contractor can not enforce the contract against the building owner.
  2. However, the tribunal may, on an application made, as provided under the QCAT Act, to the tribunal by the building contractor, award the building contractor the cost of providing the contracted services plus a reasonable profit if the tribunal considers it would not be unfair to the building owner to make the award.
  1. [47]
    Section 55(1)(b), as set out above, relevantly permits such a contract where a substantial part of the cost cannot reasonably be calculated without some of the work being carried out. In paragraph [17] of her reasons for decision, the learned Member says that a cost plus contract is allowed where ‘a substantial portion of the subject work cannot be calculated prior to the contract being entered into.’ Is this a proper construction?
  2. [48]
    Dunmoor submits that test is misstated by the learned Member. It referred us to the recent Full Court decision in CMF Projects Pty v Ltd v Rigall & Anor [42] (the CMF Case). The CMF Case was concerned with whether a proper construction of the DBCA Act prohibited a builder who was in breach of s 55(2) from recovering from a homeowner on a quantum meruit claim. In reliance upon the presumption of statutory interpretation against abrogation or curtailment of common law rights, the Full Court held that s 55, (and in particular the concession in s 55(4) upon the operation of s 55(3)), did not impliedly abrogate the right of a builder to claim quantum meruit.[43] Rather, s 55(4) was seen as an alternative jurisdiction conferred upon QCAT for a claim instead of a quantum meruit. Although the Full Court discussed the construction of s 55 DBC Act generally, the  meaning of s 55(1)(b) and the phrase ‘can not reasonably be calculated without some of the work being carried out’ was not (and does not appear to have been elsewhere judicially) considered.
  3. [49]
    Mainz written submissions focus, rather than on the proper construction of s 55, upon identifying examples contained in the evidence, including the scoping document prepared by Dr Leat, of uncertainties about the scope of the works when the contract was drawn. It argues that, in those circumstances, it inconceivable that Mainz could have provided a more accurate estimate of cost. The thrust of this argument seems to be that the builder had no choice but to enter a cost plus contract because of the lack of detail in the instructions from Dr Leat.[44]  However, at the hearing of the application for appeal and leave to appeal, Mainz further submitted that the Tribunal decided at [18] of its reasons for decision, that a cost plus contract was permissible, in the absence of plans. In any event, it suggests that even if the Tribunal erred in respect of its interpretation of s 55(1)(b), that the result would be unchanged because the Tribunal would have made the same award to Mainz under s 55(4).
  4. [50]
    On a plain reading of s 55(1), builders are generally prohibited from entering a cost plus contracts, unless certain circumstances arise. There are three possible circumstances in which the section allows a builder to enter into such a contract. Firstly, the contract concerned is not a regulated contract under the DBC Act. Secondly, it falls into a class of contracts prescribed under a regulation. Neither of these apply.
  5. [51]
    Thirdly, on a plain reading of 55(1)(b), a builder must not enter into  a cost plus contract unless the cost of a substantial part of the work can not reasonably be calculated without some of the work being performed. This requires two things. Firstly, a substantial part of the cost can not reasonably be calculated before the contract is entered into. Secondly, that the cost can not reasonably be so calculated without some of the work being done. ’Without’ is the linkage between the relevant phrases. In the ordinary course and in context, it means in the absence of, or excluding. Here, in other words, it denotes that the cost can not be reasonably calculated in the absence of or unless or until, some of the building work is first done.
  6. [52]
    Scenarios in which this might apply include, for example, when a house is in imminent danger of structural collapse or damage. Work must undertaken immediately to secure structural integrity and without the luxury of time to properly identify the full scope of the works. It may also apply in circumstances when, because of conditions on the building site, the scope of the works required are unable to be ascertained without some demolition work taking place (for example, if preliminary non-destructive testing suggests that termites may have structurally compromised the bearers in a particular room of a house, but it is reasonably suspected that the damage may extend to other areas of a house). In such circumstances, a conclusion may be readily reached that until some work is carried out, the cost of a substantial part of the work cannot reasonably be calculated, until after some of the work is first undertaken by the builder. 
  7. [53]
    We do not accept that on a proper construction, s 55(1)(b) makes it permissible for a builder to enter a cost plus contract where the cost of a substantial portion of the work has not been calculated prior to the contract being entered into, as the Tribunal found, merely because the parties have not sufficiently defined it. The exception is not satisfied if a builder fails to take steps to define, identify or describe the works sufficiently in order to be able to reasonably cost the work before he gets underway with the works. Such a construction would be inconsistent with the general prohibition against cost plus contract which the section provides for, and it could be defeated effortlessly by builders, rendering the prohibition nugatory in effect. This would not give effect to the parliamentary intent in enacting the provision, to generally prohibit cost plus contracts under the DBC Act.
  8. [54]
    Based on the Tribunal’s factual findings, (notwithstanding that there were uncertainties about the works to be done), that is what occurred here. It was not the case that the substantial part of the cost could not reasonably be calculated without some of the work being carried out, rather that a substantial part of the cost could not reasonably be calculated because the works had not been adequately defined before the works commenced to allow the calculation to be done. Accordingly, the Tribunal erred in law in its construction of s 55, and in particular, s 55(1)(b) of the DBC Act.
  9. [55]
    Mainz submits that the result would have been the same, as had the Tribunal correctly interpreted the section, it would have gone on to make the award it did under s 55(4). However, the possibility of its application does not appear to have been anticipated by the parties and Tribunal did not consider the issues relevant under that sub-section. In this regard, we were not referred to any evidence (and nor have we seen any) in the appeal about the cost of providing the work and what may constitute a reasonable profit.
  10. [56]
    But, in any event, when an appeal is allowed on the basis of an error of law, the Appeal Tribunal must dispose of it under s 146 of the QCAT Act. The Court of Appeal has held that s 146 contains no element of rehearing.[45] Accordingly, (although this may be an unfortunate result in a case such as this) unless the correction of the error of law disposes of the matter in its entirety (which it does not here), the Appeal Tribunal must return the proceeding reconsideration to the Tribunal.
  11. [57]
    The appeal must be allowed on the basis of this error of law. The Tribunal’s decision awarding an amount to Mainz must be set aside. The Tribunal must consider whether s 55(1(b) is satisfied having regard to the proper construction of it. As we have not received submissions about any further evidence that may be necessary in relation to the issues relevant to ss 55(4), we will leave it for the Tribunal to make such directions about further evidence as it considers appropriate.
  12. [58]
    Because the findings and orders made about this issue in the building dispute were relied upon in the Tribunal’s determination of the review proceeding, the decision on the review must also be set aside. It must be determined again having regard to the outcome of the Tribunal’s reconsideration of the application of section 55. Again, we will leave it to the Tribunal to determine whether any further evidence should be allowed and to make appropriate directions about that issue.

Ground E: Did the Tribunal err in allowing the full amount of Mainz claim by failing to take into account inconsistencies in the invoices and progress claims?

  1. [59]
    In light of our conclusions in relation to ground D, we do not need to decide whether the Tribunal erred in the manner contended in allowing the full amount of Mainz claim. That said, it appears that there may be some discrepancies in the documentation. If it is relevant to its further decision in  the proceeding, we urge the Tribunal to explain the manner in which it deals with these discrepancies.

Ground F: Did the Tribunal err in not ordering Mainz to rectify the works conditional upon the payment it ordered Dunmoor to make to Mainz?

  1. [60]
    Dunmoor submits that in light of the Tribunal’s order for Dunmoor to pay Mainz, it erred in not finding that the correct and preferable decision on the review application was to make a direction for Mainz to rectify the defective work.
  2. [61]
    Given our conclusions in relation to Ground D above, the order for payment is set aside by our orders. However, under s 72 of the QBCC Act, all of the circumstances which are reasonably relevant may be taken into account in determining whether to give a direction to rectify,[46] including whether it would be unfair to the builder.[47] Whether or not there are outstanding monies, however the non-payment of those monies arose, may be relevant to the determination of fairness in the circumstances. We make the observation that if the works are defective, and all monies properly payable for the works are to be paid in accordance with the Tribunal’s orders, that it cannot properly be concluded that the fact of outstanding monies at the time of the orders renders it unfair for a direction to rectify to issue. 
  3. [62]
    However, we make the observation that the learned Tribunal member did not determine whether the work was in fact defective in the review proceeding. This question must be determined before the question of fairness arises.

Conclusions and Orders

  1. [63]
    The application for leave to appeal is refused.
  2. [64]
    However, the appeal is allowed on the question of law of the construction of s 55(1)(b). The orders of the Tribunal are set aside.
  3. [65]
    We agree with the QBCC’s submission that the building dispute should be determined before the review proceeding is determined. We make directions to this effect. As discussed earlier, we further direct that the Tribunal make any appropriate directions for the filing and serving of further evidence as it considers appropriate. For this reason, we direct that the proceedings be listed for a directions hearing in the near future. To ensure the Tribunal has access to the transcript of the proceedings containing the evidence at the original hearing, we direct that this APL file, on which a copy of the transcript has been filed, travel with BDL073-14 and GAR371-13 until the proceedings are finalised.

Footnotes

[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), s 142, esp ss 142(1), (3).

[2]  Ibid.

[3]  See Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394.

[4] Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748.

[5] Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748 at [35] per Iacobucci J.

[6] Pickering v McArthur [2005] QCA 294 [3].

[7] Lovell v Lovell (1950) 81 CLR 513.

[8]  (1938) 60 CLR 336.

[9]  Reasons for decision of Dr Cullen dated 5 February 2015 (‘reasons for decision’) at para [29].

[10]  Reasons for decision.

[11]  Reasons for decision at para [35].

[12]  Ibid [38].

[13]  Ibid [39].

[14]  Applicant’s submissions on appeal at para [9].

[15]  Mainz submissions on appeal at para [32].

[16] Queensland Building and Construction Commission v Mudri [2015] QCATA 78; Laidlaw v Queensland Building and Construction Commission [2010] QCAT 70.

[17]  Reasons for decision at para [29].

[18]  QCAT Act s 20(2).

[19]  Ibid s 20(1).

[20] Queensland Building and Construction Commission v Mudri [2015] QCATA 78 [12-13].

[21]  Reasons for decision at paras [22]-[27].

[22]  Transcript of proceedings, (Queensland Civil and Administrative Tribunal, GAR371-13/BDL073-14, Dr Cullen, Member, 23 – 24 June 2014) (‘Transcript’) at 1-34, L 26-42.

[23]  Transcript 1-55, L45; 1-56 L12.

[24]  Transcript 1-15, L36-40.

[25]  Transcript 1-21, L5-35, 14; L21-29; 1-42, L40; 1-43 L10; 1-44 L38-45; 1-45 L1-2 and 29-31; and 1-47 L1-2.

[26]  Transcript 1-43 L14; 1-48 L21.

[27]  Transcript 1-15 L45.

[28]  Transcript 1-43 L30

[29]  Reasons for decision [25-26]; Transcript 1-45 L6-9.

[30]  Transcript 1-18 L15-17.

[31]  Transcript 1-34, L16 and L44.

[32]  Transcript 1-19, L31.

[33]  Transcript 2-37, L5-45; 2-48 L15-27; 2-49 L1-5.

[34]  Transcript 2-40, L33-34.

[35]  Transcript 1-42, L40.

[36]  Transcript 1-44, L43-45.

[37]  Transcript 1-42, L 37.

[38]  Transcript 1-43 L28-32.

[39]  Transcript 1-45 L9.

[40]  Reasons for decision [31].

[41]  Transcript 1-22 L1-4.

[42]  [2014] QCA 318.

[43]  Ibid [34]-[35], [39]-[46].

[44]  Submissions of Mainz filed on 28 September 2015 [34]-[52].

[45] Ericson v Queensland Building and Construction Commission [2014] QCA 297.

[46]  QBCC Act, s 72, esp s 72(3).

[47]  Ibid s 72(5).

Close

Editorial Notes

  • Published Case Name:

    Dunmoor Pty Ltd v Queensland Building and Construction Commission & Anor

  • Shortened Case Name:

    Dunmoor Pty Ltd v Queensland Building and Construction Commission

  • MNC:

    [2016] QCATA 39

  • Court:

    QCATA

  • Judge(s):

    Senior Member Brown

  • Date:

    29 Apr 2016

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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.