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Forbes Building Group Pty Ltd v Minogue QCATA 62
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Forbes Building Group Pty Ltd v Minogue  QCATA 62
FORBES BUILDING GROUP PTY LTD
ORIGINATING APPLICATION NO/S:
MCD Q223/17 and Q241/17
9 May 2019
26 September 2018
APPEAL – APPLICATION FOR LEAVE TO APPEAL – MINOR CIVIL DEBT – DAMAGES APPLICATION – Where orders made in Q223/17 (debt claim) and Q241/17 (damages application) between same parties heard together – where tribunal found an unpaid invoice of $20,517.67 for building work against the applicant in Q223/17 and refused to set-off the claim for alleged defect rectification and completion costs in Q241/17 – whether alleged debt was due and owing – whether respondent wrongfully repudiated and liable for performance breaches – whether the tribunal identified and decided the substantial merits of the case – whether reconsideration called for.
Queensland Building and Construction Commission Act 1991 s 67
Building and Construction Industry Payments Act 2004 (Qld)
Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 13
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
APPLICANT: Cameron Forbes for Forbes Building Group Pty Ltd
RESPONDENT: Daniel Minogue for CBS
REASONS FOR DECISION
- The question this application raises is whether the tribunal decisions in rival construction contract claims were legally correct and the orders fair and equitable as s 13 Queensland Civil and Administrative Tribunal Act 2009 (Qld) requires.
- For the reasons following I have decided that the overall interests of justice call for granting leave, allowing the appeal, setting aside the tribunal orders and remitting the matter for reconsideration.
- The applicant FBG was hired to do building alterations at a child care centre in Mackay.
- On 1st December 2014 some work was sub-contracted to the named respondent, Daniel Minogue, trading as CBS, for the agreed price of $60,500 the subcontract was partly written (PO-55) but mainly oral. It is common ground that a reasonable standard of workmanship was implied.
- While it is an offence for building contracts for works costing $10,000 or more not to be written non-compliant arrangements are still enforceable. CBS had a statutory right at the time to receive progress payments under the Building and Construction Industry Payments Act 2004 (Qld). An alternative is a claim in quantum meruit or restitution to compensate for services rendered and materials supplied on request.
- A dispute arose between the parties over progress payment claims early in the New Year. The first contested invoice (#92) was issued on 7 January 2015 for $14,954.56 (including $7,645.40 for plaster board fix out). Instead of paying by the stated date FBG revised the figure down to $9,081.81 after accounting for negative variations and extended the due date to 31 January in line with asserted oral terms of payment or implied reasonable period. The second (#94) for $13,537.70 (7/8ths for demolition) was dated 13 January 2015.
- Due to asserted concerns about whether, more than when, FBG was going to pay at all in breach of contract CBS stopped work on 19 January 2015 without notice.
- FBG later paid a total $7,974.59 on account of the two disputed invoices even though, on its case, neither was strictly payable because the milestone events they were based on had not been achieved.
- FBG took over the site from 21 January 2015 and later purported to cancel PO-55 when Mr Minogue allegedly made it clear that he just needed to be paid for the work he had done and no longer wanted to continue with the job.
- There was a heated telephone exchange about the invoices with Mr Forbes on 23 January 2015.
- On the 26th FBG agreed to pay any outstanding amount the next day conditional on final approval of construction work to date.
- According to Mr Minogue he met Mr Forbes on site on 27 January 2015 and hand delivered a final invoice (#96) for $22,417.92 (or $30,392.51 less the part payment of $7,974.59) and another document (providing a breakdown of the calculations).
- Eight-four and a half per cent (84.5%) of #96 related to PO-55. Of that $11,028.65 (or nearly 74%) was carried over from #92. Excepting asbestos removal ($1,200) all #94 items were included in #96.
- Mr Forbes admits being given a sheet of calculations on 27 January but categorically denies ever seeing #96 until well after Q223/17 was filed.
- The tribunal resolved this issue in favour of CBS based on an acknowledgment of a 28 January 2015 email postponing payment until the following Monday pending final inspection. On my reading, however, the text of the email does not support the adverse inference the tribunal drew against FBG but the likely misconstruction is not significant for leave purposes.
- CBS filed Q223/17 on 14 November 2017 claiming the #96 debt and default interest (capped at $2,582.08). No alternative case of unjust enrichment was pleaded.
- CBS alleged that FBG owed $22,417.92 for PO-55 work carried out in a proper and workmanlike manner to 19 January 2015 invoiced in #96.
- FBG asserted in response that the cost of rectifying and completing and PO-55 works exceeded both the quoted price and the progress claims.
- Q241/17 was later filed by FBG claiming final cost of completion was $26,578.94 or 30 per cent more than PO-55. CBS rejected any liability for any extra cost FBG incurred to finish PO-55 work after termination because the work left to do should not have cost any more than what CBS quoted.
- The tribunal identified the key issue as being whether FBG had a right to terminate. It decided in the negative because CBS did not seriously breach or repudiate PO-55 merely by suspending the building work as “enforcement action in a pay dispute”.
- FBG was ordered to pay CBS $20,517.67 (plus $3,178.78 interest) in Q223/17 for not giving CBS a reasonable opportunity to rectify and finish the PO-55 work before termination. Q241/17 was dismissed for the same reason.
The proposed evidence on appeal
- Both parties were self-represented. There is no indication that they were overly familiar with either contract law, restitutionary principles or tribunal procedures.
- Accordingly, they were both heavily reliant on the tribunal’s specialist knowledge, expertise and experience.
- DM1.14-21 exhibited to Mr Minogue’s main hearing affidavit contains details of alleged FBG losses. FBG tendered an expert witness statement dated 7 December 2017 by the Regional Manager of the Masters Builders Association, Mr Hull, verifying that as at 29 January 2015 the construction was still at a part framing stage and confirming “that some of the works was not completed or being undertaken in a compliant manner and not in accordance with correct construction procedures and the national construction code”. He also considered some sections of the bathroom needed to be demolished to rectify faulty sheeting, tiling and plumbing work.
- Mr Hull’s statement was not initially objected to but (after a little prompting from the tribunal) Mr Minogue insisted on asking a few (unspecified) questions. Mr Minogue did not specifically challenge Mr Hull’s assessment and even offered a $5,000 rebate for 5 or 6 invoice items of the wall framing he conceded did not meet Australian Standards. Given that Mr Hull’s expertise, independence and credit were not really contested the fact that the statement was unsworn and not verified in person or tested by relevant cross-examination was an immaterial consideration. The tribunal remark at T1-96:12-18 that an unsworn or unaffirmed statement “doesn’t carry as much weight as an affidavit” was unwarranted in the circumstances and suggests a preoccupation with form over substance in a merits focussed jurisdiction.
- The adversarial rules procedure and evidence are specially relaxed in tribunal proceedings so reliable and relevant evidence can be submitted even informally and weighed consistently with hearing fairness and QCAT’s less technical self-informing approach. So that all reasonably available information needed for deciding the substantial merits is considered.
- Understandably, FBG applied to admit further affidavit evidence in these proceedings in case the evidence of CBS’s substandard work was underestimated.
- The appeal tribunal has a wider discretion to receive additional evidence on an appeal than adversarial courts do but its general practice is not to allow the transcript to be supplemented in appeal proceedings unless the proposed material was not reasonably available for the hearing and too significant to disregard.
- However, the proposed material does not add enough to the evidence presented to the tribunal at the hearing to affect the outcome or warrant receipt on appeal.
The fair and equitable solution
- CBS claimed the balance of a debt allegedly owed before it suspended work because of the pay dispute not loss of bargain damages for wrongful termination.
- FBG claimed the right to defect damages (substantially acquired before the contract was rescinded) and completion costs incurred either due to CBS breaches or by virtue of termination.
- Both parties are entitled to enforce any rights arising from the partial execution of PO-55 even after they have been discharged from further performance.
- Generally, the contract price of a construction contract is not recoverable as a debt under the general law until it is earned by full and faithful performance of the contract. As explained in JW Carters, Contract Law in Australia, the common law position is that:
… if a builder terminates the performance of a building contract for repudiation by the other party before the completion of the work, the builder will be restricted to the recovery of damages or restitution. If progress payments have been earned (prior to termination) these may be recovered, but the balance, or the total price if there is no provision for progress payments, will not be recoverable as a liquidated sum. And, if the contract specifies a date for payment of the price, the builder’s position is not improved merely by delaying termination until the date for payment has passed.
- Thus, CBS’s right to payment of the progress claims due and owing as at 19 January 2015 depends solely on whether and how compliantly it had performed its PO-55 obligations and not at all on the validity of its suspension or FBG’s termination.
- FBG articulated a clear, substantial and plausible case as to why the disputed invoiced amounts were not payable and any debt owed to CBS was subsumed by FBG’s set off or damages claim for default and for rectifying breaches.
- However, because the tribunal focussed on the legitimacy and fairness of FBG’s cancellation of the work order it lost sight of the real issues including whether:
- CBS had earned the disputed progress payments up to 19 January 2015 by proper performance of PO-55 or alternatively had a valid claim for the reasonable price of the building work it had done at FBG’s request.
- FBG was in breach by not paying all or some of the invoiced amounts.
- FBG had acquired rights to sue for damages for contravention of the implied workmanship condition before termination entitling it to a set off against any debt owed to CBS.
- post termination completion costs are recoverable by FBG even where CBS was ready willing and able to finish the job but prevented from doing so by premature termination.
- The dispute resolution steps proposed by the tribunal are good practice for settling disputes and standard in the building industry but they were not necessarily implied conditions of PO-55. FBG is not a judicial or administrative decision maker bound to afford procedural fairness before adversely affecting CBS the rights and interests and was never given the opportunity to counter the tribunal’s contrary conclusion before it was reached.
- The tribunal could not decide issues according to their substantial merits and make fair and equitable orders without informing itself of all relevant facts such as the nature, extent and cost of the defects it was satisfied of by reference to the best available evidence including Mr Hull’s verified but unsworn statement. In partially enforcing CBS’s debt and totally dismissing FBG’s damages claim based solely on the validity of the termination action (which in the circumstances had little bearing on the parties accrued rights) the tribunal constructively failed to exercise its adjudicative function.
- Accordingly, intervention by the appeal tribunal to set things right is called for by granting leave, setting aside the orders in both Q223/17 and Q241/17 and remitting both matters for reconsideration.
Queensland Building and Construction Commission Act 1991 (QBCC Act) s 67G.
 Applicant’s appeal submissions, 16 August 2018, 3.
 Affidavit of Cameron Forbes, 15 August 2018, -.
 Applicant’s appeal submissions, 16 August 2018 .
 Transcript of proceedings, 18 May 2018, 1-15:5-25.
 Transcript of proceedings, 18 May 2018, 1-42:5-35.
 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 476-7.
 Lexis Nexis, Butterworths (2013) 6th ed at 896 [37-31].
 See for example QBCC Act s 67O re: suspension of building contract works for not paying undisputed amounts required under s 67P re: late progress payments.
- Published Case Name:
Forbes Building Group Pty Ltd v Daniel Minogue
- Shortened Case Name:
Forbes Building Group Pty Ltd v Minogue
 QCATA 62
09 May 2019