Worthington v Ryan[2021] QCATA 138

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   Mr Worthington, who traded as Worthington Simmons Builders, contracted with Dr Ryan for the performance of building work involving a substantial renovation of Dr Ryan’s residence. The parties fell into dispute. Mr Worthington commenced proceedings in the Tribunal seeking to recover an amount he said was due and owing under the building contract. Dr Ryan counterclaimed for liquidated and other damages.
2. [2]
   The proceedings have had a long and eventful history.
3. [3]
   In 2013 the tribunal decided, inter alia, that Mr Worthington had validly terminated the building contract, that Mr Worthington had suffered loss and damage in an amount of $82,190.85, and that Dr Ryan had no entitlement to liquidated damages.^[1]
4. [4]
   Dr Ryan appealed the decision.
5. [5]
   The Appeal Tribunal decided to remit the matter to the tribunal for reconsideration, finding that:

   1. (a)
      The tribunal had erred in law by awarding damages on a basis not claimed or pleaded;
   2. (b)
      The damages award was incorrectly calculated;
   3. (c)
      The tribunal had not erred in its construction of the terms of the building contract.
6. [6]
   Dr Ryan appealed the decision of the Appeal Tribunal.
7. [7]
   The subsequent findings of the Court of Appeal^[2] of relevance in the present appeal were usefully summarised by the tribunal in Worthington t/as Worthington Simmons Builders v Ryan^[3]:

   1. (a)
      Dr Ryan’s purported termination of the contract did not take into account the unforeseeable period of extensive delay due to the construction of a swimming pool by another contractor. Without taking that into account Dr Ryan’s termination was ineffective, as found at first instance.
   2. (b)
      Notwithstanding complaints by Dr Ryan that Worthington Simmons had no properly formulated claim for damages before the Tribunal, the matter was best dealt with by the Tribunal especially given the nature of its jurisdiction to deal with claims with less formality than a court normally requires.
   3. (c)
      The matter should be remitted for determination according to law and in the light of the Court of Appeal’s reasons.
8. [8]
   The matter was returned to the tribunal at first instance for re-hearing on the papers after the following steps had been taken by the parties:

   1. (a)
      Worthington Simmons filed an amended Statement of Claim and Dr Ryan filed an amended Response and Counter-Application.
   2. (b)
      Dr Ryan filed a further report from one of his experts, Mr Cosker.
   3. (c)
      The parties filed written submissions addressing:

      1. the matters remitted to the Tribunal by the Court of Appeal;
      2. the calculation of the amount claimed by Worthington Simmons;
      3. the calculation of the amount counter-claimed by Dr Ryan;
      4. the amended Statement of Claim and amended Response and Counter-Application.
9. [9]
   The transcript of the previous hearing in BDL274-11 was, by consent of the parties, admitted into evidence in the re-hearing.
10. [10]
    The tribunal gave its further decision in January 2017.^[4] Dr Ryan was ordered to pay Mr Worthington $63,855.72 for damages and $11,416.83 for interest.
11. [11]
    Both Mr Worthington and Dr Ryan appeal the decision of the tribunal.

The grounds of appeal – APL045-17 and APL163-18

12. [12]
    Mr Worthington’s application for leave to appeal or appeal contains two grounds:

    1. (a)
       Appeal ground 1 – the learned member erred in determining that interest was only payable for the period 30 August 2011 to 30 May 2013;
    2. (b)
       Appeal ground 2 – the learned member erred in determining the cost of rectification of defective work.
13. [13]
    Both appeal grounds raise questions of law.
14. [14]
    Dr Ryan cross appealed on three grounds:

    1. (a)
       Appeal ground 1 - the learned member erred in calculating the total credit for variations;
    2. (b)
       Appeal ground 2 - the learned member erred in interpreting and applying clause 15 of the contract;
    3. (c)
       Appeal ground 3 - the learned member erred in relying upon s 18 of the Domestic Building Contracts Act 2000 (Qld).
15. [15]
    Appeal ground 1 raises a question of fact. Dr Ryan subsequently abandoned appeal grounds 2 and 3.

The findings by the tribunal relevant to the grounds of appeal

16. [16]
    The following findings by the tribunal are relevant to the grounds of appeal raised by both parties:

    1. (a)
       Dr Ryan did not lawfully terminate the contract;^[5]
    2. (b)
       Worthington Simmons validly terminated the contract on 29 August 2011, both under the contract and at common law;^[6]
    3. (c)
       Worthington Simmons was entitled, under clause 22.4 of the contract, to recover from Dr Ryan, all loss, costs, expenses and damages in connection with Dr Ryan’s breach and the termination, as if Dr Ryan had wrongfully repudiated the contract;^[7]
    4. (d)
       Dr Ryan was not entitled to recover any amount claimed for the cost of rectification of defective work;^[8]
    5. (e)
       As at the date of termination, Dr Ryan had no accrued cause of action for breach of contract arising out of defective work which would enable him to sustain his claim for the cost of rectification of defective work;^[9]
    6. (f)
       Dr Ryan was not entitled to recover the costs associated with reapplying for building approval;^[10]
    7. (g)
       Dr Ryan was entitled to recover the cost of electricity charges of $1,357.76;^[11]
    8. (h)
       Worthington Simmons was entitled to recover profit in respect of the incomplete work;^[12]
    9. (i)
       The total cost of rectification work in respect of defective and incomplete work was $14,135.00;^[13]
    10. (j)
        The adjusted contract sum was $2,154,874.00;^[14]
    11. (k)
        The work, the subject of variations 31, and 33 to 37 had been completed;^[15]
    12. (l)
        The total value of approved (negative) variations 1 to 30 was $129,567.00 and was required to be deducted from the contract sum;^[16]
    13. (m)
        Variations 31 to 35 were not approved and therefore not taken into account;^[17]
    14. (n)
        Variations 36 and 37 were approved and an additional amount was required to be allowed for these variations, reducing the total cost of the negative variations required to be deducted from the contract price to $112,224.36;^[18]
    15. (o)
        The Worthington Simmons entitlement to damages was calculated in the amount of $65,213.48.^[19]
    16. (p)
        Dr Ryan was liable for interest on the damages payable to Worthington Simmons for the period 30 August 2011 to 30 May 2013 in the amount of $11,416.83, on the basis that:

        1. Dr Ryan became liable to Worthington Simmons for damages for breach of contract on 29 August 2011;
        2. Interest was calculated to the date when Dr Ryan might ordinarily have been ordered to pay damages after the first hearing.^[20]

The conduct of the appeals - APL045-17 and APL163-18

17. [17]
    As these reasons will reveal, we have identified errors in the decision by the learned member including errors of law and an error of fact. The errors of law relate to the appeal by Mr Worthington. The error of fact relates to the appeal by Dr Ryan.
18. [18]
    Where an appeal involves a question of law, s 146 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) governs the way the appeal must be heard and the orders the appeal tribunal may make.^[21] Where an appeal involves a question of fact or a question of mixed law and fact, s 147 of the QCAT Act is applicable.^[22]
19. [19]
    There is an obvious tension between s 146 and s 147 of the QCAT Act. In Dwyer Corporation Pty Ltd t/as Dwyer Quality Homes v Dunne^[23] the Appeal Tribunal stated:

Apart from the requirement for leave, the distinction between questions of law and, in particular in this case, questions of mixed law and fact, is significant to the appeal tribunal’s role. Broadly speaking, in deciding an appeal on a question of law under s 146, the appeal tribunal must either confirm the decision or return the matter to the Tribunal for reconsideration, unless the appeal tribunal’s determination of the question of law is capable of resolving the matter as a whole in the applicant’s favour.^[24] By contrast, an appeal on a question of fact or a question of mixed law and fact under s 147 is decided by way of rehearing with or without the hearing of additional evidence as decided by the appeal tribunal. 

20. [20]
    In respect of the appeal by Dr Ryan, we have identified an error of fact. Section 147 of the QCAT Act requires us to decide the appeal by way of rehearing if leave to appeal is granted. In respect of the appeal by Mr Worthington, there are identified errors of law. However, s 146 does not permit a rehearing when an appeal is on a question of law only. If an error of law is identified we may set aside the decision and substitute our own decision, but only if this results in the appeal being decided entirely in Mr Worthington’s favour. We must otherwise remit the matter for reconsideration.
21. [21]
    How then to address the situation where the manner in which the appeals must proceed is different in relation to the appeal and the cross appeal?
22. [22]
    In Harrison & Anor v Meehan,^[25] McMurdo JA said the following in relation to appeals to the QCAT Appeals Tribunal involving both questions of law and questions of fact or mixed law and fact:

[48] In this Court it is argued that the Appeal Tribunal should have first considered only the questions of law, and if satisfied that there was such an error, remitted the case for a further hearing, without considering the questions of mixed fact and law. Indeed, it was argued that it ought to have remitted the matter for an entirely new hearing. Those submissions cannot be accepted.

[49] The Appeal Tribunal considered whether leave should be given to appeal for the questions of mixed fact and law. It decided that there was an error of that kind and that a substantial injustice might be suffered by the applicants if leave to appeal was not granted. Having concluded that leave should be granted, it proceeded to conduct a rehearing in the way which was described in these paragraphs of its decision:

[20] As required by s 147(2) of the QCAT Act we will now proceed to decide the appeal by way of rehearing. Appeals by way of rehearing involve a new determination of the rights and liabilities of the parties, rather than a mere correction of the errors in the determination of the Tribunal below.

[21] An appeal by way of rehearing under s 147 of the QCAT Act is not a rehearing de novo. The Appeal Tribunal must make its own determination on the material before the Tribunal below (supplemented, if necessary by additional evidence if permitted under s 147(2)) with due respect for the findings of fact of the primary Tribunal, and due consideration of the advantages enjoyed by it.

[22] In rehearing the matter we have adopted the learned member’s primary findings of fact other than where those findings have been challenged in these appeals or where there is some doubt as to the findings made. We have otherwise formed our own views on the evidence consistently with the principles applicable in appeals by way of rehearing on the record of proceedings before a primary tribunal.” (footnotes omitted)

[50] The Tribunal was correct to proceed in that way. This meant that all of the questions raised by the applicants’ appeal were to be considered in the rehearing by the Appeal Tribunal. However, in giving its reasons for the disposition of the appeal, the Appeal Tribunal did not have to discuss distinctly each of those questions, if the reasons sufficiently explained how the Appeal Tribunal reached its conclusion.

23. [23]
    The statement by McMurdo JA regarding dealing with all of the applicants’ questions in the rehearing is directly relevant for present purposes. There is no logical purpose served, in the present case, in dealing with one appeal by way of rehearing and the other in a different fashion.
24. [24]
    An appeal on a question of law is only determined on the uncontested evidence or primary facts found at first instance.^[26] There is no element of rehearing in an appeal on a question of law under s 146 of the QCAT Act.^[27] An appeal involving claimed errors of fact or mixed law and fact under s 147 of the QCAT Act must be decided by way of rehearing.
25. [25]
    For the reasons that follow, we grant Dr Ryan leave to appeal. In conducting the appeal by Dr Ryan by way of rehearing, we will also deal with the questions of law raised by Mr Worthington. This approach is consistent with Harrison & Anor v Meehan.^[28] There is no lack of procedural fairness in this approach. First, in proceeding this way, all of the questions raised by the parties will be considered in the rehearing. Second, this dispute has been before the tribunal for almost 10 years. The issues in dispute between the parties have been comprehensively identified and refined. We are sure the parties both desire finality.
26. [26]
    This approach is consistent with the objects of the QCAT Act and the functions of the tribunal in achieving those objects, ensuring that the appeals are dealt with in a way that is economical, informal or quick, or more generally, that the proceeding is being conducted in a way that minimises costs to the parties.^[29]

Consideration – APL163-18: The appeal by Dr Ryan

27. [27]
    Dr Ryan’s sole ground of appeal is that the Tribunal erred in calculating the total credit for variations. Dr Ryan says that the learned member erred in finding that the total credit for variations to be deducted from the contract sum was $112,224.36, when in fact it was $148,674.36. The result of the error, says Dr Ryan, is that Worthington Simmons’ entitlement to damages should have been reduced by $28,763.48. As we have observed, this ground of appeal raises a question of fact.
28. [28]
    There were a total of 37 variations claimed by Worthington Simmons. Variations 1 to 30, and variations 36 and 37 were approved by Dr Ryan. Variations 31 to 35 were not approved by Dr Ryan. The learned member found that the amount to be deducted from the contract sum for variations numbered 1 to 30 (which comprised both positive and negative variations) was $129,567.00.^[30] The total value of variations 36 and 37 was $17,343.00. Variation 37 was for pool and other fencing. The learned member found that this work had been completed and the builder was entitled to be paid. The result, concluded the learned member, was that the amount to be deducted from the contract price was $112,224.36.^[31]
29. [29]
    Dr Ryan says that the correct amount to be deducted from the contract price is $148,674.36. Dr Ryan says that the error by the learned member arises out of the failure to take into consideration a negative variation in respect of landscaping works.
30. [30]
    In the amended application for domestic building dispute,^[32] Mr Worthington set out the particulars of the 37 variations. The application did not particularise the actual building work relating to the variations. In respect of variation 28, an amount of (negative) $1,480.00 was conceded by the builder. 
31. [31]
    Mr Cosker was the expert quantity surveyor upon whose evidence Dr Ryan relied.^[33] In his report, Mr Cosker valued variations 1 to 30 in the amount of (negative) $150,924.50 (excluding GST). Mr Cosker allowed a negative variation of $34,481.82 (excluding GST) in respect of variation 28. In his report, Mr Cosker described variation 28 as ‘Landscaping’.
32. [32]
    Copies of the variations were in evidence.^[34] Variation 28 is dated 15 January 2011. The description of the variation is:

Credit for supply of door handles not supplied by W & S Builders. Owner to supply.

33. [33]
    The amount of variation 28 is $1,480.00. Variation 28 in evidence is consistent with the description of variation 28 in the schedule of variations included in Mr Worthington’s originating application.
34. [34]
    Section 8 of Mr Cosker’s report is headed ‘Construction Variations Summary’. Among other things, the summary lists 36 variations, the date of the variation, the contractor submitted value, the date of approval, the approved value, the percentage of the works complete in respect of each variation and the current value of the completed variation.  As noted above, variation 28 is described in Mr Cosker’s report as ‘landscaping’, the date of the variation is 16 November 2011, the date of approval is 16 November 2011 and the contractor submitted value is $34,481.82.  The reference to variation 28 carries a notation ‘see PS2’. This is a reference to the prime cost sums and provisional sums referred to in section 7 of Mr Cosker’s report. The reference to ‘PS2’ is a reference to ‘soft landscaping’. The report notes the initial contract sum for this item to be $45,454.55, with the works being 91.2% complete. The current value of the works is calculated by Mr Cosker in the amount of $41,454.55 and the payment value as (negative) $4,000.00. The reference to PS2 in section 7 of Mr Cosker’s report contains a notation ‘see VO28’. This is presumably a reference to variation 28, which is identified in the Cosker report as the landscaping variation.
35. [35]
    In his report, Mr Cosker does not refer to having sighted the variation documents themselves. He says:

Based on the Builders schedule there have been thirty-six variations, of which, twenty-nine have been approved… Details of the variations are noted at section 8 of this report. (emphasis added)

36. [36]
    Mr Cosker refers in his report to having been provided with six documents by Dr Ryan. There is no reference to a ‘Builders schedule’ as being among those documents.
37. [37]
    Mr Fritz was the expert relied upon by Worthington Simmons. Mr Fritz’s reports were in evidence.^[35] In his first report, Mr Fritz set out 37 variations with a corresponding description and, where applicable, a claimed time extension. No amount for each variation is included. Variation 37 is referred to in Mr Fritz’s report as ‘Door handles’. It is relevant to note that in his report, Mr Fritz refers to having been briefed with, inter alia, the originating application and the first amended counter application.
38. [38]
    Neither of the joint experts reports prepared following two conclaves addressed the landscaping variation.
39. [39]
    In evidence before the tribunal was an affidavit by Mr Worthington.^[36] Attached to Mr Worthington’s affidavit was a bundle of documents described as progress claims. The various progress claims made reference to spreadsheets prepared by the builder. The progress claim dated 16 February 2011 is described as:

Revised progress Claim 13 for renovations to 163 Kennedy Tce Paddington as per spread sheet. Variations included in this claim V10, V15, V22, V23, V 25, V26, V27, V28, V29.’

40. [40]
    The amount of progress claim 13 is $49,494.56, calculated as an amount of $90,411.16 less $40,916.60. Attached to the progress claim is a spreadsheet setting out 29 variations including variation 28 described as landscaping and noting a credit of $37,930.00 (including GST). Mr Worthington deposed to the progress claim as having been paid on 16 February 2011.^[37] There was not however, in evidence, a variation document relating to the landscaping. Dr Ryan deposed in an affidavit filed in the proceedings below to having received progress claim 13 on 16 February 2011.^[38] Dr Ryan also deposed to variation 28 as relating to the supply of door handles and that he agreed to the variation. Apart from the general reference to progress claim 13, Dr Ryan did not refer in his evidence to the landscaping variation.
41. [41]
    The contract included allowances for a number of provisional sums including an amount of $50,000.00 for ‘soft landscaping’.
42. [42]
    Mr Cosker was asked a series of questions at the first hearing about the first joint report. Item 15 in the first joint report was ‘soft landscaping’. This was one of the items of work identified by Mr Cosker in his report as being incomplete. This item of work related to the reinstatement landscaping at the end of the project, in relation to which Mr Cosker allowed an amount of $4,000.00. Mr Cosker gave evidence at the first hearing that he had not been provided with copies of the variation documents.^[39] Mr Cosker’s evidence was that when he visited the site the gardens were not in a complete state.^[40] The following exchange took place between Mr Cosker and counsel for the builder during cross examination:

Counsel: … Are you aware that the landscaping had been removed from the contract?

Mr Cosker: Yes. The landscaping had been withdrawn under a variation, but it was still works that needed to be tidied.

Counsel:  Yes?

Mr Cosker: Still – it had been used for storage buildings here so it hadn’t been reinstated.

Counsel: Okay. But as it’s no longer part of the contract it can’t be regarded as incomplete works, can it?

Mr Cosker:  No.^[41]

43. [43]
    During re-examination the following exchange took place between Mr Cosker and counsel for Dr Ryan:

Counsel: … you were just asked some questions about removal of the soft landscaping from the contract, an allegation that – do you know the actual details of that removal?

Mr Cosker:  No, I don’t.

Counsel:  Right. So you don’t know if it has been removed or not?

Mr Cosker:  All I have is a variation that says - - - ^[42]

44. [44]
    There the evidence on the issue ended.
45. [45]
    The builder’s expert, Mr Fritz, did not give evidence at the first hearing about the landscaping.
46. [46]
    In his submissions in the appeal, Dr Ryan says that the effect of the evidence of Mr Cosker as contained in his report is that the actual value of the landscaping works to be undertaken was some $34,481.82 less than the provisional sum allowance. Dr Ryan says that ‘(i)n other words, the value of the landscaping works to be undertaken in connection with the project was $10,518.18. Mr Cosker in his report and in the joint expert report says that, of that sum (the value of the landscaping works to be undertaken), $4,000.00 worth of work had yet to be completed.’^[43]
47. [47]
    As we have noted, the contract included a provisional sum of $50,000.00 for landscaping. Clause 9.4 of the contract dealt with adjusting the contract price in respect of prime cost items and provisional sums:

9.4 Contract price adjustment where cost is less than allowance

If the actual cost of a Prime Cost Item, or the actual cost of the work for a Provisional Sum is less than amount allowed for that item, the difference is deducted from the Contract Price and is to be allowed by the Builder in the next progress claim.

48. [48]
    Progress claim 13, to which we have referred, apparently credited an amount of $37,930.00 (GST inclusive) in respect of landscaping works. If it had done so, the progress claim purported to meet the builder’s obligations in accordance with clause 9.4 of the contract to deduct part of the landscaping provisional sum from the contract price.^[44] However by the same progress claim 13, the builder negated any such credit by first claiming payment for the provisional sum in an amount of $42,500.00. The nett effect was a claim for payment for the Prime Cost (PC) item ‘landscaping’ of $4,570.00.
49. [49]
    Adjustments in respect of the cost of prime cost items and provisional sums were dealt with in the contract in a manner different to variations. Variations were dealt with in clauses 12, 13 and 14 of the contract.
50. [50]
    Seen within this context, the deduction in respect of the landscaping provisional sum was dealt with in accordance with clause 9.4 of the contract, and not as a variation. It seems reasonably apparent that the landscaping item came to be described as variation 28 as a result of how it was described in progress claim 13.
51. [51]
    The learned member failed to take into consideration the agreed withdrawal of the provisional sum for the landscaping works. It remained a claimed item by the builder as part of the contract price and therefore incomplete work. This amount should have been deducted from the contract price with the consequence that the calculation of Mr Worthington’s entitlement to damages was overstated. It follows that leave to appeal should be granted to avoid a substantial injustice to Dr Ryan.

Rehearing – APL163-18

52. [52]
    We now proceed to conduct Dr Ryan’s appeal by way of rehearing in accordance with the principles stated by the Appeal Tribunal in Harrison & Anor v Meehan.^[45] We will not restate the relevant history of the dispute or the history of the proceedings in the tribunal or the Court of Appeal. We will adopt the primary findings of fact by the learned member except where challenged or where there is doubt as to the findings. 

Allowance for landscaping

53. [53]
    We referred earlier in these reasons to progress claim 13. Neither party disputed that the progress claim was given by the builder and was paid by Dr Ryan. Neither party disputed the validity of the progress claim nor did either party dispute the entitlement of the builder to receive the payment for the claim.
54. [54]
    We have also earlier in these reasons referred to clause 9.4 of the contract. By operation of clause 9.4, the purported effect of progress claim 13 was to reduce the contract price by $37,930.00 inclusive of GST. In fact, it did no such thing.
55. [55]
    We will address the required adjustment in the calculations part of these reasons.
56. [56]
    In undertaking the balance of the rehearing in Dr Ryan’s appeal we will refer to the grounds of appeal relied upon by Mr Worthington.

Consideration - APL045-17: The appeal by Mr Worthington

Interest

57. [57]
    Mr Worthington’s first ground of appeal is that the learned member erred in failing to award interest on his entitlement to damages for the period from the date of termination to the date Dr Ryan was ordered to pay the damages.^[46]
58. [58]
    Mr Worthington does not challenge the rate of interest awarded by the learned member. This ground of appeal raises a question of law.
59. [59]
    The learned member held:

[94] Worthington Simmons have claimed interest on its award of damages. This Tribunal is empowered to award interest on damages pursuant to s77(3) of the Queensland Building and Construction Commission Act 1991. By s34B of the Queensland Building and Construction Commission Regulation 2003, the rate is either the rate specified in the contract or 10% payable on and from the day after the day that the amount became payable until and including the day the amount is paid. The only rate specified in the contract relates to the payment of interest on overdue payments. No rate is specified with respect to any award of damages. Accordingly, I intend to award a sum for interest at the rate of 10%.

[95] The calculation of interest is set out below.

…

[118] A period of well over 5 years has elapsed since Dr Ryan became liable to Worthington Simmons for damages for breach of contract on 29 August, 2011. During that time a hearing, two appeals and a further hearing on the papers have taken place. Dr Ryan has met with some success in each appeal. On this basis, I do not consider it appropriate that he be required to pay interest for the full period from the date of termination to the date he is ordered to pay damages. In the absence of submissions from either party and doing the best I can, I calculate interest on the sum of $65,213.48 from the day after the date of termination of the contract by Worthington Simmons to a date when he might ordinarily have been ordered to pay damages after the first hearing. That is for a period 30 August, 2011 to 30 May, 2013. The amount of interest is $11,416.83.

60. [60]
    Mr Worthington says his cause of action accrued when he lawfully terminated the contract. It was at that date, he says, the amount awarded became payable under the contract and interest was therefore properly payable by Dr Ryan from that date until the date of the final decision.
61. [61]
    Dr Ryan says that Mr Worthington’s claim was for damages for breach of contract, not for an amount payable under the contract. Dr Ryan says that the effect of s 77(3)(c) of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’)^[47] and s 58(2) of the Queensland Building and Construction Commission Regulation 2018 (‘QBCC Regulation’)^[48] is that interest was payable from the date of the decision until the date of payment. He says that the damages were not payable until the decision was made by the tribunal awarding Mr Worthington damages.
62. [62]
    Mr Worthington says that s 77(3)(c) of the QBCC Act gives the tribunal a discretion to award interest on an award of damages from a date preceding the date of the final decision, that is pre-decision interest, and that the effect of Dr Ryan’s submission is that the tribunal could only award post decision interest.
63. [63]
    Mr Worthington also refers to s 59 of the Civil Proceedings Act 2011 (Qld) and says that post decision interest can be claimed by a successful party without the requirement for a tribunal order. Mr Worthington says that if Dr Ryan’s construction of s 58(2) of the Regulation^[49] is preferred, the power to award interest on damages would be little or no benefit to successful parties.
64. [64]
    The tribunal is a creature of statute, having only those powers conferred upon it by the QCAT Act or rules or an enabling Act. The power of the tribunal to award interest in strictly circumscribed by the QCAT Act. By s 14(3) the tribunal may award interest in respect of a minor civil dispute involving a claim to recover a debt or a liquidated demand of money.^[50] By s 50(2) and s 50A (2) an applicant may apply for a decision by default which includes interest on the amount claimed as a debt or liquidated amount at the rate the tribunal considers appropriate.^[51] These provisions do not apply in the present case.
65. [65]
    The Civil Proceedings Act 2011 (Qld) gives a court the power to award interest before judgment. A ‘court’ does not include the tribunal.^[52]
66. [66]
    To find the source of the tribunal’s power to award interest in building disputes, other than in circumstances where a party has applied for a decision by default, one must turn to the enabling Act, the QBCC Act.
67. [67]
    By s 77(3)(a) of the QBCC Act, the tribunal may order the payment of an amount found to be owing by 1 party to another. This may include the payment of interest prescribed under a contract.
68. [68]
    By s 77(3)(c) of the QBCC Act, the tribunal’s powers to resolve a building dispute include the power to award damages, and interest on the damages at the rate, and calculated in the way, prescribed under a regulation. Section 34B of the Queensland Building and Construction Commission Regulation 2003^[53] provides:

3. (1)
   For section 77(2)(c) of the Act, interest is payable on the amount of damages awarded—

(a) if the parties have entered into a contract—at the rate specified under the contract; or

(b) at the rate agreed between the parties; or

(c) otherwise—at the rate of 10%.

3. (2)
   The interest is payable on and from the day after the day that the amount became payable until and including the day the amount is paid.

69. [69]
    Clause 11.8 of the general conditions of the contract entitled the builder to interest on any outstanding amount not paid by the owner at the rate prescribed under the contract calculated from the date the amount became payable until the date of payment. The contract prescribed an interest rate of 15%. In the amended application for domestic building dispute, Mr Worthington claimed interest under the contract or alternatively under the QBCC Act and regulation. The learned member awarded Mr Worthington interest on late payments in accordance with the contract.^[54] Neither party challenges this award. In this appeal, Mr Worthington does not seek to rely upon the contract in relation to the claim for interest but in consequence of an award of general damages.^[55]
70. [70]
    The tribunal’s power to award interest under s 77(3)(c) of the QBCC Act is strictly circumscribed. Interest on damages may be awarded at the rate, and calculated in the way, prescribed under a regulation. The QBCC regulation provides that interest is payable on the amount of damages awarded on and from the date that the amount became payable until and including the day the amount is paid.
71. [71]
    Before turning to consider the ground of appeal in more detail it is first necessary to consider the following issues:

    1. (a)
       What is the scope of the tribunal’s power to award interest in building disputes?
    2. (b)
       Is the monetary award in favour of Mr Worthington in respect of monies payable under the contract or is it an award of damages?
72. [72]
    Section 77 of the QBCC Act sets out a non-exhaustive list of the powers the tribunal may exercise to resolve a building dispute. Section 77(3)(a) empowers the tribunal to order the payment of an amount found to be owing by 1 party to the other. We have referred earlier to s 77(3)(c) and the power of the tribunal to award damages and interest on damages.
73. [73]
    Damages are a substitutionary remedy. A claim for monies due and owing under a contract, with or without interest recoverable under the contract, is a claim for recovery of a debt. Absent a specific contractual entitlement to claim interest, it is evident from s 77 that the legislature intended monetary awards for claims for debts or liquidated demands to be dealt with in a different way to monetary awards for damages. In respect of the latter, the powers of the tribunal to award interest on damages are circumscribed by s 34B of the Regulation. There is no power in the tribunal to award interest on monetary awards for debts or liquidated demands other than in the limited circumstances to which we have earlier referred relating to default decisions.
74. [74]
    Interest on an award of damages is payable on and from the day after the day that the amount became payable. In Miller v Lida Build Pty Ltd ^[56] the Appeal Tribunal held:

The tribunal has power to award interest on damages at the rate and calculated in the way, prescribed under regulation 34B of the Queensland Building and Construction Commission Regulations 2003 (Qld). Regulation 34B(2) provides that interest is payable on and from the day after the day the amount became payable. Until a decision to award damages is made no amount is payable.^[57]

75. [75]
    The decision in Miller was relied upon by the Appeal Tribunal in Harrison and Anor v Meehan.^[58] On appeal, the Court of Appeal held:

This being a claim for unliquidated damages, an amount became “payable” only when there was an amount which had been fixed by an assessment of damages. Regulation 34B is in different terms from s 58(3) of the Civil Proceedings Act 2011 (Qld), which provides that the court may order that there be included, in the amount for which judgment is given, interest at the rate the court considers appropriate for all or part of the period between the date when the cause of action arose and the date of judgment.^[59]

76. [76]
    The learned member awarded interest on the damages payable to Mr Worthington at the rate of 10% for the period 30 August 2011 to 30 May 2013.^[60] The interest award was made pursuant to s 77(3) of the QBCC Act and s 34B of the QBCC Regulation.^[61]
77. [77]
    On a proper construction of s 77(3)(c) of the QBCC Act and s 34B of the QBCC Regulation, the tribunal had no power to award interest on the damages payable to Mr Worthington from the date of termination. It follows that the learned member erred in awarding interest. This error arises from the learned member’s application of s 34B of the QBCC Regulation.
78. [78]
    The question arises as to whether, on a proper construction of the contract, any part of the damages to which Mr Worthington may be entitled fall within clause 11.9 of the general conditions of the contract. However, this was not a matter argued by the parties in the appeals and we therefore do not propose to address the issue further.

Damages for the cost of rectifying defective work

79. [79]
    Mr Worthington’s second ground of appeal is that the Tribunal erred in allowing an amount of $14,135.00 in respect of the cost of the rectification of defective work.
80. [80]
    There are three limbs to this ground of appeal:

    1. (a)
       Mr Worthington says that, in determining the matter, the learned member was only permitted to rely upon the evidence adduced at the first hearing, thereby constraining Dr Ryan to the case he ran at the first hearing. The learned member erred in permitting Dr Ryan to expand his claim to include additional amounts claimed for defective and incomplete work (the first limb);
    2. (b)
       The learned member erred in not distinguishing between incomplete and defective work (the second limb);
    3. (c)
       The third limb, which contains two sub-limbs relating to the assessment of Mr Worthington’s damages:

       1. The learned member found that Dr Ryan was not entitled to recover the cost of rectifying defective building work. This finding is not challenged. In calculating Mr Worthington’s entitlement to damages, the learned member found that it was necessary to take into consideration the saved cost of executing incomplete work. Mr Worthington does not cavil with this approach in principle. He does however say that the learned member erred in not assessing the costs on the basis of the cost to Mr Worthington of completing the work. Mr Worthington;
       2. The learned member found that variations 31, 33, 34 and 35 were not signed by Dr Ryan and no application pursuant to s 84 of the Domestic Building Contracts Act 2000 (Qld) has been made by Mr Worthington. The learned member did not permit recovery of any amount by Mr Worthington for these variations. Mr Worthington, invoking s 3 and s 28 of the QCAT Act, says that in denying him recovery for the non-compliant variations the tribunal did not determine the matter according to the substantial merits of the case (the third limb).

The first limb

81. [81]
    The first decision was set aside in its entirety and the matter ultimately remitted to the tribunal to be determined afresh.^[62] Mr Worthington, relying upon the decision of the High Court in Edwards v Noble,^[63] says that the learned member should have determined the matter on the basis of the evidence adduced at the original hearing. Edwards v Noble is relevant to the question of the regard an appeal court should have for factual findings by the trial judge. It is not relevant for present purposes. Mr Worthington cites no authority for the proposition that, a decision at first instance having been made and then set aside on appeal, those findings not the subject of the appeal may not form part of the hearing of the matter afresh, upon the matter being remitted.
82. [82]
    Mr Worthington says that the learned member erred in failing to determine the matter in accordance with the claims made by the parties at the first hearing. We reject this submission for the reasons outlined above and for the reasons following.
83. [83]
    After the matter was remitted to the tribunal following the decision by the Court of Appeal, directions were made, inter alia, for Dr Ryan to file an amended response and counter application. Dr Ryan filed what was styled the ‘Amended response and second amended counter application’.^[64] The second amended counter application contained a claim for the costs of rectification of defective work in the amount of $77,254.91. Dr Ryan subsequently applied, successfully, to further amend his counter application. This resulted in the filing by Dr Ryan of a ‘Further amended response and second further amended counter application’ in which the amount claimed in respect of damages for defective work increased to $97,939.96.
84. [84]
    At no stage did Mr Worthington appeal the decisions by the tribunal to permit Dr Ryan to enlarge his counter application. It is not now open to Mr Worthington, in this appeal, to mount a collateral attack on these previous decisions of the tribunal.
85. [85]
    In any event, Mr Worthington misapprehends the impugned passage from the reasons in the first decision. The learned member was referring to the entitlement by Dr Ryan to recover the cost of rectification work. As these reasons make clear, in taking into consideration the cost of rectification work, the learned member was taking an orthodox approach to the assessment of the builder’s, and not Dr Ryan’s, entitlement to damages.
86. [86]
    There was no error by the Tribunal in respect of the first limb of this ground of appeal.

The second and third limbs

87. [87]
    Mr Worthington says that the learned member erred in awarding Dr Ryan damages for the cost of rectification of defective work. This error is said to arise by reason of Dr Ryan’s wrongful breach of contract resulting in the lawful termination of the contract by Mr Worthington. The result of this, says Mr Worthington, was that he was not afforded the opportunity to rectify the defects during the defects liability period.
88. [88]
    Mr Worthington relies upon the decision of the New South Wales Supreme Court in Bitannia Pty Ltd v Parkline Constructions Pty Ltd.^[65] That decision may be distinguished on its facts. The contract in Bitannia provided a specific mechanism for the owner to notify the builder of defects which in turn set in train a process for the defects to be remedied. The owner ignored those contractual procedures after they had been invoked and instead sought to recover damages for breach of statutory warranty. Because the owner did not establish the precise nature and extent of the defective work for which the builder was liable by reason of the asserted breach of statutory warranty, the owner did not show that any such defects were not covered by the contractual procedure that had been triggered and was therefore unable to establish damage.
89. [89]
    Mr Worthington also relies upon the decision of the tribunal in Budge v JMK Building Pty Ltd.^[66] In Budge, the tribunal did not accept that it was a general principle in Australian law that a building owner is not entitled to recover the costs of rectification or completion where it denies the building contractor an opportunity to rectify or complete. The tribunal stated:

There are other cases where such breach of the right to rectify during the defects liability period results in the builder being required to pay no more than the cost of the rectification would have been to him (rather than the costs of a third party contractor engaged by the owner) had he been permitted to return.^[67]

90. [90]
    In Budge, the defect liability period had expired prior to the builder being denied access. The result, found the tribunal, was that the builder had no contractual right (or presumably obligation) to return to complete or rectify defective building work.^[68] The decision in Budge does not assist Mr Worthington.
91. [91]
    The expenditure by Dr Ryan on amounts relating to the performance of rectification work arose directly out of his repudiatory conduct and the subsequent termination of the contract. Dr Ryan’s position in the proceedings below appears to have acknowledged this. He submitted that had the contract not been terminated Worthington Simmons would have been put to the expense of rectifying defective work. The result, submitted Dr Ryan, was that if the cost of rectification work was not taken into account in the assessment of the builder’s entitlement to damages the builder would end up in a significantly better position than he would have been in had the contract been fully performed.
92. [92]
    The learned member found:

I find that Dr Ryan is not entitled to recover his claims for the cost of rectification of defective work.  That is work which would ordinarily be attended to during the defects liability period, however, his conduct in breaching the contract which lead to termination of the contract, meant that he effectively prevented Worthington Simmons from attending to any rectification. He should not benefit from his own breach. As at the date of termination of the contract, Dr Ryan had no accrued cause of action for breach of contract arising out of defective work, which would enable him to sustain his claim.

…

I accept the submissions of Dr Ryan that when determining the saved cost of incomplete work, it is necessary to consider the saved cost of undertaking defect rectification work.^[69]

93. [93]
    The learned member correctly found that Dr Ryan had no accrued cause of action as at the date of termination which would enable him to sustain his claim for the costs of rectification work. 
94. [94]
    The learned member referred to the submissions by Dr Ryan that the builder was entitled to be placed in the same situation as if the contract had been performed but that it was not entitled to be placed in a better position, by way of damages, than would have been occupied had the contract been performed.^[70]
95. [95]
    The general rule in assessing damages for breach of contract is that a claimant is entitled to be placed, so far as money can do it, in the same position as they would have been in had the contract been performed.^[71] In other words, the claimant is entitled to recover damages for the loss of the bargain. However, this requires a consideration of the terms of the contract between the parties. Where those terms, in the context of a building contract, impose upon a builder an obligation to rectify defective work then the assessment of the builder’s loss must take into consideration the cost the builder would have incurred in undertaking such rectification work. This requires consideration of whether particular work is defective and what the likely cost to the builder would have been in rectifying the work. This is an orthodox approach to the assessment of damages for breach by a building owner of a building contract. It is not a ‘back door’ means by which a building owner may recover the cost of rectification of defective building work.
96. [96]
    We would add for the sake of completeness that the adjective ‘defective’ when referring to building work in the context we have referred to, regularly encompasses what might also be called ‘incomplete’ work. For example, a section of skirting board may be missing. This might be characterised as both defective and incomplete work. An assessment of the cost of completion work is confined to those discrete items of work not completed by the builder.
97. [97]
    It follows from the above analysis that we reject the submission by Mr Worthington that Dr Ryan’s breach of the contract had the result that the cost of undertaking rectification work, or completion work, should not have been taken into consideration by the learned member in assessing the builder’s entitlement to damages. However, the onus was on Dr Ryan to establish the quantum of the expenditure the builder would have incurred in undertaking the rectification of the defective work or completing incomplete work.^[72] This first required Dr Ryan to establish that the rectification work was both necessary and reasonable.^[73]
98. [98]
    The evidence below as to the cost of completion and rectification work was dealt with by the learned member at [106] to [110] of the reasons. Mr Worthington refers specifically to [108] of the reasons in support of his submission that the learned member erred in failing to distinguish between defective work and incomplete work. At the hearing of the appeal, Mr Worthington clarified this submission. He said that there was no evidence upon which the learned member was entitled to make the findings at [108] in relation to the assessment of the cost of rectification work.
99. [99]
    A report by Mr Millsopp of Navan Building Consultancy Pty Ltd was before the tribunal (the Navan report).^[74] The report was commissioned by Dr Ryan. All but two of the items of defective work referred to by Dr Ryan in the second further amended counter application were dealt with in the Navan report and the joint experts reports.
100. [100]
     The evidence of Mr Fritz and Mr Millsopp in the second joint experts’ report, and the evidence of Mr Millsopp in the Navan report was:

     1. (a)
        Item 1 – pool fence: replacement of 26 brackets. Mr Fritz was of the opinion that the work was not defective. Mr Millsopp was of the opinion that the work was defective. Mr Millsopp opined a rectification cost of $4,650.00. The evidence is unclear as to whether this was GST inclusive or exclusive;
     2. (b)
        Item 2 – ponding of water on tiles: the experts appeared to agree that this was a defect and agreed on the cost of rectification of $1,500.00 plus GST;
     3. (c)
        Item 4 – water damage in meals room: The experts did not agree that this was a defect. Mr Millsopp opined the cost of rectification at $2,000.00. Again, it is unclear whether this amount was inclusive or exclusive of GST;
     4. (d)
        Item 7 – missing timber skirting: Mr Fritz was of the opinion that the work was incomplete and that the cost of completion was $250.00 plus GST. Mr Millsopp agreed;
     5. (e)
        Item 8 – cracked external pavers: Mr Fritz and Mr Millsopp agreed that the pavers were cracked and required replacement and also agreed on the cost of rectification at $1,000.00 plus GST;
     6. (f)
        Item 9 – faulty lighting: the experts agreed further investigation was required. No evidence was led as to the cost of the further investigations;
     7. (g)
        Item 13 – unpainted chamfer boards and screw holes: Mr Fritz considered the work incomplete. Mr Millsopp agreed. The agreed cost of completion work was $450.00 plus GST;
     8. (h)
        Item 14 – rust staining to steel brackets: Mr Fritz and Mr Millsopp agreed that this was not defective work;
     9. (i)
        Item 16 – gas meter in the incorrect location: while the experts agreed that this was a defect, there was no evidence led as to the cost of relocation to the specific location agreed by the experts;
     10. (j)
         Item 17 – overflowing drain: Mr Fritz did not consider this to be a defect. Mr Millsopp opined that the item was a defect and that the cost of rectification was $3,000.00 although it is not clear whether this amount was inclusive or exclusive of GST.
101. [101]
     It is clear from the foregoing that the works might be considered both defective work in the sense that the work was not of an appropriate standard, and incomplete work in the sense that the work had not been completed in accordance with the terms of the contract. As we have observed earlier, we do not consider the distinction to be relevant as contended for by Mr Worthington. The builder’s entitlement to damages fell to be assessed on the basis that he was entitled to be placed in the same position as he would have been in had the contract been performed. Performance of the contract was required according to its terms. This included the completion of the contracted works and the rectification of any defective work, at least insofar as the works had been carried out at the date of termination.
102. [102]
     There is force in the submission by Mr Worthington that the learned member assessed the cost of completion and rectification works, not by reference to the cost Mr Worthington would have incurred had he carried out the work, but by reference to the cost of a third party undertaking the work. There is no evidence as to the basis upon which either Mr Fritz or Mr Millsopp calculated the cost of the completion or rectification works.
103. [103]
     Having said this and noting that the litigation between the parties had been ongoing for a significant period of time, it should have been apparent to both parties that the issue of the consequences of the builder’s termination of the contract was very much alive. It was Dr Ryan’s case that there was defective building work that required rectification. He led evidence of the cost of rectification. It would have been apparent to both parties that, in assessing damages, evidence would be required of the cost to the builder of rectifying defective and incomplete work which was a cost the builder would have incurred in any event had the contractual works been completed.   
104. [104]
     The learned member approached the assessment of the cost of rectification works on the basis of the evidence before the Tribunal. In the absence of evidence to the contrary it was open to the learned member to accept the evidence before the Tribunal as evidence of the likely cost to Worthington Simmons of undertaking the completion and rectification work.
105. [105]
     Mr Worthington’s second ground of appeal is not made out. 

Conclusion in APL163-18

106. [106]
     For the reasons we have outlined, there was error by the learned member in the assessment of Mr Worthington’s entitlement to damages and in determining Mr Worthington’s entitlement to interest.

Conclusion in APL045-17

107. [107]
     There was error by the learned member in allowing interest on the damages awarded to Mr Worthington from the date of the termination of the contract. However, the identified error does not favour Mr Worthington and his appeal therefore fails.
108. [108]
     In calculating the builder’s entitlement to damages, the learned member allowed a total credit for variations of $112,224.36. This included an amount for variation 28 of $1,480.00. In fact, the additional amount of $37,930.00 must be taken into consideration in respect of the landscaping works which the parties agreed the builder would not undertake.
109. [109]
     The result of this is that the amount payable to the builder must be reduced.

Orders

110. [110]
     We will make directions for the parties to file and exchange submissions as to the final form of orders to be made to give effect to these reasons. Those submissions should also include the determination of the issue of the costs of the appeals.