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Gillham v Kernohan Construction Pty Ltd[2022] QCATA 19

Gillham v Kernohan Construction Pty Ltd[2022] QCATA 19

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Gillham v Kernohan Construction Pty Ltd [2022] QCATA 19

PARTIES:

austin gillham

(applicant/appellant)

v

Kernohan Construction Pty Ltd

(respondent)

APPLICATION NO/S:

APL191-19

ORIGINATING
APPLICATION NO/S:

BDL116-15

MATTER TYPE:

Appeals

DELIVERED ON:

14 January 2022

HEARING DATE:

8 October 2020

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

Member Howe

ORDERS:

  1. Leave to appeal is granted;
  2. The appeal is allowed;
  3. The decision of the Tribunal dated 14 June 2019 is varied as follows:
    1. Order 1 is set aside and in lieu thereof it is ordered that Austin Gillham is to pay to Kernohan Construction Pty Ltd t/as Kernohan Construction $1,934.78;
    2. Order 2 is set aside and in lieu thereof it is ordered that a copy of this decision is to be provided by the Registry to Master Builders Queensland and of the funds held by Master Builders Queensland the amount of $1,934.78 is to be paid to Kernohan Construction Pty Ltd t/as Kernohan Construction in satisfaction of the amount due under Order 1 and the balance paid to Austin Gillham.
  4. The parties are to file two (2) copies and exchange (1) copy of submissions on the costs of the appeal, such submissions not to exceed three (3) pages in length, within 14 days of the date of this decision;
  5. The parties are to file two (2) copies and exchange one (1) copy of submissions in reply, such submissions not to exceed three (3) pages in length, within 7 days after receipt of the costs submissions filed and served in accordance with Order 4.
  6. The costs of the appeal will be determined on the papers.

CATCHWORDS:

APPEAL AND NEW TRIAL – APEAL GENERAL PRINCIPLES – RIGHT OF APPEAL – NATURE OF RIGHT – SCOPE AND EFFECT OF APPEAL – APPEALS IN THE STRICT SENSE AND APPEALS BY WAY OF REHEARING – APPEALS BY WAY OF REHEARING – SCOPE AND EFFECT OF REHEARING – where grounds of appeal raise questions of fact and questions of mixed law and fact – consideration of whether to grant leave to appeal – conduct of appeal by way of rehearing pursuant to s 147 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – GENERALLY – PERFORMANCE OF WORK – GENERAL – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF – where builder claimed variation for cost associated with removal and reinstatement of concrete slab – where existence of slab should have been apparent to builder at the time of entering into the contract – where building owner claimed building work defective or incomplete – where building owner asserted payments for variations not complying with the Domestic Building Contracts Act 2000 (Qld) were made by mistake – whether payments made by mistake – whether building owner should be permitted to recover payments – assessment of damages for breach of contract

Domestic Building Contracts Act 2000 (Qld) s 6(5) s 16, s 18(6), s 43, s 67(6), s 82, s 84, s 84(2), s 92

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 135, s 147

Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833

Cochrane v Lees (2021) QCATA 74

Coulton v Holcombe (1986) 162 CLR 1

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353

Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196

J-Corp Pty Ltd v Mladenis [2009] WASCA 157

Harrison and Anor v Meehan [2016] QCATA 197

Hookway v Racing Victoria Limited [2005] VSCA 310

Hope Island Resort Holdings Pty Ltd v Jefferson Properties (Qld) Pty Ltd [2005] QCA 315

Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124

Pickering v McArthur [2005] QCA 294

APPEARANCES &
REPRESENTATION:

Applicant:

Mr M White instructed by Black Bear Legal

Respondent:

Mr I A Erskine instructed by Garland Waddington Solicitors

REASONS FOR DECISION

  1. [1]
    On or about 16 March 2015 Mr Gillham entered into a Master Builders residential building contract with Kernohan Construction Pty Ltd (‘Kernohan’) to undertake extensive renovations of Mr Gillham’s house at the Sunshine Coast. Mr Kernohan was the builder’s director.
  2. [2]
    The contract price was $675,451.84.
  3. [3]
    Kernohan commenced work immediately. By May 2015 the parties had fallen into a dispute about the installation of soffits.
  4. [4]
    In June 2015 Kernohan commenced proceedings against Mr Gillham in the Tribunal.
  5. [5]
    On 7 August 2015 Kernohan ceased work on site and excluded Mr Gillham from the property.
  6. [6]
    On 4 December 2015 Mr Gillham paid an amount of $78,588.32 into the Master Builders Queensland Holding Account and after that gained access to his property.
  7. [7]
    The dispute between the parties came on for hearing in March 2017. In the proceedings Kernohan claimed payment of $78,588.32 from Mr Gillham for monies owing under the contract and Mr Gillham counterclaimed in the sum of $252,185.97 for breach of contract and breach of the provisions of the Domestic Building Contracts Act 2000 (Qld) (‘DBCA’) which then applied.
  8. [8]
    The learned Member who heard the matter ordered that Kernohan be paid $65,840.76 from the Master Builder’s Holding Account and Mr Gillham pay the builder an additional sum of $12,747.56.
  9. [9]
    Mr Gillham seeks leave to appeal that decision. The parties agree all the grounds of appeal concern either claimed errors of fact or mixed law and fact and therefore that leave to appeal is necessary.
  1. [10]
    Leave to appeal will usually only be granted where an appeal is necessary to correct a substantial injustice to the appellant and where there is a reasonable argument that there is an error to be corrected.[1] 

The Grounds of Appeal

  1. [11]
    Mr Gillham raises 34 grounds of appeal.
  2. [12]
    For reasons which shall become clear, it is appropriate to consider Ground 10 first.

Ground 10 – The Member erred by finding Mr. Gillham was liable to pay for the works associated with Variation 1 (remove and reinstate concrete slab around perimeter of the house) having regard to the evidence, in circumstances where the matter said by Kernohan Construction to have given rise to the variation should have been readily ascertainable by Kernohan Construction prior to his entry in to the contract and upon reading the scope of works.

  1. [13]
    The Member accepted the evidence of the experts that this was appropriately a matter of variation arising when trenching for the termite barrier occurred. It is unclear from the evidence led at hearing where the experts expressed an opinion about this. It does not seem to have featured in their reports, either individually or joint. It does not seem to have been raised with them at the hearing.
  2. [14]
    The Member found the existence of a concrete slab under the ground surface was a latent defect within the meaning of the contract. The Member was not satisfied that Kernohan could reasonably have expected to encounter this condition despite attending the site a number of times before signing the contract, because the concrete was below ground.
  3. [15]
    Mr Kernohan gave evidence that his sub-contracting termite barrier specialist found the concrete slab when he attended the site to install the Termimesh barrier. 
  4. [16]
    Mr Gillham says Mr Kernohan came to the site four times before the contract was signed and he should have realised that the concrete slab found under the surface was there.
  5. [17]
    Mr Kernohan said in cross-examination:

… the guy that came to do the termite protection took up the pavers.  He’d already taken up pavers at his pre-start, or his – you know, when he was doing the quote for Austin, he’d taken up some pavers but he hadn’t taken out the – it was like, about 100 mil of road base.  He hadn’t taken that out, so when he came to do the job, he’s taken off the – you know, he’s started taking it up and found this slab.[2]

  1. [18]
    As we have noted, the Member found the buried concrete slab was a latent condition. ‘Latent condition’ is defined under the contract as:

Any physical condition on or around the Land, including surface and subsurface  conditions, which differ materially from the physical conditions reasonably expected by the Contractor at the time the contract was entered into.

  1. [19]
    The Member said the experts accepted that the varied work was required as a result of a latent condition and she accepted the experts’ evidence. Further the Member said  Mr Kernohan could not have been expected to encounter the latent condition on his visits to the property before signing the contract.
  2. [20]
    Mr Gillham submits however that the claimed latent condition was contemplated by the scope of works document. Attention is drawn to the tender documents which included the architectural drawings, where it is stated (twice) ‘existing pavers and bedding to be removed leaving concrete base to support new tiles.’[3]
  3. [21]
    The engineering and architectural drawings formed part of the contract.[4] Again a notation about existing pavers and bedding and an existing concrete base is to be found in both sets of drawings.[5]  An existing concrete slab under existing pavers and bedding surrounding the house was clearly indicated on the drawings. In an engineering drawing the line of the old slab is marked as laid at the point where the outside edge of the new slab is to be laid.[6]
  4. [22]
    As such that existing concrete slab was not a latent condition not reasonably to have been expected to be found by Kernohan at the time the contract was entered into.
  5. [23]
    This was not a discrepancy calling for consideration of the order of precedence of documents clause 3.2 of the general conditions as submitted for Kernohan. The drawings formed part of the contract documents. The presence of the existing concrete slab was noted there. The position of the concrete was tracked on at least one of the drawings. The builder was thereby put on notice about it and it should have been considered in costing the job, including the work necessary to construct termite barriers. In so far as the builder accepted the subcontractor’s quotation, the builder had a responsibility to ensure that the subcontracted work was sufficient in terms of the scope of work of the contract.
  6. [24]
    The experts agreed[7] in their joint report that it was unclear what the circumstances were that presented to Kernohan at the time the variation arose as an issue. Mr Kernohan however explained that at hearing:

Okay.  You say it’s a latent condition?‑‑‑Yeah.

Okay.  If you could show me anywhere in those pages 171 to 175 where the word “latent” appears?‑‑‑It doesn’t.

Okay.  If you look at page 173?‑‑‑Yep.

Can you show me anywhere there in the description where it says “unexpected”?‑‑‑No.

Okay.  So it’s fair to say, then, isn’t it that nowhere in these documents that are attached to your affidavit – sorry, your statement of evidence concerning this variation describe this as latent or unexpected?‑‑‑No.

Okay.  But in suggesting that it’s a latent condition, you’re saying that it’s something that you hadn’t expected?‑‑‑We weren’t expecting it.  Nobody was expecting it.

Okay.  So you discovered the existence of this slab underneath concrete pavers that surrounded the house.  Is that right?‑‑‑There was a – there was a concrete – concrete or clay pavers surrounding the house and then, below that, was the – was a – like a road-base bed and beneath that was a slab. 

Okay.  And, even though you’d been to the site four times, you didn’t, at any stage, inspect this carefully to see if there might be something under there?‑‑‑Well, it was in relation to work with the termite protection and Austin had procured the termite guy and they’d done all the inspections that they felt necessary to provide a quote, which was then passed on to me to use. 

But you agreed with me before that your scope of works included the termite protection?‑‑‑Yeah.[8]

  1. [25]
    To the extent Mr Kernohan appears to have been suggesting the termite control contractor was engaged by Mr Gillham, it is to be noted that the scope of works stated a quotation had been obtained from Cooroy Pest Control but the builder could provide an alternative one.[9]
  2. [26]
    The experts said that it was ‘likely’ that it was a legitimate variation. They do not seem to have considered the notations on the drawings abovementioned. Given that, their finding that the variation in question was likely to have been a legitimate variation lacked substance and in so far as the Member relied on that finding, in turn the Member’s finding lacked reasonable basis in fact.
  3. [27]
    In respect of this ground it is appropriate to grant leave to appeal because the Member appears to have made an error and in result an injustice has been occasioned to Mr Gillham.
  4. [28]
    Given that leave to appeal is granted, the appeal must continue by way of rehearing.

Rehearing

  1. [29]
    A rehearing pursuant to s 147 of the QCAT Act is not a rehearing de novo. It is a rehearing on the record, without rehearing from witnesses. There has been no application made here to adduce additional evidence.
  2. [30]
    The task on rehearing is to correct demonstrated error made in the decision below.
  3. [31]
    In rehearing the matter the Appeal Tribunal must make up its own mind, but in doing that take into account and give appropriate weight to the findings of fact, views and conclusions made by the learned Member below. The rehearing is not a trial afresh and we are not required to examine all the evidence and arrive at our own conclusions on all the evidence.
  4. [32]
    Rather, we adopt the learned Member’s primary findings of fact and conclusions where those findings and conclusions have not been challenged in this appeal and where there is no perceived doubt apprehended in such findings and conclusions.[10]

The appeal

  1. [33]
    Some grounds of appeal are appropriately determined together. That applies to grounds 1 and 19.

Ground 1 – The Member erred by finding that Mr Gillham was not entitled to have deducted $3,136 from Payment Claim 4b having regard to the evidence and the Member’s finding elsewhere that Mr Gillham was entitled to have made a similar deduction from Payment Claim 5.

Ground 19 – The Member erred by finding that Kernohan was not liable to pay Gillham the sum of $4,840 in respect of Scott Schedule Item 3, having regard to the evidence.

  1. [34]
    We note from outset that the appeal has been hindered by the failure to locate and identify the Scott Schedule referred to and relied on at hearing by the parties and by the learned Member in giving her reasons for decision.
  2. [35]
    The transcript of the proceeding before the learned Member reveals that when the Member asked for an opening (given there was no agreed list of issues) the response from the parties’ legal representatives was that an opening would take the day and guidance as to issues could be derived from ‘the Scott Schedule’. One would think, given the numerous issues for resolution and voluminous material presented, in the absence of an agreed list of issues an opening was essential.
  3. [36]
    It may be that the Scott Schedule was appended to another document tendered in evidence, but the parties’ current legal representatives, different to those appearing at the hearing below, have been unable to locate a document which corresponds in all respects with the one relied on and referred to by the Member throughout her reasons for decision. The document they say that most closely corresponds and a copy of which the parties’ current legal representatives have submitted to the Appeal Tribunal shall be relied on and referred in these reasons as the Scott Schedule.
  4. [37]
    The scope of work under the contract included supply and installation of metal fascia and gutter and gutter guard.
  5. [38]
    Kernohan issued progress claim 4b on 21 May 2015 for $202,697.68. Part of that was a claim for 80% of the work associated with metal fascia and gutter in an amount of $3,136. Kernohan attributed an amount of $3,920 as the cost of metal fascia and guttering provided under the original scope of work.
  6. [39]
    The evidence below was to the effect that Mr Gillham forgot that part of the original scope of work included supply and installation of gutter guard. He therefore asked Mr Kernohan to quote for that as an extra by way of variation. The quote was for $4,840. At hearing Mr Kernohan said the quote was for an expensive stainless steel gutter guard product. Mr Gillham rejected the quote.
  7. [40]
    Kernohan issued progress claim 5 on 18 June 2015 claiming the balance 20% of the work for metal fascia and gutter in an amount of $784.
  8. [41]
    The Member agreed with the expert witnesses that supply and installation of gutter guard was from outset within the original scope of work of the contract. The failure to supply and install that was incomplete work and the reasonable cost to Mr Gillham to have that done was $1,651.72 which was recoverable from Kernohan.
  9. [42]
    Mr Gillham says the Member erred in awarding him $1,651.72. He claims it should have been $4,840, the amount Mr Kernohan quoted for gutter guard rather than the amount suggested as reasonable by the expert witnesses. He says Mr Kernohan’s quote was the true value of the work.
  10. [43]
    In the Scott Schedule the experts referred to page 25 of the expert Mr Dixon’s report. Page 25 suggests powder coated aluminium gutter guard should be used and the experts agreed that the cost for supply and installation was $1,651.72.
  11. [44]
    Mr Kernohan’s quote of $4,840 was for an entirely different product, stainless steel gutter guard. Mr Gillham rejected stainless steel gutter guard. He is not entitled to it now as the basis of cost to complete work. The experts considered powder coated aluminium gutter guard sufficient, and given there was no specified type identified in the scope of work, that seems an appropriate and reasonable conclusion, particularly given Mr Kernohan said at hearing that the other end of the range for this type of product was plastic, costing mere hundreds of dollars.
  12. [45]
    It seems clear that Kernohan did all the work associated with the fascia and gutters save for the gutter guard and a small item of incomplete work valued at $187.21 and that amount was also awarded to Mr Gillham.[11] It is not clear what that further incomplete work was, given item 27 in the Scott Schedule provided to the Appeal Tribunal is blank.
  13. [46]
    Mr Kernohan was entitled to payment for the work done less the cost to Mr Gillham to complete the work. This was the effect of the Member’s order and there is no error shown in end result.

Ground 2 – the Member erred by finding that Mr Gillham was not entitled to have deducted $5000 from payment claim 5 having regard to the evidence, including:

  1. (a)
    the expert evidence that the variation in soffit sheeting resulted in a considerable reduction in cost to Kernohan Construction; and
  2. (b)
    the evidence that Kernohan Construction had misled Mr Gillham in respect of the availability of 9 mm FC soffit sheeting.

Ground 17 – The Member erred by finding no amount was payable by Kernohan Construction to Mr. Gillham in respect of Scott Schedule Item 1 (the soffits), having regard to the evidence.

  1. [47]
    The learned Member found Mr Gillham was not entitled to withhold $5,000 from progress claim 4b for claimed savings to the builder in using different soffit sheeting to that specified.
  2. [48]
    Mr Gillham claims the expert evidence was that there was a considerable reduction in cost to Kernohan with the change. That was not the effect of the expert evidence however.
  3. [49]
    There was no sheeting detail in the specifications. There was mention made in the plans however. Drawing 7 of 14 called for ‘9mm FC sheeting to soffits. Joints to be set. No plastic joins.’ Drawing 6 of 14 referred to ‘9mm FC sheeting flush fitting to soffits. Joints to be set. No plastic joins.’
  4. [50]
    But instead, Kernohan used 6mm Hardiflex sheeting with plastic joins. Mr Kernohan’s evidence was that he was worried that using 9mm Villaboard, which he understood was the intended product with the reference to 9mm sheeting with set joints, would end up cracking at those joints. His evidence was that he told Mr Gillham that.
  5. [51]
    The Member noted the experts had agreed with the builder that use of 9mm Villaboard sheets accorded with the reference in the drawings to soffits of 9mm FC sheeting set without plastic joiners.
  6. [52]
    The builder’s evidence was that the difference in using 6mm FC sheeting as opposed to using 9mm Villaboard sheeting was cost neutral. At hearing Mr Kernohan said the difference in the quoted cost of materials at the relevant time was a mere $38.
  7. [53]
    Mr Carpenter, one of the experts, agreed the true cost (that is the cost quoted to Mr Kernohan) superseded an estimated cost based on published averages[12] and Mr Dixon did not disagree with that.
  8. [54]
    Mr Kernohan also provided detailed evidence about the labour component in fixing (and in the case of Villaboard, setting) each product. The experts did not challenge Mr Kernohan’s detailed explanation of the advantages and disadvantages of each method which had roughly similar cost outcomes, save they differed on whether the Villaboard should be fixed along the soffits as opposed to perpendicular to the run of the soffits, the latter possibly offering less loss.
  9. [55]
    But on the difference in labour costs, there was no great disagreement. Mr Carpenter said it would be a real problem to try and choose between the two, 6mm Hardiflex or 9mm Villaboard.[13] Mr Dixon also thought it was fairly balanced between the two[14] (if only one trade was used, a plasterer, to fix and set the Villaboard).[15]
  10. [56]
    We determine that the change to the soffits was cost neutral. The independent experts’ evidence does not conflict with that of the builder in any significant regard.
  11. [57]
    As to Mr Kernohan misleading Mr Gillham in respect of the availability of 9mm FC soffit sheeting, there was a conflict of evidence over what was actually said by Kernohan to Gillham when the builder discussed changing to 6mm Hardiflex using plastic joiners.
  12. [58]
    There was a discussion between the parties about the use of the products. Mr Kernohan  said he was primarily concerned with the setting aspect of soffit sheets. He was worried they would crack (at the joints).
  13. [59]
    Mr Gillham’s evidence was that Mr Kernohan told him 9mm FC sheets were not available and instead he proposed to use 9mm Villaboard. Mr Gillham said he did not understand the significance of the different jointing methods as it related to acoustic quality. The use of 6mm sheets joined by plastic joiners was acoustically inferior to set 9mm sheets. Mr Gillham subsequently made his own enquiries and discovered 9mm FC sheets (not Villaboard) were available. He claimed to have been misled by Mr Kernohan and in consequence agreed to use of an acoustically inferior product.
  14. [60]
    The contract was not a design contract. Mr Gillham may have considered the acoustics of the building important but it was no part of the role required of Kernohan as builder:

…in an ordinary building contract the builder is only responsible for bringing the works to completion according to their design.[16]

  1. [61]
    Further, after the discussion with Gillham, Mr Kernohan awaited advice from Mr Gillham’s acoustic engineer and his project manager, the latter having building experience. The builder was instructed by the project manager that it was ‘Ok to use 6mm FC sheeting’.[17] The acoustic engineer did not give evidence at the hearing.
  2. [62]
    The builder gave the following evidence in cross-examination:

Okay.  So did you say to Mr Gillham that 9 millimetre FC sheeting means Hardiflex?‑‑‑Did I say that?  No.

No?‑‑‑No.

Okay.  Did you say to Mr ‑ ‑ ‑?‑‑‑Hardiflex doesn’t come in 9 mill.

Okay.  Did you say that FC sheeting normally means Hardiflex?‑‑‑I said that – I said there’s confusion about the term, because generally when people would say FC they’re talking about Hardiflex.  But you can’t read that as Hardiflex, because it’s asking for 9 mill FC sheeting ‑ ‑ ‑

Yeah?‑‑‑ ‑ ‑ ‑ with set joints, which is villaboard.

Right?‑‑‑Because villaboard is also an FC product.

Okay.  Is there any other FC product that you could do 9 millimetre FC joints for that would be this specification?‑‑‑That would meet that specification?  No.

Okay.  So there was no other product available?‑‑‑No, not that you can set the joints.

Okay.  So you say that you said to Mr Gillham that there’s no nine millimetre FC sheeting, meaning Hardiflex, that meets this specification?‑‑‑No.  I told him that I was concerned with using the villaboard because the joins were set, and the joins would crack.  My recollection is that we then went out to his place, and he showed me what was on the ceiling out there, and told me that he wanted to use that, and he was happy with the plastic joins ‑ ‑ ‑

Right?‑‑‑ ‑ ‑ ‑ and I told him then that that’s Hardiflex which is also an FC product, but it’s not available in nine mil.[18]

  1. [63]
    The Member had ample opportunity over four days of hearing to decide on the credibility of the evidence given by the parties. Whilst the Member said she accepted that Mr Gillham recalled that Mr Kernohan told him that 9mm FC sheets were no longer available,[19] she otherwise expressed considerable doubt about the accuracy of his recollection of discussions with Mr Kernohan.[20]
  2. [64]
    Mr Kernohan’s evidence was simply that he told Mr Gillham he had concerns about using ‘9mm FC sheets with set joints’ as called for in the drawings. He raised the matter with Mr Gillham who consulted with the project manager, Mr Hermon, and Mr Kernohan subsequently received written instructions from Mr Hermon to use 6mm FC sheets with plastic joins.
  3. [65]
    Mr Kernohan gave no thought to acoustic design, but as stated above, acoustic design was no part of his responsibility.
  4. [66]
    We determine, as did the learned Member, that if there was loss of acoustic performance in the use of 6mm FC sheets, it was not attributable to any failure by the builder in performing his responsibilities under the contract.
  5. [67]
    Mr Kernohan was entitled to be paid for the work done.
  6. [68]
    These grounds of appeal fail.

Ground 3 - the member erred by awarding interest on moneys withheld by Mr Gillham from payment claim 5 by reference to the period 1460 days instead of 1442 days.

  1. [69]
    The difference claimed by Mr Gillham here is $38.94. This was a matter for correction under s 135 of the QCAT Act. Having said that, the mathematical error is conceded by Mr Kernohan.

Ground 4 – the member erred by finding Mr Gillham was not entitled to have deducted $7,500 from payment claim 6 and the Practical Completion Claim having regard to the evidence, including that the ducted air-conditioning system was not completed until after Mr Gillham took possession of the property.

  1. [70]
    Mr Gillham’s submissions clarify that this ground relates to the air-conditioning provisional sum under the contract. Kernohan claimed the balance of $7,500 because the builder’s work was finished.
  2. [71]
    Prior to the hearing Mr Gillham abandoned his claim to this deduction.[21]
  3. [72]
    In line with that there was no challenge to his evidence at hearing that the work was finished. It is inappropriate to raise it now on appeal. The issues for consideration on appeal are not open ended. Parties are normally bound by the case led at trial as explained in Coulton v Holcombe (1986) 162 CLR 1:

It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main area for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish…. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v. Gundowda Pty. Ltd. [1950] HCA 35; (1950) 81 CLR 418, at p 438; Bloemen v. The Commonwealth (1975) 49 ALJR 219.[22]

  1. [73]
    The case may be different where a question of law is raised for the first time in appeal upon the construction of a document or upon facts that are either admitted or proved beyond controversy,[23] but that was not the case here.
  2. [74]
    This ground of appeal cannot be pursued now.

Ground 5 – The member erred by finding Mr Gillham was not entitled to have deducted $1,821.60 from payment claim 6 and the practical completion claim having regard to the evidence.

  1. [75]
    This ground of appeal concerns a deduction from a payment made by Mr Gillham from a professional cleaning claim made by Kernohan. The Member accepted Mr Gillham was justified in deducting $562.88 from the amount of $1,821.60 claimed by the builder in progress claim 6, which left the builder with $1,258.72. She said the builder’s claim was over-stated.
  2. [76]
    The Member explained that the allowance was made but what was said subsequently in considering the builder’s claim to the balance at practical completion should be taken into account.[24]
  3. [77]
    What was said subsequently was that Mr Gillham was entitled to claim $1,064.56 for the cost of cleaning left undone at practical completion.[25]
  4. [78]
    Mr Gillham submits however that given that allowance and given the Member noted (and accepted) the experts’ evidence that Kernohan had failed to clean the site, her earlier award to Kernohan had been wrong.
  5. [79]
    Whilst there is nothing by way of commentary from the independent experts in the Scott Schedule the experts make comment about cleaning in their individual reports. 
  6. [80]
    Mr Dixon stated he could say little because his inspection occurred late. He was provided with photographs by Mr Gillham suggesting cleaning had not been done but he could not verify them.
  7. [81]
    Mr Carpenter said:

At the time of my inspection I observed the internal condition of the property appeared as if a builders (sic) clean had been carried out, dust on surfaces is a likely result from months of sitting vacant. In my opinion the property had been cleaned of builder’s rubbish.[26]

  1. [82]
    Accepting that some cleaning was done, which we do, Kernohan recovered only $194.12 for this work at end of day.
  2. [83]
    The award to the builder was reasonable. It was not significant. There was no error. This ground of appeal fails.

Ground 6 – The Member erred by finding Mr. Gillham was not entitled to have deducted $5,229.29 from Payment Claim 6 and the Practical Completion Claim having regard to the evidence.

  1. [84]
    Kernohan claimed $5,229.29 as the final amount of builder’s margin owing. That was premature because final completion had not been achieved.
  2. [85]
    The Member determined progress claim 6 was not superseded by the practical completion claim, but that both were distinct claims made through invoices 3219 and 3222 respectively.[27] She also found that Mr Gillham had no right of retention for defects or omissions.[28] Those findings are not challenged by Mr Gillham.
  3. [86]
    Mr Gillham claims the award fails to take into consideration the builder’s margin that he says should have been removed from the contract by variations 20 and 22 concerning painting and Armorflex. That complaint is the subject of ground of appeal 12 considered below.
  4. [87]
    Ground of appeal 12 fails for the reasons given.
  5. [88]
    In so far as the ground of appeal is therefore to be understood as simply a challenge to the amount by which the margin claimed in progress claim 6 was reduced by the Member, a reduction of the margin by half was open on the evidence in the absence of precise evidence as to completion of work at the stage of progress claim 6 from the parties. Certainly there is no indication from Mr Gillham what percentage award should have been made.
  6. [89]
    We find no error here to be corrected.

Ground 7 – The Member erred in awarding interest to Kernohan Construction at the rate of 5% per annum in respect of the payment of monies deposited into the Master Builders Holding Account by Mr. Gillham on or about 3 December 2015.

  1. [90]
    The interest awarded was that provided for by the contract for overdue payments. By clause 11.9 of the General Conditions, Mr Gillham was obliged to pay Kernohan interest on outstanding amounts at 5% from the date payment was due until actual date of payment.
  2. [91]
    Clause 11.9 makes no allowance or exception for money in dispute paid into the Master Builder’s Holding Account. What is surely decisive is the date when payment for those monies fell due. The dispute resolution provisions do not alter the effect of clause 11.9 which focuses on the date of payment due. The dispute resolution process merely allows the parties an opportunity to explore the date due.
  3. [92]
    Mr Gillham complains the matter took the Member significant time to determine. That is true, however, the matter was complex and made difficult by the conduct of the proceedings by the parties, not least of which were the numerous minor and unnecessary matters raised as disputes requiring determination despite being of relatively trivial commercial value.
  4. [93]
    Both parties were subject to the same delay and both parties were recipients of interest awards over the same period. Mr Gillham says neither party should be penalised by delay, but contends he should not have to pay interest to Mr Kernohan. He does not address the issue of his award of interest payable by Mr Kernohan, and whether Mr Kernohan should similarly be relieved from payment of that interest.
  5. [94]
    Had the Member excluded a period referrable to delay in giving reasons for decision from award of interest, given Mr Gillham was awarded interest on monies payable to him by Kernohan at 10% rather than the award to Kernohan of interest at 5%, on monies due by Mr Gillham, Mr Gillham’s would have been the greater loss.
  6. [95]
    Mr Gillham does not say what order the Appeal Tribunal should make if he was successful on this ground of appeal. Indeed the matter was not raised with the learned Member at first instance.
  7. [96]
    There is no error made by the Member in the award of interest. This ground of appeal fails.

Ground 8 – The Member erred by finding Kernohan Construction was entitled to payment for variations claimed in circumstances where the member had found those variations did not comply with the Domestic Building Contracts Act 2000 (Qld).

Ground 9 – The Member erred by failing to find that Mr. Gillham had paid for variations claimed by Kernohan Construction by mistake, having regard to the evidence.

  1. [97]
    The learned Member said this about mistake in the reasons for decision:

[138] Mr Gillham contends that the Builder did not comply with the requirements of part 7 of the DBC Act and with General Condition clause 12 in respect of variations. He submits that the Builder’s claim should be discounted by $60,626.04 because none of the variations complied with the DBC Act and the Contract and that to the extent that Mr Gillham has paid for variations such payments represent a mistake of law or fact as to the Builder’s entitlement to receive payment and seeks restitution of amounts paid.

…

[141] Further Mr Gillham contends in respect of any payment made by him in respect of any of the variations such payment represents a mistake of law (if not also a mistake of fact) as to the Builder’s entitlement to receive payment and that given the protective elements of the DBC Act they cannot be waived or disregarded. He claims that the Builder should therefore make restitution in respect of any payment made for variations claimed by the Builder.[29]

  1. [98]
    Counsel addressed Grounds 8 and 9 together.
  2. [99]
    Mr Gillham complains first that whilst the Member found that in the majority of cases the variations to the contract did not comply with the statutory requirements for variations applicable at the time by Part 7 of the Domestic Building Contracts Act 2000 (Qld) (‘DBCA’), she took the variations into account in assessing his damages relying on the Appeal Tribunal decision of Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196.
  3. [100]
    But Mr Gillham raised an issue of mistake in payment of non-compliant variations where no such issue was considered in Greer v Mt Cotton Constructions Pty Ltd. Indeed it was expressly stated in Greer v Mt Cotton Constructions Pty Ltd that mistaken payment for non-compliant variations not having been raised in the original hearing, the Appeal Tribunal refused to consider the matter on the appeal.
  4. [101]
    Mr Gillham says he paid for non-compliant variations holding the mistaken belief at the time that Kernohan was entitled to recover payment for them.
  5. [102]
    It seems to us that the first matter to be addressed is the proposition that the variations were not recoverable by Kernohan.
  6. [103]
    The DBCA has now been repealed with the majority of the provisions (less the draconian penalty of non-recovery for non-compliant variations) now to be found in Schedule 1B to the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’).
  7. [104]
    By s 84 of the DBCA:

Right of building contractor to recover amount for variation

(1) This section applies if—

(a) the building contractor under a regulated contract gives effect to a variation of the contract; and

(b) the variation consists of—

(i) an addition to the subject work; or

(ii) an omission from the subject work that results in the building contractor incurring additional costs.

(2) If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation—

(a) only if the building contractor has complied with sections 79, 80, 82 and 83; or

(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.

(3) If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation—

(a) only if—

(i) the building contractor has complied with sections 79, 80, 82 and 83; and

(ii) the ground of unforeseen circumstances applies; or

(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.

(4) The tribunal may approve the recovery of an amount by a building contractor for a variation only if the tribunal is satisfied that—

(a) either of the following applies—

(i) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation;

(ii) the building contractor would suffer unreasonable hardship by the operation of subsection (2)(a) or (3)(a); and

(b) it would not be unfair to the building owner for the building contractor to recover an amount.

  1. [105]
    As can be seen, where a variation has been sought by a building owner, s 84(2) restricts a builder’s right to recover an amount for a variation to circumstances where either the requirements of ss 79, 80, 82 and 83 have been met or the Tribunal approves recovery of an amount by the builder.
  2. [106]
    The operative word in s 84(2) is ‘recover’, and there is no intention evidenced in the provision that failure to comply with the statutory requirements for variations makes the contract (or the variations) illegal, void or unenforceable. Indeed, s 92 of the DBCA provides:

92 Effect of failure by building contractor to comply with requirement

Unless the contrary intention appears in this Act, a failure by a building contractor to comply with a requirement under this Act in relation to a domestic building contract does not make the contract illegal, void or unenforceable.[30]

  1. [107]
    The DBCA does not prohibit parties agreeing to non-compliant variations. The strictures imposed by s 84(2) affect only the recovery rights of the builder to such. The owner’s rights regarding non-compliant variations are apparently left unaffected.
  2. [108]
    Examining further the scheme of the DBCA, by s 16 a variation of a domestic building contract is simply defined as an addition to or subtraction from the scope of work of the contract. By s 6(5) if a contract is varied the total amount payable under the contract is a reference to the total amount payable under the contract as varied. By s 18(6):

(6) If the contract is varied but the building contractor has not complied with a variation provision for the variation, the stated completion date or period—

(a) must be adjusted to take account of any reduction in the number of days required to carry out the subject work; and

(b) may, with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor, be adjusted to take account of any additional days required to carry out the subject work.

  1. [109]
    The price and completion date under a contract may change as dictated by non-compliant (but agreed) variations. What is different about non-compliant variations however is that the builder’s right to recover an amount for them is limited where they are non-compliant with the DBCA statutory provisions.
  2. [110]
    As explained in Greer v Mt Cotton Constructions Pty Ltd, the limitation imposed on a builder permitting ‘recovery’ of non-compliant variations is to be contrasted with section 42 of the QBCC Act, which precludes all entitlement ‘to any monetary or other consideration for doing (building work)’ in contravention of licensing requirements (save for the cost of material and labour to the builder).
  3. [111]
    There is nothing in s 84 of the DBCA or generally Part 7 to suggest that where the owner has voluntarily paid the builder the price for non-compliant variations, that s 84 operates to restrict or prevent the builder from receiving and retaining such voluntary payments.
  4. [112]
    In the leading decision on recovery of mistaken payments, David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, the High Court said:

… the rule precluding recovery of moneys paid under a mistake of law should be held not to form part of the law in Australia. In referring to moneys paid under a mistake of law, we intend to refer to circumstances where the plaintiff pays moneys to a recipient who is not legally entitled to receive them. It would not, for example, extend to a case where the moneys were paid under a mistaken belief that they were legally due and owing under a particular clause of a particular contract when in fact they were legally due and owing to the recipient under another clause or contract….[31]

  1. [113]
    The High Court rejected the distinction between payments made under a mistake of law and payments made under a mistake of fact and held that the rule precluding recovery of monies paid under a mistake of law no longer formed part of the law in Australia.
  2. [114]
    Recovery based upon mistake is a restitutionary remedy. The unjust enrichment of the recipient is the crucial factor in determining restitution.[32]
  3. [115]
    The threshold question is whether a payment has been made by ‘mistake’.
  4. [116]
    Where a payee is legally entitled to the payment of monies, a payment which is voluntary will not be recoverable on the grounds of mistake.[33]  A payment is voluntary where the payer has made a conscious choice to make a payment notwithstanding any possible defects in the claim. Ignorance of the law may be a basis for restitution.[34]
  5. [117]
    The party asserting the mistake has the onus of proving both the mistake upon which it relies and that it was that mistake which caused it to make the payment. In David Securities Pty Ltd v Commonwealth Bank of Australia the High Court explained the onus of proof as follows:

47. … The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust ((79) Westpac Banking Corporation (1988) 164 CLR, at p 673). There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust.

…

57. It might be said that to order restitution in the present case would, in the absence of any other defences, confer something in the nature of a windfall upon the appellants at the expense of the respondent. This possible result flows from the fact that, having proven mistake, the appellants are prima facie entitled to recovery and the respondent bears the onus of proving why an order for restitution would be unjust. (underlining added)

  1. [118]
    It is necessary to examine whether, and if he did, in what way Mr Gillham raised an issue of mistake in seeking to recover amounts paid to Kernohan for non-compliant variations.
  2. [119]
    Mr Gillham was given leave to file an amended response and counter-application (the ARC) at the commencement of the hearing below. The only reference to mistake in the ARC was at paragraph 32 where Mr Gillham asserted that he paid variation VA01 in the mistaken belief that the works the subject of the variation were included in the contractual scope of works.
  3. [120]
    Mr Gillham’s evidence did not address the issue of mistake relating to the payments for the non-compliant variations. Importantly, there was no evidence by Mr Gillham that the mistake he relied upon was causative of the payments.
  4. [121]
    Indeed, the first occasion on which Mr Gillham addressed the issue of payment by mistake relating to the non-compliant variations was in his closing submissions. He submitted that the payments represented a mistake of law, if not also a mistake of fact, as to the builder’s entitlement to receive payment.
  5. [122]
    In our view, as explained, Part 7 of the DBCA did not prohibit Kernohan from seeking and receiving payment for non-compliant variations. We therefore do not accept that there was any operative mistake by Mr Gillham in making the payments.
  6. [123]
    However even if we are wrong and the DBCA prohibited the builder from seeking payment for non-compliant variations, there was no direct evidence by Mr Gillham, or any other witness, that the mistake was causative of the payments. There was no evidence from Mr Gillham about his state of mind at the time he made the payments. There was no evidence by Mr Gillham, for example, that he considered he was under a legal obligation to make the payments or that he even turned his mind to the issue. Mr Gillham did not assert that any of the building work, the subject of the non-compliant variations, was not carried out by Kernohan. Mr Gillham did not assert that the work was not agreed between the parties or that Mr Gillham has not enjoyed the benefit of that work.
  7. [124]
    Counsel for Mr Gillham said the highest he could put the matter from an evidentiary perspective was that there was an inference of mistake. He does not, however, identify any facts established at hearing from which any such inference might reasonably be drawn.
  1. [125]
    As we have observed, the issue of mistaken payment, other than as set out in the ARC (which confined the issue to one variation), was raised for the first time by Mr Gillham in his closing submissions. Certainly, Mr Kernohan was given no opportunity to call evidence about mistaken payment at least to the extent of the issue as it was belatedly raised by Mr Gillham.  
  1. [126]
    Notwithstanding our conclusion regarding whether the payments for the non-compliant variations were made by mistake, in our view Mr Kernohan should not be called upon now, in an appeal conducted by way of rehearing, to respond to a case by Mr Gillham not articulated in the ARC or the subject of evidence in the proceedings below:

It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v. Gundowda Pty. Ltd. [1950] HCA 35; (1950) 81 CLR 418, at p 438; Bloemen v. The Commonwealth (1975) 49 ALJR 219.[35]

  1. [127]
    These grounds of appeal fail.

Ground 10 – The Member erred by finding Mr. Gillham was liable to pay for the works associated with Variation 1 (remove and reinstate concrete slab around perimeter of the house) having regard to the evidence, in circumstances where the matter said by Kernohan Construction to have given rise to the variation should have been readily ascertainable by Kernohan Construction prior to his entry in to the contract and upon reading the scope of works.

  1. [128]
    We reiterate that the existing concrete slab was not a latent condition not reasonably to have been expected to be found by Kernohan at the time the contract was entered into. This ground of appeal succeeds.
  2. [129]
    The agreed price of the contract covered performance of this work. The cost of the variation was $10,773.84. Mr Gillham was entitled to reimbursement of this amount by the builder.

Ground 11 – The Member erred by finding Mr. Gillham was not entitled to be reimbursed in respect of amounts paid pursuant to Variations 10 and 12, having regard to the evidence.

Ground 34 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $7,700.00 in respect of Scott Schedule Item 75 (level bedding along north patio not supplied and installed), having regard to the evidence.

  1. [130]
    These grounds are appropriately addressed together.
  2. [131]
    Under the contract Kernohan was to install level bedding along the length of the northern patio after existing pavers were removed in preparation for laying new tiles.
  3. [132]
    Kernohan claimed two variations to the contract associated with tiling the patio.
  4. [133]
    By variation 10 dated 3 June 2015 entitled patio slab, he sought approval for the following additional work: ‘top exiting (sic) patio slab with reinforced concrete slab in preparation for tiles. 124 m2 @ $50/m2.’ The contract price was increased by $7,502 which included a builder’s margin of $682.
  5. [134]
    By variation 12 on 4 June 2015 entitled extra to patio slab, approval for the following additional work was sought: ‘Top existing patio slab with reinforced concrete slab in preparation for tiles additional 12 m2 @ $50/m2 between pool and linai (sic).’ The contract price was increased by $726 which included a builder’s margin of $60.
  6. [135]
    Both variations were paid but Mr Gillham sought a credit for the cost of installing level bedding within the original scope of work of the contract but which he said was not required given the variations.
  7. [136]
    In an email of 14 July 2015 Mr Gillham wrote to Kernohan about variations 10 and 12 to say the variations had been sought by Kernohan on the basis that it was necessary to provide a suitable surface on which to lay new tiles, to provide suitable fall, to avoid a large step down from the house and to marry up with the existing pavers at the east and west ends of the house.[36]
  8. [137]
    At hearing Mr Kernohan gave the following evidence:

That’s right.  Now, you poured an additional concrete slab around that new tiled area, didn’t you?   We poured it the full – do I give you the background?

If you like?   Yeah, okay.  So in my tendered submission, I’d allowed a standard cement bedding of 50 mil to get fall out of there, okay?  When it came – you know, once we get on site and we’re doing the demolition and we’re getting ready, getting this – getting prepared to tile – even though the tiles weren’t there, but in any case – I come to Austin, I say, mate, there’s a 100 mil step, all right?  You know, a 100 mil step, when you’re getting old – you know, maybe we should top this with concrete so that you’ll get a flush, you know.  I can just set it up so that the sub-seal on the window comes straight onto your tiled patio.  It saves you having to step down out of the door.  Austin says, yep, that’s – that’s great.  Give me a variation to do a concrete slab in there.

Yep?   Okay.  So I did a concrete slab in there.[37]

  1. [138]
    In his statement of evidence of 17 February 2017, Mr Kernohan addressed Mr Gillham’s claim for a credit for the original level bedding work as follows:

71 In relation to the purported credit for level bedding along northern patio, the provisional sum for tiling included an allowance of 50mm bedding for the tiles to achieve fall. In my view bedding of more than 50mm is not acceptable.

72 During the construction of the works, the respondent requested the application (sic) to infill the entire patio with a concrete slab (refer variation 12).

73 The cost of the 50mm bedding which is part of the tiler’s scope, will be reconciled once the tiling of the northern patio is complete, as part of the reconciliation of the provisional sum.[38]

  1. [139]
    That statement of evidence is to be understood in circumstances where the contract remained on foot and Kernohan had suspended work and commenced proceedings in the Tribunal to recover outstanding money due for progress claims.
  2. [140]
    The cost of tiling was a provisional sum. This means it was an estimate of the cost of the work. The estimate in the contract was $16,375 excluding GST and with GST, $18,012.50.
  3. [141]
    An amount representing approximately 40% of the work (tiling labour) was claimed in progress claim 5. An additional 12% (11.79%) was claimed in progress claim 6. An amount of approximately 52% of the allowance had not been claimed.
  4. [142]
    The following findings of the learned Member are not challenged in the appeal:
    1. (a)
      the remaining provisional sum allowance of $8,684.50 was not claimed by the builder;
    2. (b)
      Mr Gillham was responsible for supplying the tiles;
    3. (c)
      the parties discussed deleting the northern patio tiling work from the Contract because the tiles had not at that time been delivered and there was some doubt as to when they would be on site;
    4. (d)
      Kernohan conditionally agreed to Mr Gillham’s offer to delete the works from the Contract if the tiles had not been delivered by Practical Completion but no formal variation was signed;
    5. (e)
      the work had not been performed prior to Kernohan claiming Practical Completion because the tiles were not delivered to site until 3 August 2015 after the Builder claimed Practical Completion. The Practical Completion claim did not claim the balance of the provisional sum for tiling labour, consistent with its agreed deletion;
    6. (f)
      the remaining allowance was $7,895 (excl GST) or $8,684.50 (incl GST), which was not invoiced by Kernohan;
    7. (g)
      the parties accepted the experts’ evidence that the cost to complete the work was $10,615.37 (excl builder’s margin and GST). This was an amount in excess of the remaining allowance.
  5. [143]
    The learned Member correctly stated that where the actual cost of completing the tiling work exceeded the provisional sum allowed in the contract, the excess would be added to the contract price.
  6. [144]
    There was therefore no credit due Mr Gillham here. Had the tiling work been completed, the agreed cost of that would have resulted in Mr Gillham having to pay more.
  7. [145]
    There was no error made by the Member. These grounds of appeal fail.

Ground 12 – The Member erred by finding Mr. Gillham was not entitled to make further deduction in respect of builder’s margin from Variations 20 and 22, having regard to the evidence.

  1. [146]
    The parties agree that ‘painting’ and ‘application of Armourflex coating’ were removed from the contract through variations 20 and 22 respectively.[39] Credits of $33,000 and $11,000 were allowed Mr Gillham. Mr Gillham says the builder’s margins on that work were retained by Kernohan and should also have been credited. The Member rejected Mr Gillham’s claim to recover the builder’s margins.
  2. [147]
    The Member accepted that the reason for the variation was Kernohan discovering that the contractor arranged by Mr Gillham to do the work was unlicensed, which the Member said was good reason. We concur.
  3. [148]
    The term ‘builder’s margin’ is not defined in the subject contract. Generally it covers the builder’s administrative costs, overheads and profit for the job.
  4. [149]
    The experts’ view was that industry practice dictated the builder was entitled to keep his builder’s margin on the work lost to him under the contract. Further the builder had expended time and effort liaising with Mr Gillham’s preferred contractor before discovering he was unlicensed.
  5. [150]
    There is provision in the contract for the addition of a builder’s margin where a variation increases the cost of a job, but no mention made about builder’s margin where work is removed from the job, either by agreement or in compliance with statutory requirements.[40]
  6. [151]
    The variation documents did not extend to removing the builder’s margin from the contract price. Mr Gillham agreed with the variation as drafted. The loss of a builder’s margin in addition to loss of the work variation, all due to the direction by Mr Gillham to engage an unlicensed contractor finds no support under the contractual provisions. By s 43 of the DBCA, Kernohan as builder warranted that the work would be carried out in accordance with all relevant laws and legal requirements including the Building Act 1975 (Qld). The claim to margin by the builder was both reasonable and justifiable.
  7. [152]
    It is appropriate to give effect to the variations as drafted, which means nothing more than the amounts agreed between the parties be removed from the contract.
  8. [153]
    Mr Gillham is not entitled to an additional credit for the builder’s margins.

Ground 13 – The Member erred by finding that Mr. Gillham was entitled to liquidated damages for the period 19 June 2015 to 7 August 2015, and not for the period 19 June 2015 to 4 December 2015, having regard to the evidence.

Ground 14 – The Member erred by finding that Kernohan Construction validly suspended works under the Contract on 7 August 2015.

  1. [154]
    These grounds are conveniently dealt with together.
  2. [155]
    The learned Member found the practical completion date was validly extended to 18 June 2015.
  3. [156]
    After that date passed without practical completion having been achieved, Kernohan was exposed to payment of liquidated damages. But the obligation to pay liquidated damages was suspended on 7 August 2015 with Kernohan issuing a notice of suspension of works on the basis that Mr Gillham had committed a substantial breach of the contract in failing to pay the builder’s progress claim 6. By clause 16.2 of the general conditions the practical completion stage is deemed to be automatically extended by a period equivalent to the date of giving the notice of suspension until the date the contractor recommences work.
  4. [157]
    By clause 16.3, Mr Gillham was required to remedy the breach stated in the notice of suspension within 10 business days. He did not do that. No further work was performed on the job by Kernohan. Accordingly the Member found no additional liquidated damages ever became payable.
  5. [158]
    Progress claim 6 was issued on (Monday) 20 July 2015. Under the contract it was to be paid within 10 business days,[41] which meant by 3 August 2015.
  6. [159]
    On 24 July 2015 Kernohan issued a claim for practical completion. Under the contract it was to be paid within 12 business days,[42] which meant by 14 August 2015.
  7. [160]
    The Member found that the practical completion claim by Kernohan on 24 July 2015 was premature and invalid. Given a final certificate was not issued for the work until 30 July 2015, that finding was correct (clause 17.1(b)(iii) contract; s 67(6) DBCA definition practical completion(a)). What was outstanding work was not minor defects and omissions.
  8. [161]
    Mr Gillham argues the Member erred in not allowing Mr Gillham to offset Kernohan’s claim under progress claim 6 by the liquidated damages owed Mr Gillham for failure to complete on time. If that had been allowed, says Mr Gillham, then nothing was owed to Kernohan and Kernohan was therefore not entitled to suspend work under the contract.
  9. [162]
    Kernohan suspended work under the contract on 7 August 2015 by reason of the failure to pay progress claim 6. Mr Gillham claims the suspension of work was based on Mr Gillham’s failure to pay the ‘final payment claim’[43] and that had not fallen due when the work was suspended. The reference to the ‘final payment claim’ is intended to refer to the claim for practical completion which consisted of an invoice and an accompanying document detailing completion of work on the project and concluding with a statement that the total of ‘this claim’ was $78.558.29. That latter total is the amount of shortfall payment to Kernohan  under various progress claims, including the practical completion claim.
  10. [163]
    Mr Kernohan ave evidence at hearing that the claim for practical completion consisted only of the invoice which was for $6,351.51, and it was accompanied by another document provide to assist Mr Gillham ‘… to see where the overall project is.  The actual claims – you know, claim 5 is – the amount of that claim is reflected in the invoice.’[44]
  11. [164]
    The Member addressed the invoice and accompanying document in the reasons for decision and accepted Mr Keronhan’s evidence about this.[45] There was no challenge to that evidence.
  12. [165]
    We determine that suspension of the work was because of, and based on, the failure by Mr Gillham to pay progress claim 6, which claim fell due for payment on 3 August 2015.
  13. [166]
    The date for payment of the practical completion claim (13 August 2015) had not yet fallen due when the contract was suspended. Clause 18.2 of the general conditions of contract provided that liquidated damages could only be deducted by the owner from the practical completion payment. Mr Gillham was therefore not entitled to offset progress claim 6 by any claim to liquidated damages.
  14. [167]
    Kernohan issuing the practical completion claim on 24 July 2019 when practical completion had not been achieved did not alter Mr Gillham’s obligation to pay progress claim 6. By clause 11.8 of the contract the parties had agreed that the owner would have no right of set off under the contract or otherwise to deduct any amount from a progress payment due the contractor, or to hold any retentions for defects or omissions.
  15. [168]
    Mr Gillham failed to pay progress claim 6 by 3 August 2015 and on 7 August 2015, Mr Kernohan suspended work under the contract. Mr Kernohan  was entitled to issue progress claim 6 when he did and was entitled to suspend work based on the general conditions of contract when progress claim 6 was not paid.
  16. [169]
    By clause 16 of the contract, practical completion was suspended until the builder recommenced work and the builder was not obliged to recommence work until the breach by the owner was remedied. That only occurred on 4 December 2016 when Mr Gillham paid money into the Master Builders Queensland Holding Account.
  17. [170]
    We find no error to be corrected.

Ground 15 – The Member erred by finding that Mr. Gillham was not entitled to claim actual damages in addition to liquidated damages for loss incurred in the period subsequent to the period to which liquidated damages applied.

  1. [171]
    Mr Gillham claimed liquidated damages up to 4 December 2015, the date of his payment of money into the Master Builders Queensland Holding Account. He also claimed $28,932 for actual delay damages after that through to 31 March 2016.
  2. [172]
    That claim comprised such things as the upkeep of the worksite property and a property where Mr and Mrs Gillham resided after 5 December 2015 until 31 March 2016 and loss of rental income and land tax.
  1. [173]
    The learned Member refused Mr Gillham’s claim to actual damages in addition to liquidated damages.
  1. [174]
    The Member said:

[335] Mr Gillham contends that the liquidated damages clause does not preclude him from claiming actual damages that accrued after he obtained possession on the basis that the liquidated damages clause does not purport to provide an exclusive remedy. The final submissions rely upon a discussion in Brooking on Building Contracts. The passage refers to rights conferred upon a proper construction of the relevant contract and also to rights upon termination of the contract by an owner. The latter it suggests would give rise to not only liquidated damages, which had accrued prior to termination but also potentially to general damages, where there had been acceptance of a repudiation.

[336] Mr Gillham contends that as the Builder repudiated the Contract it is not entitled to rely upon its terms to limit its damages to that set out in the liquidated damages clause. For the reasons outlined elsewhere in these reasons, I am not satisfied that Mr Gillham validly terminated the Contract and therefore I am not satisfied Mr Gillham is entitled to general damages upon the asserted repudiation by the Builder.

…

[356] Where a liquidated damages clause provides an amount is recoverable by the owner for delayed completion the authorities overwhelmingly support the view that they are an exhaustive remedy for delay and function as a liability cap even if the actual loss is more than the amount calculated by reference to the amount fixed by the parties as part of the risk allocation when the contract was formed.

  1. [175]
    A liquidated damages provision is a genuine pre-estimate of loss or damage owner faces if not completed on time. Accordingly, if the contract is completed, there are no additional damages claimable.
  2. [176]
    In Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188 Burns J was asked to consider the award of an arbitrator in respect of a construction contract in which a liquidated damages provision had been completed with the insertion ‘$Nil’. He said with respect to the general principle applying where there is an amount fixed:

66. Where parties to a contract fix an amount payable on liquidated damages in the event of a breach of the agreement, that amount will bind the parties in the event of breach, provided it is not out of all proportion to the breach and void as a penalty. In such a case, it does not matter whether the actual losses are greater or smaller than the amount fixed, the parties are bound by the agreement: Diestal v Stevenson [1906] 2 KB 345; Cellulose Acetate Silk Co Ltd v Widnes Foundry (1925) Ltd [1933] AC 20. Particular questions, however, may arise where parties use a standard form contract which, on its face, suggests that there is no entitlement to liquidated damages.

  1. [177]
    His Honour also referred to the decision of J-Corp Pty Ltd v Mladenis [2009] WASCA 157 where the building contract also provided for ‘$Nil’ liquidated damages. There Newnes JA upheld the decision of the primary judge based on the interpretation of the relevant provision of the contract, and applying the common law principle that clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of contract arising by operation of law, whilst drawing a distinction between contracts which provided for the liability of the builder in a positive amount, and those which provided for ‘$Nil’ damages:

32 The essential question to be determined on this appeal is whether the primary judge erred in finding that, on its proper construction, the Contract did not exclude any entitlement of the respondents to claim unliquidated damages for a breach by the appellant of its obligation to complete the work by the time specified in the Contract.[46]

  1. [178]
    In J-Corp Pty Ltd[47] Buss JA said:

It is well established that an intention to exclude the common law right to damages for breach of contract must be expressed in clear and unambiguous terms. See, for example, Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 [23] (Gleeson CJ, Gaudron & Gummow JJ); Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2) [2005] SASC 483; (2007) 23 BCL 347 [66] (Besanko J).

It is true that a claim by a proprietor against a builder for late completion under a building contract, whether for liquidated damages at an agreed rate or for unliquidated common law damages, involves a single cause of action for the same loss. See Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30, 33 (Nourse LJ). In other words, a claim for liquidated damages at an agreed rate and a claim for unliquidated common law damages in respect of the same loss are not separate heads of damage.

However, this point of principle does not preclude the parties to a building contract from agreeing that the proprietor will be confined to the common law right to damages for any breach by the builder of its obligation to complete the works by a specified date. The intention of the parties in this respect turns on the proper construction of the particular contract.

  1. [179]
    In the matter at hand we conclude the contract evidences the parties agreement that damages for delay would be assessed by way of the liquidated damages provision at the agreed rate. The rate was not token. Mr Gillham includes as part of the contract documents the general conditions of contract which extend to twenty-nine pages. Pages twenty-two to twenty-nine are entitled Contract Information Statement. By s 40 DBCA this document was required to be given to the owner at or before contracting. The document clearly informs a home owner that:

In contracts for domestic building work, the term liquidated damages refers to payments by the contractor to compensate the owner for costs/losses they incur in the event the work is not completed within the timeframe allowed for in the contract. The DBC Act does not stipulate a maximum or minimum amount per day for liquidated damages which a home owner is entitled to write into the contract. The owner should carefully consider this contract provision. The appropriate amount will depend on the nature of the work and the owner’s individual circumstances. For full home construction the amount would be a genuine pre-estimate of costs which would typically include a daily allowance for rent, storage of furniture/personal effects etc., directly attributable to the delay in the completion date, not a penalty. The contract provides for a default rate for liquidated damages of $50/day, where nothing is stated in the contract schedule.

  1. [180]
    The learned Member found Mr Gillham to be a sophisticated owner. Whilst Mr Gillham claimed no experience in construction or renovation[48] he had the benefit of experienced advisors prior to contract. Mr Hermon the project manager took approximately 14 months to put together a tender package.[49]
  2. [181]
    The default amount under item 18 of the schedule to the contract was $50 per day. Mr Gillham markedly increased that to $400 per day under the contract. We conclude this was a genuine pre-estimate of the damages delay in achieving practical completion would entail without Mr Gillham being put to proof, and any entitlement to additional general damages was intended to be excluded.
  3. [182]
    The Member found that to be the case and found accordingly. There was no error. The evidence of Mr Ponsonby was not relevant in these circumstances.

Ground 16 – The Member erred by applying a builder’s margin of 10% in respect of Mr. Gillham’s claims for omitted or defective work in circumstances where the expert evidence indicated the application of a builder’s margin of 15% would be appropriate.

  1. [183]
    The Member explained why she allowed a builder’s margin of 10% rather than 15%:

[403] Whilst Mr Gillham has a duty to mitigate his loss I am not inclined to allow the Builder to return to rectify the defects or complete the incomplete works. Given the relationship between the parties, demonstrated by the fact that claims for less than $20 have been pursued and defended, that is likely to promote further disputes between them. If Mr Gillham had permitted the Builder to rectify the items admitted then his loss would have been less. The Builder continued to assert during the hearing its willingness to return to rectify and complete works. While the experts’ evidence was that 15% would be appropriate in particular in respect of defective work, in these circumstances, on balance, I find that a reasonable margin is 10%.

  1. [184]
    There was no finding that Mr Kernohan had repudiated the contract. The contract remained on foot. The contract made provision for the builder to attend during the defects liability period to rectify or complete minor defective and incomplete work. The learned Member pointed out many insignificant and trivial issues were elevated unnecessarily, and it was appropriate that the builder not return.
  2. [185]
    Had the builder been permitted to return, he would have been able to rectify many of the defects or incomplete work at cost price.[50] Certainly the cost would have been less than that charged by an independent builder who seeks to recover a profit. To offset what was an unfair disadvantage to the builder caused by the disputatious relationship between the parties, the Member reduced the margin on rectification and completion work performed by another contractor to 10%.
  3. [186]
    It was an appropriate balance to limit the disadvantage caused the builder in refusing him the opportunity to return to address such matters. There is no error to be corrected.

Ground 18 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the costs of relocating pavers in respect of Scott Schedule Item 2 (the Gazebo), having regard to the evidence.

  1. [187]
    Under the contract the gazebo was to be relocated. Mr Kernohan claimed uplifting the pavers under the gazebo was not part of that work. Mr Gillham disagreed.
  2. [188]
    There was a scope of work document forming part of the contract documents. In the scope of work the reference to the gazebo was simply:

Relocate gazebo to owner’s direction elsewhere on site (possibly by motorised crane)

  1. [189]
    There was no mention of removal of pavers as part of that work. The reference to performing work by crane suggests the scope of work concerns the standing structure. We reject the suggestion by Mr Gillham that the removal of pavers beneath the structure was an inherent aspect of the work.
  2. [190]
    The experts found similarly and were not challenged at hearing about that.
  3. [191]
    The learned Member was entitled to decide as she did. There is no error shown.

Ground 20 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $1,296.00 in respect of Scott Schedule Item 4, having regard to the evidence.

Ground 22 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $1,602.00 in respect of Scott Schedule Item 28 (support for hot water cylinders in the roof), having regard to the evidence.

Ground 23 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $5,280.00 in respect of Scott Schedule Item 35 (repair of multiple scratches to double glazed units), having regard to the evidence.

Ground 24 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $1,441.00 in respect of Scott Schedule Item 36 (defects in aluminium joinery), having regard to the evidence.

  1. [192]
    Dealing initially with ground 20, the air-conditioning unit, the contract called for the removal of an existing stand-a-lone air-conditioning unit from the master bedroom to an outside building. Mr Gillham claims the builder failed to complete the work but damaged the unit in the process, rendering it useless for re-installation. He claims the cost of a new unit.
  2. [193]
    There was no evidence about the cost of a new unit. The quotation obtained by Mr Gillham was also to re-install the existing second hand unit.
  3. [194]
    The independent experts gave their estimate of the cost of installation and the Member preferred that to the much larger figure quoted by the outside contractor. The Member was entitled to prefer that evidence.
  4. [195]
    The claim about damage to the existing unit was not put to Mr Kernohan at the hearing, nor the independent experts. The quotation from the other contractor made no mention of damage in its quotation.
  5. [196]
    The Member was entitled to conclude as she did. Mr Gillham simply seeks to re-litigate a matter that has been decided on no more substantive basis than he disagrees with the decision. He fails to show any error however in the decision. The decision was open to the Member on the evidence.
  6. [197]
    This ground fails, as too do Grounds of appeal 22, 23 and 24, on similar bases, namely an attempt at re-litigation on appeal without identifying error made by the learned Member. The Member preferred the evidence of the independent experts, who were well qualified to give their opinion evidence, had attended the premises in question and were intimately acquainted with the issues and who attended at hearing to be examined. The same cannot be said for those contractors contacted by Mr Gillham who did not attend to give an explanation for their estimates.

Ground 21 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $7,498.92 in respect of Scott Schedule Item 10 (creation of garden swale for drainage purposes), having regard to the evidence.

  1. [198]
    The independent experts differed on the costs of completing construction of a swale on the property.
  2. [199]
    The learned Member accepted the evidence of Mr Carpenter in this instance. Mr Dixon suggested a much higher cost attributable to the cost of importing soil to raise the land to create a swale, whereas Mr Carpenter considered excavation of the existing terrain would suffice.
  3. [200]
    Mr Carpenter gave the following evidence;

MR CARPENTER:   The – my opinion is the ground levels that are at the building at the moment are, as you pointed out, the paving level and the top of the septic tank level, are on a downward slope to the gully pits.  There is – I don’t believe there is any provision to put fill in that area.  Now, basically – when we talk about a swale we are talking about a depression in the ground.  We’re not talking about a bund.  We’re not – we’re not building up.  It’s actually a depression in the ground to lower that water.  And with the fixed levels that we have around in the footpath area, we need to drop from the footpath to the gullies.[51]

  1. [201]
    By contrast Mr Dixon said:

MR DIXON:   Yes.  And I – I began my explanation of this whole thing in my report by saying that there is a distinct lack of detail with regard to the swales. 

MR HARDY:   When it comes to that, you’ve said, “What is a swale,” then you’ve used the word – it involves a “bund”, but as Mr Carpenter said, a swale is really a hollow, isn’t it?

MR DIXON:   Well ‑ ‑ ‑

MR HARDY:   A low or a hollow?  It’s not a bund?

MR DIXON:   Well, to assist – to assist the tribunal, or anybody reading my reports, I actually included two diagrams or photographs within my report, which I extracted as typical swales.  Now, my report, that would be on page ‑ ‑ ‑

MR HARDY:   Page 32?

MR DIXON:   Thank you very much.  Yes, and those photographs were put in there again to indicate what I would interpret to be a swale, or what is interpreted by others to be a swale. 

MR HARDY:   And what they show is a hollow, don’t they?

MR DIXON:   They do. 

MR HARDY:   Yes.  And next, finally from me, Mr Dixon, when you look at the detail on the drawings of the site plan 2 of 14, what it says is, if I look at the right-hand side, the words, “Ground to be graded so that NODA water ponds and falls away from residence”?

MR DIXON:   Yes. 

MR HARDY:   It doesn’t say “fill to be brought in”?

MR DIXON:   No, it does not. 

MR HARDY:   And that’s an indication, isn’t it, that what’s required is to move the soil, not import soil?

MR DIXON:   It’s indicating to move soil around, to grade it in a direction and it doesn’t ‑ ‑ ‑

MR HARDY:   Yes.  And the direction is indicated on the plan?

MR DIXON:   It doesn’t – it doesn’t use the word “excavate” nor does it use the word “import”.  Like I said, this is my interpretation of how I would create a swale.[52]

  1. [202]
    The Member noted the contract did not mention importing fill. It contemplated grading the ground.[53] Architectural plan 2 of 14 contains the following description: ‘Ground to be graded so that no water ponds & falls away from Residence.’[54]
  2. [203]
    There is little assistance to be gained from the tender documents. That simply bears the comment: ‘Construct drainage swale as shown.’[55]
  3. [204]
    Mr Carpenter thought the swales should be understood as depressions and the drawings suggested a priority of drainage away from the residence. Mr Dixon agreed at end, during cross-examination, that the examples of swales he gave in his report suggested hollows.[56]
  4. [205]
    Given the paucity of evidence on the point, the Member was entitled to construe the contractual obligation concerning construction of swales as she did, finding there was no obligation on the builder to import soil, but rather to simply grade the earth.
  5. [206]
    Accordingly she was entitled to accept the cost estimate of Mr Carpenter rather than that of Mr Dixon.
  6. [207]
    The Member made no error that calls for correction.

Ground 25 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $28,417.00 in respect of Scott Schedule Item 38 (failure to rectify gaps between internal walls and ceilings) and $280.50 in respect of Scott Schedule Item 39 (cost of removing sample cornices to reveal gaps), having regard to the evidence, including the evidence that Kernohan Construction had agreed to remedy this defect as part of the scope of works through his earlier discussions with Mr. Gillham.

  1. [208]
    In the course of construction Mr Gillham spoke to Mr Kernohan about gaps at the top of internal walls and the ceilings. He asked Mr Kernohan to make sure the gaps were filled before cornices were fitted. His evidence is that Mr Kernohan agreed to do so.
  2. [209]
    At about 13 May 2016 Mr Gillham engaged a builder to remove some cornice to check whether there were gaps. Gaps were found.
  3. [210]
    Mr Gillham sought to recover the costs of removing all cornices for gaps and to rectify with sealant. The cost quoted by another builder to do that was $28,417.
  4. [211]
    The Member was not satisfied that Mr Kernohan was obliged to seal gaps as demanded by Mr Gillham pursuant to the terms of contract.
  5. [212]
    She found even if the builder had been in breach of the contract in failing to fill the gap behind the cornice, she did not accept the costs of rectification quoted by the independent builder were reasonable and she would prefer the joint expert evidence that the reasonable costs of rectification was $2,208.40 (excluding builder’s margin and GST).
  6. [213]
    Further, she found insufficient evidence to quantify the extent of the claimed defective work requiring rectification.
  7. [214]
    The Member noted the scope of work document referred to in the specifications was a contract document. It provided for 2 methods of fixing cornice. Method 1 provided:

Cornice to be cemented to walls leaving a space of approximately 3 to 5mm between the top edge of cornice and underside of plasterboard. This gap is to be filled with any paintable resilience silicon.

  1. [215]
    Method 2 stated that cornices were to be fitted ‘as per normal practice.’
  2. [216]
    The ceiling plan provided for method 1 to be used in the master bedroom and bedroom 2, and method 2 throughout the balance of the residence.
  3. [217]
    In fact however the complaint by Mr Gillham had nothing to do with the cornice. What Mr Gillham wanted Mr Kernohan to do was fill the gap between the walls and ceilings hidden behind the cornice.
  4. [218]
    That was not part of the original scope of work of the contract. Nor was any variation for that work agreed. Mr Kernohan’s evidence at the hearing below was as follows:

But there’s no mention anywhere in that scope of works about the wall ceiling junction except where it says that they wanted to leave a five mil gap between the top of the cornice and the ceiling to separate the wall from the ceiling.

Okay.  Notwithstanding that, you say you received a direction to bring the gap between the ceiling and the walls tight;  is that fair?‑‑‑At some point during the installation of the ceiling and the cornice and the rendering of the walls, Austin has come on sit (sic) and he’s looked at the gaps and he’s asked me to do – at some point, I started to address it.

Okay?‑‑‑Generally, we brought the render up.

Okay.  You didn’t submit a variation for that work?‑‑‑No.

Okay?‑‑‑At this point, it seemed pointless to submit a variation for it.  I just did the work so that we could move on.[57]

…

I was prepared to do it without a variation because I couldn’t be bothered with the haggling.  I still maintain that it wasn’t necessary.[58]

  1. [219]
    This was no agreed variation of the scope of work of the contract. There was no consideration offered or agreed for performance of additional work required of the builder. Kernohan’s acquiescence to the extra work seems simply to have been intended to avoid confrontation with Mr Gillham.
  2. [220]
    We conclude that Mr Gillham in fact believed filling the gap between walls and ceilings was part of the original scope of work. In an email of 26 May 2015 he wrote to Mr Kernohan to say:

…

I was also astounded to find that the renderer was proposing to install the cornice in the formal lounge and thus simply cover up the yawning gap between the top of the wall on the N elevation and the ceiling. It is bad enough that such an atrocious example of the bricklayer’s art was allowed to arise in the first place without Tyron needing to chase you to ensure this gap was filled in appropriately on both the interior and exterior. To find that the former has still not been carried out, presumably in the hope that what the eye doesn’t see, the heart can’t grieve over, is shocking. I can’t help but wonder how often a similar approach has been adopted elsewhere. I emphasis this is not a problem of the render’s making but the builder’s responsibility. You were aware from the outset of the importance we placed on acoustic considerations and it defeats the considerable lengths and costs we have gone to elsewhere if gaps are left in the core fabric of the building, ie. The brick walls.[59]

  1. [221]
    As stated, filling the gaps between walls and ceilings formed no part of the original scope of work.
  2. [222]
    Mr Kernohan said gaps up to 20mm were industry standard.[60] He also said however that:

The reason that you leave a gap between the walls and the ceiling is so there’s a – like, a construction joint.  So if the walls were to move, they won’t crack the ceiling.  It’s industry standard.  You leave them 10 mil back.[61]

  1. [223]
    At hearing Mr Dixon said normal practice was not to seal the gap.[62] Mr Carpenter agreed and was asked what gap was appropriate and his response was any gap, as long as the cornice covered the gap.[63]
  2. [224]
    Mr Gillham submits the experts agreed that the gaps exceeded industry standards. He refers to Scott Schedule item 39. Item 39 deals with installation of a hatchway in the Scott Schedule in the Appeal book. Item 53 in the Scott Schedule seems to be the appropriate item.
  3. [225]
    There the experts suggested a cost to remove cornice and fill the gaps between walls and ceilings. Their evidence on this however was premised, incorrectly, on the proposition that the specification ‘emphasised a high level of acoustic performance.’[64]
  4. [226]
    We are not prepared to find that gaps between walls and ceilings exceeding 10mm was defective work.
  5. [227]
    There was no error made by the Member denying Mr Gillham’s claim to remove cornice, inspect for gaps and fill the gaps between walls and ceilings at the cost of the builder.
  6. [228]
    This ground fails.

Ground 26 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $172.50 in respect of Scott Schedule Item 44, having regard to the evidence.

  1. [229]
    Mr Gillham claimed half the cost of cleaning a rainwater tank. Mr Gillham claimed that construction dirt and rubbish went into the tank during the build. Mr Kernohan  disagreed.
  2. [230]
    What was agreed was that cleaning out the water tank was not part of the scope of work under the contract. Kernohan connected an inflow water to the tank line by drilling a hole in the top of the concrete water tank. Mr Kernohan said in evidence that it was only the drilled out concrete core from the hole that fell into the tank and stirred the existing ‘muck’.[65] That had been done just before handover. He said there was a sluice valve that diverted any contaminated water from reaching the tank.
  3. [231]
    Mr Kernohan said they were told not to drink the water before they started work because it was contaminated. He described the water in the tank from outset as filthy, with mould thick on top and toads swimming inside.[66]
  4. [232]
    Those claims were not challenged at hearing.
  5. [233]
    Mr Gillham claimed some debris may have entered the tank during construction and therefore the learned Member should have allowed half his claimed costs of cleaning.
  6. [234]
    We disagree. There is no challenge Mr Kernohan’s evidence and we accept the tank’s pre-existing condition was as he described. The builder was not responsible for any contamination and not responsible for any cleaning costs.
  7. [235]
    This ground of appeal fails.

Ground 27 – The Member erred by finding Kernohan Construction was only liable to pay Mr. Gillham the sum of $500.00 in respect of Scott Schedule Item 53 (removal of rafters, roof trusses and roof sheets), having regard to the evidence.

  1. [236]
    The Member found at [550] that she was not satisfied on the evidence that, following an agreement between the parties to vary the contract relating to the ownership of unfixed and demolished materials, two-thirds of the materials were removed from site.
  2. [237]
    The agreement so called was an email from Mr Kernohan to the project manager Tyron Herman enquiring whether Mr Gillham had plans for old trusses and roofing iron. Mr Kernohan said if Mr Gillham had no plans for them an employee had arranged for them to be taken away by someone in exchange for beer for the workers. He asked to be advised.[67]
  3. [238]
    Mr Gillham replied later that day by email saying he intended to invite demolition firms to look at the old trusses, lintels etc, and therefore Mr Kernohan should leave them for the time being.[68]
  4. [239]
    Mr Kernohan’s employee was apparently not privy to the email exchange and had agreed to sell them for $250 to a buyer. On 30 May 2015 Mr Gillham stopped the buyer from removing the old trusses and roofing iron. The employee and the buyer agreed to pay Mr Gillham $500 each for the material.
  5. [240]
    Mr Gillham claims that sale accounted for about one third the old trusses and roofing iron from the site. He claimed the rest was removed before 30 May 2015. He sought an amount of $3,433.21 for the missing material.
  6. [241]
    The Member found there was no evidence how the other material was removed after 11 May 2015. That is not challenged and indeed Mr Gillham agrees the only evidence before the Member about missing material was his evidence that he noticed that the rest of the material was missing when he looked on 30 May 2015.
  7. [242]
    It is questionable whether the emails relied on did constitute agreement revesting ownership in Mr Gillham. It is questionable whether Mr Gillham was entitled to charge Mr Kernohan’s employee for the old material. It is questionable how Mr Kernohan could be responsible for any claim by Mr Gillham brought against the employee.
  8. [243]
    Be that as it may, Mr Kernohan did not much challenge the issue. Mr Gillham’s award of $500 is not the subject of appeal.
  9. [244]
    The Member was entitled to conclude as she did about not allowing a claim for the value of missing second hand material against Mr Kernohan.
  10. [245]
    There is no error to be corrected.

Ground 28 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $9,066.20 in respect of Scott Schedule Item 57 (4 Sash or ‘Aneeta’ windows), having regard to the evidence.

  1. [246]
    Mr Gillham complains he obtained a quotation for replacement of the incorrectly installed sash (framed) windows with sashless windows for $9,066.20. He says that the Member erred in preferring the cost suggested by the expert Mr Dixon of $6,046.78.
  2. [247]
    There is no Scott Schedule item 57 concerning Sash or ‘Aneeta’ windows in the Joint experts Scott Schedule copied in the Appeal Book.[69]
  3. [248]
    There is a discussion about sashless windows at item 82 of the Scott Schedule provided in the Appeal Book, however there is no reference there to a quoted cost of replacement of the windows.
  4. [249]
    At page 695 of the Appeal book there is reference to a G James Glass quotation for $5,497.08 and a quote obtained by Mr Gillham for $8,242 from Horizon Glass. The experts comment that the Horizon quotation ‘excludes reveals, trims and ‘make good’ to existing surfaces.’
  5. [250]
    The learned Member was entitled to prefer the evidence of the experts that the reasonable cost of replacement was the lesser amount.
  6. [251]
    This ground of appeal fails.

Ground 29 – The Member erred by failing to apply a builder’s margin to the amount ordered to be paid by Kernohan Construction to Mr. Gillham in respect of Scott Schedule Item 57.

  1. [252]
    The matter of a builder’s margin added to the cost of replacing the sashless windows referred to in Ground of appeal 28 was not raised below.
  2. [253]
    But in any case, according to the expert Mr Dixon, the quotation was for the custom manufacture, delivery to site, removal of the existing windows and replace them with four new double glazed windows.[70]
  3. [254]
    Given all the work could be accomplished by direct engagement with the manufacturer, there is no supervising builder required and therefore no builder’s margin to be added to the cost.
  4. [255]
    This ground of appeal cannot succeed.

Ground 30 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $854.85 in respect of Scott Schedule Item 61 (rebate regarding shortened walkway), having regard to the evidence.

  1. [256]
    During the course of the works the parties agreed to change the metal walkway where it joined the tiled house roof given the difficulty of joining different building products at differently constructed heights.  They agreed to shorten the walkway to avoid meeting at the roof.
  2. [257]
    The experts costed the work involved in joining the structures at $675.76 excluding margin and GST. Adding a 15% margin and GST the amount sought by Mr Gillham as a cost saving to the builder was $854.85.
  3. [258]
    The builder’s evidence was that foreshortening the walkway took extra work including cutting off the end bay of the pre-existing walkway at the same rake as the house and installing new rafters and fascia’s to line up.
  4. [259]
    The Member accepted Mr Kernohan’s evidence. The builder’s explanation was both logical and reasonable. The Member was entitled to accept it and offset any costs saved in not finishing the walkway at the house by the additional costs incurred in stopping it short to find that the extra cost cancelled any potential saving by changing the build.
  5. [260]
    This ground of appeal fails.

Ground 31 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $302.93 in respect of Scott Schedule Item 70 (failure to reinstate pre-existing manholes to roof space), having regard to the evidence.

  1. [261]
    The Member preferred the evidence of the joint experts as to cost of rectification rather than the quoted cost from someone who did not give evidence. The Member reduced the margin to 10 per cent because she was not allowing the builder to return to rectify which unfairly increased the cost of rectification to him otherwise possible save for the poor relationship between the parties as explained above in considering Ground 16.
  2. [262]
    There is no error identified in the decision other thanMr Gillham contests the lesser allowance.
  3. [263]
    This ground of appeal does not succeed.

Ground 32 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $220.00 in respect of Scott Schedule Item 73 (cost of installation of safe), having regard to the evidence.

  1. [264]
    The Member accepted the joint experts’ estimate of the reasonable cost of installation of a safe as $62.99.
  2. [265]
    Mr Gillham says he obtained a quotation from a locksmith for $220 and that should have been accepted as the cost for one safe not three.
  3. [266]
    Mr Gillham claims the Member misconstrued the quotation and believed the quotation was the cost of installation for three safes.
  4. [267]
    That is not correct. The Member clearly accepts in her reasons for decision that the quotation contemplates the supply and installation of one safe.[71]
  5. [268]
    The Member preferred the estimate of the joint experts however to the quotation in circumstances where the locksmith did not attend to give evidence. The work required under the contract was installation of a safe only, not delivery, and the quotation included the cost of supply.
  6. [269]
    The Member was entitled to prefer the evidence of the independent experts.
  7. [270]
    There was no error.

Ground 33 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $440.00 in respect of Scott Schedule Item 74 (termite control credit), having regard to the evidence.

  1. [271]
    Mr Gillham as owner was precluded by the terms of the contract from giving directions to the builder’s employees or subcontractors. In breach of that prohibition he negotiated directly with the builder’s pest control subcontractor for a variation to the scope of works.
  2. [272]
    On appeal Mr Gillham contends Mr Kernohan had agreed to that course of conduct. That was not the evidence before the learned Member and it was not put to Mr Kernohan at the hearing below.
  3. [273]
    Mr Gillham made no effort to obtain Mr Kernohan’s prior approval to his contract with the contractor which is clear both from the emails between Mr Gillham and Shane the contractor at the time[72] and Mr Kernohan’s evidence at the hearing.[73]
  4. [274]
    The learned Member said Mr Gillham should not benefit from his breach and denied him restitution of $440 saved by the variation.
  5. [275]
    The maxim that no party may take advantage of its own wrong is a general rule of construction of the contract whereby the parties are presumed not to intend, in the absence of clear provision to the contrary, that the other should obtain an advantage under the contract due to that party’s breach of the contract.[74]
  6. [276]
    There is no provision to the contrary in the subject contract. The maxim had application here and was correctly applied by the learned Member in so far as Mr Gillham claimed the advantage he had engineered, by action in breach of the terms of the contract, was recoverable by him. If he was allowed recovery he benefits from his breach of contract.
  7. [277]
    This ground of appeal fails.

Conclusion

  1. [278]
    Mr Gillham succeeds on grounds of appeal 3 and 10. The result is that leave to appeal is granted and the appeal allowed. The amount payable by Mr Gillham to Kernohan is reduced by the amount of $10,812.78.
  2. [279]
    We make the following orders:
    1. leave to appeal is granted;
    2. the appeal is allowed;
    3. the decision of the Tribunal dated 14 June 2019 is varied as follows:
      1. Order 1 is set aside and in lieu thereof it is ordered that Austin Gillham is to pay to Kernohan Construction Pty Ltd T/As Kernohan Construction $1,934.78;
      2. Order 2 is set aside and in lieu thereof it is ordered that a copy of this decision is to be provided by the Registry to the Master Builders Queensland and of the funds held by Master Builders Queensland the amount of $1,934.78 is to be paid to Kernohan Construction Pty Ltd T/As Kernohan Construction in satisfaction of the amount due under order 1 and the balance paid to Austin Gillham.
    4. The parties are to file two (2) copies and exchange (1) copy of submissions on the costs of the appeal, such submissions not to exceed three (3) pages in length, within 14 days of the date of this decision;
    5. The parties are to file two (2) copies and exchange one (1) copy of submissions in reply, such submissions not to exceed three (3) pages in length, within 7 days after receipt of the costs submissions filed and served in accordance with Order 4.
    6. The costs of the appeal will be determined on the papers.

Footnotes

[1] Pickering v McArthur [2005] QCA 294.

[2]  T1-41 L18-23.

[3]  Appeal book, 1128.

[4]  Appeal book, 1246.

[5]  Appeal book, 232 and 1219 (architectural) ; 247 and 1246 (engineering).

[6]  Appeal book, 247 and 1246.

[7]  Appeal book, 667.

[8]  T1-40 L1-30.

[9]  Appeal book, 1251.

[10] Harrison and Anor v Meehan [2016] QCATA 197 and see Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833, [28-30].

[11]  Member’s amended reasons, [465-466].

[12]  T2-104 L19.

[13]  T2-106 L8.

[14]  T2-106 L29.

[15]  T2-107 L20.

[16] Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124, 134.

[17]  Appeal book, 540.

[18]  T1-69 L24  T1-70 L6.

[19]  Amended reasons, [58].

[20]  Amended reasons, [65].

[21]  Appeal Book, 1049.

[22] Coulton v Holcombe (1986) 162 CLR 1, [9].

[23]  Ibid referring to O'Brien v Komesaroff (1982) 150 CLR 310, 319.

[24]  Amended reasons, [129].

[25]  Amended reasons, [476-477].

[26]  Appeal book, 633.

[27]  Amended reasons, [103-110].

[28]  Amended reasons, [35(d)].

[29]  Amended decision, [138] and [141].

[30]  s 92 DBCA; Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196, [50].

[31] David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, [40].

[32]  Ibid.

[33]  Ibid.

[34]  Ibid.

[35] Coulton v Holcombe (1986) 162 CLR 1, [9].

[36]  Appeal book, 1778.

[37]  T1-48 L10-24.

[38]  558.6 and 558.7.

[39]  Ibid 1079, [543].

[40]  Clause 13.1(d) contract, 1195.

[41]  Contract schedule, item 20.

[42]  Ibid.

[43]  Applicant’s amended outline of argument in reply, [45(f)].

[44]  T2-35 L20-21.

[45]  Reasons, [16].

[46] J-Corp Pty Ltd v Mladenis [2009] WASCA 157, [32].

[47]  Ibid.

[48]  Appeal book, 1024[12].

[49]  Appeal book, 1024[13].

[50] Cochrane v Lees (2021) QCATA 74.

[51]  T3-8 L10-18.

[52]  T3-11 L19 to T3-12 L16.

[53]  Amended decision, [438].

[54]  Appeal book, 1219.

[55]  Appeal book, 1155.

[56]  T3-11 L42.

[57]  T2-22 L4-20.

[58]  T2-23 L30.

[59]  Appeal book, 1408.

[60]  T2-24 L8.

[61]  T2-21 L10-13.

[62]  T3-28 L40.

[63]  T3-35 L17.

[64]  Appeal book, 674.

[65]  T1-45 L47.

[66]  T1-46 L18.

[67]  Appeal book, 1435.

[68]  Appeal book, 1435.

[69]  Appeal book, 658-698.

[70]  Appeal book page, 1008 [0025].

[71]  Amended reasons for decision, [595].

[72]  Appeal book, 1769 – 1774.

[73]  T2-13 L20 - T2-14 L36.

[74] Hope Island Resort Holdings Pty Ltd v Jefferson Properties (Qld) Pty Ltd [2005] QCA 315, [49].

Close

Editorial Notes

  • Published Case Name:

    Gillham v Kernohan Construction Pty Ltd

  • Shortened Case Name:

    Gillham v Kernohan Construction Pty Ltd

  • MNC:

    [2022] QCATA 19

  • Court:

    QCATA

  • Judge(s):

    Senior Member Brown, Member Howe

  • Date:

    14 Jan 2022

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188
2 citations
Jump To
Cite 1 - [2015] ACTSC 188
Cite 2 - [2015] ACTSC 188
Bloemen v The Commonwealth (1975) 49 ALJR 219
1 citation
Jump To
Cite 1 - (1975) 49 ALJR 219
Branir Pty Ltd v Owston Nominees [No 2] Pty Ltd [2001] FCA 1833
2 citations
Jump To
Cite 1 - [2001] FCA 1833
Cite 2 - [2001] FCA 1833
Cellulose Acetate Silk Co. Ltd. v Widens Foundry (1925) Ltd. [1933] AC 20
1 citation
Jump To
Cite 1 - [1933] AC 20
Cochrane v Lees [2021] QCATA 74
2 citations
Jump To
Cite 1 - [2021] QCATA 74
Cite 2 - [2021] QCATA 74
Concut Pty Ltd v Worrell (2000) 75 ALJR 312
1 citation
Jump To
Cite 1 - (2000) 75 ALJR 312
Concut Pty Ltd v Worrell [2000] HCA 64
1 citation
Jump To
Cite 1 - [2000] HCA 64
Coulton v Holcombe (1986) 162 CLR 1
4 citations
Jump To
Cite 1 - (1986) 162 CLR 1
Cite 2 - (1986) 162 CLR 1
Cite 3 - (1986) 162 CLR 1
Cite 4 - (1986) 162 CLR 1
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
3 citations
Jump To
Cite 1 - (1992) 175 CLR 353
Cite 2 - (1992) 175 CLR 353
Cite 3 - (1992) 175 CLR 353
Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2) (2007) 23 BCL 347
1 citation
Jump To
Cite 1 - (2007) 23 BCL 347
Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2) [2005] SASC 483
1 citation
Jump To
Cite 1 - [2005] SASC 483
Diestal v Stevenson [1906] 2 KB 345
1 citation
Jump To
Cite 1 - [1906] 2 KB 345
Greer v Mt Cotton Constructions Pty Ltd [2018] QCATA 196
3 citations
Jump To
Cite 1 - [2018] QCATA 196
Cite 2 - [2018] QCATA 196
Cite 3 - [2018] QCATA 196
Harrison and Anor v Meehan [2016] QCATA 197
2 citations
Jump To
Cite 1 - [2016] QCATA 197
Cite 2 - [2016] QCATA 197
Hookway v Racing Victoria Limited [2005] VSCA 310
1 citation
Jump To
Cite 1 - [2005] VSCA 310
Hope Island Resort Holdings Pty Ltd v Jefferson Properties (Qld) Pty Ltd [2005] QCA 315
2 citations
Jump To
Cite 1 - [2005] QCA 315
Cite 2 - [2005] QCA 315
J-Corp Pty Ltd v Mladenis [2009] WASCA 157
3 citations
Jump To
Cite 1 - [2009] WASCA 157
Cite 2 - [2009] WASCA 157
Cite 3 - [2009] WASCA 157
O'Brien v Komesaroff (1982) 150 CLR 310
1 citation
Jump To
Cite 1 - (1982) 150 CLR 310
Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124
2 citations
Jump To
Cite 1 - [1983] 2 Qd R 124
Cite 2 - [1983] 2 Qd R 124
Pickering v McArthur [2005] QCA 294
2 citations
Jump To
Cite 1 - [2005] QCA 294
Cite 2 - [2005] QCA 294
Suttor v Gundowda Pty Ltd [1950] HCA 35
2 citations
Jump To
Cite 1 - [1950] HCA 35
Cite 2 - [1950] HCA 35
Suttor v Gundowda Pty Ltd (1950) 81 C.L.R., 418
2 citations
Jump To
Cite 1 - (1950) 81 C.L.R., 418
Cite 2 - (1950) 81 C.L.R., 418
Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30
1 citation
Jump To
Cite 1 - (1987) 39 BLR 30

Cases Citing

Case NameFull CitationFrequency
Gillham v Kernohan Construction Pty Ltd [2023] QCATA 641 citation
Gillham v Kernohan Construction Pty Ltd (No. 3) [2024] QCATA 592 citations
Kernohan Construction Pty Ltd v Gillham [2023] QCAT 2312 citations
Monsour v C & R Darvill Pty Ltd [2022] QCAT 3023 citations
1

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