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Abbott Builders (Qld) Pty Ltd v Forrest[2023] QCATA 141

Abbott Builders (Qld) Pty Ltd v Forrest[2023] QCATA 141

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Abbott Builders (Qld) Pty Ltd v Forrest & Anor [2023] QCATA 141

PARTIES:

abbott builders (qld) pty ltd

(appellant)

v

phillip forrest

(first respondent)

jan forrest

(second respondent)

APPLICATION NO/S:

APL166-22

ORIGINATING APPLICATION NO/S:

BDL280-19

MATTER TYPE:

Building matters

DELIVERED ON:

1 November 2023

HEARING DATE:

14 August 2023

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

  1. The application by the applicant to rely upon further evidence is refused.
  2. The application by the respondents to rely upon further evidence is dismissed.
  3. Leave to appeal is granted.
  4. The appeal is allowed.
  5. Order 1 of the decision of the Tribunal dated 4 May 2022 is varied by substituting ‘$42,425.50’ with ‘$38,496.59’.
  1. The parties are to file and exchange submissions on the costs of the appeal, not exceeding five (5) pages in length within 14 days of the date of this decision.
  2. The costs of the appeal will be determined on the papers.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – NATURE OF RIGHT – APPEALS IN THE STRICT SENSE AND APPEALS BY WAY OF REHEARING – APPEALS BY WAY OF REHEARING – WHEN REHEARING DOES NOT INVOLVE HEARING DE NOVO – where leave to appeal should be granted on the basis that there was error in the primary decision and is required to correct a substantial injustice – where the appeal tribunal gives consideration to the findings of fact of the primary tribunal – whether the rehearing is limited to a consideration of those matters raised in the grounds of appeal

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – POINTS AND OBJECTIONS NOT TAKEN BELOW – WHEN ALLOWED TO BE RAISED ON APPEAL – OTHER MATTERS – OTHER CASES – where the appellant says the tribunal does not have jurisdiction to decide a building dispute on the basis that s 77(2) of the QBCC Act has not been complied with – where the matter was not raised in the proceeding below and neither party led evidence on the issue – whether the appellant may adduce fresh evidence – whether the tribunal had jurisdiction to decide the dispute

CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – whether the tribunal erred in finding that a retaining wall was not constructed in accordance with the terms of the contract – whether the tribunal erred in finding that the contract required a solid stud wall in an ensuite – whether the tribunal erred in finding that the conduct of the appellant deprived the respondents of the ability to claim off–set for late completion damages under the contract – whether upon a proper construction of the contract payment of the final claim by the owners deprived them of the right to claim liquidated damages

DAMAGES – ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT – PARTICULAR HEADS OF LOSS – FUTURE LOSS – where the appellant says that the method of calculation is erroneous and results in a windfall – whether the tribunal erred in assessing the future costs of termite protection – whether a discount rate should be applied

Civil Proceedings Act 2011 (Qld), s 3

Queensland Building and Construction Commission Act 1991 (Qld), s 77(2)

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24

Drayton v Martin (1996) 67 FCR 1

Helu v Yuan [2023] QCATA 12

Hoad v Scone Motors Pty Ltd [1977] 1 NSWLR 88

Michellis, M. & D. v Carlos Steenland Pty Ltd and Meier Corporation Pty Ltd [2006] QCCTB 197

Ryan v Worthington [2015] QCA 201

APPEARANCES & REPRESENTATION:

 

Appellant:

Mr M Robinson, Solicitor, Robinson Locke Litigation Lawyers

Respondent:

Self-represented

REASONS FOR DECISION

  1. [1]
    This appeal is about a building dispute.
  2. [2]
    Abbott Builders (Qld) Pty Ltd built a home for Phillip Forrest and Jan Forrest. The Forrests claimed that the building work did not conform with the terms of the contract and/or was defective. They claimed that Abbott had failed to deliver up relevant building certificates. The Forrests also claimed liquidated damages for late completion of the works.
  3. [3]
    The Tribunal ordered Abbott to pay the Forrests $42,425.50 plus costs fixed in the amount of $6,535.80.[1] Abbott appeals the decision.

The grounds of appeal

  1. [4]
    Abbott relies upon the following grounds of appeal:
    1. Ground 1 – liquidated damages claim:
      1. (i)
        The Tribunal erred in failing to apply clause 25.7 of the contract;
      1. (ii)
        The Tribunal erred in finding that Abbott acted dishonestly in seeking payment of the final stage claim before handing possession to the Forrests;
      1. (iii)
        The Tribunal erred in finding that the conduct of Abbott deprived the Forrests of the ability to claim off-set for late completion;
    2. Ground 2 – retaining wall:
      1. (i)
        The Tribunal erred in accepting the evidence of the Forrests regarding the structural purpose of the retaining wall;
      1. (ii)
        The Tribunal erred in mistaking the true facts in that the retaining wall was structural;
      1. (iii)
        The Tribunal erred in finding that the retaining wall was not constructed in accordance with the terms of the contract;
      1. (iv)
        The Tribunal erred in rejecting the evidence of Mr Paterson, a qualified builder;
      1. (v)
        The Tribunal erred in drawing the inference that the retaining wall could have been constructed as asserted by the Forrests;
      1. (vi)
        The Tribunal erred in reducing Abbott’s entitlement to recover for the construction of the retaining wall;
    3. Ground 3 – ensuite shower wall:
      1. (i)
        The Tribunal erred in finding that the contract required a solid stud wall;
    4. Ground 4 – termite protection:
      1. (i)
        The Tribunal erred in assessing the future costs of termite protection;
    5. Ground 5 – no jurisdiction:
      1. (i)
        The Tribunal did not have jurisdiction to decide the dispute on the basis that the requirements of s 77(2) of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’) had not been complied with by the Forrests before the proceeding below was commenced.
  2. [5]
    Both parties have applied for leave to rely upon further evidence. The Forrests say that if Abbott’s application is refused, they are content for their application to be dismissed.

Applications to rely upon further evidence

  1. [6]
    Abbott seeks to rely upon further evidence comprising: (a) statement of evidence by Mr Wayne Abbott, a director of the applicant going to the issue of compliance by the Forrests with s 77(2) of the QBCC Act before commencing the proceeding below and (b) evidence by an engineer regarding the issue of the retaining wall.
  2. [7]
    The relevant principles for the admission of new evidence in an appeal are well established:[2]
    1. The evidence could not have been obtained with reasonable diligence for use at the original hearing;
    2. The new evidence would probably have an important influence on the result of the case; and
    3. The new evidence is credible.
  3. [8]
    All three requirements must be met.
  4. [9]
    I will address the further evidence later in these reasons.

Appeals – the statutory framework

  1. [10]
    A party may appeal a decision of the tribunal.[3] An appeal on a question of law is as of right.[4] An appeal on a question of fact or mixed law and fact may only be made with the leave of the appeal tribunal.[5]
  2. [11]
    In deciding an appeal on a question of law, the appeal tribunal may confirm or amend the decision, set aside the decision below and substitute its own decision or set aside the decision and remit the matter to the tribunal for reconsideration.[6] The Tribunal may only substitute its own decision if the determination of the question of law resolves the appeal entirely in the appellant’s favour.[7]
  3. [12]
    An appeal on a question of fact or mixed law and fact the appeal must be decided by way of rehearing, with or without the hearing of additional evidence as decided by the appeal tribunal.[8] In deciding the appeal, the appeal tribunal may confirm or amend the decision, set aside the decision below and substitute its own decision or set aside the decision and remit the matter to the tribunal for reconsideration.[9]
  1. [13]
    The relevant principles applicable to an application for leave to appeal are well established: is there is a reasonably arguable case of error in the primary decision?;[10] is there a reasonable prospect that the appellant will obtain substantive relief?;[11] is leave needed to correct a substantial injustice caused by some error?;[12] is there a question of general importance upon which further argument, and a decision of the Appeal Tribunal, would be to the public advantage?[13]

Consideration

  1. [14]
    For reasons that will become apparent, I will first address ground of appeal 3.

Ground of appeal 3

  1. [15]
    The learned member found that the contract required Abbott to construct a solid (stud) wall for the ensuite shower.[14] Abbott says that the finding is contrary to other findings made by the learned member and was not supported by the evidence.
  2. [16]
    It was Abbott’s contention below that the plans indicated that the third wall in the ensuite was not a solid stud wall. The evidence of Mr Paterson, Abbott’s construction manager, was that it was industry practice for solid walls on a plan to be depicted by a double line. The Forrests’ quantity surveyor, Mr Burgess, gave similar evidence. The learned member accepted that the plan showed the third wall in the ensuite as only a single, and not a double, line and found that the single line drawing shown on the plan would not mean a solid stud wall.[15] However, the learned member found that the specification required the construction of a solid stud wall and that the specification took precedence over the plans.[16]
  3. [17]
    It is not contentious in this appeal that, in construing the contract, the specification took precedence over the plans. Abbott says however that the specification must be relevant. It is therefore necessary to examine more closely the specification.
  4. [18]
    Item 21.7 of the specification relates to ‘shower recess wall’. The specification provided for ‘stud wall, rectified tiles as per Beaumont tile spec.’ The Beaumont Tiles specification which pre-dates the contract was, by virtue of its being referred to in the principal specification, incorporated into the principal specification.
  5. [19]
    Abbott says that the Beaumont Tiles specification was confined to tile selection and was not relevant to structural issues relating to the build.
  6. [20]
    The learned member correctly identified that in construing the contract the specifications took precedence over the plans. The learned member correctly identified that the Beaumont Tiles specification formed part of the contractual specifications. The principles applicable to the construction of a contract are well established. The terms of a contract should be construed so as to give them the meaning intended by the parties. That meaning is to be determined objectively: what would a reasonable person think was intended by the term? Evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.[17]
  7. [21]
    On a plain reading of the contract, the reference in item 21.7 of the specification to ‘stud wall, rectified tiles as per Beaumont tile spec’ is a reference to the stud walls as indicated on the plans. There is no ambiguity in this regard. It is unnecessary to have reference to the Beaumont Tiles specification in order to construe the meaning of the item 21.7 of the specification. The finding by the learned member that the plans provided the relevant wall in the ensuite separating the shower recess from the ensuite was not a stud wall, is not appealed. There is no conflict between the specification and the plans.
  8. [22]
    The learned member erred in finding that the contract required a solid stud wall for the ensuite shower. It was unnecessary for the learned member to have regard to the Beaumont Tile specification in circumstances where, on a plain reading of item 21.7 of the specification, the rectified tiles in accordance with the Beaumont Tiles specification were only to be affixed to the stud walls identified on the plans. The relevant wall in the ensuite was not a stud wall.
  9. [23]
    The proper construction of a contract is a question of law.[18] The learned member erred in law in failing to properly construe the contract.
  10. [24]
    The consequence of the learned member’s error in construing the contract was that he erred in assessing the Forrests’ entitlement to damages. The assessment of damages is a question of fact.[19] Ground of appeal 3 involves questions of both law and fact. Leave to appeal should be granted on the basis that there was error in the primary decision and is required to correct a substantial injustice to Abbott caused by the error.

Rehearing

  1. [25]
    An appeal by way of rehearing involves a fresh determination of the rights and liabilities of the parties and is not confined to merely correcting error in the determination of the tribunal below.[20]
  2. [26]
    An appeal by way of rehearing under s 147 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) is not a rehearing de novo. The Appeal Tribunal must make its own determination on the material before the Tribunal below (supplemented, if necessary by additional evidence if permitted under s 147(2)) with due respect for the findings of fact of the primary Tribunal, and due consideration of the advantages enjoyed by it.[21]
  3. [27]
    In rehearing the matter the learned member’s primary findings of fact have been adopted other than where those findings have been challenged in the appeal or where there is doubt as to the findings below. Otherwise, I have formed my own views on the evidence in accordance with the relevant principles applicable in appeals by way of rehearing on the record of proceedings before a primary tribunal.[22]
  4. [28]
    I will confine the rehearing to a consideration of those matters raised in the grounds of appeal, the other relevant findings and conclusions by the learned member not being contested.

The ensuite shower wall

  1. [29]
    The Forrests’ claim the amount of $3,928.91 being the cost of removing the shower door and screen installed by Abbott and replacing it with a tiled stud wall.
  2. [30]
    I have found that on a plain reading of the contract, the reference in item 21.7 of the specification to ‘stud wall, rectified tiles as per Beaumont tile spec’ is a reference to the stud walls as indicated on the plans. The plans did not provide for a third stud wall in the ensuite shower. Accordingly Abbott was not required to construct a solid stud wall for the ensuite shower.
  3. [31]
    It follows that the claim by the Forrests is not allowed.

The retaining wall

  1. [32]
    Before addressing the issue of the retaining wall it is necessary to deal with the application by Abbott to rely upon the further evidence of the engineer. In Helu v Yuan the Appeal Tribunal stated:

While the Appeal Tribunal has an overriding discretion to permit additional evidence in order to prevent a miscarriage of justice, the fact that the evidence may of itself have had an important impact on the result at first instance does not mean that in every case such evidence will be permitted to be adduced in a rehearing. The Appeal Tribunal will consider a range of factors including the factors usually considered in an application to adduce new evidence on appeal. One of these factors is whether the evidence, with reasonable diligence, could have been obtained at the time of the original hearing. As the Appeal Tribunal observed in Queensland Vedic Cultural Centre Pty Ltd v Lal, if the evidence could have been obtained by the party seeking to rely upon it, then it is difficult to see how not permitting the evidence in the appeal will result in a miscarriage of justice. Parties are responsible for the conduct of their own case and should present it at one time and not in a piecemeal fashion. Accordingly, unless the interests of justice demand it, additional evidence should not be permitted upon a rehearing.[23]

  1. [33]
    The further evidence consists of a two-line email sent by the engineer to Mr Abbott. The evidence is not contained in a report and does not comply with the requirements for expert evidence.[24] Abbott concedes that the evidence could have been adduced at the hearing below. Abbott is now seeking to plug the evidentiary holes in the case it ran below by seeking to rely upon an extremely brief two-line email. I do not consider that the interests of justice require that the evidence be permitted in circumstances where the appellant concedes that the evidence could have been obtained and where the proposed evidence is not particularly compelling. The application to rely upon the evidence of the engineer is refused.
  2. [34]
    The retaining wall was identified in the plans. The Forrests said that the wall, as constructed, was shorter than identified on the plans and that they should have been credited for the reduction in size of the wall.
  3. [35]
    In the proceeding below, Abbott said that the change in dimensions of the wall arose out of amended plans provided by the Forrests. It was not contentious below that the house as constructed was 500 millimetres lower than indicated on the plans. It was this reduction in height, said Abbott, that resulted in the wall being reduced in length. Abbott contended that the result of the height reduction was that it was not possible for the wall to be constructed in accordance with the plans.
  4. [36]
    The learned member found that it was possible for the wall to be built to the full design length.[25] The learned member found:

It must have been possible for the retaining wall to be built to the full design length, since the Forrests say they incurred considerable cost constructing block walls to retain ground that otherwise would have been removed during construction or retained by RW2.

  1. [37]
    The written evidence of Mr Paterson, Abbott’s construction manager, was that the lowering of the finished pad resulted in additional material being required to be removed and higher and wider retaining walls installed.[26] Mr Paterson’s written evidence was that as a result of the change in height, the start and finish points in the retaining wall moved slightly as the site had a steep gradient from right to left.[27] The evidence of Mr Paterson was that as a result of the amended plans the retaining wall under the study was decreased by approximately 1 metre ‘…as with a drop in designated height for the slab junction point moves which is unavoidable.’[28]
  2. [38]
    Mrs Forrests’ written evidence was that the retaining wall was constructed approximately 2 metres shorter than indicated on the plans.[29]
  3. [39]
    A Scott Schedule was filed. The claim by the Forrests relating to the reduction in size of the retaining wall was based upon the report of Mr Burgess, a quantity surveyor. In his report, Mr Burgess stated that the retaining wall should have been 3.71 metres in length however as constructed the wall was 1.4 metres long, a difference of 2.31 metres. Mr Burgess calculated an amount of $2,910.96 as the saving resulting from the reduced wall length.
  4. [40]
    Abbott’s response in the Scott Schedule was that the reduction in construction height caused major changes to the construction:

The RW2 Wall is drawn to finish at ground level to match onto upper slab footing, with the 500mm drop from the amended plan it changed the meeting point of the SF2 footing to SF1 footing – refer to attachment 9.

  1. [41]
    Mrs Forrest was cross examined at the hearing by Mr Paterson. The evidence of Mrs Forrest was as follows:

And they actually admitted, in their statements, that the wall was constructed shorter because the house was lower. They didn’t – correct me if I’m wrong, or if I’ve misunderstood your statements, but the wall – you were digging into rock or something, and so you didn’t need to dig into rock to create the wall longer. The decision was made to build the wall shorter.[30]

  1. [42]
    It is sufficient to observe that the oral evidence given at the hearing was not particularly illuminating regarding the issue of whether the retaining wall could have been constructed in accordance with the plans.
  2. [43]
    Both parties filed written submissions after the hearing. In their submissions, the Forrests said a number of things: that the retaining wall did not directly support the house; the wall was primarily a retaining wall and was included for landscaping purposes and to provide greater access around the house; they had incurred considerable additional costs constructing block walls to retain ground that would otherwise have been removed during construction or contained by the wall; and Abbott offered no valid reason why the wall could not have been constructed in accordance with the contract.
  3. [44]
    Abbott’s submissions stated that the wall as constructed was ‘what could be constructed … due to plan error.’ There was no reference in the submissions to the retaining wall being structural.
  4. [45]
    The contract documents included the construction drawings. While it is true to say that the dimensions of the retaining wall were not specifically identified in the drawings, it is clear from the drawings that, by extrapolating and applying the identified exterior dimensions of the house, the dimensions of the retaining wall are clearly ascertainable. The relevant part of the retaining was, in accordance with the plans, required to be 3.7 metres long.
  5. [46]
    Abbott says that the learned member erred in failing to find that the retaining wall was structural. This submission rests on two bases: firstly, the evidence of the Abbotts should not have been preferred over the evidence of Mr Paterson; secondly, reliance upon the fresh evidence sought to be adduced by Abbott.
  6. [47]
    As to the first basis, it is first necessary to observe that the hearing was conducted in a somewhat informal manner. This is not unusual in Tribunal proceedings where both parties are acting for themselves nor is there any criticism of the learned member intended. In the course of cross-examining Mr Forrest, the following exchange took place:

MEMBER: So it’s – the wall is to, as it were, prop out or protect the horizontal pad of the house?

MR PATERSON: Yes.

…

MEMBER: Do you understand that, Mr Forrest? … The retaining wall is that part which props up that part of the house?

MR FORREST: That retaining wall does not prop up the house… The retaining wall holds back dirt.

…

MEMBER: So I think I understand, which is the purpose of the retaining wall is to, as it were, separate the ground from the house?

MR FORREST: Yes.

  1. [48]
    Accepting that the above exchange between the learned member and Mr Paterson involved Mr Paterson giving evidence, the exchange was the highest at which one might view Mr Paterson’s evidence on the function of the retaining wall. Mr Paterson agreed with the learned member’s proposition that the retaining wall ‘propped out’ or ‘protected’ the horizontal pad of the house. This is, in my view, well short of evidence that the retaining wall was structural in nature and supported the house pad.
  2. [49]
    Mr Paterson did not assert in his written evidence that the retaining wall was structural. Neither Abbott’s response to the building dispute application nor its  response to the Scott schedule included an assertion that the retaining wall was structural.
  3. [50]
    In conducting a proceeding the Tribunal may inform itself in any way it considers appropriate, and the Tribunal is not bound by the rules of evidence. The Tribunal must act fairly and according to the substantial merits of the case. Although the Forrests’ post hearing submissions contain what is in fact further evidence addressing the issue of the purpose and function of the retaining wall, Abbott does not appeal the reliance by the learned member on the parties’ submissions filed after the hearing. Nor is there any submission by Abbott that, in the event the appeal is required to be conducted by way of rehearing, no regard should be had by the Appeal Tribunal to the submissions. I therefore propose to have reference to the submissions by the parties.
  4. [51]
    Abbott says that the evidence of Mr Paterson should be preferred over the Forrests as he is a qualified builder. Mr Paterson’s evidence is not expert evidence as that term is recognised and understood in Tribunal proceedings. It is ultimately a matter of weighing up the evidence of each of the parties and making a determination as to what evidence is preferred.
  5. [52]
    I accept the assertion by the Forrests that they incurred expense in undertaking work that should have been undertaken by Abbott in completing the construction of the retaining wall and that the wall could have been built in accordance with the plans. The member at first instance was clearly in a better position to assess the demeanour of the witnesses and form a view as to the reliability of the witnesses and the weight to be given to their evidence. Nevertheless, even at the remove of these appeal proceedings, it is apparent that the Forrests were thoughtful and careful witnesses who thoroughly prepared their case and gave considered and detailed evidence. There is no reason to doubt the veracity of their evidence including their assertion regarding the retaining wall. That assertion is consistent with the retaining wall not being a structural wall. It follows that the claim by the Forrests relating to the reduction in size of the retaining wall should be allowed. 

The termite barrier

  1. [53]
    It is not contentious in this appeal that the termite barrier was damaged by Abbott. The learned member found that the consequence of Abbott’s breach of contract was that the Forrests would incur an annual sum of $395.00 over a period of ten years. This finding is not appealed.
  2. [54]
    The learned member calculated the loss in the amount of $3,950.00 being $395.00 per year over ten years. Abbott says that this method of calculation is erroneous and results in a windfall to the Forrests on the basis that they are recovering an amount now that will be incrementally incurred over a number of years.
  3. [55]
    At the hearing of the appeal, Abbott sought to rely upon s 61 of the Civil Proceedings Act 2011 (Qld) in relation to the application of a discount rate in calculating future loss. However, that Act does not apply in the Tribunal.[31] The assessment of damages in building dispute proceedings in the Tribunal falls to be determined in accordance with established principles.
  4. [56]
    Damages are compensatory in nature. The governing principle was stated in Robinson v Harman:

The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.[32]

  1. [57]
    Damages for breach of contract are assessed as at the date of the breach. However, it is often the case that it is not until the hearing that the most appropriate way to give effect to the compensatory principle of damages can be determined.[33]
  2. [58]
    A discount rate is a mechanism used to calculate the present value of compensation for future loss and expenses. In Todorovic v Waller[34] the High Court set the discount rate for personal injury and death claims at 3 percent. By way of illustration, applying an annualised 3 percent discount to the Forrests claim for the cost of regular termite inspections, one arrives at a figure of $3,369.34.
  3. [59]
    In Michellis, M. & D. v Carlos Steenland Pty Ltd and Meier Corporation Pty Ltd[35] the former QCCT constituted by (now) Bradley J, considering a claim for future storage expenses, stated:

The applicants are likely to have to continue to store their chattels for a further period of 12 months while rebuilding plans are approved and the building work is undertaken. It follows that further storage costs of $4,620.00 are to be incurred. I will make no deduction from this sum for early payment, as I accept that the monthly charge is likely to increase by an amount equal any relevant discount factor.

  1. [60]
    Abbott cites no case law establishing the principle that future loss in a case such as this must be assessed by reference to a specified discount rate. Todorovic v Waller was a claim for damages for personal injury, not a commercial dispute. The determination of the Forrests’ loss is not to be undertaken by a slavish adherence to a method of assessing damages relevant in personal injuries claims and must necessarily take into consideration the particular facts of the case.
  2. [61]
    It is unlikely that the annual cost to be incurred by the Forrests will remain static. Common sense dictates that they will likely incur increased annual costs in having the termite barrier inspection undertaken. Of course, what these increases may be precisely is not known. Noting however the relatively minor difference in calculation even if an annualised 3% discount were applied to the claim, taking into consideration the increased cost likely to be incurred by the Forrests leads me to conclude that the assessment by the learned member of the cost of future termite inspections was justified and I see no reason to depart from it upon rehearing.

Liquidated damages

  1. [62]
    The Forrests say that the works did not reach practical completion within the time stipulated by the contract and that, as a result, they are entitled to liquidated damages. Abbott resists the claim, relying upon clause 25.7 of the contract, asserting that payment of the final claim by the Forrests relieved Abbott of any liability to pay liquidated damages. In order to understand the position taken by the parties it is necessary to say something about the relevant provisions of the contract.
  2. [63]
    Clause 25 of the contract deals with practical completion. By clause 25.2 when the builder believed the works had reached practical completion, the builder was required to give to the owner a defects document, a notice of practical completion and the final claim. By clause 25.3 the owner was required to pay the final claim within five working days of receiving the final claim. This obligation was subject to clause 25.4 which provided that if the owner disputed that the works had reached practical completion, the owner was required to give written notice to the builder, within 5 working days of receiving the notice of practical completion, a written notice stating the owner’s requirements for practical completion to be reached and the provisions of the contract relevant to each requirement. By clause 25.5 the builder was required to complete the requirements necessary, in the opinion of the builder, for the work to reach practical completion. After completing those requirements, the builder was required by clause 25.6 to give to the owner a further notice of practical completion and the owner was required to pay the final payment within 5 working days of receiving the notice.
  3. [64]
    The contract defined practical completion as the day when the subject work is completed: (a) in compliance with the contract, including all plans and specifications for the work and all statutory requirements applying to the work; (b) without any defects or omissions, other than minor defects or minor omissions that will not unreasonably affect occupation; and (c) if the building owner claims there are minor defects or minor omissions the building contractor gives the building owner a defects document for the minor defects or minor omissions.
  4. [65]
    Clause 25.7 provided as follows:

25.7   The owner’s payment of the final claim is conclusive evidence of the builder’s satisfaction, and discharge of the builder’s obligations in connection with the subject matter of this contract except for:

  1. fraud, dishonesty or fraudulent concealment relating to the works;
  1. the builder’s liability under Clause 27.1; and
  1. the builder’s liability under a statutory warranty set out in Clause 36.
  1. [66]
    Finally, by clause 25.8 the date stated in the last notice of practical completion was deemed to be the date of practical completion unless the owner gave to the builder, within 5 working days, notice disputing the date and detailing why the date was disputed.
  2. [67]
    Of relevance to clause 25.7, clause 27.1 provided a defects liability period of 12 months from the date of practical completion during which the builder was liable to rectify non-structural defects. Clause 36 reflected the statutory warranties found in Schedule 1B of the QBCC Act implied into every regulated contract for domestic building work.
  3. [68]
    Clause 32 of the contract deals with late completion damages. Of relevance to the present dispute, the Forrests were entitled to liquidated damages from the date of the end of the building period until the earlier of the date of practical completion or the date the Forrests took possession of the works. Clause 32.1 of the contract provided that ‘the owner may set-off or deduct its claim for liquidated damages under clause 32.1 from the final claim payment to the builder.’
  4. [69]
    It was not contentious below that the ‘building period’ under the contract ended on 24 October 2017 and that the date of practical completion was 20 June 2018, a period of 240 days. It was also not contentious below that the Forrests paid the final claim on 20 June 2018.
  5. [70]
    Abbott relies on clause 25.7 to assert that the Forrests are prevented from making a claim for liquidated damages.
  6. [71]
    Below, the Forrests contended that Abbott acted dishonestly in requiring payment of the final claim as a condition for handing over possession of the works to the Forrests.
  7. [72]
    The learned member made a number of findings relevant to the issue of, and the Forrests’ entitlement to claim, liquidated damages:

[44] I find as a fact that Abbott insisted on payment of the invoice for the final claim, without deduction for any late completion claim, as a condition for handover of possession to the house on 20 June 2018. Clause 25.3 of the contract allows the owner five working days from receipt of the final claim to pay it to the builder. By insisting on payment of the final claim in full as a condition of handover, which is not a contractual entitlement in favour of Abbott, Abbott deprived the Forrests of the period of five days to make payment of the final claim and also to avail themselves of the opportunity to set off the claim for liquidated damages for late completion under clause 32.2. That conduct also set up, on the face of it, the reliance by Abbott on clause 25.7.

[45] In those circumstances, I find that the conduct on behalf of Abbott in insisting on full payment of the final claim, without deduction for late completion damages, or even giving the Forrests the opportunity to make a claim of that kind by setoff, as a prerequisite for handover, triggering what would otherwise be application of clause 25.7 was dishonest, relating to completion of the works. In those circumstances, I find that cause 25.7 does not prevent the Forrests from a successful claim under clause 32.

  1. [73]
    The finding of dishonesty is contested by Abbott.
  2. [74]
    Ultimately it is not necessary to determine whether Abbott acted dishonestly in deciding the issue of the Forrests’ entitlement to liquidated damages. The resolution of the issue turns upon the application of orthodox principles of construction of the terms of the contract.
  3. [75]
    As I have observed earlier in these reasons, the proper construction of a contract is a question of law and requires the determination of what a reasonable person in the position of the parties would have understood or assumed. The meaning of clause 25.7 is to be construed in the context in which it operates within the broader contractual framework.
  4. [76]
    Clause 25.7 refers to the ‘builder’s obligations in connection with the subject matter of the contract.’ (emphasis added) Although the term is not defined, clause 1 of the contract refers to the ‘Builder’s obligations’ as:

1.1 The builder must:

  1. complete the works in accordance with the contract; and
  1. comply with all laws and lawful requirements of any statutory or other authority with respect to the carrying out of the works.
  1. [77]
    The contract defines ‘the works’ as ‘the works to be carried out, completed and handed over to the owner in accordance with this contract as shown in the contract documents including variations.’ The reference in clause 25.7 to the ‘subject matter of the contract’ is clearly a reference to the construction of the dwelling.
  2. [78]
    While it is accepted that the phrase ‘in connection with’ has a wide meaning, the breadth of that meaning must be construed according to the context in which it appears, including the purpose of clause 25.
  3. [79]
    In Drayton v Martin, Sackville J stated:

Of course, the meaning of the phrase "in connection with", whether used in a statute or in a contract, must depend on the context: Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 at 146. Nonetheless, the width of the ordinary meaning of the phrase is indicated by a passage from the judgment of Wilcox J in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465, at 479-480:

"The words 'in connection with' have a wide connotation, requiring merely a relationship between one thing and another.  They do not necessarily require a casual (sic) relationship between the two things: see Commissioner for Superannuation v Miller (1985) 8 FCR 153 at 154, 160, 163. They may be used to describe a relationship with a contemplated future event: see Koppen v Commissioner for Community Relations (1986) 11 FCR 360 at 364; Johnson v Johnson [1952] P 47 at 50-51. In the latter case the United Kingdom Court of Appeal applied a decision of the British Columbia Court of Appeal, Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225, in which the question was whether a particular court, which was given 'jurisdiction to hear and determine all questions that may arise in connection with any assessment made under this Act, had jurisdiction to deal with a matter which preceded the issue of an assessment. The trial judge held that it did, that the phrase 'in connection with' covered matters leading up to, or which might lead up to, an assessment. He said, [1944] 4 DLR 639:

"One of the very generally accepted meanings of "connection" is "relation between things one of which is bound up with or involved in another"; or, again, "having to do with".  The words include matters occurring prior to as well as subsequent to or consequent upon so long as they are related to the principal thing.  The phrase "having to do with" perhaps gives as good a suggestion of the meaning as could be had."

This statement was upheld on appeal."[36]

  1. [80]
    Clause 25, being concerned with practical completion, is therefore concerned with the actual physical performance of the contractual works. This is apparent from the various sub-clauses dealing with the requirement for the builder to give to the owner a defects document, the entitlement of the owner to give a notice to the builder disputing that the works had reached practical completion, and the requirement for the builder to complete the works the builder considers are necessary to bring the works to practical completion. In addition, clause 25.7 specifically preserves the owner’s entitlements in respect of defective work during the defects liability period and in accordance with the statutory warranties implied by schedule 1B of the QBCC Act.
  2. [81]
    Seen in this context, the reference in clause 27.1 to Abbott’s obligations under the contract is not to be confused with, and was quite separate and distinct from, any liability incurred by Abbott as a consequence of its failure to comply with such obligations. This includes the liability to pay late completion damages.
  3. [82]
    As noted by the learned authors of Halsbury’s Laws of Australia:

The function of an agreed damages clause is to overcome the requirement of proof of loss in a claim for damages. If damages have been liquidated by the parties, there is no requirement that the plaintiff prove a loss and recovery of compensation is thereby facilitated. The clause fixes the amount recoverable by the plaintiff without the need for litigation at all unless the defendant denies that the contract has been breached or refuses to pay.[37]

  1. [83]
    Liquidation of damages does not alter the character of a respondent’s liability for damages.[38]
  2. [84]
    Abbott was not obligated to pay late completion damages to the Forrests. Abbott was obligated to bring the works to practical completion within the period stipulated by the contract. Clause 25 of the contract was concerned with the obligation imposed upon Abbott to bring the works to practical completion being the physical completion of the building works. On a proper construction of clause 25.7 in the overall context of clause 25 and the purpose of the clause, the liability of Abbott for late completion damages was not an ‘obligation’ within the meaning of clause 25.7. Rather, the payment of such damages was a liability accruing to Abbott as a result of Abbott’s failure to bring the works to practical completion within the time stipulated by the contract in circumstances where a claim for liquidated damages was raised by the Forrests.
  3. [85]
    This construction is consistent with clause 32.1 of the contract. The Forrests were not required to offset a claim for late completion damages from the final claim. The use of the permissive ‘may’ in clause 32.1 There was no contractual obligation imposed upon the Forrests to act in accordance with clause 32.1 at the time of making the final claim payment. Nor does the contract, unlike some building contracts, provide that the claim for liquidated damages was required to be made within a specified period failing which the owner would have no entitlement to such damages. Indeed, the contract did not prescribe any consequences if a claim for liquidated damages was not made and the appropriate offset not deducted from the final claim. It follows that it would be inconsistent with the plain meaning of clause 32.1 to construe clause 25.7 as requiring the deduction by the owners of any amount for liquidated damages in order to preserve a claim for such damages. 
  4. [86]
    It follows from the foregoing that the payment by the Forrests of the final claim did not compromise their entitlement to claim liquidated damages. The calculation of the liquidated damages claim is not contested by Abbott, only the entitlement of the Forrests to recovery. The Forrests claim for liquidated damages is allowed.

Compliance by the Forrests with the requirements of s 77(2) of the QBCC Act before commencing the proceeding

  1. [87]
    Abbott asserts that the Forrests failed to comply with the requirements of s 77(2) of the QBCC Act before commencing the proceeding.
  2. [88]
    I will address the application by Abbott to rely upon further evidence in the form of a statement by Mr Wayne Abbott. I have addressed earlier the relevant matters when considering an application to rely upon further evidence in an appeal conducted by way of rehearing. Abbott concedes that the evidence of Mr Abbott could have been adduced at the hearing below. It should be noted that Mr Abbott did not give evidence at all in the proceeding below either by written statement or at the hearing. As with the evidence of the engineer, Abbott is simply seeking to address fundamental deficiencies in the way in which it conducted its case below. The application to rely upon the evidence of Mr Abbott is refused.  
  3. [89]
    Sections 77(1) and 77(2) of the QBCC Act provide:

77  Tribunal may decide building dispute

  1. A person involved in a building dispute may apply, as provided under the QCAT Act, to the tribunal to have the tribunal decide the dispute.
  1. However, the person may not apply to the tribunal unless the person has complied with a process established by the commission to attempt to resolve the dispute.
  1. [90]
    It is not contentious in this appeal that compliance by a person with s 77(2) is a mandatory pre-condition to the jurisdiction of the Tribunal to decide a building dispute. Section 77(2) must be complied with before a proceeding for a building dispute is commenced.
  2. [91]
    In the originating application filed in the proceeding below, the Forrests stated:
    1. They had made a complaint to the QBCC about the dispute;
    2. They had not participated in a QBCC dispute resolution process; and
    3. They had attached the formal notification letter from the QBCC stating that the dispute resolution process required by the QBCC Act had been complied with.
  3. [92]
    With the originating application filed in the proceeding below the Forrests filed a copy of a letter from the QBCC dated 28 August 2019 in which it was stated:

If you wish to pursue the matter further, you may now apply to QCAT for assistance.

This correspondence serves as notification you have participated in the QBCC’s dispute resolution as prescribed by legislation and your case has now been finalised.

Please present this letter to the QCAT Registry staff at the time of application, quoting case number 523680.

  1. [93]
    Although the appeal is being conducted by way of rehearing it is relevant to note that in the proceeding below Abbott did not take issue with the compliance by the Forrests with the requirements of s 77(2). The issue is raised for the first time in this appeal. Abbott says that as the ground of appeal raises a question of law, it can be raised as a new issue on appeal. In Water Board v Moutsakas it was stated:

More than once it has been held by this court that a point cannot be raised for the first time upon appeal when it could possible have been met by called evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied …

…

In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of a duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings.[39]

  1. [94]
    I do not accept the submission by Abbott that the issue of jurisdiction is confined to a question of law. Whether a party has complied with s 77(2) of the QBCC Act raises a question of mixed law and fact. First, findings of fact are required as what steps were taken by the parties vis-à-vis the QBCC and any dispute resolution process established by the commission. The evidence may be that there is no such process relevant to a particular building dispute. Whether the facts as found fall within the meaning of s 77(2) will then be a question of law.
  2. [95]
    As the matter was not raised below, neither party led evidence on the issue.
  3. [96]
    In Allen & Anor v Contrast Constructions Pty Ltd (No 2) the Appeal Tribunal constituted by Deputy President Allen KC and Senior Member Traves stated:

[27] Here, the builder did attempt to comply with a process established by the commission to attempt to resolve the dispute. The builder received a formal notification from the QBCC that it had attempted to do so but was outside the scope of the established process. In our view, this is sufficient to comply with s 77(2) of the QBCC Act. If there is no process to deal with the dispute then there is no “established” process to deal with the dispute within the meaning of s 77(2). It follows that a person can not be in breach for a failure to comply with a process that does not exist, to resolve their dispute.

[28] Having said that, the builder here applied to the Commission in any event. This is a prudent step to take, particularly when it is not clear exactly what the established process is or to which disputes it applies. It also avoids the Tribunal having to determine the extent of its jurisdiction by reference to the nature and extent of the QBCC’s dispute resolution processes that may have existed at the time. In that respect we note the Consumer Building Guide published pursuant to s 46 of Schedule 1B of the QBCC Act which provides that the QBCC’s EDR (early dispute resolution) process is a free service which offers a facilitation-based approach to resolving disputes while the contract is “still on foot”. There are also fact sheets which refer to the EDR process published from time to time by the QBCC which refer to contracts which are “still active”, in which case EDR will aim to facilitate an acceptable agreement between both parties.

[29] Accordingly, in circumstances where the building contract was terminated and the builder had attempted to comply with the QBCC’s dispute resolution process before applying to the Tribunal, we find that the builder had complied with s 77(2) of the QBCC Act.[40]

  1. [97]
    The statement by the Appeal Tribunal is directly relevant for present purposes. The Forrests applied to the QBCC in relation to the dispute. This was an appropriate and prudent step to take. The QBCC wrote to the Forrests advising them that they had participated in the QBCC’s dispute resolution as prescribed by the QBCC Act with the result that the Tribunal was not required to determine the extent of its jurisdiction by reference to the nature and extent of the QBCC’s dispute resolution processes that may have existed at the time. If Abbott wished to challenge the issue of compliance by the Forrests with s 77(2) it had the opportunity to do so in the proceeding below including, for example, by leading evidence as to its involvement with the QBCC and any relevant dispute resolution process (or absence thereof). The only evidence before the Tribunal below on the issue of compliance by the Forrests with s 77(2) was the letter from the QBCC dated 28 August 2019. That letter is sufficient to conclude that the Forrests complied with the requirements of s 77(2) before commencing the proceeding.

Conclusion

  1. [98]
    The learned member assessed the Forrests entitlement to damages in the amount of $42,425.50. The only items of damage contested by Abbott in the appeal relate to the claim for liquidated damages, and the claims relating to the retaining wall, the ensuite wall and the termite protection. Of these claims, only the finding allowing for the cost of the ensuite shower wall is infected by error. Accordingly, the total amount payable by Abbott to the Forrests is reduced by an amount of $3,928.91.
  2. [99]
    I make the following orders:
    1. The application by Abbott to rely upon further evidence is refused.
    2. The application by the Forrests to rely upon further evidence is dismissed.
    3. Leave to appeal is granted.
    4. The appeal is allowed.
    5. Order 1 of the decision of the Tribunal dated 4 May 2022 is varied by substituting ‘$42,425.50’ with ‘$38,496.59’.
    6. The parties are to file and exchange submissions on the costs of the appeal, not exceeding five (5) pages in length within 14 days of the date of this decision.
    7. The costs of the appeal will be determined on the papers.

Footnotes

[1] Forrest & Anor v Abbott Builders (Qld) Pty Ltd [No. 2] [2022] QCAT 164.

[2] Pickering & Anor v McArthur [2010] QCA 341.

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

[4]  Ibid, s 146.

[5]  Ibid, s 143(3)(b).

[6]  QCAT Act, s 146.

[7] Ericson v QBCC [2014] QCA 297, [10] (Homes JA).

[8]  QCAT Act, s 147(2).

[9]  Ibid, s 147(3).

[10] QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41 (‘QUYD’).

[11] Cachia v Grech [2009] NSWCA 232.

[12] QUYD (n 10).

[13] Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577.

[14]  Reasons [176].

[15]  Reasons [170].

[16]  Reasons [172].

[17] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24.

[18] Ryan v Worthington [2015] QCA 201.

[19] Hoad v Scone Motors Pty Ltd [1977] 1 NSWLR 88.

[20] Moose Plastering Pty Ltd v Habul [2014] QCATA 354, [72].

[21] WJ v Chief Executive Officer, Public Safety Business Agency [2015] QCATA 190.

[22] Cairns Regional Council v Carey [2012] QCATA 150.

[23]  [2023] QCATA 12.

[24]  QCAT Practice Direction no. 4 of 2009.

[25]  Reasons [97].

[26]  Exhibit 23.

[27]  Ibid.

[28]  Ibid.

[29]  Exhibit 3.

[30]  T1-94, lines 24 – 29.

[31] Civil Proceedings Act 2011 (Qld), s 3.

[32]  (1848) 1 Exch 850, 855; 154 ER 363, 365.

[33] Gagner Pty Ltd t/a Indochine Cafe v Canturi Corporation Pty Ltd, [2009] NSWCA 413.

[34]  (1981) 150 CLR 402.

[35]  [2006] QCCTB 197.

[36]  (1996) 67 FCR 1, 32.

[37]  LexisNexis, Halsbury’s law of Australia, 110 – Contract, ‘(3) recovery of sums fixed by contract’ [110-11465].

[38] Hungerfords v Walker (1989) 171 CLR 125.

[39]  (1988) 180 CLR 491, 497.

[40]  [2021] QCATA 43.

Close

Editorial Notes

  • Published Case Name:

    Abbott Builders (Qld) Pty Ltd v Forrest & Anor

  • Shortened Case Name:

    Abbott Builders (Qld) Pty Ltd v Forrest

  • MNC:

    [2023] QCATA 141

  • Court:

    QCATA

  • Judge(s):

    Senior Member Brown

  • Date:

    01 Nov 2023

Appeal Status

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

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