Savage v Retloub Pty Ltd[2025] QCATA 83

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   Mr and Mrs Savage seek leave to appeal and to appeal a decision of the Tribunal made on 23 January 2023.
2. [2]
   Mr and Mrs Savage do not take issue with any of the findings of the Tribunal below, except in relation to the calculation of painting charges and the resultant terms of the final order.

Tribunal decision

3. [3]
   The Tribunal ordered on 23 January 2023 that Mr and Mrs Savage must pay Retloub Pty Ltd ATF The Boulter Building Trust t/as Boulter Built Homes (‘the Builder’) the sum of $8,805.06 by 10 March 2023.
4. [4]
   That sum was awarded after the Member found that the Builder was entitled to payment for a final progress claim, adjusted by the sums found in Mr and Mrs Savage’s favour, as follows:

$12,644.00 final progress claim, less:

5. [5]
   Relevant facts on which the Tribunal proceeded include:

   1. On 5 November 2019 the parties agreed in writing to remove external painting from the scope of works and adjusted the costs of that work by deducting the cost of external painting from the previously quoted amount of $17,600.00, leaving an amount allowed for painting of $11,257.00.
   2. The parties entered into an HIA Queensland Alteration, Addition and Renovation Contract (QC3) (‘the Contract’) on 11 November 2019.
   3. The contract price is described in cl 2 of the Contract as $216,743.00 including GST, comprising a fixed price component of $149,938.60, prime cost allowances of $20,196.40 and a provisional sum allowance of $46,608.00.
   4. Provisional sums set out in sch 3 to the Contract include as an item MLG Painting at $17,600.00, which is the amount quoted by MLG on 8 September 2019 to include external and internal painting. In all, the provisional sum allowances amount to $46,608.00.
   5. Clause 21 of the Contract provides that if the actual price of a provisional sum item is less than the allowance, the difference will be deducted from the contract price. Any extra cost is added to the contract price with a margin.
   6. Schedule 4 (cl 22) provides that external painting is not included in the contract price because Mr and Mrs Savage are either supplying these items or having other contractors do the work.
6. [6]
   The Building Schedule forming part of the Contract includes the note: “35. Painting – internal painting by builder, external painting by owner, “other – as per MLG Quote No 288 dated 8 September 2019.”
7. [7]
   On 18 February 2020, the Builder sent a variations summary document to Mr and Mrs Savage, which included:

Painting

8. [8]
   The variation amount was paid.
9. [9]
   A final notice of dispute was issued by Mr and Ms Savage on 1 July 2020, with a claim of $11,245.00 said to be owing to them comprising:

   1. $5,754.00 paid to the Builder following the painting variation of 18 February 2020; plus
   2. $5,491.00 credit which should have been given upon reduction of the provisional sum of $17,600 allocated to painting.
10. [10]
    The Builder gave two final payment claims. The first for $11,219.00 being the final contract amount of $10,732.00 adjusted for variations and the second with different adjustments in the amount of $12,644.00. Neither claim referenced any adjustment for painting.
11. [11]
    The Member accepted it was agreed that to reduce cost Mr and Mrs Savage would be responsible for external painting and the Builder for internal painting as part of the Contract, with a provisional allowance made for that. The Member found that the contract price was reduced accordingly.
12. [12]
    The Member accepted the Builder’s submission that the Contract should be rectified because of the Builder’s error in including a provisional sum for painting of $17,600.00 and that Mr and Mrs Savage were aware of the error.
13. [13]
    The Member found that Mr and Mrs Savage were aware that inclusion of a provisional sum of $17,600.00 for painting was an error because a new estimated painting cost had been agreed before entering the Contract. It was reasoned that failing to adjust the provisional sum allowance to reflect the internal painting cost only would have the impact of the homeowners paying $6,377.87 (plus builder’s margin) for painting, but receiving a credit back of $17,600.00 – namely, free internal painting plus an $11,000.00 windfall. It was found that the parties’ intention was that the provisional sum allowance for painting would reflect the estimated internal painting costs, based upon the MLG quote received, as the MLG quote is referenced in the schedule of provisional sum allowances.
14. [14]
    The Member adopted the Builder’s figures, save for the provisional sum allowance, and calculated the correct painting charges as follows:

Grounds of appeal

15. [15]
    Mr and Mrs Savage have attempted to characterise the errors they assert occurred in the decision below. With respect I do not consider a correct characterisation has been made.
16. [16]
    In my view Mr and Mrs Savage assert errors of law, errors of fact and errors of mixed law and fact. Section 146 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) applies to questions of law. No leave to appeal is required where a question of law alone is raised. As to questions of fact and mixed law and fact, s 147 of the QCAT Act requires that leave to appeal be granted before a decision in the appeal may be made. Under s147 of the QCAT Act the appeal proceeds by way of rehearing on the evidence before the Member below.
17. [17]
    Leave to appeal is granted if there is a reasonably arguable case of error and of substantial injustice if the error is not corrected.
18. [18]
    In this case where questions of law, fact and mixed law and fact can be discerned the Appeal Tribunal will determine if leave to appeal should be granted with respect to the questions of fact, and law and fact. If leave to appeal is granted the matter will proceed by way of a rehearing.
19. [19]
    I will then deal with all asserted errors in the appeal proceeding.^[3]

Submissions of Mr and Mrs Savage

Ground 1 - There was no mistake in the provisional sum allocated for painting.

20. [20]
    Mr and Mrs Savage deny that there was any mistake in inserting the sum of $17,600.00 as a provisional sum for painting in the contract. I take that submission to raise a question of fact as to whether a relevant mistake is established on the facts, and a question of law as to whether rectification of the contract should have been granted. The ground of appeal raises a question of mixed law and fact.

Ground 2 - Failure to take email correspondence between the parties into account in construing the contract.

21. [21]
    This ground of appeal is part and parcel of the question of mixed fact and law as to whether there was a mistake sufficient to justify rectification of the Contract. Mr and Mrs Savage submit that the Member relied on the 5 November 2019 email to find that there had been a mistake in recording the terms of the contract with respect to the allocation of a provisional sum for painting.
22. [22]
    They say that the Member failed to take account of the subsequent email of 10 November 2019 wherein the Builder requested that the provisional sum for painting be left at $17,600.00, noting the changed scope of works, so that the contract terms in relation to reducing the contract sum upon only internal painting being performed would govern the ultimate cost of the work. Mr and Mrs Savage say that they agreed to sign the contract on that basis.
23. [23]
    Mr and Mrs Savage also refer to emails written after the contract was entered, on 23 January and 18 February 2020 which they assert are evidence consistent with there being no mistake, but those emails were not taken into account by the Member.
24. [24]
    A failure to take into account a relevant matter or taking into account an irrelevant matter is an error of law.

Ground 3 - Incorrect calculation of money owed under the contract.

25. [25]
    Mr and Mrs Savage submit that an incorrect calculation of the money owed under the contract occurred because of an erroneous finding as to the amount of the provisional sum for painting in the contract.
26. [26]
    The ground raises a question of law as to the meaning of the Contract.^[4] Once the contract has been construed a question of fact is raised as to the correct calculation of money owing under the contract.
27. [27]
    Mr and Mrs Savage submit that they are entitled to a refund of the sum of $5,754.00 paid by way of the variation dated 3 March 2020 because the variation incorrectly cited a provisional sum for painting of $7,924.00, not $17,600.00. Further a credit of $4,280.89 is claimed against the provisional sum of $17,600.00 given the painting cost was $13,319.37.
28. [28]
    Mr and Mrs Savage say that the sum owed to them is $10,034.89 which they ask be offset against the $1,088.44 awarded to them, leaving them due $8,946.45 as a credit for painting works. They then seek to offset that amount against the amount awarded to the Builder in an amount of $8,805.06 so that the Builder must pay the Savages $141.39.

Builder’s submissions

29. [29]
    The Builder says that the agreed price for the contract works was $215,000.00 (inclusive of GST) once external painting work was removed from the scope of work. The Builder says that the painting allowance reflected in that contract price was $8,715.87 (inclusive of GST) or $7,923.52 (exclusive of GST). Taking account of some smaller items the contract price was then finalised at $216,743.00.
30. [30]
    The Builder submits that for the Savages’ argument to carry any weight cl 22 of the Contract (Excluded items) would need to be “rescinded” and “signed by both parties”.

Reply by Mr and Mrs Savage

31. [31]
    In reply, Mr and Mrs Savage say that if the contract price of $216,743.00 included a lesser provisional sum for painting the total contract price would be less than $216,743.00. They say that the fixed and prime components have not changed and are not in dispute. They point out that the addition of the fixed price component, prime cost allowances and provisional sum allowance (including the painting allowance of $17,600.00) total the contract price of $216,743.00.

Consideration

Grounds 1 and 2 – there was no mistake in the provisional sum or the contract price as set out in the contract which would justify rectification; the Member failed to take into account relevant evidence in finding a mistake.

32. [32]
    The question raised by these grounds is whether the Member was in error by purporting to rectify the contract. Further, was the Member in error by relying on the 5 November 2019 email and ignoring the 10 November 2019 email between the parties to determine if there had been a mistake sufficient to justify rectification.
33. [33]
    Although not raised by either party a question of jurisdiction arises which the Appeal Tribunal is bound to address. Does the Tribunal have the power to order rectification? The powers of the Tribunal to resolve building disputes are found in s 77(3) of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’). No express power to order rectification is given to the Tribunal. The decision of Gwin v Gabriel^[5] (‘Gwin’) considered the issue and concluded that although s 77(3)(e) of the QBCC Act includes a power to vary a contract to avoid injustice that does not include a power to order rectification of a contract. On this view the Member erred in law by mistaking her jurisdiction to rectify the contract.
34. [34]
    The question of the Tribunal’s jurisdiction in this regard is not free from doubt. There is authority which suggests that the power to vary in s 77(3)(e) is in the nature of rectification.^[6] Further it has been said that the Tribunal’s powers under s 77 are extensive and broad ranging.^[7] It seems to me that the Member resolved the proper basis for rectification by relying on the imperative in s 28 of the QCAT Act to act fairly according to the substantial merits of the case.^[8]
35. [35]
    For the reasons given in Gwin I do not consider the Tribunal has power to order rectification of a building contract. An error as to jurisdiction is an error of law which I find has occurred. The result is that under s 146 of the QCAT Act the Appeal Tribunal may substitute its own decision for that of the Member below that the Contract is not amenable to rectification.^[9]
36. [36]
    Even if the Tribunal does have the power to rectify a contract, I do not consider that the grounds exist in this matter for such an order, for the reasons which follow.
37. [37]
    The usual rule is that parties who sign a written contract are bound by its terms^[10] and extrinsic evidence of the parties’ actual intentions and expectations is inadmissible,^[11] unless the circumstances exist for the contract to be rectified.^[12] Because the Tribunal was concerned with grounds for rectification the Member was entitled to look at extrinsic evidence to determine the parties’ intention, being the email correspondence between the parties.
38. [38]
    The Member correctly identified the circumstances in which rectification might be ordered at common law.^[13] However, the Member did not say whether she considered rectification was necessary as a result of common mistake or unilateral mistake. Rectification is not a remedy by which additional or different terms are imported into contracts. It is to “re-form” instruments so as to make them accord with what the parties actually agreed to, or with what one party intended and the other party knew the first intended.^[14]
39. [39]
    The Member found as a basis for rectification that the parties were agreed external painting would be removed from the contract, they were agreed as to the price for internal painting (albeit provisional) and that the contract price was reduced to reflect reduced painting costs. The Member found that Mr and Mrs Savage would enjoy a windfall not intended by the parties if the contract did not reflect a provisional sum for internal painting, rather than a provisional sum for both internal and external painting.
40. [40]
    The email correspondence between the parties suggests that at the time of entering the contract there was no mistake and that they both intended to insert the sum of $17,600.00 in the contract as the provisional sum for painting. The relevant emails which go to intention are the email of 10 November 2019, immediately prior to signing of the contract and the two post contract emails of 23 January 2020 and 18 February 2020.
41. [41]
    The Member referred to the 5 November 2019 email in reaching her conclusion. She did not take into account the 10 November 2019 email described earlier.  The Member raised two matters which counted against the Builder, namely that it drew up the contract and an email of 23 January 2020 confirming the provisional sum of $17,600.00 for painting. Those latter matters appear not to have been given any weight in forming a view that either a common or unilateral mistake had occurred which justified rectification of the contract. It has been held that clear and convincing evidence is required to prove that the signed document does not give effect to the parties’ intention.^[15]
42. [42]
    I do not consider that the facts exist to justify a conclusion that there has been a common mistake as to the amount of the provisional sum allowance for painting.
43. [43]
    Nor do I think the facts exist to justify a conclusion that the Builder made a mistake as to the provisional sum allowance and that the Builder’s mistake was knowingly exploited by Mr and Mrs Savage.
44. [44]
    By reference to the intention of the parties set out in all the email communications, I do not think the grounds existed for rectification of the contract in favour of the terms contended for by the Builder.
45. [45]
    I find that the contract reflects the common intention of the parties that the contract price would be adjusted by taking out the cost of external painting from the provisional sum for painting, at the point of adjustment in accordance with cl 21.7 of the Contract.
46. [46]
    If the Tribunal has the power to grant rectification of a building contract, the Member erred in finding that grounds existed to grant rectification.
47. [47]
    Leave to appeal is granted. This ground of appeal succeeds.
48. [48]
    If the Tribunal has the power to grant rectification of a building contract, I conclude consistent with the submissions by Mr and Mrs Savage, that without considering the 10 November 2019 email and without taking into account the other factors identified by the Member, an error of law has occurred. This ground of appeal succeeds.
49. [49]
    Relying on both my conclusion as to the Tribunal’s lack of jurisdiction to rectify a building contract and my conclusion that if the Tribunal does have that jurisdiction an error of mixed law and fact has occurred, it is ordered that the decision below purporting to rectify the Contract is set aside. In substitution is a decision that the Contract is not rectified but remains in the form as executed by the parties.

Ground 3

50. [50]
    This ground raises the proper interpretation of the Contract, and once that is determined, the correct calculation of money owed under the Contract.
51. [51]
    As to the meaning of the Contract, the ordinary principles of construction of a contract are used. That is, what would a reasonable person think was intended by a term or terms of a contract.^[16]
52. [52]
    The following clauses are relevant:
53. [53]
    Clause 2:

… The contract price is: $216,743.00

The contract price (inclusive of GST) is the sum of the following:

Warning

The contract price is subject to change. The Clauses that allow for changes to the contract price are Clauses…21…

…

54. [54]
    Clause 16:

These documents are documents that form part of this contract and are in addition to any special conditions, these general conditions, the specifications and the plans.

1…Quote MLG Painting Quote… ^[17]

55. [55]
    Clause 21:

21.7 In relation to each … provisional sum item if the actual price of supplying the item or providing the work is:

1. less than the allowance, the difference is deducted from the contract price;

2. more than the allowance, the total of the difference plus the relevant margin on excess state in Schedule 3 or a schedule forming part of this contract applied to the difference is added to the contract price.

56. [56]
    Clause 22:

22.1 The owner and the building contractor agree that the materials, goods, labour and services shown in the contract documents and which are set out in Schedule 4 are excluded from the works and the cost of those items are not included in the contract price.

Schedule 3 Provisional Sum items

…MLG Painting and Decorating Quote $17,600

…

Total: $46,608.00

Schedule 4: Excluded Items

The owner acknowledges that the cost of the supply and/or installation of materials, goods or the provision of the labour or services that are listed below are not included in the contract price. The owner may be supplying these items or having other contractors do the work.

… external painting

57. [57]
    If the provisional sum allowed for painting includes the cost of both external and internal painting, confusion arises as to the meaning of cl 22. On the Builder’s submissions the clause means that an amount for external painting has already been removed from the contract price. That is what the Member accepted. On one reading that may be what the clause means. However, that reading is not consistent with clause 2 whereby the contract sum specifically includes a provisional sum which catches the cost of external painting. Nor is it consistent with cl 16 and sch 3.
58. [58]
    The other meaning to be attributed to cl 22 is consistent with the submissions of Mr and Mrs Savage that external painting is not to be included in the contract price and insofar as the provisional sum allowance includes an amount for external painting that will be adjusted out of the contract sum when the actual cost of internal painting is known. That is consistent with cl 2 and the explicit warning that the contract price is subject to change as a result of cl 21.
59. [59]
    I conclude that reading the contract as a whole and giving meaning to cl 2 and cl 21.7, cl 22 means that the cost of external painting is not included in the contract price when adjusted.
60. [60]
    That is an interpretation which a reasonable person would have understood those terms to mean. The subjective intentions of the parties are irrelevant in interpreting the contract.^[18]
61. [61]
    On this basis, I find that the provisional sum for painting is $17,600, and the contract price is $216,743, as set out in the Contract. The Contract remains unaltered at cl 2.
62. [62]
    To the extent that the Member below has not correctly interpreted the Contract, this ground of appeal succeeds.
63. [63]
    As to calculation of money owing under the Contract the calculations of the Builder adopted by the Member are misleading. Those calculations treat painting as a variation rather than an item of work agreed to be performed for a sum allowed at a provisional amount, later adjusted to $13,319.89 and then reflected in the contract price. The Builder uses the term variation to refer to adjustments made to the contract price, but it is clear those items of work are not variations in the sense provided for at cl 20 of the Contract. I consider the Member was in error to adopt the mode of calculation undertaken.
64. [64]
    On my construction of the Contract the progress payment issued after painting had been completed should have taken account of the reduced contract price following an adjustment on removal of external painting. Schedule 2 of the Contract which relates to progress payments provides that the total of all progress payments must equal the contract price stated in item 2. That is the contract price given in cl 2, as adjusted by reference to cl 21.
65. [65]
    Mr and Mrs Savage have paid the sum of $5,754.00 towards painting costs as a result of a “variation” having been issued. It appears they have also paid the sum of $13,319.89 for painting. The parties are agreed that in all they have paid $213,784 to the Builder.
66. [66]
    In preparation of this decision I was unable to calculate what the final progress claim should be, given actual variations which might affect the contract price and other adjustments which should have been made upon crystallisation of costings for other provisional sum items. For that reason, I sought further submissions from both parties.
67. [67]
    I required the Builder to file further submissions setting out:

    1. the contract sum adjusted by:
       3. (i)
          variations stating what variations and the amount by which the contract sum is increased or decreased;
       4. (ii)
          the difference between any provisional sum and the actual cost of a provisional sum item in accordance with clause 21.7(a) or 21.7(b);
    2. payments made by Mr and Mrs Savage;
    3. the balance owing by reference to the adjusted contract sum.
68. [68]
    I have received submissions from Mr and Mrs Savage in response.
69. [69]
    The point of difference in the approaches of the Builder and Mr and Mrs Savage is whether the starting point for adjusting the contract price to take account of the actual cost of painting includes the provisional sum of $17,600.
70. [70]
    The Builder excludes that sum from the contract price and uses an amount calculated by removing the costs of exterior painting from the 8 September 2019 quote - $8,716.00. Mr and Mrs Savage include the original provisional sum of $17,600.00. I have found that Mr and Mrs Savage are correct in their interpretation of the Contract.
71. [71]
    That being the case I consider the following calculation represents the amount owing by Mr and Mrs Savage under the Contract. I have used the information given to me by the Builder, noting that he uses the term “variation”, but is referring to the adjusted provisional sum for items of work in sch 3 of the Contract. In undertaking my calculation, I have excluded all reference to painting until a final adjustment is made.

72. [72]
    By way of a check of those calculations, I note the submission of Mr and Mrs Savage that neither the fixed price component of the contract price nor the prime cost items have altered. That was not challenged by the Builder. On that basis the sum of the fixed price component, the prime cost items and the actual cost of the provisional items should add up to the adjusted contract price of $217,733.00. Using the variation figures given by the Builder the actual cost of the provisional items is:

The sum of $149,938.60 fixed price, plus $20,196.40 prime cost items, plus $47,598 adjusted actual cost of provisional items equals $217,733.00 being the adjusted contract price.

73. [73]
    I find upon a rehearing conducted under s 147 of the QCAT Act that Mr and Mrs Savage owe the Builder the sum of $3,949.00. However, that sum should be adjusted in their favour to take account of $2,750.50 for the following amounts found by the Member and not challenged by either party:

    1. $1,005.00 for a steel beam incorrectly charged, and
    2. $1,745.50 costs to rectify painting.  
74. [74]
    The result is an amount of $1,198.50 owed by Mr and Mrs Savage to the Builder.
75. [75]
    The Member found an overcharge in relation to painting of $1,088.44 which had been offset in her calculations. I have not offset that amount because it has been counted in reduction of the contract price in the money paid by Mr and Mrs Savage.
76. [76]
    To the extent payment has been made by Mr and Mrs Savage of the amount originally ordered to be paid in an amount of $8,805.06 that sum must be repaid to Mr and Mrs Savage.

Orders 

77. [77]
    The decision below purporting to rectify the Contract is set aside. In substitution is a decision that the Contract is not rectified but remains in the form as executed by the parties.
78. [78]
    The applicants must pay the respondents the sum of $1,198.50 within 21 days of the date of this decision.
79. [79]
    Any sum paid by the applicants to the respondent in satisfaction of the orders made on 23 January 2023 in matter BDL226-20 must be re-paid by the respondent to the applicants within 21 days of the date of this decision.