Queensland Building Services Authority v Srivastava
[1999] QDC 127
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- Queensland Building Services Authority v Srivastava[1999] QDC 127
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Queensland Building Services Authority v Srivastava[1999] QDC 127
Queensland Building Services Authority v Srivastava[1999] QDC 127
DISTRICT COURT | No 111 of 1999 |
CHAMBERS
JUDGE CF WALL QC
QUEENSLAND BUILDING SERVICES AUTHORITY | Appellant |
and
SUMITRA NANDAN SRIVASTAVA | First Respondent |
and
EDWARD JOHN LAZZARONI | Second Respondent |
TOWNSVILLE
DATE 16/06/99
JUDGMENT
HIS HONOUR: This is an application for leave to appeal from a decision of the Queensland Building Tribunal reversing a decision of the Queensland Building Services Authority that the first respondent was not entitled to compensation for the cost of completing a house following termination of the building contract owing to the bankruptcy of the builder, the second respondent. The reason relied upon by the Authority was that the amount paid by the first respondent for the lock up stage was a “pre-payment”.
Clause 15 of the contract provides that the builder (contractor) shall be entitled to claim a progress payment when the builder has completed each of the following stages of work under the contract, namely, base stage, frame stage, lock up stage, pre-paint stage and practical completion. The clause further provides, so far as is relevant, that the owner shall pay the builder the progress payment within five working days of receipt of the claim.
Section 66(3) of the Queensland Building Services Authority Act 1991 effectively provides what the builder must do to obtain payment of the builder's claim under clause 15. The progress payment (instalment) is not due under the contract, i.e. is not payable, by the owner (consumer) by reason of section 66(3) until the builder “has given the consumer an account for payment of the instalment accompanied by a certificate to the effect that the building work has been completed to the relevant stage”.
The five days within which payment is to be made by the owner would not commence to run until an invoice and certificate as required by section 66(3) has first been given by the contractor to the consumer. Clause 15 is subject to section 66(3) to this extent.
I agree with the submission of Mr White that clause 15 deals with the builder's entitlement to claim an installment; section 66(3) deals with an owner's obligation to pay an installment. Without the builder's compliance with section 66(3) the installment does not become due for payment by the owner even though the stage is completed. This was also the position taken by the appellant. To this extent the Tribunal was wrong in concluding that section 66(3) is “inconsistent with and contrary to the provisions of clause 15” but this error does not affect the result. The builder still had to comply with section 66(3) for the installment to become due. The parties also agreed that clause 2.3(b) of the insurance policy conditions was also subject to section 66(3) in that a payment made without the builder first complying with section 66(3) would be a “payment of moneys before they become due under the contract” and therefore a pre-payment.
Clause 2.3 is in the following terms:
“2.3 Limit on Right to Compensation
Where in the opinion of the BSA:
- (a)The value of the residential construction work to be undertaken under the contract clearly exceeds the contract price; or
- (b)The insured pays to or on behalf of the contractor any moneys before they become due under the contract,
the BSA will reduce the amount of compensation payable under this policy by the amount of that excess or pre-payment.”
Mr White conceded that the requirements in section 66(3) had first to be satisfied before the consumer, the first respondent here, could recover under the insurance policy i.e. that section 66(3) governs clause 2.3(b) as to when moneys become due under the contract.
The findings of the Building Tribunal are liable to be set aside only if they are against the weight of the evidence or unreasonable or if the Tribunal misdirects itself so as to influence the result: Whywait Pty Ltd v Davison [1997] 1 QdR 225 at 233. Interestingly the Full Court of the Federal Court appears to have taken a narrower approach in appeals of this nature. In Collins v. Minister for Immigration and Ethnic Affairs [1981] 4 ALD 198 at 201 the Court said,
“...the concepts of a decision being against the evidence and of being against the weight of the evidence belong to appeals from courts of law and have particular application to jury verdicts...They certainly have no place when the appeal...is of proceedings of an administrative tribunal which is not bound by the rules of evidence and which, subject to the obligation to observe the requirements of natural justice, can inform itself as it chooses. (See, s33(1)(c) of the Administrative Appeals Tribunal Act 1975.) An appellant who attacks a conclusion of the Tribunal because of deficiency of proof said to amount to error of law must show, if he is to succeed, that there was no material before the Tribunal upon which the conclusion could properly be based.”
In the present case the equivalent section to section 33(1)(c) is section 87(3)(c) of the Queensland Building Services Authority Act 1991.
Notwithstanding that the Court of Appeal does not appear to have considered section 87(3)(c) and to that extent the decision could be said to be per incuriam, I consider I am nevertheless bound by the decision and I propose to follow it.
The invoice the subject of this appeal was on the second respondent's “K.D. Phillips Homes Townsville” letterhead and was in the following terms:
“INVOICE
DATE: | 6th February, 1998 |
DATE DUE: | 10th February, 1998 |
CLIENT: | Dr. Srivastava |
SITE ADDRESS: Dear Sumitra, | Lot 36 Wynberg Drive, Annandale |
We hereby request the following progress payment for lock-up stage.
Total | $41,287.75 |
Yours faithfully,
K.D. PHILLIPS HOMES - TOWNSVILLE
per Lazzaroni
(Authorised Officer)”
The relevant findings of the Tribunal were expressed as follows:
“There is no doubt that there is nothing shown on the documents which expressly purports to be a certificate to the effect that the building has been completed to the relevant stage. All invoices contain words similar to those in the invoice for the lock-up stage payment which were as follows:
‘We hereby request the following progress payment for Lock-up Stage’”
“...in the present case whilst the wording is not as clear as perhaps it ought to be, I am satisfied that the manner in which the request for payment was couched was also reasonably capable (and I have regard to the course of dealings between the parties during prior business arrangements) to constitute the appropriate certificate.
It seems to me that the words adopted are capable of being understood to mean that the money is being requested as the relevant stage has been completed. It is the last aspect of that construction which, as far as I am concerned, satisfies the requirements of Section 66(3).”
It seems to me upon a consideration of the authorities and depending upon the circumstances, that the following matters are relevant to a determination whether the invoice here amounts to a certificate to the effect that the building work has been completed to the relevant stage, here the lock-up stage:
- Section 66(3) does not require a certificate that the building work has been completed to the relevant stage.
- Section 66(3) requires a certificate to the effect that the building work has been completed to the relevant stage.
- Whether the invoice gives the information which the Legislature intended to be given.
- The particular facts and circumstances of each case.
- Depending on the circumstances it may be that a benevolent construction should be adopted.
- Whether the invoice makes it tolerably clear that the building work has been completed to the relevant stage.
- Any (relevant and probative) evidence or material bearing on the question.
- The object of the certificate and what is intended to be achieved by section 66(3).
- Whether the invoice gives to the consumer all the information which a properly completed certificate would give.
- The certificate need not say expressly that the building work has been completed to the relevant stage; it is sufficient if it is to that effect.
- Whether the consumer would understand that the invoice was to the effect that the building work has been completed to the relevant stage.
- Even if not entirely satisfactory in its terms does the invoice nevertheless comply with the statutory requirements.
- Ambiguity may be excused provided the invoice is sufficiently unambiguous to qualify as a certificate.
- It is a matter of degree whether the invoice is a certificate.
- Whether the writing is in the form of a certificate.
- Whether the writing expressly certifies to anything.
- Whether the invoice formally attests to the effect that the building work has been completed to the relevant stage.
- Whether the contents of the invoice are positive, unambiguous and not vague as to the fact being attested or declared.
- The certificate need not take any particular form.
- The certificate need not be a separate document from the account for payment.
- Whether the word certificate is used with reference to the direct dealings between the parties.
- Whether the invoice connotes formality and certainty.
- “Certificate” is a word which may have its meaning determined by its context.
- Whether the invoice complies with section 66(3) involves primarily a question of fact.
- Whether the invoice attests in an authoritative or formal manner.
- Whether the invoice states in a formal way and unequivocally to the effect that the building work has been completed to the relevant stage.
- Whether the invoice is capable of being seen by the reader to be a certification to the effect that the building work has been completed to the relevant stage.
- Whether the invoice would be understood by the contractor and the consumer as meaning that the building work has been completed to the relevant stage.
- Whether the invoice effectively means that the building work has been completed to the relevant stage.
- Whether the invoice amounts to a declaration to the effect that the building work has been completed to the relevant stage.
- What is the true construction of the invoice.
- What is the meaning of section 66(3) as applied to the particular case.
- On a broad view of section 66(3) which of the two constructions will most probably attain the object of the provision.
- What interpretation did the contractor and the consumer put on the document and how did they conduct or order their affairs relating to the document.
- Whether the history of the relationship and contractual dealings between the parties bears on the meaning to be placed on the document, or the words used in the document.
- To what extent precision is required in relation to the words used.
Not all of these will be relevant or applicable to every case. Some overlap. Some will be more relevant, more applicable, more appropriate than others. Not all will apply in each case. Each case will be different and each must be considered by reference to the facts and circumstances peculiar to each. In many cases it will be a question of balancing apparently conflicting factors and issues. The circumstances of each case will determine which assume more or less prominence than others and whether some apply and others do not.
The decisions that I have considered include the following: Farmer v Legg (1797) 101 ER 923 at 925, 926 and 927; The Queen v The Mayor of Harwich [1853] 1 E&B 617 at 619; Rainey v Lipphardt [1960] QWN 59 at 62; Re Beard's Deed of Arrangement [1970] QdR 129 at 140; Vurlow v Leighton Nursing Home [1978] WAR 15 at 20 and 25; Eastick v Australia and New Zealand Banking Group Ltd [1981] 53 FLR 91 at 92-94 and 95; Garms v Birnzwejg [1990] 2 QdR 336 at 342, 345 and 349; Burgess v Umina Park Home for the Aged and Anor (1993) 2 TasR 246 at 252; Edge v Macguarie Homes Queensland Pty Ltd, unreported, District Court Brisbane, Judge Maxwell Morley QC, 25 September 1995 at p.7.
In concluding that the invoice constituted “the appropriate certificate” and “satisfied the requirements of section 66(3)” the Tribunal had “regard to the course of dealings between the parties during prior business arrangements.”
That was a permissible approach to take especially having regard to the provisions of section 87(3)(c) of the Act. The evidence was “logically probative” to the issue of whether the invoice was a certificate. It had “rational probative force” and it was accepted as “reliable” and “relevant to the issue”. As between the contractor and the consumer there was no dispute on this issue. See Re Pochi (1979) 26 ALR 247 at 257; Herrmann v. Nurses Board (South Australia) (1993) 61 SASR 325; and Casey v. Repatriation Commission (1995) 22 AAR 234.
The Tribunal was entitled to use the evidence as an aid in the construction and interpretation of the invoice. It was not bound to treat the words used as conclusive as to the meaning of the document without reference to the evidence as to what the parties understood those words to mean. Both parties understood the document as a statement to the effect that the building work had been completed to the lock-up stage. In deciding this question the Tribunal was entitled to receive and act upon evidence of the factual background. That evidence placed the document in its context enabling it to be understood. In this context I think it important to recollect what Lord Wilberforce said in Prenn v. Simmonds [1971] 3 All ER 237 at 239-240:
“The time has long passed when agreements were isolated from the matrix of facts in which they were set and interpreted purely on literal linguistic considerations...We must inquire beyond the language and see what the circumstances were with reference to which the words were used and the object appearing from those circumstances which the person using them had in view.”
Those words, spoken with reference to an agreement, do in my view, express in better language than I could use, the approach which should be taken to interpreting the document in this appeal whilst recognising that it is a document required by Statute and not an agreement reached between two parties.
The Tribunal was entitled to have regard to the surrounding circumstances, to the factual matrix in which the document existed in order to determine its purpose and what it meant. That factual background was known to and understood by both parties. Having regard to the understanding of the parties as to the meaning of the document it has not been shown that the Tribunal was wrong in not insisting on a strict literal interpretation of the words used.
Effectively the Tribunal adopted an approach to interpreting the document which was directed towards ascertaining the meaning intended by the contractor and understood by the consumer. Both of those individuals had the same understanding of the document and it was that understanding which is reflected in the decision of the Tribunal. Approaching the matter that way avoided a result which neither party intended. The result was consistent with the dictates of fairness and commonsense. It was a result which represented substantial justice. It was their contract they were dealing with and they had reached agreement that the relevant work had been completed and payment was due; the “invoice” was intended to have this effect. It was in these circumstances that the Tribunal placed more weight on some of the matters I have listed and less or none on others. That was a balancing exercise which the Tribunal is particularly suited to conduct. It is not as if the consumer here made a pre-payment for work which had not then been completed. He made a payment for work which had in fact been completed to the relevant stage as agreed by the parties. In these circumstances the interpretation placed on the document by the Tribunal works no injustice or unfairness to the statutory insurer or the insurance fund.
It was submitted by the appellant that the “previous course of dealings do not afford any assistance to others to whom the certificate may be shown.” That may be so if those others were unaware of the factual background but the submission misconceives the purpose for which the evidence was led and the use which the Tribunal made of it. The appellant also submitted that the document was “not positive and unambiguous and was vague”. On its face that may be so especially if it is interpreted literally but its interpretation was a question of fact upon which the Tribunal was entitled to have regard to the “course of dealings between the parties.”
Mr Holyoak submitted that in considering whether the “invoice” amounted to a certificate the Tribunal should have confined itself to matters such as Judge Morley QC referred to in Edge v Macguarie Homes Pty Ltd, supra (which the Tribunal did refer to) and “should have applied that test”, it should have approached the question solely by reference to whether as a matter of law the certificate on its face “was unambiguous” and “attested in an unambiguous fashion” to the relevant fact. Unless it did so, resort could not be had to extrinsic evidence so the submission went. I cannot accept this to be the case. There is no rule of law as to what constitutes a certificate for the purposes of every case. Whether the document amounts to a certificate or not is a question of fact and in resolving that question the Tribunal was permitted to have recourse to extrinsic evidence. Further, language amounting to unambiguous attestation is but one of the factors to consider in deciding whether the document amounted to a certificate or not. In this case the Tribunal has effectively found, having regard to the course of dealings between the parties, that the document was a certificate having that effect. I am unable to conclude that such a finding is against the weight of the evidence or unreasonable or that there has been any misdirection by the Tribunal. On the contrary, I think it is supported by and consistent with the evidence and is not unreasonable. In fact Mr Holyoak conceded that if more is involved in determining whether the “invoice” is a certificate than the “unambiguous attestation test” he could not challenge the factual finding made by the Tribunal. That, in my view, was a proper concession to make. The appellant in paragraph 8 of its outline of argument summarised the factual question as follows:
“The narrow issue which fell, and falls, for determination, was what events or facts were required to be fulfilled in order for the moneys to be due under the contract.”
Mr Holyoak also conceded that the question of what the document means is “a factual question”. The equivalent documents relating to payment for the base stage and the frame stage were in similar terms to the lock-up stage document and they were also understood by the contractor and the consumer to have the same effect. There was no suggestion by the appellant that the payments pursuant to them were also “pre-payments”.
The invoice here was of importance primarily to the builder and the consumer and they understood what it meant. Mr Holyoak stressed that third parties such as a financier or bank and the statutory insurer would not understand it to mean or certify to the effect that the building work had been completed to the relevant stage. That may be so in the absence of explanation but it cannot, in every case, be the determinative consideration.
The appellant also argued that clause 15 of the contract specifically incorporated section 66(3) by the following words which are part of clause 15:
“Each such stage shall not be deemed complete unless all relevant statutory requirements have been satisfactorily completed.”
The Tribunal found that this provision did not incorporate section 66(3). I agree. The “relevant statutory requirements” are those governing the work and its completion not those governing payment. Because it is agreed that section 66(3) is determinative of when payment becomes due it is unnecessary to consider this argument any further.
The appellant therefore fails on those grounds which challenge the Tribunal's finding that there was not a pre-payment. The application for leave to appeal on those grounds will therefore be dismissed.
The appellant also seeks leave to appeal against quantum. The Tribunal found that the first respondent was entitled to compensation of $38,811.25 calculated as follows:
Contract price | $117,965.00 |
Less deposit paid | $ 3,000.00 |
Less progress payment 1 (base stage) | $ 14,694.75 |
Less progress payment 2 (frame stage) | $ 17,694.75 |
Less amount actually paid for progress payment 3 (lock-up stage) | $ 40,087,05 |
Balance | $ 42,488.45 |
The Tribunal calculated the balance to be $42,488.75 as a result of an arithmetical error. The agreed reasonable cost of completing the contract was $81,300.00. Deducting $42,488.45 from this amount left $38,811.55. The amounts of $3,000 and $14,694.75 totalled $17,694.75 which was 15 per cent (in accordance with the contract) of $117,965.00.
The appellant submits that the Tribunal's finding that $14,694.75 was paid is against the weight of the evidence and the amount should be $13,494.75. The evidence relating to this aspect appears to be as follows:
- (1)The second respondent signed a letter dated 6 March 1998 to the appellant written by the first respondent to the effect that the first respondent had paid $3,000 and $14,694.75 being 15 per cent of the contract price for the base stage.
- (2)In paragraph 10 of his statement dated 23 June 1998, (Exhibit ADC 5 to the affidavit of A D Collins filed 19 April 1999) which was before the Tribunal the first respondent said the amounts he paid were $3,000 and $14,694.75.
- (3)The second respondent filed a statement in the proceedings before the Tribunal dated 4 August 1998 (Exhibit ADC 8 to the affidavit of A D Collins filed 19 April 1999) to the effect that the first respondent paid a deposit of $3,000 on 10 December 1997 and $13,494.75 for the “slab” on 7 January 1998, a total of $16,494.75.
- (4)In evidence before the Tribunal the second respondent agreed by reference to his statement dated 4 August 1998 that the payments were $3,000 and $13,494.00.
- (5)The first respondent gave evidence to the Tribunal that his letter dated 6 March 1998 was prepared “in haste at the request of the Authority without checking the facts”. The second respondent said in his evidence that before signing that letter he “just calculated the percentages as per the contract, the overall contract price...there were four previous jobs with the same figures.” He admitted that he took “obviously inadequate steps” to check the figures, that the figures in his statement dated 4 August 1998 “supercede the original amounts” in the first respondent's letter dated 6 March 1998, and that the correct amounts that he received at the various stages are “to the best of my knowledge” those recorded in his statement of 4 August 1998.
The Tribunal gave no reasons for concluding that the amount paid was in fact $14,694.75 and like the second respondent initially did may have merely arrived at that amount plus the $3,000 deposit by merely calculating 15 per cent of the contract price.
In my view the weight of the evidence more supports a payment of $13,494.75 rather than $14,694.75. In my view ADC5 is most probably based on the letter dated 6 March 1998. ADC8 appears to have been carefully prepared after an examination of records and would appear to be the more reliable item of evidence. I am satisfied therefore that the Tribunal's conclusion that $14,694.75 was paid was wrong and cannot stand. The amount actually paid was $13,494.75.
The appellant also submits that the Tribunal erred in failing to add to the contract price “agreed” additional work (variations) totalling $4,825.70. The Tribunal referred to this amount in its reasons (page 4) and (page 18) recognised that the variations resulted in “some increase” to the contract price. It appears to me that the Tribunal should have added the cost of completed variations to reflect the actual contract price and it erred in not doing so.
The Tribunal said at page 18 of its reasons:
“If the Tribunal was to have regard to the value of variations, then assuming that they could be ascertained the process would involve the addition of the variation amount to the contract price and no doubt an addition of a similar amount (although not necessarily) to the reasonable costs of completing the contract.”
This appears to have been said with reference to variations which had been agreed to but not completed when the contract was terminated. The variations totalling $4,825.70 were said to be for “extra work involved in the slab and footings” and were claimed for the following work (see the costing sheet Exhibit SNS8 to the first respondent's statement before the Tribunal which is also attachment EJL3 to ADC8):
1. Bored piers to perimeter footing | $1,760.00 |
2. Slab costs | $2,460.70 |
3. Additional water mains | $ 137.50 |
4. Additional underground electrical mains | $ 467.50 |
Total | $4,825.70 |
In ADC8 the second respondent acknowledged that he was in error in claiming $1,760 for the bored piers; he thought the work had been carried out but subsequent enquiries indicated “it was decided to reposition the home slightly rearwards on the allotment which (negated) the requirement for the bored piers.” The result is that $3,065.70 not $4,825.70 should have been added to the contract price. Mr White conceded in argument that this extra work had been carried out.
In these circumstances I am unable to agree with the conclusion of the Tribunal, page 19, that the addition of this amount to the contract price would result in an equivalent increase in the cost of completing the contract.
The application for leave to appeal on these two quantum grounds will be granted.
The appellant has therefore succeeded on the appeal but only in relation to quantum.
The first respondent is entitled to compensation of $34,545.85 calculated as follows:
Contract price | $121,030.70 |
Less deposit paid | $ 3,000.00 |
Less progress payment 1 | $ 13,494.75 |
Less progress payment 2 | $ 17,694.75 |
Less amount actually paid for progress payment 3 | $ 40,087.05 |
Balance | $ 46,754,15 |
This amount is to be deducted from $81,300 giving a final figure of $34,545.85.
The appeal will accordingly be allowed and the Tribunal's determination of compensation varied to $34,545.85. That is the amount of compensation that the first respondent is entitled to pursuant to the insurance policy.
So far as the costs of the appeal are concerned the appellant has failed on the issues which occupied most of the time on the hearing but has succeeded in part. I would propose that the appellant pay 85 per cent of the first respondent's costs of and incidental to the appeal to be taxed if not agreed. The second respondent played no part in the appeal.
As I have not heard argument as to costs I will allow the parties 14 days to exchange and file written submissions should they contend for a different result on costs. If no submissions are filed the order will be as I have indicated. I give the parties liberty to apply on five days notice to each other in respect of any of the calculations.