DISTRICT COURT OF QUEENSLAND

REASONS FOR JUDGMENT

1. [1]
   This is an appeal from a decision of the Queensland Building Tribunal given on 28 May 2001.

2. [2]
   The dispute arose in Mt Isa. Mr Hogue is a builder. Budlex Pty Ltd is a company controlled by members of the Vaiente family, formerly of the Verona Hotel. In this case, Messrs Alberto and Ernesto Vaiente represented the company.

3. [3]
   Mr Hogue did building work for Budlex. A dispute arose about the amount of payment that he was entitled to receive. The parties agreed that the Tribunal should first resolve the issue of any liability to make payment, leaving the quantum of payment to be assessed, if necessary, on another occasion.

4. [4]
   The Tribunal found for Mr Hogue on the question of liability. Although quantum has not yet been assessed, it appears that Budlex will have to make a further substantial payment to him, in addition to the repayment of a loan of $40,000. Budlex now appeals against that finding on liability. It contends that the liability issue should have been resolved in its favour.

5. [5]
   Mr Hogue’s claim was a contractual one. There was no alternative claim in restitution. Budlex did not raise any plea of estoppel, or suggest that his claim should be disallowed on public policy grounds. No different submissions were made on the appeal.

The nature of the appeal

6. [6]
   Section 92 of the Queensland Building Tribunal Act (Qld) 2000 provides for an appeal to this court in the following terms:

1. “92(1)

   A party to a proceeding before the tribunal may appeal to the District Court against a decision of the tribunal that finally decides matters the subject of the proceeding.

2. (2)
   …
3. (3)
   An appeal must –

1. (a)
   be accompanied by the Tribunal’s decision and reasons for decision, if any; and

2. (b)
   refer to the Tribunal’s decision and reasons for decision, if any, and any other relevant material and state the grounds for the application.

4. (4)
   The appeal is by way of rehearing, unaffected by the Tribunal’s decision, on the material before the Tribunal and any further evidence allowed by the District Court.
5. (5)
   …
6. (6)
   On an appeal, the District Court may do any of the following:

1. (a)
   Confirm, annul, vary or reverse the Tribunal’s decision; or

2. (b)
   Remit the case to the Tribunal for further hearing or rehearing; or

3. (c)
   Make consequential or ancillary orders or directions.

7. (7)
   The Registrar of the District Court must give the Tribunal a copy  of the court’s Judgment and reasons.”

7. [7]
   The task of an appeal court depends on the type of appeal which comes before it. In this case, we have the advantage of a recent decision by Judge McGill S.C., about the requirements of such an appeal. His decision can be found in Pointon v Redcliffe Demolitions Pty Ltd [2002] QDC 131.  The parties here accepted that his decision was correct.  After a thorough examination of the different tasks which appeal courts might be given, he explained that an appeal against the Building Tribunal was intended to be an appeal by way rehearing in the ordinary sense.  The onus is on an appellant to show that there is something wrong in the decision.  As he had earlier explained, an appeal by way of rehearing involves a review of the merits.  It is necessary for the appeal court to bring its own judgment to bear on the question, independent of the judgment of the body under appeal, although weight may be attached to the view of that body.  An appeal court has a duty to make up its own mind, to draw inferences from the facts for itself, to give the judgment and make orders that should have been given at trial, and, in exceptional circumstances, even to admit fresh evidence into consideration (which was done here by the consent of the parties).

8. [8]
   As he pointed out, the position of the appeal court is this:- “In general an appeal court is in as good a position as the trial judge to decide on the proper inferences to be drawn from facts which are undisputed or which, having disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn the appeal court will give respect and weight to the conclusions of that trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it (referring to the decision of the High Court of Australia in Warren v Coombes (1979) 142 CLR 531-551). 

9. [9]
   In the case before Judge McGill, the Building Tribunal Member had made an assessment of the credibility of the witnesses. As to that, he observed:- “Since the decision was based on findings of primary fact involving the assessment of credibility of witnesses, the appellant will face the particular difficulty identified by the High Court in overcoming the advantage of the Tribunal which has seen or heard the witnesses. In this respect the applicable approach in the present case is in Warren v. Coombes”.  He also referred to the approach of the High Court in Devries v Australian National Railways Commission (1993) 177 CLR 472.  There, the majority of the judges put the matter this way:

“More than once in recent years this court has pointed out that a finding of fact by a trial judge based on the credibility of a witness is not to be set aside because an appeal court thinks that the probabilities of the case are against – even strongly against – that finding of fact.  If the trial judge’s finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge has failed to use or has culpably used his advantage, or has acted on evidence which is inconsistent with facts incontrovertibly established by the evidence, or which was glaringly improbable.”

10. [10]
    In State Rail Authority (NSW) v Earthline Constructions Pty Ltd (1999) 73 ALJR 306 at 326, Mr Justice Kirby regarded such decisions as simply confirming a position which had long been acknowledged, that to the extent that the trial judge had an advantage because he or she had heard the witnesses, and had been able to absorb the atmosphere of the trial, adequate recognition should be given to the significance of that advantage by an appeal court conducting a rehearing on a transcript.  While the appropriate degree of significance to be given to the practical advantages enjoyed by a trial judge, might be a subject on which the last word had not yet been said, clearly some significance was to be attributed to them.

11. [11]
    Consistently with the above approach, counsel for Budlex, the appellant, went first, in setting out to demonstrate that the learned member of the Tribunal had gone wrong on the question of liability.

The Issue

12. [12]
    The Tribunal had to decide one key issue – how much money was Mr Hogue entitled to receive for his work? Budlex built 12 townhouses on its land in Mt Isa. Mr Hogue was the builder. According to Budlex, he was to be paid his costs fixed at $720,000.00 and one-third of the profits made by the venture. According to Mr Hogue, he was to be paid his actual costs, whatever they were, plus one-third of profits.

The Documents

13. [13]
    The foundation of the case for Budlex rests on some of the documents, especially those created by Mr Hogue. They are these:

1. (a)
   On 29 October 1997, Mr Hogue gave a written quote for “12 units at Doughan Terrace, Mt Isa”, in the amount of $816,000.00.

2. (b)
   On 26 November 1997, he gave a second written quote, for $720,000.00.  As his letter says, “this quote is totally at building cost and excludes all profits and margins”.

3. (c)
   On 20 May 1998 he and Budlex signed a written building contract in a form produced by the Queensland Master Builders Association.  The schedule referred to 12 brick veneer units at Doughan Terrace, and to plans and specifications both dated 9 April 1998.  The contract sum was $720,000.00.  In return for that payment, he had to “carry out and complete the works in accordance with the drawings and specification nominated in the schedule in a workmanlike manner for the consideration ($720,000.00)”. See clause 13 of the general conditions.  The drawings specifications were those supplied by Nu-Steel – (see below).

4. (d)
   On the same day, he signed a Notification and Payment Form, addressed to the Portable Long Service Leave Authority.  It referred to the estimated cost of the work as being $720,000.00.

5. (e)
   Later, when the job was in progress, he prepared a “claim breakdown” dated 20 July 1998.  It refers to “a total price”, and refers to the work that had been done.  On the second page, it refers to some extras.  It was submitted for Budlex that the document assumed that there was a fixed price contract.

6. (f)
   In an undated letter, probably written in February or March 1998, the Vaiente brothers asked for finance from a credit union.  Their letter said, in part:

“We thank you for the opportunity to apply for funding to construct 12 townhouses on our land in Doughan Terrace. …  We are applying for $720,000 to construct the project.  The builder for this project will be Adrian Hogue.  He will be taking his builder’s profit on the sale of the project.  That is why we are asking for only $720,000.00. …”

14. [14]
    The case for Mr Hogue was that the documents were not meant to represent the entire agreement between the parties. Rather, he said, they were created for the benefit of the Vaiente’s financier, the Mt Isa City Council and the Long Service Leave Authority. He insisted that the Vaientes had agreed to pay him the actual cost of constructing the units, plus a third of the profits.

15. [15]
    The Tribunal accepted Mr Hogue’s contentions about those things. It is necessary to turn to the evidence to see if that decision was correct.

The Evidence

16. [16]
    The relationship between Mr Hogue and Messrs Alberto and Ernesto Vaiente went back to 1994. Between then and late 1997, he did several substantial building jobs for them, as representatives of two Vaiente companies. He was an experienced builder. The first was the construction of the nightclub “Switches”, in Mt Isa. He then built two duplexes, two houses, and renovated some existing houses. He might have given a quote. There was never a more formal written agreement than that. If extra work had to be done, he did what he was asked and was always paid. There was a good working relationship between him and the Vaiente brothers. There was a friendly relationship between them. They trusted each other. Mr Hogue lent Budlex $40,000 without anything in writing.

17. [17]
    Well before the end of 1997, Mr Hogue had expressed interest in building townhouses for them in Doughan Street. He was given plans for 14 townhouses prepared by an architect called Charles Arnold. He was asked to give a quote to build them. He gave a quote for $952,000.00. The date of the quotation is not common ground, but that is unimportant.

18. [18]
    They then spoke to Mr Hogue again, late in 1997, and said they wanted a quote to build only 12 units. He responded by submitting a written quote dated 29 October 1997, for $816,000.00. See exhibit 13.

19. [19]
    The parties’ discussions at this early stage have led to a significant disagreement. Mr Alberto Vaiente says that the $720,000.00 was always the cost at which Mr Hogue agreed to construct the 12 townhouses, at first according to the Arnold plans. On the other hand, Mr Hogue insists that that was just a figure to be placed before the financier, who had already agreed to lend $720,000.00, and no more. According to him, he spoke to Mr Ernesto Vaiente who requested him to do up the quotation for $720,000.00 which was the most the credit union would lend. He was told that they would make up the difference between the $720,000 and his quote of $816,000 – an amount of $96,000.00.

20. [20]
    On 6 November 1997, Mr Hogue provided the revised quote of $720,000.00, with the reservation that it was “totally at building cost and excludes all profits and margins”. It is common ground that the immediate purpose of the written quote was to allow the Vaientes to show their financier (see Mr Hogue’s statement, paragraph 16, and Mr Alberto Vaiente’s evidence, T 147, ll. 25-30). There was a difference of recollection about when Mr Hogue agreed with the idea that he might forego his usual builder’s profit, and take a one-third share in the profits of the project. It was at an early stage, according to Mr Alberto Vaiente. He says so (statement paragraph 10), and that is consistent with the reservation in the written quote for $720,000.00. It is also consistent with the Vaientes’ letter to their financier, to the same effect. Indeed, it has always been common ground between the parties, even as the details of the project changed, that Mr Hogue would receive one-third of any profit made on the venture.

21. [21]
    The Arnold plans required brick veneer on timber frames. In early 1998 the three men began to discuss the possibility of putting up steel framed buildings with block walls. The plans would be altered somewhat to allow for the different methods of construction, even though the design was similar. The supplier of the steel and the revised plans was a Brisbane company called Nu-Steel. That company quoted a price of about $419,000 for the building kits. In March 1998 it sent preliminary floor plans to Mr Hogue. Also in March, Mr Alberto Vaiente and Mr Hogue flew to Brisbane for a meeting with Nu-Steel. While there, Mr Vaiente signed a contract on behalf of Budlex, with Nu-Steel.

22. [22]
    After his return to Mt Isa, Mr Hogue started to clear the site on 15 March 1998. Some preliminary foundation work then started. Budlex commenced payments, both to Nu-Steel and to Mr Hogue. On the day after he was paid $80,584.00 by Budlex, Mr Hogue lent $40,000.00 to it.

23. [23]
    It will be recalled that 20 May 1998 is the date on the written building contract for $720,000.00. It is helpful to summarize what had happened by that date:

1. (a)
   Substantial work had been done on the site. Payments of $172,492.00 had been made to Mr Hogue.

2. (b)
   Budlex had committed itself to Nu-Steel, to pay for the supply of the steel frames.  According to the written contract between Nu-Steel and Budlex, the total price was $386,551.

3. (c)
   Not all the Nu-Steel plans were available, even by 20 May.  (The last of them arrived in June 1998, for “C” block.)

24. [24]
    Such was the state of affairs when the written documents of 20 May 1998 were signed and presented to the Council and the Long Service Leave Authority. Mr Hogue said that the documents were created merely to satisfy the demands of those authorities. He said that the building contract was prepared and signed in order that council would approve the Nu-Steel plans. He said that he spoke to Mr Ernesto Vaiente and was told to insert the $720,000 and that he would be paid what it cost. Mr Alberto Vaiente agreed that the building contract was prepared for council purposes, but he maintained that it continued to represent the deal made between the parties about the cost of the building work.

25. [25]
    It is true that the late signing of such an agreement is not unusual, in itself. In the construction business, work often starts before the documentation is completed.

26. [26]
    Mr Hogue’s evidence about the contract documentation, was to the effect that it was created purely to satisfy the authorities, and was never meant to be a reflection of the deal between the parties. Likewise, he said that the “claim breakdown” on 20 July 1999 was for the benefit of the credit union, and was written in that form to make it consistent with the earlier quotation for $720,000.00.

27. [27]
    Two significant events should be recorded. First, Mr Hogue told the Vaiente brothers that project extras totalled some $120,000.00. That was on 19 October 1998. They then went to their credit union and applied for a further advance of $120,000.00 (see below).

28. [28]
    Secondly, and more importantly, the contract between Budlex and Nu-Steel was terminated by Budlex. All three men thought that Nu-Steel had failed to perform. Budlex had paid Nu-Steel $165,925.00. The result was that the work had to be completed with materials from other sources. Whereas Budlex had planned to pay for all of the kits bought from Nu-Steel, Mr Hogue personally paid for the building materials from the new suppliers.

29. [29]
    By the end of the job, according to Mr Hogue, the total building costs had exceeded $1,000,000.00. In about mid-December he gave the Vaientes a list showing the total cost of the units at $1,039,366 excluding Nu-Steel costs. Mr Alberto Vaiente had paid at least $165,000 direct to Nu-Steel. That would make a total cost of some $1,200,000, at least.

30. [30]
    By 20 May 1998, it had become clear that in at least two respects, the building contract was not meant to record the actual agreement between the parties. It was common ground that Mr Hogue was to receive a third of the profits on the venture, and that is not mentioned in the written agreement. Secondly, Budlex had entered into a contract directly with Nu-Steel for the supply of materials, whereas the building contract assumed that the builder would be supplying all the materials, in the usual way.

31. [31]
    It was necessary for the Tribunal, and it is necessary for this Court, to find the true agreement between the parties. There is no room for the operation of the usual rule, that when the parties have decided to record all of their agreement in a formal document, it is not permissible to go outside the document.

32. [32]
    Mr Hogue gave evidence about the impact of the change of Nu-Steel on him. He said that he was previously unfamiliar with its steel products. He was not asked to give a quote based on their materials and plans. He could not have done so, without all that information. According to him, he said that, in effect, to Mr Alberto Vaiente and Mr Ernesto Vaiente. They were anxious to have the construction completed by rodeo time, at the end of August. They thought that the erection of the steel frames might have been quicker than conventional construction.

33. [33]
    In his statement, and his evidence, Mr Alberto Vaiente insisted that $720,000.00 always was the agreed price for the construction of the townhouses, both on the Arnold plans and on the Nu-Steel plans. According to his evidence the deal between the parties was made on the basis of the Arnold plans and it did not essentially change (apart from the agreed variations or extras). He said that Mr Hogue had never suggested any different price to him, because of the change to the Nu-Steel plans, except to suggest that adopting their product might save time and money.

34. [34]
    Mr Vaiente was cross-examined about the fact that Budlex had entered into a contract directly with Nu-Steel for the supply of its products. He agreed that it was not normal to enter into an “all up” agreement with a builder, and then sign a contract for the supply of materials from a third party. He said that he had been going on past dealings with Mr Hogue. In this case, he maintained that whatever was paid to Nu-Steel had to come off the $720,000.00. While he agreed that documents were created for the benefit of his financier, and the authorities, he would not agree that the figures in them were other than consistent with the contract his company had with Mr Hogue.

35. [35]
    He had no explanation, as to why there was no mention of the profit sharing arrangement in the written agreement of 20 May 1998. He accepted that there were a number of verbal terms that were not recorded in that document, including the profit sharing agreement.

36. [36]
    It was common ground that Budlex requested some extra work, or fittings, and that the work was done, or the materials supplied. That was towards the end of the job. Their value was abut $120,000 and Mr Alberto Vaiente agreed they had to be paid for. See T 119 and his statement, paras. 61-63. He put in an extra request to the credit union, for a further advance of $120,000 making the total advance $840,000.

37. [37]
    However, the agreement about the extras would seem to throw no light on the main issue. In that respect, it is equivocal.

The Findings of the Tribunal

38. [38]
    As between Mr Hogue and Mr Alberto Vaiente, the learned member found that Mr Hogue was the more credible witness – “his evidence was more logical than Mr Vaiente and accorded better with the contemporaneous documentary record. That is not to say I think that Mr Vaiente was deliberately dishonest, merely that I suspect that his memory of events has developed over time in a way that most favour the outcome that he desires … he was very careful in answering questions and freely conceded that many of his answers did not make much sense.”

39. [39]
    She noted that there had been some significant discussions between Mr Ernesto Vaiente and Mr Hogue, sometimes on the telephone. Although Mr Ernesto Vaiente attended the hearing, he was not called as a witness. In particular, she accepted that Mr Ernesto Vaiente had instructed him while they were discussing the need for a written agreement to satisfy the Council’s requirements, to put the $720,000 figure in the written document and that he would then be paid whatever the work cost. He did as suggested.

40. [40]
    The learned member then went on to make these findings:

1. (a)
   Agreement was reached in 1997 to build 12 units to the Arnolds plans for $816,000.00.  $720,000.00 would come from the Credit Union and the $96,000.00 would be paid by Budlex.

2. (b)
   That agreement was varied in 1998 for the work to be done in accordance with the Nu-Steel drawings, that it would be undertaken at cost, and that Mr Hogue would receive one-third of the profits.

3. (c)
   In 1997, and early 1998 a trusting relationship existed between the parties.  They did not intend to record their agreement in writing.

4. (d)
   When Nu-Steel was engaged, Mr Hogue was not in a position to give another quote.  He was not asked to do so, and he did not do so.

5. (e)
   The written contract of 20 May 1998 was created entirely for the benefit of the council, and the figure of $720,000.00 was inserted on the instructions of Mr Ernesto Vaiente.

6. (f)
   Despite Mr Alberto Vaiente’s evidence that the “claim breakdown” represented the true financial position between the parties, that contention was rejected.  It was found to be more probable that Mr Hogue was right, in saying that the document was produced for the credit union, using the percentages for progress payments contained in the written contract, because the credit union wanted to get information back to a percentage basis instead of a claim which had been submitted.

The Corrigan Report

41. [41]
    At the hearing, counsel for Mr Hogue tendered a report from a Mr Corrigan. The purpose of it was to demonstrate that the cost of executing the Nu-Steel work would always have been well over the $720,000.00. That evidence was said to be relevant to Mr Hogue’s conduct, and whether or not he would have been likely to proceed with a construction cost fixed at $720,000.00.

42. [42]
    Counsel for Budlex objected to the tender of that report, saying that it was irrelevant. The document was (reluctantly) received into evidence, though Mr Corrigan was not called. The objection should have been upheld. The purpose of the report was to bolster a submission which Mr Hogue’s counsel made on more than one occasion to the effect that his client would have been “crazy” or “nuts” to enter into a contract which was likely to cost him so much. That was an attempt to use the benefit of an expert’s view and hindsight, in an attempt to influence a finding about the true agreement between the parties. It was irrelevant.

43. [43]
    (The learned member was also not assisted by assertions in various parts of the evidence, that Mr Alberto Vaiente or Budlex understood the contractual arrangements to be as Mr Alberto Vaiente insisted they were. Such subjective considerations were also unhelpful).

44. [44]
    The effect of the report is reflected in the submissions of counsel for Mr Hogue, at page 11.7 of the reasons for decision. However, there is nothing after that in the reasons to show that the learned member adopted that submission, in finding for Mr Hogue.

45. [45]
    The reasons as a whole, show that the learned member followed the established principals in considering the contractual arrangements between the parties. For example, at page 10.9

“Counsel for (Budlex) submitted, and I accept that, as a general rule it is not appropriate to look into the minds of the parties to seek what they subjectively intended by way of contract, but rather to consider the outward manifestations of those intentions. 

Then, at 12.1, she recorded that:-

“Counsel for (Mr Hogue) submitted that I needed to consider the matrix of facts leading to the formation of the contract in order to give context and meaning to the written words.”

46. [46]
    Counsel for Mr Hogue then went on to submit that his client would have had to be “nuts” to have accepted a fixed sum for $720,000.00, for several reasons. One of those reasons was the opinion of the quantity surveyors (including Mr Corrigan), who agreed that the reasonable cost of implementing the Nu-Steel drawings was in excess of $1.2 million. It can be seen that the unhelpful reference to the opinion of Mr Corrigan was in the context of accepted principles which required an objective assessment of the presumed intentions of the parties.

47. [47]
    The learned member then went on to consider whether or not the facts required the Tribunal to rely entirely upon the written building contract at $720,000.00. She found, as a fact, that the parties had negotiated a contract for the construction of the 12 units without any intention of reducing their agreement to writing. The building contract of 20 May 1998 was not intended by either party to record the terms of the oral agreement which they had entered into some months previously. Rather, she found that it was prepared and signed in order that the council would approve the Nu-Steel plans.

48. [48]
    It is necessary to recall the established principals about oral evidence contradicting the effect of a written agreement. An example can be seen in the recent decision of the Queensland Court of Appeal in Equuscorp Pty Ltd v Glengallan Investment Pty Ltd [2002] QCA 380, where it was put this way:

“It is not now doubted that extrinsic evidence cannot be received to contradict, vary, add to or subtract from the terms of a written contract.  But evidence is admissible to establish that the terms of an agreement between the parties were party oral and partly in writing.  So much is clear from the Judgment of Isaacs J, in Hoyt’s Pty Ltd v  Spencer (1919) 27 CLR 133 at 142-3.  As it was said there, “it must be shown that the document was not intended as the complete record of the bargain between the parties before oral evidence could be admitted to alter or qualify what was recorded therein….  

The critical question is whether the parties gave their final consent to the terms by which they were to be bound as a complete and exhaustive statement of their rights and liabilities by executing the written document.”

49. [49]
    In making her findings the Tribunal member acted on established principles. The Corrigan report was irrelevant, but it did not lead to any error.

Conclusions

50. [50]
    It is difficult to see how this court could interfere with the findings of credibility, which were in favour of Mr Hogue. The evidence of each witness was considered, and that was a finding which was open. There was nothing to indicate that the learned member overlooked any relevant fact, or that she misused the advantage which she had, in observing the witnesses. She also took into account, quite rightly, that Mr Ernesto Vaiente had played a role in the negotiations, and the formation of any contract, and was present at court, but was not called as a witness.

51. [51]
    Questions of credibility aside, the probabilities as to the ultimate conclusion are in favour of Mr Hogue. The facts overall were not encouraging for Budlex. It is unlikely that any agreement about the $720,000 could have survived the adoption of the Nu-Steel plans and its supply of materials, about which Mr Hogue originally knew nothing. The fact that Budlex paid Nu-Steel directly, as a supplier, was a powerful blow to what would ordinarily have been presumed to be the conclusive effect of the written building contract at $720,000.00.

52. [52]
    The appeal should be dismissed. The decision of the Tribunal is confirmed.