Queensland Building Services Authority v Fox
[2005] QDC 129
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- Unreported Judgment
- Queensland Building Services Authority v Fox[2005] QDC 129
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Queensland Building Services Authority v Fox[2005] QDC 129
Queensland Building Services Authority v Fox[2005] QDC 129
DISTRICT COURT OF QUEENSLAND
CITATION: | Queensland Building Services Authority v Fox [2005] QDC 129 |
PARTIES: | QUEENSLAND BUILDING SERVICES AUTHORITY Appellant v HOWARD FOX Respondent |
FILE NO/S: | BD3911/04 |
DIVISION: |
|
PROCEEDING: | Appeal |
ORIGINATING COURT: | Commercial and Consumer Tribunal |
DELIVERED ON: | 1 June 2005 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 March 2005 |
JUDGE: | McGill DCJ |
ORDER: | Appeal dismissed with costs. |
CATCHWORDS: | BUILDING AND ENGINEERING CONTRACTS – Performance of work – statutory insurance scheme – whether claim of licence fraudulent – whether contract terminated. Queensland Building Services Authority Act 1991 s 69(2)(c). |
COUNSEL: | S L Budden (solicitor) for the appellant G W Diehm for the respondent |
SOLICITORS: | QBSA Legal Services Division for the appellant Turnbull & Co solicitors for the respondent. |
- [1]This is an appeal from a decision of the Commercial and Consumer Tribunal on 5 October 2004 allowing an appeal by the respondent from a decision of the appellant to reject an insurance claim on the statutory policy under the Queensland Building Services Authority Act 1991 (“the Act”). By s 100 of the Commercial and Consumer Tribunal Act 2003 an appeal to this court may be made only by leave, and, relevantly, only on the ground of error of law. On 10 December 2004 another judge gave leave to appeal.
Background facts
- [2]By a contract in writing dated 7 March 2002, Recycled Timbers Australia Pty Ltd agreed to manufacture and install a recycled timber floor at the respondent’s property, including sanding and polishing, for a price of $8,700. The work was done between 28 March 2002 and 1 May 2002. On 7 May 2002 in a letter from the respondent to the contractor dealing with a number of back charges, apparently to repair damage caused by the workmen during the installation, reference was made to the existence of large gaps at window edges as discussed. In November 2002 there were oral complaints to the contractor about gaps up to 8mm wide in some areas, and large gaps and splitting in other parts, which produced no response. On 16 December there was a letter referring to the complaints and noting that the floor had got progressively worse and seeking rectification. That produced no response, but a follow-up phone call ultimately led to a meeting on 29 January 2003 where there was an agreement to rectify faulty boards as marked with the replaced boards being re-sanded and the whole floor having a final sand and finish.
- [3]In March 2003 rectification work was undertaken, but subsequently a floor sander retained by the contractor advised that it was a waste of time to sand the floor. The respondent wrote to the company on 24 March 2003 asserting that the floor was unserviceable, giving the company 14 days to remove and replace the floor totally in accordance with the relevant Australian Standards and accepted industry practice and to repair damage, or in the alternative to remove the floor battens and fixings and repair damage and refund the entire moneys paid, otherwise a complaint would be sent to the Building Services Authority and the Queensland Building Tribunal. There was no response to that letter, and a complaint form signed by the respondent and dated 24 July 2003 was lodged with the appellant on 28 July 2003.
- [4]On 4 August 2003 one of the appellant’s building inspectors looked at the job and recommended that a report and recommendations be obtained. On 10 September 2003 an independent consultant retained by the appellant inspected the premises. A representative of the contractor was present at the inspection. On 10 September 2003 a contractor’s statement was provided by the contractor. It confirmed that there were no moneys owing, and claimed that the contractor was at the time of the work, and was still, licensed.
- [5]On 15 September 2003 the consultant reported to the appellant. The report records a BSA licence number for the contractor of 42608. That report indicated that no work had been done since the visit of the floor sander. The report concluded that the contractor was responsible for the completion of the repair work already begun. The report includes a couple of photographs, which shows that the floor now includes what are apparently replacement boards which do not match the floor generally, although that may be simply because of an absence of sanding and surfacing. I do not find the report very clear, but it certainly indicated that there was further rectification work to be done, although it did not confirm that the whole job required redoing. In any event the appellant regarded the work as defective, and it was not disputed in the proceedings in the tribunal or before me that the work was defective.
- [6]The appellant wrote to the respondent and to the contractor on 29 October 2003 proposing that the contractor rectify the work, and on 6 November 2003 the respondent wrote to the contractor asking the contractor to proceed as instructed by the appellant and stating that the position as set out in the letter of 24 March 2003 still stood. The appellant gave the contractor until 28 November 2003 to do this, but it was not done within that time, and on 5 December 2003 a direction to rectify within 28 days was issued by the appellant to the contractor. However, by then the contractor had vacated its premises and had applied for voluntary deregistration. Unsurprisingly therefore no rectification work was forthcoming.
- [7]On 5 February 2004 the appellant advised the respondent that the matter had been referred to the appellant’s insurance division for assessment of the claim. On 11 February 2004 the appellant forwarded to the respondent a questionnaire to be completed. The respondent’s answers were sent on 23 February 2004. Among the questions asked was: “6. What were you told about who was to carry out the building work?” The answer given was: “We were told that qualified and licensed installers from [the contractor] would be performing the duties in this case. We were told that all work would be done by employees from [the contractor].” They were then asked whether there were any discussions about whether this person/entity was licensed to carry out the work, and replied: “Yes we were told at the very first meeting … that the installation would be done by qualified and licensed installers.” They conceded there was no reference in writing to any licence number, and no discussion about insurance as such. They believed they were contracting with the particular contractor nominated in the written contract, a belief which in my view on the state of the contract would be entirely justified. They believed that company held a licence because of what they had been told at the first meeting. A copy of the contract was forwarded. The contract provided among other things in clause 3 that the contractor company “will at all times carry out the installation of your order in a tradesmanlike manner …”
The decision and the Tribunal decision
- [8]On 25 February 2004 the appellant wrote to the respondent rejecting their claim on the ground that no policy of insurance came into force, because the contractor “did not make fraudulent statements that he held a licence under which he could enter contracts with consumers to carry out residential construction work … or that the construction would be covered by the statutory insurance scheme.” Accordingly pursuant to s 69(2)(c) no policy of insurance had come into force. In addition, the letter asserted that the installation of the floor was not “residential construction work” as defined in the Queensland Building Services Authority Regulations 1992.
- [9]On 7 April 2004 the respondent applied to the Commercial and Consumer Tribunal to review that decision of the appellant which the respondent said had been received on 9 March 2004. On 3 June 2004 the appellant filed a statement of reasons in the tribunal, in which among other things it withdrew the assertion that the work was not residential construction work.[1] It maintained however that s 69(2) was not satisfied as the contractor was not licensed and was not fraudulently claiming to hold a licence under which it would have been entitled to enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme. It was further alleged that the respondent was not entitled to compensation pursuant to clause 1.2 of the insurance policy conditions as the respondent had not properly terminated the contract with the builder.
- [10]By its decision on 5 October 2004 the tribunal set aside the decision of the appellant, and declared that an insurance policy came into effect by reason of s 69(2)(b) of the QBSA Act, that the respondent had an entitlement to claim compensation pursuant to the policy, and that the contract between the respondent and the contractor had been properly terminated at law for the purposes of clause 1.2 of the insurance policy. The tribunal had before it submissions and affidavit evidence on behalf of the parties, but there was no oral hearing.
Grounds of appeal
- [11]The appellant submitted that there were two errors at law from which the decision of the tribunal suffered:
- (a)There is no, or no sufficient, evidence to support the finding that the contractor fraudulently claimed to hold a relevant licence under s 69(2)(c) of the Act.
- (b)That there was no, or no sufficient, evidence to support the finding that the respondent had terminated the contract with the contractor for the purposes of clause 1.2 of the insurance policy.
I accept that each of these is a question of law; the contrary was not argued on behalf of the respondent.
The legislation
- [12]Part 5 of the Act deals with the statutory insurance scheme.[2] Section 68 required a building contractor before commencing residential construction work to pay to the authority the appropriate insurance premium. Section 69(1) then provided that upon receipt of the premium the authority must issue a certificate of insurance in respect of the work. However the policy of insurance came into effect not upon the issue of the certificate of insurance but in the way indicated by subsection (2). That provided as follows:
“A policy of insurance comes into force in the terms prescribed by regulation if a consumer enters into a contract for the performance of residential construction work, and –
- (a)the contract bears the licence number of a licensed contractor and, under the licensed contractor’s licence, the licensed contractor may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme; or
- (b)the contract is with a licensed contractor and, under the licensed contractor’s licence, the licensed contractor may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme; or
- (c)the contract is with a person fraudulently claiming to hold a licence under which the person may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme.”
- [13]Subsection (3) made it clear that subsection (2) applies whether or not a premium has been paid or a certificate of insurance has been issued. In the present case the contract did not bear the licence number of a licensed contractor, nor was it with a contractor who was in fact licensed, so neither (a) nor (b) of subsection (2) was satisfied. The issue before the tribunal was whether s 69(2)(c) was satisfied.
What is a “fraudulent” claim?
- [14]It was submitted on behalf of the appellant that the policy’s provision was to ensure that consumers who had been falsely led to believe that they were dealing with a licensed contractor would obtain the benefit of the statutory insurance scheme. It was submitted that the term “fraudulently” connoted an element of dishonesty as explained in Peters v R (1998) 192 CLR 493 and Spies v R (2000) 201 CLR 603.[3] The submission was that it was not sufficient to show that the contractor had claimed that it was licensed when in fact it was not; in circumstances where it had sought when dealing with the appellant to rely on a licence which was held by a director of the company, it was necessary for the respondent to show that the company did not have an honest belief that it could use the director’s licence in this way, a point in respect of which there was no evidence.
- [15]I do not accept that construction of the subsection. In my opinion it is obvious that it was intended to apply in circumstances where a claim has been made to a consumer that the contractor had a licence when in fact he did not have a licence. There was I think no reason for the legislature to distinguish between a situation where the contractor was acting with deliberate dishonesty in the matter, and one where the contractor was operating under a misunderstanding of the position. That would be a strange distinction to adopt in consumer protection legislation. In my opinion these provisions are remedial legislation, and therefore in the event of ambiguity, should be given a wider rather than a narrower interpretation.
- [16]The policy of the legislation as a whole is that people are to deal with licensed contractors. Section 42(1) made it an offence for a person to carry out building work unless that person held the appropriate licence, and also it made it an offence to contract to carry out building work without such a licence. If the company did not have a licence at the time it entered into this contract, it was committing an offence under s 42 of the Act. That would seem to be so regardless of any misunderstanding as to the legal position on the part of either the company or any of its directors.[4] Furthermore a person who carried out building work in contravention of the section was prima facie not entitled to any monetary or other compensation for doing so: s 42(3). The position in relation to employees was made clear by s 42(5): it is unnecessary for an employee carrying out work in the course of employment to hold a licence so long as the employer holds a licence.
- [17]The only other reference I have been able to find to fraud in the Act as it was at the relevant time[5] is in s 48, where the term is used not as a requirement but rather to exclude any particular significance of fraud in a technical sense in paragraph (a), while paragraph (b) refers to the licence being obtained “by fraud or other improper means” as a ground for suspension or cancellation of a licence. This suggests that the legislature was not there focussing specifically on fraud as a matter of importance.
- [18]Furthermore, under s 67G a building contractor committed an offence if it entered into a building contract which was not put into written form. One of the formal requirements for a written building contract was that the licence number of the building contractor be stated: s 67G(4)(f). These provisions do not now apply in the case of a building contract which is a domestic building contract, as appears from the title to Part 4A and the definition of “building contract” in s 67A, but there is separate legislation, the Domestic Building Contracts Act 2000, which provides in s 26 that a building contractor who enters into a regulated contract must ensure that the contract is in writing or is put into written form. A regulated contract is a domestic building contract for which the contract price is more than the regulated amount: s 9(1). One of the requirements for such a contract is that it state the building contractor’s licence number: s 28(2)(c).
- [19]It is no doubt because of this that in s 69(2) paragraph (a) comes before paragraph (b). In circumstances where a consumer entered into a written contract with someone who put a licence number on the contract, if that person was in fact a licensed contractor then s 69(2)(a) will apply. But if that person was not in fact a licensed contractor, it is difficult to see why the legislature would have intended other than that in all cases paragraph (c) would apply. Furthermore, it would in my opinion be unreasonable to expect a consumer who is in a position of wanting to make an insurance claim under a statutory policy in reliance on s 69(2)(c) to have to prove actual dishonesty on the part of the building contractor.
- [20]There is no reason why the legislature would have intended to exclude from the operation of s 69(2) a situation where a contractor honestly believed that he held a licence but in fact did not, for example due to some administrative deficiency within the appellant. Such a contractor may well even have paid the insurance premium, but if the appellant’s construction is correct no policy of insurance would have come into operation. In my opinion the interpretation contended for on behalf of the appellant would produce an unreasonable, indeed capricious operation of the statute, and that is another reason to reject it.
- [21]In all the circumstances therefore in my opinion on its true construction the term “fraudulently” in s 69(2)(c) simply required that the person who was claiming to hold a licence was someone who was not in fact licensed. The legislature evidently assumed that any person making a false claim to hold a licence was doing so fraudulently.
What was the claim made?
- [22]The evidence in relation to this matter before the tribunal was that contained in the answers to the questionnaire to which I have already referred, and the affidavit of the respondent sworn 29 June 2004 (on which he was not cross-examined). In that affidavit the respondent swore inter alia:[6] “I made reasonable enquiry of [the contractor] on a number of occasions in respect of whether the work would be completed by the BSA licence holders. On every occasion [the contractor] responded that the work would be completed by a BSA licence holder. On the basis of this discussion I believed that [the contractor] was licensed. I believed that because the works were being completed by a licensed entity that the works would be insured in accordance with the provisions of s 69(2)(a) and (b) of the Act. I specifically asked [the contractor] for a licence number and was provided with licence number 42608. I now know this to be the licence number of Gary William Dow. I was not provided with information that the licence provided to me was other than that of [the contractor] itself and I believed the licence number provided to me to be that of [the contractor] and that [the contractor] was licensed to undertake the works. I did not check with [the appellant] to verify the licence number provided to me as that of [the respondent] to in fact be their licence. At all material times after being provided with the licence number by [the contractor] I believed that [the contractor] was licensed with the BSA to undertake the works.”
- [23]It was submitted that this evidence revealed that what was represented by the contractor was not that it held a licence itself, but that the person who actually did the installation work would hold a licence. Bearing in mind that the contract provided expressly that the contractor would do the installation work, that strikes me as an artificial, indeed somewhat forced, interpretation of the answers provided to the questionnaire, and the earlier part of the affidavit before the tribunal, but it is an interpretation which in my opinion is really quite inconsistent with the latter part of the affidavit, where the respondent swore that as a result of what he was told he believed that the licence number he was given was the contractor’s licence number.
- [24]What matters of course is the representation actually made rather than the respondent’s belief, it is a question of interpreting what the respondent has said as to the representation which was actually made. In particular in the affidavit, when the respondent has said that he asked the contractor for a licence number and was given a particular licence number and was not told that it was the licence of anyone other than the contractor, in my opinion that indicates clearly enough that the request to the contractor for a licence number was in context a request for its licence number, and that when the licence number was provided it was provided without any qualification to the effect that it was the licence of anyone other than the contractor itself. In those circumstances in my opinion the obvious and natural interpretation of the provision of that licence number is that it was a representation that that was the licence number of the contractor. That is in substance the effect of the respondent’s evidence.
- [25]Far from it being the case that the respondent’s evidence did not support a finding that the contractor had represented that it held that licence, in my opinion that is the obvious finding to make in the light of the evidence from the respondent. Furthermore, it is a finding which is consistent with the contractor having also claimed in the form[7] that it provided to the appellant that it held at the time of the contract and still held a licence. There was nothing ambiguous about that form, or about the claim by the contractor in that form to be licensed. If the contractor was going to pretend to be licensed to the appellant, there is no reason to doubt the uncontradicted evidence of the respondent that it had also pretended to him that it was licensed.[8]
- [26]In my opinion therefore it is quite clear on the evidence in this case, which was uncontradicted and indeed unchallenged by cross-examination, that the contractor had claimed that it held the relevant licence. It was common ground that it did not in fact hold a licence at the time, and therefore on the interpretation that I would adopt of paragraph (c), the contractor’s claim was fraudulent for the purposes of that paragraph. In my opinion that paragraph was satisfied, and accordingly pursuant to s 69(2) a policy of insurance came into force upon the respondent’s entering into the contract. It was not now disputed that the other requirements of that subsection were satisfied.
- [27]It was submitted on behalf of the applicant that it was irrelevant whether the respondent had acted diligently in making enquiries as to the licence status of the contractor. I agree that that was irrelevant. So long as the requirements of paragraph (c) were satisfied, any absence of diligence on the part of the consumer is in my opinion irrelevant. If the contractor falsely claimed to be licensed in respect of the relevant work, the fact that the consumer might have been more diligent in investigating that claim, and that if that diligence had been applied would have determined that the contractor was not in fact licensed, would be irrelevant to the operation of the statutory provision.
The termination point
- [28]Section 69(5) of the Act provided: “To remove doubt, it is declared that a policy of insurance under this section has effect according to its terms and a consumer can not avoid the consequences of a breach of a provision of the policy of insurance only because the policy of insurance forms part of a statutory insurance scheme.” That reinforces the statement in subsection (2) that the terms of the policy of insurance which came into force in the present case were those prescribed by regulation. Unfortunately since the time when the contract was entered into (7 March 2002) the regulation under the Act has been repealed and replaced by the 2003 regulation, and as a result the terms of the relevant regulation, the Queensland Building Services Authority Regulation 1992, as at the relevant date are more difficult to locate. I have found reprint 7E as at 4 January 2002, which appears to be the regulation as it was when the contract was made. The relevant section of the regulation appears to be s 24 which provided simply: “The policy of insurance mentioned in s 69(2) of the Act is in the terms stated in the board’s policies.”
- [29]The term “board’s policies” is itself defined in s 9A of the Act, which at the relevant time provided that the board’s policies must be made in writing and are statutory instruments. The relevant policies (“general policies”) were required to be published in the Gazette, and did not have effect until that occurred. Section 9A has subsequently been amended, and the policies are required to be approved by regulation, but that appears not to have been the case at the relevant time.
- [30]The effect of s 24 I find somewhat puzzling. It may be that it was a reference to the policy which existed at the time the regulation was made, although even then it is a curious example of incorporation by reference. It could hardly mean that the terms prescribed by the regulation were whatever the board happened to adopt from time to time; if so, that would appear to be invalid as an unauthorised delegation of the statutory power to determine the terms of the statutory policy. Unfortunately this is a matter in respect of which I have not heard argument, and on the view that I take it is unnecessary to consider further the question of whether the statutory policy did in fact validly contain the term relied on by the appellant in support of this argument. Nevertheless, I find the whole thing very curious.
- [31]In any case, it was submitted on behalf of the appellant, and not disputed on behalf of the respondent, that the policy which came into existence by the operation of the statute included a clause 1.2 in the following terms:
“Termination of contract
- (a)BSA is only liable to pay for loss under this part when the contract is for a fixed price and the insured has properly terminated the contract with the contractor.
- (b)In this policy, “properly” means lawfully under the contract or otherwise at law; upon the contractor’s default which extends to but is not limited to:
- (1)the cancellation or suspension of the contractor’s licence; or
- (2)the death or legal incapacity of the contractor; or
- (3)the insolvency of the contractor.”
- [32]The function of this requirement is not clear. Perhaps it is a hangover from the theory that the right to claim damages for anticipatory breach is conditional upon termination of the contract,[9] although that would not explain why it applies to all claims, not just those involving anticipatory breach. Perhaps the concern was that a situation should not arise where a particular consumer might be entitled to be paid an amount under the statutory policy of insurance while still being able to enforce a contractual obligation to perform the work (as distinct from an obligation to pay damages, which of course is not discharged in respect of a prior breach by termination of the contract). The difficulty with understanding the purpose of the clause means that it is not practicable to adopt a purposive construction of it, a construction which gives effect to the commercial purpose of this particular clause.[10] On the other hand, there would appear to be no obstacle to the adoption of a contra proferentem construction of the clause, since the form of policy comes from the appellant.
- [33]Before the tribunal the appellant submitted that there was no evidence that the respondent had terminated the contract with the contractor. The matter was dealt with succinctly by the tribunal member in the following paragraph:
“41 I find that there is ample evidence that the contract has been terminated at law. There is evidence that the work ceased on and from 24 March 2003, that [the contractor] filed for voluntary deregistration on 21 November 2003 and that it vacated its business premises. Further, there is evidence that the Authority caused the residential construction works to be inspected, and somewhat curiously, issued a direction to rectify to [the contractor] on 5 December 2003 notwithstanding the fact that the Authority had been advised … on 24 November that the company no longer existed. Suffice to say the works had not been rectified. To the extent that it is necessary, I find that the contract has been properly terminated at law due to the default of [the contractor] or its repudiation of the contract.”
- [34]It was submitted on behalf of the appellant and I agree that the direction from the appellant is irrelevant to the question of whether the contract was terminated, although I suppose that if the contractor had still existed its failure to comply with the direction would have been consistent with its repudiation of the contract. I also agree that the communication from the individual who was apparently at one time a director of the company does not constitute repudiation or termination. It is however consistent with the repudiation of the contract by the contractor. It was submitted that the last correspondence from the respondent to the contractor was the letter of 24 March 2003 which did not terminate the contract. I agree that that letter did not terminate the contract, but it did formally call on the contractor to rectify defective work under the contract, and provide a time limit within which that was to be done. However, that was not the last communication from the respondent to the contractor; according to paragraph 2.12 of the appellant’s statement of reasons, filed with the tribunal, a letter dated 6 November 2003, a copy of which is Exhibit SOR12, was sent by the respondent to the contractor, as referred to earlier.[11] Significantly, that reserved the respondent’s rights in accordance with its correspondence of 24 March 2003.
- [35]
- (a)Operation of law as a result of a frustrating event.
- (b)Termination for non-fulfilment of a contingent condition of performance.
- (c)Termination for breach.
- (d)Consent of the parties.
It is said that the second and third of these do not produce termination automatically. It also occurs to me that a contract terminates in the sense of coming to an end by being discharged by performance. In the present case the contractor’s performance was not in all respects in accordance with the contract, in that it was defective, and that gave rise to a cause of action for damages for breach. It is not necessary to consider whether that prevented the contract from being discharged by performance. The evidence indicates that the respondent had paid the contract price.
- [36]One of the frustrating events identified in Cheshire and Fifoot is “death or incapacitation” of the contracting party. The equivalent in the case of a company is dissolution, whereupon any obligations or liabilities including any contractual obligations are extinguished.[13] Although dissolution does not occur for at least two months after the lodging of a request by the company, presumably at some point the company was dissolved so at some point the contract, if it still existed, definitely came to be terminated. One thing that is clear is that the contract has terminated.
- [37]It was submitted that the clause required termination by the consumer, rather than by operation of law. But paragraph (b) refers to the contractor’s default which extends to death or legal incapacity of the contractor, which would include events which terminate a contract by frustration rather than by the action of the consumer. The dissolution of the company would be covered by the concept of legal incapacity of the contractor, which the policy expressly included in the scope of operation of the clause within paragraph (b), notwithstanding that this was something which did not require any act of termination on the part of the respondent. Accordingly, if the contract had not earlier been terminated, it was terminated so as to satisfy clause 1.2 by the legal incapacity of the company in the form of its dissolution.
- [38]There is no doubt that long before that the contractor was in default so that requirement was satisfied. The work had not been done properly, the contractor had been given every opportunity to rectify it, and had failed to do so. It would have been open to the tribunal to conclude that, from the expiration of the 14 day period identified in the letter of 24 March 2003 (if not indeed earlier) the respondent had a right to terminate the contract for default on the part of the contractor. There was no dispute that the contractor was in default.
- [39]In these circumstances, the respondent had a choice either to terminate the contract or to affirm it, at least in theory; in practice affirming the contract would have been of little benefit to him. Those positions are inconsistent, and therefore termination of the contract was effected by an unequivocal act inconsistent with the continued existence of the contract. A mere uncommunicated decision on the part of the respondent to terminate would not have been effective, but it is not necessary for the decision to terminate to be directly communicated to the other party. So in Holland v Wiltshire (1954) 90 CLR 409 an election to terminate a contract to sell land was effected by the vendor’s advertising and reselling the land: pp. 416, 424. In Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at [155] a repudiation of a lease was treated as having been accepted so as to terminate the lease by closing down a business in the leased premises and vacating them.
- [40]In the present case the respondent did two things which were inconsistent with the continued existence of the contract with the contractor. One was obtaining quotes to have the work done by other contractors, which is analogous to offering the land for sale to others. The other was to pursue the claim under the statutory insurance scheme. In circumstances where the availability of a claim under the statutory insurance scheme depends on the termination of the contract, pursuit of that claim was inconsistent with its continued enforcement and therefore manifested an election to terminate for the contractor’s repudiation.
- [41]In the circumstances therefore the tribunal was entitled to find that the respondent had lawfully terminated the contract with the contractor for the purposes of clause 1.2 of the contract. Even if there was some deficiency in the expression of the reasons of the tribunal, as submitted by the appellant, the actual finding was justified by the evidence before the tribunal. There was no evidence of affirmation of the contract.
- [42]Even apart from this, it is clear that at least after late 2003 neither party did anything to enforce the contract. Even if the contract had not been formally terminated for breach, in my opinion in all the circumstances it was open to the Tribunal to treat the contract as having been abandoned by the parties.[14] Abandonment is one recognised way in which contracts may be terminated, and it is treated in Cheshire and Fifoot as an example of termination by consent. No doubt this is because it is a termination which flows from the voluntary behaviour of both parties to the contract. In that sense it can be seen as termination by the consumer. It is not inconsistent with default on the part of the other party, and the requirement of the contractor’s default in paragraph (b) was satisfied. If the contractor is in default and it and the consumer so act as to abandon the contract, that effects the termination of it which in my opinion would be sufficient termination to satisfy the requirements of clause 1.2. Accordingly even if the respondent had not elected to terminate the contract in response to the repudiation of the contractor, it would have been open to the tribunal to find that the parties had abandoned the contract.
- [43]Accordingly clause 1.2 was satisfied because the respondent had elected to terminate the contract in response to the contractor’s repudiation, or had joined in the termination of the contract by abandonment, or the contract had been terminated by the dissolution of the contractor. Any of these was enough to satisfy the clause.
- [44]I must say I find this a surprising point for an organisation such as the appellant to take. It is apparent from the course of conduct adopted by the appellant in the present case that its initial response to the complaint was to seek to have any necessary rectification work undertaken by the contractor. When a request to do that work was unsuccessful, a direction was issued to the contractor, and it was only after there was a failure to comply with that direction that the matter was treated as an insurance claim. The consumer was clearly encouraged to participate in the earlier attempts to have the contractor rectify the problem, behaviour which may not be consistent with the termination of the contract by the consumer before a claim is made. It is also not at all clear that the respondent was ever given any warning or advice by the appellant that it was necessary for the respondent to terminate the contract with the contractor before any insurance claim could be made. If no warning of the necessity to terminate had been given, where the appellant’s processing of the matter had been so slow that there had been time for the contractor to cease carrying on business and to apply for dissolution so that there was the prospect of the contract being terminated by operation of law, to take this point in response to the claim looks to me as though the appellant is using this provision in the contract as a trap for unwary consumers. I regard that as unworthy conduct for an organisation which is supposed to be concerned with protecting the rights of consumers. It has put the respondent to considerable trouble and expense in fighting the appeal to the Tribunal and in resisting the appeal to this court, over a claim that, if Mr Fritz’s report is correct, is a very modest one.
- [45]The appellant has not shown any error of law in either respect relied on. The appeal must be dismissed with costs.
Footnotes
[1] Some difficulty with this point is understandable; the basic concepts in this legislation are defined with a notable lack of clarity: see Fraser Property Developments Pty Ltd v Sommerfeld [2005] QCA 134, esp at [23], [27].
[2] I have had reference to reprint number 7A, as at 28 February 2002, which would have been the version in force at the date of the contract.
[3] That is certainly a common interpretation of that expression in the context of a statutory provision creating an offence. In other contexts it can have a wider meaning, such as with fraud in equity: Vatcher v Paull [1915] AC 372 at 378, concerning “fraud on a power”. When used in a statute, the meaning must depend on the context, but meanings wider than the common law meaning have at times been adopted: Jones v Gedye (1909) 9 CLR 262 at 264 concerning “intent to defraud” in the Trade Marks Act 1905; Applegate v Moss [1971] 1 QB 406, concerning fraud in the Limitation Act 1939; Malleys Ltd v J W Tomlin Pty Ltd (1961) 180 CLR 120 at 127 re “fraudulent imitation” in the Designs Act 1906; Bahr v Nicolay [No. 2] (1988) 164 CLR 604 re fraud in the Torrens Title statutes.
[4] If there was to be a requirement of actual dishonesty, the logical place would be here rather than in s 69(2)(c).
[5] I have had reference to reprint 7A for this purpose.
[6] Affidavit of the respondent filed in the Tribunal 30 June 2004, paras 16 – 21.
[7] Dated 10 September 2003, part of Exhibit SDR-8 to the appellant’s statement of reasons filed in the Tribunal 3 June 2004.
[8] This evidence suggests that the false claim to the respondent was actually dishonest, and not the result of any misunderstanding as to the effect of a director’s licence, and would support a finding of fraud involving dishonesty anyway.
[9] Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 450. Cheshire and Fifoot at [23.20] suggest that this strict rule is unjustified.
[10] If the true effect of s. 42(1) is that any purported contract to do building work with someone not the holder of a licence is void for illegality, the point left open in Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196, the clause could never be satisfied in any case falling within s. 69(2)(c), since one cannot terminate something which is void. That would seem to be inconsistent with the intention of the legislature.
[11] See para [6] above.
[12] Cheshire and Fifoot “Law of Contract” (8th Aust Ed, 2002) p. 42.
[13] Ford “Principles of Company Law” (5th Ed 1990) p. 825.
[14] DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423.