DISTRICT COURT OF QUEENSLAND

1. [1]
   This matter involves three applications (two for leave to appeal, and one for a stay of execution of judgement pending appeal) arising out of proceedings before the Commercial and Consumer Tribunal (CCT) where the applicants (as owners) and the respondent (as builder) were in dispute about various matters concerning the construction of a dwelling house at Scarborough. Proceeding BD185/05 is an application for leave to appeal against a decision of the CCT given on 21 December 2004 which ordered that the applicants pay the respondent the sum of $72,248.88 pursuant to the contract. The second application, BD256/05 is brought in respect of a further CCT decision of 24 December 2004 in which the Tribunal vacated an earlier costs order made on 21 December. In the third proceeding, BD387/85, the applicants seek a stay of enforcement of the first order (which has now been registered as a judgment in this court, BD323/05).

BD185/05; CCT Decision 21 December 2004

2. [2]
   Appeals may be brought from the CCT to this court, but only with leave and on the ground of error of law^[1].  The applicants must show there is a reasonable prospect of demonstrating an error of law on the part of the learned Member who constituted the CCT, and that it could have materially affected the decision^[2].

3. [3]
   The applicants rely firstly upon what is said to be erroneous construction of parts of the contract between the parties. The applicants took possession of the dwelling around mid October 2003 and on 17 October the builder sent them a Notice of Substantial Breach under cl 28.3 of that contract, asserting they were in breach by taking possession before paying the final claim, and failing to pay that claim (and another matter). On 6 November 2003 the applicants commenced proceedings in the CCT seeking an order that it determine the amount of money payable by them to the respondent under the contract. On 28 November 2003 the respondent filed a Defence and Counterclaim seeking, among other things, a declaration that he was entitled to validly terminate the contract. It was not until 12 February 2004 that his solicitors wrote to the applicants’ solicitors giving notice that he elected to terminate the contract, in reliance upon the applicants’ alleged breaches referred to in the earlier Notice. The learned Member found that the respondent’s right to terminate was unaffected by the applicants’ commencement of proceedings in the CCT and the builder was, as a consequence of the termination, entitled to recover the cost of all work under the contract and other costs, and default interest on any unpaid moneys. That finding was a necessary preliminary to the determination that the applicants owed the respondent $72,248.88.

4. [4]
   The result hinges upon the construction of cl 28 which, in its relevant parts, provides:

28.3 If a party is in substantial breach of this contract, then the other party may give to that party a written notice to show cause:

 (a) specifying the substantial breach;

 (b) requiring that the substantial breach be rectified within 10 working days after the notice is given under this contract; and

 (c) stating that, if the substantial breach is not rectified, the other party intends to end this contract.

28.4 If the party in substantial breach does not rectify or commence to substantially rectify the substantial breach stated in the notice to show cause within 10 working days of receiving that notice, the other party may end this contract by giving a separate notice to that effect.

28.5 A party is not entitled to end this contract if, within 5 working days of receiving the notice to show cause, the party in substantial breach refers the question as to whether the other party has the right to end this contract for determination by the Queensland Building Tribunal under clause 37.

28.6 If a reference for determination is made under subclause 28.5 the carrying out of the works is suspended and the notice to show cause is not effective until the Queensland Building Tribunal has made a determination.

5. [5]
   The learned Member held the applicants did not refer the matter to the CCT (under cl 28.5) until 14, rather than five days after receipt of a Notice from the respondent. Secondly, it was held that the applicants’ referral of the matter to the CCT was not a bar to the respondent’s later termination of the contract. The Tribunal relied upon the decision in Gianfriddo v Garra Constructions Pty Ltd (1971) VR 289 but that is a case which decides no more than that the validity of a notice terminating a contract is not affected by the referral of the matters in issue to a court, or to arbitration, and it does not address the question whether the time limits set in cl 28.5 might be construed as procedural matter, and not of the essence of the contract.  Counsel for the applicants was able to point to a number of decisions^[3] for the proposition that, where time is stipulated in a contract, if there is doubt about what the language of the contract means the court will lean against a conclusion that it is of the essence.  This is clearly an arguable point of law and one which, had it been determined in the applicants’ favour, it would have had a significant effect upon the outcome.

6. [6]
   The same conclusion arises in respect of the learned Member’s determination that the applicants’ referral, to the CCT, of the question whether there were still moneys due and owing under the contract could not be construed as something which raised the question whether the respondent had a right to terminate. In truth, the respondent did not do so for another two months. The finding that the right remained alive also involves a particular construction of cl 28.5 about which an alternative view was plainly open, and arguable.

7. [7]
   The appellant is also able to point to two other matters which might involve errors of law, the first of which is that the learned Member concluded the total cost of the work to the respondent was $263,338.89 when the only evidence from the respondent himself about that matter showed the total to be $250,460.29, with $22,661 referrable to wages for the respondent (which, it might be thought, could not be a cost of the work carried out by the builder). The figure adopted by the learned Member came from the evidence of an expert called by the respondent, Mr Sims. Calculation of the cost does not, however, appear to involve any expertise and the adoption of the higher figure may be unwarranted, and constitute an error. Secondly, the learned Member adopted an interest rate of 9.55% when, it is alleged, there was no evidence of that matter.

8. [8]
   The applicants have established grounds upon which they ought to be given leave to appeal the decision.

BD 256/05; CCT Decision 24 December 2004

9. [9]
   In its order of 21 December 2004 the CCT ordered that each of the parties pay their own costs of and incidental to the proceedings. (Under ss 70 and 71 costs will usually follow the event, but the Tribunal has a discretion.) Subsequently, it appears, the respondent’s solicitors wrote directly to the learned Member requesting that the CCT reopen the question of costs under s 94 of the Act. The applicants’ solicitors did not see that correspondence and the CCT simply issued a further order vacating the earlier order as to costs, and requiring the parties to deliver submissions about costs by 18 January 2005.

10. [10]
    The order purports, on its face, to rely upon s 50(5) of the CCT Act which gives the Tribunal, on the application of a party or its own initiative, power to vary or revoke an order or direction at any time.  Section 50 appears within the Act, however, in a part concerned with case management^[4] and is headed “Directions and Orders”.  Section 50(1) refers to orders or directions “… for the just, fair, informal, cost efficient and speedy resolution of our proceeding”.

11. [11]
    The applicants submit that the decision was made in terms which breach s 50(6) and in circumstances which contravene the requirements of natural justice, under which the Tribunal is required to operate (s 47(2)); and s 91, which requires that decisions include reasons.

12. [12]
    Section 142 applies if a party makes an offer to settle and the result for the recipient is not more favourable than the offer, in which event under s 142(2) the Tribunal must award the offeror all its reasonable costs after the offer was made. The discovery of an offer after the decision of 21 December was handed down may explain the learned Member’s subsequent order, but does not address the question whether there was a denial of natural justice in determining the proceedings should be reopened without one party knowing an application to that effect had been made, or being able to respond to it. It is arguable this is an error of law and leave to appeal should be granted.

BD 387/05; Stay of Proceedings

13. [13]
    The applicants have filed an affidavit showing they do not have sufficient funds, presently available, to enable them to meet the judgement and that to do so they will either have to borrow against their home or sell it, and the home is their only substantial asset.

14. [14]
    The discretion to grant a stay pending determination of an appeal arises under UCPR r 761; and, the court’s inherent jurisdiction^[5].

15. [15]
    The discretion is a wide one and is aimed at achieving justice in all the circumstances. Here, the material factors will include the fact that the dispute concerns the applicants’ residence; the appeal has been brought properly; and the applicants have been able to show arguable grounds of appeal which, if successful, will have the effect of either substantially reducing the judgment in favour of the respondent or, indeed, requiring him to pay money to the applicants.

16. [16]
    The respondent has filed an affidavit indicating prejudice to him if there is delay in receiving the judgment sum but the suggestion (in para 5 of his affidavit) that the sum costs already incurred plus a small builder’s margin does not sit comfortably with his own evidence before the Tribunal. The judgment appears to represent all of his outlays and costs on construction, including income to him for his own work, plus a 20% builder’s margin.

17. [17]
    The judgment sum is far in excess of the contract price and appears, significantly, to be largely the product of those elements of the Tribunal decision to do with the operation of the termination clauses about which there is, with respect, room for doubt or, at least, significant argument. It is also relevant that the applicants have already paid the respondent a sum about equalling the contract price.

18. [18]
    While there is authority favouring the principle that an applicant for a stay of this kind needs to establish special circumstances^[6], it has also been said that the jurisdiction should not be hedged by a requirement of that kind^[7].  Here, the nature of the dispute and the factors set out above warrant, in my opinion, the granting of a stay conditional upon the applicants being prepared to offer to extend their present undertaking until judgment in the appeal – a course which will ensure the preservation of the primary subject matter of the dispute.

19. [19]
    I will hear submissions about costs, and further directions.