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  4. Thompson Residential Pty Ltd v Hart - [2014] QDC 132

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Thompson Residential Pty Ltd v Hart[2014] QDC 132

Thompson Residential Pty Ltd v Hart[2014] QDC 132

DISTRICT COURT OF QUEENSLAND

CITATION:

Thompson Residential Pty Ltd v Hart & Anor [2014] QDC 132

PARTIES:

THOMPSON RESIDENTIAL PTY LTD

(plaintiff)

v

MICHAEL CHARLES HART

(first defendant)

and

MARGARET ANN HART

(second defendant)

FILE NO/S:

BD 1011/12

DIVISION:

PROCEEDING:

Trial

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

11 April 2014

DELIVERED AT:

Brisbane

HEARING DATE:

18-22 November 2013

JUDGE:

McGill SC DCJ

ORDER:

Judgment for the defendants with costs.

CATCHWORDS:

BUILDING AND ENGINEERING CONTRACTS – Remuneration – progress payments – “enclosed stage” – not completed – no right to claim – contract validly terminated by owners.

BUILDING AND ENGINEERING CONTRACTS – Remuneration – progress payments – substantial performance doctrine not applicable.

Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 – cited.

Bolton v Mahadeva [1972] 1 WLR 1009 – cited.

Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248 – cited.

Cardona v Brown [2010] VSC 368 – cited.

Connor v Stainton (1924) 27 WALR 72 – considered.

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 – cited.

Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 – applied.

Eshelby v Federated European Bank Ltd [1932] 1 KB 423 – cited.

Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 – applied.

Hoenig v Isaacs [1952] 2 All ER 176 – considered.

Horton Geoscience Consultants Pty Ltd v Energy Minerals Pty Ltd [2005] QCA 169 – cited.

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 421 – cited.

Kevru Industries Pty Ltd v Barnes (unreported, Supreme Court of New South Wales, Cross J, 16 July 1981, BC 8111557) – considered.

Lemura v Coppola [1960] Qd R 308 at 314 – cited.

McGibbo Pty Ltd v Willex Projects Pty Ltd [2013] QDC 313 – followed.

Morgan v S & S Constructions Pty Ltd [1967] VR 149 – cited.

Ownit Homes Pty Limited v Batchelor [1983] 2 Qd R 124 – cited.

Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 – applied.

Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 – cited.

Queensland Alumina Ltd v Alinta DQP Pty Ltd [2006] QSC 391 – cited.

Shevill v Builders Licensing Board (1982) 149 CLR 620 – cited.

Simpson Steel Structures v Spencer [1964] WAR 101 – considered.

Sopov v Kane Constructions Pty Ltd (2008) 20 VR 127 – cited.

Sumpter v Hedges [1898] 1 QB 673 – cited.

Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 – applied.

Williamson v Murdoch (1912) 14 WALR 54 – considered.

Zachary Developments Pty Ltd v Turner [2012] QCATA 86 – not followed.

Zamperoni Decorators Pty Ltd v Lo Presti [1983] 1 VR 338 – cited.

COUNSEL:

S McNeil for the plaintiff

G I Thomson for the defendants

SOLICITORS:

Holding Redlich for the plaintiff

CBP Lawyers for the defendants

  1. [1]
    The parties entered into a contract for the plaintiff to build a residence for the defendants on land owned by them at Noosa Waters, a canal front block: Exhibit 1.  The total contract price including GST was just over $2 million.[1]  It is now common ground that the contract has come to an end, although each party claims to have validly terminated it, after a substantial part of the contract work was undertaken.  Under the contract payment was to be made in seven stages, including a deposit of 5%, and as the seventh stage at practical completion, at which stage the remaining 10% of the price became payable.  Stages 1 to 4 were claimed and paid, but when a progress claim for stage 5, the “enclosed stage”, was submitted by the plaintiff, the defendants refused to pay on the basis that the plaintiff had not in fact completed the enclosed stage.  Each party insisted on its position, and the plaintiff suspended work on the project.  The defendants treated that as a substantial breach of the contract by the plaintiff, and after notice terminated the contract.  The plaintiff purported to terminate in turn in reliance on this, and on the failure of the defendants to make the progress payment. 
  1. [2]
    The plaintiff claims payment of the amount of the progress payment, and also claimed payment for certain variations, and for some additional work which would ordinarily be included in the following stage but in fact was undertaken before the plaintiff stopped work on the project. In the alternative, the plaintiff claimed on a quantum meruit for certain work done. All of these claims were resisted by the defendants, and a number of defences were relied on. The major defence however is that the progress claim was premature, and the defendants validly terminated the contract. After the trial, the plaintiff advised that it elected to pursue only the claims in contract, and abandoned any claim in restitution. It follows that the claims for additional work, and for variations, have been abandoned.

Background

  1. [3]
    The plaintiff is part of a group of companies carrying on the business of builders, a business established by the grandfather of the managing director in Toowoomba in 1957.[2]  It is a third generation family business which includes constructing houses extending from small affordable homes to superior architect designed homes.  The managing director of the company is and was at the relevant time Mr Brendan Thompson, who gave evidence.  His brother Mr Bradley Thompson was also a director, and he also gave evidence.[3]  His work was in the marketing side of the company, and he had limited involvement in the matters the subject of this action.[4]  This particular project was under the day to day management of a Mr Chipperfield[5], and the site supervisor was a Mr Ramsay; neither was called as a witness.  It appears that most of the communication between the parties in relation to the project occurred through Mr Chipperfield: p 2-75.
  1. [4]
    The defendants were and are residents of the United Kingdom, but were interested in obtaining a home in Queensland.[6]  The male defendant is a banker.  They purchased a canal front property at Noosa Waters, and had the existing residence demolished.  They arranged for an architect to design a two-storey house to be constructed on the site; the plans and specifications from the architect were incorporated in the contract.  The plaintiff submitted a tender for the project, and a contract between the parties was executed.[7] A deposit was payable on signing of the contract, and was paid.

Progress of the work

  1. [5]
    The plaintiff arranged for an identification survey to be undertaken of the site, which revealed that the existing boundary fences were not constructed in precisely the correct locations. Ultimately arrangements were made with both neighbours, under which the existing fences were demolished, and new boundary fences were constructed as part of the project.[8]  There was said to be some debris from the demolition work on the site which needed to be removed before construction could commence, and this was arranged by the plaintiff.[9]  In addition, it was necessary to obtain some certification in relation to the demolition of the swimming pool, and a report about the energy efficiency characteristics of the new residence.[10]  All of these were organised and paid for by the plaintiff. 
  1. [6]
    Work started in March 2011,[11] and continued until October 2011.  The next three stages for progress payments were the completion of the ground floor slab, the completion of the first floor slab, and the completion of the roof slab.  Claims in respect of each of these stages were made, the last on 16 September 2011, and for each stage the amount claimed was paid in accordance with the claim.[12] 
  1. [7]
    Although plans and specifications for the project were incorporated into the contract, it appears that in practice, at least up to a point, the parties worked in a cooperative way so as to ensure that the defendants were satisfied with what was being done under the contract, particularly in terms of fittings and finishes. For example, on the face of the contract the plaintiff would have been entitled to install any windows and doors which satisfied a fairly detailed schedule of windows and doors included in the specifications for the house, and the defendants strictly had no right to any further say in the matter. In fact however the defendants were invited to participate in the selection of windows and doors, and took advantage of this.[13]
  1. [8]
    In early September 2011 Mr Chipperfield informed Mr Hart that there was to be a particular supplier and a meeting was arranged on the premises of that company for 6 September, which the defendants and their architect attended.[14]  This was the first occasion when this input was sought about doors and windows.[15]  It was suggested in cross-examination of Mr Hart (p 4-21) that he had requested the plaintiff to obtain three competitive quotations from window suppliers, but I do not think he then clearly accepted that he had, and when I sought to clarify the issue with him later (p 5-36) he said he had agreed with a suggestion from Mr Chipperfield that this occur.  Mr Chipperfield used this as an excuse in an email to the window supplier on 5 September 2011, Exhibit 80, but there was no clear evidence that it was true that this was an initiative of the defendants, and I do not accept that it was.  The same applies to the provision of sample windows, which in fact were produced only by the supplier selected by the plaintiff.
  1. [9]
    On 6 September the defendants made certain selections, and shortly thereafter requested some changes and noted some errors and omissions in the door and window schedule.[16]  An email from the plaintiff seeking some clarification of this on 19 September 2011 received a response by email on 25 September 2011.[17]  However, in early October Mr Chipperfield told Mr Hart that the window supplier had been changed, and suggested that the company install a control sample window for the approval of the defendants.[18]  According to Mr Hart, he assured them that this change would not have any adverse effect on the progress of the works, and that the new supplier would be able to manufacture all of the windows within four weeks.  On about 10 October 2011 two control sample windows were installed,[19] Mr Chipperfield advised Mr Hart of this by telephone, the defendants inspected the site and approved the samples:  p 3-95.  At the same time, they asked that certain sash windows be changed to louvre windows:  p 4-29.[20]
  1. [10]
    At about the same time, it had come to the notice of Mr Hart that the subcontractor who had been responsible for the block work was not prepared to do any further work on the site, alleging that he had not been properly paid.[21]  On 11 October this was confirmed by Mr Chipperfield. No evidence about the rights and wrongs of this was led before me, but Mr Hart was concerned about this, and took legal advice.  As a result, on 12 October 2011 a solicitor acting for the defendants sent the plaintiff a letter seeking assurance from the plaintiff that it had the financial capacity to complete the works under the contract:  Exhibit 16.  Under the contract the defendants were entitled to do this.  At that stage, that may well have been the only thing that the defendants could do.  If there had been a progress claim, they may have been entitled to obtain confirmation that the subcontractors whose work was covered by the claim had been paid, but at that stage all progress claims had already been paid.  The next claim was due at the enclosed stage.  Such an enquiry would be consistent with a concern about whether the plaintiff was going to be able to complete the works on time.  The defendants had originally hoped that the project might be finished by Christmas 2011, but, for reasons that were not explored during the trial, the construction time had been extended and by this time the expectation was that completion would not occur until early in 2012.[22]
  1. [11]
    The plaintiff provided information in response to the letter and it was not suggested during the trial that the provision of that information did not satisfy the plaintiff’s obligations in that regard under the contract. It appears however that this request prompted the plaintiff to expedite the making of the next progress claim, for the “enclosed stage”. Mr Thompson decided that the doors and windows of the property, apart from the windows in which the control samples had been installed, should be temporarily boarded up[23], so that a progress payment in respect of the enclosed stage could be given.  This was arranged by the plaintiff’s site foreman over the next few days.

18 October 2011

  1. [12]
    Mr Hart said that on 18 October 2011 Mr Chipperfield informed him that the plaintiff was intending to do this: p 4-3.  He contacted his solicitor and, because he was about to leave Australia, retained Mr MacLeman, a building consultant, to act for him, and gave him a power of attorney.[24]  According to Mr Hart, later that day while he and his wife were driving from Noosa back to Brisbane he received a call on his mobile phone from Mr Brad Thompson, which his wife answered and then put on speakerphone.  Mr and Mrs Hart both testified that during that conversation Mr Brad Thompson said that they had been stunned to receive the letter from the solicitor the previous week, and that they had decided in response, “stuff him, we’ll board up his windows and doors out of spite.”[25]  There was a brief discussion about the situation, and Mr Hart ended the conversation.
  1. [13]
    Mr Brad Thompson in evidence said that he could not remember one way or the other whether he had made such comments, though he agreed with the proposition that they did not sound like the sort of thing that he would commonly say to a client.[26]  Such behaviour is certainly very odd behaviour for anyone associated with a building company, or indeed any business when dealing with a client, particularly in circumstances where it is not apparent that the conversation would achieve any useful purpose, except possibly letting off steam.  Mr Hart had already been told by Mr Chipperfield what was going to happen, and presumably would find out what had happened once it had happened.  I cannot see how there could be, or could be thought to be, any advantage to the plaintiff in Mr Brad Thompson saying such a thing at that time.[27]  On the other hand, it would provide a plausible explanation for the defendants, apparently on that day, having developed a desire to extricate themselves from the contractual relationship with the plaintiff.  Mr Hart that day consulted his solicitor, and secured the assistance of a consultant who was experienced in the conduct of building disputes, with perhaps some particular expertise in getting owners out of contracts.[28]  Mr Hart said these steps had occurred before the conversation, but conceded that from this time his objective was to achieve an orderly exit from the contract.[29] He no longer trusted the plaintiff.[30]
  1. [14]
    One of the things that puzzled me in this case was that this matter stood out from other building disputes with which I have had professional involvement over the years because the contract went so quickly from one where the parties were apparently working well and happily together to one where the owners wanted to get out of the contract.[31]  Apart from the fact that one or two subcontractors had a complaint about not being paid some money, there was no suggestion that there was anything in the plaintiff’s conduct of the works with which the defendants were unhappy up to the time when the decision was taken to board up the doors and windows.[32]  This made me wonder during the trial whether the defendants had had some other reason, which was not revealed by the evidence, for wanting to terminate the contract.  Indeed, I raised with Mr Hart at one stage during his evidence the feeling I had that I had not been told the whole story.[33]  It did occur to me that if the defendants, for some other reason, sought to get out of the contract, inventing the account of this conversation would provide a plausible justification for their having developed that desire.
  1. [15]
    There is however the consideration that it seems to me strictly speaking to be of no relevance whatever whether and why the defendants developed a desire to get out of this contract if they could do so. Merely having such a desire does not amount to repudiation of the contract.[34]  There was nothing to suggest that the defendants had developed an intention not to perform the contract in accordance with its terms, much less that they had communicated that intention to the plaintiff.  Rather the inference is that the defendants had developed a desire to terminate the contract if they could lawfully do so.  Whether they had such a right was an entirely different matter.  It would be plausible that in those circumstances they would seek some expert advice as to whether they could find any lawful ground to terminate the contract.  As it turned out, they hardly needed expert assistance on this point, because, as I shall explain, the plaintiff proceeded to present them with such a ground on a platter. 
  1. [16]
    The real problem for the plaintiff was that boarding up the doors and windows appears in fact to have been done with a view to making a claim for the enclosed stage progress payment, and as I will explain it was ineffective for that purpose. Mr Thompson gave evidence that there would have been a delay of about six weeks between when the order for the windows and doors had been placed and when the supplier was actually in a position to install them, but there was no independent evidence that this was a motivating factor behind this decision, bearing in mind that no particular urgency had been shown by the plaintiff in making arrangements in relation to the doors and windows up to that time.[35]  Indeed, even after this date some negotiation continued between the plaintiff and the defendants about the details of the doors and windows.[36]  Mr Thompson claimed the boarding up was done to enable the plaintiff to proceed to the next step, the installation of the gyprock: p 2-27, 37, 75. I do not accept that evidence, because nothing was done towards installing gyprock before work was officially suspended on 7 November. If this had been the real reason, something would have been done in that time.
  1. [17]
    It occurred to me during the trial that there might have been concern about the security of the site, bearing in mind that a good deal of the electrical rough-in work and the plumbing rough-in work had already been done, so there was a quantity of valuable copper sitting around this building site, which might have attracted the attention of thieves. Such things are by no means unknown at building sites.[37]  But there was no contemporaneous documentation supporting the existence of such a concern as a motivating consideration here, and obviously no steps were being taken to make the site secure before this work was done.[38]  If there was a six week delay in the supply of windows and doors, which had not begun to run, beginning the electrical and plumbing rough-in work was bound to be creating a security issue which up to this point had apparently been ignored.
  1. [18]
    In those circumstances, and bearing in mind the timing of this decision in relation to the letter from the defendant’s solicitors, it does rather look as though in fact the decision to board up the windows and doors was motivated by spite on the part of the plaintiff.[39]  In such circumstances, if Mr Brad Thompson said this, he would simply have been telling the truth, though that does not explain why he would take the step of telephoning the defendants apparently simply for the purpose of telling them that this had occurred.  Perhaps the conversation on this occasion started as an attempt on Mr Brad Thompson’s part at fence mending[40], and I suppose it is possible that someone in his position might have felt that it would assist in that process for him to be frank about what his brother had done, in the hope that he could contrast this with his attitude of trying to get the relationship back on an even keel.  If so, it was not good tactics. The defendants had never experienced such treatment (p 5-39) and, understandably, it put them off the plaintiff. There was no evidence that they had a desire to terminate the contract until after this conversation.
  1. [19]
    Ultimately it does not seem to me that there is any issue in the proceeding the resolution of which requires me to make a finding one way or the other about whether this curious conversation actually took place. In case a different view may be taken elsewhere, however, I should say that, if I had to make a finding about it, the issue would turn on my impression of the witnesses. I really saw very little of Mr Brad Thompson in the witness box and was not given a great deal of opportunity to assess his reliability as a witness; but his version of the conversation, that later than 18 October he spoke to Mr Hart who said that he was happy with the project (p 2‑83), does not fit the fact that after 18 October Mr Hart was not happy with the plaintiff.[41]  On the other hand, there was no particular reason for me to reject the evidence of Mr and Mrs Hart, and I did have more opportunity to assess their credibility, particularly in the case of Mr Hart.  There is I think some substance in the point made by counsel for the defendants that Mr Brad Thompson’s initial response when questioned about the conversation was somewhat guarded, surprisingly so given its nature, and on the whole I prefer and accept the evidence of Mr and Mrs Hart that this conversation took place.

Subsequent events

  1. [20]
    After the doors and windows were boarded up,[42] it appears that little further work was undertaken on the site.  The progress claim for the enclosed stage was made on 31 October 2011, seeking payment of an amount of $409,288.80:  Exhibit 2. There were tradesmen’s trucks outside the site on 1 November 2011 (Exhibit 35) but there was evidence that no work was seen in later visits by Mr MacLeman, who was visiting the site specifically for the purpose of checking that, and there was no reliable evidence from the plaintiff of any work being done on the site thereafter.[43]  Mr Thompson claimed that by 3 November 2011 the electrical and air conditioning rough in was complete: p 2-33. The plumber was finished by 2 November 2011: Exhibit 28, p 2-10, 11. On 3 November Mr MacLeman, the defendant’s agent, wrote to the plaintiff asserting that the enclosed stage had not then been reached: Exhibit 3.[44]  He gave reasons the following day (Exhibit 5) but the plaintiff rejected his reasoning by an email to Mr MacLeman of 7 November 2011:  Exhibit 6.  That email suspended work under cl 19.1 and made it clear that the plaintiff would not be performing further work on the site unless and until the progress claim was paid.  On 8 November Mr MacLeman gave notice under cl 28.3 requiring the plaintiff to remedy the unlawful suspension of the contract:  Exhibit 8.
  1. [21]
    In fact no further work was performed on the site by the plaintiff. The progress claim was not paid. On 18 November 2011 the plaintiff issued a notice to remedy breach to the defendants: Exhibit 17. On 24 November 2011 the solicitor for the defendants wrote purporting to terminate the contract because of the failure to remedy the suspension of the works, and to revoke the plaintiff’s right of access to the property: Exhibit 11. On 4 December 2011, the plaintiff purported to terminate the contract: Exhibit 12. The contract being at an end, the defendants retook possession of the property, and ultimately had the house completed by another builder: p 4-10, 11, p 5-38.  They have since used the house from time to time as a holiday home, although they continue to reside in the United Kingdom.
  1. [22]
    I should say something about credibility. The only witnesses whose credit seemed to be put in issue were Mr Thompson, Mr Brad Thompson and Mr Hart.[45] I have already dealt with the one issue involving Mr Brad Thompson. Overall I was impressed by Mr Hart, who struck me as an honest witness, and generally reliable. The theory that this whole exercise was a plan by him to obtain the benefit of the enclosed stage works without paying for them[46] overlooks both that the plaintiff had to choose to act as it did for that to occur, and that, because the contract had been front-loaded, the defendants had already paid more than everything done by the plaintiff was worth.[47]  The emails to and from Mr MacLemon[48] are consistent with Mr Hart’s evidence, that he wanted an amicable termination of the contract by negotiation, which is understandable in the circumstances, and not discreditable.  Mr Thompson did not impress me as favourably. I have rejected his evidence on a couple of specific points elsewhere. I also note that he said that as at 31 October 2011 all the props had been removed (p 1-68) when photos take after that show that that was not the case: Exhibit 72.[49] There were also aspects of the claim originally advanced which proved to be unsupportable, such as the “rejected” window and the variation claim for electrical work which was for more than the total amount charged by the electrician, both since abandoned. As managing director, he must have been responsible for these claims.  Overall, I did not regard him as a reliable witness. 

The contract

  1. [23]
    The contract Exhibit 1 is undated, but was executed on about 3 February 2011, by the defendants executing a version which was then scanned and emailed to the plaintiff.[50]  The contract used was a standard Housing Industry Association form,[51]  and consisted of four schedules, the general conditions, 11 pages of building specification as revised 27 January 2011, 15 pages of schedule of finishes revised the same day, the construction drawings revised 18 January 2011, and “structural S5214 rev C”.

Terms of the contract

  1. [24]
    The contract contained a customised progress payment schedule, stating as its reason for this that the house construction method was not standard. Stage 5 was identified simply as “enclosed”, and 20% of the contract price was payable at that stage. The introductory words to the progress payment table pick up the definition of “enclosed stage” in Schedule 2 of the contract[52] which is in the following terms:

“Enclosed stage for a building means the stage when:

  1. (a)
    the external wall cladding is fixed; and
  1. (b)
    the roof covering is fixed, but without
  1. (i)
    soffit linings necessarily having been fixed; or
  1. (ii)
    for a tile roof – pointing necessarily having been done; or
  1. (iii)
    for a metal roof – scribing and final screwing off necessarily having been done; and
  1. (c)
    the structural flooring is laid; and
  1. (d)
    the external doors are fixed (even if only temporarily) but, if a lockable door separating the garage from the rest of the building has been fixed, without the garage doors necessarily having been fixed; and
  1. (e)
    the external windows are fixed (even if only temporarily).”
  1. [25]
    The general conditions provided in cl 11 for the builder to comply with any lawful requirement of any statutory or other authority relating to carrying out and completing the works, to notify the owner of any extra work required to do this and to request a variation to carry out that extra work; the owner “must sign all documents and do all acts as requested by the builder to obtain all permissions, consents and approvals required from the relevant statutory or other authority.” Clause 15 deals with unforeseen circumstances, referring to an actual surface or sub‑surface condition of the site which was likely to affect the works or cause an increase in the contract price.[53]  Clause 19 gave the builder the right to suspend the works in certain circumstances.  Clause 20 dealt with variations to the works.  Clause 28 provided for the owner to give a notice to remedy breach under subclause (3) if the builder was in substantial breach of the contract, and for the builder to give a notice to remedy breach if the owner was in substantial breach of the contract, in various ways including failure to pay a progress payment as required by cl 4.  That clause provided that the owner must pay a progress claim to the builder within five working days of receiving the progress claim. 
  1. [26]
    If a party is in substantial breach of the contract the other party may give that party a written notice to remedy the breach in compliance with cl 28.3, and if the breach is continuing after 10 working days the other party may end the contract by giving a separate notice to that effect. However, neither party is entitled to give notice to remedy breach while that party is in substantial breach of the contract: cl 28.7. Clause 28.8 deals with the builder’s rights on the contract being ended by the builder. The building specification included statements that external doorframes were to be as per window schedule in clear anodised aluminium, the main entrance door was as per detail, and all windows and doors as per window schedule in clear anodised aluminium.

Enclosed stage – doors and windows

  1. [27]
    To decide whether this stage had been reached, the starting point at least is the terms of the definition which was in the contract. The defendants submitted that one feature of that definition which had not been satisfied was that the external doors and windows had not been fixed in place, even temporarily. There was evidence that two windows had been put in place, essentially as a trial for the purpose of seeing whether the defendants were satisfied with them, but none of the doors or the rest of the windows had been installed, or even at that stage been manufactured.
  1. [28]
    I have mentioned what passed between the parties about windows and doors. A list of the doors and windows and information about them was included in the plans and specifications of the building, and the schedule of finishes included a reference to the finishing for the doors and window frames, so on the face of the contract there was no difficulty in the plaintiff’s obtaining and providing the doors and windows required. The plaintiff’s evidence was however that the defendants had to sign off on the window and door schedule before they could be manufactured[54], and negotiations between the parties as to just what windows and doors were to be provided were continuing even after the point at which the door and window openings were boarded up.[55]
  1. [29]
    On 31 October the plaintiff sent a document from Hitec Glazing dated 26 October 2011 which was its quotation for the windows, which Mr Hart was asked to check and approve.[56] On 1 November Mr Hart responded with a new version of the door and window schedule, Exhibit 52, and sought certain assurances, including that there would be no extra costs, and that the windows would be like the control sample. In response the plaintiff sent on 7 November a different version of the Hitec quote, dated 4 November,[57] with a further request to review and return this, including signing a variation document. This elicited a lengthy and detailed critique in response[58], which exposed many errors in the supplier’s quote. It is difficult to believe that the window supplier’s understanding of the defendants’ requirements could have been so extensively mistaken if they had been all passed on by the plaintiff.  The plaintiff responded by saying that they could not discuss the matter while work was suspended.[59]
  1. [30]
    Mr Thompson, who was not personally involved in negotiations in relation to the windows, gave evidence that his understanding of the situation was that the defendants kept changing what they wanted:  p 1-71.  The male defendant agreed that there were some changes sought from what had been originally specified, and that the changes that they requested also changed from time to time, but said that he had always been told that these changes could be made without difficulty, and it had never been suggested that there would be extra cost or delay involved as a result.[60] 
  1. [31]
    The difficulty with the plaintiff’s argument in relation to delay however is that the great majority of the delay associated with the finalisation of the door and window schedule is explained by the fact that, apart from investigating the question of whether any additional costs would be necessary as a result of the requirements of the sustainability report, nothing was done to arrange for ordering the windows between February and September 2011. The plaintiff, having invited the defendants to participate in the process of window and door selection, and in that way having invited them to make changes to the door and window schedule in the contract, can hardly complain if they take advantage of this invitation, and did not at the time complain. Some of the changes were said to be in the form of correcting mistakes in the schedule, although that was as between the plaintiff and the defendants the responsibility of the defendants. Nevertheless, the evidence shows that whenever the defendants were invited to make some comment about the windows and doors, they responded reasonably promptly.
  1. [32]
    Insofar as there was delay in relation to the process of finalising the door and window selection, it seems to me on the evidence that the delay was attributable to the plaintiff more than the defendants. It was the plaintiff’s responsibility to manage the work, and, if it wanted the defendants to sign off on a final door and window schedule, to arrange with them for that to occur at the appropriate time. If the windows and doors were needed by the end of October to permit installation of the gyprock, the schedule should have been finalised by mid September, so the plaintiff should have been organising this from about mid August; it did not. It is therefore unnecessary for me to consider if any delay by the defendants could have breached an implied term of the contract and in that way excused the plaintiff’s failure to install the doors and windows.
  1. [33]
    Some significant delay was inevitable given that the practice is to build the door and window penetrations and then measure them, in order to ensure that the doors and windows properly fit the penetrations.[61]  If there was going to be a lead time of over six weeks between when the doors and windows were finally ordered and when they were installed, there was inevitably going to be a period of over six weeks from the completion of the block work to the point where the doors and windows could be installed.  That is something which ought to have been taken into account by the plaintiff in the formulation of its construction program.[62]
  1. [34]
    Whatever the rights and wrongs of the situation, the plaintiff in fact proceeded on the basis that the specifications for doors and windows had not been finalised, and therefore the subcontractor who was to supply these things had not been given a definite purchase order for the windows and doors. Mr Thompson said the manufacturing time for these windows and doors, given their general nature, was going to be of the order of six weeks[63], and they would then take some time to install, even if temporarily.  He said that for this reason he decided instead to close up the various openings with plywood, or in the case of some doors with temporary doors to provide access.[64]  What was done over the smaller penetrations was simply to dynabolt plywood to the block work; for the larger penetrations, a pine frame was dynabolted to the block work and the plywood screwed to the frame.[65]  No additional waterproofing was fitted, and the photographs show that this arrangement was not perfectly waterproof,[66] though no doubt it would make the premises reasonably waterproof, and reasonably secure. 
  1. [35]
    There was evidence that this sort of thing is done from time to time in order to enable a builder to proceed with fixing the gyprock, which requires at least a reasonably waterproof environment, and roughing in the wiring and plumbing, which is better done when the premises are reasonably secure, to minimise the risk that thieves will steal the wiring and copper piping.[67]   In fact in this project the roughing in of the plumbing and electrical work was either complete or substantially complete, so far as those things could be done without something else being required first, and for practical purposes the next work to be undertaken was fixing battens for the fixing of gyprock to the walls and ceilings where that was to occur.[68]  That step however was never undertaken by the plaintiff.[69] 
  1. [36]
    It was submitted for the plaintiff that boarding up the windows and doors was the equivalent of installing temporarily the windows and doors in terms of making the premises secure and watertight, and for that reason premises so treated satisfied this part of the definition of the enclosed stage. There was some evidence of some practice to that effect, and this interpretation of the contract was supported by the Housing Industry Association, but the evidence did not rise to a level where it was arguable that there was a term implied by custom or usage to that effect into the contract.[70]  No authorities were cited on behalf of the plaintiff in support of the proposition that the contract as drafted could be interpreted in such a way that boarding up of the windows and doorways, or the installation of temporary doors which did not satisfy the contractual specification for doors for the particular penetration concerned, nevertheless satisfied the elements in the definition of the enclosed stage for the installation (even if only temporarily) of the windows and doors.  Reference was made to Cardona v Brown [2010] VSC 368, but I cannot see how that case, which seems to have involved the literal application of a different definition, assists the plaintiff.
  1. [37]
    In my opinion the contract means what it says, what matters is whether the enclosed stage as defined has been reached, and the plaintiff had not satisfied this element of the definition of enclosure stage: the reference to windows and doors means the windows and doors required to be installed under the contract, and the plaintiff had not installed those, even if only temporarily. In my opinion there is nothing in the wording of the contract to justify giving the document the interpretation contended for by the plaintiff. Accepting that the court should strive to give a practical commercial interpretation to a document of this nature,[71] it seems to me that the interpretation for which the plaintiff contends really amounts to changing the terms of the contract.  In circumstances where the term “enclosed stage” is defined, it is not a question of whether the building is enclosed in a practical sense by a process which does not meet the definition, or whether that process would in practice serve the function or requirement of enabling the fitting of gyprock internal wall sheeting to proceed.[72]  The function of the progress payment schedule is to provide for certain amounts to be payable when certain stages in the building work are achieved, and the definition of the enclosed stage is expressed in terms such that the supply and at least temporary installation of the windows and doors is to be achieved as part of the enclosed stage.  The windows and doors for this building had not been supplied, and therefore that element of the work required for the enclosed stage had not been satisfied.  The plaintiff’s argument to the contrary is rejected.
  1. [38]
    It was submitted for the plaintiff that the enclosed stage had been reached once the windows and doors had been boarded up because once that had been done the premises were effectively waterproof, so that it was possible to proceed with the installation of the gyprock. This was said to be the next stage of construction, and that may well be true. No doubt in practice gyprock cannot be installed until the building has been made waterproof, and completion of construction work up to the enclosed stage as defined would, I expect, have the effect of rendering the building waterproof, and ready to proceed with the installation of gyprock. However, the stage is not defined by reference to the building being reasonably secure or being reasonably waterproof. The fact that, if the windows and doors are installed, they would render the building reasonably secure and reasonably waterproof does not mean that the definition of enclosed stage will be satisfied if something else which has the effect of rendering the building reasonably secure and reasonably waterproof is undertaken. The fact that these two steps might be functional alternatives for these purposes does not mean that they are equally effective in satisfying the definition of enclosed stage for the purposes of the progress payment clause.[73]
  1. [39]
    No doubt the progress payment scheme is designed to reflect reasonably well established stages in the construction of a building, but once the stages are defined by reference to particular work having been completed, or having reached a particular point, then what matters is whether that work has been completed or reached that point, not whether the work on the project has reached a stage which could reasonably be characterised in terms of ordinary business practice as the equivalent of that. This follows from the fact that the stage is defined in some detail. Once the entitlement to a progress payment is based on the completion of a particular stage as defined, it is satisfaction of that definition rather than practical or functional considerations which determines whether the enclosed stage has been achieved for that purpose. It is not enough to say that what has been done also achieves enclosure of the building in a practical sense, if the contractual definition has not been satisfied.
  1. [40]
    The plaintiff submitted that the boarding up of window and door penetrations was an established practice which was regularly utilised in the building industry where there was some delay in the installation of permanent windows and doors. The evidence certainly supports a conclusion that it is a common practice for this to occur to some extent,[74] though it is not clear that it is a common practice for it to occur to the extent that it occurred on this occasion, that is all doors, and all but two of the windows boarded up.[75]  Mr Cuskelly from the Housing Industry Association spoke of the practice in the context where the Association was involved in some dispute or at least disagreement between the builder and the customer (p 3-43), and accordingly his experience may not be entirely representative of the building industry; presumably there are building contracts which proceeded to completion without disputes which come to the attention of the HIA.  It seemed to me that his evidence was qualified in two significant respects.  In the first place, he spoke of this occurring in circumstances where there had been some delay though no fault on the part of the builder:  p 3-44.  He also spoke about encouraging the parties to negotiate a practical resolution of some dispute as to whether the enclosed stage had been reached, by an amount less than the figure for that stage being paid to the builder, at least in circumstances where there was some fault on both parties in relation to the delay:  p 3-49.
  1. [41]
    The difficulty with this argument however is that I cannot see how the existence of a practice, however widespread, can have the effect of modifying the terms of the contract, not by implying some additional term, but in substance by deleting an express term of the contract. It also seems to me that the approach he is contending for, and perhaps urging upon his members and the other contracting parties, is one which is focussed on achieving a practical resolution of the dispute between the parties, so that the particular building project can be completed as satisfactorily as possible. That is no doubt a desirable objective in the real world, and Mr Cuskelly’s approach to that may well be a reasonable and, on his evidence at least, quite successful way of achieving it.  But that is not directed to the question that I have to decide.  This is a court of law, and I am concerned with the legal rights of the parties in this situation.  Evidence of what has proved to be a practical way of overcoming a practical problem in other cases is not helpful in determining what the legal rights of the parties are. 
  1. [42]
    It was further submitted that in circumstances where there was no express definition of “external doors” and “external windows” regard may be had to the context in which the word is used. I have no difficulty with that as a general proposition, and I have no difficulty with the proposition that the meaning of these terms has to be determined in the light of the context provided by the contract as a whole.[76]  It was submitted that the expression “doors” and “windows” should therefore be interpreted by reference to the surrounding words so that works which produced the effect of enclosing the building, even as a temporary measure, nevertheless should be treated as satisfying the definition.  It was submitted that by the use of the expression “even if only temporarily” the definition contemplated temporary works in respect of doors or windows. 
  1. [43]
    I do not agree. The word “temporarily” is an adverb, and therefore modifies a verb not a noun. In context, the reference is to the word “fixed”, not the word “doors” or “windows”. The concept of fixing windows and I suppose doors temporarily and its purpose were explained clearly by Mr Dixon: p 5-58. I accept that explanation, which incidentally was not contradicted, and consider that it is this which provides the explanations for that qualifying expression in these two parts of the definition, bearing in mind that on all the evidence it is appropriate to have the building made reasonably waterproof prior to the installation of the gyprock. In my opinion the qualification merely permits external doors and windows to be fixed temporarily, not that temporary windows and doors may be fixed.
  1. [44]
    That is reinforced by the use of the definite article “the” which in context and reading the contract as a whole in my opinion is a reference to the doors and windows required to be installed in accordance with the specifications and the door and window schedule as part of the works. In my opinion the clear, natural reading of this part of the definition is that what is required is that the external doors and windows specified and required to be installed under the contract have been fixed, even if the fixing is only temporary. Plainly that was not done, and accordingly these parts of the definition have not been satisfied.
  1. [45]
    When a term is defined by reference to the existence of certain elements, one does not interpret those elements by effectively disregarding them if they conflict with a generalised meaning of the term defined. The plaintiff’s arguments involves treating the term “enclose stage” not as a defined term, but as a term the meaning of which depended entirely on the existence of functional enclosure. That is not what this contract provided. I also cannot see how fixing a sheet of plywood over the opening in a wall left to provide for the installation of a window can possibly be characterised as installing a window, whether or not temporarily.  If it is anything, it is the temporary installation of a section of wall. 
  1. [46]
    There is also the consideration that the cost of supplying and fitting the external doors and windows will commonly be a significant part of the cost of doing the works between the previous stage and completion of the enclosed stage. In this case there was at one point a quote for the windows and doors obtained from a supplier in an amount in excess of $97,000.[77]  The enclosed stage progress payment was not much more than four times this amount.  One of the things that that section of the purchase price might be expected to cover is the cost of manufacturing supplying and installing the external windows and doors, and at the time this claim was made that had not been done.  In those circumstances, it would be an odd, and decidedly unsatisfactory outcome if the contract were to be interpreted as giving an entitlement to payment of an amount in excess of $400,000 in circumstances where a large part of what was supposed to be paid for by that sum had not been provided.  It does the plaintiff’s case no good that, for this reason, its contention in relation to the windows and doors is fundamentally unjust. 

Enclosed stage – roof covering

  1. [47]
    Another aspect of the definition of enclosed stage which was in issue was whether the roof covering had been fixed. The contractual definition refers in part to a tile roof, and part of the roof here was tiled. The defendants submitted that this part of the definition had not been satisfied, on four grounds. First, that there were two parts of the roof which were not complete, or indeed constructed at all at this stage; second, that the capping tiles had been left only loosely in place, not fixed, bedded or pointed; third, that some tiles had not been fixed because they had to be lifted later to have some additional flashing installed; and fourth, that a separate square roof on four columns at the front gate had not been built. As well, the defendants submitted that the concrete slab areas of the roof had not had a waterproof membrane applied, as required under the contract.[78]
  1. [48]
    The first point concerned the tile roofing above two parts of the ground floor which did not have part of the first floor structure above them, namely part of the garage and part of one of the bedrooms. In response it was submitted for the plaintiff that the tiles in this area were essentially decorative features, that the concrete slab which was the floor for the first floor of the building extended over these parts of the garage and the bedroom, so as to function as a suspended slab roof, and in that way those parts of the ground floor were roofed even though the tiles and the framework on which they sat had not been put in place. There was evidence that at that stage of the job scaffolding was required to enable further work to be done on the exterior surface of the first floor walls, and that the scaffolding was in such a position that these areas of tiles could not be installed until after the scaffolding had been removed.[79]  In one of these areas the strip of tiles was fairly narrow, and was either entirely or very nearly completely covered by the eaves extending from the external walls of the first floor, and the tile roof above that. 
  1. [49]
    In my opinion these areas of tiles amount to roof covering, in that, if constructed as designed, they would have functioned as tiled roofs above the areas of the ground floor rooms which were not covered by the first floor, and the fact that, had they been absent, the concrete slab could have served the same purpose, at least if it had been properly treated, is really irrelevant. Indeed, there were substantial areas of tiled roof above first floor rooms which were also over a concrete suspended slab “ceiling”, where essentially the same argument could have been applied. I do not think that what is required by the contract is simply a waterproof or at least reasonable waterproof and secure surface covering the interior of the dwelling, but rather the construction of whatever it is that has been designed to function as the roof of the dwelling.[80]  It seems clear that these areas of tiling were not purely decorative in the sense that they were not designed to function as roofing; on the contrary, they appear to have been designed to be functioning sections of roofing when they were in place, and there is no reason to think that the plaintiff was not intending ultimately to construct them so that they would function as sections of roof.  The fact that the ceiling beneath them was in the form of a concrete slab is really irrelevant.  It follows that fixing the roof covering required the completion of these two tiled areas, which had not been done.
  1. [50]
    Second, it was submitted that, not only had the pointing for the tile roofs not been done, the ridge and hip capping tiles had been left only loosely in place, being neither fixed nor bedded. The plaintiff submitted that the contract expressly permitted that, so the roof was fixed despite that. The concept of pointing was explained by two of the witnesses, in I think somewhat different ways. According to Mr Rosetta, the plaintiff’s operations manager and a man with a good deal of practical experience in the building industry (p 3-92), bedding involved laying the mortar under the ridge tiles which were then fixed onto it, and pointing was essentially a process of finishing off the edge of the mortar bed after the ridge tiles had been laid in order to tidy it up, in much the same way as a brick layer will point bricks:  p 3-97.  He said that this was usually left to a time when there would not be anyone else walking over the tiles, in order to prevent further movement from causing cracking in the mortar: p 3-96. 
  1. [51]
    On the other hand, Mr Dixon, an experienced building consultant and building inspector who gave evidence for the defendant (p 5-45), described pointing as a separate process by which a coloured product would be applied to the outside of the mortar used to create the cement bed for the capping tiles to sit on, to create an appropriately coloured material which was seen when one looked at the roof: p 5‑62.  The material used produced a very thin coating similar to cement render, and indeed it was best described as like a cement render over the bedding mortar, essentially a cosmetic finish: p 5-63.  He said in his experience it is usually applied a couple of days after the cement bedding, to give the roof time to settle somewhat, and to give the bedding mortar time to dry out properly.[81] 
  1. [52]
    Neither witness was cross-examined about his explanation, but on the whole I prefer the evidence of Mr Dixon, which seemed to me to make sense, and indeed to explain why paragraph (b) (ii) of the definition of enclosed stage excluded pointing but not bedding. In these circumstances, in my opinion simply laying loose the capping tiles without bedding them did not amount to fixing the roof covering. On the evidence this applied to all of the tiled roofing (except to the extent that it had not been constructed at all) and accordingly this aspect of the definition of enclosed stage had not been satisfied.
  1. [53]
    Third, flashing had not been installed,[82] and some tiles had just been loose laid because they had to be lifted in the future in order to enable some flashing to be put underneath them.[83]  That this was the situation was ultimately not contentious.
  1. [54]
    Fourth, the defendants submitted that this part of the contract had not been performed because the plaintiff had not constructed a small square area of roofing which was to be supported on four brick columns situated at the front gate, as a sort of “gatehouse”. The definitions in the progress payment schedule are by reference to the “building” rather than to the “works”, and in my opinion although the gatehouse was part of the works it was not part of the building, which was the residential dwelling the principal subject of the contract. In my opinion it was not necessary to construct the roof of the gatehouse in order to have fixed the roof of the building for the purpose of satisfying that aspect of the definition of enclosed stage.  This part of the defendants’ argument therefore fails.
  1. [55]
    Another matter was raised by the defendants in relation to the question of fixing the roof covering: it was submitted that, because the concrete roof required a waterproof membrane, the absence of that membrane meant that the concrete roof had not been “fixed”. I do not consider however that the application of the waterproof membrane was part of the process of fixing the roof covering. In my opinion, if the roof covering is a concrete slab that will have been “fixed” once it has been poured, set and cured, and it will not also be necessary for the waterproof membrane to be installed even if that is required by the terms of the contract, to prevent water penetration by seepage through the concrete. That I think follows from the use of the expression “the roof covering is fixed”, particularly the last word, which indicates that what is being spoken of is the process of putting the roof covering in place, rather than any treatment which it is to receive after it has been put in place.
  1. [56]
    Three of the five grounds relied on by the defendants for showing that the roof had not been fixed have been made out. Three of the elements of the definition of the “enclosed stage” had therefore not been satisfied. The question then is whether strict compliance with this definition was required, or whether substantial performance was sufficient, and if so whether what had been done in respect of the building overall amounted to substantial performance of the enclosed stage. The plaintiff submitted that substantial performance was sufficient, and had been achieved.

Substantial performance

  1. [57]
    As a general proposition when a contract provides that a party is to do something performance of the contract requires the party to do what is specified by the contract in accordance with the contract. In Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 the parties had entered into a contract for the sale of land under which the land to be conveyed, which was not at that time identified in a registered plan, was to have a specified area and certain boundaries, and went on to provide in effect that the area of land to be purchased was not to be reduced by more than 3% nor the boundaries varied by more than 20 metres at any point.  Ultimately the vendor proposed to convey a parcel of land with an area 3.015% smaller than the agreed area, and one of the boundaries varied from that specified by a distance of 26 metres at a particular point: [34]. 
  1. [58]
    A submission that the transfer of the land proposed to be conveyed would still give the purchaser substantially what it had contracted to purchase was rejected by the Court of Appeal, on the basis that the contract specified a permissible extent of divergence and that extent could not be exceeded without breaching the contract. Keane JA, with who Cullinane J agreed, said at [41]:

“The clear terms of the contract required the appellant to register a plan of subdivision in conformity with the explicit requirements of special condition 47.4.  This was not done.  To excuse this failure because the amount by which the specifications of the registered plan deviated from those stipulated in the contract was ‘small’ would be to deprive the terms agreed upon by the parties and contained in that special condition of any real meaning.  The common law does not operate in this way. … A contracting party such as the appellant must abide by, and expect to be held to, the parameters of an agreement freely entered into by it.”

  1. [59]
    So the starting point of the analysis is that, when the parties agreed that what is required is X, what is required is X.
  1. [60]
    The doctrine of substantial performance arose as a qualification on the principle that where there was incomplete performance under an entire contract no part of the agreed consideration was recoverable. Hence it had been held that slight or trivial omissions in the completion of a contract did not prevent enforcement of the contract: Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 at 235.  The doctrine was taken up enthusiastically by Denning LJ in Hoenig v Isaacs [1952] 2 All ER 176 at 180, where he said that the promise to complete the work was construed as a term of the contract but not as a condition, so that it was only a breach which went to the root of the contract which entitled the other party not to pay the contract price.  That approach was applied by Jeffriess J in Lemura v Coppola [1960] Qd R 308 at 314.[84] 
  1. [61]
    In Williamson v Murdoch (1912) 14 WALR 54 the plaintiff sued to recover the contract price for clearing and fencing the defendant’s property, alleging that the work had been done.  The defendant denied that the work had been done, and counterclaimed for the amount he had spent completing the work.  It was held on appeal that in computing the damages under the counterclaim allowance should be made for the value of the work that had been done by the plaintiff.  The court distinguished Sumpter v Hedges [1898] 1 QB 673 on the ground that in this case the plaintiff had not abandoned the contract but had merely broken the contract in some way: p 56. 
  1. [62]
    In Connor v Stainton (1924) 27 WALR 72 the plaintiff agreed to erect a fence of a certain length for the defendant, with (relevantly) posts 12 feet apart.  The fence was erected but the posts were not all 12 feet apart, some being further apart, up to 18 feet.  McMillan CJ said that the question was whether there had been substantial compliance with the contract.  The plaintiff alleged that any resulting difficulties could be overcome by the installation of droppers, but the Magistrate had taken off almost half the contract price as the cost of rectification.  It was held that in view of the amount allowed there had not been substantial compliance with the contract, but the court went on to hold that, even after this rectification work had been done, “the fence would be of an entirely difference character from that which the plaintiff had contracted to erect; and it is not open to one who has undertaken to perform work of a certain kind to say that he has done something which is of a different nature, which is really as good and as satisfactory as that which he had undertaken to do.  A person who has agreed to accept this is entitled to have that which is contracted to be done … .” 
  1. [63]
    It was submitted for the plaintiff that this case was authority for the test of substantial performance being whether what was done was of an entirely different character from that which had been promised. I do not read the decision that way. The court had already held that, simply because of the cost of rectification to make the fence as constructed the functional equivalent of what had been contracted for, there had not been substantial performance, but went on to say that the plaintiff’s performance had actually been much worse than that because what he built was of an entirely different character from what he had contracted to build. That is not so much a test of what is not substantial performance, as a test of what will be nothing like substantial performance. The court certainly did not say that anything less than that would be substantial performance.
  1. [64]
    In Simpson Steel Structures v Spencer [1964] WAR 101 the plaintiff constructed a farm shed under a contract which specified that the floor should have a certain carrying capacity and that standard quality floor boards should be supplied.  In fact the floor was constructed with reject boards and in accordance with normal engineering practice was not regarded as fit for the specified load.  It was held that there had not been substantial performance, the test for which was said to be whether the defects could be described as comparatively non-essential or trivial, because the cheapest remedy for the defects was to remove all the floor and rebuild it, which put the plaintiff in no better position than if he had failed to put in any floor at all.
  1. [65]
    The position in relation to building contracts was summed up recently by Bathurst CJ, with whom the other members of the court agreed, in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 at [94]: 

“In the case of contracts which at least on their face appear to be entire contracts, particularly lump sum building contracts, courts have been reluctant to construe complete performance of the works as an essential pre-condition for payment. Rather, in circumstances where there has been substantial performance, they have treated a failure to complete as a breach of a non-essential term of the contract not disentitling the builder to contractual payment for the work done but, rather, giving the proprietor a right of setoff or claim for damages for the cost of completing the work or rectifying any defects.” 

His Honour referred to Hoenig v Isaacs, and other authorities.

  1. [66]
    On the other hand, his Honour had just referred by way of contrast to cases where complete performance was a condition precedent to payment or counter-performance, where there was authority that strict performance of the contractual obligation was a necessary precondition to receiving the contractual consideration: [93]. One of the cases cited was Highmist (supra).  Another was Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689.  In that case Samuels JA analysed the decision of the High Court in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549, and said at p 705:

“It seems to me to follow from Ankar that it is meaningless to speak of the substantial performance of a condition precedent.  Either it has been performed, or it has not.  If it has, performance enlivens the obligation to which the stipulation is a condition precedent.  If it has not, the obligation does not arise. … Where an act by one party is a condition precedent to the liability of the other, whether it has occurred or been fulfilled depends upon if the act proffered matches the description of the condition precedent in the contract, and not upon the seriousness of the divergence from that description.”

  1. [67]
    In the same case, Waddell AJA, who came to the same conclusion, said at p 718:

“The clear commercial purpose of the provisions is to provide a mechanism whereby the liability on the part of HDFI can be established in a way which is unambiguous and certain.  It is essential in commercial dealings that provisions of this kind should be applied strictly so that parties know exactly where they stand. … In my opinion, the submission that clause 2.2 should be interpreted otherwise than as requiring literal compliance with its provisions and in particular those of clause 2.2.1 should not be accepted.”

  1. [68]
    It seems to me that the approach of Samuels JA is applicable in the case of the clause in this contract governing progress payments, clause 4.  Clause 4.1 provides that the owner “must pay the contract price adjusted by any addition or deductions made under this contract progressively at each stage.”  Clause 28.2(a) provides that the owner is in substantial breach of this contract if the owner does not pay progress payments as required by cl 4.  Accordingly cl 4 is a significant term of the contract, but it does not in terms impose upon the builder a specific obligation to complete each stage of the works.  The obligation on the builder to complete the works is in clause 3.1, which obliges the builder to complete the works (as a whole) on or before the end of the building period stated in item 10, as extended under cl 17.  Breach of that obligation is not a substantial breach of the contract: cl 28.1.  Indeed, cl 32.1 provides expressly for liquidated damages in the event of the works not reaching practical completion by the end of the building period.
  1. [69]
    The question therefore is whether the contract is to be construed as one where completion of a particular stage of the work is a condition precedent to payment of the progress payment in relation to that stage, or is one where a failure to complete is seen as a breach of a non-essential term not disentitling the builder to contractual payment. In circumstances where there is no separate obligation on the builder to complete the work required for each particular stage, a failure to do so cannot be characterised as a breach of a non-essential term: it is not a breach of a term at all. The position is simply that the contract provides that, if the builder does X, the owner is obliged to make a specific payment. In these circumstances, I cannot see how the doctrine of substantial performance can apply. Unless the builder does X, the obligation to make the payment does not arise.[85]
  1. [70]
    This is consistent with the approach adopted in Hudson “Building and Engineering Contracts” (12th Ed 2010) at para 3.076, where it was said that there is no room for any theory of substantial performance save in regard to purely trivial failures:  “Since the purpose of such provisions is to secure an interim payment on account … extreme exactitude is no doubt not envisaged, but effective and satisfactory completion of the required stage will be a condition of any instalment payment, it is submitted, and there could be no question of substantial performance arguments entitling a contractor to sue for the instalment while giving credit for incomplete or defective work, such as might be possible with the price or a final balance due for work on completion.”[86]
  1. [71]
    This quote points out another difficulty with the application of the substantial performance doctrine. It has always been part of that doctrine that substantial performance would not give rise to an obligation to recover the whole of the price, but only the price subject to a reduction in one way or another in respect of the incomplete or deficient work. But cl 4 is clearly inconsistent with that approach, the amount payable is specified expressly in schedule 2 of the contract, and cl 4.8(b) provides expressly that the owner has no right of set-off. It is one thing to say that something less than strict and complete performance of the entire contractual obligation is sufficient to give rise to an obligation to pay the contract price with an adjustment for any deviation from the requirements of the contract, and another to say that something less than strict and complete performance will justify the obligation to pay the contract price without any reduction. In the circumstances it seems to me clear that this clause on its true construction provides a condition precedent to payment of the progress payments, at least in respect of all of them except the last, so that the approach adopted by Samuels JA in HDFI is applicable.  The doctrine of substantial performance does not apply.
  1. [72]
    There remains the question raised in the passage from Hudson of just what is required before what has been done matches the description of the condition precedent in the contract.  That I think is best resolved essentially as a practical question of fact, but it is necessary to ask the right question.  The practical question is not whether what has been done can properly be described as a completion of “the enclosed stage”, but whether what has in fact been done can be said to constitute satisfaction of the definition of “enclosed stage” in the contract.  Commercial contracts are usually to be interpreted in a commonsense practical way, and building contracts in particular need to be interpreted in a practical and workable fashion.  But I do not think that justifies any substantial difference between what has occurred and what is required.  Obviously the difference between what has occurred and what is required might be so slight or trivial that it could be said that in a practical sense the definition had been satisfied.  Thus, if the owner could find one loose tile on the roof I do not think that it could be said that that in itself meant that it was not correct to say that the roof covering was fixed.
  1. [73]
    It has been said[87] that “the test in determining whether work has been substantially done is said to be whether it is ‘finished’ or ‘done’ in the ordinary sense.”  Counsel for the plaintiff relied on this decision in her submissions, and counsel for the defendants quoted this proposition as correct, probably because it is the sort of proposition which is safe, and thus difficult to criticise, rather than being helpful.  On the whole, it seems to me that the test is whether the omissions are slight or trivial.[88]  Another way would be to describe the disparity between what was done and what was required as coming within the maxim: de minimis non curat lex.[89]
  1. [74]
    Applying this approach to the facts of the present case, it seems to me clear beyond argument that there has not been effective compliance with those parts of the definition of “enclosed stage” dealing with external doors and windows; indeed, I do not regard what was done as compliance at all with those parts. As to fixing the roof covering, in relation to those sections of tiled roof which had simply not been constructed because they were over parts of the ground floor where scaffolding was in place in order to enable further work to be done on the first floor, I was somewhat concerned by the fact that on the evidence the completion of parts of the work which were not required for the enclosed stage in relation to the first floor required the presence of scaffolding in accordance with ordinary building practice, and no doubt workplace health and safety requirements, which because of the design of the house, required scaffolding to be so placed that it prevented the construction of these parts of the roof.
  1. [75]
    I am conscious of the proposition that the contract must be construed as a whole, and it could perhaps be said that in circumstances where the contract is to construct a residence to a design where the application of ordinary building principles would require parts of the roof not to be constructed until a late stage in order to enable scaffolding to be retained until that stage had been reached, interpreting the definition of enclosed stage in relation to the requirements for the fixing of the roof covering in the context of the contract as a whole meant that those parts of the roof should not be treated as roof the fixing of which was required in order to satisfy the definition of enclosed stage for the purpose of this contract. Such an interpretation might be supported in circumstances where because of the other features of the structure, in particular the concrete slab which these sections of roof were to be constructed over, the absence of these portions of roof did not in fact prevent the interior of the building from being enclosed.
  1. [76]
    What concerns me however is that an approach of that nature involves moving beyond a process of construction of the contract which the parties have actually made, and substituting for it the contract which in the circumstances it might have been more sensible if the parties had made instead. It could perhaps be said that this is a case where a standard form contract ought to have been modified to accommodate the exigencies of the particular design of this house. There is however the consideration that, in respect of the definition of the enclosed stage, like the rest the definitions associated with progress payments, the parties were not starting with a blank sheet. These matters are regulated by the Domestic Building Contracts Act 2000, and the definition is one used in the statute.  That definition makes no allowance for whether, because of a particular design in the case of a particular building, ordinary building methods render it impractical to construct and fix all of the roof covering at what would ordinarily be the point where the enclosed stage would otherwise be completed. 
  1. [77]
    When statutes intrude in this way into the operation of ordinary contractual freedoms, the implementation of the policy of the legislature must be given priority. The statutory definition is not to be read down in order to accommodate methods of working which may be more convenient for the builder; that would be contrary to the clear purpose of the statute.[90]  It seems to me that, given the definition of “enclosed stage”, if a situation arises in a particular case where part of the roof cannot be constructed because of a necessity for scaffolding to be erected in the usual way in order to enable work which would ordinarily not be part of the enclosed stage to be undertaken on a higher floor, that work must be completed, the scaffolding removed, and the roof finished before the statutory definition imported into the contract will have been satisfied.  It follows that in my opinion the difficulties caused by the presence of scaffolding do not provide an excuse for the plaintiff, and the failure to construct these two sections of roofing meant that the tiled roof had not been fixed. 
  1. [78]
    The position is similar in my opinion in relation to the failure to bed the capping tiles. The contract expressly exempts pointing; it does not expressly exempt bedding. It follows that bedding is required before it can be said that the roof has been fixed. It cannot be said that the capping tiles have been fixed until they have been bedded. This was not something which was omitted only to a slight or trivial extent; the effect of the evidence was that none of the capping tiles had been bedded. That is not in my opinion a slight or trivial omission. As to the third ground, whether this in itself was sufficiently slight or trivial not to prevent it being said that the roof was fixed is something that strictly speaking I do not need to decide, though it occurs to me that flashing should be regarded as part of the roof covering required to be fixed, so that the deficiency here was not merely that a number of tiles were loose, but also that necessary flashing had not been installed.
  1. [79]
    Be that as it may, the real question is whether the difference between what was required under the contract by way of fixing the roof covering and what had been provided was slight or trivial, and in relation to the tiles I consider that, in view of the combined effect of those three factors, the difference was not slight or trivial. This element of the definition of the enclosed stage had not been satisfied at the time when the request for the progress payment was made. The finding remains, that three elements of the definition had not been satisfied. I therefore find that the enclosed stage had not been reached when the progress claim was made. In these circumstances, I do not think it is necessary for me to deal expressly with any other matters raised in the defence by virtue of which it was alleged that the enclosed stage had not been reached.[91] 
  1. [80]
    If the doctrine of substantial performance did apply to a progress payment, I find (on a precautionary basis) that it was not satisfied here. The plaintiff had not substantially performed the enclosed stage works. This involves a comparison of what was done with what was to be done, and is a matter of fact and degree.[92] The nature of the defects and deficiencies, and the proportion between the costs of completing or rectifying the work, and the amount of the payment are relevant,[93] although I accept that the latter consideration is not to be applied in a mechanical way.[94] One looks at the effect of the overall deficiency, but in circumstances where there were no doors and hardly any windows supplied and installed, where a significant part of the total tiled roof had not been built at all, and where there were a few other deficiencies, in my opinion in this case the work required for the enclosed stage had not been substantially performed.[95]  A house with the window and door openings boarded up is quite different from one with the windows and doors supplied and installed.

Consequences of this finding

  1. [81]
    The effect of the finding that the enclosed stage had not in fact been reached at the time when the plaintiff gave the progress claim for that stage is in my opinion that there was no obligation on the defendants to pay on that progress claim. Clause 4.1 provides for the progressive payments of the contract price to occur “at each stage” and it follows that there is no obligation to pay the progress payment due at a particular stage until that stage has in fact been completed.[96]  The contract does not provide that the mere making of a progress claim gives rise to an obligation to make the progress payment, whether or not the contract stage has in fact been completed.  Clause 4.5 is concerned only with the timing of the obligation to pay.
  1. [82]
    In my opinion there was no obligation on the part of the defendants to pay the progress payment claimed by Exhibit 2, and therefore no breach on the part of the defendants of their obligations under the contract by not making that payment. It follows that the plaintiff was not entitled to terminate the contract on the basis that the defendants were in breach of the contract by refusing to pay the progress payment in respect of the enclosed stage, nor is the plaintiff entitled to damages for breach of contract on the basis of that refusal. The true position, I find, is that the defendants were entitled to refuse to make the payment, because the plaintiff had no entitlement to such a payment at that time.
  1. [83]
    On the other hand, the plaintiff responded to the defendants’ failure to pay by suspending the contract works. Clause 28.1 provides that the builder is in substantial breach of the contract if the builder suspends the carrying out of the works otherwise than under cl 19. Clause 19.1(a) provides that the builder may suspend the carrying out of the works if the owner does not pay a progress claim as required by cl 4, but that had not arisen. No other provision of cl 19.1 was relied upon by the plaintiff, or shown to have occurred. It follows that the plaintiff was not entitled to suspend the carrying out of the works under cl 19,[97] and accordingly the plaintiff’s suspension of the works was unjustified, and a substantial breach of the contract.
  1. [84]
    In those circumstances the defendants were entitled to give notice under cl 28.3 of the contract, and that was done: Exhibit 8. The plaintiff did not rectify that substantial breach by removing the suspension of the works within 10 working days after that notice was given, nor had the plaintiff commenced to rectify the substantial breach within that period. Nor had the plaintiff referred the question of whether or not there was a right to end the contract to the Commercial and Consumer Tribunal (or QCAT) for determination under cl 37. It follows that the defendants were entitled to end the contract by giving a separate notice to that effect, under cl 28.4, and that contractual right was exercised by them on 24 November 2011:  Exhibit 11.  They thereby validly put an end to the contract.
  1. [85]
    Apart from the exercise of the contractual right to put an end to the contract, in my opinion the actions of the plaintiff, in refusing to continue with the contract unless and until the defendants made a progress payment they were not liable to make, even after the reasons why they were not liable to make that progress payment had been pointed out to them by the letter from Mr MacLeman, evinced an intention not to comply with the contract in accordance with its terms.  This was not in my opinion a situation where the plaintiff was simply contending for a particular interpretation of the contract, without necessarily expressing a fixed intention to perform the contract only in accordance with its interpretation.  In my opinion the plaintiff’s position in this case was that it would proceed to complete the contract only on its terms, and in such circumstances, if its interpretation of the contract proved to be erroneous, it had repudiated the contract.[98]  In short, the plaintiff nailed its colours to the wrong mast.  Accordingly I find that the defendants also had an entitlement to terminate the contract in response to the plaintiff’s repudiation of it.  On either basis, the contract was brought to an end by the defendants without any breach of contract on their part. 
  1. [86]
    The plaintiff in paragraph 14 alleged that on or about 21 October the defendants informed a sub-contractor of the plaintiff that the defendants sought to terminate the contract, relying on something said by Mr MacLeman to the plumbing supplier in a telephone conversation that day.  This was a matter relied on as showing that the defendant had repudiated the contract, along with the defendants’ failure to pay the progress payment and their purported termination of the contract on 24 November 2011: para 16.  Mr Stevens said that on 24 October 2011 he received a phone call from Mr MacLeman at 3.00 pm advising him that he had been retained by Mr Hart’s solicitor as a building consultant as Mr Hart “is seeking to terminate the contract with the” plaintiff.  He made a contemporaneous diary note of the conversation in those terms: p 1-25.  The purpose of the conversation was to ask the supplier to hold on to the goods ordered, which he was not prepared to do, though in fact they were left in his possession for a long time after that conversation. 
  1. [87]
    There is nothing to indicate that Mr Stevens was asked to pass on this information to the plaintiff, thought in fact it was passed on in an email from his wife on 26 October 2011: Exhibit 15.  Mr MacLeman denied that he said this (p 5-28), but it is apparent from Mr Hart’s evidence that after 18 October he was in fact seeking to get out of the contract, so it is possible that this could have been said.  On the whole, bearing in mind the existence of the contemporaneous diary note, I prefer the evidence of Mr Stevens and find this was said.  Nevertheless, I do not consider that it amounts to repudiation of the contract. 
  1. [88]
    The statement that the defendant was “seeking to terminate the contract” in my opinion does not imply that he was refusing to perform it, but simply that his preference would be to terminate the contract if he were able lawfully to do so. That indeed corresponds with his actual position at the time, as I would interpret it, but that in my opinion does not amount to repudiation of the contract. I doubt whether something said in this way to someone other than the other party in the contract could amount to repudiation of the contract, because ordinarily what matters is the behaviour of one party to the contract towards the other party, objectively assessed,[99] and this statement was not a direct communication to the plaintiff, nor is there any indication that it was intended or expected to function as an indirect communication. 
  1. [89]
    I doubt whether it could amount to repudiation for that reason either, but in my opinion the correct objective interpretation is that it was no more than evidence of a desire to be relieved of the contract if lawfully possible, rather than an indication of a refusal to comply with the contract according to its terms. A person may be reluctant to comply with a contract without being unwilling, or refusing, to do so. I find that this alone did not constitute repudiation by the defendants, and there was no other conduct which with it could amount to repudiation of the contract.
  1. [90]
    Since the contract came to an end prior to the work reaching the point where the definition of the enclosed stage had been satisfied, the plaintiff never became entitled to payment of the progress payment for that stage. The plaintiff has no claim under the contract for recovery of that amount,[100] and, the defendants not having breached the contract, they are also not liable for that (or any) sum as damages for breach of contract. 

Conclusion

  1. [91]
    It follows that the claims advanced by the plaintiff in this action are not made out. There will accordingly be judgment for the defendants. I assume costs follow in the event, but will invite submissions as to the appropriate order when these reasons are delivered.

Footnotes

[1]  The contract was later varied by agreement to omit some work, and reduce the price to $1,783,004:  p 1-43, Exhibits 29, 56. This change did not affect the issues in this trial.

[2]  Thompson p 1-38.  For this paragraph, see also p 1-39, p 1-46.

[3]  I shall refer to Mr Brendan Thompson simply as “Mr Thompson” for convenience, and specify Mr Brad Thompson when he is referred to.

[4]  Brad Thompson p 2-80.

[5]  Thompson p 1-42; p 1-104.  Mr Chipperfield no longer works for the plaintiff: p 1-42.

[6]  Hart p 3-81-2.

[7]  Thompson p 1-41, 42; Hart p 3-81; Exhibit 1.

[8]  Thompson p 1-80; Hart p 4-15.

[9]  Thompson p 1-81; Rosetta p 2-100.

[10]  Thompson p 1-78, 79.

[11]  Exhibit 57.

[12]  Thompson p 1-44, p 1-104.

[13]  Thompson p 1-71, 72.  This may have started in this case because the sustainability report required a particular type of tinted glass in some windows, and this had not originally been specified:  Hart p 3-83, 84; Exhibits 46, 47, 48.

[14]  Hart p 3-86, 87.  He had not been advised of the supplier previously:  Exhibit 49.

[15]  Although Mr Hart had been told that the manufacturer would be selected in early July:  Exhibit 49.  The plaintiff did not explain the delay to September.

[16]  Hart p 3-88-91; p 4-29.

[17]  Hart p 3-89; Exhibits 50, 51.  Exhibit 51 did involve some further changes.

[18]  Hart p 3-94.

[19]  Windows W25, W26 and W27, really one window in three parts, on the ground floor, and W60 on the first floor: Defence para 37(c)(ii), reply para 36(b). For the date, see Hart p 4-44.

[20]  There was some ambiguity about the timing of this request (p 4-44, 45), but I accept that it occurred when the sample windows were approved: Exhibit 52. The request was later withdrawn: Exhibit 36.

[21]  Hart p 4-2. See also Exhibit 30.

[22]  Hart p 3-93, p 4-27 (told 7 October); Exhibit 27.

[23]  He claimed he gave instructions for this on 22-24 October:  p 1-72, p 2-27, inconsistent with his answer on p 2-25 line 7. That at least a proposal to do this was afoot by 19 October is shown by Exhibit 31, and at one point Thompson admitted he had decided to do this by then (p 2-26 line 26) although he later tried to back out of this admission.

[24]  Hart p 4-4; Exhibit 5, which shows the defendants signed the power of attorney on 18 October 2011.

[25]  Mr Hart, p 4-5; Mrs Hart p 5-44.

[26]  Brad Thompson, p 2-84.  He agreed there was a conversation:  p 2-82.  He said it was later than the 18th:  p 2-83.

[27]  Hence my comment at p 2-84.

[28]  MacLeman p 5-2, 5-17, 5-24. He spoke to Hart for the first time on 19 October p 5-38.

[29]  Hart p 4-37, 40, 57; Exhibit 66; MacLeman p 5-21.

[30]  Hart p 4-57, p 5-39.

[31]  Thompson p 1-48; Stevens p 1-25 (as at 24 October 2011); Exhibit 15; Hart p 4-5.

[32]  Hart p 4-45, 53.

[33]  p 4-58. Note his response p 4-58, 59, and in re-examination: p 5-39-41.

[34]Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1988) 166 CLR 623 at 647, 658.

[35]  The revised construction programme sent by the plaintiff to the defendant on 7 October 2011 provided for manufacture of doors and windows to commence on 11 October, and to take 15 days:  Exhibit 27.  If it would really require six weeks, the plaintiff had not at that stage taken that into account in its programme of works. Mr Hart was never told he was holding up the project: p 4-19.

[36]  See Exhibits 33, 34, 52, 53, 54.

[37]  Schultz p 3-10.

[38]  Exhibit 27 provided for all the rough-in work to be completed five days before completion of the installation of the doors and windows.

[39]  Mr Thompson admitted to surprise and shock (p 1-48) and anger at the letter: p 2-20.

[40]  Hart p 4-5.  This is not entirely consistent with Mr Hart’s version.

[41]  Mr Brad Thompson also said he was asked to tell Mr Hart that the cement render was not part of the works for this stage: p 2-82. There was no reason for him to speak to Mr Hart after 18 October for that purpose. Render was raised in Exhibit 5 on 4 November, along with lots of other things.

[42]  This apparently occurred from 28 to 31 October 2011: Thompson p 2-31.

[43]  Thompson claimed (p 2-32) that work continued to 7 November, but he was not able to verify that, apart from an assertion that the electrician was there on that day (p 2-32), which was not confirmed by Cosovan.

[44]  Mr MacLeman had inspected the site on 3 November:  p 5-8; 5-29, 30; Thompson, p 1-52. There was no work being done then: p 2-37; MacLeman p 5-11.

[45]  I deal below with a specific issue between Mr MacLemon and Mr Stevens.

[46]  Plaintiff’s submissions in writing para 272.

[47]  Costanzo Exhibits 83 para 9 – 44% of project built; Exhibit 1 p 10 - 50% of price paid. 

[48]  Exhibits 65, 66, 75, 76. 

[49]  See also Williams p 2-90; Rosetta p 2-98.   He also claimed that the soffit lining was complete (p 1-74) when it was not: Exhibit 42 p 9; Exhibit 82, pp 1572, 1582, 1586.

[50]  Thompson p 1-102.

[51]  Housing Industry Association Queensland Plain Language New Home Construction Contract QC 1 March 2008.  This was commonly used by the plaintiff:  Thompson p 1-43.

[52]  Exhibit 1 p 7.  This follows the terms of such a definition in the Domestic Building Contracts Act 2000, schedule 2.

[53]  Exhibit 1 p 38.

[54]  Thompson p 1-72.  His assertion that it was necessary under the contract for the defendants to sign off on the schedule of doors and windows was not what the contract provided:  window schedule Exhibit 19 and building specification:  Exhibit 1 p 62.  This seems to have just reflected the previous cooperative approach of the parties.

[55]  Hart p 4-5-10, p 4-40, 41, 44; Exhibit 33, 34, 52, 53, 54.

[56]  Exhibit 33: the price quoted has been blanked out, preventing comparison with Exhibit 20.

[57]  Exhibit 53: again the price has been obscured, but there was a document from the plaintiff asserting that this produced an increased cost of $31,735.44.

[58]  Exhibit 54, which among other things abandoned proposed changes to 11 of the windows.

[59]  Exhibit 36, a singularly unconstructive response. Clearly by this time the plaintiff had no interest in finishing the project. 

[60]  See Hart p 4-19, p 4-37.

[61]  Schultz p 3-9, 10.

[62]  It was not:  Exhibit 27, as late as 7 October 2011, provided for measuring the penetrations on 10 October and immediately ordering the doors and windows, which would be ready to install three weeks later.

[63]  Thompson p 1-68.

[64]  Thompson p 1-72, as they were ready to proceed to install gyprock. 

[65]  Thompson p 1-73; B Williams p 2-88.

[66]  Exhibit 82 pp 1446, 1449, 1450, 1463, 1471, 1566, 1583. See also exhibit 42, p 3.

[67]  Thompson p 1-55.  Williams p 2-88, 89, Rosetta p 2-95; Schultz p 3-6, who however could not recall a previous case where it was done to this extent:  p 3-8. Dixon said it was uncommon: p 5-59.

[68]  Thompson p 1-72; Rosetta p 2-99.

[69]  No reason appears why it was not done, or at least started, between 31 October and 7 November, except that the plaintiff in fact stopped work on 1 November.

[70]  See Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 at 236. There would be difficulties with the requirement that the implied term not be inconsistent with the express terms.

[71]Horton Geoscience Consultants Pty Ltd v Energy Minerals Pty Ltd [2005] QCA 169 at [5]; Queensland Alumina Ltd v Alinta DQP Pty Ltd [2006] QSC 391 at [77].

[72]  As asserted on behalf of the plaintiff:  Thompson p 1-54.

[73]  See Connor v Stainton (1924) 27 WALR 72, particularly the passage cited below.

[74]  Exhibit 41, and see n 64 above.

[75]  Exhibit 42, p 7; Schultz p 3-8.

[76]  Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 421 at 64.

[77]  Thompson, p 1-69; Exhibit 20: $97,397.30.

[78]  These are the matters raised in submissions. The plaintiff’s pleading as to what work it had done to justify the enclosed stage claim made no reference to the definition in the contract, and the defence followed that approach, so that the pleadings on this point were essentially unhelpful.

[79]  Thompson p 1-63, 64.; Rosette p 2.96.

[80]  It is not “a roof covering”, but “the roof covering”, which is required.

[81]  Dixon p 5-62. The bedding is also best left for a few days, or commonly a week, after the roof is loaded: p 5-63, 64.

[82]  Exhibit 42 p 8; Exhibit 82.

[83]  Rosetta p 2-102.

[84]  See also Morgan v S & S Constructions Pty Ltd [1967] VR 149 at 156; Zamperoni Decorators Pty Ltd v Lo Presti [1983] 1 VR 338 at 340-342.

[85]  See also Eshelby v Federated European Bank Ltd [1932] 1 KB 423. I respectfully disagree with the decision in Zachary Developments Pty Ltd v Turner [2012] QCATA 86, which appears to be to the contrary.

[86]  This passage (in the 11th Ed para 4-024) was approved and applied recently by Kingham DCJ in McGibbo Pty Ltd v Willex Projects Pty Ltd [2013] QDC 313 at [71].

[87]Kevru Industries Pty Ltd v Barnes (unreported, Supreme Court of New South Wales, Cross J, 16 July 1981, BC 8111557)

[88]  The wording apparently endorsed by Starke J in Phillips v Ellison Brothers Pty Ltd (supra).

[89]  Contrast Bolton v Mahadeva [1972] 1 WLR 1009 at 1013E, dealing with the substantial performance rule. Once upon a time a judge could duck the question by leaving it to the jury:  Connor v Stainton (1924) 27 WALR 72 at 73.

[90]  Act s 3(a) – achieving a balance of interests.

[91]  One matter raised, defence para 15(e), that the construction of the roof was defective because the height went about the legal limit, was not proved as the accuracy of the level used by the surveyor as “ground level” was not proved: p 5-81.

[92]Zamperoni Decorators (supra) at p 341-2.

[93]Bolton v Mahadeva (supra) at p 1325.  I have already discussed the former.

[94]Zamperoni Decorators (supra) at p 341.

[95]  The cost of making good the deficiencies would be the cost of supply of the windows and doors, about $90,000, plus labour to strip the boarding up, the cost of removing the scaffolding, and the cost of finishing the tiling, including flashing, fixing and bedding.  This was not proved with precision, but would be of the order of 25 – 30% of the payment claimed.

[96]  Indeed, it may be an offence to demand payment for the enclosed stage before it has been completed: Domestic Building Contracts Act 2005, s 66(5).

[97]McGibbo Pty Ltd v Willex Projects Pty Ltd [2013] QDC 313 at [73].

[98]Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33; Highmist (supra) at [56]; Sopov v Kane Constructions Pty Ltd (2008) 20 VR 127 at [17].

[99]Highmint (supra) at [55].

[100]  Assuming that a right to a progress payment which had arisen survived termination of the contract, which, given that it was a payment on account only (cl 4-8(a)), was not the situation: Ownit Homes Pty Limited v Batchelor [1983] 2 Qd R 124 at 134-5; Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248 at [76].

Close

Editorial Notes

  • Published Case Name:

    Thompson Residential Pty Ltd v Hart & Anor

  • Shortened Case Name:

    Thompson Residential Pty Ltd v Hart

  • MNC:

    [2014] QDC 132

  • Court:

    QDC

  • Judge(s):

    McGill DCJ

  • Date:

    11 Apr 2014

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
2 citations
Jump To
Cite 1 - (1987) 162 CLR 549
Cite 2 - (1987) 162 CLR 549
Bolton v Mahadeva [1972] 1 WLR 1009
2 citations
Jump To
Cite 1 - [1972] 1 WLR 1009
Cite 2 - [1972] 1 WLR 1009
Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248
2 citations
Jump To
Cite 1 - [2005] NSWCA 248
Cite 2 - [2005] NSWCA 248
Cardona v Brown [2010] VSC 368
2 citations
Jump To
Cite 1 - [2010] VSC 368
Cite 2 - [2010] VSC 368
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
2 citations
Jump To
Cite 1 - (1986) 160 CLR 226
Cite 2 - (1986) 160 CLR 226
Connor v Stainton (1924) 27 WALR 72
4 citations
Jump To
Cite 1 - (1924) 27 WALR 72
Cite 2 - (1924) 27 WALR 72
Cite 3 - (1924) 27 WALR 72
Cite 4 - (1924) 27 WALR 72
Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184
2 citations
Jump To
Cite 1 - [2012] NSWCA 184
Cite 2 - [2012] NSWCA 184
Eshelby v Federated European Bank Ltd. [1932] 1 KB 423
2 citations
Jump To
Cite 1 - [1932] 1 KB 423
Cite 2 - [1932] 1 KB 423
Highmist Pty Ltd v Tricare Ltd [2005] QCA 357
2 citations
Jump To
Cite 1 - [2005] QCA 357
Cite 2 - [2005] QCA 357
Hoening -v- Isaacs (1952) 2 All E.R. 176
2 citations
Jump To
Cite 1 - (1952) 2 All E.R. 176
Cite 2 - (1952) 2 All E.R. 176
Horton Geoscience Consultants Pty Ltd v Energy Minerals Pty Ltd [2005] QCA 169
2 citations
Jump To
Cite 1 - [2005] QCA 169
Cite 2 - [2005] QCA 169
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 421
2 citations
Jump To
Cite 1 - (1984) 156 CLR 421
Cite 2 - (1984) 156 CLR 421
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1988) 166 CLR 623
1 citation
Jump To
Cite 1 - (1988) 166 CLR 623
Lemura v Coppola [1960] Qd R 308
2 citations
Jump To
Cite 1 - [1960] Qd R 308
Cite 2 - [1960] Qd R 308
McGibbo Pty Ltd v Willex Projects Pty Ltd [2013] QDC 313
3 citations
Jump To
Cite 1 - [2013] QDC 313
Cite 2 - [2013] QDC 313
Cite 3 - [2013] QDC 313
Morgan v S & S Constructions Pty Ltd (1967) VR 149
2 citations
Jump To
Cite 1 - (1967) VR 149
Cite 2 - (1967) VR 149
Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124
2 citations
Jump To
Cite 1 - [1983] 2 Qd R 124
Cite 2 - [1983] 2 Qd R 124
Phillips v Ellison Bros Pty Ltd (1941) 65 CLR 221
2 citations
Jump To
Cite 1 - (1941) 65 CLR 221
Cite 2 - (1941) 65 CLR 221
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
2 citations
Jump To
Cite 1 - (1985) 157 CLR 17
Cite 2 - (1985) 157 CLR 17
Queensland Alumina Ltd v Alinta DQP Pty Ltd [2006] QSC 391
2 citations
Jump To
Cite 1 - [2006] QSC 391
Cite 2 - [2006] QSC 391
Shevill v Builders' Licensing Board (1982) 149 CLR 620
2 citations
Jump To
Cite 1 - (1982) 149 CLR 620
Cite 2 - (1982) 149 CLR 620
Simpson Steel Structures v Spencer [1964] WAR 101
2 citations
Jump To
Cite 1 - [1964] WAR 101
Cite 2 - [1964] WAR 101
Sopov v Kane Constructions Pty Ltd (2008) 20 VR 127
2 citations
Jump To
Cite 1 - (2008) 20 VR 127
Cite 2 - (2008) 20 VR 127
Sumpter v Hedges (1898) 1 QB 673
2 citations
Jump To
Cite 1 - (1898) 1 QB 673
Cite 2 - (1898) 1 QB 673
Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689
2 citations
Jump To
Cite 1 - (1990) 21 NSWLR 689
Cite 2 - (1990) 21 NSWLR 689
Williamson v Murdoch (1912) 14 WALR 54
2 citations
Jump To
Cite 1 - (1912) 14 WALR 54
Cite 2 - (1912) 14 WALR 54
Zachary Developments Pty Ltd v Turner and Anor [2012] QCATA 86
2 citations
Jump To
Cite 1 - [2012] QCATA 86
Cite 2 - [2012] QCATA 86
Zampironi Decorators Pty. Ltd. v Lo Presti [1983] 1 VR 338
2 citations
Jump To
Cite 1 - [1983] 1 VR 338
Cite 2 - [1983] 1 VR 338

Cases Citing

Case NameFull CitationFrequency
Allen v Queensland Building and Construction Commission [2023] QCATA 661 citation
Braycroft Pty Ltd v Queensland Building and Construction Commission [2017] QCAT 1764 citations
CapFF Pty Ltd v Queensland Building and Construction Commission [2020] QCAT 4088 citations
Cochrane v Lees [2021] QCATA 743 citations
Edwards v Sovereign Homes (QLD) Pty Ltd [2020] QCATA 1463 citations
Imperial Homes (Qld) Pty Ltd v Boys [2020] QCAT 2992 citations
Instyle Homes Qld Pty Ltd v Middler [2017] QCAT 3762 citations
Lee Manson v Brett [2016] QCAT 2822 citations
Michelsen v Pivovarova [2017] QCAT 2352 citations
Partington v Urquhart [2015] QCATA 672 citations
Partington v Urquhart (No 2) [2018] QCATA 1206 citations
Pivovarova v Michelsen [2019] QCATA 543 citations
Pivovarova v Michelsen(2019) 2 QR 508; [2019] QCA 2568 citations
Purnell v Manson [2023] QCATA 772 citations
Sutton v Nicol [2021] QCAT 1372 citations
1

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