Thompson Residential Pty. Ltd. v Tran
[2014] QDC 156
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- Unreported Judgment
- Thompson Residential Pty. Ltd. v Tran[2014] QDC 156
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Thompson Residential Pty. Ltd. v Tran[2014] QDC 156
Thompson Residential Pty. Ltd. v Tran[2014] QDC 156
DISTRICT COURT OF QUEENSLAND
CITATION: | Thompson Residential Pty Ltd v Tran & Anor [2014] QDC 156 |
PARTIES: | THOMPSON RESIDENTIAL PTY LTD v PHONG TRAN and CHI PHAM |
FILE NO/S: | BD 1012/12 |
DIVISION: |
|
PROCEEDING: | Determination of separate question before trial |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 22 July 2014 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Submissions in writing |
JUDGE: | McGill SC DCJ |
ORDER: | Order that the following question be determined separately in advance of the matters in issue at the trial, namely whether s 84 of the Domestic Building Contracts Act 2000 excludes any liability of the defendants for the claim in restitution brought by the plaintiff in this court in respect of variation works. Order that that question be answered “yes”. Order that paragraph 20, and such parts of the second paragraph 20 and paragraphs 21-23 as relate to variation works, be struck out of the plaintiff’s statement of claim. |
CATCHWORDS: | BUILDING AND ENGINEERING CONTRACTS – Statutory regulation – variations – requirements of documentation of variations to regulated contract – no entitlement to claim in restitution outside statute Domestic Building Contracts Act 2000 s 84. Allaro Homes Cairns Pty Ltd v O'Reilly [2012] QCA 286 – considered. Baque v River Gum Homes Pty Ltd [2013] QCATA 24 – cited. Campbell v Fields [2000] QDC 206 – considered. CMF Projects P/L v Riggall & Anor [2014] QDC 90 – followed. Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 – cited. Gemini Nominees Pty Ltd v Queensland Property Partners Pty Ltd [2008] 1 Qd R 139 – considered. Lee v NSW Crime Commission (2013) 87 ALJR 1082 – cited. Marshall v Marshall [1999] 1 Qd R 173 – cited. Miccon Hire Pty Ltd (in liquidation) v Birla Mt Gordon Pty Ltd [2013] QSC 139 – considered. Pavey & Mathews Pty Ltd v Paul (1987) 162 CLR 221 – cited. Poiner v Quirk [2007] QDC 299 – cited. Seveastopoulos v Spanos [1991] 2 VR 1974 – followed. Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196 – considered. |
COUNSEL: | S McNeil for the plaintiff G I Thomson for the defendants |
SOLICITORS: | Holding Redlich for the plaintiff Hemming & Hart for the defendants |
- [1]By a claim and statement of claim filed 15 March 2012 the plaintiff sought $579,801.88 in restitution together with interest by statute from the defendants. The pleading alleged that it entered into a contract with the defendants for the construction by it of a dwelling house for a particular contract price, which contract the defendants wrongfully repudiated on 19 December 2011 at a time when the work under the contract was almost complete, by purporting to terminate the contract. The plaintiff claimed reasonable compensation for the construction of the works the subject of the contract, together with an amount of $286,533.89 for variations in the contract work at the request of the defendants, as alleged in paragraph 20 of the statement of claim, and particularised in more detail in annexure B thereto.
- [2]The defendants by a defence filed with a notice of intention to defend on 19 April 2012 alleged that the contract was to carry out domestic building work within the meaning of the Domestic Building Contracts Act 2000 (“the Act”), was a domestic building contract for the purposes of the Act, and was a regulated contract for the purposes of the Act, all of which were admitted in the reply paragraph 1. The defendants alleged that they were entitled to terminate the contract on 19 December 2011 because of conduct identified in the pleading which amounted to repudiation of the contract by the plaintiff, and raised a number of other matters relating to liability, including, specifically in respect of what was referred to in the plaintiff’s pleading as the variation works, that because of the provisions of Part 7 of the Act the plaintiff has no entitlement to restitutionary relief in respect of the variation works, at least so far as proceedings in this court are concerned.
- [3]If that is correct, that part of the plaintiff’s claim which relates to the variation works cannot succeed. This proposition was put in issue in the reply, but the matter turns on the correct interpretation of the relevant provisions of the Act, as shown by the parties’ submissions. In essence, the plaintiff’s argument is that there is nothing in the Act, in particular s 84 of the Act, which bars the restitutionary remedy otherwise available, on the basis that work was done by the plaintiff for the defendants at their request, so as to give rise to an entitlement to reasonable remuneration for that work. The defendants on the other hand submit that the effect of the statute is that there is no enforceable right to any payment in respect of those works except pursuant to a specific statutory mechanism, which involves an application to QCAT, and which therefore cannot be pursued in this court.
- [4]It seems to me that this is a question which turns on the correct interpretation of the Act, and that, if the interpretation contended for by the defendants is correct, there is no point in taking up time litigating here whether each of the items of variation works was requested by the defendants, and whether the amount claimed by the plaintiff is reasonable remuneration for it. Accordingly I invited submissions on this point with a view to determining it as a preliminary question under the UCPR r 483. Submissions in writing were received from the defendants on 26 May 2014, and from the plaintiff on 27 June 2014. Having considered those submissions, the authorities referred to therein and the terms of the legislation, I have concluded that s 84 does exclude any restitutionary claim other than the specific statutory restitutionary claim before QCAT, and that accordingly, the plaintiff’s claims in respect of the variation works cannot succeed in this court, and should be therefore struck out. The reasons for this are as follows.
The Act
- [5]Variations are regulated by Part 7 of the Act. Section 79 imposes on the builder an obligation to put any agreed variation in written form, before the variation work is done, unless it is to be carried out urgently. The document must comply with the formal requirements in s 80, and in respect of price, with s 81, and must be signed by the builder who must take all reasonable steps to have the document signed by the owner: s 82. A copy of the document must be given to the owner within five business days: s 83. If the variation means additional work or additional costs, s 84 restricts the right of the builder to recover any amount for the variation.
- [6]It was admitted on the pleadings that the contract in this case was subject to part 7 of the Act, dealing with variations of contracts, and that the plaintiff had not complied with s 79 to 81 of the Act: defence para 39(c); reply para 33(d). Section 84 of the Act provides in subsection (1) that it applies if a building contractor under a regulated contract gives effect to a variation of the contract, which consists of an addition to the subject work or an omission which results in the contractor occurring additional costs. Subsection (2) provides:
“If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation:–
- (a)only if the building contractor has complied with ss 79, 80, 82 and 83; or
- (b)only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.”
- [7]The section goes on in subsection (3) to deal with the situation where a variation is not a variation that was originally sought by the building owner. It is even more restrictive but the plaintiff alleged that all the variations were at the defendants’ request: statement of claim para 20. Subsection (4) permits the tribunal to approve the recovery of an amount under the section only if certain, fairly restrictive conditions are satisfied, and subsection (6) determines the amount that the building contractor will be entitled to recover for a variation, with the tribunal’s approval, in the case of a fixed price contract, as this was.
Analysis
- [8]There is in Australia some history of legislative restrictions on the enforceability of contracts, or rights to recover remuneration, by builders unless certain steps have been satisfied. For example, persons who do not hold the relevant license may be prevented from recovering remuneration in respect of building work done, even if the work was quite satisfactory and has been accepted by the owner. To some extent courts have been reluctant to accept the situation that a building owner might escape payment for work which it had requested and accepted simply on the basis that there had been a failure to comply with the statutory requirements.[1] That is consistent with the general tendency for courts to interpret statutes as not excluding common law rights until they do so expressly or by necessary implication.[2]
- [9]This approach was taken up in Queensland, leading to two amendments to the legislation designed to prevent persons who were not registered builders from recovering any remuneration in relation to building work: see the discussion of the history of the legislation in Marshall v Marshall [1999] 1 Qd R 173 at 176-7 by McPherson JA. That position was reinforced by the decision of the Court of Appeal in Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196. In that case the legislation under consideration included a provision that “a person who carries out building work in contravention of this section is not entitled to any monetary or any other consideration for doing so.” It was held that this excluded restitutionary compensation for the relevant work.
- [10]Similarly, there are requirements that contracts for building work be in writing, and restrictions on enforceability if the contract is not in writing. The Act by s 26 imposes on a building contractor who enters into a regulated contract an obligation to do so in writing, or to put it into written form promptly; failure to comply is made an offence. A regulated contract “has effect” only if it is signed by the parties or their agents: s 30, but this does not go as far as the provision considered in Zullo (supra). It is unnecessary to decide if a builder who fails to comply with s 26 can pursue a restitutionary claim for the work done.
- [11]A requirement that a variation of a domestic building contract be in writing, and a provision that the builder not be entitled to recover in any court the costs of any work performed or material supplied under the variation unless that had occurred, was held in Seveastopoulos v Spanos [1991] 2 VR 1974 to exclude liability in restitution as well as in contract. It was submitted that the wording of the section there was very different, and so it was,[3] but the wording of s 84(2) is if anything clearer and broader. It restricts the recovery of “an amount for the variation” to a situation falling within one of the following paragraph. This on its face goes further than the amount payable under the contract for the variation, bearing in mind that under s 16 “variation” is defined by reference to the change in the subject work, rather than a change in the terms of the contract, so long as the additional work is domestic building work.
- [12]The plaintiff submitted that, in circumstances where it was common ground that the contract had come to an end, there was no question of enforcing any entitlement under the contract in respect of the variation works, and therefore the Act, which was concerned only with the regulation of domestic building contracts, did not operate to prevent a restitutionary claim from arising. But it necessarily follows from the pleadings that, at the time when the variation works were undertaken, the contract was on foot, and the Act therefore applied. The plaintiff is seeking payment for work which was domestic building work but which was additional to the work already covered by the contract, so it met the definition of “variation” in s 16, and Part 7 applied. The plaintiff is not freed from the restrictions imposed by s 84 just because the contract has been terminated.
Earlier decisions
- [13]There has been some reference in judgments in Queensland to s 84, but the plaintiff submitted that this was without this specific point being decided.[4] In Allaro Homes Cairns Pty Ltd v O'Reilly [2012] QCA 286 the Court of Appeal refused to interfere in the refusal of QCAT to allow the statutory restitutionary remedy under s 84(4). Significantly however it appears that Holmes JA at [2] rejected the idea that the applicant could have a restitutionary remedy outside s 84(4), a remedy which, had it existed, the applicant ought to have been able to pursue before the Tribunal.[5] If there was a general law restitutionary remedy available as well as that provided by s 84(4), it is very surprising that the Court did not say so.
- [14]The plaintiff submitted that Campbell v Fields [2000] QDC 206 was a case where relief was claimed specifically under s 84 of the Act, which does seem to be correct, although there was a comment by Long DCJ at [33] which suggests that the terms of s 84 were not necessarily regarded as excluding any other restitutionary remedy, a point he did not specifically decide, nor elaborate on. His Honour referred to the definition of “variation” in s 16 of the Act, and continued:
“Accordingly it can be seen that the critical criteria is not the incurrence by a building contractor, of additional cost in respect of the subject domestic building work, but rather a variation in the sense of an addition of domestic building work to or omission from the subject work. Particularly having regard to the apparent purpose of Part 7 of the DBC Act, in requiring prompt and agreed written amendment to the Building Contract, in order to support recovery for variations and otherwise the requirement that the building contractor must obtain the approval of the tribunal pursuant to s 84(4) for any such recovery, it is not immediately apparent that these provisions would act to exclude recovery otherwise pursuant to an express entitlement under the written contractual terms.”
- [15]In the present case the plaintiff does not seek to recover for the variations under the contract either. The plaintiff also relied on Miccon Hire Pty Ltd (in liquidation) v Birla Mt Gordon Pty Ltd [2013] QSC 139, where de Jersey CJ at [32] held that a failure to comply with contractual restrictions on claims for variations did not prevent recovery in restitution. This was in a matter which did not involve domestic building work, and therefore says nothing about the effect of s 84(2). The question is not whether, but for the Act, the plaintiff would have a claim in restitution, but whether the effect of s 84 is that a general law claim for restitution cannot arise.
- [16]Most recently, Andrews DCJ considered a very similar point arising under s 55 of the Act, and concluded that that section did exclude any restitutionary claim except under the Act: CMF Projects P/L v Riggall & Anor [2014] QDC 90. In arriving at that conclusion, he dealt with a submission seeking to distinguish between s 55 and s 84 of the Act, for which purpose he considered the effect of s 84(2). His Honour said at [23]:
“In my opinion, s 84(2) excludes a builder’s capacity to recover an amount on account of a variation on any basis other than by satisfying one of the subparagraphs in s 84(2)(a) or s 84(2)(b). This is for two reasons. The first is that that is the natural meaning of the words used at s 84(2). The second is that there would be little point in the legislature creating a specific, and quite restricted right at s 84(4) to, in effect, a restitutionary remedy in certain circumstances if the legislature did not intend otherwise to exclude any right to recover, including in restitution. I accept that the wording at s 84 is clearer than the wording at s 55 in expressing an intention to limit the builder’s remedy to the remedy the tribunal may grant (where the builder failed to give the required estimate). I accept the builders’ argument that the words of s 84(2) more clearly demonstrate an intention to curtail other common law rights than the words of s 55(3). But a comparison of s 55(4) and 84(4) gives some support to the home owners. Section 84(4) is an instance of the legislature creating a specific and restricted right to a restitutionary remedy for builders who failed to obtain properly documented variation agreements, a remedy available only from the tribunal and to the exclusion of other rights of recovery.”
- [17]His Honour went on to conclude that by analogy the same effect should be attributed to s 55(4). In doing so, he agreed with the conclusion of Mullins J in Gemini Nominees Pty Ltd v Queensland Property Partners Pty Ltd [2008] 1 Qd R 139, where Her Honour said at [36]: “It cannot be concluded that in addition to s 55(4) a builder who breached s 55 of the [Act] would be able to make a claim based on quantum meruit.” Whether or not this conclusion of Andrews DCJ was part of the ratio of his decision, considerations of judicial comity suggest that I should follow it unless persuaded that it was wrong. Far from being so persuaded, in my respectful opinion it is clearly correct. I was told it is subject to appeal, but I do not consider that I should wait to see what the Court of Appeal does if that appeal is pursued. I propose to decide this question on my understanding of the Act, in the light of the authorities currently available.
Conclusion
- [18]In my opinion s 84(2) does exclude any restitutionary remedy as well as any contractual remedy, and, in circumstances where it is accepted that the section applies and s 79-81 have not been complied with, the plaintiff may not recover in this court any amount in restitution for any of these variations. This part of the plaintiff’s claim therefore fails. It is appropriate to decide that question now, before the trial, and having decided it in this way, to order that the plaintiff’s claims in respect of the variation works be struck out of the statement of claim.
- [19]I therefore order that the following question be determined separately in advance of the matters in issue at the trial, namely whether s 84 of the Domestic Building Contracts Act 2000 excludes any liability of the defendants for the claim in restitution brought by the plaintiff in this court in respect of variation works. I order that that question be answered “yes”. I also order under UCPR r 484 or r 485 that paragraph 20, and such parts of the second paragraph 20 and paragraphs 21-23 as relate to variation works, be struck out of the plaintiff’s amended statement of claim. I shall invite submissions as to the costs of the separate determination of this issue when these reasons are published.
Footnotes
[1] For example, Pavey & Mathews Pty Ltd v Paul (1987) 162 CLR 221 at 228-9.
[2] Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at [19]. The nature of the right in question is important: Lee v NSW Crime Commission (2013) 87 ALJR 1082.
[3] “[T]he builder is not entitled to recover in any court the cost of any work performed or materials supplied under the variation ... “ One could argue that there is a difference between the cost and reasonable remuneration for the variation.
[4] See also Poiner v Quirk [2007] QDC 299 at [17], [69], where however the point was not in issue.
[5] Baque v River Gum Homes Pty Ltd [2013] QCATA 24 at [19] – [21].