Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd[2018] QDC 218

Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd[2018] QDC 218

DISTRICT COURT OF QUEENSLAND

CITATION:

Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218

PARTIES:

CHAPEL OF ANGELS PTY LTD (ACN 154 327 867) (Plaintiff)

AND

HENNESSY BUILDER PTY LTD (ACN 117 587 998) IN ITS OWN CAPACITY AS TRUSTEE FOR THE HENNESSEY FAMILY TRUST (ACN 45 515 151 376) (First Defendant)

AND

JOHN PAUL HENNESSEY (Second Defendant)

FILE NO/S:

4124/14

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

12 November 2018

DELIVERED AT:

Brisbane

HEARING DATE:

10, 12, 13, 14, 17, 18, 19 September 2018

2 October 2018

JUDGE:

Porter QC DCJ

ORDER:

The parties are to make submissions on the form of orders to give effect to these reasons.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY –  where  plaintiff brought proceedings against Hennessey for damages for breach of contract and/or restitution of sums paid under the building contract entered into by the parties – whether the scope of work under the Building Contract included work for which the first defendant was unlicensed – where the first defendant was not licensed to construct an assembly building with a rise in storeys of two – whether on the proper construction of the Building Code of Australia, the Chapel undertaken to be built had a rise in storeys of two – whether, if the first defendant undertook to carry out unlicensed work, the plaintiff is entitled to restitution of all sums paid under the building contract – whether, if the first defendant undertook to carry out unlicensed work, the adjudication under the Building and Construction Industry Payments Act 2004 (Qld) for payment of sums due under the building contract is invalid 

CONTRACTS – BUILDING, ENGINGEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY ON QUANTUM MERIT – where the defendant claimed an entitlement to restitution on a quantum meruit basis – whether the defendant is entitled to restitution on a quantum merit basis.  

Cases

Cant Contracting Pty Ltd v Casella [2007] 2 Qd R 13

Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (2009) 254 ALR 661

Dart Holdings Pty Ltd v Total Concept Group Pty Ltd [2012] QSC 158

Marshall v Marshall [1999] 1 Qd R 173

Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196

Toll Holdings Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Legislation

Building Act 1975 (Qld)

Building Code of Australia (Class 2 to Class 9 Buildings) 2012 A1.1, A3.1, A3.2, A3.3, A3.4, C1.1, C1.2, C1.3, C1.4, C1.5, CO1, CF1, CP1 

Building and Construction Industry Payments Act 2004 (Qld)

Building Services Authority Act 1991 (Qld)

Competition and Consumer Act 2010 (Cth), Schedule 2, Australian Consumer Law s 236

Queensland Building Services Authority Act 1991 (Qld) s 42 

Queensland Building Services Authority Regulation 2003 (Qld) Schedule 8, Part 4, Part 15

Other

Building Regulation Australia, Annotated Code, Lexis Nexis Looseleaf Service (as at August 2018)

COUNSEL:

S Di Carlo and A Fronis for the plaintiff

P Travis for the defendants

SOLICITORS:

Irish Bentley Solicitors for the plaintiff

Axia Litigation Lawyers for the defendants

Contents

Introduction

Factual background

Dealings leading up to the Quotation dated 14 August 2012

Events up to finalisation of the Amended Plans and start of work: May 2013

The construction of the Chapel

The parties fall into dispute

Was the work undertaken to be done unlicensed?

The parties’ contentions

The statutory framework

The BCA

QBSA Regulations

Analysis

The factual question: was the under storey “for storage”?

Restitutionary claims

Restitution to the plaintiff of payments under the Building Contract

Hennessey’s entitlement to reasonable remuneration

Hennessey’s first argument: no reduction for unlicensed work

Hennessey’s second argument: entitlement after allowing for unlicensed work

The net sum on the restitutionary claims

The plaintiff’s breach of contract claim

The deficiencies in the pleaded case

Was notice given?

The causation analysis fails

The disputed $15,000 claim

Hennessey’s claim under the Building Contract

Form of Orders

Introduction

  1. [1]
    The plaintiff contracted with the first defendant (Hennessey), to construct a wedding chapel and surrounds at Kondalilla Falls Road at Montville (the Chapel). The Chapel building and much of the surrounds was constructed by Hennessey, but towards the end of the works the parties fell into dispute.
  2. [2]
    The plaintiff brought proceedings against Hennessey for damages for breach of contract and/or restitution of sums paid under the building contract entered into by the parties (the Building Contract) and/or for misleading or deceptive conduct. It also sought damages for misleading or deceptive conduct against the second defendant, Mr Hennessey, one of the directors of, and guiding mind of, Hennessey. 
  3. [3]
    The plaintiff’s case was significantly narrowed on the eve of trial. The claims for misleading or deceptive conduct were abandoned with the consequence, inter alia, that no claim remained against Mr Hennessey. In addition, a number of claims for damages for breach of contract were abandoned. Ultimately, the Fourth Further Amended Statement of Claim (FFASOC) was filed which articulated the claims as they stood on the opening of the plaintiff’s case.
  4. [4]
    The plaintiff’s case narrowed during counsel’s address. Mr Di Carlo (who appeared at trial for the plaintiffs with Mr Fronis), pressed only one of the damages claims advanced in the FFASOC.  He also maintained one claim disputing a sum claimed as due under the Building Contract.  Accordingly, by the end of the trial, Hennessey faced the following claims.
  5. [5]
    First, the plaintiff contended that the scope of work under the Building Contract included work for which Hennessey was unlicensed.  The plaintiff contended that the Chapel’s under storey meant that the Chapel building overall was classified under the Building Code of Australia (BCA) as a two storey building.   Hennessey’s license did not authorise it to construct a two storey building in the BCA classification to which the Chapel belonged (that is, a class 9b assembly building).  Consequently, the work was unlicensed.  This meant that the Building Contract was entered into in breach of the prohibition on undertaking to carry out unlicensed work contained in s. 42(1) Queensland Building Services Authority Act 1991 (Qld) (QBSA).
  6. [6]
    Accordingly, the plaintiff contended, it was entitled to restitution of all sums paid under the Building Contract and was not obliged to pay certain further sums alleged to be due under an adjudication on a payment claim delivered under that contract.
  7. [7]
    Second, the plaintiff contended that Hennessey had breached the Building Contract by failing to comply with the contractual requirements for articulating variations. It alleged that but for that breach, the plaintiff would not have agreed to any variation of the work under the Building Contract which resulted in the contract price exceeding the original contract sum. The FFASOC does not plead the loss flowing from that breach, despite the plaintiff being given an opportunity after addresses to file a further statement of claim which addressed that deficiency. 
  8. [8]
    Third, the plaintiff contended that Hennessey was not entitled to a sum of $15,000 claimed as due under the Building Contract for the cost of resolving inconsistencies and errors in the Contract Documents.
  9. [9]
    Hennessey defended the claims at trial as follows.
  10. [10]
    First, Hennessey disputed that the scope of work under the Building Contract was unlicensed.  It contended that on the proper construction of relevant sections of the BCA, the Chapel building was not one class 9b building of two storeys, but two “buildings” of one storey each; one being a class 9b building and the other a class 7 store building.
  11. [11]
    Second, if the scope of work under the Building Contract was unlicensed, Hennessey conceded that payments made under the Building Contract were recoverable, and that the adjudication was invalid. However, Hennessey claimed an entitlement to restitution on a quantum meruit basis:
    1. (a)
      Hennessey contended that the effect of the pleadings was that the plaintiff had admitted an entitlement to quantum meruit for the whole of the work done (effectively as a consequence of not alleging in the plaintiff’s answer those parts of the work done which was unlicensed); or
    2. (b)
      Alternatively, Hennessey alleged an entitlement to quantum meruit adjusted by the considerations in s. 42(4) Queensland Building Services Authority Act 1991 (Qld) (QBSA) for those parts of the work which were unlicensed.
  12. [12]
    Third, Hennessey denied the alleged breach and contended in any event that no loss had been pleaded and indeed no loss could be made out.
  13. [13]
    Fourth, Hennessey maintained that it was entitled to the amount of $15,000 for taking steps to resolve error in the Contract Documents.
  14. [14]
    Finally, (assuming the work undertaken under the Building Contract did not fall foul of s. 42(1) QBSA) Hennessey counterclaimed for a sum remaining due under the Contract, including interest and costs of $98,316.24. The plaintiff pleaded its damages claims by way of set-off in its answer. Mr Di Carlo conceded in address that if the plaintiff’s damages claim was decided against the plaintiff, Hennessey was entitled to this relief.

Factual background

Dealings leading up to the Quotation dated 14 August 2012

  1. [15]
    The plaintiff owned land on Kondalilla Falls Road at Montville. In about 2011, one of its directors and guiding mind, Ms Peek, conceived the idea of constructing a building in the style of a chapel for use in celebrating weddings. In the course of making inquiries with suppliers about costs, she was approached by Mr Hennessey, the second defendant and guiding mind of Hennessey. He expressed an interest in quoting on the project.
  2. [16]
    Thereafter, Mr Hennessey gave assistance to Ms Peek in her efforts to obtain plans for construction of the Chapel and quotes for the parts of the work. Mr Hennessey did not at any stage, however, contract to provide design services. Ms Peek retained Alex Milanovic & Associates, Consulting Civil and Structural Engineers, to prepare plans for the Chapel. They provided a number of iterations of those plans, as will be seen.
  3. [17]
    Mr Hennessey provided a quotation on 14 August 2012 for building the Chapel (the Quotation).[1] It included a series of plans. Relevantly, those plans:
    1. (a)
      Did not include the under storey;
    2. (b)
      Showed the tower on the South West end of the Chapel, on the downhill side of the land and facing away from Kondalilla Road;
    3. (c)
      Showed relatively straightforward external works with limited earthworks and fill for car park: (see in this regard the car park section on MS01D in exhibit 17. See also MS01A which shows retaining walls of less than 1m.)
  4. [18]
    The quoted price was $593,011.63 plus GST of $59,301.16, a total of $652,312.79.  The quotation also relevantly included the following:
    1. (a)
      Page JS-1 showed numerous provisional sum and provision cost items; and
    2. (b)
      Pages PP-1 and PP-2 showed a progress payments schedule for 8 Progress Payments including the final payment on Practical Completion.
  5. [19]
    Despite the form of the plans incorporated into the Quotation, it was admitted on the pleadings by Hennessey that the plans provided for Mr Hennessey to quote on were the so-called initial plans which comprise Exhibit 11 (Initial Plans). Those plans include many more individual plans than those contained in the bound Quotation as admitted into evidence[2] and show the under storey, designated as “store”.
  6. [20]
    Mr Hennessey gave evidence partly consistent with that admission. He said he recalled receiving plans showing the under storey before finalising the Quotation but that he did not revise the Quotation to take into account that change because Ms Peek required a Quotation to seek finance and was in a hurry to get on with that task.
  7. [21]
    The question as to how the under storey came to be included in the plans and for what purpose is contentious and is dealt with further below in [112] to [118] below.  For present purposes it is sufficient to note that Mr Hennessey was aware of the intention to build the under storey from the time of the Quotation.
  8. [22]
    It is peculiar that the documents in the bound Quotation and identified as the plans differ from the plans pleaded and admitted as being incorporated into the Quotation. It appeared that the bound version of the Quotation produced by the plaintiff at trial had not been in the possession of the defendants prior to that time. In the end, this was not material in the resolution of the proceedings.

The Building Contract: 6 December 2012

  1. [23]
    On 6 December 2012, the Building Contract was executed.[3]  It was in the form of the Master Builders Commercial Building Contract as at April 2012. It comprised a Schedule with two Annexures and General Conditions. A number of fields in the Schedule were not completed. The Schedule did relevantly provide:
    1. (a)
      That the Contract Sum remained the same as in the Quotation: $652,312.79;
    2. (b)
      That the plaintiff had obtained finance for $640,000 on 6 December 2012;
    3. (c)
      That payment claims were to be submitted on the 25th day of each month; and
    4. (d)
      That Practical Completion was to occur 30 days from the Start Date.
  2. [24]
    Annexure A to the Schedule was headed “Scope and Extent of Work” had fields which were headed “Scope of and Extent of Work”, “Contract Documents” (with two subheadings: Specification and Drawings) and “Bill of Quantities”. The notations in those fields were not detailed or precise. However, it was common ground in the pleadings and at trial that:
    1. (a)
      The plans referred to in those fields were the Initial Plans which became exhibit 11;
    2. (b)
      That the references in Annexure A incorporated the Quotation.
  3. [25]
    The General Conditions relevantly provided:
    1. (a)
      By clause 1:

1.WORKS & CONTRACT SUM

(a)The Contractor shall carry out and complete the Works:

(i)in an appropriate and skillful way;

(ii)with reasonable care and skill;

(iii)in accordance with the Contract Documents; and

(iv)using materials that are suitable, new and free of defects.

(b)The Owner shall pay to the Contractor the Contract Sum in the manner and at the times stated in the Contract.

  1. (b)
    By clause 5:

5.CONTRACT DOCUMENTS

(a)The Owner warrants to the Contractor:

(i)the accuracy and suitability of the Contract Documents and any other document or data that the Owner may give to the Contractor;

(ii)that the Contract Documents and any other document or data that the Owner may give to the Contractor comply with all Statutory Requirements relating to the Works; and

(iii)that use of the design, materials, documents and methods specified in all documents and data given by the owner does not infringe copyright, moral rights or any other intellectual property right.

(b)The Owner indemnifies the Contractor against any claim, loss, expense or liability arising out of a breach of Clause 5(a);

(c)Subject to Clause 5(d), any ambiguity, inconsistency, or error in or between the Contract Documents shall be resolved by applying the following order of precedence:

(i)special conditions;

(ii)these general conditions of contract;

(iii)specification;

(iv)drawings; and

(v)other Contract Documents.

Provided that figures shall always prevail over scaled dimensions in the event of any ambiguity or inconsistency between them.

(d)The Contractor may take any steps necessary to resolve any ambiguity, inconsistency or error in or between the Contract Documents and where a relevant Contract Document was given by the Owner, the cost to the Contractor in taking any such steps, together with the Contractor’s Margin on that cost, shall be added to the Contract Sum.

  1. (c)
    By clause 6:

COMPLIANCE WITH STATUTES

(a)The Contractor shall:

(i)comply with all Statutory Requirements relating to the Works; and

(ii)unless otherwise agreed, obtain all consents, approvals and permits necessary for the carrying out of the Works.

(b)The Contractor shall give any notice or report and pay any fee in order to comply with Clause 6(a).

(c)If the cost to the Contractor:

(i)in complying with any Statutory Requirement increases after the entering into of the Contract by the parties; or

(ii)in carrying out the Works increases after the entering into of the Contract by parties as a result of the introduction or increase of any tax, charge, levy or regulation.

The amount of the increase shall be added to the Contract Sum.

(d)If the Contractor’s compliance with a Statutory Requirement requires a Variation to the Works, the Contractor shall give the Owner a written notice setting out the reason for, and the details of, the Variation.

(e)On the giving of a notice under Clause 6(d), the Works are deemed to be varied to that extent necessary to permit the Contractor to comply with the Statutory Requirement and the cost to the Contractor of the Variation, together with the Contractor’s Margin on that cost, shall be added to the Contract Sum.

  1. (d)
    By clauses 8 and 9(a):

8. COMMENCEMENT

  1. (a)
    The Owner shall give the Contractor possession of the Site on the Date of Commencement.
  1. (b)
    The Contractor shall commence carrying out the Works on the Date for Commencement or within 14 days after receiving all necessary consents, approvals and permits to carry out the Works, whichever is the later.

9. ACCESS

  1. (a)
    The Contractor is entitled to vacant possession of the Site and the Works from the Date for Commencement until the Contractor gives the Owner possession of the Site and the Works under Clause 23(g).
  1. (e)
    By clause 14:

14. PAYMENT

  1. (a)
    The Contractor shall submit payment claims to the Owner on the following reference dates:
  1. (i)
    the times stated in the Schedule (or, if any time stated in the Schedule is not a Business Day, the next Business Day) or the last Business Day of each month, whichever is the earlier; and
  1. (ii)
    on the Works reaching Practical Completion.
  1. (b)
    A payment claim shall set out:
  1. (i)
    details of:
  1. (A)
    the work carried out by the Contractor to which the payment claim relates;
  1. (B)
    the amount that he Contractor claims for payment by the Owner for that work; and
  1. (C)
    any other amount arising out of, or in connection with, the Contract that the Contractor claims for payment by the Owner; and
  1. (ii)
    the total amount that the Contractor claims for payment by the Owner; and
  1. (c)
    On the submission of a payment claim under Clause 14(a), or the final claim under Clause 25(a), the Owner shall:
  1. (i)
    pay to the Contractor the total amount of the payment claim, or the final claim, by the time stated in the Schedule for payment or the date 15 Business Days after the Submission Date, whichever is earlier; or
  1. (ii)
    if the Owner disputes all or any part of the total amount of the payment claim, or the final claim:
  1. (A)
    give the contractor a written notice setting out the amount in dispute and details of the dispute by the time stated in the Schedule for payment or the date 10 Business Days after the Submission Date, whichever is the earlier; and
  1. (B)
    pay to the Contractor the amount of the payment claim, or the final claim, that is not disputed by the Owner by the time stated in Schedule for payment or the date 15 Business Days after the Submission Date, whichever is the earlier.
  1. (d)
    If the Owner fails to give the Contractor a notice under Clause 14(c)(ii)(A) by the time required under Clause 14(c)(ii)(A), the Owner shall pay to the Contractor under Clause 14(c)(i), the total amount of the payment claim, or the final claim, without any deduction.
  1. (e)
    The Owner shall pay interest, calculated on a daily basis, to the Contractor on any overdue amount under this Clause, including any part of the amount of a payment claim, or the final claim, wrongly withheld by the Owner, up to and including the date on which the overdue amount is paid by the Owner at the rate stated in the Schedule or the rate comprising the annual rate, as published from time to time by the Reserve Bank of Australia, for 90 day bills, plus 10%, whichever is the higher.
  1. (f)
    Payment, other than payment of the Contractor’s final claim, is payment on account only.
  1. (g)
    Subject to Clause 15(a), the Owner is not entitled to set-off against, or in reduction of, any amount due to the Contractor under this Clause any claim, including any claim for an amount due by the Contractor to the Owner under the Contract, that the Owner may have against the Contractor for any amount.
  1. (f)
    By clause 16:

16. PROVISIONAL SUMS & PRIME COST ITEMS

  1. (a)
    Where a provisional sum or prime cost item is included in the Contract, the owner shall give the Contractor all necessary Directions regarding the selection and supply of materials, goods or work comprising the provisional sum or prime cost item in sufficient time to ensure that the progress of the Works is not delayed.
  1. (b)
    If the actual cost to the Contractor in carrying out the work or supplying the item comprising the provisional sum or prime cost item is less than that estimated and included in the Contract Sum, the difference shall be deducted from the Contract Sum.
  1. (c)
    If the actual cost to the Contractor in carrying out the work or supplying the item comprising the provisional sum or prime cost item is greater than that estimated and included in the Contract Sum, the difference, together with the Provisional Sum or Prime Cost Item Margin stated in the Schedule on the difference, shall be added to the Contract Sum.
  1. (g)
    By clause 17:

17. VARIATIONS

  1. (a)
    Subject to the Contract, the parties may agree to a Variation of the Works.
  1. (b)
    If the parties agree to a Variation of the Works, the Contractor shall, within a reasonable time, give the Owner a written notice setting out:
  1. (i)
    details of the scope of the work which is the subject of the Variation; and
  1. (ii)
    any agreed price for, or methodology for calculating the price of, the Variation.
  1. (c)
    On the giving of a notice under Clause 17(b), the Contract Sum shall be adjusted by:
  1. (i)
    if the parties agree to a price for, or methodology for calculating the price of, the Variation, the agreed price; or
  1. (ii)
    in the absence of any agreement on, or on calculating, price:
  1. (A)
    the reasonable variation of the Variation; and
  2. (B)
    if the Variation increases, or will increase, the cost to the Contractor in carrying out the Works, the Variation Margin stated in the Schedule on that reasonable valuation.
  1. (h)
    By clause 18:

18. TERMINATION BY OWNER

  1. (a)
    A substantial breach of the Contract by the Contractor includes, but is not limited to:
  1. (i)
    suspension of the Works by the Contractor otherwise than in accordance with Clause 20 or Clause 23(f); and
  1. (ii)
    failure by the Contractor to carry out the Works with reasonable diligence or in a competent manner.
  1. (b)
    If the Contractor is in substantial breach of the Contract, the Owner may give the Contractor a written notice by registered post or delivery to the Contractor:
  1. (i)
    setting out full details of the substantial breach;
  1. (ii)
    requiring the Contractor to substantially remedy the substantial breach within 21 Days after the giving of the notice; and
  1. (iii)
    stating the Owner’s intention to terminate the Contract if the Contractor fails to substantially remedy the substantial breach within 21 Days after the giving of the notice.
  1. (c)
    If the Contractor fails to substantially remedy the substantial breach set out in the notice given by the Owner under Clause 18(b) within 21 Days after giving the notice, the Owner may, without prejudice to any other right or remedy, terminate the Contract by giving a written notice of termination by registered post or delivery to the Contractor.
  1. (d)
    The Owner is not entitled to exercise a right to terminate the Contract, under this Clause or otherwise, if:
  1. (i)
    the exercise of the right to terminate would be unreasonable or vexatious; or
  1. (ii)
    the Owner is in breach of the Contract.
  1. (i)
    By clause 19:

19. TERMINATION BY CONTRACTOR

  1. (a)
    A substantial breach of the Contract by the Owner includes, but is not limited to:
  1. (i)
    failure by the Owner to pay to the Contractor any amount due to the Contractor under the Contract by the time for the payment of the amount due under the Contract;
  1. (ii)
    failure by the Owner to give the Contractor possession of the Site in accordance with Clause 8(a);
  1. (iii)
    unreasonable interference with, or obstruction of, the carrying out of the Works by the Owner, the Owner’s consultants, agents or contractors or authorised officers of the Lending Authority;
  1. (iv)
    failure by the Owner to comply with Clause 3(a) or Clause 3(c); and
  1. (v)
    any delay in the carrying out of the Works caused by:
  1. (A)
    a claim or proceeding being taken, or threatened to be taken, by a third party; or
  2. (B)
    a dispute with an adjoining or neighbouring owner or occupier,

that did not arise as a result of any act or omission of the Contractor.

  1. (b)
    If the Owner is in substantial breach of the Contract, the Contractor may give the Owner a written notice by registered post or delivery to the Owner:
  1. (i)
    setting out full details of the substantial breach;
  1. (ii)
    requiring the Owner to remedy the substantial breach within 7 Days after the giving of the notice;
  1. (iii)
    stating the Contractor’s intention to terminate the Contract if the Owner fails to remedy the substantial breach within 7 Days after the giving of the notice.
  1. (c)
    If the Owner fails to remedy the substantial breach set out in the notice given by the Contractor under Clause 19(b) within 7 Days after the giving of the notice, the Contractor may, without prejudice to any other right or remedy, terminate the Contract by giving a written notice of termination by registered post or delivery to the Owner.
  1. (j)
    By clause 23:

23. PRACTICAL COMPLETION

  1. (a)
    The Contractor shall ensure that the Works reach Practical Completion by the Date for Practical Completion.
  1. (b)
    On Practical Completion of the Works, the Contractor shall give the Owner a written notice stating that the Works have reached Practical Completion.
  1. (c)
    If the Owner disputes that the Works have reached Practical Completion, the Owner shall give the Contractor a written notice stating that the Owner disputes that the Works have reached Practical Completion and setting out full details of the further work that the owner believes is required to be carried out for the Works to reach Practical Completion within 7 Days after the giving of the notice under Clause 23(b).
  1. (d)
    If the Owner does not give the contractor a notice in accordance with Clause 23(c), the Works are deemed to have reached Practical Completion on the date of the giving of the notice under Clause 23(b).
  1. (e)
    If the Owner gives a notice under Clause 23(c), the Contractor shall:
  1. (i)
    if the Contractor disputes that any further work is necessary for the Works to reach Practical Completion, give the Owner a written notice of dispute under Clause 27(b); or
  1. (ii)
    if the Contractor does not dispute that further work is necessary for the Works to reach Practical Completion, carry out the further work necessary for the Works to reach Practical Completion and then give the Owner a further written notice stating that the Works have reached the Practical Completion under Clause 23(b).
  1. (f)
    If the Contractor gives the Owner a written notice of dispute under Clause 27(b) in accordance with Clause 23(e)(i), the Works are deemed to be suspended from the date of the giving of the notice until the date 7 Days after the date on which the dispute is resolved or decided.
  1. (g)
    On:
  1. (i)
    the Works regarding Practical Completion; and
  1. (ii)
    the Owner paying:
  1. (A)
    any overdue amount, including interest thereon, to the Contractor under Clause 14; and
  2. (B)
    the payment claim submitted by the Contractor under Clause 14(a)(ii),

the Contractor shall give the Owner possession of the Site and the Works.

  1. (h)
    If, for any reason, the Owner without the prior written consent of the Contractor:
  1. (i)
    takes possession of;
  1. (ii)
    occupies; or
  1. (iii)
    uses,

the Works, or any part of the Works, prior to the Contractor giving the Owner possession of the Site and the Works under Clause 23(g), the Works are deemed to have reached Practical Completion on the date that the Owner takes possession of, occupies or uses the Works, or any part of the Works, and the Owner is deemed to have accepted that the Works have been carried out and completed by the Contractor in accordance with Clause 1(a).

  1. (k)
    By clause 31 which contained definitions:

Contract Sum – means the Contract Sum (inclusive of GST) stated in the Schedule as adjusted from time to time in accordance with the Contract;

Practical Completion – means the completion of the Works except for minor defects or omissions which do not prevent the Works from being reasonably capable of being used for their intended purpose;

Variation – whether agreed by the parties, deemed under the Contract or otherwise, means to vary the Works by:

  1. changing the nature or scope of the work that the Contractor is required to carry out under the Contract, including the omission of work from the Works;
  2. changing the manner or sequencing in which the Contractor is required to carry out the work under the Contract.
  1. [26]
    As noted above, the Initial Plans had been provided, at least in part, prior to the provision of the Quotation, though their inclusion in the calculation of the price in the Quotation was disputed on the evidence.  The Initial Plans were, however, accepted by both parties as the plans relevant to the Scope of Work under the Building Contract.  The Initial Plans show the under storey marked as “store”: see A01-B in Exhibit 11. 
  2. [27]
    The Initial Plans also show the emergence of an enduring problem for the project: the accuracy of levels shown in the plans. There is no suggestion that Mr Hennessey or Hennessey were responsible for those errors. It appears to have been the fault of those responsible for drafting the plans (though I emphasise that they were not at trial to give their side of the story on that issue).   Sufficient for present purposes is that the plaintiff does not suggest the errors were Mr Hennessey’s fault.
  3. [28]
    In essence the problem was that the levels for the ground floor of the Chapel and the car park in the Quotation Plans had not accounted for the necessity for the top of the Chapel to be less than the maximum allowable height of 8.5m from ground level.
  4. [29]
    This was not easily fixed: keeping the Chapel below the maximum height had consequences for disabled access to the Chapel, construction of the car park and the need to create larger retaining walls. The true seriousness of those problems and their implications for costs of the external works emerged only after entry into the Building Contract.
  5. [30]
    The problems had been first identified prior to entry into the Contract. The Initial Plans differed from those contained in the Quotation document, inter alia, so as address the problem. At that stage, it was thought by those responsible for the plans that all that was required was to raise the ground level in the vicinity of the tower, making it less than 8.5m above ground level at that point. This can be seen in the South East elevation on Plan A02-B in Exhibit 11.
  6. [31]
    It is to be noted that Mr Hennessey did not seek to increase the Contract Sum over that in the Quotation despite these limited changes.[4]  He explained why in his evidence.[5] He pointed out that the response to the height issue identified in [30] above did not result in a large change to the scope of work. He identified the relatively small change on A02-B of the plans which showed the built up ground level under the tower. It can also be seen on MS01-F in the car park section diagram on the right of that plan that there were relatively minor earthworks to create the car park. 
  7. [32]
    It is worth noting at this stage that the plans for the Chapel building itself did not change materially over time from the plans contained in the Initial Plans.  Other than that, the material changes in the scope of works mostly related to the external areas: primarily the car park, disabled access, retaining walls, and the earthworks and fill required to carry out this work.

Events up to finalisation of the Amended Plans and start of work: May 2013

  1. [33]
    After entry into the Building Contract, further problems emerged with the levels in the Initial Plans and the solution to the height problem contained therein. At some stage in this process, Mr Hennessey volunteered the idea of moving the tower to the North East end of the Chapel (facing Kondalilla Road) as a way of addressing the height problem. It is not suggested that Mr Hennessey did anything wrong in making this suggestion and it was ultimately taken up by the engineers and Ms Peek. 
  2. [34]
    There were a number of iterations of the plans as the engineers attempted to address the height issue and levels issue.
  3. [35]
    The first revised version was provided to Mr Hennessey by Ms Peek on or about 22 January 2013.[6] These plans still had the tower at the South Western end of the Chapel. However, they abandoned the approach of building up the ground level at the tower and instead “sunk” the Chapel into the ground so as to lower the whole building.
  4. [36]
    The second revised version was provided to Mr Hennessey and Ms Peek by Ms Hutchinson of the engineers on 13 February 2013.[7] A third revised version was provided on 6 March 2013 by Ms Hutchinson. This version introduces for the first time the moving of the tower from the South Western end to the North Eastern end.[8] Each of these versions maintained the approach of meeting the height restrictions by sinking the Chapel into the ground level.
  5. [37]
    The final version of the plans was provided to Mr Hennessey in or about May/June 2013. He gave evidence that that version was exhibit 12 in the proceedings and were the plans which he used in building the Chapel and surrounds. Exhibit 12 is referred to in the pleadings as the Amended Plans.  It is accepted on the pleadings that the parties ultimately agreed prior to commencement of works, to vary the Building Contract so that Hennessey was to build the Chapel and surrounds in accordance with the Amended Plans.
  6. [38]
    Mr Hennessey explained the consequences of the changes between the Initial Plans and the Amended Plans as follows:
    1. (a)
      First, the disabled access was more complex and more expensive. It involved a significant structure required to procure access for a wheelchair from the road level to the lower Chapel entry;
    2. (b)
      Second, the lowered level of the Chapel required much larger and more complex retaining walls;
    3. (c)
      Third, the car park required large amounts of fill to be brought onto the site and compacted; and
    4. (d)
      Finally, they showed additional details of the car park, retention and storm water systems.
  7. [39]
    Mr Hennessey and Ms Peek both gave evidence that they understood the effect of these changes to the external areas resulting from the changes in levels was to increase the cost of the work. A key area of dispute between them at trial was how they agreed to deal with those consequences.
  8. [40]
    Mr Hennessey’s evidence was that he investigated excluding the expanded external works from the scope of the Building Contract and having that work let to another contractor. However, he found that the quotes provided were very expensive. He gave evidence that he then informed Ms Peek that he would be willing to undertake the expanded scope of works, but on the basis of cost plus a margin for carrying out that work. After giving evidence about the extent of the changes caused by the revisions, Mr Hennessey said this:

And do you recall over what span of time you and Ms Peek continued to try to get quotes from civil contractors?---It was probably two – two to three months.

And towards the end of that period of attempting to get civil quotes, so that would take you through to around about mid-June; does that sound right?---Yes.

So towards the end of that period of getting the quotes, do you remember discussing with Ms Peek whether to use a civil contractor or have you manage those works?---Yes, it was – it was becoming clear that a lot of the civil contractors were within a similar range. So I think that satisfied us that that’s as cheap as we were going to get it done by a civil contractor, and based on that, and my knowledge from people I know in the industry, I believed that their margins that they work off or definitely higher than what we work off. So I did suggest that if I managed it and used a lot of our trades that are not necessarily charging those rates, that we could – there was a good chance we could do it cheaper. I was pretty confident that we’d do it cheaper than the civil contractors.

But I – I definitely made it clear that we were –we were not going to do it for the contracted price.

Right. And what was Ms Peek’s response to that?---At that point - - -

This is – remember we’re in June. We got up to about June-ish?---Yeah. The end of the contract quoting - - -?---Yes.

Sourcing period?---We agreed to – to go ahead on the basis that we knew there was a certain amount of unknown at that point, and I tried to relay to Ms Peek that I was prepared to go ahead, trusting that she would trust me to get the cheapest quotes I could, and I was trusting that she would – that I would get paid.

So in terms of figuring out the price for the work being carried out, what did you discuss in terms of how you would figure out what the price was that she would owe you?--- Well, basically I would use the cheapest contractor’s price that I could get for – for breaking it up into individual components, and, yeah, just try and – I would manage it and we would – the end result was going to come in cheaper than a fixed price contract from a civil contractor.

And did you discuss what your compensation would be for managing that process?---A 20 per cent margin.

So did you discuss that with Ms Peek, the 20 per cent margin?---Yes.

And what did Ms Peek say in response to that cheapest quotes, 20 per cent margin?---Yes, she was happy to proceed on those bases.[9]

  1. [41]
    On the question of the amount of finance, Mr Hennessey gave evidence that Ms Peek told him that she would seek further finance when the building was closer to completion on the basis that the valuation would be higher once the work was near completion.
  2. [42]
    Ms Peek rejected any conversations in those terms at all with Mr Hennessey.[10] She said that she had told Mr Hennessey that she only had finance for $640,000, that she had agreed to remove certain items from the scope of work to cover the additional costs of the revised external works.  As to the savings that could be made, she identified various items pleaded in paragraph 11A(b) of the FFASOC.  The gravamen of her evidence was captured in this passage[11]:

All right. So what happened then? Did the building work start?---Well, once we established what savings we could make and what we – what the new costs were going to be, we both felt that there was enough money there to go ahead. So we went ahead with the building works…

  1. [43]
    Ms Peek did agree that there had been a discussion with Mr Hennessey but that was in respect of landscaping works in the Quotation.[12]
  2. [44]
    The key difference between the parties is therefore this: was the question of the additional costs of the revised external works dealt with on the basis that Mr Hennessey would do the work and charge the cost plus 20% and Ms Peek would pay that or, alternatively, was it dealt with on the basis that the additional costs would be covered by the items removed from the scope of work?
  3. [45]
    Resolution of this point is not aided by relevant contemporaneous written communications and the evidence that was given about these competing arrangements was not particularly detailed from either party. Further, there are objective indicators which support both versions to some degree.
  4. [46]
    As to Ms Peek’s version:
    1. (a)
      It was admitted on the pleadings that some $57,000 worth of work was omitted from the Building Contract scope at about this time: mainly Landscaping ($40,700) and artist allowances ($10,000); and
    2. (b)
      It was clear Mr Hennessey had been told the amount of finance: it was recited in the Building Contract.
  5. [47]
    As to Mr Hennessey’s version, given the nature and scale of the changes and the lack of certainty as to the likely ultimate cost of the varied external works, it seems unlikely that he would have proceeded on the basis that everything would turn out for the best. However, optimism of that kind in builders is not unknown.
  6. [48]
    Of more substance, however, is the fact that what ultimately occurred was consistent with Mr Hennessey’s version:
    1. (a)
      He in fact carried out substantial additional works during the 6 months of construction and carried that cost until mid-December 2013, when he says he told Ms Peek that he was concerned about getting paid.[13] It is rational that he would have that concern if dealing with such a large overrun;
    2. (b)
      Ms Peek sought further finance at about that time and asked Mr Hennessey to provide an update on costs at that time and for that purpose;[14]
    3. (c)
      When Mr Hennessey did so by the December 2013 Spreadsheet, Ms Peek did not respond referring to the earlier arrangement or understanding she gave evidence of.   She queried some specific items but otherwise there is no evidence of shock or surprise of the kind one would expect if she truly believed that the revised work could be done for the original sum;[15] and
    4. (d)
      No dispute about the amount claimed arose until well into March 2014, after Mr Hennessey had provided a number of spreadsheets showing variations and additional costs (none of which were not challenged by Ms Peek on the basis of any such understanding).
  7. [49]
    Indeed, Ms Peek’s response to the overrun spreadsheets was quite to the contrary of what might be expected if she had agreed with or had an understanding with, Mr Hennessey that the revised works could be completed for the Contract Sum or thereabouts.                On 3 February 2014, Mr Hennessey caused a further spreadsheet showing variations and increased costs to be sent by email to Ms Peek. It showed additional costs totalling $194,439.53.[16]   Three days later, Ms Peek sent an email to Mr Hennessey, the whole of which is relevant to these proceedings. She wrote (note Caroline was her bank contact)[17]:

Hi Paul

I am still finalising everything with Caroline. I am trying to speed up the process of getting you paid so that you can eat and still have a roof over your head. In preparation for me meeting with Caroline from ANZ, would you mind sending me your final invoice for the work that has been done to date please. Dave has managed to do a contra deal with one of our clients so that we can 1) get the project finished and 2) stop panicking that the banks won’t lend us the money. (I am so nervous, I should be losing weight). I am going to have to let the landscaping go for the time being as well and as soon as the situation changes I can then get quotes from Andrew or see if we can do it ourselves. I was up there today and it is looking fantastic. I think that with what has been done so far, the landscaping won’t take much for the gardens to look great. I am getting quotes on fencing as well as I don’t really like the idea of pool fencing. I can probably handle this I think. Then I will need to get Don in to sign everything off won’t I. Do I get you back in at that stage, or can I do this myself?

Hope all is well. Hardly spoken to you lately.

  1. [50]
    There is no complaint or concern about any breach by Mr Hennessey of an understanding or agreement that the price would not exceed the original Contract Sum by more than a small amount.   Given her understandable anxiety in the email about the situation, one would have expected her to raise any such matter.   She was certainly quite willing to complain about the errors by the engineers which she believed had resulted in much of the increased cost.  This response is also consistent with her having a good understanding of the work which had been undertaken on site through the course of construction. It was evident she had a good understanding of what was done.[18]
  2. [51]
    She also gave this evidence in cross examination[19]:

You also said on around about 13th of February you also said that you didn’t think for a minute that Hennessy Builders was overcharging or that the building wasn’t worth the money because of the other prices you had had?---I can’t reme – recall what date that was, but we did have a discussion along those lines.

  1. [52]
    Given the timing of construction, this was very likely said at around the time suggested by Mr Travis (13 February 2014) because that was the time at which the Chapel building was evidently completed, or all but completed.
  2. [53]
    There is another broader consideration which favours Mr Hennessey’s version: Ms Peek reliability as a witness on issues of cost generally.
  3. [54]
    Ms Peek gave evidence that she believed until allegedly being told by Mr Hennessey on 23 January 2014 that he had run out of money, that the cost of the works only exceeded the Contract Sum by $10,000.[20]  She also said that the first time she received a document showing the variations and additional cost was when she received the 3 February 2014 spreadsheet. She gave that evidence with confidence and certainty and a significant event in the history of the works.  However, as noted above, she received the December 2013 Spreadsheet in mid-December, which showed substantial additional costs and variations. Her evidence on this important point was clearly wrong and her certainty in that erroneous evidence reflects poorly on her ability reliability to recall matters contrary to the interests of the plaintiff.
  4. [55]
    Further, many of the allegations made in relation to breach of contract were unable to be sustained. While I am conscious that Ms Peek might not fully have understood the subtleties of the statement or claim, it is reasonable to infer (given she was the guiding mind and will of the plaintiff and ran the project on its behalf) that she was the source of at least some of the instructions as to alleged defects, incomplete work and excessive prices for the retention and retaining walls. At the least she was content to advance those claims.  Ultimately those claims were not pursued, seemingly because no evidence was led which could sustain them or because they could not be sustained in the face of other evidence, particularly the documentary record. It is difficult to avoid inferring that, at least to some degree, Ms Peek was content to make or concur in allegations of breaches by Hennessey which were not fairly made or unlikely to be able to be proved.
  5. [56]
    An example is the breaches alleged relating to the costs of the retaining walls and detention work alleged in paragraphs 16A to 16L of the Second FASOC. They were partially abandoned in the Third FASOC, but remained in some other parts of the pleading. The pleaded defence to these allegations and the documents at trial (which supported the pleaded defence) showed quite clearly in my view that the allegations were misconceived. Despite all that, they were initially pressed in cross examination of Mr Hennessey by Mr Di Carlo, though he ultimately received instructions not to continue to press the point.   
  6. [57]
    In conclusion, for these reasons:
    1. (a)
      I found Ms Peek’s evidence generally to be unreliable on details which were central to the issues to be determined in the proceedings; and
    2. (b)
      I prefer Mr Hennessey’s evidence on the discussions about the costs of, and arrangements reached, in relation to additional costs from completion of the revised external works.
  7. [58]
    It is convenient here also to observe that I found Mr Hennessey’s evidence generally to be reliable and accurate. He avoided overstatement and could give clear explanations on points of detail which arose in his evidence. He clearly had a much better recollection of events than Ms Peek and did not present as being blinded by a sense of grievance.
  8. [59]
    One caveat on that was his response to cross examination on his understanding as to whether the under storey was intended to be an office. His responses to those questions might have been suggestive of an attempt to avoid answers which he thought might harm his case. However, his answers during that part of the cross examination were not highly improbable and overall I was not persuaded that even this part of his evidence was unreliable.

The construction of the Chapel

  1. [60]
    The construction of the Chapel commenced in June 2013. Work progressed on the building efficiently. The documents in evidence show a close working relationship between Ms Peek and Mr Hennessey. By Christmas 2013, the work on the Chapel building was substantially completed. The work on the external areas remained incomplete.
  2. [61]
    Ms Peek was involved closely in the progress of the project, giving instructions to proceed with various items of work, including in relation to provisional cost and provisional sum items.
  3. [62]
    There were a number of changes in the external works over that period. The main change was the redesign of the disabled access which Ms Peek accepted in evidence arose from a suggestion by Mr Hennessey which saved money and improved the look of the Chapel.
  4. [63]
    Prior to Christmas 2013, the parties corresponded as to the date for completion of the Chapel. Ms Peek agreed with Mr Hennessey that the Chapel could be completed on Valentine’s Day, 2014.[21]
  5. [64]
    The works were then stopped over the Christmas period.
  6. [65]
    During the course of the works, Hennessey provided 8 payment claims[22] under the Building Contract. The first seven were issued and paid without dispute as follows:

 

Invoice No.

Invoice Amount

Paid Amount

i.

Invoice 524

$32,615.64

$32,615.64

ii.

Invoice 667

$97,846.92

$97,846.92

iii.

Invoice 711

$97,846.92

$97,846.92

iv.

Invoice 736

$130,462.56

$130,462.56

v.

Invoice 767

$65,231.28

$65,231.28

vi.

Invoice 824

$97,846.92

$97,846.92

vii.

Invoice 822

$65,231.28

$65,231.28

  1. [66]
    The progress claims were made on the basis of the payment claim schedule in the Quotation, despite the fact that on the proper construction of the Building Contract, it might be doubted that that part of the Quotation was incorporated by reference into it.
  2. [67]
    It was not in dispute that invoice 849 was issued on 23 January 2014. It claimed the balance of the original Contract Sum on Practical Completion. That amount was $65,231.28.[23] Despite the significant variations and additional costs identified in the December 2013 Spreadsheet, it did not seek payment of any sum over the original Contract Sum.
  3. [68]
    While it might be debated whether the Chapel building itself had reached Practical Completion by that time, no such submission was maintained by the plaintiff by the end of the trial (seemingly because the evidence did not sustain that conclusion).
  4. [69]
    However, the external works had not reached Practical Completion by that date. Why then did Mr Hennessey deliver the Practical Completion payment claim at that point? Mr Hennessey gave evidence that he delivered that invoice at Ms Peek’s request. Ms Peek denied that. However, she did agree with Mr Hennessey’s evidence that she asked him to accept payment of only part of that sum pending her efforts to obtain further finance with the ANZ Bank to complete the work and that he agreed to part payment. It is admitted on the pleadings that the plaintiff paid only $45,534.12 on invoice 849.
  5. [70]
    I find that Mr Hennessey did deliver that Payment Claim at Ms Peek’s request. That is consistent with the fact there is no evidence of any complaint about the issue of the Payment Claim at that time by Ms Peek. It is also consistent with Ms Peek’s efforts to obtain further finance. It is a reasonable assumption that the Bank would be more likely to extend further finance on a completed building than an incomplete building.

The parties fall into dispute

  1. [71]
    Between 23 January 2014 and 18 March 2014, the parties fell into dispute. The narrative on how that occurred was incomplete from both parties. Ultimately, Hennessey relied upon two matters:
    1. (a)
      That the plaintiff had retaken possession of the site by changing the locks on the Chapel; and
    2. (b)
      That the plaintiff had refused to pay sums due under the Building Contract.[24]
  2. [72]
    Ms Peek admitted that she had changed the locks and had done so to gain access to the Chapel because she did not have keys.[25] Mr Hennessey gave evidence that there were keys available on site which Ms Peek used. Ms Peek admitted such keys existed in January 2014 but alleged nonetheless that she was locked out.
  3. [73]
    It is a difficult to accept that Mr Hennessey would have concealed the keys after January 2014, or changed the locks, especially as the contemporaneous correspondence shows that the parties were still on friendly terms in February 2014. Not only did Mr Hennessey agree to permit work to be taken out of the scope of works to assist in the completion of the works more cheaply (see the email in [49] above), but he offered help in that endeavor when asked by Ms Peek to do so on 10 February 2014[26] and provided information to assist Ms Peek in identifying the cost consequences of the mistakes relating to the level of the Chapel on 11 February 2014.[27]  This is another example where Ms Peek’s evidence is inherently unlikely give contemporaneous matters revealed in correspondence.  I reject her evidence on this issue.
  4. [74]
    It is evident that by 8 April 2014, Mr Hennessey had concluded that the plaintiff would not be paying the amount which he contended was owing under the Building Contract.[28] He caused Hennessey’s solicitors to give notice of intention to terminate the contract for failure to pay sums due and giving notice of intention to rely on the retaking of possession as triggering deemed Practical Completion. The notice gave 7 days for the plaintiff to remedy the identified breaches.[29] It is not in dispute that it failed to do so.
  5. [75]
    The FFASOC, however, pleads repudiation of the Building Contract by Hennessey by reference to a number of pleaded acts; paragraphs 17 to 18B and 30-32. However, the plaintiff did not lead evidence that made out any of those allegations. No submission was made in addresses or in writing that it did.  
  6. [76]
    While it appears the Building Contract was terminated validly by Hennessey, neither party made submissions which referred to, or turned on the resolution of, this issue.  It is therefore unnecessary for me to decide that issue.
  7. [77]
    Together with the notice of intention to terminate, Mr Hennessey caused Hennessey to deliver a further Payment Claim: invoice 866. Invoice 866 claimed $98,316.24 to be owing under the Building Contract. That invoice was identified as being a Payment Claim under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).
  8. [78]
    A Payment Schedule was issued by the plaintiff on 24 April 2014. On 9 May 2014, a registered Adjudicator issued an adjudication decision requiring payment of $96,526.24 along with interest. That adjudication was registered as a judgment under the BCIPA but, as I understand it, has not been paid.
  9. [79]
    These proceedings were commenced on 23 October 2014.

Was the work undertaken to be done unlicensed?

The parties’ contentions

  1. [80]
    The plaintiff contends that by the Building Contract, Hennessey undertook to carry out building work without holding the appropriate contractor’s license. It contends that it is entitled to restitution of all amounts paid under the Building Contract; agreed on the pleadings as $632,615.64 (as to the late but unsuccessful attempt by the plaintiff to allege a higher amount was paid, see from [168] to [170] below). It also contends that the adjudication decision is invalid.
  2. [81]
    The plaintiff makes it contentions in reliance on s. 42 QBSA Act (as the Queensland Building and Construction Commission Act then was[30]). That section provided at the relevant time:
    1. (1)
      A person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under this Act.
    2. (2)
    3. (3)
      Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
    4. (4)
      A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed—
      1. (a)
        is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
      1. (b)
        does not include allowance for any of the following—
      1. (i)
        the supply of the person’s own labour;
      1. (ii)
        the making of a profit by the person for carrying out the building work;
      1. (iii)
        costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
      1. (c)
        is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
      1. (d)
        does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
  3. [82]
    The plaintiff’s argument that Hennessey was not licensed to undertake to carry out that work under the Building Contract was as follows:
    1. (a)
      Hennessey’s license was, relevantly, a “builder-low rise” license;
    2. (b)
      That license permitted Hennessey, relevantly, to construct a class 9b assembly building but not including Type A or Type B construction;
    3. (c)
      Type A and Type B construction where referred to in that license referred to classification by reference to the number of stories of a building under C1.1 of the BCA;
    4. (d)
      For the purposes of a class 9b building, Type B construction comprises a rise in storeys of two as defined in C1.2 BCA; and
    5. (e)
      The work under the Building Contract required the construction of a class 9b building which had a rise in storeys of two because, on the proper construction of the definition of rise in storeys in C1.2 as applied to the Chapel, the under storey was as a storey, and the main Chapel floor was a second storey.
  4. [83]
    Therefore, the plaintiff concludes, the Chapel was a class 9b building Type B construction which was outside the scope of the builder-low rise license and the undertaking to carry out that work under the Building Contract contravene s. 42(1) QBSA.
  5. [84]
    Hennessey accepts the first four of the propositions in [82]. However, it pleaded two answers to the proposition in [82](d).
  6. [85]
    First, Hennessey pleaded that the Chapel building did not have a rise in storey’s of two because, on the proper construction of the definition of rise in storeys in C1.2, the under storey was not a storey. It was contended, in effect, that the under storey could take advantage of an exclusion in the definition for basements. Very significant resources were committed to resolving this issue: expert reports were obtained by both parties and a common report produced. In the end, however, Hennessey did not press this argument. That decision was understandable: it appeared to have no real prospect of succeeding once it occurred to the plaintiff’s expert to apply the relevant definition taking into account the rear wall of the Chapel building.  No more need be said about this issue.
  7. [86]
    Second, Hennessey pleaded and maintained at trial that on the proper construction of the relevant provisions of the BCA, the Chapel building was not a two storey Class 9b assembly building, but rather a one storey Class 9b assembly building and a one storey Class 7 store building.
  8. [87]
    The plaintiff answered this proposition in two ways:
    1. (a)
      It contended that the factual foundation for Hennessey’s argument did not exist because the purpose of the under storey at all relevant times was not that it be a store but that it be an office; and
    2. (b)
      It contended that even if the factual foundation could be established, the construction of the BCA advanced by Hennessey was wrong.

The statutory framework

  1. [88]
    It is convenient to begin the analysis of this issue by setting out the relevant statutory provisions.

The BCA

  1. [89]
    The BCA is produced and maintained by the Australian Building Codes Board on behalf of the Commonwealth and States and Territories. It provides a uniform set of technical provisions for the design and construction of buildings and other structures throughout Australia. It is given the effect as a statutory provision in each jurisdiction. In Queensland, as at 2012 (and still) the relevant statutes include the Building Act 1975 (Qld) and regulations and the QBSA. Of particular relevance in this case is the link between the statutory description of the scope of the low-rise license held by Hennessey and the relevant terms in the BCA. That link was made by the relevant definitions in Schedule 8 of the Queensland Building Services Authority Regulation 2003 (Qld) (QBSA Regulation).
  2. [90]
    The relevant version of the BCA is the 2012 version Volume 1 dealing with Class 2 to Class 9 Buildings.
  3. [91]
    By Part A3 deals with “Classification of Buildings and Structures”. It provided:

A3.1 Principles of classification

The classification of a building or part of a building is determined by the purpose for which it is designed, constructed or adapted to be used.

A3.2 Classifications

Buildings are classified as follows:

Class 1: one or more buildings which in association constitute –

  1. (a)
    Class 1a – single dwelling being –
    1. (i)
      a detached house; or
    1. (ii)
      one of a group of two or more attached dwellings, each being a building, separated by a fire-resisting wall, including a row house, terrace house, town house or villa unit; or
  2. (b)
    Class 1b
    1. (i)
      a boarding house, guest house, hostel or the like –
    1. (A)
      with a total area of all floor not exceeding 300m2 measured over the enclosing walls of the Class 1b; and
    1. (B)
      in which not more than 12 persons would ordinarily be resident; or
    1. (ii)
      4 or more single dwellings located on one allotment and used for short-term holiday accommodation,

which are not located above or below another dwelling or another Class of building other than a private garage.

Class 2: a building containing 2 or more sole-occupancy units each being a separate dwelling.

Class 3: a residential building, other than a building of Class 1 or 2, which is a common place of long term or transient living for a number of unrelated persons, including –

  1. (a)
    a boarding house, guest house, hostel, lodging house or backpackers accommodation; or
  2. (b)
    a residential part of a hotel or motel; or
  3. (c)
    a residential part of a school; or
  4. (d)
    accommodation for the aged, children or people with disabilities; or
  5. (e)
    a residential part of a health-case building which accommodates members of staff; or
  6. (f)
    a residential part of a detention centre.

Class 4: a dwelling in a building that is Class 5, 6, 7, 8, or 9 if it is the only dwelling in the building.

Class 5: an office building used for professional or commercial purposes, excluding buildings of Class 6, 7, 8 or 9.

NSW Class 6

Class 6: a shop or other building for the sale of goods by retail or the supply of services direct to the public, including –

  1. (a)
    an eating room, café, restaurant, milk or soft-drink bar; or
  2. (b)
    a dining room, bar area that is not an assembly building, shop or kiosk part of a hotel or motel; or
  3. (c)
    a hairdresser’s or barber’s shop, public laundry, or undertaker’s establishment; or
  4. (d)
    market or sale room, showroom, or service station.

Class 7: a building which is –

  1. (a)
    Class 7a – a carpark; or
  2. (b)
    Class 7b – for storage, or display of goods or produce for sale by wholesale.

Class 8: a laboratory, or a building in which a handicraft or process for the production, assembling, altering, repairing, packing, finishing, or cleaning of goods or produce is carried on for trade, sale, or gain.

Class 9: a building of a public nature –

  1. (a)
    Class 9a – a health-care building, including those parts of the building set aside as a laboratory; or
  2. (b)
    Class 9b – an assembly building, including a trade workshop, laboratory or the like in a primary or secondary school, but excluding any other parts or the building that are of another Class; or
  3. (c)
    Class 9c – an aged care building.

Class 10: a non-habitable building or structure –

  1. (a)
    Class 10a – a non-habitable building being a private garage, carport, shed, or the like; or
  2. (b)
    Class 10b – a structure being a fence, mast, antenna, retaining or free-standing wall, swimming pool, or the like; or
  3. (c)
    Class 10c – a private bushfire shelter.

A3.3 Multiple Classification

Each part of a building must be classified separately, and –

  1. (a)
     
  1. (i)
    where parts have different purposes – if not more than 10% of the floor area of a storey, being the minor use, is used for a purpose which is a different classification, the classification applying to the major use may apply to the whole storey; and
  1. (ii)
    the provisions of (i) do not apply when the minor use is a laboratory or Class 2, 3 or 4 part; and
  1. (b)
    Classes 1a, 1b, 7a, 7b, 9a, 9b, 10a, 10b and 10c are separate classifications; and
  1. (c)
    a reference to –
  1. (i)
    Class 1 – is to Class 1a and 1b; and
  1. (ii)
    Class 7 – is to Class 7a and 7b; and
  1. (iii)
    Class 9 – is to Class 9a, 9b and 9c; and
  1. (iv)
    Class 10 – is to Class 10a, 10b and 10c; and
  1. (d)
    A plant room, machinery room, lift motor room, boiler room or the like must have the same classification as the part of the building in which it is situated.

A3.4 Parts with more than one classification

  1. (a)
    Notwithstanding A3.3, a building or part of a building may have more than one classification applying to the whole building or the whole of that part of the building.
  2. (b)
    If a building or part of a building has more than one classification applying to the whole building or part in accordance with (a), that building or part must comply with all the relevant provision of the BCA for each classification.
  1. [92]
    By Part C deals with “Fire Resistance”. It provides:
    1. (a)
      Under the heading  “Objective”:

CO1

The Objective of this Section is to –

  1. (a)
    safeguard people from illness or injury due to a fire in a building; and
  2. (b)
    safeguards occupants from illness or injury while evacuating a building during a fire; and
  3. (c)
    facilitate the activities of emergency services personnel; and
  4. (d)
    avoid the spread of fire between buildings; and
  5. (e)
    Protect other property from physical damage caused by structural failure of a building as a result of fire.
  1. (b)
    Under the heading “Functional Statements”, provisions including by way of example:

CF1

A building is to be constructed to maintain structural stability during fire to –

  1. (a)
    allow occupants time to evacuate safely; and
  2. (b)
    allow for fire brigade intervention; and
  3. (c)
    avoid damage to other property.
  1. (c)
    Under the heading “Performance Requirements, provisions dealing with that subject, examples of which are CP1 and CP5 which provide:

CP1

A building must have elements which will, to the degree necessary, maintain structural stability during a fire appropriate to –

  1. (a)
    the function or use of the building; and
  2. (b)
    the fire load; and
  3. (c)
    the potential fire intensity; and
  4. (d)
    the fire hazard; and
  5. (e)
    the height of the building; and
  6. (f)
    the proximity to other property; and
  7. (g)
    any active fire safety systems installed in the building; and
  8. (h)
    the size of any fire compartment; and
  9. (i)
    fire brigade intervention; and
  10. (j)
    other elements they support; and
  11. (k)
    the evacuation time.

CP5

A concrete external wall that could collapse as a complete panel (eg. tilt-up and pre-cast concrete) must be designed so that in the event of fire within the building the likelihood of outward collapse is avoided.

Limitation:

CP5 does not apply to a building having more than two storeys above ground level.

  1. [93]
    Part C1 deals with Fire Resistance and Stability. It relevantly provides:

C1.1 Type of construction required

  1. (a)
    The minimum Type of fire-resisting construction of a building must be that specified in Table C1.1 and Specification C1.1, except as allowed for –
  1. (i)
    certain Class 2, 3 or 9c buildings in C1.5; and
  1. (ii)
    a Class 4 part of a building located on the top storey in C1.3(b); and
  1. (iii)
    open spectator stands and indoor sports stadiums in C1.7.
  1. (iv)
    ….

SA C1.1(a)(v)

  1. (b)
    Type A construction is the most fire-resistant and type C the least fire-resistant of the Types of construction.

Table C1.1 TYPE OF CONSTRUCTION REQUIRED

Rise in storeys

Class of building

 

2, 3, 9                 5, 6, 7, 8

4 OR MORE

A

A

3

A

B

2

B

C

1

C

C

Deemed-to-Satisfy Provisions

SA C1.1(c) and (d)

C1.2 Calculation of rise in storeys

  1. (a)
    The rise in storeys is the sum of the greatest number of storeys at any part of the external walls of the building and any storeys within the roof space –
    1. (i)
      above the finished ground next to that part; or
    1. (ii)
      if part of the external wall is on the boundary of the allotment, above the natural ground level at the relevant part of the boundary.
  2. (b)
    A storey is not counted if –
    1. (i)
      if it is situated at the top of the building and contains only heating, ventilation or lift equipment, water tanks, or similar service units or equipment; or
    1. (ii)
      it is situated partly below the finished ground and the underside of the ceiling is not more than 1 m above the average finished level of the ground at the external wall, or if the external wall is more than 12 m long, the average for the 12 m part where the ground is lowest.
  3. (c)
    In a Class 7 of 8 building, a storey that has an average internal height of more than 6 m is counted as –
    1. (i)
      one storey if it is the only storey above the ground; or
    1. (ii)
      2 storeys in any other case.
  4. (d)
    For the purposes of calculating the rise in storeys of a building –
    1. (i)
      a mezzanine is regarded as a storey in that part of the building in which it is situated if its area more than 200 m2 or more than 1/3 of the floor area of the room, whichever is the lesser; and
    1. (ii)
      two or more mezzanines are regarded as a storey in that part of the building in which they are situated if they are at or near the same level and have an aggregate floor area more than 200 m2 or more than 1/3 of the floor area of the room, whichever is the lesser.

C1.3 Buildings of multiple classification

  1. (a)
    In a building of multiple classifications, the Type of construction required for the building is the most fire-resisting Type resulting from the application of Table C1.1 on the basis that the classification applying to the top storey applies to all storeys.
  2. (b)
    In a building containing a Class 4 part on the top storey, for the purpose of (a), the classification applying the top storey must be –
    1. (i)
      when the Class 4 part occupies the whole of the top storey, the classification applicable to the next highest storey; or
    1. (ii)
      when the Class 4 part occupies part of the top storey, the classification applicable to the adjacent part.

C1.4 Mixed types of construction

A building may be of mixed Types of construction where it is separated in accordance with C2.7 and the Type of construction is determined in accordance with C1.1 or C1.3.

C1.5 Two storey Class 2, 3 or 9c buildings

A building having a rise in storeys of 2 may be of Type C construction if –

  1. (a)
    it is a Class 2 or 3 building or a mixture of these classes and each sole-occupancy unit has –
    1. (i)
      access to at least 2 exits; or
    1. (ii)
      its own direct access to a road or open space.
  1. (b)
    It is a Class 9c aged care building protected throughout with a sprinkler system complying with Specification E1.5 and complies with the maximum compartment size specified in Table C2.2 for Type C construction.
  1. [94]
    Part A1.1 contains definitions. The relevant definitions are as follows:

Assembly building means a building where people may assemble for –

  1. (a)
    civic, theatrical, social, political or religious purposes including a library, theatre, public hall or place of worship; or
  2. (b)
    educational purposes in a school, early childhood centre, preschool, or the like; or
  3. (c)
    entertainment, recreational or sporting purposes including –
    1. (i)
      a discotheque, nightclub or a bar area of a hotel or motel providing live entertainment or containing a dance floor; or
    1. (ii)
      a cinema; or
    1. (iii)
      a sports stadium, sporting or other club; or
  4. (d)
    transit purposes including a bus station, railway station, airport or ferry.

Storey means a space within a building which is situated between one floor level and the floor level next above, or if there is no floor above, the ceiling or roof above, but not –

  1. (a)
    a space that contains only –
    1. (i)
      a lift shaft, stairway or meter room; or
    1. (ii)
      a bathroom, shower room, laundry, water closet, or other sanitary compartment; or
    1. (iii)
      accommodation intended for not more than 3 vehicles; or
    1. (iv)
      a combination of the above; or
  2. (b)
    a mezzanine.
  1. [95]
    There is no definition of “building” or “storage” in the BCA.

QBSA Regulations

  1. [96]
    At the relevant times, the QBSA Regulations[31] provided the following in respect of the building licenses held by Hennessey (and Mr Hennessey):
    1. (a)
      As to the low rise license, relevantly:

Part 4 Building – low rise license

1 License class

Builder – low rise.

2 Scope of work

  1. (1)
    Building work on a class 1 or class 10 building.
  2. (2)
    Building work on classes 2 to 9 buildings with a gross floor area not exceeding 2000m2, but not including Type A or Type B construction.
  3. (3)
    Prepare plans and specifications if the plans and specifications are –
    1. for the licensee’s personal use; or
    2. for use in building work to be performed by the licensee personally.
  4. (4)
    However, the scope of work does not include –
    1. A completed building inspection for an interested party; or
    2. Personally carrying out any building work for which –
      1. A fire protection license is required; or
      2. An occupational license is required unless the licensee holds the occupational license.
  5. (5)
    In this section – interested party, for a building, means a party or prospective party to a contract of sale for the building.
  1. (b)
    As to the carpentry license:

Part 15 Carpentry license

1 License class

Carpentry.

2 Scope of work

  1. (1)
    Construct and erect timber and steel wall framing and roof structures.
  2. (2)
    Construct and erect non-load bearing internal partition walls.
  3. (3)
    Install windows and doors including framing.
  4. (4)
    Erect ceiling and subfloor framing.
  5. (5)
    Install timber and sheet flooring.
  6. (6)
    Install exterior cladding, fascias and soffits.
  7. (7)
    Install metal roofing.
  8. (8)
    Construct timber stairs.
  9. (9)
    Fix internal linings, paneling and mouldings.
  10. (10)
    Install door and window locks and furniture.
  11. (11)
    Restore and renovate doors, windows and frames.
  12. (12)
    Install fitments.
  13. (13)
    Concreting to simple forms, including install formwork, reinforcement and concrete.
  14. (14)
    Erect and strip formwork, including strip form and jump form formwork.
  15. (15)
    Incidental work of another class.
  16. (16)
    In this section –

door includes a fire door or a fire shutter.

Analysis

  1. [97]
    The starting point for Hennessey’s argument was an acceptance that the Chapel building had two storeys as that term was defined in the BCA. The question was whether it was a building with a rise in storeys of two for the purposes of classification under C1.1.
  2. [98]
    The starting point is A3.2 BCA. It was accepted by both parties that the Chapel itself was a class 9 b assembly building. Mr Travis, however placed particular emphasis on the part of the definition underlined below:

Class 9(b)- an assembly building including a trade workshop, laboratory or the like in a primary or secondary school but excluding other parts of the building that are of another class

  1. [99]
    Hennessey submitted this should be read as follows: an assembly building is a building excluding other parts of the building that are of another class. Hennessey points out, correctly, that no other classification has the particular form of words. The importance of that distinction to the argument will emerge presently.
  2. [100]
    Next, Hennessey focusses attention on Class 7b in A3.2, a building which is “for storage”. It points out that on the face of the Initial Plans and Amended Plans which defined the scope of work under the Building Contract (and consistently with Ms Peek’s position on planning issues: see [116] below), the under storey was identified as a “store” and therefore was a part of the building which was of another class: i.e. Class 7b.
  3. [101]
    Thus says Hennessey, the structure comprising the Chapel was made up of a class 9b (upper) storey and a Class 7b (lower) storey. Applied to C1.1, that leads to the conclusion on Hennessey’s case that the structure comprised:
    1. (a)
      A one storey class 9 building which is identified in the Table C1.1 as of Type C construction; and
    2. (b)
      A one storey class 7 building which is identified in the Table C1.1 also as of Type C construction.
  4. [102]
    The result therefore is that the work under the Building Contract was within the low rise license because it involved two Type C constructions, not one Type B construction.
  5. [103]
    The plaintiff responds to this argument of construction by pointing to C1.3. That section contemplates that there can be, in a building, multiple classifications for the purposes of C1.1. Indeed, C1.3 reflects what is evident in section A3.3 in any event. It will be recalled that that section provides that “each part of a building must be separately classified…”. The BCA does not expressly say how a part is to be identified, but the answer is clearly given by implication when regard is had to A3.1  That section provides that classification depends on “the purpose for which” a building or part of a building “is designed, constructed or adapted to be used”.  It can be inferred a building will be comprised of parts to the extent it had different parts designed, constructed or adapted for different uses under A3.2.
  6. [104]
    The problem for Hennessey’s argument on classification in part comes from the provision made in C1.3. Not surprisingly, the BCA deals with how to determine the type of construction where there are multiple stories for different classifications for different parts of a building. The general rule is that a building is classified on the basis of the assumption that “the classification applying to the top storey applies to all storeys”. In my view the operation of that provision is clear. If a building is, for example, three storeys, with class 2 on the top and class 3 in the middle and class 5 on the ground, the building is classified under C1.1 as a three storey class 2 building. This is the analysis reflected in the commentaries.[32]
  7. [105]
    At a basic level is it also consistent with the objectives in CO1, in circumstances where multiple classification would otherwise result in a multi-storey building being classified a series of single storey buildings which would undermine the obvious intention in C1.1 of requiring higher levels of fire resistant structures for multiple storey buildings.
  8. [106]
    The plaintiff submits, therefore, that on the facts of this case, even if the Chapel structure has a multiple classification of 9b and 7b, the effect of C1.3 is that the building is classified as a class 9b building with a rise in storeys of two.  It is therefore a Type B building.
  9. [107]
    Hennessey responds, however, that class 9b buildings should be treated differently from all other classifications because of the matters identified in [98] and [99]. The argument as I understood it was this: because a class 9b building can be a building even if there are other parts of the building which are not, a class 9b building is a special and unique case when applying C1.3 because it is not “a building of multiple classification”, it is a building in its own right.
  10. [108]
    I do not accept this argument.
  11. [109]
    It involves assuming that the BCA uses the expressions “a building” and “the building” in its numerous provisions in a manner which allows the subtle distinction contended for by Hennessey to be drawn and for a statutory intention to be inferred from that distinction. I do not think that assumption can be sustained. The BCA uses the two expressions on numerous occasions throughout.  It is difficult objectively to infer that the use of the definite and indefinite form in the part dealing with classification 9b is intended to have the significant consequences in the application of Section C which Hennessey contends for.  
  12. [110]
    All the more so because the construction advanced by Hennessey is inconsistent with the obvious intention of C1.3 as explained in [105] above. Hennessey was unable to   explain of why a class 9b building should be treated as a special case in applying that provision. Mr Travis said that the construction advanced should nonetheless be adopted because the exclusory provision in the definition had to be given some meaning. He did not explain why it had to be given meaning in the context of clause C1 in particular, nor how it was consistent with the obvious purpose of that Part to do so. Neither could any assurance be given that from of the exclusory provision in the definition of 9b had no other role elsewhere in the BCA. Indeed, no argument was advanced as to the statutory intention in adopting that particular form of expression was adopted against which issues of construction of other parts of the BCA could be tested.
  13. [111]
    I find that on the proper construction of the Building Contract and the BCA, the work under that contract involved undertaking to carry out the construction of a building of Type B construction under Table C1.1. Accordingly, I find that in undertaking under the Building Contract to construct the Chapel building, Hennessey undertook to carry out building work without the appropriate class of license in breach of s. 42(1) QBSA Act.[33]

The factual question: was the under storey “for storage”?

  1. [112]
    The consequence of this conclusion is that it is unnecessary to decide whether the under storey was properly classified as for storage for the purposes of assessing the character of the work undertaken under the Building Contract. In case I am incorrect on the construction of the BCA provisions, however, I make these observations.
  2. [113]
    Mr Travis contended that it was not open on the pleadings for the plaintiff to dispute that the under storey was properly classified as for storage. That submission is correct. The relevant allegations are 7A(b)(ii) and (iii), especially 7A(b)(ii)(1) and 7A(b)(iii)(3) of the defence which raised the contention now under consideration. These allegations are responsive to the allegations in the statement of claim that the original work under the Initial Plans was unlicensed. Similar allegations are made in respect of the alleged unlicensed work under the Amended Plans: see 10A of the defence. The reply alleged in response to each of paragraphs 7A and 10A:
    1. (a)
      That the under storey was a store area under the Initial and Amended Plans; and
    2. (b)
      Most relevantly, in response to Hennessey’s pleading that the store area was class 7b and excluded from the definition of a class 9b building, “by virtue of C1.3 of the BCA the classification applying to the chapel as the top storey applies to all storeys”.
  3. [114]
    It is clear from the pleadings that the plaintiff did not raise as an issue whether the under storey was “for storage”. It could have done so. Classification is determined by the purpose for which a building is “designed, constructed or adapted for use”: see A3.1 BCA. The plaintiff could have pleaded (as it later sought to argue at trial) that the application of A3.1 led to a conclusion on the evidence that the under storey was not classified as “for storage” under the Building Contract (whether referring to the Initial or Amended Plans) because, for example, the common intention of Ms Peek and Mr Hennessey was that the under storey be an office. However, it did not do so.
  4. [115]
    Nor do I think it fair at this stage to permit the plaintiff to raise that matter. No application to amend in this respect was made. Further, I do not think the issues expanded de facto during the trial. While there was evidence given about the genesis of the idea of using the under storey as an office, the ambiguity as to what was truly a live issue on the pleadings was considerable given the plaintiff’s late and extensive amendments. Further, in that context, it is difficult fairly to conclude that Hennessey’s conduct of the trial was inconsistent with maintaining that for the purposes of this issue, the plaintiff was bound by its pleadings. Proper pleading of this matter by the plaintiff would have alerted Hennessey of the need carefully to consider the scope of evidence it might lead on the matter.
  5. [116]
    Finally, the evidence in any event supported Hennessey’s position. The Initial Plans and Amended Plans identified the under storey as a store. That is what Hennessey was required to build under the Building Contract. Further, while it was plainly in contemplation that the under storey could be, and probably would be, used ultimately as an office, the plaintiff’s formal position as a matter of planning compliance was that it was a storage area.[34] There was no evidence that there was ever any change in the planning position while Hennessey was carrying out the work, much less a change which affected an alteration in the obligations to carry out work under the Building Contract.
  6. [117]
    Further, Chapel pointed to no convincing evidence that the requirements for construction of the under storey under the Contract was inconsistent with it being a store as shown in the plans. Mr Di Carlo placed some emphasis on the inclusion of an amount for a kitchen area. It was never explained, however, where the plans showed this being installed in the under storey, nor that there was no-where else it could have been installed. Nor was it explained why a kitchen area might mean that the area was not properly characterised as “for storage”: I note A3.3 BCA in that regard which deals with minor uses. He also pointed to an exit sign which was installed. I do not understand how this assists the plaintiff.
  7. [118]
    Perhaps it was intended by Mr Di Carlo to sustain an argument that the work as in fact undertaken (rather than as identified by the Building Contract) changed the character of the area from storage to something else. Nothing of the kind was ever pleaded. It raised quite distinct issues from those raised in the plaintiff’s pleadings. An opportunity was given for the plaintiff to seek leave to amend to raise the matter (and indeed the broader question of whether the work under the Building Contract was for the relevant purpose). No application was brought to seek to amend to make any such allegation.

Restitutionary claims

Restitution to the plaintiff of payments under the Building Contract

  1. [119]
    The articulation of the restitutionary claim advanced by the plaintiff in the statement of claim is as follows:
    1. (a)
      That the premises to be constructed in accordance with the Amended Plans was a Type B Class 9b assembly building;
    2. (b)
      That Hennessey was not licensed to build such a building;
    3. (c)
      That Hennessey was not entitled to any monetary or other consideration for undertaking that work pursuant to s. 42(3) QBSA; and
    4. (d)
      That Hennessey was therefore entitled to restitution of all money paid in respect of the work being all progress payments under the Building Contract.
  2. [120]
    The plaintiff also pleads that by reason of the first three matters set out above, Hennessey had no right to payment of any monies “in respect of any claim made under BCIPA”[35] in relation to that work.
  3. [121]
    The former allegations are somewhat ambiguous. It is not clear whether the restitutionary claim is advanced on the basis that that the progress payments are recoverable because:
    1. (a)
      They were made under a contract unenforceable at the suit of Hennessey by operation of the prohibition under s. 42(1) QBSA (and by implication, that the plaintiff is entitled to recover on a restitutionary basis because they were payments made under an ineffective contract); or
    2. (b)
      They represent “monetary or other compensation” for (actually) carrying out building work in contravention of s. 42(1) (and by implication, that the plaintiff is entitled to recover on a restitutionary basis because of the effect of s. 42(3) which removes the entitlement to hold the compensation).
  4. [122]
    Either way, the pleading appears to assume that no part of the work undertaken to be performed under the Building Contract was licensed. This is highly debatable, given that the work undertaken included the car park and external works and there was no suggestion that that work was outside the scope of the license.
  5. [123]
    Looking first at the proposition in [121](a), while a contract to perform work will be unenforceable by the builder if any non-severable part of that work is unlicensed[36], it does not necessarily follow that all consideration paid under that contract is recoverable as of right. While that seems the better view, that matter did not have to be determined in Dart Holdings because that case was concerned with whether a valid adjudication decision could be made under the BCIPA where a non-severable part of the work under the contract was unlicensed. Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196 and Marshall v Marshall [1999] 1 Qd R 173 do not necessarily resolve the issue because on the facts of both cases as I read them, no part of the work under the contract was licensed.
  6. [124]
    In Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (2009) 254 ALR 661, the unlicensed work was identified as being that part of the works which comprised “building work”. Such work was only part of the work under that contract. The issue of whether all the contractual payments were recoverable or only part did not arise in that case because the head contractor only sought to recover payments made under the contract in respect of that part of the work which was unlicensed. Indeed, if the head contractor had successfully contended that the whole of the contractual payments were recoverable, the outcome of the proceedings might have been even more disastrous for the appellant than it was.
  7. [125]
    Contentions might be made against the notion that all payments made under a contract for building work will be recoverable as of right in circumstances where only part of the work under the contract is unlicensed, even if the contract cannot be severed.
  8. [126]
    Other more straight forward difficulties arise in respect of the proposition in [121](a) above. As I have observed, there seems no reason why the external works would be outside the Hennessey’s low-rise builder’s license. Further, Hennessey held a carpenter’s license which on any view authorised much of the work in the Chapel itself.  These considerations might also inform an argument that not all payments under the contract should be repaid.
  9. [127]
    However those interesting points do not have to be addressed because Hennessey did not raise any of these considerations in its pleading, and accepted in submissions the plaintiff’s entitlement to recovery of all payments made under the Building Contract if it succeeded on the licensing issue.[37]  
  10. [128]
    Similarly, Hennessey did not challenge the plaintiff’s position that if the work was unlicensed, the adjudication cannot stand (and by implication, the claim for further payment under the Building Contract must fail). That was a correct position to adopt in my view.[38]
  11. [129]
    Further, it seems to me that my conclusion has the consequence that Hennessey’s claims based on the charge in the Building Contract must fail, based as it is on enforcing rights under that contract.
  12. [130]
    Rather, Hennessey asserts it is entitled to a restitutionary remedy on a quantum meruit basis which answers the entitlement of the plaintiff. It is to that issue I now turn.

Hennessey’s entitlement to reasonable remuneration

  1. [131]
    Hennessey advances two alternative arguments as to its entitlement to reasonable remuneration:
    1. (a)
      Hennessey contends it is entitled to reasonable remuneration for the whole of the works without regard to the effect of s. 42(4) QBSA. In that case it claims an amount equivalent to the sum due on its case under the Building Contract;
    2. (b)
      Alternatively, Hennessey contends it is entitled to reasonable remuneration for the whole of the reasonable value of the licensed work actually done plus reasonable remuneration of the unlicensed work actually done which is calculated consistently with the requirements of s. 42(4) QBSA. 

Hennessey’s first argument: no reduction for unlicensed work

  1. [132]
    It might be thought unusual that Hennessey could contend that it is entitled to reasonable remuneration for the work done in constructing the Chapel and surrounds without compliance with the limitations under s.42(4) in circumstances where it is found that the work undertaken to be done under the Building Contract was, at least in part, unlicensed.
  2. [133]
    Mr Travis’ argument in support of this contention focused on the effect of s. 42(3) QBSA and the state of the pleadings. As I apprehend the argument, it was as follows:
    1. (a)
      Section 42(3) QBSA only prohibits recovery on a quantum merit basis for work actually carried out which is unlicensed. Work actually carried out which was within the scope of any license held by Hennessey may be the subject of a restitutionary claim for reasonable remuneration which is not limited by s.42(4);
    2. (b)
      By its defence and counterclaim, Hennessey alleged that it was entitled to reasonable remuneration not limited by s. 42(4);
    3. (c)
      By its reply and answer, the plaintiff failed to plead that any part of the work actually undertaken was unlicensed; and
    4. (d)
      Accordingly, Hennessey is entitled to remuneration for the whole of the work actually undertaken.
  3. [134]
    I accept the correctness of the proposition in [133](a). It is consistent with the words of the subsection and with authority.[39]
  4. [135]
    I now turn to the pleading propositions. Hennessey relies on the following components of the pleadings:
    1. (a)
      It held a carpentry license (Defence 2(c)) to which the plaintiff pleaded a non-admission;
    2. (b)
      The Amended Plans contemplated performance of carpentry work (Defence 10A(b)), which the plaintiff denied because the Building Contract was not exclusively carpentry work; and
    3. (c)
      If it is determined the Building Contract is unenforceable, then Hennessey is entitled to reasonable remuneration in an amount to be particularised in expert reports (Defence 16(c)(i)), to which Chapel makes a plead which Hennessey characterises as giving rise to a deemed admission.
  5. [136]
    I do not consider any deemed admission arises from these allegations which assists Hennessey. Pleading of the entitlement to restitution in the defence does not properly give rise to an entitlement to judgment for any restitutionary sum. Such a claim must be advanced in a counterclaim[40] (and is in fact advanced in the counterclaim). Further, the deemed admission, if there be one, is ambiguous as to the amount of the reasonable and basis of calculation of reasonable remuneration. No set off is pleaded by way of defence. To the extent that the restitutionary claim is advanced, attention must be focused on the counterclaim.
  6. [137]
    Hennessey relied on paragraph 25 of the counterclaim. It submitted that the effect of that allegation was to shift the onus onto the plaintiff of proving that any party of the work actually done was unlicensed work and that the answer failed to do so.  However, paragraphs 25 to 27 of the counterclaim read with the relevant paragraphs of the reply create some ambiguity as to exactly what is contended for and on what basis.  This ambiguity is highlighted by the fact that the answer was not amended to deal with relevant amendments made to the counterclaim close to trial. I am not persuaded that the pleadings read as a whole have the effect contended for by Hennessey.

Hennessey’s second argument: entitlement after allowing for unlicensed work

  1. [138]
    Hennessey is in my view on stronger grounds on its second argument. It contends that if any part of the works claimed as restitution represent a claim for consideration for carrying out unlicensed works, Hennessey is entitled to restitution modified by s. 42(4) QBSA in respect of that work and restitution in respect of the balance of the work which is licensed.
  2. [139]
    The question is the identification of the sum to which Hennessey is entitled in that regard.

Challenges to Mr Carey’s report

  1. [140]
    This was dealt with in some detail in the expert report of Mr Carey, a quantity surveyor. The plaintiff filed no expert report in reply. Indeed it led no evidence on the question of the correct restitutionary measure in respect of the work actually undertaken.
  2. [141]
    Rather, it took the approach of critiquing Mr Carey’s credibility and some aspects of his report. It is convenient to deal with these critiques before turning to the analysis of Mr Carey’s evidence to determine the correct measure of restitution to which Hennessey is entitled.
  3. [142]
    At page 9 of the plaintiff’ submissions, five matters are listed as giving reasons to doubt Mr Carey’s report. None of them provide a basis to doubt Mr Carey’s evidence or the conclusions in his report.[41]
  4. [143]
    First, it is said that in calculating the cost of the store room separately from the upstairs Chapel, Mr Carey counted the cost of building the store room twice because the structural aspects of the store room were always intended to be part of the Chapel. The latter point is uncontentious. The former cannot be accepted. The process of dividing up the store room work from the upstairs work does not logically result in the store room work being calculated twice. It just involves allocating that work between two different cost centres. There is no reason to assume Mr Carey made this error and it was never put to him that he did. 
  5. [144]
    Second, it is said that there are duplicate invoices in the documents briefed to Mr Carey and he does not say in his report whether he took this into account. No such invoices were identified by the plaintiff. However, it might be accepted that duplicate invoices were provided. That does not mean one should infer Mr Carey overlooked the fact. It was not put to him that he had. Further, Mr Carey impressed as a person of considerable experience in quantity surveying generally and in assessing costs for construction of religious type buildings in particular. He appeared to understand in detail the material he had been briefed with. I can see no good reason to assume he failed to notice duplicates and erroneously took them into account. 
  6. [145]
    Third, it is said Mr Carey did not have regard to Exhibit 19. The difficulty is that the plaintiff did not identify where it was provided to him. I could not see where it was included in the index to his brief. It is reasonable to assume he did not see it.  The real question is whether this affects the reliability of his opinion. This calls for an understanding of Exhibit 19.
  7. [146]
    Exhibit 19 was disclosed by Hennessey and tendered by the plaintiff. It is a print out from an accounting package on an accruals basis in respect of the Chapel project. That document is admissible evidence of costs incurred by Hennessey in relation to the project, however it is not conclusive evidence.  The plaintiff relies on the document as suggesting that the total costs of the work relating to the project sworn to by reference to invoices tendered at length through Mr Hennessey[42] and seemingly relied upon by Mr Carey was incorrect because the total of those invoices was less than the amounts shown in this accounting record.
  8. [147]
    In that regard Mr Hennessey gave this evidence in cross examination[43]:

So if we go through this, just assist me in trying to understand it. It’s a job transactions accrual. So it records the work as and when it’s done and as and when it hits this – I suppose – is this part of your MYOB system, is it, or something like that?---I believe it is, and I’ll be honest, I’m not familiar at all with this stuff.

Okay. Thank you for that. Well, could you at least help me this far: on the left-hand side, we have the debit, and that’s a charge for something; is that correct? You don’t know. Okay. I won’t take it any further. What about the right-hand side where you have credits? Do you know?---It might sound silly, but I really don’t understand this stuff.

No, no, no, I’m not being critical at all. That can go back as well, your Honour.

  1. [148]
    Mr Hennessey’s evidence in this respect was not challenged further in cross examination, quite probably because his evidence that he did not understand his own accounting package outputs had the ring of truth. I accept it. This is not to say that the evidential relevance of the document is exhausted. However, Hennessey is not a sophisticated business. Book entries were seemingly done by a young lady employed by Hennessey. There is no particular reason to think that differences between those records and invoices for work sworn to by Mr Hennessey suggest Mr Hennessey’s evidence was wrong. No such suggestion for any particular item of work was seriously pursued in cross examination.
  2. [149]
    It is worth noting that later in its submissions,[44] the plaintiff submits that Mr Hennessey gave evidence that Exhibit 19 was accurate. I cannot find where he gave that evidence in the transcript and the submission was not referenced. The evidence above is inconsistent with that conclusion.
  3. [150]
    In the absence of some basis to think that inconsistency between the invoices for work relied upon by Mr Carey and Exhibit 19 are indicative of error in the invoices or their attribution to the project. I cannot see why the Mr Carey’s failure to refer to Exhibit 19 damages the reliability of his report.
  4. [151]
    Fourth, it is submitted that Mr Carey did not undertake an independent assessment of costs but rather reviewed material given to him by Hennessey. The short answer to this is that Mr Carey did more than just accept the material given to him. In the case of the Chapel work, he compared the overall cost to a relevant m2 rate in an industry publication and explained the basis for the difference: see p. 3-4 of his report. In each other case he considered the invoiced work and found it fair and reasonable for the work undertaken, an opinion well within his expertise to express. In the case of the store room, he calculated costs in a bill of quantities manner: see p. 5 of his report. 
  5. [152]
    Fifth, Mr Carey relied on the Building Economist 2012 to obtain a check m2 price for a chapel type building. The plaintiff submitted that this rate was far in excess of the rate in other publications recording building costs: Rawlinsons and Cordells. The plaintiff submitted that the only reason for that given by Mr Carey is that his experience made him better placed to judge reasonable cost than those publications. That is not strictly fair: he also had regard to the Building Economist 2012. When challenged about that as a reliable source, he explained it was a source relied upon by quantity surveyors and not generally available. No evidence to the contrary was led. In any event, Mr Carey explained in detail why the figures in the other publications were not appropriate: in particularly that they were likely based on “modern” assembly buildings which were more like warehouses then traditional chapel buildings, which had a much lower floor to wall ratio. This explanation was persuasive and logical. Further, Mr Carey’s extensive experience in churches and chapels made him well placed to make a judgment on how to assess and use industry publications.
  6. [153]
    The plaintiff’s fifth point contains another proposition. The plaintiff argues that Mr Carey’s rate for overheads at 12% is at the top end of the range for overheads in Rawlinsons of 9.6% to 12%. I do not understand how this is a critique of Mr Carey’s evidence, even on the plaintiff’s case, because it is within the range identified. In any event, Mr Carey was qualified to identify an appropriate amount for overheads for the kind of work undertaken. His opinion in this regard was explained (clearly in my view) in evidence in chief.[45]
  7. [154]
    The plaintiff also makes extensive submissions on the assumption that the Court ought to treat Exhibit 19 as accurately and completely identifying the costs incurred in construction of the project by Hennessey.[46] None of the specific points raised were raised in cross examination. Further, none of the evidence by Mr Hennessey as to the costs incurred which he gave by reference to invoices tendered[47] was challenged and no basis properly to do so has been established. Given those matters and the points made in [145] to [150] above, I do not accept that reasonable remuneration should be determined on the basis of Exhibit 19.

Calculation of reasonable remuneration

  1. [155]
    Hennessey relied on Mr Carey’s report. Mr Carey’s report identifies a reasonable rate for the work actually carried out, with no exclusion of any amount for unlicensed work, as $735,440.63. This is the highest amount which Hennessey seeks as a restitutionary remedy. For the reasons I have given already, Hennessey is not entitled to a sum calculated on that basis.
  2. [156]
    In its counterclaim, Hennessey pleads in the alternative an entitlement to $616,999.55. A strict reading of the counterclaim might limit Hennessey to that sum: see paragraph 27 of the counterclaim. However, it was made clear in oral submissions that this sum is calculated on the basis that none of the work done was licensed. That is plainly not correct for two reasons:
    1. (a)
      First, the car park and external works appear to be within Hennessey’s license. Certainly, no submission to the contrary was ever made; and
    2. (b)
      Second, the whole of the work in the Chapel could not be unlicensed because Hennessey held a carpentry license which authorised a substantial part of the Chapel works.
  3. [157]
    Mr Carey’s report permits calculation of the amount to which Hennessey is entitled on a quantum meruit basis taking these two considerations into account. Although the plaintiff made some complaint about this, the fact is that Mr Carey’s report has been in their possession for at least 5 months prior to commencement of the trial and reliance on that report as providing the particulars of the sum claimed on a quantum meruit basis if it was found that Hennessey had carried out unlicensed building work was expressly notified by amendments to the counterclaim made over a month before the trial. No objection was taken to the report and it was cross examined on extensively.  Further, as I observed in [137] above, the pleadings were ambiguous as the final pleaded position on the amount and mode of calculation of the restitutionary entitlement advanced by Hennessey.  In those circumstances I do not think it unfair to consider Mr Carey’s report in determining the reasonable remuneration properly due.
  4. [158]
    Mr Carey assesses the work involved in construction of the Chapel including the under storey which falls outside the scope of the carpentry license. He assesses the unlicensed work at $26,071.19.[48]
  5. [159]
    He assesses the reasonable rate for as built construction of the whole of the works (excluding overheads and profit) at $542,680.51.[49] Thus a reasonable rate for the licensed work (excluding overheads and margin) was $542,680.51 - $26,071.19 = $516,609.32.
  6. [160]
    Mr Carey adopted, reasonably in my view, figures of 12% for overheads and 10% for margin. On that basis, a reasonable rate for the licensed work (ex GST) calculated in accordance with that approach was ($516,609.32 x 1.12) x 1.1 = $636,462.67
  7. [161]
    As to the unlicensed work, Mr Carey gave evidence that he considered as reasonable that half of the overhead sum would be allocated to supervision by the builder. He assumed (at least impliedly) that this amount cannot be recovered under s. 42(4)(b) and or s. 42(4)(d) QBSA. I agree in that view in the context of this case. I also assume, favourably to the plaintiff, that the whole 10% allocated to margin (which includes off-site overheads and profit) are not recoverable under s. 42(4)(b).
  8. [162]
    Accordingly, Hennessey is entitled to the following as a reasonable rate for the work which was unlicensed: $26,071.19 x 1.06 = $27,635.46 (ex GST).[50]
  9. [163]
    That sum for unlicensed work must also be established as being:
    1. (a)
      Not more than the amount paid by Hennessey in carrying out the unlicensed work: s. 42(4)(a) QBSA; and
    2. (b)
      Not more than any amount agreed to, or purportedly agreed to, as the price for carrying out that work: s. 42(4)(c) QBSA.
  10. [164]
    The difficulty for Hennessey on this point is that Mr Carey does not address these issues and no submission was made to me as to how the issues could be determined from other evidence. The Contract Sum, whether the original sum or the sum ultimately contended for by Hennessey, does not much assist as it related to the whole of the works in circumstances where only a small component of the works actually carried out was unlicensed. Similar problems affect the evidence of the total cost of the works as established by the invoices.
  11. [165]
    While it might be imagined that neither consideration excludes recovery of the small amount identified as referable to unlicensed work, the onus was on Hennessey to make out its entitlement to payment for unlicensed work in accordance with s. 42(4) QBSA. Hennessey has not made out that onus. Accordingly, I do not include in the reasonable sum for the work overall the sum calculated for the unlicensed work.
  12. [166]
    In the final result then, Hennessey the GST inclusive sum which represents a reasonable rate for the licensed work is $636,462.67 x 1.1 = $700,108.20

The net sum on the restitutionary claims

  1. [167]
    The plaintiff pleaded, and the defendant admitted, that the plaintiff had paid the amounts identified in [65] and [69] above. Those payments are admitted as totalling $632,615.64.
  2. [168]
    In final address, Mr Di Carlo argued for the first time that Exhibit 19 demonstrated that the plaintiff had paid more than that amount. That submission was also made in writing.[51] The written submission appears to be in error. It shows only seven payments which does not reach the total shown on that page. Presumably, the submission was intended to show the nine “sales” shown on Exhibit 19 which match the totals in the submission.
  3. [169]
    This submission was inconsistent with the pleaded case in a very significant manner. It was also a matter about which one would imagine the plaintiff would have been very clear. The prospect of the plaintiff overlooking a substantial payment to Hennessey seems remote. Further, Mr Di Carlo could give no basis or explanation for that, nor was my attention drawn to any document disclosed showing the additional payment. Raising the additional payment would have required an amendment to the pleading. When asked by me, Mr Di Carlo could not confirm that he had instructions on the matter. Hennessey had no opportunity to investigate this alleged further payment. Mr Di Carlo did not seek leave to amend to allege this additional payment.
  4. [170]
    In any event, I refer to my above comments on the reliability of Exhibit 19. Bearing those comments in mind, there seems an obvious explanation for the issue raised by Mr Di Carlo. Exhibit 19 is an accrual account. If it operates in the normal manner of an accrual account, it will record a liability of a debtor when it arises, not when it is paid. This explanation seems consistent with the fact that the total amount shown as “sales” for the plaintiff, plus GST, is materially the same as the total claimed as owing under the invoices issued by Hennessey, including those invoices not paid, whether in part or in whole.
  5. [171]
    In any event, the amount paid by the plaintiff is the amount alleged and admitted in the pleadings: $632,615.32 (incl. GST).
  6. [172]
    On that basis, the net sum due between the defendant and plaintiff for their respective restitutionary claims is $700,108.20 - $632,615.32 = $67,492.88 due to the defendant.

The plaintiff’s breach of contract claim

The deficiencies in the pleaded case

  1. [173]
    The plaintiff’s sole remaining claim for damages for breach of contract is articulated as a claim for damages for failure of Hennessey to comply with the requirements of clauses 6(d) (costs of compliance with statutes) and 17(b) (relating to variations) of the Building Contract. It is odd that non-compliance with these two provisions should be articulated as claims for breach of contract. Ordinarily, such provisions are not promissory in character. Rather, they operate as contractual pre-conditions which the builder must comply with so as to be able to recover any further sum under the contract beyond the contract sum. Nonetheless, the plaintiff’s claim is articulated as a claim for breach and must be dealt with as such.
  2. [174]
    The relevant allegations in the FFASOC are as follows:
  1. Further or alternatively, during the period from on or about 28 March 2013 to 8 April 2013 the Contractor pursuant to:
  1. Clause 6.(d) and Clause 17.(b) of the general conditions of the Varied Agreement respectively, did not give the Owner:
  1. any written notice setting out the reason for, and the details of, the any of the Claimed Variations (if any) that related to if the Contractor’s compliance with a Statutory Requirement and which required a Variation to the Works; and, or alternatively,
  2. any written notice of:-
  1. the details of the scope of the work the subject of the Variation required by any of the Claimed Variations, whether allegedly agreed to by the parties or otherwise; or
  2. any agreed price, or methodology for calculating the price, of any of the Claimed Variations;

20A. But for the breach of the Varied Agreement pleaded in subparagraph 20a. above, the Owner would not have agreed to any proposed variation or alternation to the Varied Works that would have resulted in the Contract Sum exceeding $652,312.79.

  1. [175]
    The defence responds as follows:
  1. As for paragraph 20 of the SASOC, the Defendants:
  1. (a)
    says:
  1. (i)
    written notice of the Claimed Variations was provided to the Plaintiff on or about 8 April 2014 when the First Defendant provide the Plaintiff with the Final Payment Claim; and
  1. (ii)
    during the period from on or about 6 December 2012 to 8 April 2014 the Plaintiff was fully informed and had notice of the costs associated with each of the items pleaded at paragraphs 14 and 15 of the SASOC (assuming those are the relevant variations);
  1. (b)
    deny the allegations in subparagraph 20(a) because the Defendants believe those allegations to be untrue on the basis of the matters pleaded in subparagraph 20(a) of this Defence;
  1. (c)
    alternatively, with respect to subparagraph 20(a), say any breach of Clause 6(d) and Clause 17(b) of the Agreement (which breach is denied) did not cause any loss to the plaintiff;

20A. As for paragraph 20A of the SASOC, the Defendants deny the allegations therein because the Defendants believe the allegations are untrue on the basis of the matters pleaded in 11C and 20 of this Defence.

  1. [176]
    Paragraph 11C of the defence provided:

11C. In relation to paragraph 11C of the SASOC the Defendants:

  1. (a)
    admit that the Plaintiff (by Saksia) and the First Defendant (by Hennessy) discussed Saskia and Hennessy seeking to obtain cheaper quotations in respect of elements of the works and utilise such cheaper quotations as directed by the Plaintiff; and
  2. (b)
    subject to subparagraph 11C(a) of this Defence, deny the allegations made therein because the Defendants believe the allegations to be untrue on the basis of the matters pleaded in paragraphs 11, 11A, 11B, 2K of this Defence.
  1. [177]
    The most directly relevant allegation referred to in that paragraph is 11A(a) of the defence which provided:

11A. In relation to paragraph 11A of the SASOC the Defendants:

  1. (a)
    in relation to the allegations made at 11A(a):
    1. (i)
      say that on a date between April to May 2013:
      1. (1)
        Hennessy said to Saskia words to the effect that the cost to construct the works in accordance with the Amended Plans could not be achieved for the Contract Price;
      1. (2)
        Saskia said to Hennessy words to the effect that she was confident that the Plaintiff’s financier would offer additional finance to fund the increased cost once construction was close to completion and the chapel could be revalued; and
      1. (3)
        Saskia said to Hennessy words to the effect that if the Plaintiff was unable to obtain additional finance, Saskia, Saskia’s husband and/or Saskia’s business partner, McQuitty, would meet the additional construction costs.

(the Second Additional Funding Representation); and

  1. (ii)
    deny the allegations made therein because the Defendants believe the allegations to be untrue and on the basis of the matters pleaded at subparagraph 11A(a)(i) of this Defence; …
  1. [178]
    Mr Travis submitted in his trial submission that no proper claim for damages for breach of contract is advanced by the plaintiff’s pleading because it does not allege any sum of loss flowing from the alleged breach.[52] This submission is correct. It is not merely a technical complaint. It is far from clear what the amount would be which properly reflected the loss flowing from the breach alleged. Some of the increases in price came as a result of increases in provisional sums and provisional cost items. Some items might have been recoverable under different clauses even if there was non-compliance with clause 17. It does not follow that every amount claimed by Hennessey above the contract price would represent loss flowing from the breach alleged.
  2. [179]
    In the course of addresses, I raised the issue with Mr Di Carlo. He accepted that the problem existed. He accepted that the loss which should be pleaded is the extent to which the sum claimed by Hennessey exceeded the original Contract Sum due to variations. There was then discussion as to whether Mr Travis would object to an amendment in that form. With some reservations, he indicated he would not. I expected that an amended pleading would be filed and the matter was expressly left on that basis.[53] Strangely, no such amended was ever made. As it stands, no loss or damage is pleaded for the so-called Variations breach. The claim is dismissed on this basis.
  3. [180]
    Notwithstanding that conclusion, it is appropriate in my view to address two factual issues relating to this claim.

Was notice given?

  1. [181]
    Hennessey did not defend the claim on the grounds often seen where a builder has not complied with contractual pre-conditions for claiming variations such as estoppel or waiver. This might be a consequence of the form of the allegation. However, Hennessey did defend on the basis that it complied with the requirement of clause 17 in respect of “the variations”. Hennessey submitted:
  1. Thus:
  1. (a)
    there was no need for a particular form to be used when giving notice of variations; and
  1. (b)
    there was no need for the notice to be given prior to the performance of variations.
  1. On the question of breach, the evidence is that:
  1. (a)
    details of the scope of the work that is the subject of the variations was detailed in the Amended Plans, the plans for the new disabled access area, or specific invoices requested by the Owner to be paid by the Contractor, which passed electronically and by mail between the Contractor and the Owner (and the Owner’s representatives);
  1. (b)
    the agreed methodology for calculating the price of the positive variations was the invoice reasonably issued on the cheapest quote (or the quote insisted on by the Owner) plus 20% for the builder’s margin;
  1. (c)
    the Contractor gave the Owner within a reasonable time, a written notice in the form of a series of detailed spreadsheets that set out the amounts invoiced or quoted for the carrying out of specific works undertaking in carrying out the variations; …
  1. [182]
    Even assuming the correctness of 33(a) and (b), there was no compliance with the contract for two reasons:
    1. (a)
      First, the clause requires, relevantly, the methodology for calculating the price of the variation to be set out in a written notice. There is no evidence that the alleged methodology was set out in writing; and
    2. (b)
      Second, giving notice in a spreadsheet some 5 months after the Amended Plans were provided is not notice within a reasonable time for a project with a 30 week construction period.

The causation analysis fails

  1. [183]
    Any success for the plaintiff on this cause of action depended in any event on the proposition that but for the failure to comply with the variations formalities, the plaintiff would not have agreed to any variation to the works taking the price above the original contract price.
  2. [184]
    I reject that proposition.
  3. [185]
    For the reasons given in [47] to [54] above, I do not accept that Ms Peek would not have agreed to any variations if Mr Hennessey had strictly complied with clause 17. She was in my view aware that significant additional costs were likely to be incurred in relation to all the external works. Notwithstanding that, she showed no inclination to abandon the project prior to commencement when those costs risks were clear.
  4. [186]
    In my view, Ms Peek was very committed to her idea of a wedding chapel and was determined to pursue it to its conclusion, hoping for the best in respect of final cost and her ability to pay that sum from her own resources and/or her co-director’s resources (Mr Whitty, who was not called) and/or from bank finance based on a revaluation when the work was more complete. She accepted the consequences of this approach when they were made clear from mid-December 2013 at the latest, and did not seek to blame Mr Hennessey for them. Her change of heart was motivated by the difficulties she ultimately faced in paying for the work.

The disputed $15,000 claim

  1. [187]
    Amongst the claims advanced under the Building Contract by Hennessey was a claim for $15,000 arising under clause 5(d).   That claim was first advanced in the payment claim issued on 9 April 2014 under the BCIPA.  It had not previously been claimed.
  2. [188]
    Mr Hennessey gave evidence that his charge out rate for his time in the relevant period was $80 per hour + GST.  He accepted that he did not recall whether he ever told Ms Peek this rate.  He said that from entry into the Building Contract on 6 December 2012 until finalization of the Amended Plans and commencement in about late June 2013 he spent between 1 hour and 1.5 hours a day on contractual matters.
  3. [189]
    He described the work done as follows:

And can you explain to the court how that time was taken up? What was involved in looking through those plans? ---Basically – I’m sure, as you can see, there’s been so many changes – identifying the changes, discussing them with Ms Peek, coming up with ideas to rectify the mistakes, meeting contractors on site, you know, to potentially get quotes, doing my own little sketches to put forward to various people, and, again, trying to keep track of the quotes and the costs involved in all the changes.

Did you include in that time – we’ve already seen in the evidence that you’ve had communications with Ms Hutchison, for example. Do you include within that time conversations that you had with the architects or engineers? ---Yes.

Are you able to estimate now how many conversations you might have had? Was closer to one, was it closer to some - - -? ---There was a – there was lots. It was more than Ms Hutchison. There was the engineer who drew the walls as well.

Who was he? ---I can’t recall his name, but – but he – he drew the – the potential options for the retaining wall, and I spoke to him at length trying to come up with different ideas of different type of walls, and – yeah.[54]

  1. [190]
    Mr Hennessey gave evidence that he only advanced the claim in April 2014 once it was evident that the plaintiff would not pay sums otherwise owing under the Building Contract.  He included it after meeting his solicitors.  He said he considered should claim everything to which he was entitled.
  2. [191]
    The plaintiff’s submissions suggests that Hennessey has abandoned this claim because it was not mentioned in the written submissions.  I see no basis to infer that conclusion.  Evidence was led on the matter in some detail and was the subject of cross-examination.
  3. [192]
    The plaintiff submitted the Hennessey was not entitled to this amount because:
    1. (a)
      It had not previously been invoiced;
    2. (b)
      No hourly rate had been notified to Ms Peek;
    3. (c)
      It cannot be said that she “freely accepted” the benefit of such a charge; and
    4. (d)
      There was no basis under the Building Contract for the charge because it was not a design and construct contract.
  4. [193]
    The only one of those matters pleaded by the plaintiff was that Ms Peek’s agreement was never obtained to charge such monies.  Hennessey’s pleaded response was that Hennessey was entitled to the sum claimed under clause 5(d) of the General Conditions.  Hennessey pleaded that that clause represented the parties’ agreement to such costs being part of the Contract Sum without more.
  5. [194]
    It is evident from Mr Hennessey’s own frank concession that he never told Ms Peek that he was going to charge any particular sum for the time which he was spending on the issues arising from the changes to the Initial Plans, though he did tell her it was taking a lot of his time.
  6. [195]
    However, Hennessey can rely on clause 5(d) despite that matter.  That clause:
    1. (a)
      Permits the Contractor to take any steps to resolve error in the Contract Documents; and
    2. (b)
      Where such and erroneous Contract Document was given by the Owner, the cost to the Contractor in taking any such step along with margin shall be added to the Contract Sum.
  7. [196]
    In my view, Hennessey can bring itself within the scope of clause 5(d) in respect of the cost to it of taking steps to resolve the error in the levels in the Initial Plans.  It might be argued that the clause strictly does not apply where later plans were provided which were never Contract Documents (as occurred here with repeated attempts to address the levels errors).  I do not think that is correct.  All those iterations of the plans upon which Mr Hennessey had to consider and liaise with the engineers and others involved steps which were taken to resolve the original error in the Initial Plans.  It is not contentious that those original Contract Documents were given by the plaintiff.
  8. [197]
    It is therefore irrelevant in my view whether Ms Peek subjectively knew that Mr Hennessey was entitled to, or intending to, rely on his contractual rights under clause 5(d): she is taken to be bound by the terms of the Building Contract by signing it.[55]
  9. [198]
    In another circumstance, it might be debated whether the hourly rate identified for time spend by Hennessey comprised a “cost to the Contractor”.  The hourly rate is not necessarily properly characterised as such a cost.  Mr Hennessey’s time might be properly characterised as an overhead of the company.  However, the contrary might have been proved if issue had been joined on that matter on the pleadings and no argument was directed to the proper construction of that phrase because of the issues joined on the pleadings.
  10. [199]
    Further, Mr Hennessey’s evidence about time spent was not effectively challenged in cross examination.  In the circumstances, therefore, I dismiss the plaintiff’s challenge to this amount.  I should say it was unclear to me how this issue sounded in relief claimed in the prayer for relief.  However, as I have found in favour of Hennessey on the issue, it is unnecessary to resolve this point.

Hennessey’s claim under the Building Contract

  1. [200]
    This leaves Hennessey’s claim under the Building Contract for sums due. As already noted, Mr Di Carlo conceded in address that if the remaining damages claim was defeated, there was no answer other answer advanced to the claim by Hennessey under the Building Contract.  I assume that concession was made subject to the challenge to the sum claimed under clause 5(d) of the Building Contract, but I have also dismissed that challenge.
  2. [201]
    Hennessey is not entitled to recover this sum under the Building Contract because of my conclusion that by the Building Contract, Hennessey undertook to carry out work for which it was not licensed to carry out. However, if I am wrong about that conclusion, Hennessey would be entitled to its claim on the Building Contract as advanced in its counterclaim.

Form of Orders

  1. [202]
    The consequence of the above reasons is that:
    1. (a)
      The plaintiff succeeded on its claim to the recover payments made under the Building Contract;
    2. (b)
      The plaintiff is entitled to appropriate orders to give effect to the invalidity of the adjudication decision;
    3. (c)
      The plaintiff failed on its claims for damages for breach of the Building Agreement;
    4. (d)
      The plaintiff abandoned its claims for damages under s. 236 Australian Consumer Law;
    5. (e)
      Hennessey is entitled to be paid for the work undertaken by it on the Chapel and surrounds on a quantum meruit basis; and
    6. (f)
      Hennessey fails on its claim for payment under the Building Contract and for orders under the charge contained therein.
  2. [203]
    This outcome raises a number of matters relating to the form of orders to be made:
    1. (a)
      The plaintiff’s claims against Hennessey and Mr Hennessey for damages under s. 236 need to be dismissed;
    2. (b)
      Questions of the form of any money judgment arise in circumstances where both parties have had material success but where there is a net sum due;
    3. (c)
      The appropriateness of the form of declaratory relief in relation to the adjudication needs to be considered and orders which properly finalise that matter (including the fate of the funds paid into Court) need to be made;
    4. (d)
      Issues arise in respect of the calculating of interest; and
    5. (e)
      Costs must be dealt with.
  3. [204]
    Accordingly I will hear the parties on the form of orders to be made.

Footnotes

[1] Exhibit 17.

[2] Exhibit 17: it is possible some pages were lost from this document given that one page of the plans had already come loose from the binding.

[3] Exhibit 8.

[4] Not forgetting that the Initial Plans were accepted as being the plans upon which the Quotation was based, it would have been open to Mr Hennessey to seek to alter his quote before entering in the Building Contract.

[5] TS 6-25.35-.45.

[6] Exhibit 29.

[7] Exhibit 34.

[8] Exhibit 36.

[9] TS 6-47.17-48.12.

[10] TS 4-107.

[11] TS 3-53.7-.10.

[12] TS 3-43.

[13] TS 6-50.18-.25.

[14] Exhibit 50.

[15] Exhibit 52.

[16] Exhibit 56.

[17] Exhibit 57.

[18] TS 5-43.36-52.5.

[19] TS 5-43.20-.24.

[20] T5-10.36-.39.

[21] Exhibit 47.

[22] FAASOC at 19(b) Particulars.

[23] FFASOC at 19(b) Particular (viii).

[24] Exhibit 70.

[25] TS 3-82.32-.35.

[26] Exhibit 58.

[27] Exhibit 59.

[28] TS 6-59.15.

[29] Exhibit 70.

[30] The change to the title of the Act occurred by amendments commencing 1 December 2013. The extracts are from the Queensland Building Services Authority Act 1991 (Qld) (reprint current from 1 January 2011 to 31 October 2013).

[31] Extracts from Queensland Building Services Authority Regulation 2003 (Qld) (current as at 28 September 2012).

[32] Building Regulation in Australia Lexis Nexis Looseleaf Service at [C1.3.1]; Exhibit 4: National Construction Code Series 2013 Guide to Volume One at p.115.

[33] No argument was advanced by Hennessey that the Building Contract could be severed so as to preserve the contract in respect of work which was lawfully undertaken: see footnote 36 below.

[34] TS 5-52.35-.45 and Exhibit 23.

[35] BCIPA, meaning Building and Construction Industry Payment Act 2004 (Qld).

[36] Dart Holdings Pty Ltd v Total Concept Group Pty Ltd [2012] QSC 158 at [15] and [37] to [40].

[37] Addresses TS1-62.25-.45 and 64.5-.35.

[38] Cant Contracting Pty Ltd v Casella [2007] 2 Qd R 13; Dart Holdings Pty Ltd v Total Concept Group Pty Ltd [2012] QSC 158.

[39] Dart Holdings Pty Ltd at [40].

[40] Cook’s Construction Pty Ltd v Stork Food Systems Aust. Pty Ltd [2008] QSC 179 at [292] to [294].

[41] Mr Carey’s expert report: Exhibit 113.

[42] Exhibits 73 to 109.

[43] TS 8-22.40 to 23.4.

[44] Plaintiff’s trial submissions at p. 11.

[45] TS 8-39 to 8-41.

[46] Plaintiff’s trial submissions at pages 11 to 14.

[47] See Footnote 42 above.

[48] See Carey Report page 6.

[49] See Carey Report page 10.

[50] See Carey Report page 6.

[51] Plaintiff’s trial submissions at p.15.

[52] Hennessey’s trial submissions at [36].

[53] Addresses TS 1-101.10 - 102.20. See Exhibit 115.

[54] TS 6-49.21-.39.

[55] Toll Holdings Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [46]-[47].

Close

Editorial Notes

  • Published Case Name:

    Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd in its own capacity as trustee for the Hennessey Family Trust and John Paul Hennessey

  • Shortened Case Name:

    Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd

  • MNC:

    [2018] QDC 218

  • Court:

    QDC

  • Judge(s):

    Porter QC DCJ

  • Date:

    12 Nov 2018

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2018] QDC 21812 Nov 2018Judgment for the plaintiff on its claim for restitution of funds paid to the first defendant; judgment for the first defendant on its counterclaim to be paid reasonable remuneration (on a quantum meruit basis): Porter QC DCJ.
QCA Interlocutory Judgment[2019] QCA 22925 Oct 2019Application to stay costs order on the undertaking of the first respondent that the costs paid will be held in trust pending further order of the Court of Appeal: Morrison JA.

Appeal Status

No Status

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.