Queensland Judgments
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Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor

Unreported Citation:

[2020] QCA 219

EDITOR'S NOTE

This case turned on the effect of s 42 of the Queensland Building Services Authority Act 1991. The question arose in the context of an application for an extension of time in which to seek leave to appeal from a judgment of the District Court. The dispute arose out of the construction of a chapel at Montville, in circumstances where the builder was only licensed to undertake part of the works. At first instance, the primary judge held that, on a proper construction of s 42 of the Act, the builder was entitled to remuneration as restitution for the work carried out. The applicant wished to re-agitate that issue on appeal, alongside a proposed ground about the primary judge’s reliance on an expert report. The Court of Appeal ultimately found that an extension of time should not be granted and affirmed the primary judge’s construction of the Act.

Fraser and Philippides and McMurdo JJA

7 October 2020

Background

In 2012 the applicant (“Chapel of Angels”) engaged the respondent (“Hennessy Building”) to construct a wedding chapel in Montville. [1]. Disputes arose soon thereafter, and the applicant sought repayment of certain amounts in District Court proceedings. [2]. In those proceedings, the applicant argued that the building contract was invalid because the respondent had done work outside the terms of its building licence, and that the respondent therefore had no entitlement to any payment by reason of s 42 of the Queensland Building Services Authority Act 1991 (“the Act”). [2]–[3].

At first instance the primary judge agreed that the contract was invalid, but found that the respondent was able to recover, on a restitutionary basis, for work it had carried out within the scope of the licences it did hold. It was also able to recover reasonable remuneration under s 42(4) of the Act for work it had carried out which was outside the scope of any licence it held. [10]. The relevant provisions are outlined below.

The applicant sought leave to appeal but was out of time. [13]. The applicant had initially “made a deliberate decision not to appeal” but had changed its mind. [18]. Accordingly, the question was whether an extension of time to allow it to seek leave to appeal should be granted because it was “demonstrably necessary to prevent a substantial injustice” (quoting Baguley v Lifestyle Homes Mackay Pty Ltd [2015] QCA 75). [20]. In the result, an extension of time was refused, with reasons given by Fraser JA (with whom Philippides and McMurdo JA agreed). [68]–[70].

The proposed grounds of appeal

The applicant proposed to raise two grounds on appeal. The first, and most substantial, concerned the proper construction of s 42 of the Act, which relevantly provides that:

“(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.

(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) A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work … [but the amount cannot include allowance for supply of the person’s labour, for the making of a profit, or for certain other costs].”

The primary judge had found that the respondent had “undertook to carry out building work without the appropriate class of licence” in breach of s 42(1). [7]. That was because part of the construction work required authorisation for “Type B construction”, which the respondent did not have. [7]. However, the respondent’s carpentry licence did authorise a “substantial part of the building work” for which the respondent recovered on a restitutionary basis. [11]. Relevantly, the primary judge held that “work that was within the scope of any such licence may be the subject of a non-contractual claim which is unaffected by s 42(4)” of the Act. [9]. It was that conclusion that the applicant took issue with.

In relation to the proposed first ground, the applicant essentially argued that the conclusion that the construction of the chapel (in whole) was not within the scope of the licence required to undertake the contracted works meant that none of the building work undertaken was authorised. [22]. Accordingly, it contended that the respondent was prohibited by s 42(3) from recovering any remuneration. The applicant argued that it is “not possible to apportion lawful work from unlawful work … the work is either entirely lawful or it is entirely unlawful”. [26].

In relation to the proposed second ground, the applicant contended that the primary judge had erred in the quantification of the respondent’s cross-claim for the licensed work. Much of this ground concerned alleged errors in an expert report. [58].

Whether an extension for leave to appeal should be granted

Fraser JA ultimately found that the proposed grounds were unmeritorious, and that being the case, “it would be futile to grant the extension of time necessary” for the applicant to seek leave to appeal. [66].

In relation to the proposed first ground concerning s 42 of the Act, his Honour observed that the applicant’s argument was contrary to an observation of McMurdo J (as McMurdo JA then was) in Dart Holdings Pty Ltd v Total Concept Group Pty Ltd [2012] QSC 158, where it was said that the limitation in s 42(4) “applies only to the building work for which the contractor did not have the appropriate licence” and that it “would not affect the defendant’s entitlement to be paid, upon a restitutionary basis, for the work which it lawfully performed under its licence”. [37].

Further, Fraser JA found that this construction accorded with the statutory purpose of s 42(4), which had been added by an amendment in 1999. [42]. The Explanatory Notes to the amendments noted that the prohibition on recovery of remuneration without exception could create “considerable injustice”, such as deliberate recruiting of unlicensed builders, thereby “legally escaping from any obligation to pay for the work performed”. [44]. The amendments were designed to “allow an unlicensed contractor to claim for reasonable recovery of moneys actually expended for the supply of materials and labour”. [44]. His Honour also concluded that the applicant’s argument that it was not possible to “apportion lawful work from unlawful work” was “no more than an assertion”. [51]. Accordingly, his Honour found that the primary judge did not misconstrue the Act in concluding that the respondent was entitled to recover for the work it undertook within the scope of its licence, unrestricted by s 42(4) of the Act. [57].

In relation to the proposed second ground, it was observed that no objection was taken by the applicant to the impugned report at trial, and it had not sought to deliver any expert report of its own. [60]–[61]. It now sought to make a “wholesale challenge” to the report “for the first time on appeal”. [62]. His Honour said that to allow such a challenge now would be to allow the applicant to treat the trial as “little more than a preliminary skirmish”, contrary to the due administration of justice. [65].

W Isdale

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