Allan David Miller v Queensland Building and Construction Commission
[2022] QCAT 151
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Allan David Miller v Queensland Building and Construction Commission [2022] QCAT 151
PARTIES: ALLAN DAVID MILLER (applicant)
v
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent)
APPLICATION NO/S:
GAR100-16
MATTER TYPE:
General administrative review matters
DELIVERED ON:
26 April 2022
HEARING DATE:
11 October 2017
HEARD AT:
Brisbane
DECISION OF:
Member McLean Williams
ORDERS:
The application to review a decision is dismissed.
CATCHWORDS: ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – where an application made to review a QBCC decision that a residential construction contract had been ‘validly terminated’ by the home owner, thus entitling a claim under the Queensland Home Warranty Scheme – circumstances wherein the builder had already terminated, yet the builder’s termination found to be invalid such that builder’s termination amounted to contract repudiation, entitling home owner to terminate – consideration of legal requirements for an effective Notice to Remedy Breach/Termination Notice.
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 24
Queensland Building and Construction Commission Act 1991 (Qld) s 86(1)(i), s 87
Yendex Pty Ltd v Prince Constructions Pty Ltd (1988) 5 BCL 74
Murphy Corporation Limited v Acumen Design & Development (Queensland) Pty Limited and Derek Graham Cooper (1995) 11 BCL 274
Batson v De Carvalho (1948) 48 SR (NSW) 417
Stewardson Stubbs & Collett Pty Ltd and Bankstown Municipal Council [1965] NSWLR 1671
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
APPEARANCES & REPRESENTATION:
Applicant:
Self-represented
Respondent:
Ms A Durocher (in-house lawyer)
REASONS FOR DECISION
Preliminary
By means of an application to review a decision filed in the Queensland Civil and Administrative Tribunal (‘the Tribunal’) on 21 April 2016, Mr Allan David Miller (‘the Applicant’) seeks a review, pursuant to sections 86(1)(i) and 87 of the Queensland Building and Construction Commission Act 1991 (Qld), of a decision made on 15 March 2016 by the Queensland Building and Construction Commission (‘the QBCC’).
In the decision made on 15 March 2016, the QBCC determined that a domestic building contract between the Applicant, as builder, and Dr Naeem Khan and Mrs Ruha Khan (‘the Owners’) had been properly terminated by the Owners, thus giving rise to the consequence of allowing the Owners to bring a claim for non-completion by the Applicant against the Queensland Home Warranty Scheme (‘the QBCC decision’). To that end, the QBCC decision records:
The Commssion has assessed all relevant information provided and has made the decision that the contract has been properly terminated by the owner. The complaint will now be assessed as a claim under the Queensland Home Warranty Scheme.
If a claim is approved and any payments are made in relation to the claim, the Commission is entitled to seek recovery of those costs pursuant to Section 71 of the Queensland Building and Construction Commission Act 1991.[1]
[1] Annexure “SOR-12” to QBCC Statement of Reasons as filed in the Tribunal on 9 June 2016, in response to a Tribunal Direction for same dated 26 April 2016.
When exercising its review jurisdiction, the final orders that may be made by the Tribunal are those as specified in s 24(1) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘the QCAT Act’). Section 24 of the QCAT Act confers power on the Tribunal to either:
(a)confirm the decision under review; or
(b)set aside the decision, and substitute the Tribunal’s own decision; or
(c)set aside the decision, and return the matter to the QBCC, with whatever directions that the Tribunal considers appropriate.
Factual Background
On 25 September 2014, the Owners entered into a Master Builders Residential Building Contract with Aramac Developments Pty Ltd as the builder for the construction of a residential dwelling situated at 15 Sheehy Street at Runcorn (‘the house construction’).
On or about 24 October 2014, Aramac Developments Pty Ltd took out an insurance policy under the Queensland Home Warranty Scheme in relation to the house construction in the amount of $694,500.00. Construction works commenced sometime thereafter.
On 21 July 2015 the building licence for Aramac Developments Pty Ltd was suspended, with the consequence that Aramac Developments was precluded from being able to continue as the builder.
On 18 August 2015 the Applicant, together with the Owners, entered into an agreement styled as a Deed of Novation (‘the deed’) whereby the Applicant agreed to become the ‘Substitute Party’ and step into the role as builder in lieu of Aramac Developments. The deed altered the date for practical completion to become 28 October 2015 and included the following term among its special conditions:
3.5 If the works are not completed by the date that is four (4) weeks from the Date of Practical Completion (as amended by this Deed), the Continuing Party shall be entitled to treat the Substitute Party’s actions as a repudiation of the Contracts and accept that repudiation by immediately terminating the Contracts.
The deed served as a formal variation of the contract and operated in conjunction with it so as to continue the contract in accordance with the standard contract terms and conditions as had been originally agreed between the Owners and Aramac Developments.
On 22 August 2015, the balance of the construction period under the deed commenced. Shortly afterwards, the Applicant noticed concerning distortions in roof trusses that had been supplied to site by a third-party truss manufacturer. In light of these, extensions of time for the construction period were requested by the Applicant and at least one extension of 10 business days was agreed by the Owners.
There is now a dispute between the Applicant and the Owners as to how many extensions to the construction period became operative. In the end however – and as shall be canvassed further below – this issue has no bearing on the ultimate determination of this review by the Tribunal.
On 17 November 2015, the Applicant issued a Notice to Remedy Breach to the Owners (dated 13 November 2015) requiring that the Owners rectify the following breaches within 10 business days:
(a)Clause 11.12 – the Owners went on site without being supervised by the Applicant or his representative;
(b)Clause 11.13 – the Owners gave directions to the Applicant’s employees and sub-contractors;
(c)Clause 11.13 – The Owners relied upon statements made or representations given by the Applicant’s employees or sub-contractors.
(‘the Applicant’s First Notice to Remedy Breach’).
On 20 November 2015, the Applicant issued another Notice to Remedy Breach (dated 18 November 2015), this time relating to a claimed non-payment of monies said to be owing under clause 11.17(c) of the contract (‘the Applicant’s Second Notice to Remedy Breach’).
Also on 20 November 2015, Rostron Carlyle (who were the solicitors acting on behalf the Owners) wrote to the Applicant regarding their receipt of the Applicant’s First Notice to Remedy Breach. In that letter, Rostron Carlyle advised:
(a)The Owners denied breaching their obligations under the deed.
(b)The Owners were not presently attending at the construction site such that even if a breach had transpired by their previously doing that, it had been remedied.
(c)The Owners withdrew any directions that the Applicant asserts may have been given by them to any of the Applicant’s employees and/or sub-contractors.
(d)The Owners confirmed that they were not relying on any representation that may have been made to them, by the Applicant’s employees and/or sub-contractors.
(e)Unless the Applicant remedied his own breach (being the Applicant’s failure to complete the building works by the date required for practical completion under the deed), the Owners would terminate the construction contract.
(‘the Owners’ Notice to Remedy Breach’).
On or about 2 December 2015, the Applicant sent a letter to Rostron Carlyle in response to the Owners’ Notice to Remedy Breach. The Applicant’s letter of that date:
(a)confirmed his receipt of their Notice to Remedy Breach;
(b)expressed that the Owners remained in breach of the contract; and
(c)attached a Notice of Termination dated 2 December 2015, referring only to the Applicant’s First Notice to Remedy Breach.
(‘the Applicant’s First Termination Notice’).
On 7 December 2015, Rostron Carlyle wrote to the Applicant in response to the Applicant’s letter dated 2 December 2015 advising that:
(a)the Applicant’s (first) Notice of Termination amounted to a repudiation of the contract;
(b)the Owners had elected to accept the repudiation; and
(c)the Owners terminated the contract.
(‘the Owners’ Termination Notice’)
Although by now already claiming that the contract had been brought to an end by his First Termination Notice, on 10 December 2015 the Applicant issued a further Termination Notice (dated 6 December 2015), this time purporting to terminate the contract pursuant to clause 11.7 (‘the Applicant’s Second Termination Notice’).
The Queensland Home Warranty Scheme
In accordance with the statutory insurance scheme established by means of Part 5 of the QBCC Act (ss 67X – 71AA inclusive), a policy of statutory insurance comes into force whenever a consumer enters into a contract for the performance of ‘residential construction work’. The statutory insurance scheme (‘the Queensland Home Warranty Scheme’) is administered by the QBCC and offers insurance cover in respect of certain defined events. Relevantly, these include the non-completion of residential construction work.
On or about 22 January 2016, the QBCC received a complaint form from the Owners (dated 20 January 2016), referable to incomplete works on the house construction by the Applicant with the Owners now seeking to have these completed by the insurer.
Liability to pay a claim for non-completion by a builder under the Queensland Home Warranty Scheme arises only in circumstances wherein the insured home-owner has ‘properly terminated’ the contract with the builder (referred to in clause 1.2 of the insurance policy). Accordingly, a first step for the QBCC is to satisfy itself that the Owners had properly terminated the residential construction contract.
Under the insurance policy conditions, the expression ‘properly terminated’ means:
…
15.3 the expression ‘properly terminated’ means lawfully under the contract or otherwise at law, upon the contractor’s default which extends to, but is not limited to
(a) the cancellation or suspension of the contractor’s licence; or
(b) the death or legal incapacity of the contractor;
(c) the insolvency of the contractor; or
(d) any breach of the contract by the contractor.
[Emphasis included here by the Tribunal]
QBCC Reasons for Decision
The QBCC investigated the matter before deciding on 15 March 2016 that the Owners had properly terminated the residential construction contract.
In its Statement of Reasons,[2] the QBCC commenced by determining that the deed created a new contract between the Applicant and the Owners, yet on the same terms and conditions as those contained in the original contract between the Owners and Aramac Developments. So much so far is uncontroversial.
[2] Statement of Reasons dated 8 June 2016, at para [43].
The QBCC then proceeded to determine that the Applicant had not achieved a circumstance wherein he was entitled to issue a Termination Notice, by reason that the Notice to Remedy Breach (a step required as a necessary precondition for the issuing of a Notice of Termination) did not meet the legal requirements for a valid notice.
In specific regard to the Applicant’s First Notice to Remedy Breach, the QBCC concluded that this notice had insufficiently described the claimed breaches. In addition, there was no evidence that the alleged breaches had occurred. Even if they had occurred, there was no evidence of these then continuing as at 2 December 2015, when the contract was purportedly terminated. In consequence, the QBCC determined that the Applicant was not entitled to issue the First Termination Notice, and his having done so amounted to a repudiation of the contract; thus entitling the Owners to accept the repudiation and terminate for a ground recognised under clause 15.3(d) of the insurance policy conditions: being ‘….any breach of contract by the contractor’.
In regard to the Applicant’s Second Notice to Remedy Breach, the QBCC also determined it to be invalid: by reason that it had not sufficiently described the Owner’s alleged breach in respect of the claimed non-payment of monies owing under the contract. Morever, the QBCC concluded that there was no evidence of:
(a)a signed copy of the Applicant’s Second Termination Notice;
(b)the Owner’s receipt of the Applicant’s Second Termination Notice; or
(c)the Owners being in breach of clause 11.7(c) as at the date of the Applicant’s Second Termination Notice.
Matters for Determination on this Application for Review
At the de novo hearing of this application for review, the Applicant contends that he had validly terminated the contract on both 2 December 2015 (the First Termination Notice) and on 6 December 2015 (the Second Termination Notice) such that, by logical extension, the necessary prelude for each of them – the Notice(s) to Remedy Breach – were valid notices.
Moreover, the Applicant contends that the Termination Notice issued by the Owners on 7 December 2015 was invalidly issued by reason that the Applicant was not at that point in substantial breach, because the date for practical completion had been extended until 16 December 2015; and because the Owners were not entitled to terminate the contract on 7 December 2015 because of the effect of clause 20.3 of the Contract, which provides:
20.3 Owner may not terminate contract in certain circumstances
The Owner may not terminate this Contract if the Owner is in substantial breach of this contract.
Analysis
The logical starting point for the Tribunal’s analysis is to commence with the Applicant’s Notice(s) to Remedy Breach in order to determine whether these were validly issued.
Clause 21.1 of the contract defines the circumstances wherein the Applicant could issue a Notice to Remedy Breach and includes:
If the Owner
…
(b) fails to comply with any of its oligations under Clause 11;
…
(f) is in substantial breach of this Contract; then
The Contractor may give a written notice to the Owner:
(i)describing the breach or breaches by the Owner; and
(ii)stating the Contractor’s intention to terminate the Contract unless the Owner remedies the breach or breaches within ten (10) Business Days after receiving the Contractor’s notice.
[Emphasis not in the original but included here by the Tribunal].
Applicant’s First Termination Notice
The Applicant’s First Termination Notice is predicated only on the Owners’ failure to remedy the breaches specified in the Applicant’s First Notice to Remedy Breach.
The First Notice to Remedy Breach – as given to the Owners on 17 November 2015 – is unsigned, yet is dated 13 November 2015. It provides:
Pursuant to clause 11.12 and 11.13 of the Contract, if the Owner fails to remedy the breach particularised herein within 10 business days of receipt of this Notice, then the Builder is entitled to terminate this contract by giving a further written notice pursuant to the contract.
Particulars of breaches by the Owner are –
1.Failing to observe and comply with 11.12 under the contract wherein the Owner has attended the designated construction site without being supervised by the Contractor or Contractors representative.
2.Failing to observe and comply with 11.13 under the contract wherein the Owner has given directions to Contractors, employes [sic] or subcontractors.
3.Failing to observe and comply with 11.12 under the contract wherein the Owner relied on statements made or representations given by the Contractor employees or subcontractors
The Owner is required to remedy this breach within 10 business days.
It is to be observed that the dates or occasions on which the Owners are claimed to have attended on site without proper supervision by either the Applicant or the Applicant’s representative are not particularised in the Applicant’s First Notice to Remedy Breach; nor are any specifics of the directions or the dates on which these directions are alleged to have been given by the Owners to either employees or subcontractors of the Applicant in the reputed breach of clause 11.12.
Similarly, the Applicant’s First Notice to Remedy Breach does not identify the actual representations that were made by either employees or subcontractors of the Applicant and that the Applicant then claims that the Owners had relied upon, in breach of clause 11.12.
To be effective at law, a Notice to Remedy Breach ‘must be unequivocal in order to convey what was amiss so as to identify the default in respect of which cause was to be shown’.[3] And, the Notice must ‘inform [the recipient] what it had to do, to remedy the alleged breach’.[4]
[3] Yendex Pty Ltd v Prince Constructions Pty Ltd (1988) 5 BCL 74, at 75.
[4] Murphy Corporation Limited v Acumen Design & Development (Queensland) Pty Limited and Derek Graham Cooper (1995) 11 BCL 274, at 293 (per Williams J).
The only further particulars given by the Applicant of the claimed breaches of clauses 11.12 and 11.13 by the Owners are the matters now specified in paragraphs 20 – 24 of Annexure A to the Applicant’s application for review, wherein the Applicant specifies:
20. During the course of the construction the owner repeatedly went onsite without permission from myself or my site supervisor and in direct breach of the HIA contract and the Domestic Building Contracts Act 2000 despite repeated requests by myself not to do so.
21. The Owner repeatedly breached the contract by communicating directly with trades people on site.
22. The Owner went so far as to direct workers to stop work and in at least one instance told the worker to get off the site.
23. The Owner further breached the contract by giving instructions to trades people without permission from myself to carry out works.
24. The Owner also gave instructions to trades people to carry out works outside the plans and specifications of the contract.
From the totality of the evidence before the Tribunal, the Owners’ specific interferences that are now claimed by the Applicant to amount to breaches of contract and that are said to be encapsulated in the matters expressed in the Applicant’s First Notice to Remedy Breach, are:
(a)Various unauthorised attendances at the site;
(b)The installation of a vacu-maid system;
(c)The installation of a beam to accommodate the weight of a chandelier;
(d)A direction to Mr Swaine to stop work on the insulation;
(e)Communications with Mr Mankey, in relation to certain works on the site; and
(f)The Owners relying on various things said by the Applicant’s employees and/or sub-contractors.
Although some more detail of the claimed breaches had become apparent by the time of the Tribunal hearing, and then became clearer still in light of the oral evidence during the Tribunal hearing itself, it remains the case that none of the things identified in the immediately preceding paragraph had been specifically particularised in the Applicant’s First Notice to Remedy Breach dated 13 November 2015, in a manner that might enable the Owners to know precisely the things which the Applicant claimed to be their breaches.
Yet, during the Tribunal hearing, the Applicant sought to contend that, in light of a course of previous communications between either himself or his site supervisor (Mr Allan Cummings) on the one hand, and Dr Khan on the other, it was hardly necessary for him to provide any more detail in the First Notice to Remedy Breach, as the nature of the problem had already been previously detailed to the Owners.[5]
[5] Transcript, p. 115, at line 25.
The only extrinsic evidence of prior communications with Dr Khan regarding unsupervised site access is an email date 20 October 2015 in which the Applicant had said:
All site visits by the owner are at the discretion and approval of the builder. Your dictating when you are available to go on site and not coordinating with me as to what is convenient from the builder’s point of view will always create conflict as it would with any builder and construction contract.
I have told you more than once that this is the case and you fail to understand this.[6]
[6] Applicant’s Response to the Statement of , at E24.
During his cross-examination of Dr Khan, the Applicant put to Dr Khan that he had also emailed Dr Khan on 1 September 2015 warning him to ‘stay off site, unless invited’[7] and that there had been ‘a heated conversation with Khan to stay off site’, which had also taken place on 3 September 2015. In his evidence, Dr Khan had no recollection of either of these communications, and the alleged further email from 1 September 2015 is not in evidence before the Tribunal. In these circumstances the Tribunal is not prepared to attach any weight to the Applicant’s claim of there being further prior communications beyond the 20 October 2015 email. Even if these further communications had transpired, the nature of the 20 October 2015 email gives rise to the prospect that these were similarly generalised in nature and, as such, could not meet what may well be termed the ‘established particularity requirements’[8] for a legally valid Notice to Remedy Breach.
[7] Transcript p. 50, line 30.
[8] Yendex Pty Ltd v Prince Constructions Pty Ltd; Murphy Corporation Limited v Acumen Design & Development (Queensland) Pty Limited and Derek Graham Cooper, see, footnotes [3] & [4].
Rostron Carlyle’s letter of 20 November 2015[9] also does not reveal that the Owners had any further understanding of the particulars of the alleged breaches, beyond those things specified in the First Notice. And, as became clear from their evidence before the Tribunal, neither the Applicant nor his site supervisor Mr Cummings had provided the Owners with any additional information regarding the things that the Owners were now expected to do in order to remedy the breaches that had been specified in the First Notice to Remedy Breach.[10]
[9] See, Annexure NIK-7 to Exhibit 1.
[10] Transcript, p. 48, line 16; p. 84, line 6; p. 100, line 27.
In Yendex v Prince Constructions Pty Ltd,[11] the Full Court of the Supreme Court of Queensland (per Moynihan J with Kelly SPJ and Ryan J concurring) upheld a declaratory finding that a Notice to Remedy Breach given under a construction contract was void and ineffectual, with the consequence that the breaches that had been nominated in it could not then form the basis for a termination of the contract.
[11] See, footnote [3].
In Yendex, the Notice to Remedy Breach had been delivered in similarly ‘broad-brush’ terms. When giving judgement for the Court, Moynihan J said, in part (at p.75):
…Such notice should be unequivocal in order to convey what was amiss so as to identify the default in respect of which cause was to be shown.
I have two difficulties with the notice in the present case when such an approach is applied. First, the three specific matters are prefaced by statements to the effect that they are examples. Secondly, item (c) fails to specify in any material sense the failure of which complaint is made. It speaks of materials and requirements of the contract. That could be any combinations of contractual provisions and any materials.
The reference in the notice to “as exampled” to my mind conveys that three matters are specified and that there are more matters the subject of complaint which are not specified. If it be assumed as so advanced in argument for the appellant, that there had been discussion of matters of complaint evidence of that would not advance the matter. If only the three matters identified by the notice of terms (a), (b) and (c) were discussed the notice conveys that fresh matters of complaint had arisen. If either fewer or more matters than the three were discussed the notice with its reference to “as exampled” does not specify those in respect of which the sub-contractor is called on to show cause. The notice then is not ambiguous in any sense which could be dealt with by extrinsic evidence. It simply fails to “specify” the default, refusal or neglect in respect of which cause is to be shown…
[Emphasis not in the original, yet included here, by the Tribunal].
In all the circumstances the Tribunal concludes that the Applicant’s First Notice to Remedy Breach does not adequately describe the alleged breaches; and does not sufficiently specify what the Owners must do – within the specified period of 10 business days – in order to properly remedy the claimed breaches. In consequence, the Applicant’s First Notice to Remedy Breach did not provide the purported grounds for the Applicant to terminate the contract.
The Tribunal further observes that, even in the event that the breaches alleged in the Applicant’s First Notice to Remedy Breach had been committed, each of these appeared to have been sufficiently remediated by the Owners, prior to the date of the Applicant issuing his First Termination Notice, given that the Owners had advised – by means of the Rostron Carlyle correspondence dated 20 November 2015 – that they were not attending the construction site; had withdrawn any directions that the Applicant asserted had been given by the Owners to the Applicant’s employees or subcontractors; and confirmed that any representations that may have been made by any of the Applicant’s employees and/or subcontractors were not being relied upon by the Owners. The Tribunal is satisfied that this correspondence was clear and was enough to remediate any of the claimed breaches. In these circumstances the necessary ‘trigger’ for issuing the First Termination Notice had been withdrawn from the Applicant, even if the circumstances were that the Owners had been initially in breach.
In his final submissions, the Applicant contends that the Owner’s undertaking to not attend at site – as contained in Rostron Carlyle’s letter dated 20 November 2015 – represents a breach of clause 11.12 that could not ever be remediated because ‘the act of going onsite without permission is an enduring breach…which cannot be remedied by no longer being on-site without permission’.[12]
[12] Applicant’s submissions, at para 13(b); Statement of Reasons, at [562]; Transcript, at p. 40 line 10.
The Tribunal is unable to accept this submission. In relation to what is required in order to remediate a breach, Australian courts have held:
To “remedy” a breach is not to perform the impossible task of wiping it out – of producing the same condition of affairs as if the breach had never occurred. It is to set things right for the future, and that may be done even though they have for some period not been right, and even though that may have caused some damage.[13]
[13] Batson v De Carvalho, (1948) 48 SR(NSW) 417 (per Sugarman J).
To similar effect, in Stewardson Stubbs & Collett Pty Ltd and Bankstown Municipal Council,[14] Moffitt J said:
I do not think it is a question of rectifying every consequence of the past suspension or lack of diligence or competence but the substantial question would be whether the [party in breach] had in the 14 day period, in a substantial and commercial sense, and not in a nominal or colourable way, ceased the suspension or proceeded with the contract with reasonable diligence and competence.
[14] [1965] NSWR 1671, at 1674.
For the sake of finality, all the Applicant’s other arguments regarding the claimed breaches by the Owners which are said to have been identified by the Applicant in his First Notice to Remedy Breach are also now dealt with hereunder:
Owners’ Unauthorised Entry to site
The Owner’s entry(s) to site are claimed by the Applicant to be in breach of clause 11.12 which provides:
11.12 Owner not to interfere with the carrying out of works
(a) the Owner, must not interfere with or hinder the carrying out of the Works. The Owner must take all reasonable steps to prevent all others from obstructing, interfering with or hindering the carrying out of works.
(b) Health and safety obligations for Owners
…
To fulfill the obligations of Principal Contractor in ensuring the Owner or their Agents health and safety, the Owner or their Agent must only attend the designated construction areas whilst supervised by the Contractor or the Contractors nominated representative.
As the words used in clause 11.12 impart, the purpose of the provision is to prevent interference with the carrying out of works and to ensure the maintenance of health and safety. In light of these words, the Owner’s unathorised entry(s) to site are hardly apt to be categorised as ‘enduring’ breaches, incapable of remedy. In actual fact these are better described as either ‘intermittent’, or ‘periodic’. Indeed, if the breach specified by the Applicant were enduring in nature, then the procedure under the contract wherein the Builder is required to send a Notice to Remedy before terminating would become an absurdist one, wherein the Owners would never be able to comply with the requirements of the notice even if that were their earnest intent. Furthermore, it is to be noted that the Applicant has adduced no evidence to show the manner in which any of the unauthorised entry(s) by the Owners have had the impact identified in clause 11.12(a).
Works performed by Applicant’s employees/subcontractors at the direction of the Owners
As ultimately became clear from the evidence received during the Tribunal hearing, the directions that the Applicant claims were given by the Owners to his employees or subcontractors in breach of clause 11.13 specifically related to:
(a)The installation of a vacu-maid system;
(b)An additional bulkhead over the kitchen area;
(c)Modifications to the laundry to accommodate joinery items;
(d)Modifications to the garage door height; and
(e)An additional beam, to accommodate the weight of a chandelier.
Yet, the evidence shows that (with the exception of the vacu-maid system) each of these matters arose during directions given by the Owners on site at a time when both of the Applicant and Mr Allan Cummings (the site supervisor) were also on site;[15] and these became matters which had been documented by the Applicant in a variation invoiced to the Owners.[16]
[15] Applicant’s Statement of Reasons Response, at para 16(v) and Annexure E7.5.
[16] Applicant’s Statement of Reasons Response, Annexure E7.3; Applicant’s affidavit, p. 1.
Meanwhile, directions in relation to the installation of the vacu-maid system were clearly given by the owners at some stage prior to 25 October 2015, noting that the invoice for the system is dated 27 Sptember 2015 and is then marked as ‘PAID 14/10/15’,[17] and the vacu-maid system is confirmed as a variation by the Applicant in his email to the Owners sent on 25 October 2015.[18] Despite this strongly contrary evidence, the Applicant continues to submit that these things do amount to directions issued by the Owners to workers on-site in breach of clause 11.13 and that in order for the First Notice to Remedy Breach to have been complied with, the Owners would have been required to remove these things totally from site, which they did not.[19] The Tribunal does not accept that contention.
[17] Applicant’s Statement of Reasons Response, Annexure E10.
[18] Applicant’s Statement of Reasons response, Annexure E7.6.
[19] Review Application, at [29]; Statement or Reasons, at [562]; Applicant’s Response to the Statement of Reasons, at [19]; and pp. 12-13.
Even if the installation of the vacu-maid and the extra beam for the chandelier were matters caused by the Owner’s directions given to site workers in breach of clause 11.13 (and that is not the Tribunal’s conclusion), it would not be necessary for the Owners to remove the vacu-maid system or the beam above the selected location for the chandelier. Firstly, such a requirement is an excessive and unreasonable one, particularly in light of the extent of the requirements noted as being necessary to meet a Notice to Remedy Breach in each of Batson v De Carvalho, and Stewardson Stubbs & Collett Pty Ltd and Bankstown Municipal Council, above.[20] Secondly, during his cross-examination at the hearing, the Applicant conceded that there would be no practical utility in requiring the removal of the vacu-maid system once it had already been installed,[21] and the Applicant agreed that the fact of the installation of both the ceiling beam and the vacu-maid had not caused any significant delays or interfered with the carrying out of any other works on the site.[22]
[20] See footnotes [13] & [14], supra.
[21] Transcript, p.47 line 27.
[22] Transcript, p.112, line 5.
In these circumstances the Tribunal determines that none of the items identified by the Applicant as arising out of directions given by the Owners to site workers in breach of clause 11.13 can now be categorised as a ‘substantial breach’ under clause 21.1 of the contract; such that none of these entitled the Applicant to issue a breach notice, and none required any further steps to be taken by the Owners in order to remediate.
Owners reliance on representations given by the Applicant’s workers or subcontractors
The Applicant contends that the Owners placed reliance on representations given on site by a Mr Mankey.[23]
[23] Applicant’s Response to the Statement of Reasons, at E14.
As indicated previously in these reasons the Tribunal is satisfied that even if the Owners had initially accepted things they had been advised by workers on site without first checking with the Applicant what they had been told by the workers, any putative breach of clause 11.13 was subsequently rectified by means of the Rostron Carlyle letter dated 20 November 2015 which, so far as is presently relevant, expressed “…our clients confirm they are not relying on any representations made to them by your employees or subcontractors”.
There then being no other evidence of the Owners being in substantial breach as at the date of the Applicant’s First Termination, the Applicant’s purported termination on that date was both ineffective, as well as amounting to words or conduct expressing a refusal by the Applicant to complete his own obligations under the deed, which at law amounts to a repudiation.[24]
[24] Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 453; See also, Contract Law of Australia, 6th Edition, 2013 at [697].
The Applicant’s Second Termination Notice
The Applicant’s Second Termination Notice[25] is dated 6 December 2015 and purports to be based on the Applicant’s Second Notice to Remedy Breach dated 18 November 2015. It is again noted by the Tribunal that the Applicant did not rely on the the Second Notice to Remedy Breach when purporting to terminate the contract on the first occasion on 2 December 2015.
[25] Annexure NIK-8 to Exhibit 1.
The Applicant’s Second Notice to Remedy Breach particularises the alleged breach as follows:
Particulars of breaches by the owners are –
1. Failing to observe and comply with 11.7 under the contract wherein the Owner has failed to pay monies under the contract pursuant to 11.7(c).
The Applicant’s Second Notice to Remedy Breach does not seek to particularise the amount that the Owners are claimed to have failed to pay; or to specify the works; or the specific item; or the invoice; or the progress claim number referable to the claimed outstanding sum, now said to give rise to a breach of clause 11.7(c). In consequence – and for all the reasons already identified by the Tribunal in relation to the Applicant’s First Notice to Remedy Breach – the Second Notice to Remedy Breach is an invalid notice such that it is insufficient to provide the basis for the Applicant’s Second Termination Notice.
Momentarily putting to one side the observed inadequacies with the Second Notice to Remedy Breach, the Tribunal is also unpersuaded that there is even sufficient evidence that the Owners owed any monies to the Applicant, as now claimed. Before the commencement of the Tribunal hearing, the Applicant’s contention was that the unpaid sums by the Owners consisted of: (i) a re-draw/render amount of $2,500; together with (ii) a variation amount of $1,990.98, in relation to the construction of a bulkhead in the kitchen, a cupboard to the kitchen island bench, re-arrangements to the laundry cupboards, and further changes to the butler’s pantry.[26]
[26] Applicant’s Statement of Reasons response, para 16(ii) and (iii).
However, during the hearing, the redraw/render amount of $2,500 was identified as having already been paid by the Owners on 24 November 2017,[27] which is a date that is obviously prior to the date of the First Termination Notice. The other monies claimed by the Applicant as still owing at the time of his First Termination Notice were then identified by the Applicant as $550 for ‘Bulkhead Extension in Kitchen’.[28] However, under cross-examination by the Respondent, the Applicant then said, ‘I’m sure that he [the Owners] paid $550 or something like that, and we accepted that….but once more I plead with you to clarify that with Mr Cummings’.[29]
[27] Transcript, p.98, line 19; Statement of Reasons at [515].
[28] Statement of Reasons, at [589].
[29] Transcript, p. 87, line 40.
Mr Cummings denied that the invoice had been paid,[30] and claimed that the outstanding sum instead related to the replacement of the laundry cupboard, the redesign of the butler’s pantry and an extension to the kitchen bulkhead, amounting in total to $1,990.98, as had been advised to the Owner’s in an email dated 22 October 2015,[31] enclosing an unsigned variation document,[32] and tax invoice.[33]
[30] Transcript, p. 103, line 5.
[31] Applicant’s response to the Statement of Reasons, at E7(1/2).
[32] Applicant’s response to the Statement of Reasons, at E7.3.
[33] Applicant’s response to the Statement of Reasons, at E7.4.
In a series of two emails sent on the same day, the Owners replied by initially disputing two of these variation items and their associated costs,[34] yet appeared to have subsequently accepted the remainder of the variation items by means of their second email.[35] Annexure E7.6 to the Applicant’s Response to the Statement of Reasons then suggests that on 25 October 2015 the Applicant had sent another email to the Owners (‘the variation email’), purportedly attaching an amended variation and amended tax invoice for the ‘kitchen bulkhead and laundry and butler’s kitchen’, referable to the fact of these recent email communications. However, the Applicant has not produced the variation agreement or the tax invoice that are claimed to have been attached to the variation email. Whilst Mr Cummings argues that the outstanding tax invoice was an attachment to the variation email,[36] the attached invoice is actually one that is dated 12 October 2015 and only makes reference to the kitchen bulkhead, but none of the other items. It seems therefore that Mr Cummings may have erroneously attached an earlier/incorrect invoice, and that the correct invoice has not ever been disclosed, either previously to the QBCC, or now before the Tribunal.
[34] Applicant’s response to the Statement of Reasons, at E7(1/2).
[35] Applicant’s response to the Statement of Reasons, at E7 (2/2).
[36] Transcript, p. 97, line 45.
In all these circumstances, the Tribunal concludes that there is simply insufficient evidence available to be satisfied that the Applicant and the Owners had reached a concluded agreement in relation to the costing of these variation items and, hence, had reached a final agreement as to the amount that was owing for these variations. Furthermore, the Applicant has not produced evidence to show the necessary existence of an agreed variation document satisfying the requirements of clause 12 of the Contract, which requires, inter alia, a document that has been signed by both the contractor and the owner. In these circumstances (and even if the Applicant’s Second Notice to Remedy Breach had not been inadequate), the Tribunal would still not be prepared to conclude that the Owners were in breach of clause 11.7(c).
Owners’ Termination Notice
The Owners issued their Termination Notice to the Applicant on 7 December 2015. As well as accepting the Applicant’s First Termination Notice as an act in repudiation giving rise to their own right to terminate, it is to be noted that the Owner’s Termination Notice goes further – also referring to the Applicant’s alleged failure to remedy the breaches that had been previously set out in the Owners’ Notice to Remedy Breach dated 20 November 2015.
The Applicant contends that the Owners’ Termination Notice is of no effect because he had already previously terminated the contract (twice), and in all events the Owners were not entitled to terminate the contract because he was not in substantial breach because the date for practical completion had been extended until 16 December 2015 in consequence of the following:
(a)An agreed variation agreement dated 16 September 2015 extending the date for practical completion by 10 business days until 11 November 2015;
(b)An undated and unsigned variation alleged to have been emailed to the Owners on 9 October 2015, extending the date for practical completion by a further 10 business days until 25 November 2015; and
(c)An undated variation, signed by the Applicant that is alleged to have been issued by the site supervisor (Mr Allan Cummings) by pre-paid post on an unknown date, extending the date for practical completion by a further 15 business days until 16 December 2015.
The Applicant further argues that the Owners could not terminate as they were precluded from doing so by reason of clause 20.3. However, the Tribunal has already determined that it is not satisfied that the Owners were in substantial breach. In these circumstances clause 20.3 does not apply.
The Tribunal has also determined that neither of the Applicant’s Termination Notices were effective. In light of this, the contract still remained on foot until 7 December 2015.
In the circumstances of the foregoing, the only remaining argument of the Applicant relates to the claim that the contract completion date had been extended until 16 December 2015, such that it could not be claimed that the Applicant was in ‘substantial breach’ of the contract by reason of his not having completed the contract works as at the date of the Owners’ termination.
Ultimately, the Tribunal concludes that the question as to what became the agreed date for practical completion and the allied question as to whether the Applicant was, or was not, in substantial breach of the contract by reason of his having not completed the project works by that date, is not a question that needs to be determined by the Tribunal. This conclusion flows from the fact that the Owners’ stated reason for their having instructed Rostron Carlyle to issue their termination notice on 7 December 2015, which relates not to the fact of the Applicant having failed to complete the contracted works, but to the specific fact of the Applicant having repudiated the contract by his having evinced a clear intention not to perform the contract, by the delivery of his First Termination Notice. In these circumstances, the further references within the Owners’ Termination Notice to the Applicant having failed to complete the contracted works by the specified date for practical completion really fall into the category of surplusage, as these have no bearing on the operation of the Owners’ Termination Notice.
It follows from the above that the Tribunal is satisfied that the QBCC was correct in concluding that the Owners had ‘properly terminated’ the contract on 7 December 2015.
Accordingly, the application for review is dismissed such that the Tribunal confirms the QBCC decision dated 15 March 2016 pursuant to s 24(a) of the QCAT Act.
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