Allen v Queensland Building and Construction Commission

[2023] QCATA 66

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Allen v Queensland Building and Construction Commission  [2023] QCATA 66

PARTIES:

REECE JUSTIN ALLEN AND CHANTELL RENEE MARIA TAYLOR

(applicants/appellants)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO/S:

APL091-20

ORIGINATING APPLICATION NO/S:

GAR136-18

MATTER TYPE:

Appeals

DELIVERED ON:

15 June 2023

HEARING DATE:

17 December 2021

HEARD AT:

Brisbane

DECISION OF:

Judicial Member D J McGill SC

ORDERS:

1.     So far as the appeal was on questions of law, the appeal is dismissed.

2.     Leave to appeal on questions of fact or mixed fact and law granted, limited to the issues of whether the appellants were in the circumstances entitled to terminate the building contract at common law for repudiation, or for sufficiently serious breaches of non-essential terms; otherwise leave to appeal refused.

3.     Appeal by leave dismissed.

4.     The appellants pay the respondent’s costs of and incidental to the appeal, on the scale appropriate for a matter in the District Court of Queensland, unless within twenty-eight days from the date of this decision the appellants provide to the associate to the Deputy President and to the respondent submissions in writing as to why such order should not be made. 

5.     If such submissions are provided, the respondent may provide submissions in response to the associate and to the appellants within twenty-eight days from receipt of the appellants’ submissions. 

6.     Subject to any further directions, the question of costs will then be decided without an oral hearing in accordance with the Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 32.

CATCHWORDS:

BUILDING ENGINEERING AND RELATED CONTRACTS – REMEDIES FOR BREACH OF CONTRACT – POWER TO SUSPEND OR DETERMINE – termination under contract – termination at common law – whether right to terminate arisen – whether substantial breach of contract – whether builder repudiated – whether substantial breaches of non-essential terms whether right to claim on statutory insurance

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 147(2)
Queensland Building and Construction Commission Act 1991 (Qld) Part 5

Advance National Services Pty Ltd v Daintree Contractors Pty Ltd [2019] NSWCA 270
Aurizon Network Pty Ltd v Glencore Coal Queensland Pty Ltd [2019] QSC 163
Botros v Freedom Homes Pty Ltd [2000] 2 Qd R 377
Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd [2022] QCA 266
Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87
Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404
CNY17 v Minister for Immigration and Border Protection [2019] HCA 50, (2019) 268 CLR 76
Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Coulton v Holcombe (1986) 162 CLR 1
DCT Projects Pty Ltd v Champion Home Sales Pty Ltd [2016] NSWCA 117
Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
EMClarity Pty Ltd v BSO Network Inc [2022] QCA 177
Ergon Energy Corporation Ltd v Rice-McDonald [2009] QSC 213
FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340
Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303
Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202
Isbester v Knox City Council (2015) 255 CLR 135
Re JRL, ex parte CJL (1986) 161 CLR 342
Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48
Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2012] 2 Qd R 114
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, (2007) 233
CLR 115
Mazelow Pty Ltd v Herberton Shire Council [2003] 1 Qd R 174
Michael Wilson & Oakey Coal Action Alliance Inc v New Acland Coal Pty Ltd [2019] QCA 184
Mousa v Vukobratich Enterprises Pty Ltd [2019] QSC 49
Partners Ltd v Nicholls (2011) 244 CLR 427
R v Deputy Industrial Injuries Commissioner, ex parte Moore [1965] 1 QB 456
Sekler v Kim Carroll Investment Pty Ltd [2021] QSC 312
Smits v Cugola [2022] QCA 262
Tullock Brae Pty Ltd v Environmental Protection Equipment Pty Ltd [2021] QSC 213
Vision Eye Institute Ltd v Kitchen [2014] QSC 260

APPEARANCES & REPRESENTATION:
Applicant:	R J Allen in person
Respondent:	S E Seefeld, instructed by the respondent

REASONS FOR DECISION

1. The appellants made a claim to the respondent in relation to incomplete domestic building work under the home warranty insurance scheme in the Queensland Building and Construction Commission Act 1991 (Qld) (“the Act”) Part 5. On 19 March 2018 the respondent rejected the claim, on the ground that the appellants had not validly terminated the contract with the builder. The appellants sought a review of that decision by the Tribunal, and on 27 February 2020 the Tribunal confirmed the decision of the respondent.[1]  The appellants now appeal against that decision of the Tribunal.  There are separate proceedings in the Tribunal in relation to a claim for defective work.

   [1]For convenience I shall refer to Mr Allen and Ms Taylor as “the appellants” and to the Commission as the respondent.  The Tribunal was constituted by a Senior Member, but for convenience I shall refer to him as “the Member”.  I shall use the term “the builder” to refer to either the building company which was a party to the contract, or the director of the company who gave evidence. 

2. The appellant is entitled to appeal to the Appeal Tribunal on a question of law, but requires the leave of the Appeal Tribunal to appeal on a question of fact, or of mixed fact and law.[2]  As a general proposition, when leave to appeal to the Appeal Tribunal is required, it will be granted only where there is a reasonable argument that the decision was attended by error and an appeal is necessary to correct a substantial injustice caused by that error, or where the appeal raises a question of general importance upon which further argument and a decision of the Appeal Tribunal would be to the public advantage.[3]  An Appeal Tribunal will not usually disturb findings of fact on appeal if the evidence is capable of supporting the finding, and it is not contrary to compelling inferences.[4] If leave to appeal is granted, the appeal is by way of rehearing so far as it is against a decision on a question of fact, or of mixed fact and law: the QCAT Act s 147. Otherwise it is an appeal which will only correct an error of law: the QCAT Act s 146.[5] 

   [2]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”) s 142.

   [3]Crime and Corruption Commission v Lee [2019] QCATA 38 at [12], citing appellate authority. See also Campbell v Queensland Building and Construction Commission [2021] QCATA 34 at [17].

   [4]Craig v Mark Kelada Auto Sellers [2016] QCATA 48 at [13].

   [5]See also Pivovarova v Michelsen (2019) 2 Q R 508 at [4], [9].  It is an appeal in the strict sense: Albrecht v Ainsworth [2015] QCA 220 at [94].

Additional evidence

1. By an application filed in the appeal proceedings on 13 November 2020, the appellants seek to rely on additional evidence in the appeal, namely two additional reports by an expert who gave evidence for the appellants at the hearing, and an affidavit of Mr Allen.  The Appeal Tribunal proceeds on the basis that the usual tests for fresh evidence, as set out for example in Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 at 408, must be met for such evidence to be admitted on appeal under the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”) s 147(2), at least in relation to additional evidence relevant to an appeal on a question of fact, or of mixed law and fact.

2. The appellants submitted that, because of the wording of s 147(2), which in terms conferred an unfettered discretion on the Appeal Tribunal, such an approach was too confining, and sought to fetter the statutory discretion. It was submitted that, in Clarke (supra), Thomas J distinguished between an appeal from a judgment after hearing a cause or matter upon the evidence and hearing an appeal generally, on the basis of the wording of O 70 r 10 of the then Rules of the Supreme Court. 

3. The reason why additional evidence on appeal is confined as set out in Clarke (supra) in cases where there has already been the opportunity to put forward evidence at first instance is that otherwise the significance of the first proceeding is diminished, and it becomes just a preliminary to an appeal, where the full range of evidence is mounted.[6] That is contrary to the efficient use of resources, and the principle that there should be an end to litigation, both of which apply as much to the Tribunal as to a court. So parties to a proceeding in the Tribunal are expected to put forward full evidence at a hearing on the merits, and it is appropriate that the discretion in s 147(2) be exercised in accordance with the fresh evidence rules in such cases. So far as this appeal is concerned, I propose to apply the fresh evidence rules to the additional evidence sought to be relied on by the appellants.

   [6]Coulton v Holcombe (1986) 162 CLR 1 at 7.

4. As to the first supplementary report of the appellants’ expert witness, that was sought and prepared after the decision and reasons of the Tribunal were available.  The report largely consists of the expert’s reconsidering and confirming the opinions expressed in earlier reports which were before the Tribunal.  This says nothing of consequence, and should not be admitted on appeal.  The witness has already given that evidence.  One part referred to some remedial work in relation to some windows, which had not been done at the time of the hearing, and said that when it was done it showed that windows had been installed without proper under-sill window flashing, and that one window had not been properly sealed.  This could have been ascertained before the hearing if the windows had been removed.  Further, as appears from the analysis later, this issue is not of significance to the outcome of the proceeding, and at best provides confirmation of evidence of a defect in construction.[7]  No part of this report will be admitted.

   [7]The evidence of the builder was that the work on the installed windows was not finished at the time of termination of the contract: Day 2 p 69.  On that basis, it was really incomplete work. 

5. As to the further affidavit of Mr Allen, this covered a number of matters. One was said to be of certain events which occurred after the hearing, which were said to be relevant to his credit, which had been attacked during cross-examination.  This is a collateral issue.  One was an email about which he was cross-examined, and which he spoke about in “re-examination”, but which neither party tendered; that was their decision as to the conduct of the proceeding, and they are bound by it.  It does not appear from the reasons of the Tribunal that the outcome of the matter turned on, or was significantly influenced by, the Member’s views of the credibility of Mr Allen. 

6. The appellants seek to put in evidence additional photographs, which they concede existed at the time but were not put in evidence, as they are said to be relevant to the fair determination of the appeal and to correct an injustice. Some photos concern a particular defect complained about by the appellants, and raised at the hearing, but do not address the ground on which that issue was dealt with by the Tribunal, which was that there was a defect but the builder was seeking to address it, so that it was not a basis to terminate the contract: [70]. Some paragraphs concerned the work required to complete the pool and surrounds at the house. This sort of material was available at the time of the hearing but not put in evidence. This is what the approach in Clarke excludes. 

7. The appellants sought to put in evidence a document from the Australian Bureau of Statistics as to the number of deaths in Australia associated with steps or stairs.  Apart from the fact that this evidence was obviously available at the time of the hearing, it is irrelevant and inadmissible.  What the appellants rely on is that there are certain requirements for stairs set out in the National Construction Code, not why they may have been put there. 

8. The appellants also sought to rely on evidence of an encroachment by the builder across the boundary of the neighbouring property.  Mr Allen in his affidavit said that after the hearing he had another survey done which confirmed his observation that the visible footings were over the boundary, an encroachment of 3 – 8 cm.  In September 2020 building work started on the neighbouring property, which involved demolition and some excavation.  This revealed that under a previous concrete surface beside the boundary there was a more substantial encroachment, about 7 metres long, up to 1 metre deep and .6 metre wide.  Part of this sat on a pier which also encroached in part over the boundary.  Subsequently the builder of the adjacent property removed the encroachment of the foundations; the intention is that the encroaching pier be left in place, as it is below the level of the building works on the adjacent property. 

9. Evidence of what was discovered in October 2020 satisfies the first test in Clarke (supra), since it could not be found without the demolition of a concrete driveway on the adjacent property, and it is apparently credible.  Whether it should be admitted depends on whether it has an important influence on the issue of whether the building contract was validly terminated by the appellants.  I will admit it for that purpose.  The second additional report by the expert witness relates to the encroachment, and would be admissible if it said anything on which expert evidence is required.  What is relevant for present purposes is that there was a breach of a contractual requirement that there be no encroachments.  That there was an encroachment was proved by the evidence of Mr Allen and of the surveyor, to the extent that it is not obvious from the photographs.  This is not something on which evidence from an expert in building construction is necessary; his report is therefore unnecessary and would be inadmissible in a court.  I will not admit it. 

Grounds of appeal – apprehended bias

1. The appellants in the Annexure to the Application for leave to appeal or appeal relied on a failure to accord natural justice, and apprehended bias, on the part of the Tribunal, and also alleged 79 errors of law, and 43 errors of fact. It is appropriate to deal first with the issues of apparent bias,[8] and failure to accord natural justice, because if established they are likely to lead to a rehearing before a different member. The test for apprehended bias is whether, in all the circumstances, a fair-minded lay observer with knowledge of the objective facts might entertain a reasonable apprehension that the Tribunal might not bring an impartial and unprejudiced mind to the resolution of the issues in the proceeding.[9] 

   [8]Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 at [2], [117].

   [9]Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [6]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [31]. This test applies to a proceeding in the Tribunal: Chandra v Queensland Building and Construction Commission [2014] QCA 335 at [83].

2. Some of the matters relied on as showing apparent bias were things that happened during the hearing, but no application was made for the member to disqualify himself.  The appellant relied on the statement by Sofronoff P in Oakey Coal Action Alliance Inc v New Acland Coal Pty Ltd [2019] QCA 184 at [68] as showing that what happened during the hearing could be relied on if further statements in the reasons give rise to a fresh apprehension of bias. His Honour went on to consider the background to the reasons, including what was said at the hearing, before concluding that the test for apprehended bias was met: [103]. I accept that the appellants can rely on matters that happened at the hearing, indeed on all the circumstances of the matter.[10] 

   [10]CNY17 v Minister for Immigration and Border Protection [2019] HCA 50 at [135], where Edelman J also cautioned against assessing comments in the reasons against an assumption of a reasonable apprehension of bias.

3. The first matter relied on was that at the hearing the Member criticised the decision of another Member not to join the builder as a party to the proceeding.  Because the builder is subject to a statutory indemnity in favour of the respondent[11] it would commonly be appropriate for the builder to be joined, but an issue can arise if the application for joinder is delayed; in such circumstances there will be a tension between the efficiency of conducting just one proceeding, and the prejudice associated with the delay, and how that is to be resolved is a matter on which minds may reasonably differ.[12]  The statement was made in a context where the Member appears to have been concerned about the respondent’s witness being difficult, and may have reflected an assumption that the witness would have been more cooperative if the builder had been joined.  The comment is understandable, and I do not regard it as a matter of any significance in relation to apparent bias. 

   [11]The Act s 71.

   [12]Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48 at [17]. I assume the builder was not a necessary party, as discussed in China First Pty Ltd v Mt Isa Mines Ltd [2018] QCA 350, as a person affected by the decision because of s 71: Lange v QBSA [2012] 2 Qd R 457 at [73]. This issue has not arisen in this matter.

4. Next the appellants relied on what was said to be a statement that claims should only be available against the respondent under the insurance scheme if the builder were insolvent.  It was submitted that this indicated that the Member believed that the appellants should not be entitled to claim or to pursue the proceeding.  The first difficulty with that submission was that it is not what the Member said.  Mr Allen was being cross-examined about the significance of progress payments, and accepted that the amount of a progress payment did not affect the amount the builder ultimately was paid, just the timing of the payment: Day 1 p 85.  He then added the qualification that “It does not help if the builder goes broke” because in those circumstances the overpayment will not be recoverable in practical terms.  The Member then commented “That’s why you have insurance.”  That does not say or imply that insurance should be available only if the builder is insolvent.  The submission is based on a false premise.

5. I also do not accept that apparent bias would have been shown if the Member had offered the opinion that the Act should permit claims only if the builder were insolvent. It is clear from the reasons that the Member was well aware of the terms and operation of the relevant Part of the Act. It is commonplace for judicial officers to comment on or to criticise the wording or operation of legislation relevant to matters which come before them.[13] This does not suggest apparent bias, as long as they apply the Act as it is.

   [13]See for example MNM Developments Pty Ltd v Gerrard [2005] 2 Qd R 515 at [27].

6. The appellants also relied on what was said to be a gratuitous apologia about this statement, calculated to defuse the earlier remark, and drew a parallel with the comments of the Land Court Member discussed by Sofronoff P in the New Acland Case (supra) at [93] to [96]. Again, this is not what happened. In re-examination Mr Allen said that it seemed to be implied that one could terminate only if the builder goes broke: Day 1 p 103. Someone, apparently the Member, said “I don’t think anyone is contending that.” Counsel for the respondent promptly said that he was certainly not contending that. Mr Allen then said “No-one is contending that. All right.” The Member then said that Mr Allen was the only one who raised that when he was talking about the progress claims, but said nothing about his views, nor sought to modify them. Again, the submission is based on a false premise. The reasons of the Member showed clearly that he was aware of the operation of the Act.

1. The appellants also relied on the Member having said to the witness for the respondent, a person associated with the builder, that it was a difficult site and a difficult job.[14]  They said this suggested that the Member believed that the contractor did not need to complete the contract work in the time agreed.  There were also complaints about the Member having said he could not help having to call the witness back for further cross-examination on the third day of the hearing,[15] thereby impliedly criticising Mr Allen for the length of and approach to his cross-examination.  This was said to be expressing sympathy for the witness at the expense of the appellants.  The Member was also criticised for failing to exclude unresponsive answers by the witness during cross-examination, despite objection; and by saying to the witness that he knew that the witness had a lot of things to say and was unhappy about all of this.

   [14]Day 2 p 56.  If it comes to that, I can see from the architect’s drawings that this was no more than a statement of the obvious. 

   [15]Day 2 p 110. 

2. I have already mentioned that the witness was difficult, and was at times uncooperative under cross-examination.  At one point the Member sought to calm down both the witness and Mr Allen, who were said to be both becoming heated, and asked them not to talk over each other.[16]  At the same time he asked the witness to confine his answers to the questions asked.  I noted from the transcript that the witness had a tendency to give extended answers, which sometimes drifted off topic. 

   [16]Day 2 p 48, something I have had to do myself countless times. 

3. Tribunal members often have to deal with difficult witnesses who are not happy to be giving evidence, and a member may well feel that it is more helpful to appear sympathetic and to encourage the witness to cooperate rather that to adopt a more strict and hostile approach, which may simply prove counter-productive.  In my experience taking a strict approach to unresponsive answers will often just waste time and provoke the witness more.  There was no jury, and unresponsive answers can easily be ignored.[17]  I do not consider that a well-informed lay observer would have taken what occurred with this witness as more than an attempt by the Member to complete the witness’s evidence as efficiently as possible; it would not have suggested apparent bias.   

   [17]See the comment at Day 2 p 45 lines 14-16. 

4. In written submissions the appellants complained that the Member had answered the questions for this witness, and referenced some intervention by the Member in questioning of the witness about a certificate showing unsatisfactory aspects of the frame inspection, with a view to showing that further work done by the builder breached a statutory prohibition.  The certificate spoke for itself, the questioning required to establish the appellants’ point was quite limited, and most of Mr Allen’s questioning on this topic was unnecessary.  It is unsurprising, and appropriate, that the Member was trying to move things along.  It does not suggest bias. 

5. The appellants complained of a number of matters in the reasons for decision.  It was said that the Member had been critical of hearsay evidence from Mr Allen, but had accepted and acted on hearsay from the respondent.  Reference was made to the reasons at [145], [146], which as I read them are referring to three separate matters.  Evidence from Mr Allen that he was suspicious about the quality and structural soundness of parts of the building does not prove anything, particularly when he had lost confidence in the builder.[18]  The quote from paragraph 60 of the affidavit does not appear to me to be relevant to anything; what might be relevant was whether the superintendent did in fact issue such a variation. 

   [18]Day 1 p 52: confidence was lost by 13 July 2017. 

6. The problem with hearsay is that its reliability can vary enormously.  In some circumstances evidence which is hearsay will be obviously reliable, or quite likely to be accurate, but in other circumstances there may be doubt about it, even substantial doubt.  Hearsay on hearsay may easily compound these problems.  In circumstances where the rules of evidence do not apply, it is a matter for the judgment of the Tribunal to decide what weight, if any, to give to any particular piece of evidence.[19]  That some of the evidence put forward by the appellants was not given any or much weight does not, in itself, suggest apparent bias.  Similarly, that the respondent’s witness gave evidence of things he had been told does not in itself suggest apparent bias, particularly if the circumstances are such that it was likely that the people informing him of things would have been at least trying to be honest and accurate.  When the reasons are considered as a whole, I do not consider that there is such a disparity between the way in which material not within the rules of evidence put forward by the appellants and that put forward by the respondent was treated as to suggest to a well-informed lay observer that there was bias against the appellants. 

   [19]R v Deputy Industrial Injuries Commissioner, ex parte Moore [1965] 1 QB 456 at 488, which also said that rules of evidence are not part of natural justice.

7. It was submitted that the finding that particular evidence of Mr Allen was unhelpful was used to justify a finding that all of his evidence about the work was of little assistance.[20]  This was not referenced, and I have not noticed the latter finding in the reasons.  It is also difficult to see that there was such a difference in treatment of the evidence of Mr Allen and of that of the respondent’s witness as to suggest bias against the appellants.  Where the evidence of witnesses is in conflict, it is inevitable that the evidence of one will be preferred to the other, but that does not show bias.  It seems to me that the Member was cautious about the evidence of the respondent’s witness[21] but the Member did accept some of his evidence, in a way which was not obviously inappropriate. 

   [20]Submissions in writing para 92. 

   [21]See for example reasons [70], [130]. 

8. The appellants also submitted that apparent bias had been shown by the failure to accept the evidence of their expert witness, who was the only expert and independent witness; it was said that his evidence was largely ignored, or was not applied.[22]   The evidence of the appellants’ expert was referred to at times by the Member, generally in terms indicating that the Member accepted what was said by the expert.[23]  At other times the evidence of the expert was referred to, but the issue was not expressly resolved, because the Member decided the matter on another basis.[24] There was an instance where the Member accepted the evidence of a statement from the gasfitters involved about the significant of a fitting being left uncrimped in preference to the evidence on that subject of the expert, which strikes me as unsurprising in the circumstances: [132].[25] 

   [22]Submissions in writing para 94. 

   [23]See for example paragraphs [62], [65]

   [24]See for example paragraph [65], where the Member referred to the explanation offered by the expert for how the problem with the ensuite door arose, and want on to say at [66] that it was not necessary to decide this, since it was clear that a mistake had been made, but the true issue was decided on the basis that the builder was working with the superintendent to resolve the problem: [67]. See also [73], where his evidence on a different issue was treated in a similar fashion.

   [25]One would expect a gasfitter to know more about gasfitting than an expert in building in general.  Besides, the passage quoted at [130] makes sense. 

9. There was another occasion where the evidence of the manufacturer of particular sarking as to the suitability of a particular product was accepted in preference to the evidence of the expert, where the evidence of the expert was based on the interpretation of the manufacturer’s data sheet: [127]. The expert said that the sarking installed did not comply with the relevant part of the National Construction Code because it was not vapour permeable sarking.[26]  A 2014 technical data sheet shown in the report described it as a Medium Vapour Barrier, and the report does not identify any statement that it is impermeable to vapour.  It had a vapour transmission of 1.44 grams per square metre, which the expert said was very low.  The expert identified another sarking which was described as a vapour permeable membrane, and as having a very high water vapour transmission rate.  Clearly it is much more vapour permeable, but I have difficulty in seeing how the expert concluded that the one used was not a vapour permeable sarking. 

   [26]Day 3 p 36; National Construction Code 2016 Part 3.5.3.2(b)(iii), quoted in his supplementary report p 9, Appeal Book p 2563. 

10. A copy of the National Construction Code in Appeal Book Vol 12 does not include any definition of vapour permeable sarking in Part 1.1, I have not found one elsewhere in it, and the expert did not identify one.  In the absence of a definition, sarking is vapour permeable if it is not impermeable to water vapour, which the sarking installed was not.  The fact that other sarking is more vapour permeable, and that the expert regarded it as more suitable in Brisbane, is irrelevant to whether there was a breach of the Code.  Apart from this, the builder said that the product in fact installed was more vapour permeable than was shown by the 2014 data sheet, and exhibited a 2017 data sheet which showed a higher water vapour transmission rate.[27]  This point was not dealt with by the Member, but it would have been open to reject the expert’s conclusion on this ground also. 

    [27]Under cross-examination the expert said that that product also did not comply with the code, he said because the manufacturer’s website said something different, which I do not understand: Day 3 p 39. 

11. I have not identified any occasion when the evidence of the respondent’s witness was preferred to the evidence of the expert where there was a direct conflict identified by the Member, and the Member acknowledged that there was some force in the appellants’ submission that the former was not independent: [123].[28]  There was some of the expert’s evidence which was not referred to expressly in the reasons, apparently because the Member did not regard it as important to the resolution of the issues to be decided.  The expert spoke about relatively few of the issues raised by the appellants.[29]  I do not regard the treatment of the evidence of the expert as suggesting apparent bias; the treatment seems to me to be consistent with the general basis on which the Member resolved the matter. 

    [28]There was at least one direct conflict between the expert and Mr Allen.  The expert said that an issue with the concrete hobs (discussed below) was an aesthetic issue – Day 3 p 48 – something Mr Allen denied: Day 1 p 77. 

    [29]Apart from comments on damage from vandalism, three issues in the first report, and six in the second report. 

12. The appellants submitted that the Member said at [94] that the appellants had made a particular submission, when that submission had not been made.  As I read [94], the Member was saying something about the effect of the appellants’ submissions, rather than just quoting a submission.  This relates to the issue of overclaiming, where the submissions of the appellants were that, in view of the statutory context of a payment claim, to overclaim at all was a substantial breach, regardless of the response to the claim.[30]  I am not sure that the submission has the effect attributed to it by the Member in [94],[31] but I do not consider that such a characterisation of the appellants’ submissions provides any indication of apparent bias. 

    [30]See submissions at first instance, 15 July 2019, paragraphs [173] to [182]. 

    [31]The Member’s point was I suspect that the quantity surveyor would consider whether and to what extent the claim was justified after it had been made: see reasons [89]. It was not that the builder was claiming for more than had already been assessed by the quantity surveyor. The appellants’ argument was that the claim had to be limited to what was really claimable under the contract.

13. The appellants complain that Mr Allen was not afforded appropriate respect as a litigant during the hearing.  The submissions of the appellants do not explain the basis for this submission, even under the heading “Lack of respect for the applicants as litigants” on p 21, where the matters discussed to paragraph [206] all relate to the reasons for the decision.  At p 30 there was a passage cited from the hearing when the Member stopped Mr Allen from taking the respondent’s witness through the terms of the building contract and aspects of the law, such as the National Construction Code.  Certainly it was relevant to show that there were breaches by the builder, but that is shown by proving that the builder did, or did not do, particular things.  That those acts or omissions amounted to breaches of contract, or of law, were questions of law, on which the views of the witness, indeed any witness, were irrelevant.  The witness’s knowledge of the terms of the contract, or his acceptance of its terms in the witness box, was irrelevant.  I agree with the Member that such cross-examination was a waste of time.[32]  It was appropriate for him to stop it.  It is not disrespectful or inappropriate to prevent a litigant in person from wasting time, and it does not suggest apparent bias.

    [32]To be fair, a certain amount of the cross-examination of Mr Allen just involved looking at and identifying documents already in evidence, and was also unnecessary. 

14. The appellants complained that the Member had been critical of the appellants or of Mr Allen in his reasons, in various respects:

    (a)Making submissions in reply that go further than the evidence: [65]. This concerned an attack on the evidence of the witness for the respondent as to how it came about that the ensuite door was too narrow, where it was said that the evidence of the witness that the architect had nominated a commercial section for the frames was a lie.[33]  The appellants were entitled to refer to evidence before the Tribunal to show that this evidence was untrue, but they ought not to have been introducing new evidence at that stage in respect of this matter.  To the extent that that occurred, any criticism was justified. 

    (b)Not calling a witness from the superintendent (the architect): [143]. The respondent’s witness gave evidence that the superintendent (who was also the architect) had given various instructions to do various things, generally to make the design workable, and this evidence was not contradicted. This passage in the reasons occurred in a context where the builder relied on such an instruction, and Mr Allen had given evidence of what he had been told by a person from the superintendent. The Member preferred the former, on the basis that what Mr Allen said he was told did not directly contradict the other evidence, and no witness from the superintendent was called, a matter he said was noteworthy. The Member did not say that he drew any inference against the appellants because of such failure, and I will not assume that he did, but the omission was noteworthy in view of the issues raised by the appellants and by the builder, even if a number of documents from the Superintendent did go into evidence.[34] 

    (c)Including evidence in submissions in writing: [147]. The appellants pointed out that Mr Allen was both witness and advocate, but that did not justify the introduction of additional evidence in submissions. To the extent that any evidence was introduced for the first time in submissions, that should not have happened and the criticism was justified. It did not indicate apparent bias.

    (d)Filing multiple statements of evidence, said to be at [147]. That paragraph did say, correctly, that the appellants had filed a significant volume of evidence, and that much was repetitive. The appellants referred to the absence of pleadings, and to directions of the Tribunal. The Member commented that it was an onerous task to sift through the material, and to discern the substantive issues. No doubt it was. In this case I suspect it would have been of assistance to the Tribunal if there had been pleadings, or something like them, to identify the issues, but that is not how things are usually done in the Tribunal. In any case, there was no reference to “multiple statements”.

    (e)Omitting to criticise the respondent for the volume of its evidence, which was not that different from the volume of the appellants’ material.  This was said to indicate unequal treatment of the parties, but the statements otherwise complained of were found largely in the conclusion of the reasons, where the Member was summarising the essential reasons why the appellants’ case had failed, despite the extensive evidence and large number of issues raised, and was emphasising his approach to the central issue.  A fair-minded lay observer would expect this to focus on the case of the appellants, because it is important that reasons explain why the case of the unsuccessful party has failed.  This did not suggest apparent bias.

    (f)Being repetitive in evidence, when the respondent had also been repetitive: [147]. Repetitive material of the respondent was said to justify the repetition. I am not at all sure that that is a justification. There is a modern tendency for pleadings and similar documents which respond to do so in full by reference to each individual matter to which there is a response,[35] which often leads to repetition.  Properly done, this may help to clarify the precise case being made, but at least so far as it applies to factual matters, I expect that usually the only effect is to lead to longer documents and more voluminous material.  In something which is just evidence, factual matters do not need to be repeated, whatever the state of the other party’s material.  On the whole the criticism was justified, and does not suggest apparent bias. 

    [33]Submissions in reply at first instance, paragraph [62]. There is a difference between evidence being untrue and its being a lie, and strictly speaking the appellants should not have made this submission unless the proposition that this was a lie had been put to the witness in cross-examination.

    [34]There was some material from the superintendent supporting an inference that, had they given evidence, it would not have assisted the appellants: Email from superintendent, at p 510 of first statement by builder, Appeal Book Vol 11 p 2923. 

    [35]For example, a response of the kind that says: “In response to paragraph 17, (a) … (b) …” etc.

15. The appellants also complained that bias was shown by sympathy for the builder and the respondent’s witness manifested in the reasons, by:

    (a)Finding that the relationship between the appellants and the builder had not deteriorated to the extent where the builder could reasonably expect termination of the contract: [31]. It was submitted that once the show cause notice was given to the builder termination could reasonably be anticipated, which may well be true, but the Member’s point at [31] is that until then the relationship had appeared not to have so deteriorated, because the context was the contrast with another case[36] where there had been much criticism of the builder before the show-cause notice was issued.  The relationship between owners and a builder can deteriorate very quickly, but in the absence of some specific trigger mechanism one would expect the relationship to deteriorate over time.[37]  Whether the state of the pre-notice relationship was relevant to the reasonableness of the response is another issue, but the making of this finding, even if adverse to the appellants, does not suggest apparent bias. 

    (b)Criticising the actions of the appellants, in going onto the site and identifying as substantial defects things which would normally be attended to during completion of the works, as particularly unfair to the contractor, where there was an explanation for why the works were in that state, and where the contractor was ready, willing and able to complete the project: [148]. The appellants submit that any defects or other failures by the builder amounted to a breach of contract, and in some cases of statutory obligations, by the builder as soon as they occurred, and that they were entitled to enforce the contract, and their rights under the insurance policy. I shall return to this point.

    (c)Giving primacy to the evidence of the respondent’s witness, referring generally to the reasons of the Member.  I have dealt with this point to some extent already.  I do not consider that there was any pre-conceived primacy accorded to the evidence of that witness.  There were a number of occasions on which his evidence was accepted, and in each case reasons were given which appear plausible.[38]  The mere fact that on a number of occasions the evidence of a witness was accepted when another party has submitted that it should not be accepted does not suggest bias against that party. 

    [36]Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99 (“Dura”).

    [37]Thompson Residential Pty Ltd v Hart [2014] QDC 132 at [13], [14].

    [38]So far as I can tell from the transcript, most of the builder’s evidence was at least superficially plausible, and Mr Allen achieved relatively little in lengthy cross-examination. 

1. In submissions the appellants identified what they said were a number of errors of law which they said indicated bias against them.  I will consider separately whether these were errors of law, but the mere fact that the Tribunal made an error or errors of law does not demonstrate bias.[39]  One ground, 14(h), was not referenced to the transcript or developed in submissions, and I cannot take it any further, except to say that it does not obviously suggest bias. 

   [39]Nicholls (supra) at [67].

2. The only matter which I consider might suggest bias against the appellants is the matter raised in ground 14(s)(ii), the comment about something being particularly unfair to the builder.  It was not relevant for the Member to make any finding as to the fairness or otherwise of any particular conduct.  The reasonableness of the response of the builder to the show-cause notice was an issue to be decided, but that did not involve the fairness of the action in giving the show-cause notice.  On the question of whether the conduct of the builder, and its acts and omissions, collectively amounted to repudiation, the focus is on the objective assessment of what the builder has or has not done, and its expressed attitude to its contractual obligations, rather than on the fairness of the other party’s conduct. 

3. Courts have in the past sometimes expressed some dissatisfaction with the result which they have been forced to come to by the strict application of the law,[40] but usually by expressing sympathy for the unsuccessful party.[41]  To characterise the conduct of an unsuccessful party in this way does give rise to some concern, but the real issue is whether it suggests that the attitude to the fairness of the appellants’ actions influenced the findings made, or whether it was simply a comment that the outcome could be seen as satisfactory in terms of broader concepts of justice.[42]  

   [40]An example is the hostility courts have in the past manifested to reliance on the Statute of Frauds as a defence, particularly in its former application to contracts for the sale of goods.

   [41]Comment adverse to the unsuccessful party is not unknown: for example, Pohlmann v Harrison [1995] 2 Qd R 59 at 62.

   [42]Broader concepts of fairness and justice are not irrelevant in the Tribunal: the QCAT Act s 28(2).

4. The fair-minded lay observer may be taken to have also read the earlier reasons, where relevant issues were identified, and various conclusions were reached.  Some of those conclusions are challenged by the appellants, but in this context what matters is the analysis in fact set out in those reasons.  On the face of it the reasons appear to address the relevant issues and resolve them in a rational way on evidence referred to in the reasons, and lead to the conclusion that the appellants’ case on the review was unsuccessful.  I do not consider that they would suggest apparent bias. 

5. In this context, I do not consider that this comment might be enough to lead a fair-minded lay observer to entertain a reasonable apprehension that the Member had not brought an impartial and unprejudiced mind to the resolution of the issues in the proceedings.  To do otherwise would be to attribute too much significance to a single comment.  A finding of apprehended bias is not to be reached lightly.[43]  There is some authority that decisions of Tribunals should not be scrutinised too closely to detect error, even when there is an obligation to give reasons.[44]  I appreciate that apparent bias can be shown by much less than the sort of evidence required to show actual bias, but I do not consider that, in context, this comment is enough, particularly when the reasons are read in full.  Apparent bias has not been shown.

   [43]Re JRL, ex parte CJL (1986) 161 CLR 342 at 371; CNY17 v Minister for Immigration and Border Protection [2019] HCA 50, (2019) 268 CLR 76 at [55]

   [44]See also Isbester v Knox City Council (2015) 255 CLR 135 at [22].

Breach of Natural Justice

1. The appellants relied on thirteen reasons in support of the proposition that the Tribunal failed to afford them natural justice, apart from the issue of apparent bias, with which I have already dealt.  To some extent the submissions covered matters already discussed in relation to apparent bias, such as failing to accept the evidence of Mr Allen and the expert witness (grounds 1, 6, 8), or affording excessive weight to the evidence of the respondent’s witness: grounds 7, 8.  Such matters do not give rise to any natural justice issues.  The reasons contain frequent references to the evidence of Mr Allen, and a number of references to the evidence of the expert, and they were obviously considered.  The mere fact that some was not accepted does not show that the consideration was not proper, genuine and realistic. 

2. The appellants complained of the failure to make available for cross-examination the authors of two documents admitted into evidence, where the content of the documents was accepted in preference to the expert witnesses, as discussed at [24], [25] above, and referred to the QCAT Act s 95(1)(b).[45]  That section requires the Tribunal to allow a party a reasonable opportunity to cross-examine witnesses.  It applies to persons called as witnesses at a hearing, as appears from the use of the word “witnesses” and the terms of the balance of that section, and does not apply when evidence in a document is put before the Tribunal, even if that evidence has not been proved in accordance with the rules of evidence.[46]  There was no requirement to produce the authors of these documents for cross-examination.

   [45]Grounds 9, 10. 

   [46]In fact one of the documents would appear to have been admissible under the Evidence Act 1977 (Qld) s 92, as the maker of the statement was overseas. See also the QCAT Act s 95(4)(a).

3. The appellants complained that the evidence of the respondent’s witness had been “elevated” to the status as if the builder were a party to the proceeding: ground 4.  Nothing said by the Member suggests that the evidence of this witness was treated as if the builder were a party, and where his evidence was accepted it was for other reasons stated by the Member, which are on the face of it plausible.[47]  I do not understand a complaint that his evidence was treated as if it was the respondent’s submissions: ground 5.  Since he was the respondent’s witness, one would expect some conjunction between his evidence and its submissions.  It was submitted that the reasons were written as if the builder were a party.[48]  That is not how I read them.  Given that the issue was whether a contract between the appellants and the builder had been properly terminated, it was inevitable that what happened between the parties to that contract would be central to the case, particularly because of the basis on which the appellants supported their termination of the contract.

   [47]I suspect the appellants’ point is that UCPR r 424(1)(a) did not apply. The UCPR did not apply anyway.

   [48]Submissions on appeal [177].

4. The appellants complained that a finding, that the defects in existence as at 21 November 2017 would have been remedied by the builder if the contract had not been terminated, was based on mere speculation: ground 12. I cannot identify a finding in those terms in the reasons, although there were a number of findings about specific defects,[49] and a comment that the existence of a defects liability period under the contract showed that the possibility of defects existing after the appellants went into possession, with the defects to be fixed when identified, was contemplated by the terms of the contract: [121]. It was not relevant to make a finding about whether all defects would have been remedied by the completion of the works by the builder. This does not involve a natural justice point.

   [49]For example, reasons [135], [136], [137]. 

5. The remaining grounds, 2, 3, 11 and 13, alleged that matters relied on by the appellants were not considered by the Member.  This is a natural justice point, although the grounds identify only one such matter, that the superintendent was mistaken as to the reason for the defect in the stairs, at [146]: ground 13.  This was a reference to the submissions in reply by the appellants, to the proposition that the excessive riser height in the top flight of stairs had been allowed by the superintendent as a deviation.  The points made in reply were, apparently, that the builder was not relieved of responsibility for the defect because the superintendent was mistaken, and that there were other problems with the stairs, such that all the stairs have since been replaced.[50] 

   [50]Submissions in reply of applicants [162] – [167].  I deal with the issue of the stairs further below. 

6. I can understand why the Member described the submissions as confusing.  Why the approval of the deviation by the superintendent was ineffective was not explained, and there was a reference to Mr Allen having been told something by the certifier, which added nothing to the expert’s opinion, was hearsay, and should not have been included in submissions.[51]  This does not show that the submission was not considered, just that it did not prove persuasive, which is not a natural justice issue. 

   [51]It was not referenced to any evidence, and may have been an illustration of the Member’s complaint of evidentiary material in submissions. 

7. In submissions on appeal the appellants outlined the experience of Mr Allen in construction law, but that was not a matter of significance in considering the weight of his factual evidence. It was not for him to be giving evidence about the relevant law; that was a matter for submissions. I reject the submission in paragraph [162]. The appellants criticised[52] the statement by the Member at [145] that Mr Allen’s belief as to the quality or structural soundness of the work, such as a garage slab, is of little assistance, but that was based on its being just a matter of belief, rather than there being any evidence of any factual basis for such concern. I doubt if even an engineer can tell just by looking at a garage slab if it is structurally sound; there is no reason to think that a solicitor who specialises in construction law can do so.

   [52]Submissions on appeal [163].

8. The statement in the reasons at [144], that part of Mr Allen’s affidavit was perplexing because it did not set out evidence of what was discussed, was also relied on under this ground.[53]  This was apparently a reference to the affidavit of Mr Allen sworn and filed 23 May 2019 paragraphs 43 to 52.  I have looked at this material, and perplexing, although not the term I would use, is a reasonable description.  It contains a mixture of submissions and speculation, with little relevant factual matter; for example, it does not state either the ceiling height required by the contract, or the ceiling height as constructed.  It speculates about the effect of a change in thickness of the slab above the ceiling, but does not contain evidence on the point, such as the design height and the “as constructed” height of whatever is above the slab.  It also contains evidence about what in fact was done later to reconstruct the ceilings, which involved demolishing the ceiling, moving the services to bulkheads at the sides, and installing ceilings very close to the concrete slab.[54]    

   [53]Submissions on appeal [164].

   [54]This was something the builder was discussing doing with the architect anyway when the contract was terminated: Day 2 p 46 line 40+. 

9. Much of the submissions about natural justice were directed to other issues, that findings were not open on the evidence or that errors of law were made, which are not natural justice issues.  It is not a breach of natural justice to prefer the evidence of a non-expert to the evidence of an expert witness, nor is it a breach to reject the evidence of an expert witness on a particular matter, even if it was not contradicted by another expert witness.  Evidence about what the builder did and why it did it, and what it was intending to do, was properly given by the respondent’s witness, and is not opinion evidence.  Even if that witness did give opinion evidence, it was not on that account inadmissible.[55]  It was not a breach of natural justice to accept other evidence in preference to the evidence of the expert witness on particular points. 

   [55]The QCAT Act s 28(3)(b).  This is not a natural justice point, and the weight of the evidence was a matter for the Member: R v Deputy Industrial Injuries Commissioner, ex parte Moore (supra) at 488

10. The appellants also submitted that it was a breach of natural justice to fail to take deemed admissions into account.[56]  This was referenced to ground of appeal 54, challenging the finding that there was an explanation for the state of the works when in many cases the defects were admitted, or the builder had not responded to them, and were therefore taken to be admitted.  I do not understand that proposition.  It is not for the builder to make admissions on behalf of the respondent, and a failure by the builder to answer an allegation about a defect in the works cannot bind the respondent.  There are no pleadings or notices to admit in this proceeding, so there can be no such thing as a deemed admission.  There was no breach of natural justice in failing to take into account something that did not exist. 

    [56]Submissions on appeal [173].

11. As to the proposition that the Member failed to consider all of the grounds advanced, the appellants identified sixteen bases on which they said they had an entitlement to terminate,[57] and said the Member had given only some consideration to six of these grounds. The count of sixteen was wrong; even on the appellants’ approach. Even if the six grounds in the Notice to Show Cause are treated as six separate grounds, there were only five further bases for termination relied on: termination at law on the six grounds; termination for repudiation; termination for defects; termination for illegality; and termination for breach of the implied term of reasonable diligence. Termination for use of unapproved sub-contractors was one of the six Grounds in the Notice, not an independent ground.

    [57]Submissions on appeal [186].

12. At one point the argument was advanced that proper, genuine and realistic consideration had not been given to the six grounds in the notice either.[58]  For example, it was said that the matters raised in Grounds 2, 3 and 6 in the Notice to Show Cause had not been properly considered because the three grounds had been considered together.  I do not consider that there was any breach of natural justice because the grounds were considered together; all three related to the issue of delay, and there was a substantial overlap of the relevant factual matters. 

    [58]Submissions on appeal [187].

13. The submissions here also relied heavily on what were said to be errors of fact or law, and it is convenient to deal with those as separate issues.  But the fact that such an error has been made does not in itself mean that there was a breach of natural justice in failing to consider the case advanced, otherwise every error would turn into a natural justice point.  Natural justice is concerned with procedural fairness, not with substantive correctness.   

14. Grounds 2 and 3 both related to delay, and were considered by the Member by reference to extensions of time for the works, which had been granted, or which the Member considered ought to have been granted.  Extensions of time are directly relevant to Ground 3, and they are also relevant to Ground 2, as shown by a decision frequently relied on by the appellants in submissions, Dura.[59]  That decision was also considered, and distinguished, by the Member.  The fact that the Member did not reach the conclusion sought by the appellants does not mean that he did not consider the submissions relating to these grounds. 

    [59]At [426] and [430], as cited by the appellants at submissions at first instance paragraph 70(b).

15. The appellants complained that in his consideration of these Grounds the Member ignored Ground 6, which relied on what was said to be a substantial breach of a different provision of the contract.  That is true, but it is clear from the appellants’ submissions in writing below in relation to this Ground that it was based on a failure to adhere to the time for practical completion stated in the contract.[60]  Given the Member’s conclusion as to the extent to which the time for completion had been and ought to have been extended, this Ground necessarily fell away, and on that approach it did not require further consideration. 

    [60]Submissions at first instance [190] to [196], especially [193]. 

16. The appellants complained that the Member did not consider their argument that the breaches identified in the Notice to Show Cause gave an entitlement to terminate at common law, preserved by the terms of the contract.  In reasons [114] the Member referred to the appellants’ reliance on the approach in Sheppard’s case, and, after considering whether there was repudiation by the builder, addressed a number of additional defects relied on as having been discovered later.  He then concluded at [148] that all the grounds of termination did not, individually or collectively, constitute a substantial breach that would give rise to a right of termination.  That finding dealt with both the argument that there was a right to terminate at law because of the matters raised in the Notice to Show Cause, and termination based on them and on the other matters raised by the appellants as defects discovered later.  So two of the grounds said not to have been addressed by the Member were in fact considered. 

17. The Member certainly addressed the ground of repudiation, and the appellants’ criticism of this was based on the proposition that the Member did not address it the way they wanted it addressed, that is, he arrived at the wrong conclusion on it.  As to the argument that repudiation was shown by the accumulation of defective work, that was dealt with by the rejection of the proposition that that accumulation amounted to a substantial breach entitling the appellants to rescind.  If it was not that, it necessarily did not amount to repudiation. 

18. As to termination for illegality, this was raised in submissions at first instance as a further ground justifying termination, but was not in those submissions developed in any coherent way.[61]  Reference was made to a complaint made by Mr Allen to the respondent, and to a term of the contract that the builder comply with legal requirements, said also to be implied by statute.  The submissions proceeded on the basis that there was no evidence from the respondent of any response to that complaint, which was relied on as amounting to the acceptance by the respondent that there had been such illegality, which is wrong. 

    [61]Submissions at first instance [214] to [220]. 

19. The submissions did not identify the legal requirements said to have been breached by the builder, or the evidence that that had occurred, and did not even make clear whether what was relied on was that this justified termination under the contract, or that the effect of the statutory provisions relied on was that the further performance of the contract was prohibited.  Some indication of what was in issue was given in the submissions by the respondent.[62]  None of the deficiencies in the appellants’ submissions were remedied in the submissions in reply.[63]  From the respondent’s submissions, it emerges that many of these raised matters otherwise complained of by the appellants, and dealt with in the reasons separately.

    [62]Paragraphs [156] to [159]. 

    [63]Paragraphs [181] to [183]. 

1. It is not for the Tribunal, confronted with a bald allegation of illegality, to have to dig around to identify some relevant legal provision and then consider whether there was any evidence of breach of it, and if so, what the consequences were under the relevant legislation.[64]  I suspect that some, perhaps a lot, of the legal requirements said to have been breached were really requirements as to the state of the premises at the completion of the project.  It appears that one of the allegations related to the failure to clamp or crimp a gas pipe where it was fitted to a particular fitting, dealt with by the Member at reasons [128] – [132] on the basis that the work on the gas system had not been completed and the gas not connected when the contract was terminated.  I expect that any regulatory requirement as to the state of the gas reticulation system would refer to the system in its finished state, not when it is still under construction. 

   [64]Cf Smits v Cugola [2022] QCA 262 at [16].

2. It is true that the Member did not deal specifically with termination for illegality. It is difficult to see however what the Member could have usefully said, in view of the submissions made. The appellants had not shown a proper basis for termination under a legislative provision, and in so far as matters said to be breaches of contract anyway also breached the provision requiring the builder to comply with legal requirements, it is not clear that it added anything to the argument based on the other breach. The appellants’ submissions were framed as if any breach of Schedule 1B clause 21, or special condition 7, gave a right to terminate. Plainly they did not; apart from anything else, they were expressed as warranties, not conditions.

3. I expect that the short answer to this complaint is that the appellants’ submissions on illegality did not deserve to be dealt with. There is authority that there is no obligation on a decision maker in giving reasons to deal with every point raised, so long as the true basis for the decision is disclosed.  If there was a technical breach of natural justice here in relation to the illegality ground, it was clearly of no consequence in the outcome of the proceedings before the Member. 

4. The remaining ground, said not to have been addressed, was termination on the ground of breach of an implied term to proceed with due diligence.  What was said in the submissions[65] was that if a failure to proceed with due expedition or a failure to proceed without delay was established, then a failure to proceed with reasonable diligence was also thereby established.  This was tucked away in submissions in support of the second ground relied on in the Notice to Show Cause, and it is by no means clear from those submissions that it was being relied on as a separate ground.  If it was, then in terms it was relied on only if Ground 2 were made out; but it follows from the reasons of the Member that Ground 2 was not made out.  In those circumstances, there was no need to deal with this ground.  If an argument is advanced conditionally and the condition is not met, it is unnecessary to deal with it. 

   [65]Submissions at first instance [71], [72]. 

5. In submissions on appeal the appellants argued that this ground should have been addressed because it was derived from an implied term in Schedule 1B s 25, and the respondent is the regulator of that section: [198]. Although the proceeding was between the appellants and the respondent, what was in issue was the state and consequences of the contractual rights between the appellants and the builder. The position of the builder under the contract has nothing to do with the status of the respondent as regulator, nor has the obligations of the Tribunal in giving reasons.

6. The appellants’ submission that there was a breach of the rules of natural justice has therefore not been made out.  It follows that Grounds 1 to 14 in the annexure to the application for leave to appeal or appeal have been dealt with.  The annexure then listed a number of alleged errors of fact, followed by a number of alleged errors of law.  The appellants are entitled to appeal on a question of law, but require leave to appeal on a question of fact, or of mixed law and fact, so it is convenient to deal first with the alleged errors of law relied on.[66] 

   [66]The appellants submitted at the hearing that the question of leave to appeal should be decided before considering the appeal on questions of law, and cited Edwards v Sovereign Homes (Qld) Pty Ltd [2020] QCATA 146. In that appeal also questions of law were decided first: [29].

Questions of Law

1. The grounds alleging errors of law start at number 58.  The first two grounds simply alleged that the Tribunal erred in failing to find that the appellants lawfully terminated the building contract.  That does not raise a question of law.  In this broad form, these are at least questions of mixed fact and law.  It is certainly not the case that on the primary facts found by the Tribunal the only conclusion open as a matter of law was that the appellants had lawfully terminated the contract.  

2. Ground 60 was that the Tribunal failed properly to consider the terms of the contract, including those terms implied by Schedule 1B of the Act or adopted by Special Condition 7 and Clause 11.1 of the contract. The Act in Schedule 1B Part 3 incorporates certain warranties into regulated contracts: Schedule 1B s 19. Special Condition 7 provided to the same effect, I expect unnecessarily, while General Conditions Clause 11.1 imposed a prima facie obligation to comply with all legislative requirements. I am not sure that Clause 11.1 “adopted” terms of the contract; it was a term of the contract, but any legislative requirement operated of its own force. In any case, without identification of which term or terms the Tribunal failed to have regard to, this Ground is too general to be meaningful. The submissions on appeal provided no particulars. No error of law has been shown.

3. Ground 61 was that the Tribunal erred in finding that it was a sufficient response to a Notice to Show Cause under General Condition Clause 39 of the contract to respond to the particulars in the Notice.  This ground appears to have been based on a sentence in the Reasons [59] which referred to the builder’s “response to the particulars of the Notice.”  Under Clause 39.3(c) the builder is required to show cause in writing why the Principal should not exercise a right referred to in Clause 39.4, with that right arising if the builder “fails to show reasonable cause” in accordance with that provision.  Obviously cause can be shown in a variety of ways depending on the nature of the complaints and what the builder in fact says in response to them.  Ground 1 of the Notice referred to three specific examples of what was said to be defective work, and the Member addressed each separately. 

4. For example, as to the alleged defects in the plasterwork, which were said by the Member to have been unparticularised, the plasterwork had been inspected by specialists selected by the builder and by the architect, and been found to be satisfactory save for some minor defects. That was the basis of the response about the plasterwork, which the Member regarded as reasonable: [58]. The appellants in submissions referred to a passage from Dura (supra) at [386], that the response need not be in the form of rectification, but is primarily concerned with future performance.  In a matter where the existence of the breach is not in dispute I would agree, but if the builder’s position was that a particular defect relied on was not present, or was not his fault, there is no reason why that cannot be a reasonable response, and be part of a process of showing reasonable cause, at least if it is true.  Whatever particular responses are made to particular matters relied on in a Notice to Show Cause, the ultimate issue is whether reasonable cause has been shown not to act under Clause 39.4.  No error of law has been shown. 

5. In submissions from [221] the appellants sought to develop an argument that the builder, in responding to a Notice to Show Cause, needed to respond to any existing defect known to it, not just those identified in the notice.  Dura was cited, but it is not authority for that proposition, which is clearly wrong.[67]  The process of showing cause must respond to the particular matters in the notice, which must be in terms sufficient to identify to the builder, in the prevailing circumstances, what cause has to be shown.[68]  It need not, and cannot sensibly, respond to matters not properly raised in the notice.  In the present case, it seems to me that the particulars given were inadequate in some respects, but that issue was not decided by the Member.  

   [67]See, for example, Vision Eye Institute Ltd v Kitchen [2014] QSC 260 at [240]; FPM Constructions (infra) at [174].

   [68]Yendex Pty Ltd v Prince Constructions Pty Ltd [1988] QSCFC 62 at p 2, 3.  Clause 39 uses the word “stated” rather than “specified”, but the reasons requiring the relevant breaches to be identified still apply, and I consider that the meaning is much the same. 

6. In other submissions the appellants again raised the proposition that they were not confined by the particulars in the Notice to Show Cause.  I do not agree; the Notice must clearly identify what is alleged to be a substantial breach, and the particulars are to show what is relied on for that purpose.  I do not accept that breaches of contract discovered afterwards can be relied on by the appellants in this way. 

7. In the submissions Grounds 62, 64 and 113 were dealt with together.  Grounds 64 and 113 are in substance the same; Ground 62 asserted that a wide range of matters had not been considered, but I take it from the submissions that this Ground was advanced to support the appellants’ argument that the effect of Clause 11.1 of the insurance policy was that there was a right on the part of the appellants to terminate the building contract for any breach of contract by the builder.[69]  The Member quoted Clause 1.2 of the policy, which provided that the respondent was liable to pay for incomplete work only if the insured, here the appellants, have “properly terminated the contract with the contractor.”  What “properly terminated” meant was explained in Clause 11.1 as “lawfully under the contract or otherwise at law, upon the contractor’s default which extends to, but is not limited to, (relevantly) any breach of the contract by the contractor.”  The appellants’ submission was that the effect of these words was that they had a right to terminate the building contract for any breach of contract by the builder, at least for the purposes of the Policy.  In effect, the contract could be “terminated” for the purposes of the policy even though it was not terminated as between the owners and the builder.

   [69]Emphasis in submissions [228].

8. This proposition needs only to be stated to be rejected.  The insurance policy, although operating under a statute, was in effect a contract between the appellants and the respondent.  It contained a condition for the respondent’s liability which depended on the termination of the contract between the builder and the appellants, which had to be done “lawfully under the contract” – that is, the contract between the appellants and the builder – “or otherwise at law”.  A term in the insurance contract cannot affect the extent or operation of termination rights under a different contract, between the appellants and the builder.  Obviously it takes whatever rights exist under that contract for the insured to terminate, and makes it clear that it is only when that contract has been lawfully terminated for default[70] that such a termination counts.  Clause 11.1 does not create or modify any rights of termination by the insured; it simply requires that a right of termination lawfully arising under the contract or otherwise at law has been exercised.  Whether such a right existed, and was lawfully exercised, depends on the terms of the building contract, and the general law of contract. 

   [70]No doubt that was inserted to prevent sweetheart deals between the insured and the builder exposing the respondent to liability under the insurance policy. 

9. The home warranty insurance scheme may be a mechanism for consumer protection but it is obvious from its terms[71] that it is quite limited in its scope. If there were some relevant statutory ambiguity the objects and context of the Act and its consumer protection nature would be relevant matters for consideration; I cannot see how the National Construction Code, the Building Act 1975 (Qld) and regulations under it would be relevant to that issue. But the relevant words lack any ambiguity. The Member made no error of law in not giving effect to this submission.

   [71]And from the decision of the Court of Appeal in Schneider v Queensland Building and Construction Commission [2021] QCA 155, where the scheme is explained.

10. Ground 63 assumed that the incorrect interpretation of the policy advanced by the appellants was correct, and asserted that the real issue was whether there had been some hypothetical termination for any breach by the builder for the purposes of the policy.  For the reasons just given, there was no such error of law. 

11. Ground 65 in substance alleged an error of law in considering what the builder would have done if the contract had not been terminated by the appellants.  There was no error of law involved in this; the passage from the decision in Dura (supra) at [386] cited earlier by the appellants[72] shows that, at least in some cases, future performance by the builder is relevant.  In the case of the door in the ensuite, for example, there was no dispute that the door as installed was not in accordance with the drawings, but the matter was resolved on the basis that the builder and the architect were working out how best to rectify it.[73]  Even if the details of that had not been finalised, that they were working this out suggests that the matter would have been resolved if the contract had not been terminated.  For the purposes of the claim on the policy, what mattered was whether the building contract was lawfully terminated as between the parties to it.  It was very much a termination dispute, and no error of law has been shown. 

- Termination under Clause 39

[72]Appellants’ submissions [222].

[73]I will discuss the door issue further later. 

1. In the submissions Grounds 65, 66 and 67 were dealt with together, under the heading of “Evidence regarding termination”.  The submission was that the Member had in effect allowed the builder to show cause in response to the notice twice, by giving explanations in evidence which had not been advanced in the response to the notice to show cause, and in applying an objective test to the question of whether the builder had shown cause, rather than a subjective test.  As to the latter point, the appellants cited the decision in FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 at [164], but that paragraph was about whether the validity of a show cause notice alleging a particular substantial breach depended on the objective existence of the substantial breach, or the subjective view (in good faith) of the principal that there had been a substantial breach. What was said there suggested that the latter was the favoured view, but the paragraph did not contain a clear decision on what was the correct view.

2. On the other hand, at [174] Bastan JA said: “The relevant legal issue depended, however, solely on whether there had been a breach of contract justifying termination by the Council or there had not.  … I would not be satisfied that the contract was terminated for any reason going beyond the matters identified in the show cause notice … .”  That looks as though his Honour was applying an objective test to the existence of grounds to terminate, and that the grounds for termination under the relevant clause in the contract were confined to the issues raised in the notice to show cause.  His Honour pointed out that once an entitlement to terminate existed, there was no basis to challenge the exercise by the Council of the discretion to terminate. 

3. In Dura (supra) at [566] Dixon J did appear to apply a subjective test to the question of whether the contractor had shown reasonable cause, describing the issue as whether the principal had decided that reasonable cause had not been shown honestly and in good faith.  Little explanation for the use of a subjective test at this point was given by his Honour, although reference was made to Clause 44.4 (the relevant clause) at [564] that “in order to act under [it] the principal must first be satisfied that the contractor has failed to show reasonable cause.”  The wording of the clause was not quoted there, and I have not been able to find it elsewhere in the reasons.  At [566] he also said that the power to act under the clause fell within the second category in “Tote Tasmania”.  That was apparently a reference to the decision of the Full Court in Tote Tasmania Pty Ltd v Garrott [2008] TASSC 86 where the Court at [17] referred to different categories of case in the context of implying a requirement that a power be exercised in good faith. That was in a context where a clause in a contract made satisfaction of a condition precedent dependent on whether something was “acceptable to” one party.

4. There can be a termination clause where the right to terminate depends on the opinion of the party giving a notice to show cause as to the reasonableness of the response to it, and I can only assume that Clause 44.4 considered in Dura was one of them.  Clause 39.4 is not. I consider that on the face of it Clause 39.4 of the General Conditions of contract, by making the existence of the power of the principal (relevantly) to terminate the contract dependent on a failure to show reasonable cause in a timely way, imposes an objective test.  If the issue is whether one party has validly terminated a contract under the general law, the existence of circumstances entitling that party to terminate is always determined objectively.[74]  If the intention had been to provide a different test under this contract, I would expect it to provide that the power to terminate arose if “in the opinion of the principal” the contractor had failed to show reasonable cause, or something to that effect.  I am not persuaded that the appellants have shown that the application of an objective test involved an error of law by the Member. 

   [74]See for example Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 657-8 per Deane and Dawson JJ, re repudiation.

5. Grounds 76 to 78 alleged error in imposing on the appellants an obligation to act reasonably in considering whether the builder had shown cause.  There is authority supporting that approach, in particular decisions of the NSW Court of Appeal;[75] those and other decisions were discussed by Jackson J in Aurizon Network Pty Ltd v Glencore Coal Queensland Pty Ltd [2019] QSC 163 at [227] – [240], in a discussion focused on whether there was an implied term of good faith and fair dealing.[76]  This issue arises only if the true interpretation of the contract is that the question of reasonableness is one for the appellants, that is, the test is subjective.  In my opinion, under this contract the test for whether the builder had shown reasonable cause is objective, and a matter for the Tribunal, and as I interpret the reasons of the Member, that was also his approach.  On that approach the issues in these grounds do not arise.  If a different view is taken elsewhere, that question of law can be decided at that point. 

   [75]See for example Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 263, 279. See also Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87 at [154] – [160], a decision too recent to be considered in Aurizon v Glencore (supra).  As to Renard Constructions, see also QNI Resources Pty Ltd v North Queensland Pipeline No 1 Pty Ltd [2022] QCA 169 at [120].

   [76]On appeal the Court upheld the judgment but on a different basis: [2020] QCA 182. McMurdo JA, with whom the other members of the Court agreed, described the discussion of the authorities by Jackson J as “illuminating” – [125] – but said that it was not necessary to express a concluded view on this issue, although he had some difficulty with the finding of breach of any implied term: [135].

- Overclaiming and subcontractors

[151]Builder Day 2 p 52. 

[152]There were 106 formal requests for information to the Superintendent (Vol 7 p 1899) and the builder said that there were many more informal ones: Day 3 p 16. Many revisions to the drawings were issued, particularly in June, July and August 2017: Appeal Book Vol 8 p 2459, 60.  Mr Allen said that one fundamental drawing was reissued 27 times: Day 1 p 83.  See also builder first statement para 65, Vol 7 p 1898. 

1. Ground 4 was the claims for payment in excess of the amount actually payable.  I have discussed this ground already, and regard these as mere technical breaches, which are irrelevant for present purposes.  Ground 5 was failing to obtain prior approval for subcontracting.  I have also discussed this ground earlier, and regard these as little more than technical breaches as well, of no significance for present purposes.  None of the matters properly covered by the Notice to Show Cause amounted to a sufficiently serious breach of non-essential terms, or made a significant contribution to a plausible case of repudiation. 

2. The appellants submitted that there were twenty-four other subcontractors who had not been approved,[153] and that this was a more substantial issue than was indicated at the time of the Notice to Show Cause, and showed that the builder was not willing to comply with this obligation under the contract. The builder said that most of these covered quite small amounts of work, usually just one man doing a bit of work.[154]  Even if these were breaches of the contract, it is difficult to see that the absence of approval had any significant effect on the delivery to the appellants of the substantial benefit of the contract.  On their own, I regard the breaches in this category as of little significance.  They would not contribute much to a case for repudiation by the builder. 

- Other Defects relied on

- Sarking

[153]Day 1 p 31. 

[154]Day 2 p 92. 

1. Turning to the other issues litigated, the first was the complaint about the use of sarking said not to comply with the National Construction Code.  This was said to be significant because to remedy it required the removal of the timber cladding and replacement of the sarking, and the cladding.  I have mentioned the evidence on this topic earlier.[155]  Having considered it, including the oral evidence of the appellants’ expert witness, I agree with the Member that the appropriate conclusion is that there was no breach of the Code, and hence no breach of contract by the builder at all.  The evidence showed that another sarking was more vapour permeable than the one used, but that did not mean that the one used was not vapour permeable.  The one used was described as a Medium Vapour Barrier according to the expert.  On the data sheet produced by the builder it was more vapour permeable than the product said by the expert to have been used, but in either case, the sarking was not impermeable to vapour, so it was vapour permeable.  The expert did not provide any reason, such as a reference to a definition in the Code, to show that that was not so.[156]  Even if the expert regarded the other sarking as more appropriate for use in this context, his evidence did not show a breach of the Code.   I consider this was not proved to be a breach of contract at all. 

- Uncrimped gas pipe join

[155]See [26], [27] above.

[156]I found his evidence as to what was vapour permeable membrane at Day 3 p 36 confusing. 

1. The next issue was the failure to crimp an end of a gas pipe which had been installed.  Again I have already mentioned this issue.  There was a short length of copper piping which ran between the outside of the house near the corner of the garage into an area above part of the ceiling of a room immediately below that part of the garage, a store opening off the home office.[157]  The length of copper pipe was quite short, and penetrated the concrete through a bored hole, then ran into a connection with a different type of gas pipe as installed in the building, described by the expert as PEX poly-pipe.  There was to be a connection to the gas meter and hence to the gas supply, but none of that had been done when the contract was terminated.  A photograph in his report showed the poly-pipe connection to the connector had been crimped, but that the connection with the copper pipe had not been crimped.[158] 

   [157]Report of expert Appeal Book Vol 9 p 2569.  The site dropped steeply from the road, and the garage was on a level above the level of the store room and the rest of the “ground floor”. 

   [158]Report of the expert Appeal Book Vol 9 p 2570. 

2. Accepting that the connection had been covered by the plasterboard, I consider that this is properly regarded as an instance of incomplete work, an unfinished part of the process after “roughing in” the gas piping.  The evidence was that this piece of copper pipe was really a “place filler” until they were in a position to connect the gas to the external meter, which had not yet occurred.[159]  It was only when that connection was put in that the need for crimping arose.  That makes sense, and is supported by evidence, and I accept it.  I am not persuaded that it is a defect and breach of contract at all; it is simply an example of uncompleted work.  Even if it were a breach, and crimping this connection had been overlooked, it was quite a minor matter to rectify, since it was simply a matter of accessing the connection through the plasterboard and crimping the end.  This would have been picked up on pressure testing before the gas was turned on, and really posed no risk.[160] 

- Internal stairs

[159]Letter from gasfitter Appeal Book Vol 11 p 2991. 

[160]Ibid. 

1. The next issue was the internal stairs, which the appellants say were constructed contrary to the National Construction Code and applicable standards, and have had to be demolished and rebuilt.  The expert identified problems with the stairs, that at one point the head clearance was below the minimum of 2 m, and that some risers were above the maximum of 190 mm.[161]  As well, there were gaps between the tops and bottoms of the treads which were greater than permitted by the Construction Code.[162]  He apparently did not check all the stairs, and by the time he saw the house again, the stairs had been demolished.  The builder agreed with the expert’s figures, and said that there were problems with the stairs, caused by the design of the stairs and changes in the levels of the slabs, and that he had been working with the architects to try to work out a solution.[163]  The stairs had not been finished when the contract was terminated. 

   [161]Report of the expert in Appeal Book Vol 9 p 2574. 

   [162]It is not clear from the report whether this last problem was due to an absence of the detailed edge upstand along the back edge of the treads, mentioned in the report, or that it was inadequate, as explained below. 

   [163]Day 2 p 29, 30. 

2. My examination of the plans demonstrated to me that there were design issues with the stairs.  I have looked at the design details for the stairs in the plans.[164]  The elevation showed four flights of stairs, including two below the Ground Level, which had risers of 180 mm; but the flights up and down from the (higher) Garage Level were shown with risers of 190 mm.  The Garage Floor level was shown as 44800, but there was a step down to 44620 to a landing at the top of the stairs down to the Ground Level.  Those stairs had only five steps before they passed under the floor above the Ground Level, at 190 mm each, a drop of 950 mm.  On the drawing the landing had clearance to the base of the First Level of 1340 mm, giving a head clearance of a minimum of 2290 mm. 

   [164]Drawings 614 and 615, Appeal Book Vol 4 p 1275, p1265.  See also Plan A3, at p 1243. 

3. There must have been further changes, however, because the builder included in his second statement part of Revision A of a drawing, which showed the garage floor level of 44.700, although the floor level below remained at 42.100 m.[165]  The drawing does not show the slab thickness, but I suspect this was before it was increased to 250 mm.[166]  That occurred because the builder pointed out that the office on the level below the garage extended beyond the garage door, and something needed to be done to waterproof the slab at this point.[167]  This was passed on to the engineers, and in the event the garage slab was increased in thickness to 250 mm.  If the top of the slab had been 44.700 and the slab was 200 mm think, that would have allowed exactly 2400 mm clearance above a floor at 42.100.  That a battened and lined ceiling produced a clearance of 2380 mm shows that the garage slab was actually moved up in connection with these changes, not down as the appellants suggested.[168]  But the real point here is that design changes were needed because of deficiencies in the original design, which were not the builder’s fault. 

   [165]Appeal Book Vol 11 p 2782. 

   [166]The original thickness was 200 mm: Engineers drawing 4.0 (Revision J), Appeal Book Vol 12 p 3150.  Increased to 250 mm: Drawing 5.0 (Revision G) Appeal Book Vol 12 p 3156. 

   [167]Email builder to architect 27 March 2017, Appeal Book Vol 11 p 2964.  A solution was proposed to the architects: p 2963, 4. 

   [168]Affidavit of Allen sworn 23 May 2019 para 44; Appeal Book Vol 12 p 3109. 

4. Subsequently on 15 September 2917 the architects gave a direction to the builder to provide risers of 191.4 on the step down to the landing, and on the steps up from the landing to the First Level.[169] At some point as well, it appears that the level of the garage floor was raised by the architect, perhaps by 100 mm,[170] and as a result the landing was raised, and that caused difficulties with the stairs down to the Ground Level, as identified by the expert. As a result, the two flights of steps really required redesigning, but that was not done before the contract was terminated. The problem here is that the levels changed, but how this affected the stairs was not worked out by the architects at the time, as it should have been.[171] 

   [169]Appeal Book Vol 11 p 2295, p 2296. 

   [170]Builder Day 2 p 28, 9. 

   [171]See also letter architects to Mr Allen 22 May 2019, Appeal Book Vol 12 p 3116. 

5. An examination of drawing 615 shows how the architects proposed originally to ensure that the steps would be compliant with the maximum gap requirement.  There was to be a backboard 70 mm by 20 mm fixed to the back of each tread, so that the gap above the backboard was 118 mm, within the 125 maximum.  (The treads tapered slightly from the front underneath.)  Unfortunately this detail was based on a tread spacing of 180 mm.  If the tread spacing was 190 mm, unless the backboard was changed, the gap would become 128 mm, non-compliant.  Increasing the tread spacing to 191.4 mm would only make this worse.  The builder said in evidence that the expert’s figures were correct, and he had raised the gap with the architects, and they were proposing to put something in to narrow the gap again: Day 2 p 29, 30.[172] 

   [172]Mr Allen said he would not have approved what the architect was proposing: affidavit sworn 23 May 2019 Appeal Book Vol 12 p 3112.  This was a matter between him and the architect.

6. The builder said that the architects believed that they could get approval for the over-height and changing risers, and the low ceiling, the latter on the basis that the relevant rooms were not habitable rooms, but that did not occur.[173]  So far as the variation in the stair risers was concerned, there was some justification for this, in view of an email from the certifier on 11 September 2017.[174]  The builder was confronted with the problem that the garage floor was changing, and hence the levels were changing, and essentially this was because deficiencies in the design emerged during construction.  The builder has to follow the instructions of the architect, who was also the superintendent, and it seems to me that essentially that was what the builder was doing.  After the termination of the contract, the stairs were rebuilt to a different design.[175]  That shows that the real problem here was one of design, and that the design issues had not been finalised at the time the contract was terminated.  I am not persuaded that this issue involved any breach of contract by the builder at all, and this issue does not contribute anything to a case for termination at common law. 

   [173]Builder second statement Appeal Book Vol 11 p 2782; Day 2 p 47

   [174]Appeal Book Vol 11 p 2992, stating tolerances in assessment of compliance of risers. 

   [175]Affidavit of Allen sworn 23 May 2019 para 49; Appeal Book Vol 12 p 3110, 1.  See also Report of the expert in Appeal Book Vol 9 p 2576. 

7. The appellants, in submissions on appeal para 513(a), said that the design issue was in relation to the stairs leading up from the garage, not down to the kitchen level.  Those stairs had design faults, but that was not the stairs the expert was speaking of in relation to the 2 m clearance issue.  In relation to the stairs up from the Garage Level, it is clear that the builder was just following directions of the architect, as it was bound to do, and any problems were the fault of the architect, and involved no breach of contract by the builder.  The appellants’ submissions do not answer the real point. 

8. The contract required the builder to construct the works in accordance with the plans and specifications: Special condition 6.1.  It also required the builder to comply with all legislative requirements: Clause 11.1.  In the event of an inconsistency, the matter was to be referred to and resolved by the Superintendent: Clause 8.1.  As well, at the start of the architects’ drawings there is a General Note including the statement that the architect’s interpretation of the contract documents shall be final.[176]  As the architect was the Superintendent, both applied, and it follows that, in essence, under the contract the builder had to do what the architect said to do, even if it was contrary to the National Construction Code.  Doing so involved no breach of contract by the builder.  It follows that it was not helpful for the appellants to argue (as they did) that the architect had made a mistake, even if that were true. 

   [176]Appeal Book Vol 4 p 1225. 

9. In my opinion, it follows that the demolition and reconstruction of the stairs was essentially the result of design errors and changes made by the architects, and even if the builder contributed to the problems in some small way, which I have not identified, the reconstruction would have been necessary anyway and was not made necessary by any breach of contract by the builder.  Certainly the builder cannot be blamed for doing what the architect instructed, and that cannot be part of a case for termination.  I doubt if there was a breach of contract at all, but it cannot contribute to a case of repudiation.   It was reasonable for the builder to have proceeded on the basis that compliance with the design would satisfy the relevant legislative requirements until the contrary emerged.  It seems to me that, if the builder was just doing what the Superintendent directed, the builder was not in breach of the contract at all, because of Clause 8.1.  At the very least, because the builder was trying to comply with the contract, this could not amount to part of a case of repudiation.  Any problems sourced to the builder were not the major problems, and this also cannot contribute to a case of substantial breach of inessential terms. 

- Wet area work

1. The next issue was what was said to be defective or incomplete work in wet areas.[177]  This largely consisted of a failure to install metal angles at the edges of wet areas, where the tile floors would abut other floors.  Such angles are certainly required, but in circumstances where the tiling had also not yet been installed, the required angles could easily have been installed, by the tiler or by someone else, before the tiles were installed.[178]  This is an example of incomplete work, rather than defective work. 

   [177]As described by the expert, Appeal Book Vol 9 p 2577 – p 2580. 

   [178]As the builder said was intended: Day 2 p 19. 

2. Apart from this, the expert identified a couple of areas where the waterproofing had small penetrations, either nail holes or a corner scraped off.[179]  Accepting that these were really defects, they were obviously minor and could not really contribute to a case of repudiation, or of substantial breach. 

- Water penetration at windows

[179]The builder disputed that it was responsible for these: Second statement Appeal Book Vol 11 p 2789. 

1. The next issue is some water penetration, to two areas of the house.  The expert identified some indicia of water penetration near the eastern windows of the library on the first floor, and offered the plausible opinion that this had been driven through inadequate sealing by north-easterly winds.[180]  He said that scaffolding or a cherry-picker would be required to identify and reseal the leaks, although I cannot see from the plans how a cherry-picker could be brought to the necessary position.  At the time the contract was terminated, scaffolding was in position to access these windows from outside, so any absence of scaffolding is not the builder’s responsibility. 

   [180]Appeal Book Vol 9 p 2584. 

2. The other area identified was in the home office, which is located at the western end of the ground level, essentially under the garage.[181]  There was evidence of water staining on the plasterboard identified by the expert, at the bottom of a wall, and on the ceiling next to a window, and the expert said the latter was typical evidence of water penetration due to defective or omitted flashing or other sealing at the top of the window frame.  This could have also caused the other water problem, or it may have been due to a waterproof membrane outside the retaining wall being penetrated or otherwise failing to exclude water from the interior.  The builder said that these were examples of incomplete work, and final sealing had not yet occurred.[182] The Member said that rectification of them was the builder’s responsibility: [137]. The expert witness said that he would have expected windows to be properly sealed before plasterwork was put in place inside them.[183]  That makes sense, and I expect that it was a mistake on the part of the builder to do the internal plasterwork as soon as it did, for this and other reasons.[184]  There was no expert evidence however that the plasterwork had been done too early.  The Member seems to have accepted that this was defective work, and I shall assume that it was.

   [181]Appeal Book Vol 9 p 2585, 2586. 

   [182]Builder Day 2 p 69; second statement para 45; Appeal Book Vol 11 p 2789.  This was supported by the glaziers:  Appeal Book Vol 11 p 2938.  The appellants’ evidence was that the relevant windows were finished, even if others were not: affidavit sworn 23 May 2019 para 21. 

   [183]Day 3 p 50. 

   [184]The builder may have felt under pressure from the appellants to expedite the job. 

3. This water penetration was a matter of some significance, but not of great significance.  I assume it required proper sealing of the windows, and replacement of the damaged plasterboard.  It was certainly not grounds for termination alone; it may contribute to grounds for termination, depending on the overall collection of relevant defects. 

- Penetrations of termite barrier

1. The next issue was that there were penetrations to the termite barrier, which was in the form of a chemical impregnated polymer sheet which lined the relevant walls.  The expert reported that on his inspection he saw multiple small punctures to the sheets, likely to have occurred in the course of carrying out other work, and that there had been larger penetrations to route gas, plumbing, electrical and air-conditioning lines through vertical surfaces.[185]  He recommended that the installer investigate the barrier, and carry out all necessary remedial work.  Presumably that was done, but there was no evidence about the extent of the work or how substantial it was.[186]  In the circumstances, I assume that the necessary repair work was not particularly substantial. 

   [185]Appeal Book Vol 9 p 2588. 

   [186]Reports from the pest control specialist exhibited to the affidavit of Mr Allen sworn 26 March 2019 as RJA 108 and RJA 109 Appeal Book Vol 10 p 2735, 2738, deal with other matters. 

1. It was submitted that this was really an example of incomplete work, as one would expect penetrations to the termite barrier, including some clearly deliberate, would entail subsequent rectification of the barrier.  The Member appears to have treated it as an example of defective work, and on that basis it could amount to a part, albeit a small part, of a case for termination.  I would expect however that, in a situation where there had been only limited certification of the termite proofing to that point, further termite-proofing work would have been done on the house before completion and it may well have been convenient to have rectified these penetrations at that point.[187]  In any case, there was no expert evidence that the penetrations of the termite barrier were not susceptible to reasonable repair.  It was not suggested that the significant wall penetrations shown in the photographs were not in accordance with the design, and if so, there was not much else the builder could have done.  Overall, in my opinion this is an example of incomplete work. 

- Unapproved subcontractors

[187]The builder said that additional termite protection work was to be done: Day 2 p 109. 

1. There were some other matters relied on by the appellants as grounds for termination, or as contributing to an overall case for termination.  The appellants relied on additional instances of unapproved sub-contractors.  As I said before, I really cannot regard this as a matter of any great importance, since the important objective of the contract was to provide the appellants with the house in accordance with the contract, and it is difficult to see how they are worse off in any practical sense if some work is done by unapproved subcontractors, so long as it is properly done.  If it was not properly done, that is the real issue, not whether or not the subcontractor was approved.  I do not regard this as contributing to a case for termination at common law.  It certainly did not deprive the appellants of a substantial part of the benefit to which they were entitled under the contract. 

- Other issues

1. Some other issues seem to have been at least ventilated at the hearing.  The appellants complained that the house as built was too close to the boundaries in breach of the development approval, requiring an application for amended approval, which was granted.[188]  Given the absence of any significant consequences, this is really not a relevant issue, as the Member said: Day 2 p 43.  In any case, it was not claimed that the house was not built in accordance with the design, and if the house was not designed to fit the required set-backs, that was a defect in the design, not the fault of the builder. 

   [188]Affidavit of Allen sworn 13 November 2020 Exhibits RJA150, RJA151.

2. The appellants complained that the windows supplied were not the brand specified.  That was true, because, according to the builder, the nominated window supplier stopped dealing with that brand, and used a different brand instead, said to be just as good.[189]  That last point was not contradicted, and if true this was a technical breach only and could not contribute to a case for termination. 

   [189]Builder second statement, Appeal Book Vol 11 p 2778. 

3. The appellants complained about the failure to install the pivot doors at the front and one side.[190]  These were frameless glass doors, and said by the builder (and by the supplier) to be uncertifiable under the National Construction Code as they were not waterproof.[191]  Mr Allen disputed this, but on my reading the Code does not provide for frameless glass doors as a waterproofing method.  However, Mr Allen admitted that the front door could not be installed until the cabinetwork had been delivered, to allow access for it,[192] which had not occurred when the contract was terminated.   This was therefore not an issue, and at best an example of incomplete work. 

   [190]Affidavit of Allen sworn 23 May 2019 para 30, Appeal Book Vol 12 p 3107.  In this case, he seems to be insisting on the drawings and specifications in preference to the requirements of the National Construction Code. 

   [191]Builder Day 3 p 25 – 30.  As well, he was waiting for details about the type and location of the lock: Second statement para 10, Appeal Book Vol 11 p 2780.  Supplier: Appeal Book Vol 11 p 2938. 

   [192]Affidavit of Allen sworn 26 March 2019 page 21, Appeal Book Vol 10 p 2623. 

4. There was a complaint about the thickness of the external fibre cement sheeting, covered by the Member at reasons [143]. The position was as he described, and I agree with his conclusion. This is not an issue. As to the issues of illegality, the only one identified of any real significance was continuing to work before obtaining a clear certificate at the frame stage, discussed earlier, and the only adverse consequence was that an inspection or inspections had to be done again. I do not regard this as contributing to a case for termination, in view of the absence of evidence of impact on the appellants.

5. There were complaints that some gas lines had not been run as required by the drawings, and that some of the electrical work was defective.[193]  This does not appear to have been raised with the builder in cross-examination, or to be supported by other evidence, or evidence about rectification, and in those circumstances I cannot draw any conclusions about it as a matter of any real significance.  This is a consequence of the appellants’ failure properly to identify the factual basis for their case for termination.  As I have said, I am not going to dig around in the material to attempt to identify any other examples of defects or other breaches which would be capable of making a real contribution to a case for termination. 

   [193]Affidavit of Allen sworn 19 October 2018 paras 44 – 59, Appeal Book Vol 6 p 1756, 7. 

Consideration and conclusion

1. I have mentioned a number of cases dealing with, and to some extent applying, the relevant legal principles, generally cases involving different types of contracts.  Those principles were applied, in a case involving a domestic building contract, in Mousa v Vukobratich Enterprises Pty Ltd [2019] QSC 49. In that matter the builder was found to have repudiated the contract by an inability to perform. A large number of individual defects, found to be the fault of the builder, were identified in the decision. The major ones were inadequate waterproofing of retaining walls leading to water seepage (rectification cost estimated at $223,642), inadequate undercroft retaining walls (rectification cost $42,268), groundwater collection at undercroft (rectification costs $19,511), extensive water penetration of external doors and windows (rectification cost $160,000 if the doors and windows can be reused), extensive problems in the roof construction (rectification costs $116,000), inadequate structural support for the atrium glass wall (rectification costs $22,500), cracking of the concrete pool (rectification costs $21,195), spalling of a blockwork wall (rectification cost $18,500), ceiling height lower than specified in the contract (rectification costs $44,348) and poor external painting (rectification costs $65,494). There were a further eighteen more minor defects, and the total cost of rectification of all defects was found to be $818,227 plus GST.

2. The cost of completing the construction of that house as required by the contract was found to be $1,145,661.67, not including rectification costs, although there was a deduction of $575,130.62 as the unpaid balance of the contract amount.  The original contract sum was $2,100,000, and there were found to be a number of variations for which an additional $180,758.51 was allowed.  By contrast, in the present case the builder said that there was $778,893.99 owing for work done but not paid for,[194] covering six weeks work, the last progress claim having been due to be certified just after the contract was terminated.[195]  He also said there was another $600,000 left to claim in the contract.[196]   Mr Allen said that the estimated cost of his brother’s finishing the house was $761,000.[197] 

   [194]First statement para 79, Appeal Book Vol 7 p 1900. 

   [195]Day 3 p 21, 2. 

   [196]Day 2 p 76. 

   [197]Day 1 p 94.  The figure was presented as if it included rectification of existing defects. 

3. In Mousa the owners terminated for repudiation in December 2015, and that entitlement was upheld by his Honour. The owners relied on the defects, and on unjustified claims for variations, non-compliant progress claims and unfounded claims for sundries. The evidence was that the builder sought payment of various amounts from time to time, not related to the scheme for payment under the contract. But repudiation was found on the basis of the extensive defects providing “overwhelming evidence of repudiation”, showing that the construction was beyond the builder’s competence: reasons [193].

4. Obviously that represents a very clear case of repudiation, and does not represent a necessary standard of default to be attained.  But it stands as a very marked contrast to the present case, where the only significant defects were the encroachment onto the neighbouring land, the absence of backblocking in parts of the plaster ceilings, and to a lesser extent water penetration through inadequately sealed windows.  There were some additional minor matters, but on the whole they do not show either a refusal, or an inability, to perform the contract other than in a manner substantially inconsistent with its terms.  Applying the approach in the authorities referred to earlier, in my opinion the behaviour of the builder in the present case has not been shown to have amounted to repudiation of the contract, so as to give rise to an entitlement to terminate on that basis at common law. 

5. As for the alternative ground, on the basis of a collection of breaches amounting to sufficiently serious breaches of non-essential terms, I do not consider that the breaches of contract which have been demonstrated, taken together, amount to a sufficiently serious set of breaches of non-essential terms to entitle the appellants to terminate on that basis at common law, since they did not deprive the appellants of a substantial part of the benefit which they were entitled to under the contract.  I consider that damages were an adequate remedy for such breaches as have been proved by the appellants.  It follows that, on this basis as well, the appellants were not entitled to terminate the building contract at common law. 

6. There is therefore no reason to interfere with the conclusion of the Member, that the appellants had not validly terminated the contract with the builder, and accordingly the decision of the respondent to reject their claim under the insurance policy was correct.  The decision of the Appeal Tribunal is that the appeal is dismissed, and although leave to appeal was granted, limited to one ground, the appeal by leave is also dismissed.  Otherwise, the application for leave to appeal is refused.  I shall give directions as to any dispute as to costs.