Freedom Homes Pty Ltd v Botros

[1999] QCA 150

IN THE COURT OF APPEAL	99.150
SUPREME COURT OF QUEENSLAND

Appeal No 7827 of 1997

Brisbane

[Botros v Freedom Homes P/L]

BETWEEN

HELEN BOTROS and MARY BOTROS

(Defendants) Appellants

AND

FREEDOM HOMES PTY LTD

(Plaintiff) Respondent

McPherson JA
Thomas JA

Moynihan J

Judgment delivered 7 May 1999.

Separate reasons for judgment of each member of the Court; each concurring as to the order made.

APPEAL DISMISSED WITH COSTS.

CATCHWORDS: BUILDING CONTRACT - Conduct amounting to repudiation - Recover damages for breach - Failure to comply with s58 of statute - Whether District Court judge erred in refusing leave to appeal against orders of Queensland Building Tribunal - Parties to the contract.

Bellgrove v Eldridge (1954) 90 CLR 613
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 433
Gaffney v Ryan [1995] 1 Qd R 19, 23
Graystone Pty Ltd [1990] 1 Qd R 157, 162.
Minion v Whywait Pty Ltd v Davison [1977] 1 Qd R 225, 233.

Shepherd v. Felt & Textiles of Australia Ltd (1931) 45 CLR 359, 377-

378

Yango Pastoral Company Pty Limited v First Chicago Australia Limited
(1978) 139 CLR 410

Zullo Enterprises Pty Ltd v Sutton (CA no 8045/1998; 15 Dec 1998)

Queensland Building Services Authority Act 1991

Counsel:	Joseph Botros (as agent) on behalf of the appellants Mr J Allen for the respondent
Solicitors:	Joseph Botros on behalf of the appellants Wight Shera for the respondent.
Hearing Date:	20April1999

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No 7827 of 1997

Brisbane

Before McPherson JA
Thomas JA
Moynihan J

[Botros v Freedom Homes P/L]

BETWEEN

HELEN BOTROS and MARY BOTROS

(Defendants) Appellants

AND

FREEDOM HOMES PTY LTD

(Plaintiff) Respondent

REASONS FOR JUDGMENT - McPHERSON JA

Judgment delivered 7 May 1999

1               This is an appeal from a decision of a District Court Judge refusing leave to appeal against

orders of the Queensland Building Tribunal, constituted by Mrs D Mullins of senior counsel (as she

now is), that the respondents Mrs Helen Botros and Mrs Mary Botros ("the owner") pay to the

applicant Freedom Homes (Qld) P/L ("the builder") the sum of $41,382 on or before 18 July 1997

or, in default, that they pay that sum with interest at 8% from 30 June 1997 until payment.

2 The orders were made under s95 of the Queensland Building Services Authority Act 1991

in respect of a written building contract dated 16 June 1995 made between the owner and the

builder for construction of a dwelling house at Forest View, Bundaberg. The building work was commenced in or after August 1995. The first progress claim, which was for the slab, was made

and paid without incident. The next stage was the frame. For this, invoice 3284 dated 29 September

1995 was issued. The Tribunal Member found it was issued by the builder and received by the

owner before the date it bore. It has never been paid. Invoice no 3328 dated 5 October 1995,

which was for a progress claim of $22,225 at lock up stage, was also issued before it was due. It

too has never been paid. The builder could have solved that difficulty by re-issuing the progress

claims, or the invoices in respect of them, after the subject work had in fact been completed; but

it did not do so. Acting under cl 24 of the contract, the builder nevertheless gave written notice

dated 18 October 1995, with a view to terminating the contract, and in fact purported to take that

step on 27 November 1995, giving non-payment of those two progress claims as the reason or

ground for termination.

3               As it happens, however, other events had intervened. On 10 November 1995, solicitors for

the owner gave notice pursuant to cl 24 of the contract that the builder was in substantial breach of

contract and required it to remedy various breaches which were identified. Five such matters were

specified. They were or concerned wall padding; a cyclone rod; a bracing wall plate; damaged

gyprock walls or ceilings; and complaints about the shower and toilet. Rectification of at least some

of these items was attended to. What remained was, in the view of the Tribunal Member, capable

of being rectified, or of being made the subject of appropriate allowance (which she quantified) by

way of deduction from the builder's claim in accordance with Bellgrove v Eldridge (1954) 90 CLR

613.

4      Despite these matters, the owner continued to maintain the attitude, which was first communicated to the builder on 10 October 1995, that payment of progress claims for frame and lock up stages would not be made unless two other conditions were also satisfied by the builder.

These were (1) that an engineer's report be provided, in terms that were specified, with respect to

the concrete footing or portion of it; and (2) that the plasterboard in the lounge and dinning room

be removed, and replaced. It was at least partly the communication of this attitude by the owner that

led the builder to give the notice dated 18 October 1995 of suspension of the work. The Tribunal

Member considered that, of these two conditions that were sought to be imposed, the second was

the more important. She accepted the evidence or opinions of a number of expert witnesses on

behalf of the builder, in preference to that of an expert or experts on behalf of the owner, that the

plasterboard did not require replacement. She did so after carrying out an inspection of the

premises. It was plainly within her authority to form such a view or conclusion about this issue, and

her decision on that question does not call for review in the proceedings before this Court.

5               The Tribunal Member found that the builder's notice of suspension was given prematurely.

She decided, however, that it did not constitute conduct by the builder amounting to repudiation on

its part. Instead, she held that it amounted to a repudiation of the building contract for the owner to

continue insisting upon compliance with the two conditions first sought to be imposed on 10

October 1995, and that the builder was entitled to accept that repudiation, as indeed it did on 27

November 1995. In consequence, as she also held, the builder was entitled to recover from the

owner damages for breach of the building contract in an amount of $36,720 and accrued interest,

after making allowance for rectification, costs of completing the work, and so on.

6               From this determination the owner applied under s94 of the Act to the District Court for leave

to appeal. The learned judge dismissed the application. His reasons for this decision have, by some

misfortune, gone astray and were not available on this appeal. It is therefore necessary to consider whether there was any discernible basis on which his Honour could or should have reached a

conclusion that the Tribunal Member was wrong in her conclusion. It was submitted that she was

mistaken in deciding that the builder was justified in treating the owner as having repudiated the

contract. It was said that, because the two progress claims were premature, the builder could not

treat the owner's refusal to pay them as a repudiation of the building contract, or was not entitled

to do so without first redelivering those claims after they became due.

7               The Tribunal Member acknowledged that redelivery of the invoices for these progress claims

was required before the builder could validly rely on non-payment of them to justify terminating the

contract. But that was not the ground on which she decided in favour of the builder. The owner's

repudiation, as she found it to be, was the owner's continued insistence on compliance with the two

conditions already mentioned as a prerequisite to making any further payment under the contract.

On that issue, her reasoning is as follows:

"Although the time for making demand for the progress payments for frame and lockup stages had not strictly arrived, the position adopted by the respondents from 10 October 1995 that they would make payment only if an engineer's report in relation to the footing in the terms they required were supplied and, more importantly, the removal and replacement of the plasterboard walls in the lounge and dinning rooms was attended to by the applicant amount to repudiatory conduct on the part of the respondents.

It was that repudiatory conduct that contributed to the applicant's giving the notice dated 18 October 1995 which the applicant was not contractually entitled to give. In some cases, the premature giving of a notice of suspension of works by the builder may amount to repudiation of the contract. In other cases, the premature giving of such a notice by the builder may be consistent with an intention to proceed with the contract. Having regard to what had occurred between the applicant and Mr Botros prior to the applicant's notice dated 18 October 1995, I find that the giving of that notice did not amount to repudiation of the contract by the applicant, nor did it preclude the applicant from accepting the respondent's repudiatory conduct."

What the Tribunal Member said in her reasons at that point was an exposition of her earlier finding

in those reasons that Mr Botros on behalf of the owner had, in October 1995, been insistent that

he would not make payment for the frame until he received a written guarantee from the engineer

and that he would not pay for the lock up stage until the plasterboard was replaced. That attitude

was, she found, maintained in the letter dated 10 November 1995 from the owner's solicitors.

8               A contracting party is not entitled unilaterally to impose on the other party conditions of a kind

for which there is no contractual warrant or authority. It follows that the owner's attitude on that

question, first communicated on 10 October 1995 and insisted on thereafter, justified the builder

in treating the contract as at an end. It is true that it was not the ground which the builder gave for

terminating the contract; but, as the Tribunal Member correctly observed, termination of a contract

can as a matter of law later be justified on any sufficient ground available to a party claiming to

terminate a contract even if that specific ground was not relied on at the time of termination. See

Shepherd v. Felt & Textiles of Australia Ltd (1931) 45 CLR 359, 377-378; and Minion v

Graystone Pty Ltd [1990] 1 Qd R 157, 162.

9               In that regard it is appropriate to add that cl 24 of the contract expressly maintains the power

of the builder to terminate the building contract under the general law. That clause prescribes a

procedure for giving written notice specifying a substantial breach of contract and requiring it to be

remedied within 10 days, failing which the notifying party may determine the contract and recover

damages. Having identified that procedure for terminating the contract, cl 24 goes on to add:

"The right to determine under this condition is in addition to any other powers rights or

remedies the determining party may have."

The effect is to preserve the power to terminate the contract if it is repudiated by the other party,

and to do so independently of the specific procedure identified earlier in the same clause requiring written notice to be given. It would be surprising if that were not the law. It would mean that the

specified procedure would have to be followed even if the other party had evinced a final and

definitive resolve not to perform the contract at all, or to do so only on terms of that party's own

choosing. It is true that a party is not lightly to be taken to have repudiated a contract in that sense:

cf DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 433; but an inference

to that effect was fairly capable of being drawn here, and, in my opinion, it was, on the material

before us, correctly drawn. Clause 24 of the contract was plainly not designed to preclude

termination of the contract in response to repudiatory conduct of the kind evinced by the owner in

the present case.

10             In my view no error of fact or law has been demonstrated in the careful and comprehensive

reasoning of the learned Tribunal Member in determining this application. In any event, in an

application for leave to appeal under s.94(1), or, on an appeal like this from a decision refusing such

leave, the function of the appellate court is limited in the manner described in Whywait Pty Ltd v

Davison [1997] 1 Qd R 225, 233. It is not open to this Court to make findings of primary fact or

to draw inferences that are inconsistent with those that were arrived at by the Tribunal Member

unless there was no reasonable evidence on which such a finding or inference could have been

arrived at. That is not the case here. It follows that the District Court Judge cannot be said to have

erred in refusing to grant the application to set aside the orders made by the Tribunal in this case.

11             Only one other matter remains to be considered. It concerns the question whether Mary

Botros, as well as Helen Botros, was a party to the contract with the builder. Mary Botros is the

mother of Mr Joe Botros, and Helen is his wife. Only Helen signed the form of contract, which in

the record is designated ex B, with the builder. The name of Mrs Mary Botros is said to have been introduced into the negotiations conducted by Mr Joe Botros with the builder only as a source of

finance, and, in some fashion or for reasons that are not altogether clear, she came to be treated as

a party to the contract. It is now said that she was never a contracting party and ought not to have

been ordered to pay the amount of damages found to be recoverable by the builder.

12             On this submission, two further questions are capable of arising. One, which is a matter of law,

is whether the contract is invalidated by s58(1)(a) of the Act. It provides that a contract between

a building contractor and a consumer for carrying out major building work must "be in writing and

signed by the building contractor and the consumer ...". The word "consumer" is defined in s4 to

mean, so far as relevant, "a person for whom building work is carried out ...". On the assumption,

which is doubtless correct, that "person" is for present purposes to be read in the plural, the contract

in this instance ought to have been signed by both Mary Botros and Helen Botros, whereas it was

signed only by Helen Botros. Apart from the absence of the signature of Mrs Mary Botros, the

other requirements of s58(1) were complied with.

13             Section 58 does not define the consequences of a failure to comply with s58(1)(a) beyond

providing in s58(4) that a building contractor who enters into a contract, which does not comply

with s58(1), with a consumer for carrying out major domestic building work commits an offence,

for which the maximum penalty prescribed by s58(4) is 20 penalty units. In Yango Pastoral

Company Pty Limited v First Chicago Australia Limited (1978) 139 CLR 410, the High Court

held that a statutory prohibition against carrying on unauthorised banking business, which was visited

with a daily penalty of $1,000, did not invalidate a contract entered into in breach of that prohibition.

All of their Honours held that the question whether the contract was invalidated was one of statutory

interpretation. Mason J, with whom Aickin J agreed, remarked that there was much to be said for a view that, once a statutory penalty has been prescribed for an offence, the role of the common

law in determining the legal consequences of commission of the offence is thereby diminished.

14             The relevant statutory prohibition in that instance differed from this in that, as the learned

Justices observed in Yango, it imposed a fixed daily penalty for its contravention irrespective of the

number of contracts (whether few or many) were entered into. Here a relatively small monetary

penalty is imposed by s58(4) in respect of each occasion on which a building contractor enters into

a contract for work of the kind in question. However, it remains true to say that, whether the amount

of the price to be paid for the building work is large or small, the relatively small maximum penalty

for breach of s58(1)(a) remains the same. As was observed in Gaffney v Ryan [1995] 1 Qd R 19,

23, in relation to earlier legislation expressed in comparable terms, there is nothing in s58(1) of the

legislation that provides that a registered builder who contravenes its terms is disentitled from

recovering payment for the work carried out. That, as the Court said there, is "in stark contract"

with the provisions like those now in s42(3) of the Act, which expressly precludes recovery by an

unlicensed person of monetary or other consideration for carrying out building work in contravention

of s42(1). See Zullo Enterprises Pty Ltd v Sutton (CA no 8045/1998; 15 Dec 1998). Having

regard to that notable difference, and also to the somewhat troubled legislative history of these

provisions in general, I do not consider that s58(4) should be interpreted as invalidating a contract

or as rendering it illegal, or unenforceable by the building contractor by reason only of failure to

comply with the requirement imposed in s58(1)(a) that the contract must be signed by the consumer

or as, in this instance, by both consumers.

15    This leaves for consideration the question whether Mrs Mary Botros was in fact a party to the contract, or, if not, whether she is now to be treated as such. As to that, Mr Joe Botros, who appeared before this Court by leave on behalf of both his wife and his mother, was the person who

engaged in the negotiations with the builder leading to the making of the contract. The Tribunal

Member specifically found that he acted on behalf of Mrs Helen Botros and Mrs Mary Botros at

all times when dealing with the builder. Those two persons not only instructed solicitors, who

appeared on their behalf at the hearing to defend the proceedings before the Tribunal, but, as the

Tribunal Member recorded, they also counterclaimed for damages for breach of the contract which

they alleged against the builder. It was not until the proceedings reached this Court on appeal that,

for the first time, the point was taken that Mrs Mary Botros was not a party to the building contract.

Mr Joe Botros informed us from the Bar table that it had been intended to raise the matter when

application for leave to appeal was made to the District Court. However, either by accident, or

possibly as a matter of tactics, that step was not taken on that occasion.

16             The result, in my respectful opinion, is that it is now far too late to do so at this stage. The

builder has throughout been permitted or encouraged to act on the assumption that Mrs Mary

Botros was a party to the contract sued upon. The learned Tribunal Member made her findings on

the footing that such a contract existed. It is not now possible to restore the proceedings or the

parties, and in particular the builder, to a state or condition in which the identity of Mrs Mary Botros

as a party remains an issue in the proceedings. The house, or the land on which it was built has, we

were informed, since been disposed of by Mrs Helen Botros. If Mrs Mary Botros was not in fact

a party to the building contract, she has, at least until this appeal was instituted, throughout allowed

herself to be held out to the builder as being such a party. She is not now at liberty to go back on

that state of affairs.

17             I would dismiss the appeal with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 7827 of 1997

Brisbane

Before McPherson JA
Thomas JA
Moynihan SJA

[Botros v Freedom Homes P/L]

BETWEEN

HELEN BOTROS and MARY BOTROS

(Defendants)

Appellants

AND

FREEDOM HOMES PTY LTD

(Plaintiff) Respondent

REASONS FOR JUDGMENT - THOMAS JA

Judgment delivered 7 May 1999

1. I agree with the reasons of McPherson JA and with the orders which he proposes.

   IN THE COURT OF APPEAL

   SUPREME COURT OF QUEENSLAND

   Appeal No. 7827 of 1997

   Brisbane

Before McPherson JA
Thomas JA
Moynihan J

[Botros v. Freedom Homes P/L]

BETWEEN:

HELEN BOTROS and MARY BOTROS

(Defendants) Appellants

AND:

FREEDOM HOMES PTY LTD

(Plaintiff) Respondent

REASONS FOR JUDGMENT - MOYNIHAN J

Judgment delivered 7 May 1999

1. The circumstances bearing on this appeal are canvassed in the reasons for McPherson JA which

   I have had the advantage of perusing. It is unnecessary for me to repeat them here. No error of fact

   or law on the part of the tribunal member has been demonstrated. It was clearly open to the tribunal

   member to conclude that the owners’ attitude that payment would not be made in respect of the frame

   until a written guarantee from an engineer was received or for the lock-up stage until all the damaged

   plasterboard was replaced, justified the builder in treating the contract as at an end. While that inference

   is not lightly drawn (DTR Nominees Pty Ltd v. Mona Homes Pty Ltd [1]) the member properly

   [1] (1978) 138 CLR 423, 433

   concluded that the owners evinced a resolve not to perform the contract save on the impermissible

   terms identified above. The tribunal member was correct in concluding that cl.24 of the contract

   preserved the right to terminate in the circumstances.

2. It is true that the ground found to justify the builder’s termination was not that relied on at the

   time and that the member found that the ground which had been relied on was not sustainable. There

   is however clear authority that determination of the contract can be justified on any sufficient ground

   available, even if that specific ground was not relied on at the time of termination: Shepherd v. Felt &

   Textiles of Australia Ltd [2]; Minion v. Graystone Pty Ltd [3].

   [2] (1931) 45 CLR 359

   [3] [1990] 1 Qd R 157

3. I agree that for reasons given by McPherson JA that s.58 (1)(a) of the Queensland Building

   Services Authority Act 1991 does not invalidate the contract because Mrs Mary Botros did not sign

   it and that it is now too late to raise the issue of whether an order should have been made against her.

   That is particularly so having regard for the fact that she was a party to a counter claim and that solicitors, instructed by her and Mrs Helen Botros, appeared before the tribunal and the judge below

   as though she was a party.