Gaffney v Ryan

[1992] QCA 427

IN THE COURT OF APPEAL

[1992] QCA 427

QUEENSLAND

Appeal No. 24 of 1992

BETWEEN:

MARTIN JOSEPH GAFFNEY

(Plaintiff) Respondent

- and

MICHAEL AIDEN RYAN

(Defendant) Appellant

REASONS FOR JUDGMENT OF THE COURT

Delivered the eleventh day of December, 1992

This is an appeal from a District Court judgment in favour of the respondent for $2,533.00 together with the costs of the action, limited to a hearing of eight days duration, to be taxed in accordance with the Magistrates Court scale of fees. Although the respondent sued both in contract and in tort, it seems that the amount which he recovered was for damages for breach of contract. The appellant, the defendant in the District Court, seeks by this appeal to have that judgment set aside and that, in lieu, there be judgment for the appellant together with costs of the action to be taxed on the District Court scale and that the respondent be ordered to pay the appellant's taxed costs of the appeal.

In or about November 1984, the respondent purchased a commercial building at 79 Vulture Street, (corner of Thomas Street) West End. The building is a two storey timber structure, part of which is about 100 years old. Shortly before the respondent's acquisition of the building, the Brisbane City Council had issued two notices pursuant to s.54 of the Building Act 1975.

One notice required the immediate performance of the following work on the building:

"1. Remove and renew all roof sheeting to the awning;

2.   Remove and renew all roof framing to the awning affected by dry rot and white ants;

3.   Remove and renew all ceiling framing affected by dry rot and white ants;

4.   Remove and renew all ceiling sheeting and cover strips to the awning;

5.    Remove and renew all white ant infestations of the framing and suitably treat the framing to prevent any further reinfestation;

6.   Remove and renew all awning posts that are structurally inadequate."

The second notice was a notice to show cause why the following further work should not be required:

"1. Remove and renew all floor boards and wall sheeting affected by white ant infestation;

2.   Remove all white ant infestation of the framing and suitably treat the building to prevent any further re-infestation."

The respondent considered carrying out the work as an owner/builder, but that proposal was rejected by the Builders' Registration Board. The appellant had a home builder's licence but not a general builder's licence and had no authority to perform work on the respondent's building. Nonetheless, on or about 30 January 1985, the appellant and the respondent made an oral agreement for the performance of work on the building by the appellant.

The trial judge found that it was a term of the contract that the appellant would carry out the work in a good and workmanlike manner with reasonable care, and that in a number of respects he had failed to do so. The amounts which his Honour allowed for these breaches aggregated the judgment sum which the respondent recovered.

Many of the issues litigated by the parties at trial over a period of 10 days are no longer in question on this appeal, some of the remaining issues are of little, if any, relevance, and at least one new issue of importance has been added. The appellant has always asserted the illegality of the transaction between the parties but now, for the first time, relies in this Court on s.58 of the Builders' Registration and Homeowners' Protection Act 1979-1983.

While that Act provided one of the bases of illegality asserted by the appellant below, at that time only s.53, not section 58, was raised.

One of the numerous complications introduced into the matter arose from the circumstance that the respondent did some of the work himself, which contravened sub-s.53(2)(a) of the Builders' Registration and Homeowner's Protection Act and involved a breach by the appellant of sub-s.58(1)(e) if he knowingly assisted the respondent in that breach. However, since there is no suggestion that the contract between the parties required the respondent to carry out such work or the appellant to assist him, such breaches are of little, if any, relevance. What matters is that the work performed by the appellant, as was required by his contract with the respondent, was (as the respondent knew) in contravention of sub-s.58(1)(a) of the Act which relevantly provided:

"58. Offences by registered builders. (1) Save as is otherwise expressly provided in this Act, a registered builder who -

(a)  performs general building construction ... when not registered as a registered general builder ...

...
commits an offence against this Act.
(Penalty $1,000.00)"

Contracts to do what a statute forbids form an established category of illegal contracts which are void and unenforceable. As Gibbs ACJ pointed out in Yango Pastoral Company Pty. Ltd. v. First Chicago Australia Ltd. (1978) 139 CLR 410; 416:

"There have been many cases in which a statute which imposes a penalty on an unlicensed or unqualified person for acting in a particular capacity has been held to prohibit by implication all contracts express or implied made by such a person to act in that capacity."

However, as his Honour had earlier pointed out at p.413, the invalidity of such contracts is not an inevitable consequence:

"Where a statute imposes a penalty upon the making or performance of a contract, it is a question of construction whether the statute intends to prohibit the contract in this sense, that is, to render it void and unenforceable, or whether it intends only that the penalty for which it provides shall be inflicted if the contract is made or performed.

The question whether a statute, on its proper construction, intends to vitiate a contract made in breach of its provisions, is one which must be determined in accordance with the ordinary principles that govern the construction of contracts ... ."

See also, for example, Mason J., with whom Aickin J. agreed, at p.423.

Later, after referring to Cope v. Rowlands (1836) 2 M & W 149; 150 ER 707 and Cornelius v. Phillips (1918) AC 199, Mason J. continued at p.425:

"These cases do no more than demonstrate that the question whether a statute prohibits contracts is always a question of construction turning on the particular provisions, the scope and purpose of the statute. They also indicate some of the considerations which will influence the court's decision on the question of construction. But the considerations to which they refer are by no means exhaustive or comprehensive ... . ...

Where, as here, a statute imposes a penalty for contravention of an express prohibition against carrying on a business without a licence or an authority and the business is carried on by entry into contracts, the question is whether the statute intends merely to penalise the person who contravenes the prohibition or whether it intends to go further and prohibit contracts the making of which constitute the carrying on of the business. In deciding this question the court will take into account the scope and purpose of the statute and the consequences of the suggested implication with a view to ascertaining whether it would conduce to, or frustrate, the object of the statute."

Nothing in sub-s.58(1) of the Builders' Registration and Homeowners' Protection Act 1979-1983 provides that a registered builder who contravenes its terms is disentitled from recovering payment for the work carried out. This is in stark contrast with sub-s.53(2), which precludes recovery for work done by an unregistered builder. Nor does it expressly forbid the doing of the work but adopt the form of saying that one who does it is guilty of an offence; and there is no corresponding provision concerning the other party to the contract. Neither s.53 nor s.58 expressly provides that the person for whom work is performed which would constitute an offence may not obtain damages for breach by the builder; for example, for faulty workmanship.

It is unnecessary for present purposes to consider whether a registered builder who contravenes s.58 can recover, but a construction of the section which would permit such a builder to evade liability for loss caused by defective workmanship is clearly not consonant with a statutory purpose of protecting those for whom building work is performed. On the contrary, it is plainly in the public interest to construe s.58 in a manner which leaves registered builders liable for the standard of their workmanship (cf. s.59), and this construction is also implicitly borne out by the terms of s.59 itself, especially when taken with s.53.

The appellant has failed to demonstrate that his contract with the respondent was void and unenforceable. Since no challenge was made to the findings of defective workmanship or the damages assessed, the appeal fails.

Accordingly, the appeal is dismissed with costs.

IN THE COURT OF APPEAL

QUEENSLAND

Appeal No. 24 of 1992

Before the Court of Appeal

The President
Mr Justice McPherson

Mr Justice Derrington

BETWEEN:

MARTIN JOSEPH GAFFNEY

(Plaintiff) Respondent

- and

MICHAEL AIDEN RYAN

(Defendant) Appellant

REASONS FOR JUDGMENT OF THE COURT

Delivered the eleventh day of December, 1992

MINUTE OF ORDER:	Appeal dismissed with costs
CATCHWORDS:	Contract. Illegality (by statute). Respondent sued applicant in tort and contract for work done by the applicant, an unregistered builder, on respondent's building - whether contract void and unenforceable such that recovery ought not be permitted.
Yango Pastoral Co. Pty. Ltd. v. First Chicago Australia Ltd. (1978) 139 CLR 410
Builders' Registration and Homeowners Protection Act 1979 s.58
Counsel:	Mr J.A. Griffin Q.C. with him Mr M.T. O'Sullivan for the Appellant
Mr J.J. Clifford Q.C. with him Mr J.W. Lee for the Respondent
Solicitors:	Messrs. Fisher Robinson for the Appellant
Messrs. John Katahanas and Company for the Respondent

Hearing date: 24th November, 1992
IN THE COURT OF APPEAL

QUEENSLAND

Appeal No. 24 of 1992

BETWEEN:

MARTIN JOSEPH GAFFNEY

(Plaintiff) Respondent

- and

MICHAEL AIDEN RYAN

(Defendant) Appellant

The President
Mr Justice McPherson

Mr Justice Derrington

Judgment of the Court delivered on the

eleventh day of December, 1992

APPEAL DISMISSED WITH COSTS