Gillham v Kernohan Construction Pty Ltd
[2022] QCATA 19
•14 January 2022
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Gillham v Kernohan Construction Pty Ltd [2022] QCATA 19
PARTIES: AUSTIN GILLHAM (applicant/appellant)
v
KERNOHAN CONSTRUCTION PTY LTD (respondent)
APPLICATION NO/S:
APL191-19
ORIGINATING APPLICATION NO/S:
BDL116-15
MATTER TYPE:
Appeals
DELIVERED ON:
14 January 2022
HEARING DATE:
8 October 2020
HEARD AT:
Brisbane
DECISION OF:
Senior Member Brown
Member HoweORDERS: 1. Leave to appeal is granted;
2. The appeal is allowed;
3. The decision of the Tribunal dated 14 June 2019 is varied as follows:
a) Order 1 is set aside and in lieu thereof it is ordered that Austin Gillham is to pay to Kernohan Construction Pty Ltd t/as Kernohan Construction $1,934.78;
b) Order 2 is set aside and in lieu thereof it is ordered that a copy of this decision is to be provided by the Registry to Master Builders Queensland and of the funds held by Master Builders Queensland the amount of $1,934.78 is to be paid to Kernohan Construction Pty Ltd t/as Kernohan Construction in satisfaction of the amount due under Order 1 and the balance paid to Austin Gillham.
4. The parties are to file two (2) copies and exchange (1) copy of submissions on the costs of the appeal, such submissions not to exceed three (3) pages in length, within 14 days of the date of this decision;
5. The parties are to file two (2) copies and exchange one (1) copy of submissions in reply, such submissions not to exceed three (3) pages in length, within 7 days after receipt of the costs submissions filed and served in accordance with Order 4.
6. The costs of the appeal will be determined on the papers.
CATCHWORDS: APPEAL AND NEW TRIAL – APEAL GENERAL PRINCIPLES – RIGHT OF APPEAL – NATURE OF RIGHT – SCOPE AND EFFECT OF APPEAL – APPEALS IN THE STRICT SENSE AND APPEALS BY WAY OF REHEARING – APPEALS BY WAY OF REHEARING – SCOPE AND EFFECT OF REHEARING – where grounds of appeal raise questions of fact and questions of mixed law and fact – consideration of whether to grant leave to appeal – conduct of appeal by way of rehearing pursuant to s 147 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – GENERALLY – PERFORMANCE OF WORK – GENERAL – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF – where builder claimed variation for cost associated with removal and reinstatement of concrete slab – where existence of slab should have been apparent to builder at the time of entering into the contract – where building owner claimed building work defective or incomplete – where building owner asserted payments for variations not complying with the Domestic Building Contracts Act 2000 (Qld) were made by mistake – whether payments made by mistake – whether building owner should be permitted to recover payments – assessment of damages for breach of contract
Domestic Building Contracts Act 2000 (Qld) s 6(5) s 16, s 18(6), s 43, s 67(6), s 82, s 84, s 84(2), s 92
Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 135, s 147
Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833
Cochrane v Lees (2021) QCATA 74
Coulton v Holcombe (1986) 162 CLR 1
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196
J-Corp Pty Ltd v Mladenis[2009] WASCA 157
Harrison and Anor v Meehan [2016] QCATA 197
Hookway v Racing Victoria Limited [2005] VSCA 310
Hope Island Resort Holdings Pty Ltd v Jefferson Properties (Qld) Pty Ltd [2005] QCA 315
Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124
Pickering v McArthur [2005] QCA 294
APPEARANCES & REPRESENTATION:
Applicant:
Mr M White instructed by Black Bear Legal
Respondent:
Mr I A Erskine instructed by Garland Waddington Solicitors
REASONS FOR DECISION
On or about 16 March 2015 Mr Gillham entered into a Master Builders residential building contract with Kernohan Construction Pty Ltd (‘Kernohan’) to undertake extensive renovations of Mr Gillham’s house at the Sunshine Coast. Mr Kernohan was the builder’s director.
The contract price was $675,451.84.
Kernohan commenced work immediately. By May 2015 the parties had fallen into a dispute about the installation of soffits.
In June 2015 Kernohan commenced proceedings against Mr Gillham in the Tribunal.
On 7 August 2015 Kernohan ceased work on site and excluded Mr Gillham from the property.
On 4 December 2015 Mr Gillham paid an amount of $78,588.32 into the Master Builders Queensland Holding Account and after that gained access to his property.
The dispute between the parties came on for hearing in March 2017. In the proceedings Kernohan claimed payment of $78,588.32 from Mr Gillham for monies owing under the contract and Mr Gillham counterclaimed in the sum of $252,185.97 for breach of contract and breach of the provisions of the Domestic Building Contracts Act 2000 (Qld) (‘DBCA’) which then applied.
The learned Member who heard the matter ordered that Kernohan be paid $65,840.76 from the Master Builder’s Holding Account and Mr Gillham pay the builder an additional sum of $12,747.56.
Mr Gillham seeks leave to appeal that decision. The parties agree all the grounds of appeal concern either claimed errors of fact or mixed law and fact and therefore that leave to appeal is necessary.
Leave to appeal will usually only be granted where an appeal is necessary to correct a substantial injustice to the appellant and where there is a reasonable argument that there is an error to be corrected.[1]
[1]Pickering v McArthur [2005] QCA 294.
The Grounds of Appeal
Mr Gillham raises 34 grounds of appeal.
For reasons which shall become clear, it is appropriate to consider Ground 10 first.
Ground 10 – The Member erred by finding Mr. Gillham was liable to pay for the works associated with Variation 1 (remove and reinstate concrete slab around perimeter of the house) having regard to the evidence, in circumstances where the matter said by Kernohan Construction to have given rise to the variation should have been readily ascertainable by Kernohan Construction prior to his entry in to the contract and upon reading the scope of works.
The Member accepted the evidence of the experts that this was appropriately a matter of variation arising when trenching for the termite barrier occurred. It is unclear from the evidence led at hearing where the experts expressed an opinion about this. It does not seem to have featured in their reports, either individually or joint. It does not seem to have been raised with them at the hearing.
The Member found the existence of a concrete slab under the ground surface was a latent defect within the meaning of the contract. The Member was not satisfied that Kernohan could reasonably have expected to encounter this condition despite attending the site a number of times before signing the contract, because the concrete was below ground.
Mr Kernohan gave evidence that his sub-contracting termite barrier specialist found the concrete slab when he attended the site to install the Termimesh barrier.
Mr Gillham says Mr Kernohan came to the site four times before the contract was signed and he should have realised that the concrete slab found under the surface was there.
Mr Kernohan said in cross-examination:
… the guy that came to do the termite protection took up the pavers. He’d already taken up pavers at his pre-start, or his – you know, when he was doing the quote for Austin, he’d taken up some pavers but he hadn’t taken out the – it was like, about 100 mil of road base. He hadn’t taken that out, so when he came to do the job, he’s taken off the – you know, he’s started taking it up and found this slab.[2]
[2]T1-41 L18-23.
As we have noted, the Member found the buried concrete slab was a latent condition. ‘Latent condition’ is defined under the contract as:
Any physical condition on or around the Land, including surface and subsurface conditions, which differ materially from the physical conditions reasonably expected by the Contractor at the time the contract was entered into.
The Member said the experts accepted that the varied work was required as a result of a latent condition and she accepted the experts’ evidence. Further the Member said Mr Kernohan could not have been expected to encounter the latent condition on his visits to the property before signing the contract.
Mr Gillham submits however that the claimed latent condition was contemplated by the scope of works document. Attention is drawn to the tender documents which included the architectural drawings, where it is stated (twice) ‘existing pavers and bedding to be removed leaving concrete base to support new tiles.’[3]
[3]Appeal book, 1128.
The engineering and architectural drawings formed part of the contract.[4] Again a notation about existing pavers and bedding and an existing concrete base is to be found in both sets of drawings.[5] An existing concrete slab under existing pavers and bedding surrounding the house was clearly indicated on the drawings. In an engineering drawing the line of the old slab is marked as laid at the point where the outside edge of the new slab is to be laid.[6]
[4]Appeal book, 1246.
[5]Appeal book, 232 and 1219 (architectural) ; 247 and 1246 (engineering).
[6]Appeal book, 247 and 1246.
As such that existing concrete slab was not a latent condition not reasonably to have been expected to be found by Kernohan at the time the contract was entered into.
This was not a discrepancy calling for consideration of the order of precedence of documents clause 3.2 of the general conditions as submitted for Kernohan. The drawings formed part of the contract documents. The presence of the existing concrete slab was noted there. The position of the concrete was tracked on at least one of the drawings. The builder was thereby put on notice about it and it should have been considered in costing the job, including the work necessary to construct termite barriers. In so far as the builder accepted the subcontractor’s quotation, the builder had a responsibility to ensure that the subcontracted work was sufficient in terms of the scope of work of the contract.
The experts agreed[7] in their joint report that it was unclear what the circumstances were that presented to Kernohan at the time the variation arose as an issue. Mr Kernohan however explained that at hearing:
[7]Appeal book, 667.
Okay. You say it’s a latent condition?‑‑‑Yeah.
Okay. If you could show me anywhere in those pages 171 to 175 where the word “latent” appears?‑‑‑It doesn’t.
Okay. If you look at page 173?‑‑‑Yep.
Can you show me anywhere there in the description where it says “unexpected”?‑‑‑No.
Okay. So it’s fair to say, then, isn’t it that nowhere in these documents that are attached to your affidavit – sorry, your statement of evidence concerning this variation describe this as latent or unexpected?‑‑‑No.
Okay. But in suggesting that it’s a latent condition, you’re saying that it’s something that you hadn’t expected?‑‑‑We weren’t expecting it. Nobody was expecting it.
Okay. So you discovered the existence of this slab underneath concrete pavers that surrounded the house. Is that right?‑‑‑There was a – there was a concrete – concrete or clay pavers surrounding the house and then, below that, was the – was a – like a road-base bed and beneath that was a slab.
Okay. And, even though you’d been to the site four times, you didn’t, at any stage, inspect this carefully to see if there might be something under there?‑‑‑Well, it was in relation to work with the termite protection and Austin had procured the termite guy and they’d done all the inspections that they felt necessary to provide a quote, which was then passed on to me to use.
But you agreed with me before that your scope of works included the termite protection?‑‑‑Yeah.[8]
[8]T1-40 L1-30.
To the extent Mr Kernohan appears to have been suggesting the termite control contractor was engaged by Mr Gillham, it is to be noted that the scope of works stated a quotation had been obtained from Cooroy Pest Control but the builder could provide an alternative one.[9]
[9]Appeal book, 1251.
The experts said that it was ‘likely’ that it was a legitimate variation. They do not seem to have considered the notations on the drawings abovementioned. Given that, their finding that the variation in question was likely to have been a legitimate variation lacked substance and in so far as the Member relied on that finding, in turn the Member’s finding lacked reasonable basis in fact.
In respect of this ground it is appropriate to grant leave to appeal because the Member appears to have made an error and in result an injustice has been occasioned to Mr Gillham.
Given that leave to appeal is granted, the appeal must continue by way of rehearing.
Rehearing
A rehearing pursuant to s 147 of the QCAT Act is not a rehearing de novo. It is a rehearing on the record, without rehearing from witnesses. There has been no application made here to adduce additional evidence.
The task on rehearing is to correct demonstrated error made in the decision below.
In rehearing the matter the Appeal Tribunal must make up its own mind, but in doing that take into account and give appropriate weight to the findings of fact, views and conclusions made by the learned Member below. The rehearing is not a trial afresh and we are not required to examine all the evidence and arrive at our own conclusions on all the evidence.
Rather, we adopt the learned Member’s primary findings of fact and conclusions where those findings and conclusions have not been challenged in this appeal and where there is no perceived doubt apprehended in such findings and conclusions.[10]
[10]Harrison and Anor v Meehan [2016] QCATA 197 and see Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833, [28-30].
The appeal
Some grounds of appeal are appropriately determined together. That applies to grounds 1 and 19.
Ground 1 – The Member erred by finding that Mr Gillham was not entitled to have deducted $3,136 from Payment Claim 4b having regard to the evidence and the Member’s finding elsewhere that Mr Gillham was entitled to have made a similar deduction from Payment Claim 5.
Ground 19 – The Member erred by finding that Kernohan was not liable to pay Gillham the sum of $4,840 in respect of Scott Schedule Item 3, having regard to the evidence.
We note from outset that the appeal has been hindered by the failure to locate and identify the Scott Schedule referred to and relied on at hearing by the parties and by the learned Member in giving her reasons for decision.
The transcript of the proceeding before the learned Member reveals that when the Member asked for an opening (given there was no agreed list of issues) the response from the parties’ legal representatives was that an opening would take the day and guidance as to issues could be derived from ‘the Scott Schedule’. One would think, given the numerous issues for resolution and voluminous material presented, in the absence of an agreed list of issues an opening was essential.
It may be that the Scott Schedule was appended to another document tendered in evidence, but the parties’ current legal representatives, different to those appearing at the hearing below, have been unable to locate a document which corresponds in all respects with the one relied on and referred to by the Member throughout her reasons for decision. The document they say that most closely corresponds and a copy of which the parties’ current legal representatives have submitted to the Appeal Tribunal shall be relied on and referred in these reasons as the Scott Schedule.
The scope of work under the contract included supply and installation of metal fascia and gutter and gutter guard.
Kernohan issued progress claim 4b on 21 May 2015 for $202,697.68. Part of that was a claim for 80% of the work associated with metal fascia and gutter in an amount of $3,136. Kernohan attributed an amount of $3,920 as the cost of metal fascia and guttering provided under the original scope of work.
The evidence below was to the effect that Mr Gillham forgot that part of the original scope of work included supply and installation of gutter guard. He therefore asked Mr Kernohan to quote for that as an extra by way of variation. The quote was for $4,840. At hearing Mr Kernohan said the quote was for an expensive stainless steel gutter guard product. Mr Gillham rejected the quote.
Kernohan issued progress claim 5 on 18 June 2015 claiming the balance 20% of the work for metal fascia and gutter in an amount of $784.
The Member agreed with the expert witnesses that supply and installation of gutter guard was from outset within the original scope of work of the contract. The failure to supply and install that was incomplete work and the reasonable cost to Mr Gillham to have that done was $1,651.72 which was recoverable from Kernohan.
Mr Gillham says the Member erred in awarding him $1,651.72. He claims it should have been $4,840, the amount Mr Kernohan quoted for gutter guard rather than the amount suggested as reasonable by the expert witnesses. He says Mr Kernohan’s quote was the true value of the work.
In the Scott Schedule the experts referred to page 25 of the expert Mr Dixon’s report. Page 25 suggests powder coated aluminium gutter guard should be used and the experts agreed that the cost for supply and installation was $1,651.72.
Mr Kernohan’s quote of $4,840 was for an entirely different product, stainless steel gutter guard. Mr Gillham rejected stainless steel gutter guard. He is not entitled to it now as the basis of cost to complete work. The experts considered powder coated aluminium gutter guard sufficient, and given there was no specified type identified in the scope of work, that seems an appropriate and reasonable conclusion, particularly given Mr Kernohan said at hearing that the other end of the range for this type of product was plastic, costing mere hundreds of dollars.
It seems clear that Kernohan did all the work associated with the fascia and gutters save for the gutter guard and a small item of incomplete work valued at $187.21 and that amount was also awarded to Mr Gillham.[11] It is not clear what that further incomplete work was, given item 27 in the Scott Schedule provided to the Appeal Tribunal is blank.
[11]Member’s amended reasons, [465-466].
Mr Kernohan was entitled to payment for the work done less the cost to Mr Gillham to complete the work. This was the effect of the Member’s order and there is no error shown in end result.
Ground 2 – the Member erred by finding that Mr Gillham was not entitled to have deducted $5000 from payment claim 5 having regard to the evidence, including:
(a)the expert evidence that the variation in soffit sheeting resulted in a considerable reduction in cost to Kernohan Construction; and
(b)the evidence that Kernohan Construction had misled Mr Gillham in respect of the availability of 9 mm FC soffit sheeting.
Ground 17 – The Member erred by finding no amount was payable by Kernohan Construction to Mr. Gillham in respect of Scott Schedule Item 1 (the soffits), having regard to the evidence.
The learned Member found Mr Gillham was not entitled to withhold $5,000 from progress claim 4b for claimed savings to the builder in using different soffit sheeting to that specified.
Mr Gillham claims the expert evidence was that there was a considerable reduction in cost to Kernohan with the change. That was not the effect of the expert evidence however.
There was no sheeting detail in the specifications. There was mention made in the plans however. Drawing 7 of 14 called for ‘9mm FC sheeting to soffits. Joints to be set. No plastic joins.’ Drawing 6 of 14 referred to ‘9mm FC sheeting flush fitting to soffits. Joints to be set. No plastic joins.’
But instead, Kernohan used 6mm Hardiflex sheeting with plastic joins. Mr Kernohan’s evidence was that he was worried that using 9mm Villaboard, which he understood was the intended product with the reference to 9mm sheeting with set joints, would end up cracking at those joints. His evidence was that he told Mr Gillham that.
The Member noted the experts had agreed with the builder that use of 9mm Villaboard sheets accorded with the reference in the drawings to soffits of 9mm FC sheeting set without plastic joiners.
The builder’s evidence was that the difference in using 6mm FC sheeting as opposed to using 9mm Villaboard sheeting was cost neutral. At hearing Mr Kernohan said the difference in the quoted cost of materials at the relevant time was a mere $38.
Mr Carpenter, one of the experts, agreed the true cost (that is the cost quoted to Mr Kernohan) superseded an estimated cost based on published averages[12] and Mr Dixon did not disagree with that.
[12]T2-104 L19.
Mr Kernohan also provided detailed evidence about the labour component in fixing (and in the case of Villaboard, setting) each product. The experts did not challenge Mr Kernohan’s detailed explanation of the advantages and disadvantages of each method which had roughly similar cost outcomes, save they differed on whether the Villaboard should be fixed along the soffits as opposed to perpendicular to the run of the soffits, the latter possibly offering less loss.
But on the difference in labour costs, there was no great disagreement. Mr Carpenter said it would be a real problem to try and choose between the two, 6mm Hardiflex or 9mm Villaboard.[13] Mr Dixon also thought it was fairly balanced between the two[14] (if only one trade was used, a plasterer, to fix and set the Villaboard).[15]
[13]T2-106 L8.
[14]T2-106 L29.
[15]T2-107 L20.
We determine that the change to the soffits was cost neutral. The independent experts’ evidence does not conflict with that of the builder in any significant regard.
As to Mr Kernohan misleading Mr Gillham in respect of the availability of 9mm FC soffit sheeting, there was a conflict of evidence over what was actually said by Kernohan to Gillham when the builder discussed changing to 6mm Hardiflex using plastic joiners.
There was a discussion between the parties about the use of the products. Mr Kernohan said he was primarily concerned with the setting aspect of soffit sheets. He was worried they would crack (at the joints).
Mr Gillham’s evidence was that Mr Kernohan told him 9mm FC sheets were not available and instead he proposed to use 9mm Villaboard. Mr Gillham said he did not understand the significance of the different jointing methods as it related to acoustic quality. The use of 6mm sheets joined by plastic joiners was acoustically inferior to set 9mm sheets. Mr Gillham subsequently made his own enquiries and discovered 9mm FC sheets (not Villaboard) were available. He claimed to have been misled by Mr Kernohan and in consequence agreed to use of an acoustically inferior product.
The contract was not a design contract. Mr Gillham may have considered the acoustics of the building important but it was no part of the role required of Kernohan as builder:
…in an ordinary building contract the builder is only responsible for bringing the works to completion according to their design.[16]
[16]Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124, 134.
Further, after the discussion with Gillham, Mr Kernohan awaited advice from Mr Gillham’s acoustic engineer and his project manager, the latter having building experience. The builder was instructed by the project manager that it was ‘Ok to use 6mm FC sheeting’.[17] The acoustic engineer did not give evidence at the hearing.
[17]Appeal book, 540.
The builder gave the following evidence in cross-examination:
Okay. So did you say to Mr Gillham that 9 millimetre FC sheeting means Hardiflex?‑‑‑Did I say that? No.
No?‑‑‑No.
Okay. Did you say to Mr ‑ ‑ ‑?‑‑‑Hardiflex doesn’t come in 9 mill.
Okay. Did you say that FC sheeting normally means Hardiflex?‑‑‑I said that – I said there’s confusion about the term, because generally when people would say FC they’re talking about Hardiflex. But you can’t read that as Hardiflex, because it’s asking for 9 mill FC sheeting ‑ ‑ ‑
Yeah?‑‑‑ ‑ ‑ ‑ with set joints, which is villaboard.
Right?‑‑‑Because villaboard is also an FC product.
Okay. Is there any other FC product that you could do 9 millimetre FC joints for that would be this specification?‑‑‑That would meet that specification? No.
Okay. So there was no other product available?‑‑‑No, not that you can set the joints.
Okay. So you say that you said to Mr Gillham that there’s no nine millimetre FC sheeting, meaning Hardiflex, that meets this specification?‑‑‑No. I told him that I was concerned with using the villaboard because the joins were set, and the joins would crack. My recollection is that we then went out to his place, and he showed me what was on the ceiling out there, and told me that he wanted to use that, and he was happy with the plastic joins ‑ ‑ ‑
Right?‑‑‑ ‑ ‑ ‑ and I told him then that that’s Hardiflex which is also an FC product, but it’s not available in nine mil.[18]
[18]T1-69 L24 T1-70 L6.
The Member had ample opportunity over four days of hearing to decide on the credibility of the evidence given by the parties. Whilst the Member said she accepted that Mr Gillham recalled that Mr Kernohan told him that 9mm FC sheets were no longer available,[19] she otherwise expressed considerable doubt about the accuracy of his recollection of discussions with Mr Kernohan.[20]
[19]Amended reasons, [58].
[20]Amended reasons, [65].
Mr Kernohan’s evidence was simply that he told Mr Gillham he had concerns about using ‘9mm FC sheets with set joints’ as called for in the drawings. He raised the matter with Mr Gillham who consulted with the project manager, Mr Hermon, and Mr Kernohan subsequently received written instructions from Mr Hermon to use 6mm FC sheets with plastic joins.
Mr Kernohan gave no thought to acoustic design, but as stated above, acoustic design was no part of his responsibility.
We determine, as did the learned Member, that if there was loss of acoustic performance in the use of 6mm FC sheets, it was not attributable to any failure by the builder in performing his responsibilities under the contract.
Mr Kernohan was entitled to be paid for the work done.
These grounds of appeal fail.
Ground 3 - the member erred by awarding interest on moneys withheld by Mr Gillham from payment claim 5 by reference to the period 1460 days instead of 1442 days.
The difference claimed by Mr Gillham here is $38.94. This was a matter for correction under s 135 of the QCAT Act. Having said that, the mathematical error is conceded by Mr Kernohan.
Ground 4 – the member erred by finding Mr Gillham was not entitled to have deducted $7,500 from payment claim 6 and the Practical Completion Claim having regard to the evidence, including that the ducted air-conditioning system was not completed until after Mr Gillham took possession of the property.
Mr Gillham’s submissions clarify that this ground relates to the air-conditioning provisional sum under the contract. Kernohan claimed the balance of $7,500 because the builder’s work was finished.
Prior to the hearing Mr Gillham abandoned his claim to this deduction.[21]
[21]Appeal Book, 1049.
In line with that there was no challenge to his evidence at hearing that the work was finished. It is inappropriate to raise it now on appeal. The issues for consideration on appeal are not open ended. Parties are normally bound by the case led at trial as explained in Coulton v Holcombe (1986) 162 CLR 1:
It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main area for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish…. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v. Gundowda Pty. Ltd.[1950] HCA 35; (1950) 81 CLR 418, at p 438; Bloemen v. The Commonwealth (1975) 49 ALJR 219.[22]
[22]Coulton v Holcombe (1986) 162 CLR 1, [9].
The case may be different where a question of law is raised for the first time in appeal upon the construction of a document or upon facts that are either admitted or proved beyond controversy,[23] but that was not the case here.
[23]Ibid referring to O’Brien v Komesaroff (1982) 150 CLR 310, 319.
This ground of appeal cannot be pursued now.
Ground 5 – The member erred by finding Mr Gillham was not entitled to have deducted $1,821.60 from payment claim 6 and the practical completion claim having regard to the evidence.
This ground of appeal concerns a deduction from a payment made by Mr Gillham from a professional cleaning claim made by Kernohan. The Member accepted Mr Gillham was justified in deducting $562.88 from the amount of $1,821.60 claimed by the builder in progress claim 6, which left the builder with $1,258.72. She said the builder’s claim was over-stated.
The Member explained that the allowance was made but what was said subsequently in considering the builder’s claim to the balance at practical completion should be taken into account.[24]
[24]Amended reasons, [129].
What was said subsequently was that Mr Gillham was entitled to claim $1,064.56 for the cost of cleaning left undone at practical completion.[25]
[25]Amended reasons, [476-477].
Mr Gillham submits however that given that allowance and given the Member noted (and accepted) the experts’ evidence that Kernohan had failed to clean the site, her earlier award to Kernohan had been wrong.
Whilst there is nothing by way of commentary from the independent experts in the Scott Schedule the experts make comment about cleaning in their individual reports.
Mr Dixon stated he could say little because his inspection occurred late. He was provided with photographs by Mr Gillham suggesting cleaning had not been done but he could not verify them.
Mr Carpenter said:
At the time of my inspection I observed the internal condition of the property appeared as if a builders (sic) clean had been carried out, dust on surfaces is a likely result from months of sitting vacant. In my opinion the property had been cleaned of builder’s rubbish.[26]
[26]Appeal book, 633.
Accepting that some cleaning was done, which we do, Kernohan recovered only $194.12 for this work at end of day.
The award to the builder was reasonable. It was not significant. There was no error. This ground of appeal fails.
Ground 6 – The Member erred by finding Mr. Gillham was not entitled to have deducted $5,229.29 from Payment Claim 6 and the Practical Completion Claim having regard to the evidence.
Kernohan claimed $5,229.29 as the final amount of builder’s margin owing. That was premature because final completion had not been achieved.
The Member determined progress claim 6 was not superseded by the practical completion claim, but that both were distinct claims made through invoices 3219 and 3222 respectively.[27] She also found that Mr Gillham had no right of retention for defects or omissions.[28] Those findings are not challenged by Mr Gillham.
[27]Amended reasons, [103-110].
[28]Amended reasons, [35(d)].
Mr Gillham claims the award fails to take into consideration the builder’s margin that he says should have been removed from the contract by variations 20 and 22 concerning painting and Armorflex. That complaint is the subject of ground of appeal 12 considered below.
Ground of appeal 12 fails for the reasons given.
In so far as the ground of appeal is therefore to be understood as simply a challenge to the amount by which the margin claimed in progress claim 6 was reduced by the Member, a reduction of the margin by half was open on the evidence in the absence of precise evidence as to completion of work at the stage of progress claim 6 from the parties. Certainly there is no indication from Mr Gillham what percentage award should have been made.
We find no error here to be corrected.
Ground 7 – The Member erred in awarding interest to Kernohan Construction at the rate of 5% per annum in respect of the payment of monies deposited into the Master Builders Holding Account by Mr. Gillham on or about 3 December 2015.
The interest awarded was that provided for by the contract for overdue payments. By clause 11.9 of the General Conditions, Mr Gillham was obliged to pay Kernohan interest on outstanding amounts at 5% from the date payment was due until actual date of payment.
Clause 11.9 makes no allowance or exception for money in dispute paid into the Master Builder’s Holding Account. What is surely decisive is the date when payment for those monies fell due. The dispute resolution provisions do not alter the effect of clause 11.9 which focuses on the date of payment due. The dispute resolution process merely allows the parties an opportunity to explore the date due.
Mr Gillham complains the matter took the Member significant time to determine. That is true, however, the matter was complex and made difficult by the conduct of the proceedings by the parties, not least of which were the numerous minor and unnecessary matters raised as disputes requiring determination despite being of relatively trivial commercial value.
Both parties were subject to the same delay and both parties were recipients of interest awards over the same period. Mr Gillham says neither party should be penalised by delay, but contends he should not have to pay interest to Mr Kernohan. He does not address the issue of his award of interest payable by Mr Kernohan, and whether Mr Kernohan should similarly be relieved from payment of that interest.
Had the Member excluded a period referrable to delay in giving reasons for decision from award of interest, given Mr Gillham was awarded interest on monies payable to him by Kernohan at 10% rather than the award to Kernohan of interest at 5%, on monies due by Mr Gillham, Mr Gillham’s would have been the greater loss.
Mr Gillham does not say what order the Appeal Tribunal should make if he was successful on this ground of appeal. Indeed the matter was not raised with the learned Member at first instance.
There is no error made by the Member in the award of interest. This ground of appeal fails.
Ground 8 – The Member erred by finding Kernohan Construction was entitled to payment for variations claimed in circumstances where the member had found those variations did not comply with the Domestic Building Contracts Act 2000 (Qld).
Ground 9 – The Member erred by failing to find that Mr. Gillham had paid for variations claimed by Kernohan Construction by mistake, having regard to the evidence.
The learned Member said this about mistake in the reasons for decision:
[138] Mr Gillham contends that the Builder did not comply with the requirements of part 7 of the DBC Act and with General Condition clause 12 in respect of variations. He submits that the Builder’s claim should be discounted by $60,626.04 because none of the variations complied with the DBC Act and the Contract and that to the extent that Mr Gillham has paid for variations such payments represent a mistake of law or fact as to the Builder’s entitlement to receive payment and seeks restitution of amounts paid.
…
[141] Further Mr Gillham contends in respect of any payment made by him in respect of any of the variations such payment represents a mistake of law (if not also a mistake of fact) as to the Builder’s entitlement to receive payment and that given the protective elements of the DBC Act they cannot be waived or disregarded. He claims that the Builder should therefore make restitution in respect of any payment made for variations claimed by the Builder.[29]
[29]Amended decision, [138] and [141].
Counsel addressed Grounds 8 and 9 together.
Mr Gillham complains first that whilst the Member found that in the majority of cases the variations to the contract did not comply with the statutory requirements for variations applicable at the time by Part 7 of the Domestic Building Contracts Act 2000 (Qld) (‘DBCA’), she took the variations into account in assessing his damages relying on the Appeal Tribunal decision of Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196.
But Mr Gillham raised an issue of mistake in payment of non-compliant variations where no such issue was considered in Greer v Mt Cotton Constructions Pty Ltd. Indeed it was expressly stated in Greer v Mt Cotton Constructions Pty Ltd that mistaken payment for non-compliant variations not having been raised in the original hearing, the Appeal Tribunal refused to consider the matter on the appeal.
Mr Gillham says he paid for non-compliant variations holding the mistaken belief at the time that Kernohan was entitled to recover payment for them.
It seems to us that the first matter to be addressed is the proposition that the variations were not recoverable by Kernohan.
The DBCA has now been repealed with the majority of the provisions (less the draconian penalty of non-recovery for non-compliant variations) now to be found in Schedule 1B to the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’).
By s 84 of the DBCA:
Right of building contractor to recover amount for variation
(1) This section applies if—
(a) the building contractor under a regulated contract gives effect to a variation of the contract; and
(b) the variation consists of—
(i) an addition to the subject work; or
(ii) an omission from the subject work that results in the building contractor incurring additional costs.
(2) If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation—
(a) only if the building contractor has complied with sections 79, 80, 82 and 83; or
(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
(3) If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation—
(a) only if—
(i) the building contractor has complied with sections 79, 80, 82 and 83; and
(ii) the ground of unforeseen circumstances applies; or
(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
(4) The tribunal may approve the recovery of an amount by a building contractor for a variation only if the tribunal is satisfied that—
(a) either of the following applies—
(i) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation;
(ii) the building contractor would suffer unreasonable hardship by the operation of subsection (2)(a) or (3)(a); and
(b) it would not be unfair to the building owner for the building contractor to recover an amount.
As can be seen, where a variation has been sought by a building owner, s 84(2) restricts a builder’s right to recover an amount for a variation to circumstances where either the requirements of ss 79, 80, 82 and 83 have been met or the Tribunal approves recovery of an amount by the builder.
The operative word in s 84(2) is ‘recover’, and there is no intention evidenced in the provision that failure to comply with the statutory requirements for variations makes the contract (or the variations) illegal, void or unenforceable. Indeed, s 92 of the DBCA provides:
92 Effect of failure by building contractor to comply with requirement
Unless the contrary intention appears in this Act, a failure by a building contractor to comply with a requirement under this Act in relation to a domestic building contract does not make the contract illegal, void or unenforceable.[30]
[30]s 92 DBCA; Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196, [50].
The DBCA does not prohibit parties agreeing to non-compliant variations. The strictures imposed by s 84(2) affect only the recovery rights of the builder to such. The owner’s rights regarding non-compliant variations are apparently left unaffected.
Examining further the scheme of the DBCA, by s 16 a variation of a domestic building contract is simply defined as an addition to or subtraction from the scope of work of the contract. By s 6(5) if a contract is varied the total amount payable under the contract is a reference to the total amount payable under the contract as varied. By s 18(6):
(6) If the contract is varied but the building contractor has not complied with a variation provision for the variation, the stated completion date or period—
(a) must be adjusted to take account of any reduction in the number of days required to carry out the subject work; and
(b) may, with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor, be adjusted to take account of any additional days required to carry out the subject work.
The price and completion date under a contract may change as dictated by non-compliant (but agreed) variations. What is different about non-compliant variations however is that the builder’s right to recover an amount for them is limited where they are non-compliant with the DBCA statutory provisions.
As explained in Greer v Mt Cotton Constructions Pty Ltd, the limitation imposed on a builder permitting ‘recovery’ of non-compliant variations is to be contrasted with section 42 of the QBCC Act, which precludes all entitlement ‘to any monetary or other consideration for doing (building work)’ in contravention of licensing requirements (save for the cost of material and labour to the builder).
There is nothing in s 84 of the DBCA or generally Part 7 to suggest that where the owner has voluntarily paid the builder the price for non-compliant variations, that s 84 operates to restrict or prevent the builder from receiving and retaining such voluntary payments.
In the leading decision on recovery of mistaken payments, David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, the High Court said:
… the rule precluding recovery of moneys paid under a mistake of law should be held not to form part of the law in Australia. In referring to moneys paid under a mistake of law, we intend to refer to circumstances where the plaintiff pays moneys to a recipient who is not legally entitled to receive them. It would not, for example, extend to a case where the moneys were paid under a mistaken belief that they were legally due and owing under a particular clause of a particular contract when in fact they were legally due and owing to the recipient under another clause or contract….[31]
[31]David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, [40].
The High Court rejected the distinction between payments made under a mistake of law and payments made under a mistake of fact and held that the rule precluding recovery of monies paid under a mistake of law no longer formed part of the law in Australia.
Recovery based upon mistake is a restitutionary remedy. The unjust enrichment of the recipient is the crucial factor in determining restitution.[32]
[32]Ibid.
The threshold question is whether a payment has been made by ‘mistake’.
Where a payee is legally entitled to the payment of monies, a payment which is voluntary will not be recoverable on the grounds of mistake.[33] A payment is voluntary where the payer has made a conscious choice to make a payment notwithstanding any possible defects in the claim. Ignorance of the law may be a basis for restitution.[34]
[33]Ibid.
[34]Ibid.
The party asserting the mistake has the onus of proving both the mistake upon which it relies and that it was that mistake which caused it to make the payment. In David Securities Pty Ltd v Commonwealth Bank of Australia the High Court explained the onus of proof as follows:
47. … The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust ((79) Westpac Banking Corporation (1988) 164 CLR, at p 673). There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust.
…
57. It might be said that to order restitution in the present case would, in the absence of any other defences, confer something in the nature of a windfall upon the appellants at the expense of the respondent. This possible result flows from the fact that, having proven mistake, the appellants are prima facie entitled to recovery and the respondent bears the onus of proving why an order for restitution would be unjust. (underlining added)
It is necessary to examine whether, and if he did, in what way Mr Gillham raised an issue of mistake in seeking to recover amounts paid to Kernohan for non-compliant variations.
Mr Gillham was given leave to file an amended response and counter-application (the ARC) at the commencement of the hearing below. The only reference to mistake in the ARC was at paragraph 32 where Mr Gillham asserted that he paid variation VA01 in the mistaken belief that the works the subject of the variation were included in the contractual scope of works.
Mr Gillham’s evidence did not address the issue of mistake relating to the payments for the non-compliant variations. Importantly, there was no evidence by Mr Gillham that the mistake he relied upon was causative of the payments.
Indeed, the first occasion on which Mr Gillham addressed the issue of payment by mistake relating to the non-compliant variations was in his closing submissions. He submitted that the payments represented a mistake of law, if not also a mistake of fact, as to the builder’s entitlement to receive payment.
In our view, as explained, Part 7 of the DBCA did not prohibit Kernohan from seeking and receiving payment for non-compliant variations. We therefore do not accept that there was any operative mistake by Mr Gillham in making the payments.
However even if we are wrong and the DBCA prohibited the builder from seeking payment for non-compliant variations, there was no direct evidence by Mr Gillham, or any other witness, that the mistake was causative of the payments. There was no evidence from Mr Gillham about his state of mind at the time he made the payments. There was no evidence by Mr Gillham, for example, that he considered he was under a legal obligation to make the payments or that he even turned his mind to the issue. Mr Gillham did not assert that any of the building work, the subject of the non-compliant variations, was not carried out by Kernohan. Mr Gillham did not assert that the work was not agreed between the parties or that Mr Gillham has not enjoyed the benefit of that work.
Counsel for Mr Gillham said the highest he could put the matter from an evidentiary perspective was that there was an inference of mistake. He does not, however, identify any facts established at hearing from which any such inference might reasonably be drawn.
As we have observed, the issue of mistaken payment, other than as set out in the ARC (which confined the issue to one variation), was raised for the first time by Mr Gillham in his closing submissions. Certainly, Mr Kernohan was given no opportunity to call evidence about mistaken payment at least to the extent of the issue as it was belatedly raised by Mr Gillham.
Notwithstanding our conclusion regarding whether the payments for the non-compliant variations were made by mistake, in our view Mr Kernohan should not be called upon now, in an appeal conducted by way of rehearing, to respond to a case by Mr Gillham not articulated in the ARC or the subject of evidence in the proceedings below:
It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v. Gundowda Pty. Ltd.[1950] HCA 35; (1950) 81 CLR 418, at p 438; Bloemen v. The Commonwealth (1975) 49 ALJR 219.[35]
[35]Coulton v Holcombe (1986) 162 CLR 1, [9].
These grounds of appeal fail.
Ground 10 – The Member erred by finding Mr. Gillham was liable to pay for the works associated with Variation 1 (remove and reinstate concrete slab around perimeter of the house) having regard to the evidence, in circumstances where the matter said by Kernohan Construction to have given rise to the variation should have been readily ascertainable by Kernohan Construction prior to his entry in to the contract and upon reading the scope of works.
We reiterate that the existing concrete slab was not a latent condition not reasonably to have been expected to be found by Kernohan at the time the contract was entered into. This ground of appeal succeeds.
The agreed price of the contract covered performance of this work. The cost of the variation was $10,773.84. Mr Gillham was entitled to reimbursement of this amount by the builder.
Ground 11 – The Member erred by finding Mr. Gillham was not entitled to be reimbursed in respect of amounts paid pursuant to Variations 10 and 12, having regard to the evidence.
Ground 34 – The Member erred by finding Kernohan Construction was not liable to pay Mr. Gillham the sum of $7,700.00 in respect of Scott Schedule Item 75 (level bedding along north patio not supplied and installed), having regard to the evidence.
These grounds are appropriately addressed together.
Under the contract Kernohan was to install level bedding along the length of the northern patio after existing pavers were removed in preparation for laying new tiles.
Kernohan claimed two variations to the contract associated with tiling the patio.
By variation 10 dated 3 June 2015 entitled patio slab, he sought approval for the following additional work: ‘top exiting (sic) patio slab with reinforced concrete slab in preparation for tiles. 124 m2 @ $50/m2.’ The contract price was increased by $7,502 which included a builder’s margin of $682.
By variation 12 on 4 June 2015 entitled extra to patio slab, approval for the following additional work was sought: ‘Top existing patio slab with reinforced concrete slab in preparation for tiles additional 12 m2 @ $50/m2 between pool and linai (sic).’ The contract price was increased by $726 which included a builder’s margin of $60.
Both variations were paid but Mr Gillham sought a credit for the cost of installing level bedding within the original scope of work of the contract but which he said was not required given the variations.
In an email of 14 July 2015 Mr Gillham wrote to Kernohan about variations 10 and 12 to say the variations had been sought by Kernohan on the basis that it was necessary to provide a suitable surface on which to lay new tiles, to provide suitable fall, to avoid a large step down from the house and to marry up with the existing pavers at the east and west ends of the house.[36]
[36]Appeal book, 1778.
At hearing Mr Kernohan gave the following evidence:
That’s right. Now, you poured an additional concrete slab around that new tiled area, didn’t you? We poured it the full – do I give you the background?
If you like? Yeah, okay. So in my tendered submission, I’d allowed a standard cement bedding of 50 mil to get fall out of there, okay? When it came – you know, once we get on site and we’re doing the demolition and we’re getting ready, getting this – getting prepared to tile – even though the tiles weren’t there, but in any case – I come to Austin, I say, mate, there’s a 100 mil step, all right? You know, a 100 mil step, when you’re getting old – you know, maybe we should top this with concrete so that you’ll get a flush, you know. I can just set it up so that the sub-seal on the window comes straight onto your tiled patio. It saves you having to step down out of the door. Austin says, yep, that’s – that’s great. Give me a variation to do a concrete slab in there.
Yep? Okay. So I did a concrete slab in there.[37]
[37]T1-48 L10-24.
In his statement of evidence of 17 February 2017, Mr Kernohan addressed Mr Gillham’s claim for a credit for the original level bedding work as follows:
71 In relation to the purported credit for level bedding along northern patio, the provisional sum for tiling included an allowance of 50mm bedding for the tiles to achieve fall. In my view bedding of more than 50mm is not acceptable.
72 During the construction of the works, the respondent requested the application (sic) to infill the entire patio with a concrete slab (refer variation 12).
73 The cost of the 50mm bedding which is part of the tiler’s scope, will be reconciled once the tiling of the northern patio is complete, as part of the reconciliation of the provisional sum.[38]
[38]558.6 and 558.7.
That statement of evidence is to be understood in circumstances where the contract remained on foot and Kernohan had suspended work and commenced proceedings in the Tribunal to recover outstanding money due for progress claims.
The cost of tiling was a provisional sum. This means it was an estimate of the cost of the work. The estimate in the contract was $16,375 excluding GST and with GST, $18,012.50.
An amount representing approximately 40% of the work (tiling labour) was claimed in progress claim 5. An additional 12% (11.79%) was claimed in progress claim 6. An amount of approximately 52% of the allowance had not been claimed.
The following findings of the learned Member are not challenged in the appeal:
(a)the remaining provisional sum allowance of $8,684.50 was not claimed by the builder;
(b)Mr Gillham was responsible for supplying the tiles;
(c)the parties discussed deleting the northern patio tiling work from the Contract because the tiles had not at that time been delivered and there was some doubt as to when they would be on site;
(d)Kernohan conditionally agreed to Mr Gillham’s offer to delete the works from the Contract if the tiles had not been delivered by Practical Completion but no formal variation was signed;
(e)the work had not been performed prior to Kernohan claiming Practical Completion because the tiles were not delivered to site until 3 August 2015 after the Builder claimed Practical Completion. The Practical Completion claim did not claim the balance of the provisional sum for tiling labour, consistent with its agreed deletion;
(f)the remaining allowance was $7,895 (excl GST) or $8,684.50 (incl GST), which was not invoiced by Kernohan;
(g)the parties accepted the experts’ evidence that the cost to complete the work was $10,615.37 (excl builder’s margin and GST). This was an amount in excess of the remaining allowance.
The learned Member correctly stated that where the actual cost of completing the tiling work exceeded the provisional sum allowed in the contract, the excess would be added to the contract price.
There was therefore no credit due Mr Gillham here. Had the tiling work been completed, the agreed cost of that would have resulted in Mr Gillham having to pay more.
There was no error made by the Member. These grounds of appeal fail.
Ground 12 – The Member erred by finding Mr. Gillham was not entitled to make further deduction in respect of builder’s margin from Variations 20 and 22, having regard to the evidence.
The parties agree that ‘painting’ and ‘application of Armourflex coating’ were removed from the contract through variations 20 and 22 respectively.[39] Credits of $33,000 and $11,000 were allowed Mr Gillham. Mr Gillham says the builder’s margins on that work were retained by Kernohan and should also have been credited. The Member rejected Mr Gillham’s claim to recover the builder’s margins.
[39]Ibid 1079, [543].
The Member accepted that the reason for the variation was Kernohan discovering that the contractor arranged by Mr Gillham to do the work was unlicensed, which the Member said was good reason. We concur.
The term ‘builder’s margin’ is not defined in the subject contract. Generally it covers the builder’s administrative costs, overheads and profit for the job.
The experts’ view was that industry practice dictated the builder was entitled to keep his builder’s margin on the work lost to him under the contract. Further the builder had expended time and effort liaising with Mr Gillham’s preferred contractor before discovering he was unlicensed.
There is provision in the contract for the addition of a builder’s margin where a variation increases the cost of a job, but no mention made about builder’s margin where work is removed from the job, either by agreement or in compliance with statutory requirements.[40]
[40]Clause 13.1(d) contract, 1195.
The variation documents did not extend to removing the builder’s margin from the contract price. Mr Gillham agreed with the variation as drafted. The loss of a builder’s margin in addition to loss of the work variation, all due to the direction by Mr Gillham to engage an unlicensed contractor finds no support under the contractual provisions. By s 43 of the DBCA, Kernohan as builder warranted that the work would be carried out in accordance with all relevant laws and legal requirements including the Building Act 1975 (Qld). The claim to margin by the builder was both reasonable and justifiable.
It is appropriate to give effect to the variations as drafted, which means nothing more than the amounts agreed between the parties be removed from the contract.
Mr Gillham is not entitled to an additional credit for the builder’s margins.
Ground 13 – The Member erred by finding that Mr. Gillham was entitled to liquidated damages for the period 19 June 2015 to 7 August 2015, and not for the period 19 June 2015 to 4 December 2015, having regard to the evidence.
Ground 14 – The Member erred by finding that Kernohan Construction validly suspended works under the Contract on 7 August 2015.
These grounds are conveniently dealt with together.
The learned Member found the practical completion date was validly extended to 18 June 2015.
After that date passed without practical completion having been achieved, Kernohan was exposed to payment of liquidated damages. But the obligation to pay liquidated damages was suspended on 7 August 2015 with Kernohan issuing a notice of suspension of works on the basis that Mr Gillham had committed a substantial breach of the contract in failing to pay the builder’s progress claim 6. By clause 16.2 of the general conditions the practical completion stage is deemed to be automatically extended by a period equivalent to the date of giving the notice of suspension until the date the contractor recommences work.
By clause 16.3, Mr Gillham was required to remedy the breach stated in the notice of suspension within 10 business days. He did not do that. No further work was performed on the job by Kernohan. Accordingly the Member found no additional liquidated damages ever became payable.
Progress claim 6 was issued on (Monday) 20 July 2015. Under the contract it was to be paid within 10 business days,[41] which meant by 3 August 2015.
[41]Contract schedule, item 20.
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