Greer & Anor v Mt Cotton Constructions Pty Ltd
[2018] QCATA 196
•21 November 2018
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196 PARTIES: DAMIEN GREER
(first appellant)
KATE GREER
(second appellant)
v MT COTTON CONSTRUCTIONS PTY LTD
(respondent)
APPLICATION NO: APL044-17 ORIGINATING APPLICATION NO: BDL190-14
MATTER TYPE: Appeals DELIVERED ON: 21 November 2018 HEARING DATE: 22 August 2017 HEARD AT: Brisbane DECISION OF: Senior Member Brown
Member Burke
ORDERS: 1. Appeal allowed.
2. The decision dated 17 January 2017 in BDL190-14 is set aside.
3. The matter is returned to the Tribunal for rehearing according to law and in accordance with these reasons.
4. The parties must file and exchange any submissions on the costs of the appeal within fourteen (14) days and any submissions in reply within seven (7) days thereafter.
CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – WHAT IS – GENERALLY –
where question of law – whether tribunal erred in assessing owners entitlement to damages on the basis of the value of variations not complying with Part 7 of the Domestic Building Contracts Act 2000 (Qld)
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – GENERAL APPROACHES TO INTERPRETATION
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF
WORK – GENERAL – Domestic Building Contracts Act 2000 (Qld) – where contractual variations – where variations did not comply with Part 7 of the Domestic Building Contracts Act 2000 (Qld) – where no application to QCAT for approval to recover amounts for non- compliant variations – where tribunal at first instance found assessment of owners’ entitlement to damages required non-compliant variation works to be valued – whether tribunal erred in assessing owners’ entitlement to damages – purpose of Domestic Building Contracts Act 2000 (Qld) – purpose of Queensland Building and Construction Commission Act 1991 (Qld) – whether s 84 of the Domestic Building Contracts Act 2000 (Qld) abrogates entitlement of a builder to retain monies paid by an owner for non-compliant variations
Acts Interpretation Act 1954 (Qld), s 14A
Domestic Building Contracts Act 2000 (Qld) (repealed), s 3, s 6, s 6(2), s 6(5), s 7, s 7(1), s 16, s 16(1), s 64, s 65, s
66, s67, s 69, s 72(2)(b), s 79, s 80, s 81, s 82, s 83, s
83(1)(b), s 84, s 84(2), s 84(2)(a), s 84(3), s 84(3)(a)(i), s
84(4), s 84(4)(a)(i), s 84(4)(a)(ii), s 84(6), s 84(7), s 92, s
93(1)
Queensland Building Construction and Commission Act
1991 (Qld), s 3, s 42, s 42(1), s 42(3), s 42(4), s 77, s 77(2),
s 77(3)(d), Schedule 1, s 62Queensland Building Services Authority Act 1991, s 42, s 42(3)
Queensland Civil and Administrative Tribunal Act 2009, s 115, s 115(1), s 116, s 116(2), s 142, s 142(1), s 142(3)(b),
s 147(1), s 147(2), s 147(3)
Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286
Bellgrove v Eldridge (1954) 90 CLR 613
Cachia v Grech [2009] NSWCA 232C & E Pty Ltd v CMC Brisbane Pty Ltd [2004] QCA 60 CMF Projects P/L v Riggall & Anor [2014] QDC 90 CMF Projects Pty Ltd v Riggall & Anor [2014] QCA 318 Cody v J H Nelson Pty Ltd (1947) 74 CLR 629 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Cook's Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661
Ericson v Queensland Building Services Authority [2013] QCA 391
Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388
Marshall v Marshall [1999] 1 Qd R 173
McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577
Mertens v Home Freeholds Co [1921] 2 KB 526Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011
Project Blue Sky Inc v Australian Broadcasting Authority
(1998) 194 CLR 355QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41
Robinson v Harman [1848] 1 Exch 850
Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196 Tang Hung Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178
Thompson Residential Pty Ltd v Tran [2014] QDC 156
YZ Finance Co Pty Ltd v Cummings [1964] 109 CLR 395
APPEARANCES & REPRESENTATION:
Applicant: Mr L M Campbell of Counsel, instructed by Gadens Respondent: Mr N M Cooke of Counsel, instructed by Tucker &
Cowen Solicitors
REASONS FOR DECISION SENIOR MEMBER BROWN:
What is this appeal about?
Mr and Mrs Greer engaged Mt Cotton Constructions Pty Ltd (MCC) to carry out building works at their property. The parties entered into a fixed sum contract. The works included alterations, additions and remedial works, the latter as a result of damage sustained to the property in the 2011 Brisbane floods.
The fixed sum payable by the Greers under the contract was $138,190 plus GST.1 As the works progressed, MCC issued 6 building progress claims totalling $481,338.59. The Greers made one payment of $239,128.40.
The parties fell into dispute. MCC commenced proceedings in the tribunal claiming damages for what it said was the Greers’ breach of contract. The Greers counter- claimed seeking the recovery of monies paid in respect of contractual variation claims which, said the Greers, did not comply with Part 7 of the Domestic Building Contracts Act 2000 (Qld) (DBCA), and also seeking damages for the cost of rectifying defective building work.
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011, [73].
MCC subsequently amended its claim to include a claim in quantum meruit on the basis that the building contract was void by virtue of s 93(1) of the DBCA.
The tribunal below dismissed MCC’s application and the Greers’ counter- application.2 The Greers appeal the decision.
Appeals in QCAT – the statutory framework
An appeal on a question of law is as of right.3 An appeal on a question of fact or mixed law and fact may only be made with the leave of the Appeal Tribunal.4
If an appeal is one against a decision on a question of fact only or a question of mixed law and fact, and subject to leave to appeal being granted, the appeal must be decided by way of rehearing with or without the hearing of additional evidence as decided by the Appeal Tribunal.5 In deciding the appeal, the Appeal Tribunal may confirm or amend the decision or set aside the decision and substitute its own decision.6
The relevant principles to be applied in determining whether to grant leave to appeal are: is there a reasonably arguable case of error in the primary decision?;7 is there a reasonable prospect that the applicant will obtain substantive relief?;8 is leave necessary to correct a substantial injustice to the applicant caused by some error?;9 is there a question of general importance upon which further argument, and a decision of the appellate court or Tribunal, would be to the public advantage?10
If an appeal involves a question of law, unless the determination of the error of law decides the matter in its entirety in the appellant’s favour, the proceeding must be sent back to the tribunal for reconsideration.11
The decision at first instance
The hearing below lasted five days. A large amount of evidence was led by both parties. The learned member made a number of findings relevant to this appeal:
(a) The parties had entered into a binding domestic building contract;12
(b) The contract was for a fixed price;13
(c) There was significant additional domestic building work performed by MCC outside the scope of work covered by the fixed price contract;14
Ibid.
Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“QCAT Act”), s 142(1).
Ibid, s 142(3)(b).
Ibid, s 147(1) and (2).
Ibid, s 147(3).
QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.
Cachia v Grech [2009] NSWCA 232, [13].
Ibid.
Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388, 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577, 578, 580.
Ericson v Queensland Building Services Authority [2013] QCA 391.
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011, [58], [60]-[61].
Ibid, [54], [73].
Ibid, [68].
(d) Any building work performed by MCC outside of the scope of works agreed under the contract was variation work;15
(e) MCC was not entitled to pursue a claim in quantum meruit in respect of the variation work;16
(f) MCC had not applied to the Tribunal for approval of the variation work with the result that MCC was prohibited from recovering an amount for the variations including a claim based on quantum meruit;17
(g) Section 84(4) of the DBCA does not remove any entitlement by a builder to monetary or other consideration where the builder fails to comply with the requirements of Part 7 of the DBCA. Section 84(4) limits the builder’s process of recovery to the Tribunal process found in s 84(4);18
(h) There is no clear legislative intent to be derived from the wording of s 84(3) and (4) of the DBCA that the builder’s right to retain payment of monies made to it voluntarily for variations which fail to comply with the requirements of the DBCA is abrogated so as to entitle the owners to subsequently recover monies so paid;19
(i) The Greers were not entitled to recover the monies voluntarily paid by them for the variation work performed by MCC;20
(j) The failure by MCC to comply with the requirements of the DBCA in relation to variations did not make the contract or the additional variation work illegal, void or unenforceable;21
(k) The reasonable value of the variation work carried out by MCC was
$162,099.54;22
(l) The cost to rectify defective work and complete incomplete building work was $45,526.09;23
(m) The fixed contract price (of $152,009) should be reduced by $19,449.20 in respect of prime cost items;24
(n) The Greers suffered no loss taking into consideration, principally, the value of the variation works and the total amount paid by the Greers to MCC.25
Ibid, [68].
Ibid, [65].
Ibid, [69].
Ibid, [84].
Ibid, [88].
Ibid, [90].
Ibid, [92].
Ibid, [106].
Ibid, [155].
Ibid, [158].
Ibid, [159]-[160].
The relevant statutory framework
This appeal involves a consideration of the (now repealed) DBCA and the Queensland Building Construction and Commission Act 1991 (Qld) (QBCC Act). Part 7, sections 79 to 84 of the DBCA govern the requirements for contractual variations. Section 42 of the QBCC Act, relating to unlicensed building work, is relied upon by the Greers as analogous to s 84 of the DBCA. The Greers also rely upon the powers of the tribunal to resolve a building dispute found at s 77 of the QBCC Act, and specifically the power to order restitution found in s 77(3)(d).
The DBCA was repealed on 1 July 2015 however the Act continues to apply to domestic building contracts entered into before the repeal.26 Accordingly, the provisions of the DBCA apply in this dispute.
The stated purpose of the DBCA is found at s 3:
The purpose of this Act, in regulating domestic building contracts, is –
(a) to achieve a reasonable balance between the interests of building contractors and building owners; and
(b) to maintain appropriate standards of conduct in the building industry.
By s 7(1) of the DBCA a domestic building contract includes a contract to carry out domestic building work. By s 6(2), the ‘contract price’ for a domestic building contract is the total amount payable under the contract for the contracted services. By s 6(5), if a contract is varied the reference in s 6(2) to the total amount payable under the contract is a reference to the total amount payable under the contract, as varied.
The meaning of ‘variation’ is found at s 16 of the DBCA:
16 Meaning of variation
(1) A variation, of a domestic building contract, is –
(a)an addition of domestic building work to the subject work; or
(b)an omission from the subject work.
(2) However, for a cost plus contract, an addition or omission is a variation only if the addition or omission is not reasonably contemplated by the contract.
‘Subject work’ as referred to in s 16(1) is defined as:
(a) the domestic building work carried out, being carried out or to be carried out under the contract; or
(b) the domestic building work the carrying out of which has been, is being or is to be managed under the contract.
Section 79 deals with the requirement for contractual variations to be in writing:
QBCC Act, Schedule 1, s 62.
79 Variations must be in writing
(1) The building contractor under a regulated contract must ensure any variation of the contract agreed to between the building contractor and building owner is put into written form –
(a)within the shortest practicable time; and
(b)for a variation consisting of an addition to the subject work—before any domestic building work the subject of the variation is carried out. Maximum penalty—20 penalty units.
(2) Subsection (1) does not apply to a building contractor for a variation of a contract if –
(a)the variation is for domestic building work that is required to be carried out urgently; and
(b)it is not reasonably practicable, in the particular circumstances, to produce a variation document before carrying out the work.
(3) Subsection (4) applies if –
(a)a proposed variation of a regulated contract has not yet been agreed to between the building contractor under the contract and the building owner, but is proposed to come into existence on the signing of a variation document by the owner and the contractor; and
(b)the variation document is to be the first and only agreement between the building contractor and the building owner for the particular variation.
(4) If the proposed variation consists of an addition to the subject work, the building contractor must ensure that no domestic building work the subject of the proposed variation is carried out until the variation document has been signed.
Maximum penalty—20 penalty units.
(5) When the variation document is signed, the following provisions do not apply for the variation –
(a)subsections (1) and (2);
(b)section 82;
(c)section 83(1)(b);
(d)section 84(2)(a) and (3)(a)(i), to the extent the provisions concern sections 82 and 83(1)(b).
Sections 80 and 81 deal with the contents of a variation document. Section 80 provides:
80 General contents of variation document
(1) The building contractor under a regulated contract must ensure a variation document for the contract complies with the formal requirements for a variation document. Maximum penalty—20 penalty units.
(2) A variation document complies with the formal requirements for a variation document if the document –
(a)is in English and is readily legible; and
(b)describes the variation; and
(c)if the variation was sought by the building contractor—states the reason for the variation; and
(d)if the variation will result in a delay affecting the subject work—states the building contractor’s reasonable estimate for the period of delay; and
(e)for a fixed price contract—states the change of the contract price because of the variation, or how the change of the contract price is to be worked out; and
(f)for a cost plus contract—states a fair and reasonable estimate of the costs associated with the addition or omission the subject of the variation; and
(g)if the contract provides for progress payments—makes appropriate provision for payments under the contract to reflect any change of the contract price caused by the variation.
Section 84 deals with the recovery by a building contractor of an amount for a variation and provides:
84 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.
(5) For subsection (3)(a)(ii), the ground of unforeseen circumstances applies if the variation became necessary because of circumstances that could not have been reasonably foreseen by the building contractor when the contract was entered into.
(6) If the building contractor is entitled to recover an amount for the variation of a fixed price contract, the amount is –
(a)the increase in the contract price stated, or worked out in the way stated, in the appropriate variation document for the variation; or
(b)if paragraph (a) does not apply—the cost of carrying out the variation plus a reasonable profit.
(7) If the building contractor is entitled to recover an amount for the variation of a cost plus contract, the amount is the amount worked out in the way stated in the contract.
Part 9 of the DBCA deals with other matters relating to contracts. Relevant to this appeal is s 92 which 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.
Section 42 of the QBCC Act relevantly provides:
42 Unlawful carrying out of building work
(1) A person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under this Act.
(3) Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
(4) A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed –
(a)is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
(b)does not include allowance for any of the following –
(i) the supply of the person’s own labour;
(ii) the making of a profit by the person for carrying out the building work;
(iii) costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
(c)is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
(d)does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
The powers of the tribunal to resolve a building dispute are found in s 77(2) of the QBCC Act:
(2) Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers –
(a)order the payment of an amount found to be owing by 1 party to another;
(b)order relief from payment of an amount claimed by 1 party from another;
(c)award damages, and interest on the damages at the rate, and calculated in the way, prescribed under a regulation;
(d)order restitution;
(e)declare any misleading, deceptive or otherwise unjust contractual term to be of no effect, or otherwise vary a contract to avoid injustice;
(f)avoid a policy of insurance under the statutory insurance scheme;
(g)order rectification or completion of defective or incomplete tribunal work;
(h) award costs. What do the parties say? What do the Greers say?
The Greers say that the learned member erred in two principal respects:
(a) The learned member applied the incorrect measure of damages. This argument consists of two limbs:
(i) The learned member erred in valuing the variation claims by MCC and treating them as part of the contract price payable to MCC when it had dismissed those variation claims in their entirety;
(ii) The learned member misapplied the rule in Robinson v Harman27 and did not apply the correct measure of damages for breach of contract in respect of the defective works. This error consisted of the tribunal setting off the assessed value of the dismissed variation claims against the damages assessed as payable to the Greers for defective works on the basis that the Greers were required to give credit for what they would otherwise have had to pay the builder for the work, including variations.
(b) The learned member refused restitution for amounts already paid for dismissed variation claims by finding that MCC had a common law right to retain money paid to it voluntarily. This argument comprises a number of limbs:
(i) The learned member misconstrued s 84 of the DBCA;
(ii) Section 84 of the DBCA abrogates entirely all common law rights a builder may have who claims payment for additional works in respect of a regulated building contract. The learned member construed s 84 on the erroneous presumption that MCC had an existing common law right to its variation claims;
(iii) The learned member erred in construing ‘recover’ in s 84 as only limiting the builder’s process of recovery to the processes in the tribunal. The learned member failed to consider and construe the first of the two alternative limbs in each of s 84(2)(a) and s 84(3)(a) which provide that the builder is entitled to recover payment for a variation only if it has complied with s 79, 80, 82, and 83 of the DBCA;
(iv) MCC has in law no right or title to the monies which it received for the dismissed variation claims and thus there is no defence to the claim by the Greers for restitution;
(v) The tribunal’s preferred construction of s 84 is wholly inconsistent with, and would defeat, the objective of the Act to protect the Greers as consumers when dealing with a builder. The decision of the learned member has the effect of shifting the statutory onus of ensuring
(1848) 1 Exch 850.
compliance by the builder with Part 7 of the Act from the builder to the home owner before making a progress payment for variation claims in circumstances where the builder wholly disregarded the requirements of the DBCA.
What does MCC say?
MCC says:
(a) On a proper construction of s 84 of the DBCA a building contractor need not ‘recover’ an amount that has already been paid with the result that a building contractor who had been paid would not then be required to make an application to the tribunal for approval of an amount already received;
(b) Section 84 of the DBCA gives no statutory right to the building owner to ‘recover’ an amount paid or to any refund. By contrast:
(i) Section 69 of the DBCA gives the Court the power to order a building contractor to refund to the building owner an amount paid to the building contractor that the building contractor was not entitled to receive28 if a court finds a charge against a building contractor for an offence against a ‘payment section’ proven; and the offence involves the receipt of an amount by the building contractor; and
(ii) Section 72(2)(b) of the DBCA requires a building contractor to refund part of a prepaid amount to the building owner if a building owner withdraws from a regulated contract under s 72 of the Act;
(c) Section 84 of the DBCA does not prohibit a building contractor from receiving a payment from a building owner. A building contractor is legally entitled to receive a payment from a building owner even if the payment is one they could only ‘recover’ under s 84 of the DBCA. The payment made by the Greers to MCC for the variations was not under the kind of ‘mistake of law’ considered in David Securities Pty Ltd v Commonwealth Bank of Australia;29
(d) The authorities consistently decide that a payment like that made by the Greers for the variation works is not recoverable in restitution;
(e) The contract price includes the amount for a variation irrespective of whether the building contractor may ‘recover’ the amount of the variation;
(f) MCC may have an action under estoppel to prevent the Greers from being unjustly enriched. The Greers were aware of MCC’s reliance that a contract was on foot despite there being no signed variations. To allow the Greers to rely on an argument that the contract was not signed and/or that the contract may be unenforceable under statute would enable the Greers to be unjustly enriched and therefore the Greers should be estopped from avoiding compensating MCC for its detriment in completing the works.
DBCA, ss 64-67.
(1992) 175 CLR 353.
The Greers’ reply
The Greers say in reply:
(a) Variations are only to be valued and the ‘amount’ determined once the builder’s entitlement is established. The ‘amount’ follows the entitlement;
(b) Having dismissed the variation claims the tribunal lacked jurisdiction under s 84(6) to proceed to value the variation works;
(c) The variation claims did not meet the requirements under clause 12 of the contract which were identical to those found in s 79 to s 82 of the DBCA. The invalid variation claims therefore never formed part of the contract price on any basis;
(d) Once a variation claim is dismissed by the tribunal, it cannot be taken into account in considering the amounts payable by the parties and the non- compliant variations must be disregarded entirely;
(e) MCC is not entitled to raise an estoppel argument. It was not raised at any time by MCC at first instance and cannot now be raised;
(f) The word ‘recover’ in s 84(2) of the DBCA is not limited to the process of making an application to the tribunal contemplated in s 84(2)(b) of the DBCA. Referring to the Explanatory Note to the Domestic Building Contracts Bill the Greers say that the restriction on a builder’s entitlement to ‘recover an amount’ in s 84(2) is to be construed broadly and is not limited to the tribunal’s procedure on an application being made under s 84(2)(b);
(g) A builder’s lack of entitlement to ‘recover an amount for the variation’ if either limb under s 84(2) of the DBCA is not satisfied is therefore directly analogous to the interpretation of s 42(3) of the Queensland Building and Construction Commission Act 1991(Qld) by the Court of Appeal in Sutton v Zullo Enterprises Pty Ltd;30
(h) There are strong similarities between s 42 of the QBCC Act and s 84 of the DBCA;
(i) On the proper construction of s 84 of the DBCA as having the same effect as s 42(3) of the QBCC Act, there is no need for the Greers to prove mistake in order to be entitled to restitution;
(j) If it is found that mistake was required to be demonstrated by the Greers, it should be inferred that Mrs Greer made the progress payment under the mistake of law that the Greers paid money to MCC who was not legally entitled to receive the payment;
(k) There was no evidence in the hearing below to support a finding that the payments made by the Greers were made voluntarily. Further, it was never put to Mrs Greer when giving evidence in the hearing below that an election
[2000] 2 Qd R 196.
was made by the Greers to make payment for variations knowing that MCC had not met the statutory requirements and so was not entitled to recover any amount for that additional work;
(l) In any event, there was no finding by the learned member that the Greers had made voluntary payments to MCC knowing that MCC had no entitlement to recover the payment;
(m) The statutory power to order restitution arises under s 77(3)(d) of the QBCC Act and MCC has no claim in quantum meruit or under the contract which can support a claim in restitution;
(n) Section 84(2) of the DBCA exhibits a clear and specific intention to render illegal both the making and the performance of a variation agreement if the builder has not complied with the requirements of ss 79 to 83;
(o) Whether a breach of a statutory requirement gives rise to a personal cause of action is one of statutory interpretation. If a person falls within the class intended to be protected by the statutory obligation and prohibition, that may give rise to a right of restitution or recovery if that prohibition is breached.
Before turning to a consideration of the grounds of appeal it is appropriate to briefly survey the relevant case law dealing with Part 7 of the DBCA and s 42 of the QBCC Act.
Part 7 of the DBCA – an overview of the authorities
Allaro Homes Cairns Pty Ltd v O’Reilly & Anor31 involved an appeal from a decision of the QCAT appeal tribunal. In Allaro the builder at first instance sought to recover costs incurred in having variation works performed by a subcontractor. At first instance, and on appeal to the appeal tribunal, it was held that the builder had failed to bring itself within s 84(4) of the DBCA. The appeal to the QCAT appeal tribunal was confined to whether the tribunal at first instance had erred in considering the alternative criteria of exceptional circumstances and unreasonable hardship. The Court of Appeal held that there was no error by the QCAT appeal tribunal in finding that the builder had not demonstrated exceptional circumstances or unreasonable hardship as referred to in s 84(4)(a)(i) and s 84(4)(a)(ii) of the DBCA. In her judgement the (now) Chief Justice appeared to accept that a builder who did not bring themselves within s 84 had no claim in quantum meruit.
In CMF Projects P/L v Riggall & Anor32 the District Court was required to consider s 55 of the DBCA by reference to a cost plus contract and whether the builder had a claim in quantum meruit in circumstances where the DBCA prohibited the entering into of cost plus contracts except in very limited circumstances. Andrews SC DCJ considered that s 84(2) of the DBCA operated to exclude a builder’s capacity to recover an amount on account of a variation on any basis other than satisfying one of the sub paragraphs in s 84(2)(a) or s 84(2)(b).33 His Honour found this to be so based upon, firstly, the natural meaning of the words found in the section and, secondly, that
[2012] QCA 286.
[2014] QDC 90.
Ibid, [23].
there would have been little point in the legislature creating a specific and restricted right at s 84(4) to, in effect, a restitutionary remedy in certain circumstances if the legislature did not intend otherwise to exclude any right to recover, including in restitution. Andrews DCJ found that s 55 of the DBCA also precluded any claim by a builder in quantum meruit.
The decision of Andrews SC DCJ in CMF Projects was appealed. In CMF Projects Pty Ltd v Riggall & Anor34 the Court of Appeal found that s 55 of the DBCA did not operate to exclude a claim by the builder in quantum meruit in circumstances where the contract was unenforceable. Relevant to the present appeal the Court held:
Nor do I see force in the respondents’ submissions referenced to s 84. The DBCA was enacted after the decision in Pavey, Marshall and Sutton were published. The formulations of ss 55 and 84 were informed by those decisions. The choice of different formulations with known different consequences is apt to suggest that the respective provisions were intended to operate with different effect.
In Thompson Residential Pty Ltd v Tran35 McGill DCJ considered whether s 84 of the DBCA operated to exclude any liability of the homeowners for a claim in restitution by the builder for variation works. The builder had not complied with the ss 79 to 81 of the DBCA in respect of the claimed variations. McGill DCJ held:
In my opinion s 84(2) does exclude any restitutionary remedy as well as any contractual remedy, and, in circumstances where it is accepted that the section applies and s 79-81 have not been complied with, the plaintiff may not recover in this court any amount in restitution for any of these variations.36
Neither party cites any decision directly addressing the question of whether and in what manner the value of non-compliant variations paid by a homeowner may be taken into consideration in assessing a claim by a homeowner for damages for a builder’s breach of contract. Similarly neither party cites any decision in which a homeowner has been found to be entitled to recover from a builder a payment made for a non-compliant variation. In regard to the latter issue, the Greers rely upon s 42 of the QBCC Act which they say is analogous to s 84 of the DBCA and the various decisions dealing with s 42.
Section 42 of the QBCC Act – an overview of the authorities
In Marshall v Marshall37 the Court of Appeal considered the meaning and effect of s 42 of the (then) Queensland Building Services Authority Act 1991 (QBSA) (now the QBCC Act). McPherson JA stated that the combined effect of s 42(1) and s 42(7) of the QBSA was twofold: to prohibit a person from carrying out unlicensed building work; and to prohibit a person from undertaking to carry out unlicensed building work. His Honour held:
In my opinion, the effect of s.42(3) is to prevent an unlicensed builder, in proceedings of any kind, from recovering the price or any part if it payable under a contract for building work carried out in contravention of the section.
[2014] QCA 318.
[2014] QDC 156.
Ibid, [18].
[1999] 1 Qd R 173.
Taken by itself, that might perhaps not prevent a builder from receiving money voluntarily paid by the other party. The terms of s. 42(3) are, however, very wide. A person who carries out work in contravention of s. 42 is “not entitled” to any “monetary consideration” for doing so. According to the ordinary meaning of those words, a person receives a “monetary consideration” for carrying out work if he is paid for doing it.
…
…but s.42(3) expressly declares it to be money to which the recipient is “not entitled”, which can only mean that it is money to which he has in law no right or title. If that is so, there is no identifiable basis on which he can, as against the person who paid it, claim to keep or retain it or its equivalent.38
McPherson JA referred to the legislative history of s 42 noting that the section was:
…the third attempt by the legislature to make its meaning clear. On this occasion it may be credited with having intended to cast the net as widely as possible. An unlicensed builder is, as s. 42(3) now provides, not entitled to any monetary consideration for carrying out building work. A principal object of the legislation, both in its original and in its current form, is to prevent unlicensed builders from doing certain kinds of building work.39
In addressing the question of whether the homeowner was entitled to recover monies paid to the builder McPherson JA held:
In determining whether or not the mistake of law has that character here, it is, in my respectful opinion, first of all necessary to determine whether the effect of s. 42, and in particular of s. 42(3), is to relieve the plaintiff of any legal obligation to pay the price or any part of it. It is only if there was no such legal obligation that the plaintiff can claim to recover her payment as money paid under a mistake of law. Once that is shown, it may not be necessary to make the further inquiry whether s. 42(3) also has the effect of denying the defendant the right to retain the money so paid. The plaintiff may, on the authority of David Securities Pty. Ltd. v. Commonwealth Bank (1992) 175 C.L.R. 353 be entitled without more to recover the money paid.
But if the payment was made in pursuance not merely of a mistake of law but under an agreement or transaction that was prohibited and made an offence by statute, then the plaintiff needs to go the further length of establishing that the statutory prohibition does not preclude her from recovering what she has paid.
…
If the defendant was not entitled to any monetary consideration for carrying out building work in contravention of s. 42, then, as I would interpret s. 42(3), he is not entitled to retain the payment made to him for doing it. Because the prohibition in s. 42 was enacted for the benefit of a class of persons of whom the plaintiff is one, she is entitled to recover the payment she made to the defendant.40
Ibid.
Ibid.
Ibid.
Following Marshall was the decision of the Court of Appeal in Sutton v Zullo Enterprises Pty Ltd.41 In Sutton, McPherson JA held:
But, since the undertaking to do and the carrying out of the building work are both prohibited by s.42(1), it is difficult to see why the expression “monetary consideration for” doing the work should not receive a correspondingly wide meaning preventing recovery of restitutionary compensation for the prohibited work.
In Sutton Pincus JA noted the significance in s 42(1) of the prohibition upon the doing of the relevant work and that it was principally that prohibition which suggested that the result in Pavey v Matthews should not necessarily govern the construction of s 42(3) of the QBSA. In addressing whether a claim in quantum meruit fell within the meaning of ‘consideration’ in s 42(3), Pincus JA held:
…I do not accept that the principle, of which the leading example is Pavey & Matthews, permitting such a claim to be made where a contract is unenforceable for want of formality should be extended to include also instances in which a statute prohibits both the contract and the doing of the work.
The most recent consideration of s 42 by the Court of Appeal is the decision in Cook's Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd).42 In the period between the decisions in Marshall and Sutton, s 42 of the QBCC Act was amended43 to provide as follows:
(3) Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
(4) A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed –
(a)is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
(b)does not include allowance for any of the following–
(i) the supply of the person’s own labour;
(ii) the making of a profit by the person for carrying out the building work;
(iii) costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
(c)is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
[2000] 2 Qd R 196.
(2009) 254 ALR 661.
With effect from 1 October 1999.
(d)does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
In Cook’s Construction Keane JA held in relation to the operation of s 42(1) of the QBCC Act:
Section 42(1) renders illegal the making and performance of a contract for building work by an unlicensed builder. It is the conduct of the builder which is struck at. The provision is plainly intended to operate for the benefit of the other party to the building contract.
It is clear from the terms of s 42(3) and s 42(4) that neither provision purports to create a right of action to recover money in any person. Rather, each subsection is concerned to regulate a cause of action for payment which is assumed to have arisen, either under contract or under the principles of the common law which permit claims for payment for work done at the request of another. These common law claims have been variously described as claims for quantum meruit or in quasi-contract or to prevent unjust enrichment.
Section 42(3) is, in terms, concerned to sterilise any claim which might otherwise be made under a contract or under the common law by an unregistered builder. Section 42(4) is concerned to impose limitations upon the right of action at common law which it preserves against the sterilising effect of s 42(3). Without s 42(4), the entitlement of an unregistered builder to payment which would, apart from the Act, arise upon the performance of work by the builder, would be defeated by s 42(1) and s 42(3).44
Keane JA found that it was only to the extent that a claim for reasonable remuneration was made out by the builder in conformity with s 42(4) that the operative effect of s 42(3) upon the rights and liabilities of the parties was affected.45
As to the operative effect of s 42, Keane JA held:
Section 42 of the Act exhibits a clear intention to render illegal both the making and the performance of a contract by an unlicensed builder in so far as building work is concerned. Section 42(3) makes it clear that the consequence of a contravention of s 42(1) by an unlicensed builder is that the builder is unable to recover payment for unlicensed building work. Those consequences include the recovery of payments made to the builder by the other party to a contract for unlicensed building work.46
In considering the question of whether and to what extent there was any limitation placed upon a payer’s right of recovery, Keane JA held:
…to insist upon a more extensive limitation upon the payer's right of recovery, for example, one based on its inability to make restitutio in integrum – whether in money or money's worth – is to introduce a qualification upon the payer's right of recovery which is consequential upon the operation of s 42(3). That
Cook's Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661, [37]-[39].
Ibid, 672 [40].
Ibid, 675 [53].
qualification urged by the appellant cannot be accepted: its acceptance would defeat the operation of s 42(3).47
Consideration
Part 7 of the DBCA is directed at, firstly, the requirements for the form and content of contractual variations and, secondly, the right of a builder to recover amounts for variations. The High Court observed in Project Blue Sky Inc v Australian Broadcasting Authority:48
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. (footnotes omitted)
As has been observed, the purpose of the DBCA is to achieve a reasonable balance between the interests of building contractors and building owners; and to maintain appropriate standards of conduct in the building industry. In C & E Pty Ltd v CMC Brisbane Pty Ltd49 the Court of Appeal held that the protection of building owners was a significant consideration of the legislature in passing the DBCA.
The objects of the QBCC Act are found in s 3:
The objects of this Act are –
(a) to regulate the building industry –
(i)to ensure the maintenance of proper standards in the industry; and
(ii)to achieve a reasonable balance between the interests of building contractors and consumers; and
(b) to provide remedies for defective building work; and
(c) to provide support, education and advice for those who undertake building work and consumers; and
(d) to regulate domestic building contracts to achieve a reasonable balance between the interests of building contractors and building owners; and
(e) to regulate building products to ensure –
(i)the safety of consumers and the public generally; and
(ii)persons involved in the production, supply or installation of building products are held responsible for the safety of the products and their use; and
Ibid, 678 [60].
(1998) 194 CLR 355.
[2004] QCA 60.
(f) to provide for the proper, efficient and effective management of the commission in the performance of its functions.
It can therefore be seen that, while there are similarities between the purpose of the DBCA and the objects of the QBCC Act. The purpose of the DBCA is confined to specified outcomes relating to the regulation of domestic building contracts. The objects of the QBCC Act on the other hand are broader, and include the regulation of the building industry.
Appeal ground 1
It is uncontentious that the contract variations claimed by MCC did not comply with Part 7 of the DBCA. It is also uncontentious that the learned member was correct in finding that MCC was not entitled to a claim in quantum meruit in respect of the non- compliant variations.
A ‘variation’ of a domestic building contract is an addition of domestic building work to the subject work or an omission from the subject work.50 A variation therefore operates to vary the scope of work under a contract and, where additional work is to be performed, will usually involve an additional sum being payable by the owner.
In his reasons, the learned member found that the fixed contract price was $138,190 plus GST. The learned member found that MCC made six progress claims totalling
$481,338.59 and that the Greers made one payment only in the amount of
$239,128.40.51 After adjusting for a number of provisional and prime cost sums, the learned member found that the fixed price under the contract was $132,559.80. The learned member assessed the value of the non-compliant variation works at
$162,009.54.52
The learned member considered the general principles applicable in assessing claims for damages by owners in building disputes. The learned member held:
[93] Where an owner sues for damages for breach of contract the general rule of the measure of damages laid out in Robinson v Harman applies. By that rule the owner is entitled to recover an amount that will put him in the same position, so far as money can do it, as if the contract had been fulfilled. That also means however that in assessing damages for breach of contract the normal rule is that credit should be given for any benefit acquired under the contract.
[94] In Mertens v Home Freeholds Company Warrington LJ said “The Referee has adopted what I think is the true measure of damages – namely, ‘what it cost the plaintiff to complete the house substantially as it was originally intended, and in a reasonable manner, less any amount that would have been due and payable’ to the builder by the building owner, that is to say to the defendant by the plaintiff, had the defendant ‘completed the house at the time agreed by the terms of his contract’.”
[95] The learned authors of McGregor on Damages in considering a builder’s breach of his building contract in failing to build at all or in part and the correct measure of damages that flows from that, noted: “The normal measure of damages is the cost to the owner of completing the building in a reasonable
DBCA, s 16(1).
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011, [8].
Ibid, [106].
manner less the contract price.” A footnote to that statement continues “Or that part of the contract price, if any, remaining unpaid.” The text goes on to cite authority for that measure of damages, cost of completion less contract price, as the Court of Appeal decision of Mertens and they continue “which must still be regarded perforce as the leading case since it proves to be the only one dealing with this issue”.
[96] Other cases have dealt with the matter, most commonly in the context of entire contracts. In circumstances of breach by a builder of his obligations under an entire contract, where he is not entitled to any payment because the contract requires completion before any payment, the advantage to the owners following the builder’s breach is often in not suing and seeking damages for breach of contract. If the owner does sue for damages however, then the rule of Robinson v Harman applies and credit must be given to the builder for any unpaid balance of the price of the contract.
[97] The rule is of general application. It is not limited to cases involving entire contracts. It applies in my view with even greater force if possible to the present situation where the work has been done but s84 inhibits the builder’s recovery of remuneration for that work.
[98] How credit is given for the unpaid price is perhaps unclear. In Cordon senior counsel for the builder made a concession that Tan Hung Nguyen was authority for the proposition that where a proprietor claimed damages for wrongful repudiation the builder was entitled to set off a claim for work done based on quantum meruit against that claim. That concession appears to have been accepted without demur by Bathurst CJ, with whom the other members of the Court of Appeal agreed.
[99] In Ventura v Svirac however, the court, after confirming the measure of damages against a building contractor for failure to properly complete the contract was the cost of proper completion less any unpaid balance of the contract price, said it was not necessary in order to get credit for the unpaid balance of the contract price that the builder should have to plead a set off or counterclaim. Mertens was cited as authority. (footnotes omitted)53
The Greers’ counter application included a claim for damages for breach of contract for defective building work. The learned member found that all of the claims for defects related to variation work.54 The learned member found, relying upon s 92 of the DBCA:
The failure to comply with the statutory requirements for variations does not make the contract nor the additional work of the variations illegal, void or unenforceable.55
The learned member was correct in making this finding. Part 7 of the DBCA does not prohibit parties from agreeing to contractual variations nor does it prohibit the performance of building work by a building contractor in respect of non-compliant variations. Failure to comply with the requirements set out at s 79 of the DBCA exposes the builder to a regulatory outcome in the form of the imposition of a stated
Ibid, [93]-[99].
Ibid, [92].
Ibid.
number of penalty units. When read with s 92 of the DBCA there is no expressed intention in Part 7 of the DBCA that non-compliant variations are illegal or void.
The ruling principle in assessing damages for breach of contract is, as stated in Robinson v Harman, that the claimant is entitled to recover the amount necessary to place him or her in the same position as if the contract had been performed. Where there is defective building work the prima facie measure of damages is the cost of rectifying the defective work to conform with the terms of the contract. This is the rule in Bellgrove v Eldridge.56 A party suing for damages for breach of a contract may only recover for the net loss sustained, that is, the value of the benefit of the contract fully performed less the contract price for securing such performance.
In Commonwealth v Amann Aviation Pty Ltd57 the High Court held that the corollary of the rule in Robinson v Harman is that a plaintiff is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed.
As has been observed, and as was stated in Mertens v Home Freeholds Co58, the measure of the loss of an owner is what it cost the owner to complete the house substantially as it was originally intended, and in a reasonable manner, less any amount that would have been due and payable to the builder by the owner had the builder completed the house at the time agreed by the terms of the relevant building contract.
The learned member found that credit was required to be given to the builder for any unpaid balance of the price of the contract, that the rule (in Robinson v Harman) was of general application, is not limited to cases involving entire contracts and applied with greater force in the circumstances under consideration where MCC had carried out the non-compliant variation work and s 84 of the DBCA inhibited the right to recover by MCC.59 The learned member considered two ways in which credit might be given for what he referred to as the ‘unpaid price’:
(a) Subtracting from the owners’ claim for rectification of defective building work credit for the price payable for variation additions to the contract; or
(b) Setting off against the claim by the owners the price of the variations.60
The Greers say that the learned member fell into error in treating the value of the non- compliant variations as the unpaid balance of the price of the contract.
As has been observed, the parties to a building contract may agree to a variation of a contract, including the scope and amount of the variation, however the builder may not recover the amount for the variation unless the requirements of s 84 have been met.
MCC says that the contract price includes the amount for a variation irrespective of whether the builder may be entitled to recover the amount under s 84 of the DBCA.
(1954) 90 CLR 613.
(1991) 174 CLR 64.
[1921] 2 KB 526.
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011, [96]-[97].
Ibid, [100].
MCC says that the contract price may include the value of variations notwithstanding non-compliance with the requirements at Part 7 of the DBCA. The basis for this submission is the reference in s 84 to ‘recovery’ and the argument that s 84 is restricted to the prospective payment for variations and does not apply to payments already made.
Deducting any amount due and payable under the contract in assessing an owner’s entitlement to damages prevents offending against the rule in Robinson v Harman. The Greers say however that the correct application of Mertens requires a consideration of the balance that may be due and payable under the contract and, on the basis that MCC had no entitlement to recover any amount for the variation works, there was no amount due and payable under the contract.
The effect of s 84(2) of the DBCA is to restrict a builder’s right to recover an amount for a variation unless the requirements of ss 79, 80, 82 and 83 have been complied with or the tribunal approves the recovery of the amount by the builder. Section 84(2) operates therefore to restrict recovery of an amount by a builder in respect of what may be variations agreed by a builder and an owner in circumstances where there has been a failure by the builder to comply with the relevant requirements of Part 7 of the DBCA.
As I have observed Part 7 of the DBCA does not operate to render illegal, void or unenforceable a non-compliant variation. Parties to building contracts are free to agree to contract variations that do not comply with Part 7 but which may operate to change the scope of works under the contract, the contract price or the date of completion. In respect of the latter, for example, where a contract is varied but the building contractor has not complied with a variation provision for the variation, the completion date may be adjusted with the approval of the tribunal.61 Of course, the risk for a building contractor in undertaking non-compliant variation work is that the builder will not be able to recover an amount for such a variation.
What then does ‘recover’ in s 84 mean?
General words used in a statute should be given their plain and ordinary meaning unless the contrary is shown.62 The Oxford Dictionary defines ‘recover’ as meaning ‘regain or secure (money spent or lost or compensation) by legal process or the making of profits.’ Section 84 is directed at the recovery by a builder of an amount for a contract variation. Section 84 deals with recovery in respect of both compliant and non-compliant variations. It might seem, on one view, an odd result if a building contractor was required to apply to the tribunal for approval of an amount for a non- compliant variation in circumstances where the building contractor and the owner agree in relation to the scope and amount of the variation work and the owner has paid the amount to the building contractor. This is the meaning pressed for by MCC, and that ‘recover’ is prospective in meaning and that s 84(2) applies only to unpaid non- compliant variations. Adopting the plain meaning of ‘recover’ there is, in my view, no basis for narrowly construing the word to give it a prospective meaning only and thus confine the effect of s 84(2) to claims for unpaid variation work.
DBCA, s 18(6).
Cody v J H Nelson Pty Ltd (1947) 74 CLR 629 per Dixon J at 647.
The contract price for a domestic building contract is the total amount payable under the contract for the contracted services.63 ‘Contracted services’ means the thing done, being done or to be done by the building contractor under the contract in relation to domestic building work.64 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.65
It follows that the contract price will be the amount, as may be varied, agreed between the parties as being payable under the contract.
There is, in my view, a distinction to be drawn between an amount payable under a contract and the recovery by a builder of an amount for a non-compliant variation that is part of the total amount payable under the contract. There may be agreement between an owner and a building contractor to vary the scope of works and the contract price and thereby the amount payable under the contract however recovery by the building contractor of the amount in respect of a non-compliant variation may be restricted by operation of s 84 of the DBCA.
By s 6(3) of the DBCA, the contract price includes the amount the building contractor is entitled to receive and keep under the contract and the amount the building contractor is entitled to receive under the contract for payment to another person. The definitional provision is inclusive, not exhaustive. The use of the word ‘includes’ conveys an intention to enlarge the ordinary meaning of the defined word or expression.66 Accordingly, in my view, ‘contract price’ is not restricted in its meaning to the amount a building contractor is entitled to receive under the contract either to keep or for payment to another person. It also has the meaning of the total amount payable under a contract, as varied and as agreed between a building contractor and an owner including amounts for non-compliant variations. A building contractor remains subject however to the operation of s 84 of the DBCA in seeking to recover any amounts that would otherwise be agreed amounts payable for non-compliant variations.
Seen in this way, there is consistency in the meaning and effect of the various provisions in Part 7 and the Act more generally. Unlike s 42 of the QBCC Act which strikes at unlicensed building work, Part 7 of the DBCA does not prohibit parties from freely entering into agreements for variation works that may not comply with the stated provisions. The interpretation I favour of the DBCA achieves a reasonable balance between the interests of building contractors and building owners, and maintains appropriate standards of conduct in the building industry.
I turn now to consider the first ground of appeal.
The learned member made no specific findings in relation to whether and to what extent the parties had agreed in relation to the variation works. From a reading of the transcript of the hearing below and of the parties submissions at the conclusion of the hearing, there was considerable dispute on the evidence as to whether the variation works had been the subject of agreement. In the reasons at paragraph [89] the learned member refers to the conflict between the parties:
DBCA, s 6(2).
Ibid, Schedule 2.
Ibid, s 6(5).
YZ Finance Co Pty Ltd v Cummings [1964] 109 CLR 395.
Here there is no claim made either in the pleadings or at hearing that payment for the variations was made other than voluntarily. There was no evidence that payment for variations was made on a mistaken view that there was a legal obligation to pay the amounts claimed. Rather payment seems to have been pursuant to a course of compromise and conciliation adopted with the builder, based in part to avoid conflict and in part to achieve earliest possible completion of the job. By January 2014 the project was already some five months behind schedule. (footnotes omitted)67
The learned member was, in this passage from the reasons, referring to the payment made by the Greers for the variations contained in revised Progress Claim 1 issued by MCC.68
In making the finding that the payment for variations was made pursuant to a course of compromise and conciliation to avoid conflict, the learned member relied upon a statement by the Greers’ architect, Suzanne Bosanquet. In that part of her statement to which the reasons refer, Ms Bosanquet states that she told MCC’s director, Mr Christopher Scroope, that she had forwarded the first progress claim to Mrs Greer for her to ‘assess’ in order to ‘avoid a confrontation’.69 On the question of whether there had been agreement in relation to the variation works Ms Bosanquet says in her statement:
I was shocked when I received Payment Claim 1 as it claimed over twice as much as the contract price and MCC had not submitted any variation documents or quotes for the additional work which was not in (MCC’s) Tender, other than as set out in paragraph 37 above, despite my numerous requests (and variations 2 and 3 had not been carried out). I knew that Kate and Damien would be extremely unhappy with the amount claimed.70
In her statement Ms Bosanquet says that she prepared a progress certificate containing her assessment of the amount payable to MCC for work carried out to that time. The certificate refers to ‘Plus agreed variations $137,809.10’.71 The evidence of Ms Bosanquet was that:
Despite what was discussed at our meeting of 14 January 2014 and my numerous emails since reminding Scroope that he needed to provide cost estimates for variation and to obtain approval before proceeding, MCC had continued to carry out the work without giving estimates and submit claims for payment …72
Mrs Greer says in her statement filed in the proceedings below:
I understand from conversations with Suzanne over the ensuing couple of days that Suzanne prioritised her assessment of the revised Progress Claim 1, culminating in her issuing a progress certificate on 17 January 2014 assessing the amount payable to MCC as $239,128.40 including GST.
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011, [89].
Statement of Christopher Scroope dated 10 October 2014 at [63].
Exhibit 9, Statement of Suzanne Bozanquet dated 14 November 2014 at [45].
Ibid at [44].
Ibid at [70].
Ibid at [107].
That amount was paid to MCC on 20 January 2014.73
MCC refers to the evidence given by Mrs Greer at the hearing in relation to Ms Bosanquet’s progress certificate and payments made for works referred to in the certificate.74 In its submissions in the appeal, MCC refers to Mrs Greer’s evidence as being in response to ‘counsel’s examination about voluntary payments about progress payments.’75 The Greers say that the evidence by Mrs Greer does not support a finding that the payments were made voluntarily. The evidence was however relevant to the determination of whether there had been agreement between the parties relating to the non-compliant variations contained in the progress claim.
Having identified the general principle for assessing damages where an owner sues for breach,76 the learned member appears to find that, in assessing an owner’s entitlement to damages, an amount may be considered to be ‘due and payable’ to a builder for the purpose of the application of the rule in Robinson v Harman and Mertens where s 84 inhibits the builder’s recovery of remuneration for that work.77 This observation is further clarified by the learned member in considering how credit was to be given to the builder for any unpaid balance of the price of the contract.78 The learned member fell into error in approaching the assessment of the Greers’ entitlement to damages in this manner.
The learned member embarked upon the exercise of valuing the variation works rather than determining the contract price agreed between the parties. In assessing the Greers’ entitlement to damages for MCC’s breach the learned member was first required to make a finding as to what was agreed between the parties in relation to the variation works. This included making findings as to the scope of works, the price of the works and any other relevant matters including, for example, the completion date for the works as varied. In failing to proceed in this manner, the learned member was unable to make findings as to what amount was due and payable under the contract as varied.
On a proper construction of s 84, MCC had no right to recover amounts for the unpaid non-compliant variations in the absence of the tribunal’s approval. In proceeding as he did to value the variation works, the learned member undertook the process set out at s 84(6)(b) of the DBCA. In the absence of compliance by MCC with ss 79, 80, 82 and 83 of the DBCA this process was only triggered if the builder successfully applied to the tribunal for approval to recover an amount for the unpaid variation works pursuant to s 82(2)(b) of the DBCA. Section 84(6) of the DBCA specifically provides that a builder’s entitlement to recover an amount for a variation is either the amount stated in a compliant variation document79 or, if there is no compliant variation document, the cost of carrying out the variation plus a reasonable profit.80
The Greers say that the variation claims did not meet the requirements under clause 12 of the fixed price contract, which were identical to those found in ss 79 to 82 of the
Exhibit 5, Statement of Kate Greer dated 14 November 2014.
Transcript dated 12 October 2016 T3-90, lines 13-27.
Respondent’s submissions filed 3 July 2017 at [23].
Reasons at [96].
Ibid, at [97].
Ibid, [100].
DBCA, s 84(6)(a)
Ibid, s 84(2)(6)(b)
DBCA and that the invalid variation claims never formed part of the contract price on any basis. That may be so. But as part of determining the contract price a determination as to what was agreed to between the parties was first required to be made. This necessarily involved a consideration of the terms of the contract and compliance, or otherwise, by the parties with the contract.
As was held in Thompson Residential Pty Ltd v Tran & Anor81 the operation of s 84(2) excludes any restitutionary remedy as well as any contractual remedy. As set out earlier in these reasons, there is a distinction to be drawn between the right of a building contractor to recover an amount for a non-compliant variation and the amount payable under the contract as varied. Undertaking an approach to assessing damages, as I have outlined, when an owner claims for breach of contract does not permit a restitutionary or contractual remedy for a building contractor to recover monies that is otherwise impermissible by operation of s 84 of the DBCA. It is the owner’s loss that is being assessed.
For the reasons outlined, the learned member erred in law in undertaking the valuation of the non-compliant variations and erred in treating the valuation arrived at as the amount due and payable under the contract.
This ground of appeal is made out.
Appeal ground 2
The Greers say that the learned member erred in finding that s 84 of the DBCA did not abrogate a right on the part of MCC to retain monies voluntarily paid to it in respect of the dismissed variation claims.
The reasons at paragraphs [73] to [90] deal with the Greers’ claim to recover the variation amounts paid to MCC.
Before the tribunal below, the Greers argued that s 84 of the DBCA has been held to have a similar prohibitive and prescriptive effect on a builder’s right to payment as does s 42 of the QBCC Act. They submitted that where there is no entitlement on the builder’s part to payment for non-compliant variations, ‘the building contractor is required to disgorge any payments received by it which it was (not) entitled to receive, just as occurs with unlicensed builders.’82
In considering whether the Greers were entitled to recover amounts paid for the dismissed variation claims, the learned member undertook a consideration of s 42 of the QBCC Act and a comparison of that section with s 84 of the DBCA. The learned member held at paragraph [82] of the reasons:
The wording in s84(4) is different to the wording used in s42(3). Section 42(3) refers to the unlicensed builder being “not entitled to any monetary or other consideration.” Section 84 refers to the “recovery” of money by a builder. The former, in my opinion, casts a far broader net than does the latter. The latter directs the course to be followed by a builder pursuing action to recover remuneration for work done. The former encompasses both action able to be taken by an unlicensed builder to recover remuneration, and also the unlicensed
[2014] QDC 156.
Respondents’ closing submissions in support of counterclaim – it is inferred that the word ‘not’ was mistakenly omitted.
builder’s receipt of remuneration. Hence McPherson JA’s conclusion in Marshall that the money received by the unlicensed builder there was “money to which the recipient is ‘not entitled’, which can only mean that it is money to which he has in law no right or title. If that is so, there is no identifiable basis on which he can, as against the person who paid it, claim to keep or retain it or its equivalent.”83
The learned member went on to find at paragraph [84] of the reasons:
But s84(4) does not remove any entitlement to monetary or other consideration of a builder who fails to comply with Part 7 of the Act. It simply limits the builder’s process of recovery to only the Tribunal process provided for in s84(4). Section 84(4) lacks the clear legislative proscription against any entitlement to remuneration that is contained in s42(3).84
It should be observed that the restriction on the ability of a builder to recover an amount for a variation is found not in s 84(4) but in s 84(2). By s 84(2), a builder may only recover an amount for a variation if the builder has complied with ss 79, 80, 82 and 83 of the DBCA or the tribunal, upon application by the builder, approves such recovery.
The Greers say that the provisions of the QBCC Act and the DBCA are analogous in a number of respects: s 42(1) of the QBCC Act which prohibits an unlicensed contractor from carrying out, or undertaking to carry out, building work is analogous to ss 79 to 83 of the DBCA setting out the requirements for variation works; s 42(3) of the QBCC Act which provides that an unlicensed contractor is not entitled to any monetary or other consideration for performing building work is analogous to s 84(2) of the DBCA which provides for the recovery by a builder of amounts for variations; s 42(4) of the QBCC Act enabling an unlicensed contractor to claim reasonable remuneration for building work is analogous to s 84(4) of the DBCA which provides for the tribunal to approve the recovery by a builder of an amount for a variation.
In considering whether the identified provisions of the QBCC Act and the DBCA are analogous it is relevant to again observe that s 42 of the QBCC Act and Part 7 of the DBCA are directed at quite different mischiefs. In Marshall85 McPherson JA traversed at some length the reasons for concluding that an unlicensed builder, by operation of s 42(3) of the Act, is not entitled to receive or retain money paid for doing building work. His Honour observed that a principal object of the QBCC Act is to prevent unlicensed builders from doing certain kinds of building work. His Honour also observed that an object of the QBCC Act is to establish and maintain the scheme of insurance funded by premiums paid by building contractors from which claims by building owners can be satisfied. McPherson JA referred to the regulatory function of the QBCC Act of which the main object is to protect owners from incompetent or dishonest builders.
Section 42(1) of the QBCC Act and ss 79 to 83 of the DBCA
As has been observed, the effect of s 42(1) of the QBCC Act is to render illegal both the making of an agreement to perform unlicensed building work and the performance of unlicensed building work. However agreements relating to contract variations that
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 011, [82].
Ibid, [84].
Marshall v Marshall [1999] 1 Qd R 173.
do not comply with the relevant provisions of Part 7 of the DBCA are not illegal nor is the performance of building work in respect of such non-compliant variations illegal.
As has been observed, other provisions of the DBCA reflect the intention of the legislature not to render illegal or void agreements for non-compliant variations. Section 18(6) of the DBCA provides for the adjustment of the stated completion date86 where the contract has been varied but the variations are non-compliant. The tribunal may approve an adjustment of the stated completion date if satisfied of certain stated matters.87
Section 42(3) of the QBCC Act and s 84(2) of the DBCA
In Cook’s Construction88 Keane JA referred to the ‘sterilising effect’ of s 42(3) upon any claim which might otherwise be made under a contract or under the common law by an unlicensed builder. His Honour referred to the following passage from the decision in Marshall:
But s. 42(3) expressly declares it to be money to which the recipient is 'not entitled', which can only mean that it is money to which he has in law no right or title. If that is so, there is no identifiable basis on which he can, as against the person who paid it, claim to keep or retain it or its equivalent.
Keane JA held:
Section 42 of the Act exhibits a clear intention to render illegal both the making and the performance of a contract by an unlicensed builder insofar as building work is concerned. Section 42(3) makes it clear that the consequence of a contravention of s 42(1) by an unlicensed builder is that the builder is unable to recover payment for unlicensed building work. Those consequences include the recovery of payments made to the builder by the other party to a contract for unlicensed building work.
The Greers rely upon this passage as support for their submission that s 84(2) of the DBCA expresses the same prohibition on recovery found in s 42(3) of the QBCC Act. However Keane JA’s statement regarding the builder’s right of recovery must be read together with, and in context of, the preceding sentence in the judgment regarding the illegality of the making and performance of a contract for building work by an unlicensed builder. It should also be observed that in referring to the ability of an unlicensed builder to recover payment for unlicensed building work, Keane JA was considering a different statutory provision directed at addressing a different mischief to s 84 and a note of caution should be sounded in giving His Honour’s words an unintended meaning and effect.
It is relevant that the legislature chose to use quite different words in s 42(3) and s 84(2). In Marshall McPherson JA detailed the legislative history of s 42(3) and the section’s various iterations. In Cook’s Construction Keane JA referred to the Explanatory Note to the Queensland Building Services Authority Amendment Act
‘stated completion date’ means the date stated in the contract as the date by which the subject work is to be finished. DBCA, Schedule 2.
DBCA, s 18(1).
Cook's Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661.
1999 (Qld), which introduced s 42(4) of the QBCC Act, and to the Second Reading speech of the Bill. His Honour held that the amendments were not concerned to alter the operation of s 42(3) so as to allow an unlicensed builder to retain any payments made to it by the other party and that the operation of s 42(3) was to be limited only to the extent that the builder was entitled to reasonable remuneration in conformity with the criteria in s 42(4). Beyond the amount of that entitlement, the consequences of s 42(3) were to be unaltered.89
The words used in s 42(3) of the QBCC Act – ‘is not entitled to any monetary or other consideration for so doing’ – are notably different to the words found in s 84(2) of the DBCA – ‘a building contractor may recover an amount for the variation’. The DBCA was enacted following the amendments to s 42. Given the history of the provision and the attempts to give effect to the intention of the legislature regarding unlicensed building work, if the legislature had intended s 42(3) and s 84(2) to have the same effect, in drafting the DBCA language could have been used in s 84(2) that reflected s 42(3). It seems that the legislature chose to use quite different language in the two Acts with different intended consequences in respect of unlicensed building work on the one hand and the effects of non-compliant variation works on the other. This is perhaps unsurprising given the very different mischiefs the relevant sections are intended to address.
Part 7 of the DBCA is directed at the requirements for licensed builders relating to contractual variations. As has been observed, unlike s 42(1) of the QBCC Act, Part 7 of the DBCA does not prohibit the performance of non-compliant variation work or agreements relating to such work. It places in the way of a builder a barrier to recovery of an amount for such work which may only be surmounted in certain specified circumstances. When one considers: the object of the QBCC Act to establish and maintain the scheme of insurance; that unlicensed builders do not pay insurance premiums; allowing unlicensed building contractors to receive or retain money for building work strikes at the central objects of the QBCC Act; and the regulatory function of the QBCC Act, to protect owners from incompetent or dishonest builders, it is clear that s 42 serves a very different purpose with different intended consequences for breach than do the provisions of Part 7 of the DBCA.
In the context of the legislative schemes under consideration, unlicensed building work is particularly egregious conduct. The legislature clearly intended that the most severe consequences attend such conduct. While it cannot be doubted that proper documentation of contract variations is an important consideration in protecting the interests of owners, the provisions of Part 7 of the DBCA do not prohibit parties from freely agreeing to, and the performance of, variation work that is otherwise non- compliant with the requirements of the Act. This observation is made to illustrate the risks of analogizing separate pieces of legislation directed at different conduct with different consequences.
Section 42(4) of the QBCC Act and s 84(4) of the DBCA
Given my conclusion that the Member was in error in applying the proper measure of damages in relation to the Appellants’ claim for rectification costs, ground 1 of the Appellants’ appeal must succeed.
Ground 2 on appeal
The second ground of appeal arises from the Member’s reasons for dismissing the Appellants’ claim to restitution, being the recovery of monies paid for the non- compliant variations.122
The Appellants’ primary position is that the Member erred in finding that there was a presumed entitlement for the Respondent to retain monies voluntarily paid to it. The Appellants argue that s 84 of the DBC Act provides no entitlement in the present circumstances given there has been both non-compliance with Part 7 of the DBC Act and a failure to make an application under the Act. Secondly, whether or not the payments are made voluntarily is irrelevant because of the clear wording of s 84 of the DBC Act. Thirdly, there was no evidential basis for the finding that the payments were made voluntarily by the Appellants.
The Member concluded that s 84(4) of the DBC Act123 does not remove any entitlement to monetary or other consideration of a building contractor who fails to comply with Part 7 of the DBC Act but rather it simply limits the building contractor’s recovery to only the tribunal process provided in s 84(4). The Member determined that s 84 of the DBC Act lacks the clear legislative proscription against any entitlement to remuneration as provided in s 42(3) of the QBSA Act.
From that reasoning, the Member concluded that there is no clear intention derived from s 84124 that the building contractor’s right to retain payment for variation work which contravened Part 7 of the DBC Act is abrogated so as to entitle the home-owner to recover the amounts paid for the non-compliant variation work.125
See also: Tang Hung Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178, [51]-[54].
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 11, [73] – [90].
Ibid at [84], it may be assumed that the Member intended the reference to be s 84(2) not s 84(4).
Reference to s 84(3) and (4) is assumed to also refer to s 84(2).
Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 11, [88].
As the arguments relating to the second ground raise comparisons with s 42 of the QBSA Act, it is necessary to address its proper interpretation and to determine its effect in comparison with that of s 84 of the DBC Act.
A comparison of the operation of s42 of the QBSA Act and s 84 of the DBC Act
In Cook’s Construction, Keane JA set out clearly the operation of s 42:
[37] Section 42(1) renders illegal the making and performance of a contract for building work by an unlicensed builder. It is the conduct of the builder which is struck at. The provision is plainly intended to operate for the benefit of the other party to the building contract.
[38] It is clear from the terms of s 42(3) and s 42(4) that neither provision purports to create a right of action to recover moneys in any person… Rather, each subsection is concerned to regulate a cause of action for payment which is assumed to have arisen, wither under contract or under the principles of the common law which permit claims for payment for work done at the request of another. These claims have been variously described at claims for quantum meruit or in quasi-contract or to prevent unjust enrichment.
[38] Section 42(3) is, in terms, concerned to sterilise any claim which might otherwise be made under a contract or under the common law by an unregistered builder. Section 42(4) is concerned to impose limitation upon the right of action at common law which it preserved against the sterilising effect of s 42(3). Without s 42(4), the entitlement of an unregistered builder to payment which would, apart from the Act, arise upon performance of work by the builder, would be defeated by s 42(1) and s 42(3).
His Honour states that there is a clear intention in s 42(3) and s 42(4) that an unlicensed builder may recover payment for contravening building work but only to the extent that the building contractor proves a claim in conformity with s 42(4). No right of action is conferred by s 42(4) but rather s 42(4) qualifies the operation of s 42(3) by imposing conditions upon the availability and extent of that right.
The Appellants submit that the effect of s 84 of the DBC Act is not dissimilar to the regulation of payment to an unlicensed builder pursuant to s 42 of the QBSA Act. In this respect, the terms of s 84(2) are very wide so that a person who carries out variation work in contravention of Part 7 of the DBC Act is not entitled to recover any form of payment except upon an application pursuant to s 84(2)(b).
Sections 79 to 83 of the DBC Act are the compliance provisions of the DBC Act in relation to the carrying out of variations. Each of the sections provides that the building contractor must comply with the requirements in each subsection and provides for a penalty in the case of non-compliance. Whilst s 42 of the QBSA Act states what a building contractor must not do (namely not carry our unlicensed work), sections 79 to 83 of the DBC Act outline what a building contractor must do (namely comply with the documentation provisions in those sections). Both sections provide for a penalty for non-compliance.
Section 84(2) provides for the circumstances in which a building contractor may recover payment for a variation. Firstly, by compliance with sections 79, 80, 82 and 83 and only upon compliance. An alternative course for recovery of payment is
through the tribunal’s approval given on an application made by the building contractor to the tribunal.
Section 84(2)(a) of the DBC Act is analogous to s 42(3) of the QBSA Act which abrogates the building contractor’s entitlement to any monetary or other consideration for the carrying out of unlicensed building work. The wording “not entitled to monetary or other consideration” in s 42(3) is in the same terms of restriction as “may only recover payment if….” in s 84(2)(a) of the DBC Act.
Section 84(2)(a) makes it clear that a consequence of a contravention of complying with sections 79 to 83 is that the building contractor is unable to recover payment for the variation work. This is the same consequence as s 42(3) if there is a contravention of s 42(1).
Section 84(2)(b) provides an avenue to the building contractor to seek payment for work undertaken which fails to comply with sections 79 to 83. That avenue is an application to the tribunal. Further to that safety-net, the DBC Act sets out the matters which need to be satisfied for a successful application. Those matters are set out in s 84(4)(a) and (b).
Section 84(2)(b) combined with s 84(4) ameliorates the restriction in s 84(2)(a). It is analogous to s 42(4) of the QBSA Act which ameliorates the restriction of s 42(3) and provides the building contractor with a limited claim which is dependent on the building contractor satisfying the onus of proof in relation to the restricted remuneration allowed.
The entitlement under s 84(2)(b) and s 84(4) of the DBC Act is in fact more onerous than in s 42(4) of the QBSA Act as it is necessary for an application to the tribunal to be made as opposed to merely a limitation on the right to payment under s 42(4) of the QBSA Act.
Consideration of Member’s reasons relating to ground 2
The comparison above has not been accepted by the Member at paragraph [84] of the Reasons for the Decision. The Member concludes that s 84(4) does not remove any entitlement to monetary or other consideration for a building contractor who fails to comply with Part 7 of the DBC Act and states that it simply limits the builder’s process of recovery to the tribunal process provided in s 84(4). The Member thus concludes that s 84(4) lacks the clear proscription against any entitlement that is contained in s 42(3) of the QBSA Act.
The error in this conclusion is apparent. It is not s 84(4) of the DBC Act which removes the entitlement to monetary or other consideration for non-compliance with Part 7 of the DBC Act but rather s 84(2)(a). Section 84(4) only becomes effective once an application to the tribunal has been made. It does not create any right or entitlement. With respect, one may query whether the Member intended to refer to s 84(2) rather than s 84(4) in the Reasons for the Decision. In any event, the Member’s conclusion must be that the effect of s 84 is purely to prescribe a specific and restricted method of recovery for variation work performed and thus a recovery process as opposed to a recovery entitlement.
The Appellants submit that the Member erred in construing s 84 as having no more than a procedural effect which did not abrogate the Respondent’s right to retain the monies voluntarily paid to it for the non-compliant variations.
The Respondent’s submission that s 84 provides for a process of recovery ignores the onus on the building contractor to prove entitlement to payment under s 84(2)(a) or s 84(2)(b).
I have formed the view that the purpose of s 84 of the DBC Act is not to provide merely a procedural avenue for the building contractor. The purpose of the section is to protect the home-owner in circumstances where a building contractor has failed to comply with the requirements of the DBC Act. Section 84(2)(a) is directly analogous with s 42(3) of the QBSA Act in its substantive and curtailing effect rather than just a procedural effect.
Just as s 42(3) of the QBSA Act makes it clear that the consequence of a contravention of s 42(1) is that the building contractor is unable to recover payment for the unlicensed work, those consequences have been held to include the recovery of payments made to the building contractor by the other party to a contract for unlicensed work.
In Marshall v Marshall, McPherson JA outlined the legislative history of s 42 of the QBSA Act and formed the view that the Act was intended to disentitle the unlicensed building contractor from receiving or retaining any payment on any basis for the building work performed by it. His Honour concluded that s 42(3) operated both to deny the building contractor any payment for building work [subject to s 42(4)] and to oblige the building contractor to disgorge payments received by it for the unlicensed work. McPherson JA determined that the monies were repayable because the payer had paid them in the mistaken belief that there was a contractual obligation to do so126 and on a further ground that the owner was entitled to recover her payments because the effect of s 42 was that the unlicensed builder had no right to claim, keep or retain the money as against the home-owner who was a member of a class of person intended to be protected by s 42.127
On the analysis by McPherson JA, Keane JA accepted in Cook’s Construction at [58] that:
Mistake on the part of the payer as to its obligation on the payee’s entitlement is not an essential element of the builder’s disentitlement to receive or retain payment or the payer’s reciprocal entitlement to recover. On this analysis, unless the respondent was in pari delicta with the appellant, the respondent was entitled to recover the moneys paid by it to the appellant as moneys had and received by the appellant to the use of the respondent.
The Respondent submits that the Appellants made the payments voluntarily and that there was no mistake as to entitlement or obligation under the contract either in fact or law by the Appellants. Counsel for the Respondent referred to David Securities
Following David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353;
Marshall v Marshall [1999] 1 Qd R 173, [180] and [178] – [179].
Marshall v Marshall [1999] 1 Qd R 173, [176]-[178]; See also Fraser JA in Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661 at [124] – [125].
Pty Ltd v Commonwealth Bank Australia,128 which is authority for the entitlement to a payer to recover monies paid under a mistake if it appears the monies were paid by the payer in the mistaken belief that there was a legal obligation to pay the monies or that the payee was legally entitled to payment of the monies.
The Respondent contends that there was no mistake in the present circumstances and that the evidence is that the payments were made voluntarily for the purpose of maintaining a course of compromise and conciliation with the building contractor to ensure completion of the works expeditiously. The Appellants submit that there was no evidence of the voluntary nature of any payment and that the evidence relied upon by the Respondent in its submissions129 does not support the assertion that the payments were made voluntarily.
The Respondent relies upon a number of New South Wales decisions which appear at first blush to support the Respondent’s interpretation of the DBC Act. Those cases concern the interpretation of the HB Act NSW.130
There are a number of factors to consider. First, unlike s 84 of the DBC Act which completely abrogates any rights for the payment for variations which do not comply with Part 7 of the DBC Act, the HB Act NSW specifically allows a claim by the building contractor in quantum meruit. Secondly, the New South Wales courts have traversed in a different direction from the Queensland courts in relation to the recovery of monies paid in circumstances where there is no entitlement under the relevant legislation to receive those payments. This may be of little comfort to the Respondent in circumstances where this tribunal is disposed to follow the decisions of the District Court and Court of Appeal in Queensland.
The outcome of this matter has the same surprising element as that referred to by Keane JA in Cook’s Construction and Counsel for the Appellant on appeal in that matter. The fact that the Appellants have been able to enjoy the benefits of the variation works performed and yet be released from the obligation to make payment for those works appears “scandalous”. The fatality however is the failure of the Respondent to make an application for an assessment of the variation work pursuant to s 84(2)(b) of the DBC Act. Thus the unhappy outcome for the Respondent has resulted from the way in which the case has been litigated before the learned Member for whatever reason.
Keane JA commented that it is important that the concern of the courts to avoid an unjust outcome should not distort the operation of a statute intended to encourage licensing of builders by disadvantaging unlicensed building contractors and advantaging consumers of building services at their expense.
The same applies in relation to works carried out beyond the scope of the contract. This is particularly the case when variations exceed the value of the contract works for a number of reasons: firstly the number of variations and secondly, the extra costs incurred. One of the common outcomes from variation work is the risk that a building contractor may recoup any losses incurred under the contract by subsuming those costs in the valuation of a variation beyond its true value. The requirements of
(1992) 175 CLR 353, [378].
Refer to transcript references in the Respondent’s written submissions on appeal at [21] – [23].
Alexander & Anor v Gregoriou & Ors [2010] NSWDC 15; Field v Dettman [2013] NSWCA 147.
sections 79, 80, 82 and 83 of the DBC Act are designed to protect the home-owner who is unaware of this peril.
The outcome of this appeal, which would otherwise be an affront to basic ideas of justice, is understandable on the basis of the issues considered in Cook’s Construction where the appellant did not prove its claim to reasonable remuneration in conformity with the strictures of s 42(4) of the QBSA Act. Here the Respondent has not proven its entitlement pursuant to s 84 of the DBC Act either by way of compliance with the requirements of the statute or by way of an application to the tribunal for approval of its entitlement. Responsibility for the failure lies with the Respondent. It is unfortunate, as was the case in Cook’s Construction where the Respondent failed to provide the evidence for its claim, that the Respondent has failed to make an application in conformity with s 84(2)(b) of the DBC Act
The issue of onus of proof which was important in Cook’s Construction has not been raised in the present matter. However, as explained by Fraser JA at [139] – [141], the onus of proof is on the payee to justify its receipt by proof of its own claim for “counter restitution” against the payer. Here the Respondent has failed to fulfil the onus of establishing its entitlement and thus failed to displace the prima facie presumption that the Appellants’ enrichment by the amount of the payments should be regarded as unjust.
The policy of the DBC Act is to achieve a balance between the interests of building contractors and home-owners and to maintain an appropriate standard of conduct of building contractors. This must include the protection of home-owners who rely upon building contractors to provide services. The statutory objective of the DBC Act of protection of a home-owner would be defeated if a building contractor were able to recover and retain payments to which it was not entitled as a result of non-compliance with its obligations under the DBC Act.
In the present circumstances, the outcome for the Respondent arises from its failure to demonstrate its entitlement pursuant to an application to the tribunal pursuant to s 84(2(b) and s 84(4).
Whilst a comparison with s 42 of the QBSA Act has been constructive in assisting in the interpretation of s 84 of the DBC Act, it is necessary to consider the plain words of the section to determine the meaning intended by the legislature. The words of s 84 of the DBC Act are clear:-
(a)Variations must be in writing and compliant with the requirements of sections 79, 80, 82 and 83 of the DBC Act.
(b)The building contractor may only recover an amount for the variation if it has complied with sections 79, 80, 82 and 83 of the DBC Act.
(c)If the building contractor has not complied with sections 79, 80, 82 and 83 of the DBC Act, the building contractor will only be able to recover an amount for the variation upon approval by the tribunal upon an application by the building contractor.131
DBC Act, s 84(4).
(d)If the building contractor is entitled to recover an amount for the variation, the amount is to be assessed in accordance with the DBC Act.132
(e)Unless there is compliance with the statute the building contractor has no entitlement to payment for the variation.
Given the Member’s error in denying the Appellants their claim to recovery of the monies paid for variations which did not comply with Part 7 of the DBC Act, ground 2 of the Appellants’ appeal must succeed.
Orders sought by the Appellant
In annexure A to the application for leave to appeal or appeal, the Appellants seek the following orders:
(a)that the Respondent be ordered to pay the Appellants the sum of $45,526.09, being the Appellants’ costs of rectification and completion of works as assessed by the tribunal;
(b)that the Respondent be ordered to pay restitution to the Appellants in the sum of $106,568.60, alternatively $87,119.40, being the amount paid by the Appellants to the Respondent in respect of variation claims which did not comply with Part 7 of the DBC Act.
At the end of the hearing of the appeal, the parties were requested to provide particulars of the amounts claimed by the Appellants for its claim in restitution. In response to this request, the parties provided an agreed schedule of calculations for the Appellants’ restitution and damages claims.
It is appropriate in the circumstances that the matter be remitted to the Member to determine the damages owed to the Appellants based on the matters determined in this appeal.
Pursuant to s 146 of the QCAT Act, the decision of the Member is to be set aside and the matter returned to the Member for a determination of the Appellants’ entitlement to damages based on the matters determined in this appeal.
Ibid, s 84(6) and s 84(7).
12
17
2