Haimes v Queensland Building and Construction Commission
[2024] QCAT 326
•2 July 2024
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION: Haimes v Queensland Building and Construction
Commission & Ors [2024] QCAT 326PARTIES: LUKE HAIMES
(applicant)v QUEENSLAND BUILDING AND CONSTRUCTION
COMMISSION
(first respondent)RUSSELL STOCKTON
LISA STOCKTON
(second respondents)APPLICATION NO/S: GAR188-18 MATTER TYPE: General administrative review matters DELIVERED ON: 2 July 2024 HEARING DATE:
25 November 2020 26 November 2020
HEARD AT: Brisbane DECISION OF: Member Deane ORDERS:
The Queensland Building and Construction Commission decision of 10 May 2018 that the domestic building contract had been validly terminated by Russell Stockton and Lisa Stockton having the consequence of allowing a claim for non- completion under the Statutory Insurance Scheme is confirmed.
Any Application for costs of the proceedings by a party is to be made by filing in the Tribunal two (2) copies and providing to the other parties one (1) copy of any submissions and evidence in support of the Application for costs, by 4:00pm on 5 August 2024.
If any such Application for costs is made:
(a)
the other parties must file in the Tribunal two (2) copies and provide one (1) copy of any submissions and evidence in response to the party making the Application for costs and the other party, by 4:00pm on 2 September 2024;
(b)
the party making the Application for costs must file in the Tribunal two (2) copies and provide one (1) copy of any submissions and evidence in reply to the other parties, by 4:00pm on 23 September 2024;
(c)
the Application for costs will be determined on the papers based on any documents filed unless a party requests an oral hearing not before 4:00pm on 23 September 2024.
If no Application for costs is made in accordance with Order 2 then there shall be no order as to costs.
CATCHWORDS:
PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – review of decision that the homeowners validly terminated the Contract having the consequence of allowing a claim under the statutory insurance scheme – whether contract properly terminated – whether breach notice invalid as signed by solicitor rather than by homeowners – whether breach notice invalid because of homeowners’ failure to pay invoices – whether invoices were progress claims - whether breach of warranty can be a substantial breach - whether breach notice premature – whether contractor in substantial breach – whether contractor commenced to substantially rectify the claimed breaches – whether the contractor repudiated the Contract at law
Human Rights Act 2019 (Qld), s 8, s 9, s 13, s 25, s 31,
s 48, s 58, s 108
Queensland Building and Construction Commission Act
1991 (Qld), s 3, s 19, s 66, s 69, s 69A, s 86, s 86E, s 87,
Schedule 1B s 41
Queensland Building and Construction Commission and
Other Legislation Amendment Act 2014 (Qld)
Queensland Building and Construction Commission and
Other Legislation Amendment (Postponement) Regulation
2015 (Qld), s 2
Queensland Civil and Administrative Tribunal Act 2009
(Qld), s 3, s 6, s 17, s 18, s 20, s 24Allen & Taylor v Queensland Building and Constriction
Commission [2020] QCAT 63
Botros v Freedom Homes Pty Ltd [2000] 2 Qd R 377
Castle Constructions (Qld) Pty Ltd v Pourasad [2015]
QCAT 17
Cowen & Anor v Queensland Building and Construction
Commission & Anor [2017] QCAT 416
Hampton Home Builders Pty Ltd v Queensland Building
and Construction Commission [2023] QCAT 21
Hometeam Constructions Pty Ltd v McCauley [2005]
NSWCA 303Kehl v Board of Professional Engineers of Queensland
[2010] QCATA 58
Koompahtoo Local Aboriginal Land Council v Sanpine Pty
Ltd [2007] HCA 61
Laidlaw v Queensland Building Services Authority [2010]
QCAT 70
Maynard v Goode (1926) 37 CLR 529
Mazelous Pty Ltd v Herberton Shire Council [2003] 1 Qd
R 174
Stojanovski v Australian Dream Homes [2015] VSC 404
Thunder Corp Pty Ltd v Queensland Building Services
Authority [2011] QCAT 56
Waymore Constructions Pty Ltd v Wyatt & Anor [2020]
QCAT 251APPEARANCES &
REPRESENTATION:Applicant: CH Matthews, instructed by All Building Law First Respondent: R Ensby, Gadens Lawyers Second Respondents: M Williams, instructed by Aitchison Reid Building and
Construction Lawyers
Contents
REASONS FOR DECISION ...................................................................................... 5
Background ................................................................................................................. 5
Did the Stocktons properly terminate the Contract? ................................................... 7
What are the terms of the policy? ............................................................................ 7 Was Mr Haimes in default of the Contract? Were the Stocktons entitled to terminate under clause 28.4 of the Contract? .......................................................................... 9
Were the Breach Notice and Termination Notice (the Notices) invalid because they
were given by the Stocktons though their lawyers as agents? ............................... 10
Were the Notices ineffective because the Stocktons were in substantial breach? 13
Was the Breach Notice invalid because it required specified work to be carried out
within 10 business days? Was the Breach Notice invalid by reason of being
prescriptive of works required to remedy? Were the stipulated works required in an
impossible timeframe?........................................................................................... 14
Was Mr Haimes in substantial breach? Even if he was in substantial breach when
the Breach Notice was given had he rectified or commenced to substantially rectify?
............................................................................................................................... 15
Are breaches of warranties precluded from being substantial breaches? .............. 16
Was Mr Haimes in breach of clause 36.1(b)? Was the breach substantial when the Breach Notice was given? Even if he was in substantial breach had he rectified or commenced to substantially rectify? ......................................................................... 17
Was Mr Haimes in breach of clause 36.1(c)? Was the breach substantial when the Breach Notice was given? Even if he was in substantial breach had he rectified or commenced to substantially rectify? ......................................................................... 18
Footing steel exposed to the sea air rusted ............................................................ 20
Brick cavities breached with mortar ...................................................................... 21
External wall – articular joints or control joints has mortar/render in them and areas
already cracking..................................................................................................... 21
External – weep holes blocked .............................................................................. 21
External gas hot water system ............................................................................... 23
External – no shrinkage gaps to window base....................................................... 23
Internal (media room, garage, ceilings level 1, 2 and ground – plaster and skirting
damaged with mould ............................................................................................. 24
Plaster – cut and damages...................................................................................... 24
External cladding above BBQ is substandard ....................................................... 25
Internal dining area – tiles have lippage and are uneven....................................... 25
Stairs are not consistent with height variation of 10mm ....................................... 26
Outdoor area – finished floor level up to DPC bottoms of the weep holes ........... 26
Glass Doors – no provisions for weather proofing, no rebate or channelling to
prevent water/moisture ingress .............................................................................. 26
Stacker doors – substandard work in attempt to weatherproof ............................. 26
Roof sheeting rusted .............................................................................................. 27
Sliding Doors chipped ........................................................................................... 27
Pool area tiles ........................................................................................................ 28
Was Mr Haimes in substantial breach when viewing all the breaches together? .. 28
Was Mr Haimes in breach of clause 36.1(d)? Was the breach substantial when the Breach Notice was given? Even if he was in substantial breach had he rectified or commenced to substantially rectify? ......................................................................... 29
Was Mr Haimes in breach of clause 36.1(e)? Was the breach substantial when the Breach Notice was given? Even if he was in substantial breach had he rectified or commenced to substantially rectify? ......................................................................... 29
Failure to complete the works by the date for practical completion and the works
being significantly delayed .................................................................................... 33
What was the date for practical completion under the Contract? Did the Stocktons’
obtaining of finance cause delay? .......................................................................... 33
Delay to progress of works due to conduct of Lane Stockton and Matthew Scholz
............................................................................................................................... 37
Did variations or other conduct of the Stocktons cause delay? ............................. 37
Termination at law ..................................................................................................... 39
Does the Human Rights Act 2019 (Qld) apply? ........................................................ 40
Costs .......................................................................................................................... 40
REASONS FOR DECISION
Background
Mr Haimes, a licensed contractor, entered into a written contract with Mr and Mrs Stockton to build a new home for them (the Contract). Following the delivery of a Notice to Remedy Breach[1] (Breach Notice), the Stocktons purported to terminate the Contract on 5 May 2017 (Termination Notice).[2] Mr Haimes disputes they validly terminated, claims the Stocktons repudiated the Contract, that he was entitled to terminate the Contract based on the repudiation and that he accepted the repudiation and terminated the Contract on 12 May 2017. In these proceedings, the Stocktons also purport to rely upon a claimed repudiation of the Contract by Mr Haimes.[3]
[1] Statement of Reasons and indexed bundle of documents filed 13 July 2018 (collectively referred to as SOR), SOR3, pp 199-206.
[2] Ibid, pp 215-216.
[3] Stocktons’ submissions filed 30 April 2021, [39].
On 9 May 2017, the Stocktons made a non-completion claim to the Queensland Building and Construction Commission (QBCC).[4]
[4] SOR3.
Initially the QBCC decided that Mr Haimes was not in substantial breach and therefore the Stocktons’ termination was invalid.[5] The Stocktons commenced review proceedings.[6] On 5 December 2017, the QBCC reconsidered its decision and decided that the Stocktons had validly terminated the Contract having the consequence of allowing a claim under the statutory insurance scheme (the SIS).[7]
[5] SOR16, pp 666-669.
[6] GAR215-17.
[7] The Queensland Building and Construction Commission (QBCC) received additional information from the Stocktons as part of their review proceedings, including a report from Mr Helisma, to which I will refer later.
Mr Haimes applied to the QBCC to internally review the decision. On 10 May 2018, the QBCC made an internal review decision, which was to confirm the decision that the Contract had been validly terminated (the Decision). Mr Haimes applied to the Tribunal to review the Decision.[8]
[8] Application to review a decision filed 5 June 2018 (Application).
Following the oral hearing, after some delay, written submissions were filed.[9] The delay in finalising this application since the submissions were filed is extremely regrettable and relates at least in part to resourcing issues.
[9] QBCC’s submissions filed 13 April 2021; the Stocktons’ submissions marked as filed in GAR215-17 on 30 April 2021 and 8 June 2021 but apparently intended to be filed in this proceeding; Mr Haimes’ submissions filed 26 May 2021 and 20 July 2021.
The Tribunal has recognised that an applicant in review proceedings has no formal onus of proof but rather has an evidential or practical onus to adduce evidence which supports its case as the Tribunal must make its decision on the material before it. As stated in Laidlaw v Queensland Building Services Authority[10]
In the absence of appropriate evidence the tribunal will not be free to make the decision sought by the party. This has sometimes been described as an evidentiary burden, but there is no formal onus of proof. The question is whether the Tribunal is satisfied that the provision under consideration can be invoked on the information or material before it.
[10] [2010] QCAT 70, [23] (references omitted).
Although each party was legally represented the evidence relied upon could have been clearer, which may have assisted in finalising this application sooner.
Section 17 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) provides:
The Tribunal’s review jurisdiction is the jurisdiction conferred on the tribunal by an enabling Act to review a decision made or taken to have been made by another entity under that Act.
Section 18 of the QCAT Act provides:
The Tribunal may exercise its review jurisdiction if a person has, under this Act, applied to the tribunal to exercise its review jurisdiction for a reviewable decision.
The relevant enabling Act is the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).[11] For the purposes of internal review, a decision that a domestic building contract has been validly terminated having the consequence of allowing a claim for non-completion under the SIS is a reviewable decision.[12] For the purposes of an external review, ‘reviewable decision’ means a reviewable decision as listed in section 86 of the QBCC Act other than a decision that was the subject of an internal review or an internal review decision.[13]
[11] Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 6 (QCAT Act).
[12] Queensland Building and Construction Commission Act 1991 (Qld), s 86(1)(i) (QBCC Act).
[13] Ibid, s 86E.
I am satisfied the Decision is a reviewable decision.
A person affected by a reviewable decision of the QBCC may apply to the Tribunal for a review of the decision.[14]
[14] Ibid, s 87.
On a review, the Tribunal has power to confirm or amend the decision, set aside the decision and substitute its own or set aside the decision and return it for reconsideration.[15] The Tribunal’s function is to reach the correct and preferable decision after a fresh hearing on the merits.[16] The Tribunal must decide the review in accordance with the QCAT Act and the enabling Act under which the decision was made. There is no presumption that the decision under review is correct.[17]
[15] QCAT Act, s 24.
[16] Ibid, s 20.
[17] Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58, [9].
The issue for determination is whether the Stocktons properly terminated the Contract in accordance with the relevant policy of the SIS.[18]
[18] Thunder Corp Pty Ltd v Queensland Building Services Authority [2011] QCAT 56, [45]-[47].
The objects of the QBCC Act include, amongst other things, to achieve a reasonable balance between the interests of building contractors and consumers and to provide remedies for defective building work.[19]
[19] QBCC Act, s 3.
Did the Stocktons properly terminate the Contract?
I find that the Stocktons properly terminated the Contract.
What are the terms of the policy?
I find that the relevant terms of the policy are set out in the Policy Conditions effective 1 July 2009, known as Edition 8 (the Policy).[20] No party contended to the contrary.
[20] SOR1.
The undisputed evidence is that the Contract was signed on 27 October 2015.[21] As at that date the relevant reprint of the QBCC Act was that current as of 1 July 2015.
[21] SOR3, p 91.
Part 5[22] set out provisions in respect of the SIS. It provided that the statutory policy of insurance comes into force in the terms stated in the board’s policies if a consumer enters into a contract for the performance of residential construction work with a licensed contractor.[23] Insurance cover commences on the earliest of the following: (i) when the contractor pays the premium; (ii) on the date the contract between the contractor and consumer is entered into; or (iii) when the contractor commences the work.[24]
[22] QBCC Act, Reprint 1 July 2015, ss 67X to 71AC (inclusive).
[23] Ibid, s 69(2).
[24] Ibid, s 69A(2).
The documents filed in these proceedings were quite extensive. I have been unable to locate any direct evidence before me as to when Mr Haimes paid the premium. There is a dispute as to when he commenced the work, to which I will refer in more detail later in these reasons.
The Stocktons contend work commenced on 14 October 2015, prior to the Contract being signed. There is evidence that the Council had granted a development permit on 13 October 2015.[25] That approval made clear that Building Works approval was also required to allow the development to be carried out.[26]
[25] SOR3, p 155.
[26] Ibid, p 158.
Mr Haimes’ evidence is that work on the screw piers for both the pool and the house were performed in October 2015, prior to the Contract being signed, and which continued in November 2015 was outside of the scope of the Contract and that work under the Contract commenced on 30 March 2016 after the deposit was paid in February 2016.
There is no evidence before me that the screw piers work was performed under a separate written contract. There is no detailed evidence about a separate oral agreement. The only contemporaneous document about this work before me is an invoice dated 30 October 2015 for $40,000 (incl GST).[27] It clearly indicates that the ‘balance of $27,895.55 to be paid as deposit’. The Contract provided that the deposit was $67,895.55.[28] The Contract lists 15 items of work that are not included in the Contract price. Screw piers are not referred to in the list although swimming pool is an excluded item of work. The inclusions schedule in the Contract expressly included screw piers as part of the ‘site work – footings and slab’ works.[29]
[27] SOR8, p 425.
[28] Ibid, p 286.
[29] SOR3, p 116.
As at the date of the hearing the relevant reprint of the QBCC Act was that current as of 2 October 2020. Schedule 1 of the QBCC Act sets out transitional provisions. It provides:
(a) a policy of insurance that came into force under former part 5 continues in force on the terms stated in the board’s policies for that purpose.[30] (b) ‘board’s policies’ is defined to mean the policies of the board made for the purposes of section 19 of the QBCC Act and relating to the SIS.[31] (c) despite the replacement of part 5, the former part 5 continues to apply to a contract for residential construction work if the contract was entered into before the replacement day.[32] (d) ‘replacement day’ is defined to mean the day the former part 5 was replaced under the Queensland Building and Construction Commission and Other Legislation Amendment Act 2014 (Qld).[33] [30] QBCC Act, Reprint 1 July 2015, Schedule 1, s 66(1).
[31] Ibid, s 66(5).
[32] Ibid, s 66(2).
[33] Ibid, s 66(5); Queensland Building and Construction Commission and Other Legislation Amendment (Postponement) Regulation 2015 (Qld), s 2; 28 October 2016.
Whether work commenced in October 2015 prior to the Contract being signed or on 30 March 2016, Part 5 of the relevant reprints remains in the same terms.
Based on the limited evidence before me I find that it is more likely than not that the policy of insurance came into force in October 2015 and the relevant board policy in force at that time was the Policy Conditions effective 1 July 2009, known as Edition 8 (the Policy).[34]
[34] SOR1.
Clause 1.1 of the Policy provides:
Subject to the terms of this policy, the QBCC agrees to pay for loss suffered by the Insured in the event of the contractor failing to complete the contract for the residential construction work.
Clause 1.2 of the Policy provides in relation to payment for non-completion that:
The QBCC is only liable to pay for loss under this Part when the contract is for a fixed price and the Insured has properly terminated the contract with the contractor.
Clause 11.1 of the Policy sets out definitions of certain terms used in the Policy, most relevantly:
“contract” means a contract for the performance of the residential construction work referred to in the certificate of insurance or, where there is no certificate of insurance issued, a contract for the performance of residential construction work which is afforded the benefits of the policy by virtue of the QBCC Act
“contractor” relevantly means (i) the licensed contractor referred to in the certificate; or (ii) where there is no certificate, a contractor who holds a licence which appears to signify that the contractor may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme, who enters into a contract with a consumer to carry out residential construction work or otherwise carries out residential construction work other than as a subcontractor
“fixed price” means a price which is certain, except for the effect of provisional costs or sums, prime costs or sums, variations and any costs escalation clause.
“insured” relevantly means the owner of the land or a consumer who has entered into a contract with the contractor to have residential construction work carried out in Queensland.
“properly terminated” means lawfully under the contract or otherwise at law,
upon the contractor’s default which extends to, but is not limited to:
(a) the cancellation or suspension of the contractor’s licence; or
(b) the death or legal incapacity of the contractor; or
(c) the insolvency of the contractor; or
(d) any breach of the contract by the contractor.
“residential construction work” relevantly means residential construction work
as defined in section 10 of the Regulation.In these proceedings there was no dispute that the Contract was for a fixed price,[35] that the Stocktons were the Insured under the Policy, that Mr Haimes was a contractor and that the Contract was for residential construction work.
[35] SOR3, p 91.
The Stocktons rely upon sub-clause (d) of the definition of “properly terminated”.
Was Mr Haimes in default of the Contract? Were the Stocktons entitled to terminate under clause 28.4 of the Contract?
I find that Mr Haimes was in default of the Contract and the Stocktons were entitled to terminate under clause 28.4 of the Contract.
The evidence is that neither party strictly complied with the terms of the Contract. I refer to examples of this later in these reasons. There is no evidence before me which demonstrates that either party sought to require the other party to strictly comply with the terms of the Contract prior to the Breach Notice being issued on 18 April 2017.
The Breach Notice:
(a)
alleged that Mr Haimes had failed to comply with requirements of the Work Health & Safety Act 2011 (Qld) and Work Health and Safety Regulations 2011 (Qld) in breach of clause 36.1(b).
(b)
identified 17 items of work in respect of which it was alleged Mr Haimes had failed to carry out in an appropriate and skilful way and with reasonable skill and care in breach of clause 36.1(c).
(c)
identified one item of work in respect of which it was alleged Mr Haimes had failed to carry out in accordance with the plans and specification in breach of clause 36.1(d).
(d)
alleged that Mr Haimes had failed to carry out the works with due diligence in breach of clause 36.1(e).
(e)
called for the breaches to be rectified within 10 Business Days after the notice was given and set out remedial works the Stocktons required.
Mr Haimes’ evidence is that following receipt, he undertook works to commence to address matters raised. He instructed his then solicitor to respond by letter dated 21 April 2017.[36] At that time he maintained that he was prepared to attend to rectification of all defects as required by law once notice of practical completion was given and called upon the Stocktons to establish a security account for the final payment.
[36] Ibid, p 207.
I address in turn each of the reasons Mr Haimes relies upon to say the termination was invalid.
Were the Breach Notice and Termination Notice (the Notices) invalid because they were given by the Stocktons though their lawyers as agents?
I find that the Notices were not invalid by reason of being given by the Stocktons through their lawyers.
The Stocktons engaged a building inspector to prepare a report. The inspector, Mr Tacon, attended site on 10 April 2017. The inspector’s report is in evidence before me.[37] Mr Tacon did not give evidence in these proceedings.
[37] Ibid, pp169-198.
The Stocktons’ lawyers signed and sent the Breach Notice, which identified claimed substantial breaches of the Contract, based on the inspector’s findings. After the period specified in the Breach Notice, the Stocktons’ lawyers signed and sent the Termination Notice.
Mr Haimes contends that clause 28 of the Contract required each of the Notices to be signed by the Stocktons and that they are therefore invalid.
Clause 28 of the Contract provides:
28.1 The owner is entitled to give a notice to remedy breach under Clause 28.3 if the builder is in substantial breach of this contract. The builder is in substantial breach of this contract if the builder:
(a) suspends the carrying out of the works, other than under Clause 19;
(b) has the builder’s licence cancelled or suspended; or
(c) is otherwise in substantial breach of this contract.
28.2 The builder is entitled to give a notice to remedy breach under Clause 28.3 if the owner is in substantial breach of this contract. The owner is in substantial breach of this contract if the owner:
(a) does not pay progress payment as required by Clause 4;
(b) does not pay the deposit as required by Clause 4.2;
(c) does not give evidence of the owner’s title as required by Clause 6;
28.8 If a party breaches (including repudiates) this contract, nothing in this
28.7 [Omitted as irrelevant]. any other right or remedy.
(d) does not give evidence of the owner’s capacity to pay the contract price
from time to time as required by Clause 7;
(e) (i) the requirements of Clauses 7.2 or 7.3;
where a lending body is stated in Item 6 does not comply with: (iii) the requirements of Clause 5.2;
(f) does not establish or maintain the security account as required by Clause 8;
(g) does not give possession of the site as required by Clause 10.1;
(h) interferes with or obstructs the builder or the builder’s workers, suppliers or
subcontractors in carrying out the works in breach of Clause 10.3;
(i) does not give an instruction within 5 working days of becoming aware of a
problem under Clause 13;
(j) does not, or does not ensure that the owner’s contractors, comply with the
requirements of Clause 24;(k) takes control of, possession of, or uses the works or any part of the works without the prior written agreement of the builder prior to the payment in full of the contract price, adjusted by any additions or deductions made under this contract, in breach of Clause 26; or
(l) is otherwise in substantial breach of this contract.
28.3 If a party is in substantial breach of this contract, then the other party may
give to that party a notice to remedy breach in writing:
(a) specifying the substantial breach;
(b) requiring that the substantial breach be rectified within 10 working days after
the notice is given under this contract; and
(c) stating that, if the substantial breach is not rectified, the other party intends
to end this contract.28.4 If the party in substantial breach does not rectify or commence to substantially rectify the substantial breach stated in the notice to remedy breach within 10 working days of receiving that notice, the other party may end this contract by giving a separate notice to that effect.
28.5 A party is not entitled to end this contract under this Clause if, within 5 working days of receiving the notice to remedy breach, the party in substantial breach refers the matter to the Queensland Building and Construction Commission, and/or the Queensland Civil and Administrative Tribunal under Clause 37.
28.6 Neither party is entitled to give a notice to remedy breach while that party is in substantial breach of this contract. A notice given by a party in substantial breach is ineffective.
Mr Haimes points to the difference in the Contract definitions of builder and owner. Clause 38.1 provides that:
In this contract, except where the context otherwise requires:
‘builder’ means the party named in item 3 and includes the builder’s successors, permitted assigns and where appropriate, includes anyone acting with the builder’s express authority.
…….
‘owner’ means the party named in item 2 and includes an owner’s successors
and permitted assigns.There is no suggestion that Mr Haimes chose to respond to the Breach Notice in a different way than he would have if it had been signed by the Stocktons rather than by their lawyers on their behalf. Mr Haimes does not dispute that the Notices were given with the Stocktons’ express authority.
The Contract prescribes certain requirements for the notice none of which relate specifically as to who is to sign the notice.[38] The relevant term in clause 28 is ‘give’, which term is not defined in the Contract. The term is not ‘sign’, which is used in other clauses.[39]
[38] Clause 28.3.
[39] Clause 2.4, clause 11.3
Clause 31 of the Contract sets out when a notice is deemed to be given and received. These all relate to the mode of delivery of the notice rather than to signing. Clause 38.5(c) of the Contract makes it clear that where there is more than one owner, if one signs a notice this binds all owners. This does not expressly preclude the owners instructing an agent to give a notice on their behalf. The difference in definitions can be explained as the builder is much more likely to act through an agent such as a nominee if the builder is a company or to act through a site supervisor. All definitions are subject to the exception of where the context otherwise requires.
I am satisfied, on an objective construction of the Contract as a whole, that the Breach Notice and the Termination Notice were given by the owners and were not invalid by reason of them being given by the owners through their authorised agent signing the Notices. The same or at least similar point was considered and rejected by the Tribunal in Hampton Home Builders Pty Ltd v Queensland Building and Construction Commission.[40]
[40] [2023] QCAT 21, [62].
For completeness, Mr Haimes contends that the Stocktons repudiated the Contract entitling him to validly terminate the Contract, including by reason of the invalid Notices.[41] I find that the giving of the Notices by the Stocktons through their lawyers did not constitute repudiation by the Stocktons.
[41] Submissions filed 26 May 2021, [18].
Were the Notices ineffective because the Stocktons were in substantial breach?
I find that the Notices were not ineffective by reason of the Stocktons being in substantial breach. I find that the Stocktons were not in substantial breach for failing to pay invoices V105/14 (revised) dated 27 February 2017 and V105/20 (revised) dated 21 March 2017 for administration fees.[42]
[42] Exhibit 2, LH8.
As stated earlier, the Contract provides that neither party is entitled to give a notice to remedy breach while that party is in substantial breach of the contract and any such notice is ineffective.[43]
[43] Clause 28.6.
Mr Haimes contends that the Stocktons were in substantial breach of the Contract as they had failed to pay progress payments in accordance with the Contract.[44]
[44] Clause 4.
[51] Mr Haimes relies upon the Stocktons failure to pay V105/14 (revised) dated 27 February 2017 and V105/20 (revised) dated 21 March 2017 for administration fees[45] in respect of two variations requested but not proceeded with.
[45] Exhibit 2, LH8.
[52] The Contract provided:[46]
[46] SOR3, p127, Inclusion Schedule, clause 2.
Any change or variation to the inclusion schedule after contract sign off will incur a minimum administrative fee of $230 Inc GST per variation plus the cost of the variation. This will be charged regardless of whether the change is a debit or credit to the contract. All variations and changes to be paid at the next appropriate progress draw. Variations may occur before House construction has begun for example, if hard rocks found at site works or extra excavation occurs due to unforeseen circumstances.
The Stocktons’ evidence is that they requested quotes from Mr Haimes so that they could determine whether to proceed with these changes or variations. Once they obtained cost information from Mr Haimes, they say after considerable delay, they decided not to proceed.
I am not satisfied the Contract, on an objective construction, entitles Mr Haimes to charge the fee where the change or variation is requested but not proceeded with. If that were intended the clause could have readily made that clear by inserting a few additional words.
Even if I accepted that the fees were payable in the circumstances, which I do not, I am not satisfied that the amounts formed part of a progress claim, which had not been paid within the required time in breach of clause 4.
As noted earlier in these reasons the Contract provides that the owner is in substantial breach if they do not pay a progress payment as required by clause 4.
Clause 4.1 requires the owner to pay the contract price adjusted by any additions or deductions at each stage. Clause 4.4 relevantly provides that the claim should state the amount claimed for the stage,[47] amounts for variations,[48] the amount of any other addition to or deduction from the contract[49]and the total.[50] Consistent with clause 4.4, Clause 2 of the Inclusion Schedule provides that the variation and changes are to be paid at the next appropriate progress draw. The administration fee is such an additional amount.[51] Clause 2 of the Inclusion Schedule does not provide a different regime for when such a fee may be claimed or invoiced. Clause 4.5 provides that the progress claim is to be paid by the owner within 5 working days of receiving the progress claim.
[47] Clause 4.4(a).
[48] Clause 4.4(b).
[49] Clause 4.4(d).
[50] Clause 4.4(e).
[51] Clause 4.4(d).
The evidence is that the fixing stage claim, the stage prior to the practical completion stage claim[52] had been claimed by invoice on 19 January 2017,[53] well before these fees were purportedly invoiced. The practical completion stage claim had not been made at all.
[52] SOR3, p 130.
[53] Exhibit 1, LH4.
I am not satisfied that the time for payment under clause 4 had commenced and therefore it had not expired because I am not satisfied that these fees formed part of a progress claim payable under clause 4.
There is insufficient evidence before me for me to be satisfied that the regime set out in clause 4 for payment had been varied by the parties such that invoices issued separately from progress claims are payable under clause 4.
For completeness, Mr Haimes contends that the Stocktons repudiated the Contract entitling him to validly terminate the Contract, including by reason of the Stocktons being in continued substantial breach as a result of late progress payments.[54] I find that the failure to pay V105/14 (revised) dated 27 February 2017 and V105/20 (revised) dated 21 March 2017 for administration fees did not constitute repudiation by the Stocktons.
[54] Submissions filed 26 May 2021, [18].
Was the Breach Notice invalid because it required specified work to be carried out within 10 business days? Was the Breach Notice invalid by reason of being prescriptive of works required to remedy? Were the stipulated works required in an impossible timeframe?
I find that the Breach Notice is not invalid on this ground.
The Breach Notice stated that the Stocktons required Mr Haimes to carry out specified rectification work.[55] It lists 20 claimed substantial breaches, sets out page references to Mr Tacon’s report and the rectification required for each.
[55] SOR3, pp 204 – 206.
His Honour MacPherson JA in Botros v Freedom Homes Pty Ltd stated:[56]
[56] [2000] 2 Qd R 377, 379 – 380.
A contracting party is not entitled unilaterally to impose on the other party conditions of a kind for which there is no contractual warrant or authority. It follows that the owner's attitude on that question, first communicated on 10 October 1995 and insisted on thereafter, justified the builder in treating the contract as at an end. It is true that it was not the ground which the builder gave for terminating the contract; but, as the Tribunal Member correctly observed, termination of a contract can as a matter of law later be justified on any sufficient ground available to a party claiming to terminate a contract even if that specific ground was not relied on at the time of termination. See Shepherd v. Felt & Textiles of Australia Ltd (1931) 45 CLR 359, 377-378; and Minion v Graystone Pty Ltd [1990] 1 Qd R 157, 162.
The Breach Notice set out in considerable detail the claimed breaches and set out the Stocktons’ expectations of how Mr Haimes was to address them. The Breach Notice is required to be sufficiently specific to ensure that Mr Haimes understands the claimed breaches.[57] I am not satisfied that the setting out of the Stocktons’ expectations amounted to the unilateral imposition of a condition invalidating the Breach Notice. The Stocktons’ expectations largely refer to requiring the work to comply with various building standards. This is not a case where Mr Haimes contends that he rectified each claimed breach within the time and the Stocktons purported to terminate because he did not precisely meet their stated expectations.
[57] Thunder Corp Pty Ltd v Queensland Building Services Authority [2011] QCAT 56, [96].
Was Mr Haimes in substantial breach? Even if he was in substantial breach when the
Breach Notice was given had he rectified or commenced to substantially rectify?
I find that Mr Haimes was in substantial breach in respect of certain (but not all) claimed breaches in the Breach Notice when it was given. I am not satisfied that he had rectified or commenced to substantially rectify at least some of those substantial breaches within the notice period, as set out below.
Mr Haimes denies he was in substantial breach at the time the Breach Notice was given.
Alternatively, he contends that the Stocktons’ entitlement to terminate was limited to circumstances where he did not rectify or commence to substantially rectify a substantial breach in the Breach Notice within 10 working days. He says that to the extent required he had commenced to substantially rectify. He says that the Stocktons’ Termination Notice stated he had failed to remedy breaches and therefore applied an incorrect test.
Mr Haimes says that the time provided in the Breach Notice was insufficient to attend to all the alleged defects or incomplete work such that all that was required was for Mr Haimes to make a genuine effort to commence to rectify by performing the work or making relevant inquiries with contractors about the appropriate method of rectification.
Mr Helisma gave oral evidence that the work required could have been performed within the timeframe set out in the Breach Notice. Given the extent of the work contended for by Mr Helisma, including by a variety of subcontractors, it seems unlikely it could have all been attended to within the 10 business days. I take this apparent inconsistency in evidence into account when considering Mr Helisma’s evidence in these proceedings.
I accept that Mr Haimes was required to commence to substantially rectify the defects which were substantial breaches of the Contract within 10 business days, failing which the Stocktons were entitled to terminate.
Mr Haimes did not appear to understand the seriousness of receiving the Breach Notice or was poorly advised or both. There is no persuasive evidence before me that he had a plan to address the matters raised, which were substantial breaches. If he did have such a plan, the evidence is that Mr Haimes did not inform the Stocktons or their solicitors of any such plan. He did not inform the Stocktons of the steps he had taken to rectify or progress the works upon receiving the Breach Notice within the time specified in the Breach Notice. He only did so after the Stocktons purported to terminate.
The Stocktons’ gave evidence that prior to giving instructions to issue the Termination Notice they had observed from outside the site that Mr Haimes had commenced to rectify some of the items, they did not seek access to the site, either directly or indirectly, to observe whether other rectification work had been undertaken or Mr Haimes had commenced to substantially remedy the alleged breaches. They say that they were entitled to form a view that Mr Haimes had not rectified or substantially commenced to rectify the breaches given that Mr Haimes’ response stated that he would attend to the defects once practical completion was achieved. The Stocktons had little or no regard for whether Mr Haimes had, in fact despite his response, commenced to substantially rectify the alleged breaches and had, it seems, been intent on terminating the Contract. While they could have done more to satisfy themselves, the issue in these proceedings is whether the claimed breaches were substantial breaches and whether Mr Haimes had in fact rectified or commenced to substantially rectify those breaches.
Are breaches of warranties precluded from being substantial breaches?
I find that breaches of warranties are not precluded from being substantial breaches. It is necessary to consider the breach in each case to determine whether it is a substantial breach.
Mr Haimes contends that the alleged breaches were at most breaches of warranties, breach of which result in a right to claim damages but not a right to terminate.
I accept that the usual remedy for a breach of warranty is damages rather than a right to terminate. However, the Contract, by agreement of the parties, sets out a regime by which an entitlement to terminate for ‘substantial’, as distinct from trivial breaches, of the terms of the Contract may arise if the recipient of the notice does not within the time allowed rectify or substantially commence to rectify the claimed breaches, which right is in addition to the parties’ rights at common law.[58]
[58] Mazelous Pty Ltd v Herberton Shire Council [2003] 1 Qd R 174, 182-183; Allen & Taylor v Queensland Building and Construction Commission [2020] QCAT 63, [36].
As set out earlier at [41], clause 28.1 provides for when the builder is in substantial breach. The Stocktons rely upon clause 28.1(c) i.e., the builder is otherwise in substantial breach of this contract.
Clause 28.1 of the Contract does not specifically refer to a breach of clause 36, however, I am not persuaded that a breach of warranty could not, in appropriate circumstances, fall within clause 28.1(c).
Clause 28.2 sets out various circumstances where the owner is in substantial breach, which includes not giving instructions within 5 working days under clause 13.[59]
[59] Clause 28.2(i).
The Tribunal has previously accepted, and I agree, that a ‘substantial breach’ in the context of a clause such as clause 28 is distinguishable from one that would justify a common law determination.[60]
[60] Allen & Taylor v Queensland Building and Constriction Commission [2020] QCAT 63.
Given the types of matters listed in clause 28.2, I am satisfied that a substantial breach is one that is not trivial or of inconsequential significance but is not required to equate to a breach of a condition, which would enliven a right to terminate at common law. It is necessary to consider the significance or consequences of the conduct alleged to determine whether a breach is substantial in each case.
Was Mr Haimes in breach of clause 36.1(b)? Was the breach substantial when the Breach Notice was given? Even if he was in substantial breach had he rectified or commenced to substantially rectify?
I find that Mr Haimes was in breach of clause 36.1(b) when the Breach Notice was given. I am not satisfied that the breach was a substantial breach because there is no evidence or submissions before me of the consequences of the breach. Even if it was a substantial breach, I accept that Mr Haimes had commenced to substantially rectify the breach.
Clause 36.1(b) provides that the works will be carried out in accordance with all relevant laws and legal requirements.
Mr Tacon’s report contends that Mr Haimes failed to comply with Work Place Health and Safety law in relation to lack of edge protection.[61]
[61] D1.1
Mr Haimes contends that the temporary edge protection to the balconies had been removed for the glass handrails to be installed and that after Mr Tacon’s first inspection he installed warning signs on 11 April 2017. Mr Haimes evidence in relation to internal void protection is that he contacted the scaffold subcontractor on 10 and 18 April 2017 to request the issue be rectified and that it was rectified on 3 May 2017 prior to the Termination Notice being given.
The Stocktons engaged Mr Tacon to prepare a second report. A copy is in evidence before me.[62] The second report was prepared after an inspection on 27 May 2017. Mr Tacon’s second report contends that while the breach in relation to the internal stairs had been rectified the warning signs were insufficient, in his opinion, to remedy the breach in relation to external edge protection.
[62] SOR12, p 615.
[87] There was little focus on this alleged breach during the hearing or the written submissions.[63]
[63] QBCC’s submissions [14]-[17].
The QBCC’s Technical Claims Manager considered that D1.1 was a breach.[64] I have not been directed to or located in the evidence before me whether the relevant QBCC officer considered the breach had been rectified by the steps taken by Mr Haimes prior to the Termination Notice being given.
[64] SOR15, p 665.
There was no evidence or submissions before me as to the actual consequences of this breach. I am unable to conclude, on the balance of probabilities, that the breach was so serious as to constitute a substantial breach. In any event, the evidence is, and I accept, that Mr Haimes took steps to commence to substantially rectify the breach.
Was Mr Haimes in breach of clause 36.1(c)? Was the breach substantial when the Breach Notice was given? Even if he was in substantial breach had he rectified or commenced to substantially rectify?
I find Mr Haimes was in substantial breach of clause 36.1(c) in certain respects. On the evidence before me, I am not satisfied that he had rectified or commenced to substantially rectify at least some of those substantial breaches, as detailed below.
Clause 36.1(c) provides that the works will be carried out in an appropriate and skilful way and with reasonable skill and care.
Mr Haimes says that the Breach Notice was premature as he had not refused to progress the works, nor had he claimed the works had reached Practical Completion such that the time for him to perform the works except for minor defects or omissions had not yet been reached. He says his obligation was to bring the works to completion save minor defects or omissions by the time practical completion was achieved and to attend to minor defects and omissions during the defects’ liability period. He points to the owners’ rights to provide notice of works required to reach practical completion if the contractor claimed it had been reached and the owner disputed it.[65]
[65] Contract, cl 25.4.
Mr Haimes says that even if the quality of the work was poor entitling the Stocktons to claim damages, this did not amount to a serious breach or constitute repudiation enlivening a right to terminate.
Mr Haimes’ initial response to the Breach Notice was framed in similar but different terms. At that time, he contended that to the extent there were defects they were minor and could be dealt with in the defects’ liability period. Upon the evidence before me there were items that required attention to enable Mr Haimes to reach practical completion. All the items could not be addressed during the defects liability period. His response did not indicate that he was taking steps to remedy the alleged defects. In this context the Stocktons say they were entitled to assume that Mr Haimes was not taking meaningful steps to remedy the breaches and was evincing an intention not to be bound by the terms of the Contract, which required at least some of the items to be rectified prior to achieving practical completion.
In many respects Mr Tacon’s first report was more consistent with a report about a contractor’s work where the contractor was claiming Practical Completion, rather than an assessment of a contractor’s work prior to practical completion. As referred to earlier in these reasons, Mr Tacon did not give evidence in this proceeding.
A similar clause was considered in Stojanovski v Australian Dream Homes[66] in which the contractual obligation that the works be carried out in a proper and workmanlike manner, reflecting a statutory warranty, was distinguished from the obligation to complete the works to that standard. It was noted:
[66] [2015] VSC 404, [56]-[58].
It is irrelevant that the builder may later complete the works to the requisite standard….That the works are carried out in a proper and workmanlike manner will ordinarily be fundamental to the owner and failure to do so is what is contemplated as enlivening the power to serve a default notice….
The contractual purpose of the default notice is to inform the builder that something is amiss with the works that require its immediate attention.
However, this is to be balanced against a contractor’s right to choose how the works are progressed subject to the obligation to carry out the works in a timely fashion. The Tribunal has recognised that ‘many of the particular parts of the works will be started and not completed but as the works progress to practical completion, step by step the works will be completed.’[67]
[67] Allen & Taylor v Queensland Building and Constriction Commission [2020] QCAT 63, [119].
The Stocktons rely upon independent expert evidence given by Mr Helisma.[68] Mr Helisma was available to confirm his evidence and be questioned by the parties and by me. Mr Helisma prepared a report following an inspection of the site on 3 and 9 August 2017. Mr Helisma’s report raised items not included in the Breach Notice.
[68] Exhibit 11.
Given the Stocktons purported to terminate the Contract prior to Mr Haimes reaching Practical Completion, it is not surprising that there were quite a few items of ‘defective’ or incomplete work.
[100] Mr Helisma’s evidence is that the cost to rectify and complete what he regards as ‘major defects’ is $525,691.93.[69] His evidence is that a major defect, in his opinion, is work that has not been completed in accordance with the Contract, does not comply with all laws and requirements as required by the Contract,[70] will require significant rectification work both in terms of replacing building elements and cost to rectify and should have been rectified prior to proceeding or commencing the next stage of work.
[69] Ibid, p 4.
[70] Clause 1 and 11.
Mr Helisma’s oral evidence was that, other than items he identified as minor matters,[71] the defects required immediate action because many required de-construction to complete the remaining works.
[71] Items D2.5, D2.8, D2.9, D2.14, D2.15 and D2.17.
[102] Mr Helisma’s evidence was that the works had reached Enclosed Stage, which is the stage prior to the Fixing stage, which had been claimed by Mr Haimes.[72]
[72] Exhibit 11, p 8.
Mr Haimes did not produce any specific evidence in these proceedings as to the costs to complete or rectify. Mr Haimes did submit a costings list of outstanding work as at 10 May 2017 to the QBCC.[73] In his response to the QBCC he estimated that the works were between fixing and practical completion stages.[74] His estimated costs to complete were $126,450.17, which was more than the practical completion progress claim stage payment provided in the Contract of $67,895.55 but represents about 9.3% of the original contract price of $1,357,911.[75] It represents an amount very close to the combined fixing and practical completion stage claim amounts. This does not consider the impact of positive or negative variations on the adjusted contract price.
[73] SOR8, p 466.
[74] Ibid, p 260.
[75] SOR 3, p 91.
[104] I accept that Mr Haimes’ primary obligation was to bring the works to completion in accordance with the Contract save minor defects or omissions by the date for practical completion or where strict compliance with the terms of the Contract regarding the date for practical completion have been waived within a reasonable time. I consider the issue of delay later in these reasons.
[105] Mr Haimes did not rely upon any independent expert evidence. I accept Mr Haimes has relevant experience and expertise as a builder, but he is clearly not independent. I take this into account in assessing the evidence. Reports authored by QBCC inspectors and QBCC’s Technical Claims Manager are in evidence before me. The only QBCC officer called by any party to give evidence and be questioned on their various reports was QBCC Inspector, Mr Robert Murphy. He inspected the works on 19 February 2018 and provided a report dated 19 April 2018.[76] I take this into account in assessing the evidence.
[76] Exhibit 6.
Footing steel exposed to the sea air rusted[77]
[77] Referred to in the documents as D2.1; Exhibit 11, p 9, Item 1.
[106] I am not satisfied that Mr Haimes was in breach of clause 36.1(b) when the Breach Notice was given. If I am wrong on that, I am not satisfied, having regard to the only evidence of rectification cost before me, that this was a substantial breach.
Mr Helisma’s evidence is that the exposed reinforcing steel and screw piles to the rear of the building is a major defect requiring engineering advice and ought to have been rectified at stage 2 – slab and should not have been left to the latter stages. Mr Haimes contends this would not be unduly difficult to rectify and would have been attended to prior to practical completion. His evidence is consistent with the evidence of QBCC’s Technical Claims Manager, who considered that this was an item of incomplete work which could be remedied prior to practical completion with engineering advice.[78]
[78] SOR15, p 665.
[108] There is some evidence that Mr Haimes sought engineering advice which was received on 17 May 2017 after the Stockton’s purported to terminate.[79] I have been unable to locate any specific evidence as to whether this advice was sought prior to the Termination Notice being given. It is more likely than not that Mr Haimes sought this advice prior to the Stocktons’ termination because there would less utility to seek it afterwards.
[79] SOR 8, p 335.
[109] Mr Helisma’s evidence was, and I accept, that the costs to rectify this item was $3,263.26,[80] which is not a substantial cost viewed on its own or when compared with the contract price.
[80] SOR19, p1594.
Having regard to the significance or consequences of the conduct alleged, on balance, I am not satisfied that this was a substantial breach at the time of giving the Breach Notice. I therefore find that Mr Haimes was not required to rectify or commence to substantially rectify within the notice period. If I am wrong on that, I find that it is more likely than not that Mr Haimes had commenced to substantially rectify by seeking engineering advice.
Brick cavities breached with mortar[81]
[81] Referred to in the documents as D2.2; Exhibit 11, pp 15 and 16, part of item 4.
External wall – articular joints or control joints has mortar/render in them and areas already cracking[82]
[82] Referred to in the documents as D2.3; Exhibit 11, pp 15 and 16, part of item 4.
External – weep holes blocked[83]
[83] Referred to in the documents as D2.4; Exhibit 11, pp 15 and 16, part of item 4.
On balance, I am satisfied that Mr Haimes was in substantial breach of clause 36.1(b) in respect of these claimed breaches, at least when viewed collectively, when the Breach Notice was given. I am not satisfied that Mr Haimes had rectified or commenced to substantially rectify these defects prior to the Stocktons’ termination.
[112] Mr Helisma’s evidence in relation to these issues is that he observed that in some locations, which were accessible the external brick veneer cavities are not clear of mortar and weepholes were blocked preventing the cavity from draining. His evidence is that failure to progressively clean mortar from the cavity and ensure weepholes are clear is unacceptable industry practice, causing water to track back inside the storeroom and water was evident in the cavity after performing water testing on the balconies. Mr Helisma’s evidence is that the external brick veneer walls articulation and control joints are non-compliant in various respects. His evidence is that rectification work will require removal of external brick veneer walls.
[113] Mr Haimes’ did not give very detailed evidence about these issues and did not rely upon independent evidence nor evidence from his subcontractor, who he contends performed rectification work.
[114] I prefer Mr Helisma’s evidence to Mr Haimes’ evidence on this point because he is an independent witness, was available to confirm his evidence and be questioned and his evidence on these issues is substantially consistent with the QBCC’s evidence and Mr Tacon’s reports.
[115] He set out a scope of work to rectify. His evidence was that the costs to rectify this item along with related ground floor brick works was $53,296.46.[84]
[84] SOR19, p 1597.
Having regard to the significance or consequences of the conduct alleged, on balance, I find the breach, at least when viewed collectively, was a substantial breach because rectification required deconstruction and the only evidence as to the costs to rectify before me were quite significant.
[117] Mr Haimes took some limited steps in relation to some of these issues. There is no evidence before me that Mr Haimes had a plan to address these matters. I am not satisfied that he had commenced to substantially rectify these issues prior to the purported termination.
[139] Contract, cl 31.1 in relation to notices, contemplates written notice rather than oral notice.
[232] The evidence is that the Stocktons did not give such a written notice nor seek an extension of time within which to obtain finance.
[233] Mrs Stockton’s evidence is that on 20 November 2015 they informed Mr Haimes ‘in person’ that finance approval had been obtained.[140] Mr Haimes disputes he was informed finance had been obtained.
[140] Exhibit 8, [29].
Unless the Stocktons notified Mr Haimes that the loan was refused the Contract ceased to be conditional upon the approval.[141] Despite this provision, Mr Haimes did not invoice the Stocktons for the deposit at that time.
[141] Contract, cl 7.2(d).
Mr Haimes was not required to commence work until various pre-conditions were met including the owner obtaining finance in accordance with clause 7.2[142] (as modified by the special condition), the owner giving the builder a notice from the lending body that construction of the works may commence[143] and the builder receiving all approvals required under clause 2.3[144], whichever is the latter.
[142] Contract, cl 2.1(c), SOR3, p 102.
[143] Contract, cl 2.1(f). SOR 3, p 102.
[144] Contract, cl 2.1(g). SOR3, p102.
There was no evidence before me that the Stocktons gave Mr Haimes notice that their lender agreed that construction may commence, nor that they took any steps to pay the deposit or to seek an invoice for the deposit or to enquire as to when building approval would be sought or when work would commence or given the screw pier work was performed, when the work would continue.
[237] Although Mr Haimes was not required to commence until the pre-conditions were satisfied that does not mean that he could not commence prior to these conditions being satisfied.
[238] Mr Haimes says that the Stocktons told him that a suitable valuation of the proposed house and land was required to obtain finance approval and he took steps to assist them in obtaining such a valuation. He says a valuation was obtained in early 2016.
Mrs Stockton’s evidence was that a valuation was required by their lender to ‘finalise’ the finance but that it had been approved. The Stocktons did not produce any documentary evidence as to finance approval nor explain why it was not produced.
[240] Mr Haimes points to the payment of the deposit in late February 2016. There is evidence before me that the balance deposit, invoiced 11 February 2016,[145] was paid by way of three payments made on 25, 26 and 28 February 2016.[146]
[145] SOR3, p 220.
[146] Ibid, pp 221 – 223.
[241] He says following payment of the deposit, building approval was sought and that it was obtained on 17 March 2016[147] and work under the Contract commenced 30 March 2016.[148]
[147] A copy of the building approval dated 17 March 2016 is at SOR18, p 831.
[148] SOR3, p 208.
Mr Haimes’ conduct is consistent with him waiving his right to regard the Contract as unconditional and essentially granting an extension of time to the Stocktons’ to obtain finance. The Stocktons’ conduct is not consistent with homeowners who have obtained unconditional finance approval in November 2015.
[243] In the absence of documentary evidence as to finance approval, I find that it is more likely than not that finance was not unconditionally approved until after the Stocktons provided a suitable valuation to their lender in early 2016.
Mr Haimes’ evidence is that work on the screw piers performed in October 2015, prior to the Contract being signed, was outside of the scope of the Contract and that work under the Contract commenced on 30 March 2016 after the deposit was paid in February 2016.
There is no clear evidence of a separate written nor informal oral contract for the screw piers work. Mr Haimes’ position that the screw piers were not part of the Contract works is inconsistent with the invoice dated 11 February 2016 for the balance of the deposit, which reduced the deposit by the amount previously paid for screw piers.[149] The clear inference is that the screw pier works were part of the contracted works because the amount paid for them was part of the Contract price.
[149] Ibid, p 220.
[246] I find that it is more likely than not that both Mr Haimes and the Stocktons agreed to vary the terms of the Contract such that whilst work under the Contract was commenced, the balance of the Contract was conditional upon the obtaining of finance and neither party had any expectation that the balance of the contract works would proceed until finance was unconditionally obtained.
Mr Haimes says that the Stocktons’ delay in obtaining finance caused four months or 120 days delay. I accept that the Stocktons’ delay in obtaining finance caused in the order of four months delay. Such delay does not demonstrate a breach by Mr Haimes of the obligation that the works will be carried out with reasonable diligence.
Delay to progress of works due to conduct of Lane Stockton and Matthew Scholz
I am not satisfied that any such delay is the responsibility of the Stocktons as distinct from Mr Haimes.
[249] Mr Haimes contends that Lane Stockton (the Stocktons’ son) and Matthew Scholz (the Stocktons’ son-in-law), carpenters contracted to perform work on this build caused at least five months (150 days) delay due to their failure to rectify frame defects, which he ultimately rectified himself on 17 January 2017. Lane Stockton disputes Mr Haimes’ evidence. Matthew Scholz did not give evidence in these proceedings. Mrs Stockton’s evidence refutes Mr Haimes’ evidence of delay and points to progress of the works during this time including as evidenced by the issuing of a number of progress claims.
[250] Despite Mr Haimes’ assertions that they were in essence nominated sub-contractors, the Contract did not include any provision for or the consequences of nominated sub- contractors. Although I accept that the relationship between Mr Haimes’ contracted carpenters and the Stocktons may have given rise to a need to proceed with a little more caution and diplomacy than arms-length sub-contractors, Mr Haimes was responsible for the work of his sub-contractors. There is no sufficient explanation as to why he could not have taken steps to carry out or have the work undertaken by others prior to January 2017.
Did variations or other conduct of the Stocktons cause delay?
There is insufficient evidence before me to find that variations or other conduct of the Stocktons caused a particular number of days delay.
Mr Haimes contends that the progress of the works was delayed because of variations and because of conduct of the Stocktons,[150] which was disputed by the Stocktons.[151]
[150] Exhibit 1, [54]-[65].
[151] Exhibit 8, [7]-[17], [35-42].
[253] Neither Mr Haimes nor the Stocktons provided any independent evidence as to any delay to the critical path of the works because of these matters. Mr Haimes gave oral evidence of the assessment of delay he and his father undertook. Mr Haimes’ father did not give evidence in these proceedings. There was no documentary evidence of the analysis before me.
[254] I accept that variations, including for omission of work from the scope, may cause delay but variations do not necessarily cause delay to the critical path.
[255] On the limited evidence before me as to variations, all variations were documented after the Stocktons’ contended for date for practical completion of 30 June 2016.[152] Dates of the variations commenced on 25 July 2016. There is limited evidence as to when the variations were requested or became necessary. The 1 March 2017 list of variations shows that a number of the variations were dated after the date for practical completion of 15 December 2016 contended for by Mr Haimes i.e., VTC 13, VTC 16 – VTC19. The latter was dated 27 February 2017.
[152] SOR3, p 246 – 249.
[256] The Contract provided variation documents must state various matters and if there will be a delay because of the variation, a reasonable estimate of the delay.[153] This contractual obligation is also reflected in the QBCC Act.[154] The variation documents before me do not contain such reasonable estimates.[155] Variation 6 indicated an extension of time may be incurred if the installation of joinery delays follow on trades.[156]
[153] Contract, cl 20.1(f).
[154] QBCC Act, Schedule 1 B s 41(2)(d).
[155] SOR8, pp 440 – 464.
[156] Ibid, p 446.
[257] Mr Haimes says that the changes to windows and doors involved major structural reconfiguration and significant delays. He says this caused 1 month or 30 days delay. Variation V105/5 setting out these changes is dated 4 August 2016. The evidence is that it was accepted, after about 7 weeks delay, by the Stocktons, when they signed it on 26 September 2016.[157] Mrs Stockton concedes there were changes to the windows at frame stage and acknowledged that it caused some minor delay.[158]
[157] Exhibit 2, LH11.
[158] Exhibit 8, [36].
[258] I accept that it is more likely than not that the changes to windows and doors caused some delay for which Mr Haimes was not responsible. I am not satisfied, on the evidence before me, that this variation or other variations caused a particular number of days delay.
[259] Mr Stockton’s evidence[159] was that the works came to a complete standstill in February 2017. Mr Haimes conceded this but blamed the Stocktons.
[159] Exhibit 4, [18].
[260] Mr Haimes points to the Stocktons being continually late in making both progress payments and variation payments.[160] Mr Stockton conceded that several invoices were paid later than the due date because of their financier’s requirements.[161] As against Mr Haimes the Stocktons were responsible for their financier’s delays. Despite this evidence there is no evidence that Mr Haimes exercised his contractual rights to formally suspend the works for failure to pay progress claims in accordance with clause 4.[162] However an email of 24 February 2017 is evidence that Mr Haimes informally suspended the works because of a claimed failure to pay amounts owing.[163]
[160] Exhibit 1, [65].
[161] Exhibit 4, [20].
[162] Contract, cl 19.1, SOR 3, p108.
[163] Exhibit 4, RJS6.
Variations were due for payment at the next progress payment unless a different time was agreed.[164] The evidence as to when the variations were actually payable under the Contract is limited. The evidence is that Mr Haimes issued invoices for variations as distinct from including them as adjustments to progress claims as contemplated by the Contract. For the reasons set out earlier I am not satisfied that the variations were due for payment under clause 4, upon the issue of a separate invoice.
[164] Contract, cl 20.7, SOR3, p 109.
Even if I accept that payment for variations were in fact delayed, about which there is some doubt, in the absence of exercising a right to suspend, Mr Haimes was obliged to continue to progress the works. Delayed payment is not expressly a ground for seeking an extension of time under clause 17. To the extent such a delay may have been a ground for an extension of time as ‘anything done or not done by the owner’[165] there is insufficient evidence upon which I can rely to find that delayed payment caused actual delay to the critical path.
[165] Contract, cl 17.2(g). SOR 3, p107.
[263] Mr Haimes says that the electrical rough in process by the Stocktons’ electrical contractor caused project delay of over two weeks.[166] He says he believes he would have been entitled to an extension of time of 14 days. Mrs Stockton concedes there was some minor delay in relation to this work.[167] I accept that it is more likely than not that the changes required by the Stockton’s electrical contractor caused some delay for which Mr Haimes was not responsible.
[166] Electrical works were excluded from Mr Haimes’ scope of works.
[167] Exhibit 8, [34].
[264] Mr Haimes says that he chased the Stocktons for cabinetry supply and installation from November 2016 to April 2017 and that this delay made it difficult for his trades to efficiently continue their works. Mrs Stockton denies that they or their joinery contractor delayed Mr Haimes. Mr Biggs, the director of the joinery contractor engaged by the Stocktons, gave evidence of various delays to their work by Mr Haimes or earlier trades.
[265] On the evidence before me, I am not satisfied the issues with the joinery contended for by Mr Haimes caused delay or any particular number of days delay for which Mr Haimes was not responsible.
I am satisfied that Mr Haimes was not responsible for at least some of the delay.
Termination at law
[267] I am not satisfied that Mr Haimes repudiated the Contract.
[268] The Stocktons submit that they had the right to terminate because Mr Haimes had repudiated the Contract.
They say that his conduct was such as to convey to a reasonable person, in the situation of the Stocktons, renunciation either of the contract as a whole or of a fundamental obligation under it.[168]
[168] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, [44].
Although Mr Haimes’ response to the Breach Notice was to assert that the items would be attended to in the defects liability period, the evidence is, and I accept, that he did commence to rectify and he and his subcontractors were progressing incomplete works identified during the notice period[169] and that the Stocktons were aware that at least some of that work had been performed. This is not consistent with a contractor who has repudiated the contract.
[169] SOR8, pp 362 - 364.
The Stocktons contend that the failure to achieve practical completion by the time the Breach Notice was issued also manifested an intention not to be bound by the terms of the Contract.
[272] There is no evidence before me that the Stocktons raised concerns in relation to the rate of progress prior to giving the Breach Notice nor did they put Mr Haimes on notice that they required strict compliance with the Contract.
[273] For the reasons set out earlier, on the evidence before me, I am not satisfied that the delay was of inordinate length in the circumstances and therefore I am not satisfied that the failure to achieve practical completion was a repudiation of the Contract.
The Stocktons also point to other conduct of Mr Haimes e.g., failure to seek extensions of time and failure to properly document variations to include information about likely delay as evidencing an intention not to be bound. There is no evidence before me that the Stocktons raised concerns about these matters. As stated earlier there is no evidence that they put Mr Haimes on notice that they required strict compliance with the Contract.
[275] I am not satisfied that Mr Haimes was not ready, willing and able to complete the Contract.
Does the Human Rights Act 2019 (Qld) (HR Act) apply?
[276] I find that the HR Act does not apply.
The HR Act commenced on 1 January 2020. The transitional provisions provide that the HR Act does not affect proceedings commenced before the commencement.[170] No party made any submissions about the HR Act. These proceedings were commenced before the HR Act commenced.
[170] Human Rights Act 2019 (Qld), s 108.
If I am wrong and the HR Act applied, in deciding this application I have in any event interpreted statutory provisions, to the extent possible that is consistent with their purpose, in a way that is compatible with human rights.[171] In conducting the hearing and deciding this Application, I am acting as a public entity[172] in an administrative capacity. I accept that this application potentially impacts Mr Haime’s and the Stocktons’ rights to a fair hearing, and I considered them in conducting the oral hearing and in coming to my decision by considering the evidence given by or on behalf of and the submissions filed by each party.[173]
[171] Ibid, s 48.
[172] Ibid, s 9.
[173] Ibid, s 31.
I accept that these proceedings and a decision under the QBCC Act potentially impacts other rights, in particular the right to privacy and reputation.[174] I have considered Mr Haimes’ and the Stocktons’ human rights and am satisfied that the decision is compatible with their human rights as the limitations on those rights are reasonable and justifiable.[175] The limitation of Mr Haimes’ and the Stocktons’ human rights is consistent with the objects of the QBCC Act[176] and the objects of the QCAT Act.[177]
[174] Ibid, s 25.
[175] Ibid, s 8, s 13, s 31, s 48, s 58.
[176] The QBCC Act, s 3.
[177] QCAT Act, s 3.
Costs
[280] All parties were legally represented in these proceedings. It is appropriate to make directions allowing parties to apply for an order in relation to costs, should they wish to do so, failing which there will be no order as to costs.
2
8
0