Kusters v Queensland Building and Construction Commission - [2024] QCAT 592

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Kusters v Queensland Building and Construction Commission [2024] QCAT 592

PARTIES:

TONY KUSTERS

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO:

GAR260-20

MATTER TYPE:

Building matters

DELIVERED ON:

13 December 2024

HEARING DATE:

24 September 2024

HEARD AT:

Brisbane

DECISION OF:

Member Scott-Mackenzie

ORDERS:

The internal review decision of Queensland Building and Construction Commission made 8 June 2020 a domestic building contract between Nigel Gary Borresen and Leonie Jane Borresen and Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich dated 4 September 2017 had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme is confirmed.

CATCHWORDS:

GENERAL ADMINISTRATIVE REVIEW – BUILDING – INTERNAL REVIEW OF DECISION A DOMESTIC BUILDING CONTRACT HAS BEEN VALIDLY TERMINATED – whether owners in substantial breach of the contract – whether owners precluded from terminating the contract – whether contractor in substantial breach of the contract – whether owners validly terminated the contract

Queensland Building and Construction Commission Act 1991 (Qld), s 85A, s 86, s 87, s 67Y

Queensland Building and Construction Commission Regulation 2003 (Qld) (now repealed), sch 2C, sch 6, s 1, s 4, s 6

Queensland Civil and Administrative Act 2009 (Qld), s 17, s 24

Allen & Taylor v Queensland Building and Construction Commission [2020] QCAT 63

Demir v Vision Built Pty Ltd (Building and Property) [2024] VCAT 1073
DJJ Promotions Pty Ltd v Gianacopoulos [2019] VCAT 177
Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No. 3) [2012] VSC 99
WP & SB Cusack v Raceberry Pty Ltd [2013] QCAT 330
Mazelow Pty Ltd v Herberton Shire Council [2003] 1 Qd R 174
Queensland Building Services Authority v Fox [2005] QDC 129
Stojanovski v Australian Dream Homes [2015] VSC 404

Wilson v Kyle [2021] VSC 537

APPEARANCES & REPRESENTATION:

Applicant:

Self-represented

Respondent:

Ms Cooper of Counsel, instructed by HWL Ebsworth Lawyers

REASONS FOR DECISION

Application

On 20 July 2020 the applicant (‘Mr Kusters’) made application to the Tribunal to review a decision of the respondent (‘QBCC’) made 8 June 2020 (‘internal review decision’) that a domestic building contract between Nigel Gary Borresen and Leonie Jane Borresen (‘Mr and Mrs Borresen’ together and ‘Mr Borresen’ and ‘Mrs Borresen’ separately) and Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich (‘Western Downs’) dated 4 September 2017 had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme (‘application’).
Background
The following facts are not in dispute.
On 4 September 2017 Mr and Mrs Borresen and Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich entered a Master Builders Queensland Residential Building Contract – Level 2 (‘building contract’) for the construction of a domestic residential building (‘building work’) at 90 Tatham Road, Haigslea (‘site’).
The contractor’s licence number specified in the building contract was that issued to Western Downs Irrigation and Building Supplies Pty Ltd. Mr Kusters is a former director and representative…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] QCAT 592
Decision Date: 13 December 2024

CaseChat Overview and Summary

The case of Kusters v Queensland Building and Construction Commission involves Mr Kusters, a former director of Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich, who applied for a review of a decision made by the Queensland Building and Construction Commission (QBCC). The QBCC had determined that a domestic building contract between Mr and Mrs Borresen and Western Downs was validly terminated, allowing a claim for non-completion under the statutory insurance scheme. The primary legal issues before the court were whether Mr and Mrs Borresen were in substantial breach of the contract, precluding them from terminating it, and whether Mr and Mrs Borresen validly terminated the contract.

The court first considered whether Mr and Mrs Borresen were in substantial breach of the contract, which would have precluded them from terminating under clause 20.3 of the contract. The court found that while Mr and Mrs Borresen took possession of the site and installed internal walls without permission, these actions did not amount to a substantial breach. The court noted that the defects identified were due to the contractor's failure to comply with the engineering design, and the changes to the mezzanine floor layout were not structural in nature. Furthermore, the court held that Mr and Mrs Borresen were not interfering with Western Downs' work but were attempting to complete the construction due to the contractor's delays and deficiencies.

Subsequently, the court assessed whether Mr and Mrs Borresen validly terminated the contract. The court found that Western Downs was in substantial breach of the contract due to multiple failures, including not completing the work diligently, not rectifying defective work, and not paying subcontractors. These breaches led to the conclusion that Western Downs repudiated the contract. Therefore, Mr and Mrs Borresen's termination of the contract was deemed valid.

In conclusion, the court confirmed the QBCC's decision that the domestic building contract was validly terminated, allowing a claim for non-completion under the statutory insurance scheme.

Orders

Orders of the court

The internal review decision of Queensland Building and Construction Commission made 8 June 2020 a domestic building contract between Nigel Gary Borresen and Leonie Jane Borresen and Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich dated 4 September 2017 had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme is confirmed.

Background

Background to the litigation

On 20 July 2020 the applicant (‘Mr Kusters’) made application to the Tribunal to review a decision of the respondent (‘QBCC’) made 8 June 2020 (‘internal review decision’) that a domestic building contract between Nigel Gary Borresen and Leonie Jane Borresen (‘Mr and Mrs Borresen’ together and ‘Mr Borresen’ and ‘Mrs Borresen’ separately) and Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich (‘Western Downs’) dated 4 September 2017 had been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme (‘application’).Background The following facts are not in dispute. On 4 September 2017 Mr and Mrs Borresen and Western Downs Plumbing and Building Supplies trading as ShedsnHomes Ipswich entered a Master Builders Queensland Residential Building Contract – Level 2 (‘building contract’) for the construction of a domestic residential building (‘building work’) at 90 Tatham Road, Haigslea (‘site’). The contractor’s licence number specified in the building contract was that issued to Western Downs Irrigation and Building Supplies Pty Ltd. Mr Kusters is a former director and representative of the company. The company, on 4 April 2020, was deregistered. On 13 March 2018 Somerset Regional Council issued an approval for the building work. The work commenced in around April 2018 or May 2018. On 27 September 2018 GMA Certification Group (‘GMA’) inspected the frame erected by Western Downs and identified several defects preventing further work until the defects were rectified. On about 9 October 2018 the frame collapsed and was removed from the site. A new frame was erected by Western Downs in early to mid-2019. On 18 July 2019 Western Downs ceased work on the site. Subsequently, on 23 July 2019, Mr Kusters sent to Mr and Mrs Borresen a without prejudice offer to mutually terminate the building contract. They rejected the offer the same day. The next day, 24 July 2019, GMA issued a certificate for the inspection of the ‘frame stage items’ undertaken on 26 June 2019. On 26 November 2019 Mr and Mrs Borresen, by their lawyers, gave to Western Downs a notice of intention to terminate the building contract under clause 20.1 (‘Mr and Mrs Borresen’s notice of intention to terminate the building contract’). On 10 December 2019 Mr Kusters made a further without prejudice offer to Mr and Mrs Borresen to mutually terminate the building contract. The offer was rejected by them the same day. On 12 December 2019 Mr and Mrs Borresen’s lawyers sent to Western Downs’ lawyers an email purporting to terminate the building contract under clause 20.2 (‘Mr and Mrs Borresen’s termination notice’). The same day, Western Downs lawyers sent to Mr and Mrs Borresen’s lawyers an email:(a)rejecting Mr and Mrs Borresen’s termination notice;(b)alleging Mr and Mrs Borresen are in substantial breach of the building contract by reason of the following:(i) taking possession of the building work (including by having the internal gyprock painted and having their own contractors access the work) without Western Downs’ permission; and(ii) giving directions to Western Downs’ subcontractors,with the consequence they were not able to terminate the contract under clause 20.3; and(c)asserting Mr and Mrs Borresen’s purported termination of the contract amounts to a repudiation of the contract, which has been accepted by Western Downs (‘Western Downs’ termination notice’).

Evidence

Evidence Before The Court

Mr Kusters refers to Mr and Mrs Borresen’s notice of the intention to terminate the building contract and termination notice. He asserts:The owners were not entitled to terminate the Contract because clause 20.3 provides that “the Owner[s] may not terminate this Contract if the Owner[s] [are] in substantial breach of the Contract”. For this reason, I took the Owners Purported Termination Notice as a repudiation of the Contract because it clearly evinced an intention to be no longer bound by the Contract, and so, I instructed Western Downs’ solicitors to accept the Owners repudiation and terminate the Contract on the basis of the Owners repudiation …Mr Borresen’s statement of evidence On 24 May 2024 QBCC filed a statement of evidence of Mr Borresen. In paragraphs 1 – 44 he sets out the background to the application. Once again, it does not significantly depart from the background in the internal review decision, Mr Kusters’ statement of evidence, or earlier in these reasons for decision. Mr Borresen then goes on to respondent to paragraphs 31 and 33 of Mr Kusters’ statement of evidence set out in paragraphs 26 and 27 of these reasons for decision. In response to paragraph 31, Mr Borresen states:(a) Mr Kusters’ statement is incorrect. There was never, and still is not, any intention for our daughter to move into the dwelling on the Property. Myself and Leonie never had any intention to modify the upstairs mezzanine level of the dwelling, and it was in fact referred to as the library on the architect’s plans dated 20 June 2019 (see page 238 of exhibit “NB-28”).(b) With respect to the alteration of the layout of the mezzanine floor, this came about as a result of the defective work by Western Downs.(c) At some point between the frame collapse in October 2018, referred to in paragraph 18 above, and June 2019, we decided we would like to include two additional bedrooms and one bathroom on the mezzanine level. As outlined in paragraph 26 above, Mr Kusters advised this would be possible.(d) We engaged our architect to update the layout plans to reflect the addition of the two bedrooms and a bathroom, so that we could submit this to GMA for approval. These changes were only in relation to the internal framing for the mezzanine level and were not in any way a structural change to the design. As mentioned in paragraph 3 above, Western Downs was responsible for the engineering design under the Contract.(e) On 7 June 2019, I had a discussion with Mr Kimmince regarding the construction of the mezzanine floor. We discussed that the mezzanine floor was not constructed properly as it was not holding weight. In addition to that many walls were out of alignment. Mr Kimmince then provided some additional bracing underneath the mezzanine floor to assist with this.(f) On 22 June 2019, I emailed the updated architectural drawings reflecting the addition of the two bedrooms and one bathroom to Mr Kusters to pass on to the certifiers. That email also informed Mr Kusters that we had engaged Mr Kimmince to construct the additional walls and install the plaster for the mezzanine level (at our cost).(g) On 26 June 2019, when GMA inspected the frame, they were not happy with the structural design, and asked the engineers to assess the site for rectification. As outlined in paragraph 28 above, the defects found by the certifiers related to a number of structural aspects of the build including:(i)additional posts installed outside the engineering design;(ii)tie-down not in accordance the approved design; and(iii)bracing not in accordance with the approved design.(h) These defects were not and could not have been related to the (non-structural) alteration to the layout of the mezzanine floor because construction of the bedrooms and bathroom had not been completed at the time of GMA’s inspection.(i) On 2 July 2019, the engineers came on site and were happy with the structural posts that Mr Kimmince had put in, however were not happy with the mezzanine floor and wanted more bracing along the media/main bathroom wall.(j) At all times Western Downs was responsible for the structural design of the dwelling. As outlined in paragraph 19 above, Mr Kusters changed the design of the dwelling due to the frame collapse. Mr Kimmince also put in some additional bracing under the mezzanine floor to prevent it from bouncing. Neither of these alterations to the design were at our request, or in any way due to our request to add some rooms on the mezzanine level but rather were due to issues with the structure of the dwelling, which was the sole responsibility of Western Downs.(k) In any case, we had consulted Mr Kusters in relation to the change in design. We sent Mr Kusters the updated designs prepared by our architects so that they could be sent to the certifiers for approval however he had failed to pass these on.(l) On or around 18 July 2019, I made a telephone call to GMA to ask whether they needed to reinspect the frame prior to certifying the works and, if so, whether they had received the revised drawings for the mezzanine from Mr Kusters. I was advised that ‘Chris’ would call me back regarding the inspection and that they had not received any revised drawings.(m) Following that conversation, I emailed GMA the revised drawings as outlined in paragraph 31 above.

Decision

Reasons for decision

On 8 June 2020 QBCC confirmed the original decision, finding the building contract was validly terminated and allowing the non-completion claim.Internal review decision In submissions to QBCC dated 11 May 2020, Mr Kusters asserted that at a time after completion of the frame stage, when Western Downs had partially completed the plasterboard and internal lining, Mr and Mrs Borresen unlawfully took possession of the site and installed internal walls. In doing so, Western Downs further asserted, Mr and Mrs Borresen were in substantial breach of the building contract in that:(a)they took possession of the building work when not entitled to do so by carrying out painting of gyprock using a scissor lift on hire by Western Downs without permission, supervision or instruction (ground 1);(b)interfered with Western Downs carrying out the building work in that:(i) they installed walls without any engineering design, inspection or approval, creating, amongst other things, a workplace health and safety risk which obstructed, interfered with, and hindered Western Downs in carrying out the balance of the building work;(ii) the installation of the internal walls by Mr and Mrs Borresen should not have been carried out until after practical completion of the building work. The installation of the walls prior to Western Downs completing the ceilings sheeting portion of the work obstructed, interfered with and hindered Western Downs carrying out the work as planned and priced as Western Downs would then have been required to cut the ceiling sheets prior to installation resulting in additional labour and material costs (ground 2); and(c)communicated with and instructed Western Downs’ subcontractors to carry out the internal wall installation (ground 3). In relation to ground 1, the decision-maker:(a)was not satisfied Mr and Mrs Borresen had demonstrated a failure or refusal to perform a substantial obligation under the building contract to render them in substantial breach; and(b)was not satisfied Mr and Mrs Borresen repudiated the building contract to evince an intention no longer to be bound by the contract, or to fulfil it only in a manner substantially inconsistent with their obligations, and considered Mr and Mrs Borresen’s conduct demonstrated they were ready and willing to perform their contractual obligations. The decision-maker made like findings in relation to grounds 2 and 3. The decision-maker found Western Downs was in breach of the building contract in that:(a)it failed to bring the building work to practical completion by the date for practical completion, 11 December 2018;(b)it failed to proceed with the building work with due diligence or in a competent manner; and(c)it unlawfully suspending the carrying out of the building work. The decision-maker identified further substantial breaches of the building contract by Western Downs in that it claimed progress payments before completion of the designated stages. The decision-maker concluded Western Downs repudiated the building contract by reason of the following:(a)failing to progress the building work with due diligence and in a competent manner, including:(i) failing to achieve compliance with frame stage inspection and failing to rectify defective work identified by the certifier at the site;(ii) persistent delay in progressing the work at the site;(iii) failing to adequately supervise the work at the site;(iv) failing to pay subcontractors, resulting in several leaving the site; and(v) failing to order materials, despite being paid for same in the early stage of the building contract, or ordering materials which were the incorrect size/shape;(b)ceasing the building work at the site without adequate explanation or giving a suspension notice, in accordance with the procedural requirements under the contract; and(c)proposing a mutual termination of the contract (which was not accepted by Mr and Mrs Borresen) on several occasions (26 July 2019, 21 October 2019 and 10 December 2019).

Ratio Decidendi

Legal Principle Established

The statutory insurance scheme is established by part 5 of the QBCC Act. The assistance available under the scheme is that prescribed by regulation.[4] The assistance a consumer for residential construction work is entitled to claim under the scheme if the work is incomplete is set out in part 2 of schedule 2C to the QBCC Regulation.[5] Relevantly, assistance for the reasonable cost of completing residential construction work is provided for in division 2 of part 2 of schedule 2C. The division applies to a consumer for residential construction work if, inter alia:(a)the work is carried out under a fixed price residential lot contract; and(b)the contract within two years after the day work starts under the contract; and(c)the work is incomplete.Consideration[4]QBCC Act, s 67Y.[5]QBCC Regulation, s 1(1).Issues The issues to be decided by the Tribunal are narrowly focused. First, were Mr and Mrs Borresen in substantial breach of the building contract when they purported to give to Mr Kusters notice of termination and thereby precluded from terminating the contract by clause 20.3? (Issue one) Secondly, on the assumption Mr and Mrs Borresen were not precluded from terminating the contract, did Mr and Mrs Borresen validly terminate the contract? (Issue two)Building contract Access to the site is provided for in clause 7.3 of the building contract. The party nominated in item 13 of the schedule to the contract is responsible for providing and maintaining access to the site for any persons, vehicles or machinery reasonably necessary for carrying out the building work. The person so nominated is the ‘Owner’. Clause 11.12 of the building contract prohibits the owner from interfering with the carrying out of the building work. Subclause (a) provides:The Owner must not obstruct, interfere with or hinder the carrying out of the Works. The Owner must take all reasonable steps to prevent all others from obstructing, interfering with or hindering the carrying out of the Works. The consequences of the owner taking possession of the works when not entitled to do so are provided for in clause 17.10. It provides:If the Owner takes Possession of the Works when not entitled to do so under this Contract, the Works are deemed to have reached Practical Completion without any defects or omissions on the Day that the Owner takes Possession, and the Owner is liable to the Contractor for any loss or damage that the Contractor may incur or suffer as a result. Possession is defined in clause 1 of the building contract. It means:... when the Works, or any part of the Works, are taken over, occupied or used by the Owner or the Owner’s employees, other contractors or agents ... The owner’s rights to terminate the building contract are set out in clause 20. Clause 20.1 provides:If the Contractor:(a) fails to proceed with the Works with due diligence or in a competent manner;(b) unlawfully suspends the carrying out of the Works;(c) refuses or persistently neglects to remove or remedy defective work or improper materials so that the progress of the Works is significantly, adversely affected;(d) is unable to complete the Works;(e) fails to effect or maintain any insurance policy required by this contract; or(f) is otherwise in Substantial Breach of this contract,the Owner may give a written notice to the Contractor by hand, registered post or facsimile transmission:(g) describing each alleged Substantial Breach of this Contract by the Contractor; and(h) stating the Owner’s intention to terminate this Contract unless the Contractor remedies the alleged Substantial Breach or Breaches within ten (10) Business Days after receiving the Owner’s notice.