Look Design and Development Pty Ltd v Nicholson - [2023] QCATA 6

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Look Design and Development Pty Ltd v Nicholson [2023] QCATA 6

PARTIES:

Look design and Development pty ltd t/as coast life homes

(Applicant)

v

Mark nicholson and simone nicholson

(Respondents)

APPLICATION NO/S:

APL089-21

ORIGINATING APPLICATION NO/S:

MCDO64/20 (Caloundra)

MATTER TYPE:

Appeals

DELIVERED ON:

17 February 2023

HEARING DATE:

26 July 2022

HEARD AT:

Brisbane

DECISION OF:

Judicial Member Forrest SC

ORDERS:

1.     Leave to appeal granted.

2.     Appeal allowed.

3.     The Orders made on 2 March 2021 are set aside.

4.     The original application is otherwise dismissed.

CATCHWORDS:

APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – FROM QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – BY LEAVE OF TRIBUNAL – where the Applicant seeks to appeal a decision by a Magistrate sitting as a Tribunal Member in a Minor Civil Dispute – where leave is granted

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE – REPUDIATION – DELAY AND PROVISIONS AS TO TIME – whether the Applicant was entitled to be paid the balance of a deposit pursuant to a building contract – whether time was of the essence in the contract – whether the Applicant acted in a manner that was consistent with a belief, expectation or understanding that time was of the essence – where it is determined the Respondents are not required to pay that sum

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – DISCHARGE BY AGREEMENT – NOVATION – whether the Respondents are entitled to a refund of money paid on a preliminary agreement – whether the building contract novated the preliminary agreement – where it is determined the Applicant is entitled to keep that sum

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – whether the Respondents are entitled to a refund of money paid on a preliminary agreement – whether retention of the sum by the Applicant amounted to unjust enrichment – where it is determined the Applicant is entitled to keep that sum

Queensland Civil and Administrative Tribunal Act 2009 (Qld), ss 142(3)(a)(i) and (3)(b)

Pickering v McArthur [2005] QCA 294

Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387

APPEARANCES & REPRESENTATION:

Applicant:

Mr B King, Solicitor, Butler McDermott Lawyers

Mr R Kay, Director, Look Design and Development Pty Ltd

Respondents:

Mr M Nicholson (self-represented)

Ms S Nicholson (self-represented)

REASONS FOR DECISION

This is an application for leave to appeal and, if granted, an appeal against the orders of a Magistrate sitting as a Tribunal Member in a Minor Civil Dispute.
The dispute between the parties arises out of a contractual arrangement between them.
FACTUAL BACKGROUND
The Respondents had purchased a block of land in 2019 in the Sunshine Coast region. On 19 August 2019, the male Respondent signed a document called a “Preliminary Agreement” with the Applicant, with a view to him and his wife subsequently entering into a contract for the construction…

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: [2023] QCATA 6
Decision Date: 17 February 2023

CaseChat Overview and Summary

The dispute in the case of Look Design and Development Pty Ltd v Nicholson concerns a contractual disagreement between the Applicant, Look Design and Development Pty Ltd, and the Respondents, concerning payments under a building contract and a preliminary agreement. The matter was initially heard by the Queensland Civil and Administrative Tribunal (QCAT) in its minor civil dispute jurisdiction and was subsequently appealed to the Supreme Court of Queensland. The Supreme Court granted leave for the appeal and ultimately allowed the appeal.

The primary legal issues before the court were whether the Respondents were required to pay the balance of a deposit under the building contract, whether time was of the essence in the contract, and if the Applicant's conduct was consistent with the belief that time was not of the essence. Additionally, the court considered whether the Respondents were entitled to a refund of the $1,000 preliminary agreement fee and if the Applicant's retention of this sum constituted unjust enrichment.

The Supreme Court found that the contract did not expressly state that time was of the essence and that the surrounding circumstances did not warrant such a finding. The court concluded that the Applicant's conduct, including the acceptance of the Respondents' statement that the contract was subject to finance, indicated that the Applicant had not strictly enforced the time requirements. The court also determined that the condition in the contract which allowed for the forfeiture of the deposit in the event of default by the Respondents did not constitute a penalty and was therefore enforceable. Finally, the court held that the Respondents were not entitled to a refund of the preliminary agreement fee as the building contract had novated the preliminary agreement, thereby rendering the preliminary agreement fee non-refundable.

The Supreme Court allowed the appeal, set aside the QCAT orders, and remitted the matter to QCAT for further consideration in light of the court's findings. The Applicant was thus entitled to retain the deposit and the preliminary agreement fee, while the Respondents were not required to pay any sums to the Applicant.

Orders

Orders of the court

1. Leave to appeal granted.

2. Appeal allowed.

3. The Orders made on 2 March 2021 are set aside.

Background

Background to the litigation

The dispute between the parties arises out of a contractual arrangement between them. FACTUAL BACKGROUND The Respondents had purchased a block of land in 2019 in the Sunshine Coast region. On 19 August 2019, the male Respondent signed a document called a “Preliminary Agreement” with the Applicant, with a view to him and his wife subsequently entering into a contract for the construction by the Applicant of a house on the block of land. A sum of $1,000 being a “preliminary agreement fee” was paid by the Respondents to the Applicant. That sum was to pay the Applicant to undertake preliminary works in preparation for building a house on the Respondents’ land, including assessment and preparation of preliminary drawings. By the terms of that Preliminary Agreement that sum of $1,000 was to be treated as part-payment of the amount that was to be paid under a subsequent building contract, if one was entered, but was to be “non-refundable” if no subsequent building contract was entered into. The evidence is supportive of a finding that some preliminary works were undertaken by the Applicant in presenting proposed drawings of plans to the Respondents. On Saturday, 7 September 2019, the Respondents signed a building contract that provided for the Applicant to construct a house on their land for $201,250 inclusive of GST. They each signed the document at the end of its “Schedule 1 – Particulars of contract” and their signatures were each witnessed by Ms Morgan Bananno who was the authorised sales representative of the Applicant. The Respondents each initialled the foot of each page of the contract document, including pages that included the “General Conditions”. On Monday, 9 September 2019, Mr Scott McDonald, who was authorised by the Applicant to do so, signed the contract on behalf of the Applicant. He, too, initialled the foot of each page of the contract. By clause 4.2 of the General Conditions of the contract, the “owner” (the Respondents) was required to pay the Applicant “the deposit stated in Schedule 2”. By Schedule 2, that amount was fixed at $10,062.50. By clause 4.2, that deposit was required to be paid when the Respondents signed the contract. It was common ground that the Respondents did not pay the Applicant that amount when they signed the contract. There is no evidence about, what, if anything, was said about that at the time by anyone, save for the female Respondent’s affidavit evidence that she heard her husband say “this is subject to finance?” and a representative of the Applicant say “agreed.” That was accepted by the Tribunal Member as having occurred. In any event, it was common ground that the contract also expressly stipulated that it was conditional on the Respondents obtaining finance. In Clause 6 of “Schedule 1 – Particulars of contract”, under Clause 5 “Finance” it said “Is the contract price subject to finance? Yes”. However, Clause 6 –“Lending Details” had no details as to the lender from whom finance was being sought and no details of any specific amount of finance being sought.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 9 July 2020, the Applicant made an application to this Tribunal in its Minor Civil Dispute jurisdiction seeking payment of the sum of $9,062.50. A short while later, the Respondents filed a Response seeking dismissal of the Applicant’s claim and an order for the payment to them of the $1,000 they had paid to the Applicant as the preliminary agreement fee. THE TRIBUNAL’S FIRST INSTANCE DECISION Her Honour, Magistrate Tonkin, sitting as the Tribunal at first instance, heard and determined the matter and delivered her decision on 2 March 2021. Her Honour considered the matter turned on several questions. They were:-(i) Was time of the essence in the contract?(ii) If it was, did the Applicant by its behaviour invite the Respondents to believe that the Applicant had given them an extension of time for finance (including time for payment of the balance deposit), albeit with no specific date set for compliance, or put another way, can the Applicant, never having relied on its rights to adopt the clause 25 default procedure, and having appeared to waive any requirement of strict compliance both for payment of the deposit, and finance approval, now rely on breach by the Respondents to insist on forfeiture of the deposit?(iii) Are the Respondents bound by their having advised the Applicant that their finance had been approved, or are they entitled to qualify that with the assertion that the finance they had obtained was not sufficient for them to complete the contract, entitling them to a finding that they used their best endeavours to obtain finance from a variety of lenders, but without success and thus termination? (iv) Does the condition in the event of default not being the fault of the builder (Applicant), that the contract deposit of $10,062.50 shall be forfeited to the builder, constitute a penalty, so that the condition is not enforceable? (v) Are the Respondents not only not obliged to pay the balance deposit, but also entitled to a refund of $1,000 paid on the preliminary agreement? Her Honour, pointing out that there was no express wording in the contract making time of the essence, nevertheless acknowledged that it has been authoritatively held that absent express statement, the subject matter of the contract or the surrounding circumstances may allow a finding in favour of the party seeking to insist that time was of the essence.[1] Here, it was the Applicant insisting that was the case. Her Honour found that neither the subject matter nor the surrounding circumstances of the contract warrant a finding that time was of the essence and she said she was not satisfied that it was in this case. Her Honour went on to say:-If it was, the applicant has forfeited its right to rely on the failure to pay the deposit on time, and by its behaviour led the respondents to believe that they had almost unlimited time (or at least a reasonable time) to obtain finance, in the absence of which they retained the right to terminate, despite the terms of the contract. [1] Referencing the English decision of United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 cited with approval by Peter Lyons J of the Queensland Court of Appeal in Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2013] QCA 271.

Ratio Decidendi

Legal Principle Established

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