MacDonald v Queensland Building and Construction Commission
[2014] QCAT 158
| CITATION: | MacDonald v Queensland Building and Construction Commission [2014] QCAT 158 |
| PARTIES: | Jonathon Stewart MacDonald (Applicant) |
| v | |
| Queensland Building and Construction Commission (Respondent) |
| APPLICATION NUMBER: | GAR019-12 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 24 July 2013, 18 October 2013, 30 October 2013 and 30 January 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howard |
| DELIVERED ON: | 11 April 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Queensland Building and Construction Commission is set aside. 2. The Tribunal substitutes its own decision that the homeowners did not validly terminate the contract on 19 August 2008. |
| CATCHWORDS: | REVIEW PROCEEDING – TERMINATION OF BUILDING CONTRACT – where homeowners made numerous requests for additional work – where no formal variations agreed – where limited extensions of time sought – whether builder suspended works – whether builder’s actions collectively constituted repudiation of contract which home owners were entitled to accept – whether conduct of homeowner’s disentitled them to accept repudiation of builder – whether contract validly terminated by homeowners EVIDENCE – whether rule in Jones v Dunkel should be applied against builder – where builder failed to call independent corroborative evidence Domestic Building Contracts Act 2000 (Qld), s 66, s 92, s 93 ACN 096 278 483 Pty Ltd v Vercorp Pty Ltd [2011] QCA 189 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr MacDonald represented himself. |
| RESPONDENT: | Mr B S Turnbull of HWL Ebsworth Lawyers represented the Queensland Building and Construction Commission |
REASONS FOR DECISION
Mr MacDonald is an experienced builder who has held a building license since 1989. On 23 August 2007, he entered into a domestic building contract with Ms Gail Poppenk and Mr Wezley Perkins (‘the owners’ or ‘the homeowners’) to build a house for them at their Helidon property. Construction did not proceed smoothly, with both parties acting in a manner not strictly in accordance with the terms of the contract in various ways.
The homeowners purported to terminate the contract on 19 August 2008. Proceedings were then brought shortly afterwards by Mr MacDonald against the homeowners in the former Commercial and Consumer Tribunal (‘CCT’). Ultimately, the application and counter-application were both withdrawn in late 2009. The only substantive orders made were about costs.
Subsequently, the homeowners made a complaint to the Queensland Building Services Authority (now ‘the Queensland Building and Construction Commission’ or ‘QBCC’) about non-completion of the works. The then QBSA treated it as a claim under the BSA Home Warranty Insurance Policy (‘the Policy’). QBCC paid out under the Policy. Payment for non-completion can only be made under the Policy when the contract is for a fixed price and the insured homeowner has properly terminated the contract.[1]
[1] Exhibit 6, items 1.1 and 1.2.
On 15 December 2011, the QBSA determined that the contract had been validly terminated by the homeowners upon the contractors default, although the basis for this finding is not articulated either in the letter which sets out the decision, or the Statement of Reasons subsequently provided to this Tribunal purporting to be in compliance with s 21(2) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). Mr MacDonald applied to the Tribunal to review that determination.
The review process and the issue for determination
In making a decision on the review application, the Tribunal stands in the shoes of the original decision-maker and makes its own decision. It can confirm or amend the decision, or may set it aside and either substitute its own decision or return it to the decision-maker for reconsideration.[2] Its function is to make the correct and preferable decision, on the evidence before it and according to law.
[2] QCAT Act s 24.
The QBCC submits, and I accept, that the issue for the Tribunal to determine is whether the contract was validly terminated by the homeowners on 19 August 2008. For it to have been validly terminated, the homeowners must have had a right to terminate the contract as at the date of purported termination, even though they may have failed to nominate a sufficient ground at the time.[3]
[3]Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; ACN 096 278 483 Pty Ltd v Vercorp Pty Ltd [2011] QCA 189.
The parties’ respective submissions
The QBCC submits, in essence, that (although this is not what they purported to do) the homeowners were entitled to accept the repudiation of the builder and terminate the contract at common law at the date of purported termination. They submit that Mr MacDonald had repudiated the contract through multiple breaches. The alleged breaches relied upon are essentially failure to progress of the works; unlawful suspension of the works; and demanding payment to which he was not entitled (by way of the enclosed stage payment and payment for variations).
Mr MacDonald submits, in essence, that the homeowners were not entitled to terminate the contract because he at all times acted in good faith, and changes to time frames and departures from the contract were openly discussed and agreed with the homeowners, whom he regards as having attempted to avoid their obligations. He also says that he had lawfully suspended the works at the time of the purported termination. He submits that the homeowners’ behaviour in the proceeding is indicative of the manner in which they behaved towards him during the construction.
The disjointed course of the hearing
The hearing of the matter had a somewhat disjointed path.
On 24 July 2013 when the hearing was first scheduled, Ms Poppenk attended pursuant to a notice to attend and produce documents. Mr Perkins was also subject to a notice but failed to attend. Ms Poppenk advanced his excuses on the basis of business commitments. However, she received a telephone call during a brief period when the proceeding was stood down to the effect that Mr Perkins had suffered a heart attack. Ms Poppenk was released. The hearing was adjourned. The notices compelling attendance and production of documents were extended to the further hearing of the proceeding.
The hearing resumed on 18 October 2013, when Mr MacDonald and Ms Poppenk gave evidence. Once again Mr Perkins failed to attend. I issued a warrant on 22 October for Mr Perkins to be brought before the Tribunal to give evidence on 30 January 2014. In the meantime, he attended on 30 October 2013 and gave evidence of his own accord. As Mr MacDonald gave his evidence without knowledge of the issues to be addressed in evidence by Ms Poppenk and Mr Perkins, he was recalled after Mr Perkins’ evidence to give evidence in response.
Both parties requested the opportunity to provide written submissions. These were provided on agreed dates over the November 2013 to January 2014 period. Oral submissions were also given on 30 January 2014.
The contract
Although Mr Perkins, a disagreeable and reluctant witness, initially denied that it was his document, it is common ground that the domestic building contract[4] was executed by the parties 23 August 2007. It was for the construction of a low set brick veneer house.[5]
[4]Exhibit 5, pp151-200.
[5]The contract documents include the specifications; Engineer’s Design by Lindsay Reid; Working Drawings by Gary Grieve: Exhibit 5 page 153.
The price agreed was $345,180. Progress payments for stages were specified in the following percentages and amounts: Deposit 5% $17,258; Base 20% $69,036; Frame 20% $86,295; Enclosed 30% $103,554; Fixing 15% $51,777; and Practical Completion Balance 5% $17,259. Under the Domestic Building Contracts Act 2000 (Qld) a builder must not demand or receive at the completion of a stage specified in a domestic building contract, an amount more than the specified percentage of the original contract. At the time, the prescribed maximum allowable percentage claims for the original contract were Base Stage 10%, Frame Stage 15%; Enclosed Stage 35%; and Fixing Stage 20%.[6] Departure from the standard percentages could be achieved by agreement in the way prescribed by regulation, whereby the builder was required to give a detailed notice about the departure from the usual requirements.[7]
[6] Domestic Building Contracts Act 2000 (Qld) Reprint No 1C, ss 66(1),(2),(5), and (7).
[7]Domestic Building Contracts Act 2000 (Qld) Reprint No 1C, section 66(6) and Domestic Building Contracts Regulation 2000 (Qld), Reprint 1D, s4.
The homeowners deny receiving a document varying the standard percentages. The builder, who impressed as a person who sought to give his evidence honestly and to the best of his recollection, but it must be said that his evidence and material suggests, was not diligent about attending to necessary paperwork, says he discussed the need for this with them because of the complicated nature of the slab. He further says he ‘probably would have’ given them a document setting out the required details, but could not produce it during the hearing.
The building period was 120 days from commencement.[8] The works were to be completed by the end of the building period.[9]
[8] Exhibit 5, p153, Item 10 and p 165, clause 3.1 and page 190, clause 38.
[9] Exhibit 5, p165, clause 3.1.
Under the contract, the builder must give the owner a written claim for a progress payment for the completion of each stage.[10] Progress payments were required to be paid, adjusted by additions and deductions under the contract progressively at each stage, within 5 working days of receiving a progress claim.[11] The homeowners were obliged to give the builder evidence from time to time as requested by him of their capacity to pay the balance of the price and any additions or deductions.[12]
[10] Exhibit 5, p165, clause 4.4.3 and 4.4.
[11] Exhibit 5, p165, clause 4.1, and 4.5.
[12] Exhibit 5, p163, clause 7, esp 7.3.
The contract requires that the owner must give the builder exclusive possession of the site to carry out the works[13] and must not interfere with the builder’s access or possession of the site or progress of the works.[14] In particular, the owner must not give instructions to the builder’s workers or subcontractors.
[13] Exhibit 5, p165, clause 10.1.
[14] Exhibit 5, p165, clause 10.3.
The contract provides that the owner warrants the accuracy of the contract documents supplied by it and the suitability of the design: clause 13.1. In the case of error or ambiguity in the documents, the party who becomes aware must give written notice to the other. The owner must within 5 working days of becoming aware of a problem, give the builder written instructions necessary to enable the builder to proceed with the works, and if not done then the owner is deemed to have instructed works according to a specified order of precedence (which assumes the problem is one of inconsistency, rather than suitability, between the contract documents): clauses 13.3, 13.4, and 13.6. If the problem is not solely related to the documents provided by the builder, the owner is deemed to have asked for a variation for the builder to have complied with those instructions: clause 13.5.
Clause 17, in particular, 17.3 sets out the requirements for an extension of time. A claimable delay is a delay due to the builder suspending works under clause 19, or from a cause beyond the builder’s control that was not reasonably foreseeable at the time the contract was entered into. It includes a variation requested by the owner; and anything done or not done by the owner: clause 17.2. The builder must give written notice to the owner detailing the extension of time and the cause of the delay by the later of 20 days after he is aware of the cause and extent of the delay or 5 days on or before practical completion: clause 17.3. The homeowner may dispute the claimed extension, in writing within 5 working days: clause 17.4.
Clause 19[15] provides for suspension of works by the builder by written notice in specified circumstances. These include when an owner does not pay a progress claim as required by clause 4; when the owner enters the site in breach of clause 10; a dispute being referred to the CCT for determination; or the owner is otherwise in breach of the contract.
[15] Exhibit 5, p 176.
Clause 20 provides for variations. If a variation is requested by an owner, before commencing the work, the builder must agree to carry out the work by giving the owner a signed written variation document, or refuse to carry it out: clause 20.2. If the builder requests a variation, before commencing the work, the builder must give a signed variation document which the owner must sign and return: clause 20.3. If the variation is agreed, but the owner does not return the signed variation document within 5 working days, the builder may if he has taken all reasonable steps to have a variation signed, carry out the variation or withdraw it: clause 20.4. In either case after a variation is agreed, the builder must give the owner a copy of the variation within 5 working days: clause 20.5.
Termination by default is provided for in clause 28. Both parties are entitled to give a notice to remedy breach if the other is in substantial breach of the contract, specifying the breach, requiring it to be remedied and stating that if it is not, then the contract will be terminated: clause 28.1 and 28.2. The contract may be terminated in a separate notice if the substantial breach is not rectified within 10 working days of the notice (clause 28.4), unless the other party within 5 working days refers the question of whether the other party has a right to end the contract to the CCT. Neither party may give a notice to remedy breach while it is in substantial breach: clause 28.7. Clause 28.9 provides that if a party breaches (including repudiates) the contract, nothing in the clause affects the right of the other party to exercise any other right or remedy.
Was the common law right to termination excluded by the contract?
Courts have considered the common law right to terminate a contract is only excluded when the contract contains a clear intention to exclude it.[16]
[16]Holland v Wiltshire (1954) 90 CLR 409; Cooper v Ungar (1958) 100 CLR 510; Concut Pty Ltd v Worrell (2000) 176 ALR 693, 699.
In the contract between the builder and the homeowners, there is no specific exclusion of the common law right. Clause 28 does not contain specific reference to the common law, but does in 28.9 appear to preserve its operation in addition to contractual rights in terms which contemplate all rights co-existing by use of the words ‘or exercise any other right or remedy’. Therefore, I find that, as a matter of construction, any common law right to terminate was not excluded by the contract.
At common law, if one party renounces his liabilities under a contract showing an intention to no longer be bound by the contract or to fulfil it in a way that is substantially inconsistent with its obligations, then an innocent party is entitled to accept the repudiation and terminate the contract.[17] Repudiation is not to be lightly found: it must appear clearly and without ambiguity.[18]
[17]Shevill v Builders Licensing Board (1982) 149 CLR 620, 625-6.
[18]Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202, 207 referring to Ross T Smyth v Bailey [1940] 3 All ER 60.
In deciding whether there has been repudiation, breaches may be viewed together as indicating an intention to no longer be bound.[19] All of the circumstances relevant to performance of the contract may be taken into account.[20]
[19]Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202, 205-206; 208.
[20]Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202, 208; Wilson v Kirk Contractors Pty Ltd (1991) 7 BCL 284; Sopov v Kane Constructions Pty Ltd [2007] VSCA 257.
However, there are recognised constraints on when a party may accept another party’s repudiation. A party who is itself in breach of a contract may still accept repudiation by the other party and terminate for the breach of the other party, provided that the terminating party has not itself repudiated the contract.[21] As a matter of general principle, a party can not take advantage of its own non-compliance with a contract.[22] If there is a causal relationship between the breach of the party purporting to terminate and the default of the other party, there is a strong presumption that a party can not take advantage of his or her own wrong to terminate a contract.[23]
[21]A party in breach of a non-essential term, or an essential but independent term of the contract was still entitled to terminate: Kelly v Desnoe [1985] 2 Qd R 477.
[22]Quinn Villages Pty Ltd v Mulherin [2006] QCA 433.
[23]Nina’s Bar & Bistro v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR613, 620, 632; Road Show Entertainment Pty Ltd v ACN 053006269 Pty Ltd (formerly CEL Home Video Pty Ltd) (1997) 2 NSWLR 462, 479-480.
Also, unless further performance will be futile or useless, a party in breach of essential, but dependent and concurrent term/s, will not be able to terminate for the other party’s breach or repudiation, because a repudiating party must be ready willing and able to perform the contract.[24]
[24]For example, see Peter Turnbull & Co v Mundas Trading Co (Australia) Pty Ltd (1954) 90 CLR 235; Foran v Wright (1989) 168 CLR 835, 417-419.
The evidence of the builder and the homeowners about the progress of the works
By way of background, the homeowners operate an earthmoving business. It is uncontroversial that the Mr Perkins, who described himself as a machinery operator, operated the homeowners’ business from the existing house on the block adjacent to the building site. He said he was generally busy with work between 7am and 5pm. Mr MacDonald said that Mr Perkins came and went from the premises throughout the day. Ms Poppenk worked from home and said she was aware when vehicles were going to site. The builder said that because of its elevation little could be seen of the building site from the existing house.
The deposit was payable by the homeowners on signing of the contract,[25] but was not paid by them until some three months later on 23 November 2007. The builder refers to them experiencing some difficulty obtaining finance. It is common ground that Mr MacDonald commenced construction on 16 November 2007, when the footings were poured. The building period therefore was due to expire on 15 March 2008.
[25] Exhibit 5, p165, clause 4.2.
Stage payments were made for the base and frame stages in the amounts specified in the contract on about 10 January and 14 April 2008 respectively. The enclosed stage invoice was delivered on 12 May 2008.
Both the builder and Mr Perkins gave evidence about issues during construction. Mr MacDonald spoke of disruption because of Mr Perkins’ machinery being onsite and very frequent requests from Mr Perkins for changes to the works required under the contract. He says that several of what he describes as verbal ‘variations’ were discussed by Mr Perkins directly with subcontractors without reference to him.
The ‘Variations’
Despite the issues described, from Mr MacDonald’s perspective, construction progressed relatively smoothly until, he says, he presented a list of variations to the homeowners. The list is contained at page 18 of Exhibit 5. It is in the following terms:
Tax Invoice
·Excavation of water and power line trench $345.50
·Reengineering of house and shed slabs $1,300
·Remodelling, and design of kitchen and other cabinets $12,833
·Realignment and additional plumbing to bath second dishwasher and fridge $900
·Council required second water line to toilets $1,370
·Move location of bath $1,200
·Additional cost to upgrade panel lift door from colour bond to timber $3,100
·Additional concrete work done to shed and deck, as specified by Engineer $5,300
·Increase in length of shed and partitioning $6,700
·Remodelling of bulkhead to kitchen $350
·Additional electrical, control panel, lights, power points and circuits $10,800
·Administration to variations $2,200
·Total
$46,478.00 inc gst
Payment within seven days
Cost of cooking appliances is $8 500 over allowance.Not included in this invoice.
The builder says that many of these items were done by him. However, he did not do the following items: remodelling and design of kitchen $12833; additional cost to upgrade panel lift door from colour bond to timber $3160; additional electrical, control panel, lights, power points, $10880. Further, increasing the length of shed and partitioning he said was half done at the time of purported termination. The builder’s evidence was to the effect that the variation items other than the council requirement for a second water line to the toilets were requested by the homeowners.
Mr MacDonald says that (although page 17 of Exhibit 5 is addressed to the homeowners’ lawyers), he also gave the ‘variation document’ at page 18 to the homeowners at an earlier time and discussed the amounts of additional costs with them. He says that this was what prompted the dispute which ensued. Mr Perkins evidence was to the same effect. Mr Perkins said that the homeowners went to lawyers because the builder wanted an extra $50,000 and would not pay Retravision. He asserted that the builder wanted payment for extras and payment for lock-up but ‘we had no doors.’ He also asserted that Mr MacDonald had said that it was his contract and he would take as long as he liked, and that was why the homeowners went to lawyers. That said, Mr Perkins said he left paperwork to Ms Poppenk and did not himself see the lawyers for the homeowners, leaving that to Ms Poppenk also.
Ms Poppenk did not think page 18 had been given to the homeowners directly, although she appeared to become more certain about this as her evidence progressed. She said that the dispute began because of slow progress on the works. Ms Poppenk initially said that Mr MacDonald had said words to the effect that it was his contract and he would take as long as he liked. She later clarified that she had not heard any such comment made, but that Mr Perkins had told her that the builder said it.
Mr MacDonald denies having made any such assertion.
Mr Perkins’ evidence about the requested variations was inconsistent. He made assertions against Mr MacDonald which, upon further exploration were misleading and gave a false impression, as will be explained in the following paragraphs.
Mr Perkins initially denied asking for any variations. He said that if he had asked for variations, there would be a variation (document).Ultimately however he accepted that items listed were either done or to be done on the homeowners request.
Some costs are claimed for a variation related to relocating a bath (contrary to its position on the plans). Mr MacDonald says that after installation, upon the homeowners’ request, he moved the bath (that is, had it jack-hammered out and reinstalled) from one side of the child’s bathroom to the other. Mr Perkins, while minimising the work involved, did ultimately accept that it was done but at that stage asserted that he did not ask to change anything else.
Concerning the ‘variation’ claimed for the costs of having a 100m trench dug for services to the site, Mr MacDonald says that it had been agreed that Mr Perkins do it, but he did not. Eventually it was agreed that Mr MacDonald would engage Brookes Excavation to do it. Mr Perkins eventually and somewhat reluctantly acknowledged that was probably correct.
In response to whether he had requested that the shed slab be made bigger, Mr Perkins said in essence that the builder had not done it properly and ‘we’ made it bigger, because of a mistake for which he initially sought to blame the builder. Eventually, he admitted, that the homeowners had the plans drawn. The fact that the shed as drawn was too small was not Mr MacDonald’s doing at all. It was not big enough for a pool table which Mr Perkins wanted to place in it, and he asked the builder to make it bigger. (As discussed later, an issue arose about responsibility for the amended plans required for this purpose). Mr Perkins asserted that they (the homeowners) had paid the cost of this. Inconsistently, he later admitted that the homeowners did not make any payments other than the stage claims made under the contract which did not include any component for extras on top of the contract price. Several of the costs at page 18 of Exhibit 5 relate to this work.
In respect of the costs of remodelling and design of kitchen and cabinets, Mr Perkins asserted that it was not correct that they required variations and that what they wanted was not covered by the contract. He asserted that the electrical work included was insufficient. He claimed that the bulkhead remodelling in the kitchen was necessary because Mr MacDonald had not done it properly. Mr MacDonald said the homeowners wanted it remodelled post-construction and relied upon the specifications regarding what was included for the kitchen and electrical works.
Mr MacDonald’s oral evidence about what variation documents had been given to the homeowners and when given was sketchy. He said he had produced variation documents over time. He also said, that ‘at the end’ he provided a variation document to the homeowners but they did not sign it and so he had not provided it to the Tribunal. He said Ms Poppenk understood that the extras had to be paid, but that Mr Perkins intervened, and they could no longer speak.
Progress of the works and alleged suspensions
Ms Poppenk said that works were suspended by the builder when the homeowners did not promptly pay the enclosed stage invoice. She also gave evidence that nothing much happened on site between 1 July 2008 and 22 July 2008, although she admitted that during this period the frame for the entertainment room was constructed as were pillars at the front of the house. She then said that between 29 July when Mr MacDonald delivered pages 17 and 18 of Exhibit 5, and about 4 August, that she thought no work was done on the site. Later she said no work was done between 4 August and 19 August. Having been referred to the chronology at Exhibit 11, she thought no work was done after pages 17 and 18 were delivered on 29 July 2008.
Mr Perkins said that after the enclosed stage payment was made, he thought the only work done was standing of some posts around the house, the back veranda and standing the frame on the out-door area. He said that he thought nothing was done after August 2008. Mr MacDonald says that in July and early August 2008, he stood the pavilion timber wall framing and timber roof trusses. He agrees he stood some hardwood timber posts which were 2.7m and weighed 1.2 tonne each. He said it was intricate work with a significant fixing system. He also bolted the galvanised steel plate to the veranda floor, front and back and concealed the fixings. He asserts that he was actively constructing the house. He also had plumbers and plasterers onsite. Although he acknowledges that he had other work on at the same time and so he was not onsite every day, he denies leaving the site on 29 July 2008.
Mr MacDonald explained that on an occasion in early August, Mr Perkins attended the site and criticised the fixings being done, saying words to the effect of ‘that looks like pox.’ Mr MacDonald says he warned him not to come onsite again pointing out that he was not entitled to do so under the contract.
He says that Mr Perkins returned to site in the following days. Mr MacDonald says he gave Mr Perkins a notice suspending works on 8 August 2008, which he says Mr Perkins screwed up and threw away. Mr MacDonald produced to the Tribunal at the hearing a copy of a letter dated 7 August 2008, addressed to the homeowners giving notice that ‘all works are suspended forthwith and that an application has been made to the’ CCT.[26] He says he recorded giving the notice to Mr Perkins in his diary, which he had with him, referred to and looked at in giving his evidence.
[26] Exhibit 4.
He explained his recollection of who else was present at the time and other details and discussion with Mr Perkins on the day. That said, the notice is set out in a format which is different from all of the other correspondence from the builder to the homeowners and their lawyers. Mr MacDonald gave evidence that this was because it had been prepared by ‘his daughter’. However, in submissions after evidence had closed (and in response to a submission from QBCC) he clarified that one daughter usually prepared his documents, but due to her unavailability, another daughter had prepared the suspension notice. QBCC did not have the opportunity to test this assertion. However, for reasons later discussed, the outcome does not hinge on this late and untested evidence from Mr MacDonald.
This notice of suspension of works is not referred to in correspondence between the homeowners lawyers and Mr MacDonald and his lawyers leading up to the purported termination. Mr MacDonald thought he ‘would’ have given it to his lawyers. It was not referred to in Mr MacDonald’s draft witness statement to the CCT in the earlier proceeding.[27] An executed copy of the witness statement which may have contained changes, additions or corrections was not provided.
[27] Exhibit 7.
Ms Poppenk said that no written suspension notices had been received, but asserted that Mr MacDonald had just stopped work at times, that is, until the enclosed stage invoice was paid, and subsequently from about 29 July 2008. As discussed above, Mr MacDonald acknowledged that he was not on site every day, saying he had other work on also.
Mr Perkins was initially equivocal about whether he had received the Exhibit 4 suspension notice in August 2008. He then asserted he did not recall Mr MacDonald giving him any documents and that he would ‘probably’ remember if he had received it.
Ms Poppenk had prepared a chronology of events which is Exhibit 11. However, she says she prepared it in about October 2010. This is considerably after the events had transpired. Although she generally impressed as an honest and organised person, I do not accept that a chronology prepared several years later is necessarily an accurate record of events, except where the dates and events were able to be checked against independent and contemporaneously prepared documents. In respect of some dates, this is the case. Some coincide with correspondence and CCT related events. However, I place less weight on the other alleged dates of events in the chronology which are not verified by contemporaneously prepared documents.
The correspondence commencing 30 May 2008 until purported termination on 19 August 2008
Mr MacDonald had delivered the enclosed stage invoice to the homeowners on 12 May 2008, for $103,554.[28] Then between 30 May 2008 and the date of purported termination, the parties, mostly though their lawyers, exchanged a significant volume of correspondence.
[28] Exhibit 5, p 260.
The homeowners issued a notice to remedy breach to the builder for alleged substantial breach on 30 May 2008, namely failing to complete the works. They also alleged he had rendered the enclosed stage invoice when works to the enclosed stage were incomplete because the glass doors, front door and garage door had not been provided, and the construction of the shed had not commenced.[29]
[29] Exhibit 5, p 2.
The notice required him to remedy the breach within 10 days by completing to the enclosed stage and agreeing to vary the contract such that completion was due on 30 June 2008, and late completion damages were payable by the builder which would be waived if completion was effected by 23 June 2008.
Mr MacDonald responded on 3 June 2008 that he was not in substantial breach. He says the enclosed stage was complete except the front door (which the owners had not chosen) and the garage door (in respect of which Mr Perkins had changed his mind from the specified door on 1 May 2008 when it was then reordered). Further, he says the shed slab was discussed on 27 March 2008, and as a result of the homeowners were to request new plans. He says he awaits the revised plans. He further cites demand for skilled trades and the homeowners delay in decision-making as contributing to delay. In keeping with Mr Perkins evidence (discussed earlier) about the trigger for the dispute, he refers to a request from the homeowners for him to pay Retravision for appliances. He suggests that in view of the delays it is difficult to predict a completion date, but suggests that 30 July 2008 is more realistic.
In correspondence dated 4 June 2008, the builder also alleged various breaches of the contract by the homeowners, alleging late payment of the deposit; issues about access at the site because of the homeowners’ equipment onsite; and the homeowners interfering and giving instructions to workers and subcontractors onsite.
On 11 June 2008, the homeowners’ lawyer wrote to advise that they would agree to a completion date of 25 July 2008. They also denied that the homeowners were in any way responsible for the delay in completing the shed, which they assert is effectively an extension to the house, and allege that the progress claim to lock-up stage was premature.
On 17 June 2008, lawyers for Mr MacDonald assert that for the contract, the works do not include the shed and consist of the brick veneer house; and that the homeowners were in substantial breach of the contract when they purported to issue the notice dated 30 May 2008. Further, time could not now be made of the essence again by them unilaterally given conduct of the parties to date and when they were well aware of the reasons why the work could not be completed by 15 March and elected to continue with the contract. They state that Mr MacDonald required the progress payment to be made or he would give a notice suspending works and of his intention to refer the matter to the CCT. Alternatively, they confirm that Mr MacDonald suggests that 25 July is a realistic practical completion date, and he is prepared to work towards that if the invoice was paid, the plans for the shed are settled by the homeowners, and the homeowners refrain from interfering with his employees and subcontractors.
On 19 June, the homeowners again deny fault in the delay of the shed and reiterate their proposal of 11 June.[30] A facsimile dated 13 June from the homeowners’ draftsman confirms that at that stage he had not been contacted by the homeowners.[31] On 24 June 2008, the builder’s lawyers confirm the draftsman’s advice and point to the responsibility of the homeowners to provide plans. They request either a revised plan or an instruction to proceed with the shed in accordance with the approved plans (which will now result in costs to cut the slab). They assert that the homeowners are in substantial breach for failing to pay the instalment due and to provide necessary instruction. Further, they say that the matter will now be referred to the CCT.
[30] Exhibit 5, p 11.
[31] Exhibit 5, p 10.
A letter marked ‘draft’ dated 25 June 2008, from the homeowners lawyer, asks if the builder purported to terminate the contract. They go on to assert that the homeowners understood from a discussion with the builder on 24 January 2008 that the builder would arrange a new plan, but he had failed to contact the draftsman at all until 7 May 2008. They then assert that the builder had a responsibility to tell the homeowners that they had to instruct the draftsman, and that although ‘technically’ the homeowners authority was required, the builder would have told them by now if they were mistaken. The homeowners consider the assertion that they were to obtain the plans and are in substantial breach is an excuse to justify the builder’s delay in completing the works. Further, they state that they require the shed to be completed before accepting the works have reached the enclosed stage and require it to be done within four weeks of the fresh plan being provided.[32]
[32] Exhibit 5, p14.
On 27 June 2008, the builders’ lawyers wrote to advise that he wished to complete the works as soon as possible, and, if the last claim was paid, would ‘immediately recommence the work’ and have it completed within 6 weeks. They confirmed that the homeowners would obtain a final plan for the shed, and that the shed would be completed within four weeks of delivery of the plan to him. They seek confirmation of the arrangements.
On 1 July 2008, the homeowners accepted the proposal, arranged payment of the enclosed stage and advised that they expected the revised plans to be finalised that week.[33]
[33] Exhibit 5, p72.
However, on 22 July 2008, the homeowners’ lawyer wrote expressing concern that since ‘our agreement’, little work has been carried out on the site and that Retravision have not been paid for kitchen appliances. Allegations are made that if the appliances remain unpaid for, then repackaging and other costs will be incurred and the chosen items may not be available. Notice is given of an intention to claim damages if this occurs and that the homeowners will require strict compliance with ‘the agreement that the works be completed by 18 August, 2008.
Mr MacDonald replied personally to the letter of 22 July by facsimile to the homeowners lawyers on 29 July 2008 (pages 17 and 18 of Exhibit 5). He states essentially that the allowance specified is far exceeded by the chosen appliances and denies responsibility for costs associated with them. He suggests the homeowners pay Retravision. He further asserts that the completion date will have to be adjusted because the owners did not nominate a front door until 14 July, and delivery time is 25-30 working days; he has been advised by the homeowners that the spa is not the correct one (in Exhibit 7 he explained that it was nominated in a catalogue on page 23, but closer inspection reveals that 2 different spas on other pages were also marked) and he has ordered another one but delivery is estimated at 3 weeks; instruction on the custom cornices was provided and ordered but delivery date is unconfirmed; on 23 July 2008, the homeowners (for the first time) instructed plumbing was required to the fridge; since the works recommenced, rain and restricted access (because of the homeowners vehicles on the site) had delayed works.
He says that because of these items an extension of time is required for completion. Further, he attaches the tax invoice for costs associated with variations instructed by the homeowners. He states that the list will extend the completion date by 20 days. The tax invoice detailing the cost of the ‘variations’ discussed earlier (which is at page 18 of Exhibit 5), totalling $46,478 is attached. It is undated but requires payment within 7 days for the items specified.
On 4 August 2008, the homeowners’ lawyer writes asserting that for some considerable time they have been complaining about delay in completing the works and that they consider the builder is still in substantial breach. They require him to complete the works by 18 August. They deny weather ‘ought to have delayed the works’. They assert that he is not entitled to any of the claimed amounts as he has not provided any signed variations or documents supporting the claims, and are not entitled to payment until the relevant stage has been completed and the relevant progress claim delivered. They do not respond to the allegations of the builder that the homeowners are responsible for ongoing delay or his claim for an extension of 20 days.
On 6 August 2008, the builder’s lawyers respond. They assert that the variations will increase by $8500 if the selected items at Retravision are required. They attach a schedule showing specifications allowed for the kitchen and the electrical work. It is asserted that the homeowners must expect the additions will impact on the time frame for completion. The builder requests agreement to the variations and evidence that the homeowners can pay the amount for overruns, in addition to the remaining progress payments. The attached documentation includes 2 quotes from an electrician, setting out the quote for the work requested by the builder as allowed of $4400; and a 2nd quote for client’s requested work of $20,130; and regarding the kitchen for what the builder had quoted to supply and what the homeowners now required.
On 8 August, 2008, Mr MacDonald says he gave the notice of suspension of works to Mr Perkins which was discussed earlier.
Then on 19 August 2008, the homeowners’ lawyer wrote purporting to terminate the contract. The nominated grounds are failing to complete in accordance with the further agreed dates as contained in the builder’s correspondence of 27 June and the correspondence from the homeowners’ lawyers of 1 and 8 July (the correspondence of 8 July does not appear to before the Tribunal);[34] unlawfully suspending the works and failing to remedy that breach as per their notice in the correspondence of 22 July (the correspondence of 22 July as discussed earlier does not give notice of the alleged unlawful suspension); and abandoning the works.
[34]Exhibit 5 contains 281 pages of documents. Multiple copies of various pieces of correspondence are included. Unfortunately, contrary to expected and usual practice the index unhelpfully does not set out the documents contained, other than as ‘Documents Received’ on 1-261. I was unable to locate the letter referred to.
On 28 August, the builder advised that he did not accept they had a right to terminate and referred the dispute to the CCT, required directions about the variations to the contract and remained ready to complete the works. There was no reference to the suspension notice.
As discussed earlier, the CCT proceedings were resolved in December 2009 on the basis that the application and counter-claim were dismissed and the builder pay the homeowners costs in a specified sum.[35]
[35] Exhibit 5, p42.
Were the homeowners entitled to terminate the contract on 19 August 2008?
The QBCC says that Mr MacDonald’s actions in allegedly failing to progress the works, allegedly unlawfully suspending the works and allegedly demanding monies to which he was not entitled (relating to the enclosed stage invoice and the ‘variations’), when viewed together, were a repudiation of the contract which the homeowners were entitled to accept.
Whether the builder had repudiated the contract must be considered in the circumstances surrounding performance of the contract. Those circumstances included the homeowners’ actions.
The alleged bases of Mr MacDonald’s repudiation
QBCC submits that various alleged breaches by Mr MacDonald should be viewed together to demonstrate repudiation of the contract by him. These are considered below.
1. The alleged unlawful suspension of the works
The QBCC submits that Mr MacDonald unlawfully suspended works following the non-payment of the enclosed stage. It says that the correspondence trail supports this conclusion.
Mr MacDonald does not suggest that he complied with Clause 19 and suspended the works under the contract at this time. He says in essence that he had other work on also and that he just was not at the site every day, but that he had not suspended the works.
Accordingly, it is uncontroversial that there were a number of days when the builder was not onsite. That said, Mr MacDonald was not obliged by any term of the contract to be onsite every day. At the relevant time (when for the reasons dicussed later, time was no longer of the essence), his implied obligation was to complete the works within a reasonable time.
In Exhibit 11, Ms Poppenk refers to him leaving site on 30 May 2008, when the homeowners’ lawyers sent correspondence, and returning to site on 7 July 2008. However, I do not accept this in large part because it is not supported by the contemporaneous documents.
Firstly, it is not likely that Mr MacDonald received the homeowners’ lawyers letter on the day it was produced. Also on 11 June 2008, the homeowners’ lawyer wrote again, but did not allege the builder had suspended works. Ms Poppenk impressed as an organised person (she impressed as more organised than either Mr Perkins or Mr MacDonald). She dealt with the homeowners lawyers. It is reasonable to infer that she would have advised her lawyers that works had ceased, if that was the case. Then on 17 June 2008, the builder’s lawyers wrote advising that unless the enclosed stage claim is paid a notice suspending works will be given, suggesting that works continued until at least that time. When the homeowners’ lawyers responded on 19 June 2008 and 25 June 2008, they still did not allege a suspension has occurred.
Mr MacDonald’s lawyers suggest however that he will ‘recommence’ work in their correspondence of 27 June 2008. Most likely he told them at some point that he had not been to site for some period of time or days. It is reasonable to infer that this may have led them to use the word ‘recommence’. Having regard to their correspondence, it appears that any absence from site most likely occurred from sometime between 17 June 2008 (when he was apparently considering suspension) and perhaps 3 July 2008 (when Exh 11 suggests it was paid). If all of the days were absences, it would be a maximum of 12 working days. Ms Poppenk says it was until 7 July (13 working days) but that date is not supported by any other contemporaneous document. I consider that there is no reliable evidence about how many days absence occurred.
On the available evidence, although I accept that there were some days during which Mr MacDonald and his employees did not attend the site, I am not reasonably satisfied that Mr MacDonald did informally and unlawfully suspend the works following the non-payment of the enclosed stage invoice. I find that he did not do so. The maximum likely period during which any absences occurred is relatively brief in circumstances when Mr MacDonald was not obliged to attend every day. I observe that if a temporary front door was affixed at the time, he had an entitlement to suspend the works under the contract for non-payment of a stage claim: clause 19.1. However, although he was considering suspension, Mr MacDonald does not suggest he did do so.
If I am wrong, and Mr MacDonald in fact unlawfully suspended works between 17 June 2008 and 3 or 7 July 2008 then under clause 28.1, this was a serious breach of the contract. It would have given rise to an entitlement of the homeowners to give a notice to remedy breach. However, if they considered the works had been unlawfully suspended, they did not do this and nor did they suggest works were suspended in correspondence from their lawyers. Instead agreement was reached to extend the building period to 18 August. The homeowners thereby waived their entitlement to give a notice to remedy this breach under the contract.
The QBCC also submits that there was a later unlawful suspension from 29 July 2008. The builder says a lawful suspension occurred from 8 August 2008 when he gave a notice of suspension to Mr Perkins. He provided a detailed and plausible explanation and account of surrounding events and other persons present. He produced a diary in which he said he had an entry to the effect that he gave it on that date. QBCC indicated they may inspect the diary and Mr MacDonald was apparently happy for this to occur although it did not subsequently do so during the hearing. In submissions, QBCC now seeks to criticise Mr MacDonald for not tendering the diary in this administrative review proceeding. I draw no adverse inference from the failure to tender the diary by Mr MacDonald who is not legally represented. It was open to QBCC in its role of assisting the Tribunal to make its (correct and preferable) decision on the review,[36] to ask him to do so and it did not.
[36] QCAT Act s21.
Also, QBCC says that I should draw an adverse inference against Mr MacDonald because of his failure to call his daughter alleged to have prepared the notice in the proceedings on the basis of the rule of evidence referred to as the rule in Jones v Dunkel.[37] Again as Mr MacDonald is self-represented and considering his inexperience and lack of sophistication in representing himself, I do not consider it appropriate to apply this rule against him in these administrative review proceedings.[38]
[37] (1959) 101 CLR 298.
[38]It has been held that the rule should be applied with discretion against an unrepresented party in administrative review proceedings: Re Rodgers and Secretary, Department of Social Security (1991) 24 ALD 720.
Consistently with the suspension alleged by Mr MacDonald, Mr Perkins evidence was that he thought the last work done onsite was in August 2008. Ms Poppenk’s chronology includes an entry that the builder faxed the variations document on 29 July 2008 and did not return to site. However, this date is not otherwise supported by contemporaneous documents. In their letter of 4 August, 2008, the homeowners’ lawyers in responding to the delays which the builder claims the homeowners have caused, do not suggest that work has ceased on the site. It is reasonable to infer they would have done so if their instructions were that work had ceased. Therefore, I conclude that at that point, it had not.
I find that under clause 19, Mr MacDonald was entitled in early August 2008 to suspend works by written notice because of the homeowners breaches of the contract including, interference with the builder’s access to the site which he referred to in his correspondence of 29 July 2008 (and which was not denied) and entry into the site and giving instructions to employees or subcontractors of the builder (which was not denied) in breach of clause 10. Mr MacDonald says he did this and produced Exhibit 4 in support of this claim. He says he gave the notice to Mr Perkins who threw it away. Mr Perkins evidence was equivocal at best about whether he had received it, saying he would probably remember it, but later totally denying receiving it.
Alleged absence from the site commencing around this time, is not inconsistent with the suspension notice having been given as the builder alleges. Ms Poppenk was unaware of the notice and saw it for the first time in this proceeding, but this is consistent with Mr Perkins having disposed of it in the manner Mr MacDonald alleges.
Against that, QBCC says I should not accept that Exhibit 4 was given. It submits that if it was, it would undoubtedly have been referred to in the builder’s lawyer’s correspondence at about that time, and Mr MacDonald’s CCT proceedings, which based on the documents available to me, it was not.
Mr MacDonald was able to say no more than he assumed he gave the notice to his lawyers, but that perhaps they thought other things more important. As QBCC argues, if they had instructions about it this seems unlikely, given its potential to impact on the outcome of those proceedings. It does have a different look in terms of layout to other documents prepared for Mr MacDonald’s business which are contained in Exhibit 5. His explanation that it was prepared on a different computer could explain that apparent anomaly. It also refers to CCT proceedings having been commenced. The application in the CCT was not filed until 19 September 2008, although Mr MacDonald had signed the documents on 1 September.[39]
[39] Exhibit 5 page 49.
Mr MacDonald says that once he had instructed the lawyers to proceed in the CCT, he considered it done. That said, if he gave instructions by about 7 August 2008 to commence proceedings, other events (that is, purported termination) occurred shortly afterwards and further instructions would have been necessary. Any documents drafted before the purported termination would have required redrafting. It is reasonable to infer that there was some delay, after initial instructions were given to his lawyers, to issue proceedings. The events which transpired are not inconsistent with Mr McDonald having given instructions for proceedings to be issued by 7 August 2008.
Mr MacDonald is not a sophisticated man. His explanation that he considered it done once he gave instructions to lawyers is not unreasonable having regard to his level of sophistication. Although Mr MacDonald did not suggest it, it is also plausible in light of his general disorganisation in attending to paperwork that because the suspension notice was stored, not on the computer on which almost all of his business documents were produced, that Mr MacDonald simply omitted to give that one document to his lawyers.
Mr MacDonald generally impressed as an honest, although disorganised person as concerns keeping the appropriate paperwork. This is apparent from his failure to diligently attend to the required paperwork in administering the contract to protect his own interests. For example, although I am satisfied that the homeowners instructed the variations in respect of which he rendered the ‘tax invoice’, and Mr MacDonald did a considerable amount of the work involved, he did not act to secure payment for them, by complying with clause 20.
On balance, I find that Mr MacDonald did give the suspension notice to Mr Perkins on 8 August 2008, as he says. However, I am reasonably satisfied that he failed to give it to his lawyers most likely due to his general disorganisation concerning attention to paperwork. In reaching this conclusion I take into account that Mr Perkins was equivocal about whether he received the notice and he did not present a strong denial. Although Ms Poppenk impressed as an honest witness, there is nothing to suggest that she saw or even became aware of the suspension notice in the circumstances alleged by Mr MacDonald. Therefore, I find that there was no unlawful suspension of the works on this occasion either.
Under clause 17.2, the period of the suspension then constituted a further a claimable delay, in respect of which the builder was entitled to an extension of time to complete. That said, at the time of purported termination shortly thereafter, he had not notified the homeowners of the claim for extension of time on this basis.
If I am wrong and the notice was not given on 8 August, then on both the homeowners and the builder’s versions of events, there must have been a further informal and unlawful suspension. It occurred at some time between 29 July (according to Ms Poppenk) and early August (according to Mr Perkins and Mr MacDonald). I would be satisfied that the suspension occurred in August as Mr Perkins and Mr MacDonald suggested, because the homeowners lawyers do not refer in their 4 August correspondence to any suspension. I would infer that it must have occurred later. On balance, I would be reasonably satisfied that it occurred from about 8 August. This suspension, if the notice was not given, was not implemented in accordance with the contract. If this was the case, the builder was in breach of contract for unlawful suspension.
This suspension would have entitled the homeowners to give a notice to remedy breach under clause 28.1 of the contract, provided they were not themselves in substantial breach: clause 28.7. They did not do so. Instead they wrote on 19 August 2008 purporting to terminate the contract.
2. Lack of progress
QBCC submits that the builder failed to progress the works.
Initially, there was delay in commencing the works. The homeowners failed to pay their deposit on signing of the contract as it required. They did not pay it until some 3 months later. Mr MacDonald was aware of their difficulties sourcing finance: on the evidence, he did not complain about the delay. However, because of it, works did not commence until the days immediately before the deposit was paid. It is reasonable to infer from this that Mr MacDonald was aware that they had obtained finance at that point.
The building period agreed in the contract expired on 15 March 2008. There is limited evidence about what transpired between November 2007 and March 2008. Mr MacDonald says the parties discussed what was happening. In signing the contract, the homeowners had warranted that the plans were correct and suitable. However, they decided that they were not suitable and the shed was too small for their required intended use. Revised plans were to be obtained. It is not clear from the evidence when it was decided this was required. Inconsistent evidence suggests that it was either late January 2008,[40] or 27 March 2008.[41] The builder was awaiting revised plans. The builder did not obtain the plans or take responsibility for them under the contract. The homeowners were responsible for them. Despite this, they later sought in correspondence from their lawyers to blame the builder for the delay in obtaining the revised plans.
[40] Exhibit 5, p14.
[41] Exhibit 5, p 4.
If the builder instructed revised plans, he would have become responsible for paying for them unless the homeowners first gave instructions and gave the draftsman authority to deal with the builder, which it is clear in their lawyers correspondence of 25 June 2008, they had not. Indeed, it is suggested that their authority for the revised plans was merely a ‘technicality.’ It was a technicality which arose because of the terms of the contract.
The builder says he had discussions with the homeowners about the numerous variations they requested and the costs. He also says that the homeowners were reluctant to agree to variations. Even though I have found that the builder failed to prepare the variation documents required under the contract, on Mr Perkins evidence, I find that the variations were instructed. It is apparent that the homeowners reluctance was not to having the work done, it was to paying for it to be done. In this context, it is unsurprising that the builder waited for the homeowners to do as the contract required, and provide the amended plans.
Other works were progressing, but subject to access problems at the site due to the homeowners’ storage of vehicles onsite and because of numerous variations instructed sometimes directly to employees of the builder and his subcontractors.
Time was of the essence under the original contract terms. The evidence does not suggest that either party was concerned when the works were not completed by 15 March 2008 as required by the contract. At least in part, this was likely because of the various changes to the works which I accept were instructed by the homeowners including through Mr Perkins during his regular visits to site and approaches to Mr MacDonald and his staff and subcontractors, and the delay occasioned by the requirement for revised plans as a consequence of the requested changes. Both parties allowed the time provision to lapse. Time was no longer of the essence, although the common law in those circumstances implies a term requiring completion within a reasonable timeframe. I find that the works at that point were to be completed within a reasonable timeframe.
Several months later, after the enclosed stage invoice was rendered in mid-May 2008, a dispute began between the parties. Ms Poppenk says it began because of delay in construction. Both Mr MacDonald and Mr Perkins say it happened because of the costs levied for the variations referred to in the tax invoice at page 18 of Exhibit 5, which Mr MacDonald says he discussed with and gave to the homeowners directly before it was attached to page 17 and provided to their lawyers. That said, it is apparent that Mr Perkins, through his site visits, had discussions with the builder and other workers onsite to which Ms Poppenk was not a party.
Having regard to the evidence of the builder and Mr Perkins in particular, it is uncontroversial that there had been discussions between the homeowners and the builder about variations as the works had progressed.
It is reasonable to infer that the builder advising the homeowners about the cost of the proposed variations to the works may have been the source of some tension between the homeowners and the builder, especially if the homeowners had difficulty sourcing finance for the original contract amount, let alone the costs of any variations. Despite the willingness by both parties to allow the prescribed building period to pass by several months without any apparent concerns being raised[42] or correspondence, advising of additional significant costs might reasonably have prompted dispute.
[42]In this regard, I note that there is no reference in Exh 11 to the passing of the date for completion under the contract.
There was also an expectation by the homeowners for a payment to Retravision, which Mr Perkins refers to at about that time, and which Mr MacDonald mentions in correspondence at about that time. There is some consistency in their versions of events about the sequence of events. I find that the tax invoice was given to the homeowners at about the time that the enclosed stage invoice was rendered and that this then prompted the correspondence dated 30 May 2008. It is therefore reasonable to infer that, if any other ‘variation documents’ were provided to the homeowners by the builder, none were provided by him before this time because if they had been, problems might have been expected to arise earlier.
Mr Perkins says, and he told Ms Poppenk, that the builder had said at about the time of the dispute following the enclosed stage invoice, that it was his contract and he would take as long as he liked to complete it. Mr MacDonald denies this and I accept his evidence about this. For the reasons already explained, I accept that the impetus for the dispute was the rendering of a tax invoice for the variations.
There is no correspondence until the homeowners lawyers wrote to the builder on 30 May 2008 to suggest that either party was concerned about delay or failures of the other party to act strictly in accordance with the requirements of the contract.
Although time was not of the essence when the correspondence began on 30 May 2008, agreements were then reached which restored time as an essential term. Agreement was reached that completion was due in 6 weeks, that is, by 18 August 2008.
However, putting aside the actions of the builder for the moment, it is apparent, that the homeowners themselves did not then act in a manner which allowed completion by that further agreed date. Mr MacDonald in his letter faxed on 29 July 2008, (and he was not challenged on these details), explained that the date was not achievable, because of the actions of the homeowners. He said the homeowners had only finally ordered a front door on 14 July and delivery time was 25-30 days. Further, he said that the homeowners had also now advised that the spa nominated by them (although confusingly, one of 3 nominations) was not the correct one and the new one would not arrive for some three weeks. Further, he says that on 23 July, the homeowners for the first time instructed that the fridge was to be plumbed in. He attached a list of the ‘variations.’ Finally, he says there had been some rain since recommencing work and restricted access because of the homeowners’ vehicles. He stated that an additional 20 days was required to complete.
Under clause 17.1, the builder was entitled to a reasonable extension of the building period if carrying out the works was delayed by a claimable delay. He claimed 20 days. He set out the cause of the delay and the extension claimed as required by 17.3. The owner had 5 working days to dispute the claimed delay under 17.4. The homeowners disputed only delay caused by rain. The homeowners response, although denying that rain ‘ought to have delayed the works’, did not refute any of the other reasons for delay raised by the builder, other than to say that the additional amounts claimed would not be paid as no variation documents had been produced. Consistent with the oral evidence of Mr MacDonald and Mr Perkins, they do not say that the additional works referred to were not instructed & in many instances, done.
During this period, in breach of clause 10.3(a) of the contract the homeowners were storing equipment at the site causing access problems which contributed to the delay. They continued to request variations. They were also tardy in giving necessary instructions. The absence of a front door was a primary reason the homeowners refused to pay the enclosed stage claim. Yet, they did not select the door to be ordered until 14 July. Further, they had provided confusing instructions regarding the spa they selected. It was marked up in a catalogue. Mr MacDonald turned the pages until he located the marked one. He ordered and installed it. Later, the homeowners say it was the wrong one as 2 others were also marked up on later pages. I am satisfied that the homeowners actions contributed to the delays in this manner.
Unhelpfully, Mr MacDonald did not say how many days he claimed for rain and each other item separately. However, he validly claimed extensions of time which largely were not disputed. Accordingly, I find that the date for completion was no longer 18 August 2008, although on the evidence before me I can not determine precisely the date to which it had been extended. In any event for reasons to be explained, this lack of certainty does not ultimately affect my conclusions.
Returning to the submission of the QBCC that the builder failed to progress the works. The homeowners complain that the builder did little to progress the works after agreement was reached for completion by 18 August. However, the evidence given by both of the homeowners and the builder confirm that he did not insignificant works including the pavilion timber wall framings including standing the large hardwood timber posts and constructing the fixing system, framing the outdoor area and working on the verandas. The builder says, and I accept, that some plumbing and plastering was also done. Mr MacDonald says, and in light of the work done during this period, I find, that he was actively constructing the house until the suspension in August 2008.
Mr MacDonald advised of a required extension of time, which for reasons already explained, was a validly given notice of extension of time and which (except in relation to rain) was not disputed. In the notice, he pointed to actions of the homeowners, especially delay in giving instructions, and hindering access which resulted in the agreed date for completion being unachievable. I have found that completion was no longer due on 18 August 2008 as a result. It is apparent from this consideration that delays in construction were the consequence of numerous actions and inactions, many of them not attributable to the builder.
Because completion was not due by 18 August 2008, the time for completion had not been reached at the time of the purported termination. Mr MacDonald was not in breach of the contract concerning the date for completion.
3. Demanding payment to which he was not entitled
The enclosed stage claim
A written claim for payment was to be provided by the builder ‘for the completion of each stage’: clause 4.3. The homeowners were to pay within 5 business days of the claim: clauses 1.2, 4.1 and 4.5.
It is uncontroversial that Mr MacDonald rendered the enclosed stage claim on about 12 May 2008, at a time when the front door was not in place, and nor were the garage doors. The evidence about when the glass doors were fitted is equivocal. It seems that they were affixed at or about the time the claim was rendered.
Schedule 2 defines enclosed stage[43] to include fixed external windows and doors, even if only temporarily. The works under the contract were described as a low set brick veneer house.
[43] Exhibit 5, page 154.
The claim was not paid within the requisite period. On 17 June 2008, Mr MacDonald’s lawyers advised that he required payment or would give notice suspending the works.[44] On 24 June, he advised that he regarded the homeowners to be in substantial breach.[45]
[44] Exhibit 5, page 9.
[45] Exhibit 5, page 12.
As earlier discussed, I am reasonably satisfied that the glass doors were affixed at about the time the enclosed stage claim was rendered. Further, although the garage doors had to be affixed prior to practical completion, I do not accept that they were required by the enclosed stage payment for the works as defined, that is, the house. However, a front door was required to be in place before the builder was entitled to render the claim. From Mr MacDonald’s perspective the delay in affixing the front door was caused by the homeowners’ failure to select a door. Despite that, before the claim was rendered at least a temporary door was required. He offered to put a temporary door in place. Ultimately the enclosed payment was made.
Whether or not the temporary door was in place when payment was made, the enclosed stage had not been reached at the time the claim was rendered because there was no front door affixed. Although it is apparent that the major work was done to the enclosed stage when rendered, I am satisfied that Mr MacDonald nevertheless breached the contract by rendering his claim before the stage was completed.[46]
[46] This is consistent with G. Lazy J Pastoral Pty Ltd v QBSA [2000] QDC 220.
The QBCC makes an argument related to the enclosed stage, based on the alleged non-compliance of Mr MacDonald with the DBC Act.
As discussed earlier, the percentage claims at each stage as specified in the contract were not in accordance with s 66 of the DBC Act.
The oral evidence given by the builder and the homeowners about whether s 66(6) of the DBC Act was complied with in order to affect a variation is vague and somewhat unsatisfactory. The homeowners do not recall receiving the document that would have been required, but this is hardly surprising given that the document might have been a single piece of paper received at the same time as the contract which contained a considerable number of pages, if it was given, about 6 years earlier. The builder does not specifically recall giving it, although he said he ‘probably would have’. That said, Schedule 2 to the contract used contains an option to complete a ‘Customised Progress Payment Schedule’[47] where the standard percentages in the DBC Act are departed from. It was completed only by the insertion of ‘N/A’. On this basis, on balance, it seems unlikely that a separate document was given.
[47] Exhibit 5, page 155.
The QBCC therefore argues that the builder was entitled to receive only the prescribed statutory percentages. Section 66 provides that a contractor may not demand or receive more than the prescribed percentages. A builder may face penalty for non-compliance. The enclosed stage payment under the DBC Act was 35%, whereas the builder’s enclosed stage claim was for 30% under the contract and so there is no non-compliance as concerns the enclosed stage payment.
However, the payments that had been made under the contract for the base and frame stages were greater that the statutory percentages. The argument seems to be that (although the 30% claimed for the enclosed stage, was less than the 35% allowed under the DBC Act), that because greater percentages were paid for the earlier stages, the builder was not entitled to demand the contracted 30% enclosed stage claim and that doing so was an act of repudiation.
However, if a requirement of the DBC Act, is not complied with by the builder, such failure does not generally render the contract illegal, void or unenforceable.[48] In any event, although non-compliance with the DBC Act, if it occurred, may have had unrelated potential consequences for the builder under that Act, agreement on a basis that did not comply with a requirement of the DBCA Act, does not render either reaching the agreement itself or later seeking to press for a payment claim in accordance with the contract, a repudiatory act. For these reasons, I do not need to determine whether Mr MacDonald, in fact complied because even if I was satisfied of non-compliance, it would have no consequences for the outcome of this proceeding.
[48]DBC Act s 92. Section 93 is not contravened, since any non-compliance with s 66 could only be in demanding or receiving greater than the statutory percentages, rather than rendering the contract itself contrary to the DBC Act: further, the contract does not purport to annul, exclude or change a provision (or exclude change or restrict a right) of / under the DBC Act.
Variations
As discussed earlier, I have found that the homeowners instructed the various variations to the contract alleged by Mr MacDonald. Some of them had been done and others had not at the time Mr MacDonald gave the ‘tax invoice’ to the homeowners.
Under clause 13, under which the homeowners warranted the suitability of the design, when the homeowners decided that an error had been made in drawing or instructing the plans to the effect that the shed was too small, they were obliged to give written notice of error within 5 working days of becoming aware of it. There is no evidence that written notice was given. Although the clause deals primarily with inconsistencies in documents it specifically refers also to error or ambiguity, and the type of error that occurred is not expressly excluded from its operation. The application of clause 13.4, that is, the order of precedence would deal with inconsistency, rather than unsuitability as alleged here and so it does not assist. Under clause 13.5, a deemed variation occurs when the problem is not solely related to documents provided by the builder, which was so here.
The problem in this case was entirely as a consequence of the unsuitability of the plans provided by the homeowners to meet their purposes. Although clause 20 could conveniently have been applied to overcome the issue, Mr MacDonald says, and the homeowners actions at the time and subsequently suggest, that they were not amenable to signing variation documents and taking responsibility for variations instructed by them. It is sufficiently clear that under clause 13.5 that a deemed variation may have occurred in respect of the costs which were claimed in the tax invoice related to the increased size of the slab and shed. As there are other variations which are not covered by clause 13.5, I make no finding about this, as the outcome will not be affected.
In any event, the builder was entitled to claim variations in accordance with clause 20 of the contract. To his detriment, he was not diligent in attending to his responsibilities as concerns preparing the necessary paperwork. However, he was not entitled to claim for variations by rendering a tax invoice and requiring payment within 7 days in the manner he did. That is so despite the builder’s evidence, (which is supported in large part by Mr Perkins evidence), that he had done a significant amount of the work for which he claimed. I find that he had done the variations listed in the tax invoice except as identified by him (the exceptions being kitchen remodelling and cabinetry, the upgraded panel lift door, and the additional electrical work was not done, and the shed works were commenced but not completed). However, other than in respect of the possible deemed variation under clause 13.5, under the contract, amounts in respect of variations could only be claimed under the contract after following the procedure in clause 20 and with stage payments. Otherwise, he could only claim them under the DBC Act: Part 7.[49]
[49]If a variation was sought by the homeowner, the variation builder could only recover an amount for the variation if he had either complied with the requirements of the DBC Act (ss79, 80, 82 or 83: by a written document setting out the variation signed by the parties) or if not only with the Tribunal’s approval (which he did not have): s 84(2) and (4).
The builder rendered the tax invoice at page 18 of Exhibit 5, claiming for variations. Under the contract, he could only claim variations in accordance with clause 20, which I am satisfied on his own version of event he did not do. He does not purport to have done so under the DBC Act.
I accept that Mr MacDonald was in breach of his obligations under clause 20 of the contract to this extent. In context, he had, at the request of the homeowners, done a not insignificant amount of the work claimed for in the variations. He says, and I find that he did, act in good faith to try to accommodate the homeowners’ desires and requests.
Viewing the breaches of the builder together and in context of the homeowners’ actions do they evince an intention to repudiate the contract?
The QBCC submits that Mr MacDonald’s breaches of the contract amounted to a repudiation of the contract which the homeowners were entitled to accept on 19 August 2008. I have accepted that he breached the contract by way of rendering the enclosed stage invoice when the front door was not affixed; and claiming variations other than in accordance with the contract. Although Mr MacDonald, as the building contractor, had the responsibility to comply with the DBC Act, failure to comply with its requirements in respect of percentages claimed for each stage was not a breach of the contract or otherwise an act of repudiation.
Therefore, I am satisfied that Mr MacDonald did not tender performance on the terms agreed in the contract in all respects. However, it must be viewed in context. He had been asked to do, and had accommodated many and varied variations upon the request of the homeowners. He acted in good faith to accommodate the desires and requests of the homeowners. His failures occurred in the context that the homeowners’ paid the deposit late; delayed significantly in obtaining revised plans; requested the numerous variations described in the tax invoice; interrupted access at the site; gave instructions directly to the builder’s employees and subcontractors; and as discussed earlier, their breaches and other actions made the completion by the extended completion date unachievable. They also maintained some untenable constructions of the contract including that the shed had to be at lock-up stage before the enclosed stage payment was payable; issued a notice for alleged substantial breach of the contract on 30 May 2008 for failing to complete the works despite time no longer being of the essence; that having delayed in obtaining the revised shed plans which the builder was not contracted to provide, asserted that their involvement in obtaining them was a ‘technicality’ and the builder was responsible.
In these circumstances, I am not be reasonably satisfied that Mr MacDonald’s breaches of the contract viewed collectively demonstrated an intention to no longer be bound by the terms of the contract. On the contrary, I find that his actions were consistent with an intention to perform the contract.
Accordingly, I would set aside the decision of the QBCC and find that the correct and preferable decision is that the homeowners did not validly terminate the contract on 19 August 2008.
Observations
If I am wrong about the facts and the builder in breach of the contract unlawfully suspended the works in either or both May/June 2008 and /or August 2008, my conclusions would be unaffected, because in context that the date for completion had not been reached, and the various and other multiple and ongoing breaches and other actions by the homeowners, I would still conclude that the builder had not evinced an intention not to be bound or only to tender performance on a vastly different basis.
Further if I am wrong to the extent that any or all of Mr MacDonald’s breaches are evidence of the builder’s repudiation, and/or that the builder’s demand for more than the statutory percentage under the DBC Act was an act of repudiation, I would be satisfied that the multiple breaches by the homeowners should be similarly classified as evidence of their repudiation of the contract evincing an intention not to be bound on the terms agreed. That being the case, it would not have been open to them at common law to accept any repudiation on Mr MacDonald’s part.
If I am wrong that the date for completion had been extended and that the homeowners breaches are evidence of repudiation, I would in any event find that there is a causal relationship between the homeowners’ breaches and failures and the builder’s inability to complete the works by the extended completion date. There is a strong presumption that they can not take advantage of their own wrongs, which (at least) contributed to the inability of the builder to complete the works by 18 August for the reasons he outlined in his letter of 29 July. In light of their default, if it was necessary, I would find that the homeowners were not entitled to take advantage of their own failures in accepting any repudiation of the builder in order to terminate the contract.
Further, if I am wrong, and the homeowners had not repudiated the contract but the builder had, there is no evidence before me that the homeowners were ready willing and able to complete the contract. The builder asked for evidence on 6 August 2008. It was not given. Therefore, based on the evidence, I would find that they were not entitled to accept any repudiation by the builder because they were not ready willing and able to complete the contract.
Orders
I make orders setting aside the decision of the QBCC, and substitute my own decision that the homeowners did not validly terminate the contract.
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