Nichols v Earth Spirit Homes Pty Ltd
[2014] QCATA 260
•17 September 2014
| CITATION: | Nichols v Earth Spirit Homes Pty Ltd [2014] QCATA 260 |
| PARTIES: | George Nichols (Applicant/Appellant) |
| v | |
| Earth Spirit Homes Pty Ltd (Respondent) |
| APPLICATION NUMBER: | APL236-13 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | 9 December 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Thomas, President Member Roney |
| DELIVERED ON: | 17 September 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. In relation to appeal grounds 1 – 3, the appeal is dismissed. 2. In relation to appeal grounds 4 – 12, leave to appeal is refused. 3. Consistent with the reasons in APL235-13: a) Leave to appeal is granted; b) The appeal is allowed; c) The issue of costs in the proceeding below is remitted to the tribunal for determination in accordance with those reasons. 4. Subject to any application with respect to costs within 14 days by either party, the appellant pay the respondent’s costs on the appeal on a standard basis, by reference to the District Court scale, to be assessed, or agreed. |
| CATCHWORDS: | APPEALS – QUESTIONS OF LAW AND MIXED LAW AND FACT – LEAVE TO APPEAL – BUILDING DISPUTE – where tribunal found funds in Master Builders Association should be paid to respondent builder – where dispute about terms of agreement – whether tribunal erred in finding written contracts without effect – whether tribunal erred in concluding three oral contracts – whether appeal should be allowed – where tribunal Member found evidence of respondent’s witnesses more credible than that of appellant – whether cause to upset findings of fact by tribunal Member – whether grounds for leave to appeal Acts Interpretation Act 1954 (Qld), 14B Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1985] NSWLR 309, applied |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT/APPELLANT: | M Martin QC instructed by Mills Oakley Lawyers |
| RESPONDENT: | A B Wallace instructed by Hemming+Hart Lawyers |
REASONS FOR DECISION
APL236-13 is an appeal from a decision of the tribunal, dated 8 May 2013, which ordered that funds deposited by the appellant into the Master Builders Association be paid to the respondent builder in the sum of $245,612.04, and that the appellant pay interest at a rate of 10% for outstanding fees owed to the respondent, and for amounts the respondent had paid to suppliers or subcontractors. The appellant, Mr Nichols, has raised 13 grounds of appeal, asserting that the learned Member made various errors in her reasoning.
Background
In 2007, members of Mr Nichols’ family planned a property development that involved the construction of 10 houses in Wakerley, just outside of Brisbane. At the outset of the development, five of the homes were to be for members of the Nichols family; the other five were to be sold by Mr George Nichols’ (Mr Nichols) son, Philip Nichols, and his then wife Melinda (trading as Asden Developments Pty Ltd), as part of a commercial/profit making venture, so that they might gain property development management experience. Mr Blacklow was engaged by the Nichols. He designed the houses and prepared contracts for five homes that were to belong to the Nichols children.
Work commenced in December 2009, however the development’s progress under the management of Asden was slow, and significant defects in the work became obvious to both parties. In October 2010, Mr Nichols and Mr Blacklow agreed that Asden would be removed from management onsite, however would continue to be involved in the ordering of materials. No written document exists that confirmed this agreement.
The situation deteriorated further, and by December 2012, Asden were refusing to pay invoices and contractors. On 15 December 2012, Mr Nichols, his brother Peter, and his wife Debra, met with Mr Blacklow. At that meeting, it was decided that:
-Asden would cease to be involved in the project;
-The Nichols Group would continue to pay Earth Spirit the weekly management fee, and all costs incurred moving forward; and
-$250,000 would be paid by the Nichols Group into the Master Builders Association.
That amount was deposited into the Master Builders account on 16 December 2014. Again, nothing was put into writing.
After a two day oral hearing, the learned Member found for the respondent builder. Pursuant to s 142 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), the appellant appeals that decision based on 13 grounds. The appellant at the appeal hearing on 9 December 2013 did not argue, although did not withdraw, grounds 4 to 13 of his written submissions. We will deal with each of these grounds in turn below.
Leave to appeal
The respondent has raised the question of leave to appeal. The applicant has not dealt with this issue, and has not sought leave in its application or dealt with the issue in submissions, except, in the orders sought in paragraph [101] of his submissions, that the appeal tribunal should grant leave to appeal.
We will deal, initially, with the requirements concerning leave and the nature of the appeal, should leave be granted.
The nature of the application for leave to appeal or appeal
An appeal is not a right at common law but is a remedy given by statute.[1] The nature of an appeal is governed by the terms of the enactment creating it.
[1]Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 619 per Mason J.
The requirement that leave be obtained before certain appeals will lie has become a standard part of appellate procedure in Australia. It recognises that appeals against certain decisions should not be brought as a matter of routine.
An application for leave to appeal is, in this context, a proceeding that is quite separate from the appeal itself. The step of considering the question of whether leave is granted must be maintained since to do otherwise would create an appeal as of right where such a right does not exist.
Since the discretion to grant or refuse leave is statutory, it must be exercised by reference to the scope and purpose of the QCAT Act.
The QCAT Act identifies the scope and effect of appeals against decisions of the tribunal.[2] Section 142 provides that an appeal against a decision of the tribunal on a question of fact, or question of mixed law and fact, may be made only if the party has obtained the appeal tribunal’s leave to appeal.[3] Leave is not required to appeal against a question of law.
[2]QCAT Act, Chapter 8, Division 1.
[3]QCAT Act, s 142(3)(b).
The distinction between questions of law, and fact, and the nature of questions in which they are mixed, will sometimes be difficult to make. A helpful summary appears in a passage from a decision of the Supreme Court of Canada.
Briefly stated, questions of law are questions about what the correct legal test is: questions of fact are questions about what actually took place between the parties: and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.[4]
[4]Canada (Director of Investigation and Research) v Southern Inc [1997] 1 SCR 748 at 766 – 767, cited in Ash Industries Pty Ltd v Plumb [2010] QCATA 53 at [15].
Leave to appeal and appeal as of right issues: grounds 1 to 3
Grounds 1 – 3 concern questions of law. The appellant therefore, does not require leave on those grounds. These grounds relate to the same issue: the learned Member’s asserted failure to consider the enforceability of the oral contract, which she found to exist, in light of a breach of s 67AAA and the offence provisions of s 67G of the QBCC Act. They are set out below:
Ground 1: The learned Member erred in ordering the appellant to pay the respondent $254,612.04 pursuant to an oral contract for the provision of building works.
Ground 2: The learned Member erred in failing to consider and apply s 67AAA and s 67G of the Queensland Building Services Authority Act 1991 (Qld) (QBSA Act) (now the Queensland Building and Construction Commission Act 1991) in that the tribunal should not enforce an oral contract for the provision of building work as such contract is an illegal contract under the Act.
Ground 3: The learned Member erred in failing to consider and apply the decisions in Gemini Nominees Pty Ltd v Queensland Property Partners Pty Ltd,[5] Cant Contracting Pty Ltd v Casella & Anor[6] and Sutton v Zullo Enterprises Pty Ltd[7] in that an oral contract for the provision of building works is illegal and cannot be enforced in Queensland.
[5][2008] 1 Qd R 137.
[6][2006] QSC 242.
[7][2000] 2 Qd R 196 at 204.
The Queensland Court of Appeal in the decision of Flegg v CMC and Assistant Commissioner O’Regan[8] confirmed that the ambit of an appeal to the QCAT appeal tribunal on a question of law is confined to the determination of the question of law and does not have a broader ambit in the nature of a full rehearing of the matter. The appeal tribunal in determining an appeal on a question of law only is not at liberty to make findings of fact anew.
Appeal grounds 1- 3
[8][2013] QCA 376.
Is the oral agreement unenforceable due to a breach of s 67G and s 67J of the QBCC Act
Section 67G of the QBCC Act provides:
67G Building contracts to be in writing
(1) A building contractor commits an offence if –
(a)the building contractor enters into a building contract, whether as the contracting party or the contracted party for the contract; and
(b)the building contract is not put into writing –
(i)if the reasonable cost of the building work the subject of the contract is more than $10000 – before carrying out the building work is started; or
(ii)if the reasonable cost of the building work the subject of the contract is $10000 or less – before carrying out the building work is finished.
Maximum penalty – 80 penalty units.
…
(6) If, in contravention of subsection (1) or (2), a building contract is not put into writing, a building contractor who is a party to the contract is taken not to commit an offence against the provision if –
(a)building work the subject of the contract must be carried out urgently; and
(b)it is not reasonably practicable to enter into a written contract in the particular circumstances.
Example –
a cyclone has caused considerable damage at a remote community, repairs are urgently needed, the parties to the building contract are not both present at the community and communications failure prevents transmission of written material between the parties
It is common ground between the parties that the respondent is in breach of s 67G(1); it has entered into a building contract for building work valued in excess of $10,000 and the contract was not put in writing.
The issue for this appeal tribunal is whether the effect of s 67G of the QBCC Act renders the oral contract void. This would require the tribunal to find that the oral building contract is one expressly or impliedly prohibited by statute.
Related questions which might arise in the event that the oral contract is found to be void are:
a)In the event that the contract is unenforceable at law, is recovery under it permitted on a restitutionary basis (see Pavey & Matthews Pty Ltd v Paul;[9] Gino v D’Alessandro[10]); or
b)Is any illegality such that there should be no restitutionary relief having regard to the policy of prohibition intended by the statute.[11]
[9](1987) 162 CLR 221.
[10][1987] 2 Qd R 40.
[11] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471.
The appellant’s submissions
The appellant submitted that the making of an oral agreement is the very thing that is prohibited by s 67G of the QBCC Act. He said that the oral agreement is in clear breach of the Act, and, therefore illegal, preventing this tribunal from enforcing it as a matter of public policy in line with the authorities of Sutton v Zullo Enterprises Pty Ltd, Cant Contracting Pty Ltd v Casella, Gemini Nominees Pty Ltd v Queensland Property Partners Pty Ltd. (Cant was concerned with a breach of the Domestic Building Contracts Act 2000 (Qld); Gemini with a breach of the Building and Construction Industry Payments Act 2004 (Qld); and Zullo with s 42 of the QBSA Act (unlicensed building work).)
No right to recovery under an oral agreement exists on a restitutionary basis, for example, on a quantum meruit basis, or, as occurred in Pavey & Mathews Pty Ltd v Paul[12] for unjust enrichment, on the basis of the principles enunciated in Equuscorp Pty Ltd v Haxton & Ors.[13]
[12](1987) 162 CLR 221.
[13](2012) 246 CLR 498.
In Equuscorp, the High Court, on appeal from the Victorian Supreme Court, considered the enforceability of loan agreements made by the promoters of investment schemes in Blueberry Farms in New South Wales. An entity related to the promoting entity lent money to the investors under the loan agreements in question. The schemes themselves were found to be illegal due to a failure to comply with the Companies Codes in New South Wales and elsewhere. The promoters had failed to register a proper prospectus for the schemes. Proceedings for the recovery of moneys advanced to investors for the purpose of investment in the scheme were brought by an assignee of the original loan agreements.
The appeal succeeded in the High Court on the question of restitutionary relief available to the assignee, on the basis that moneys were in fact advanced under the agreements, and investors had the benefit of those moneys.
Again, on appeal in the High Court, in Miller v Miller,[14] no issue was taken about the finding that loans were illegal and unenforceable. The majority of the High Court held that the illegality which prevented recovery under the contract also impacted the availability of restitutionary rights. In the judgment of the majority of the Court in Equuscorp, comprised by French CJ, Crennan, and Kiefel JJ, the Court stated:
The outcome of a restitutionary claim for benefits received under a contract which is unenforceable for illegality, will depend upon whether it would be unjust for the recipient of a benefit under the contract to retain the benefit. There is no one-size-fits-all answer to the question of recoverability as with the question of recoverability under a contract affected by illegality the outcome of the claim will depend upon the scope and purpose of the relevant statute.
The central policy consideration at stake, as this Court said in Miller,[15] is the coherence of the law. In that context it will be relevant that the statutory purpose is protective of a class of persons from whom the claimant seeks recovery. Also relevant will be the position of the claimant and whether it is an innocent party or involved in the illegality.[16]
[14](2011) 242 CLR 446.
[15]Ibid.
[16]At [34].
An issue which restricts the principles recited in this decision is the finding of the Court that, even had restitutionary rights existed (which ultimately were found not to), they would not have been transferred by the Deed of Assignment from the original lender. A further topic which impacts the application of the Equuscorp decision is that the claims for moneys owing under the loan agreements, were, in any event, statute barred.
The appellant says that ‘the balancing process’ in interpreting the policy of the relevant legislation, the QBCC Act, should result in this appeal tribunal finding there is no right to restitutionary relief under this oral contract, in line with the High Court’s approach in Equuscorp.
The appellant made no submissions about s 67J.
The respondent’s submissions
The respondent says the oral contract does not breach the provisions of the QBCC Act and remains enforceable. It maintains the oral contract is not void or voidable by reason of the lack of writing; that the legislative intent of the new Part 4A of the QBCC Act is to create offences for the breach of the new provisions by imposing monetary penalties in the event of breach. It says that, in light of these amendments, the purpose of the provision is not to extinguish contractual rights.
The respondent submits if it is not successful on the contractual point, then the builder may still avail itself of equitable remedies consistent with the principle of unjust enrichment in Pavey & Matthews: that it should not suffer a loss when the owner has accepted and taken benefits from the work performed by the builder.
Further, it says the Equuscorp decision is distinguishable on its facts, as there was no ultimate benefit obtained by the investors under the loan agreements.
Is the oral contract between the appellant and the respondent enforceable?
The appellant asserted that the learned Member erred in failing to consider and apply the decisions outlined when determining that an oral contract for the provision of building works was enforceable. At a superficial level, those cases appear to support the appellant, but on closer examination, that result does not follow.
Cant Contracting P/L v Casella & Anor[17]
[17][2006] QCA 538.
The case concerned unlicensed contracting which was prohibited by s 42(1) of the Queensland Building Services Authority Act 1991 (Qld) (as it then was). Under s 42(9) of the Act, contravention of the section constituted an offence. Moreover, s 42(3) provided:
“Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.”
Section 42(4) allowed such a person to claim “reasonable remuneration for carrying out building work” calculated in accordance with that subsection.
In view of those provisions, Williams JA concluded that an unlicensed builder “would not be entitled to recover moneys due under the contract or on the common law quantum meruit basis alleged in the statement of claim”, but “would be restricted to a claim quantified in accordance with s 42(4) of the Building Act [Queensland Building Services Authority Act]”.[18]
[18]At [11].
Williams JA observed:
“Because s 42(3) of the Building Act provides that an unlicensed contractor “is not entitled to any monetary or other consideration” for doing work pursuant to the contract, such a contractor cannot be said to have any entitlement to progress payments…”[19]
[19]At [30].
As to entitlement, Jerrard JA concluded:
“The respondent was not entitled … to a progress payment for any building work it had carried out, because s 42(3) of the 1991 Act says so. The progress payment it claimed was a monetary consideration for the building work carried out.”[20]
[20]At [44].
Whilst Philip McMurdo J made the observation that “the respondent’s case therefore proceeds from the unattractive proposition that its committing an offence was an essential step in its becoming entitled to the beneficial operation of this scheme”,[21] he ultimately appears to have relied on the disentitling provisions of s 42(3). His Honour said “this is a difficulty in the operation of the Payments Act in the case of an unlicensed builder, because that builder is not entitled to enforce its contract and, in particular, to recover its contract price. The builder is limited effectively to recovering its costs, according to s 42(4) of the Building Act.”[22]
[21]At [53].
[22]At [55].
The outcome in Cant did not turn upon the fact that an offence was committed. Rather, it turned upon the express provision that, if there was a contravention of the section, the unlicensed person was not entitled to any monetary or other consideration.
Gemini Nominees Pty Ltd v Queensland Property Partners Pty Ltd[23]
[23][2008] 1 Qd R 139.
This case concerned a breach of s 55 of the Domestic Building Contracts Act 2000 (Qld) (DBCA) relating to cost plus contracts.
Section 55 prohibited entering into cost plus contracts in certain circumstances and provided that if a building contractor entered into a cost plus contract in contravention of the section, the building contractor could not enforce the contract against the building owner. However, the tribunal could, on an application made, award the building contractor the cost of providing the contracted services plus a reasonable profit if the tribunal considered it would not be unfair to the building owner to make the award.
In her Honour’s judgment, Mullins J considered relevant authorities, including Cant Contracting. As to the operation of the Act, Mullins J said:
“As contemplated by s 92 of the DBCA, s 55(3) of the DBCA specifies the consequence of a breach of s 55(1) or (2) which is that the contract is then not enforceable. That consequence is ameliorated by the provision then made in s 55(4).”[24]
[24]At [34].
Mullins J continued:
“As a matter of construction of s 55 of the DBCA within the context of that Act, the legislature has restricted a builder who breaches s 55(1) or (2) of the DBCA to recover costs of the work undertaken pursuant to that contract to the extent provided in s 55(4)… it cannot be concluded that in addition to s 55(4) a builder who breached s 55 of the DBCA would be able to make a claim based upon a quantum meruit.”[25]
[25]At [35].
Her Honour concluded:
“… the plaintiff is prohibited by s 55(3) from enforcing the contract and therefore cannot claim to be entitled to a progress payment under the contract. This conclusion is supported by the reasoning of the Court of Appeal in Cant and the judgement of Hodgson JA in Brodyn at 449 (82).”[26]
[26]At [36].
Again, the reasoning of Mullins J does not rely upon an offence having been committed as a basis for concluding that the contract is not enforceable. Rather, the reasoning is based upon the express provision of the relevant section.
Sutton v Zullo Enterprises Pty Ltd[27]
[27][2000] 2 Qd R 196.
This case concerned a breach of s 42, dealing with an unlicensed contractor. Section 42(1) prohibits a person from carrying out or undertaking to carry out building work unless that person holds a contractor’s license.[28]
[28]At [3].
In Sutton, McPherson JA observed that “it would be surprising if, having prohibited the making of such a contract, the legislature had not also intended that it should be unenforceable. This conclusion is not founded on the circumstance that, by s 42(7), a person contravening s 42 commits an offence, although it provides additional support for such a legislative intention.”[29]
[29]At [4].
His Honour continued, “when Parliament prohibits the very process of formation of a contract, it scarcely lies with the courts to ignore that prohibition and enforce the contract despite the express legislative embargo on its being made at all.”[30]
[30]Ibid.
However, McPherson JA expressed the opinion that it is not necessary to draw a final conclusion as to that question. This is because of the presence of s 42(3) in the section. As his Honour observed:
This is not an instance in which the legislation has left to implication the question whether the contract, if performed in breach of the statutory prohibition, is unenforceable by the person performing or carrying it out. Section 42(3) expressly provides:
“A person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.”[31]
[31]At [7].
His Honour acknowledged the need to consider the wording of the statute in deciding if the breach renders the contract unenforceable. He concluded it was clear that the prohibition contained in s 42(3) prevented a person from recovering the contract price or any part of it, and that he would regard it as also preventing the recovery of damages for breach of contract, or any claim based upon quantum meruit for work done. This was explained in the following terms:
In whatever form the claim is framed, the amount in question is a “monetary consideration for” his doing or having done the work, and so falls within the exclusion in s. 42(3) as being something to which a person carrying out building work in contravention of s. 42(1) is “not entitled” in the sense of his having in law no right or title to it.[32]
[32]At [8].
Again, the substantial reasoning of McPherson JA was based upon his interpretation of the statute as it is expressed, including the specific provision contained in subsection (3).
Freedom Homes Pty Ltd v Botros[33]
[33][2000] 2 Qd R 377.
This case involved a consideration of a breach of s 58 of the Queensland Building Services Authority Act 1991 (Qld).
Section 58 relevantly provided:
58 Contract for major domestic building work
(1) A contract for carrying out major domestic building work—
(a) must be in writing and signed by the building contractor and by the consumer;
…
(4) A building contractor who enters into a contract with a consumer for carrying out major domestic building work commits an offence if the contractor does not comply with (1).
Maximum penalty – 20 penalty units
McPherson JA identified, as a matter of law, the question, whether the contract was invalidated by s 58(1)(a) of the Act.
His Honour observed that s 58 did not define the consequences of a failure to comply with s 58(1)(a) beyond providing in subsection (4) that a building contractor who entered into a contract which did not comply with subsection (1) committed an offence.
McPherson JA referred to the case of Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd[34] in which the Court expressed a view that the question of whether a contract is invalidated is one of statutory interpretation.
[34](1978) 139 CLR 410.
In Yango, Mason J, with whom Aickin J agreed, remarked that there was much to be said for a view that, once a statutory penalty has been prescribed for an offence, the role of the common law in determining the legal consequences of the commission of the offence is thereby diminished.
McPherson JA pointed to the fact that there was nothing in s 58(1) which provided that a registered builder, who contravened its terms, was disentitled from recovering payment for the work carried out.
He distinguished the case of Sutton[35] on the basis that the outcome there had been influenced by s 42(3) where the section expressly precludes recovery by an unlicensed person of any monetary or other consideration for carrying out the building work in contravention of s 42(1).
[35][2000] 2 Qd R 196.
McPherson JA concluded:
“I do not consider that s 58(4) should be interpreted as invalidating a contract or as rendering it illegal, or unenforceable by the building contractor by reason only of failure to comply with the requirement imposed in s 58(1)(a) that the contract must be signed by the consumer…”[36]
[36]At [14].
The authorities to which the appellant has referred do not support the conclusion that the commission of an offence under s 67G will lead to the contract being unenforceable.
Section 67G of the QBSA Act provides that a building contractor commits an offence if the building contractor enters into a building contract and the building contract is not put into writing. It does not prohibit an oral contract. The section prescribes no consequence for the contract not being put in writing other than that the building contractor commits an offence. Unlike s 42 of the QBSA Act (considered in the other cases above), s 67G does not provide that, as a consequence, the contract is unenforceable. The decision in Freedom Homes is on point, as the relevant section in that case was in similar terms. There is no aspect of s 67G which suggests a consequence of breach, other than, or in addition to, the fact that the building contractor commits an offence.
The QBSA Act, however, also contains s 67E, which relevantly provides:
67E Operation of pt 4A
(1) …this part (which includes s 67G) does not have effect to make void or voidable a building contract, or a provision of the building contract, even:
(a)in entering into the building contract, or the building contract containing the provision, a party to the building contract commits an offence against this part.
(2) However, if a building contract, or a provision of a building contract, is inconsistent with a provision (the Act provision) of this part applying to the building contract, the building contract, or the provision of the building contract, has effect only to the extent it is not inconsistent with the Act provision.
The meaning of the words in s 67E(1) is clear: the contract is not void or voidable. However, as has been pointed out by the appellant, a verbal contract is, in its entirety, inconsistent with the Act provision (that the contract be in writing). In that circumstance, the relevant question is: would s 67E(2) override the result which flows from s 67E(1) on the basis that, in the case of a verbal contract, the inconsistency is essentially the entire contract?
In seeking to answer that question, assistance may be found in the explanatory notes to the Queensland Building Services Authority Amendment Bill 1999 (Qld), (that relevantly introduced Part 4A to the QBSA Act), which says that “section 67E removes doubt that this part only makes void any conditions of the contract expressly made void by this part and that it applies to all contracts even if, in entering into the contract, an offence is committed or the contract is entered into outside Queensland.”
The Honourable Judy Spence, in the second reading speech for the Bill, said on 21 July 1999:
Provisions are structured so that where inconsistencies arise between the legislation and contractual provisions, contractual provisions are void only to the extent of the inconsistency. All other existing contractual rights are preserved (s 67E(2)).
Injustices occur where contracts are not committed to writing. The legislation therefore makes it mandatory to put contracts in writing and set out basic contract terms. Failure to do so constitutes an offence for all parties to the contract who are building contractors. However, the unwritten contract is not rendered void by the legislation.[37]
[37]Hansard page 2771 (21 July 1999).
The wording used in s 67E(2) is possibly confusing and ambiguous. However, in our view, s 67E(1) makes it clear that the contract will not be void or voidable in the event that the contract is inconsistent with the legislation. It is not ambiguous. Section 67E(2) should not be read so as to defeat that operation of s 67E(1) which is clear in its effect.
To the extent that these statutory provisions are ambiguous or obscure it is open to take extrinsic material into account to assist in the interpretation. Such material includes the explanatory memoranda and the second reading speech of the Bill,[38] both of which support the way in which, in our view, the two sections should be understood.
[38]Acts Interpretation Act 1954 (Qld) s 14B.
On those bases, we conclude that the contract was not unenforceable as a result of not being reduced to writing, and so Grounds 1 to 3 fail. As a result of finding the contract enforceable, it is unnecessary for us to consider the issues of unjust enrichment and quantum meruit, which were raised by the respondent.
Grounds 4 – 13
Mr Nichols requires leave to appeal on grounds 4 – 13, which raise questions of fact.[39]
[39]QCAT Act s 142(3)(b).
Leave to appeal
Leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.[40] The error by the tribunal and the resulting injustice of the decision, if left uncorrected, must bear upon the granting of the specific relief sought. Essentially, an applicant must show that the decision would be reversed or substantially different if the error of fact, or mixed law and fact, was established on appeal.
[40]Pickering v McArthur [2005] QCA 294 at [3].
Before leave would be given, the appeal tribunal must be satisfied that:
(i)the tribunal erred in its findings of fact, and
(ii)that as a consequence there are reasonable prospects on appeal of it being shown that the exercise of the learned Member’s discretion miscarried.
If the question involved is one of fact or mixed law and fact, and leave is granted, then the appeal proceeds by way of a rehearing on the evidence before the tribunal below, with any additional evidence that is admitted by the appeal tribunal.[41]
[41]QCAT Act s 147(2).
The appeal tribunal will not usually disturb findings of fact on appeal if it considers the conclusions of the decision maker below were able to be made on the evidence before them,[42] however may interfere if the conclusion is ‘contrary to compelling inferences’ in the case.[43] When considering whether the original decision maker was in error, the appeal tribunal must exercise its own discretion.[44]
[42]Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at 125-126.
[43]Chambers v Jobling (1986) 7 NSWLR 1 at 10.
[44]Fox v Percy (2003) 214 CLR 118 at 128 per Gleeson CJ, Gummow and Kirby JJ.
Ground 4
Ground 4 states: The learned Member erred in her application of the rule in Jones v Dunkel[45] by finding that every party to a conversation is required to give evidence and that adverse inferences can be drawn if those parties are not called.
[45](1959) 101 CLR 298.
The rule in Jones v Dunkel is expressed in this way:
“where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference…”[46]
[46]Jones v Dunkel [1959] 101 CLR 289 at 312 per Menzies J.
The underlying premise is based on common sense: that a party is likely to call all available evidence which is favourable to it. In those circumstances, if evidence not called is otherwise available (that is, there is no explanation for the evidence not being called) the inference can be drawn that the evidence would likely not have been supportive of that party’s case. The rule is an expression of a reasonable approach which might be taken in considering evidence at a hearing.
The applicant specifically refers to the absence of evidence by Debra Nichols as being the circumstance under which the inference was drawn by the learned Member. On a number of issues, the learned Member was presented with a conflict of evidence between Mr Nichols and Mr Blacklow. The learned Member makes the observation that “in particular the understanding of the agreement known by Debra Nichols would have been of assistance to this decision”, and, that “Ms Debra Nichols did not give evidence and I was given no reason why she did not attend. I am left to assume her evidence may not have supported Mr Nichols”.
These comments were made in circumstances where, in a well reasoned judgment, the Member had come to the conclusion that she preferred the evidence of Mr Blacklow. The learned Member concluded that Mr Nichols presented his evidence in an unconvincing manner often simply refusing to answer or recording disagreement. The learned Member went so far as to conclude “I do not believe his evidence to this Tribunal was completely honest, either because he did not recall or because he now remembers the events in a way that suits his purposes”.
In the circumstances, it was not unreasonable for the learned Member to take account of the absence of corroborating evidence which might have operated against a conclusion which had already been drawn, based upon direct observation of the witnesses who did give evidence.
The learned Member did not err in her application of the rule in Jones v Dunkel. This ground of appeal has no substance to it.
Findings at first instance – issues of evidence
In her reasons, the learned Member sets out findings organised in chronological order.
The learned Member indicates that she prefers the evidence of Mr Brett Blacklow over the evidence of Mr George Nichols and describes reasons for this view.
The credit findings are not questioned in the applicant’s grounds for appeal.
The learned Member carefully and clearly deals with findings made where there are conflicts of evidence.
It is our view that the findings made in this respect were open on the evidence and so should not be disturbed.
Grounds 5 and 10
Ground 5 states: The learned Member erred in finding the appellant wholly responsible for all payments due to the respondent when the Member found the existence of oral contracts between the applicant and other members of the Nichols Group who were not parties to the proceeding.
Ground 10 states: The learned Member erred in finding that the second and third oral contracts were a variation of the first oral contract as there was evidence against such finding given they involved different parties.
The learned Member found that the contracts for progress of the development were with Mr Nichols and the various (at times different key members) of the Nichols Group.
She found that the contracts were with George Nichols personally and as agent for the Nichols group, as that entity may have been comprised, from time to time.
The learned Member found that Mr Nichols was the “driving force in this family group” and “gave instructions for family members”; that Mr Nichols reached the agreement on 27 October; that Mr Nichols was the “guiding hand and financier in this whole project”.
She found that Mr Nichols had conducted himself so as to invite the conclusion that he was authorised to commit the Nichols group to the varied agreement.
The learned Member was satisfied there had been three oral contracts and found that “the second and third contracts were variation of the first as circumstances changed”. The word ‘variation’ is clearly used in the sense that the terms between the new parties in the new contracts varied to accommodate changing circumstances.
The learned Member’s finding against Mr Nichols solely is unremarkable. Implicit in that finding, which was open on the evidence before her, was that the nature of the transaction was such that the parties were jointly and severally liable. She found that the relevant contract, on which the judgment was based, was the “final agreement” referred to in paragraph [61] of the reasons, where the terms (as found by the learned Member) are set out.
The findings made by the learned Member were open on the evidence, and consequently, there is no reason to disturb them. As to Grounds 5 and 10, there is no reasonable argument that, in this respect, the decision is attended by error, and so leave to appeal is refused
Ground 6
Ground 6 states: The learned Member erred in finding that the payment into the Master Builders trust account was security for the costs of the respondent generally, and not just for PC items as noted on the front page of the Master Builder’s Association deposit form.
Based on the evidence of Mr Blacklow, the oral contract was found by the learned Member to include the term “Security for costs of Earth Spirit of $250,000 would be paid into Master Builders”.
There was a dispute as to the basis on which the funds were deposited. The learned Member rejected the applicant’s evidence, specifically finding: “I do not accept there were specific terms as alleged by Mr Nichols in relation to payment”.
This finding was open to the learned Member. The decision is not in any way attended by error, and so leave to appeal is refused.
Ground 7
Ground 7 states: The learned Member erred in failing to find that any oral contract with the appellant was a guarantee and therefore unenforceable under s 56 of the Property Law Act 1974 (Queensland).
The learned Member decided that there was no intention to create legal relations in relation to the 5 signed documents. Under Ground 8, we have considered this issue.
The learned Member found that “the real but oral contracts” for the progress of the development were with Mr Nichols and various members of the Nichols group (see paragraph [57] of the reasons and our discussion under Grounds 5 and 10).
It follows that Mr Nichols did not guarantee the liability of any third party. No third party guarantee was necessary at the outset, nor was one required at the time that the deposit was made to the Master Builders Trust account.
As to Ground 7, we find that there is no reasonable argument that the decision is attended by error. The learned Member’s finding was open on the evidence, and so leave to appeal is refused.
Ground 8
Ground 8 states: The learned Member erred in finding:
a)That the written building contracts between Earth Spirit Home and the following –
1.Melinda Jane Nichols
2. Andrew David Nicholas Nichols
3.Gay Margaret Jordan
4.Peter James Anthony Nichols
5.Donna Indra Nichols
did not create a contractual relationship or were of no legal effect;
b)that the parties paid no regard to the written building contract when the evidence was contrary to such a finding.
The learned Member found:
[55] I was satisfied on the evidence before me there was no intention by the parties to work under the 5 contracts for the individual houses or the precontractual relationships. The contracts were there to fulfil what the parties thought were there obligations under the BSA Act. Those contracts once entered were then ignored. There was no evidence to show any regard to them….”
[56] I am satisfied that the designated owners from the beginning, never intended to be bound to or create contractual agreements binding on them with Earth Spirit, for example to actually pay for the house construction on the lot chosen for them by Mr Blacklow ..
The assessment of the intention to create legal relations requires an objective assessment of the state of affairs between the parties.[47] It is necessary to consider all of the circumstances to detect whether the relevant intention exists. The learned Member did this; she considered all of the evidence and the surrounding circumstances and determined that no relevant intention existed.
[47]Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1985] NSWLR 309.
The applicant’s submissions refer just to invoices which were issued but to no broader surrounding circumstances. The learned Member considered the purpose of the contract and the intention and conduct of the parties. The learned Member also noted that the arrangement was in reality a license lending arrangement, designed to cut building costs. It was also suggested that the 5 documents were signed to achieve a tax minimisation objective (see evidence of Brett Blacklow as contained in his statement, sworn 22 June 2012).
The findings made by the learned Member were open on the evidence. As to Ground 8, leave to appeal is refused.
In the circumstances there is no need to consider the issue of abandonment. The learned Member did not find that the executed contracts had been abandoned; she found that there was no intention to create legal relations and so no contracts.
Ground 9
Ground 9 states: In the alternative the learned Member erred in finding that the Domestic Building Contracts Act 2000 (Qld) did not apply to the oral contracts between the applicants/Nichols and Earth Spirit Homes.
The learned Member found at paragraph [60] of the judgment: “As there were more than two houses in this development, I am satisfied the provisions of Domestic Building Contracts Act 2000 do not apply (s7(2)(b)).”
In view of the learned Member’s finding on this point, ground 9 is unsustainable. No reasonable argument exists that the decision is attended by error. Leave to appeal is refused.
Ground 11
Ground 11 states: The learned Member erred in finding that the appellant had an obligation to reimburse the respondent for unpaid invoices.
This ground arises from the finding in paragraph [61] of the learned Member’s decision as to the terms of the ultimate agreement.
At paragraph [61] the learned Member finds that “Earth Spirit's costs would be either paid or reimbursed by the Nichols Group and these decisions about suppliers and contractors would be made by Earth Spirit Homes.” This was the evidence which the learned Member accepted from Brett Blacklow. It appears at paragraph [59] of his statement. He says it was one of the terms of the agreement reached at the “Coffee Club” meeting on 15 December 2010. She accepted Mr Blacklow’s evidence where it conflicted with Mr Nichols.
There is no basis to disturb this finding. It was open to her to accept his evidence and it made objective sense in all the circumstances that for Earth Spirit Homes to take over as construction manager, as it did, it had to have the support of the existing subcontractors and suppliers to continue their work. They needed to be paid for this purpose and Earth Spirit Homes now had the position essentially as head contractor.
The findings made by the learned Member were open on the evidence. As to Ground 11, there is no reasonable argument that the decision is attended by error, and so leave to appeal is refused.
Ground 12
Ground 12 states: The learned Member erred and her discretion miscarried when ordering the appellant to pay interest to the respondent on outstanding fees owing to the respondents.
This ground arises from the learned Member’s findings at paragraph [70]:
“I am satisfied that it is appropriate that interest should be awarded to Earth Spirit Home Pty Ltd for outstanding fees owing to it by Mr Nichols from the date the invoices were due and payable.”
This finding is a reasonable and obvious one. We are unable to discern any error. Earth Spirit Homes was out of pocket for these funds. This ground is dismissed.
Ground 13
Ground 13 states: The learned Member erred and her discretion miscarried when ordering the appellant to pay the respondents costs
This ground relates to the learned Member’s findings at paragraph [77] and [78] of her judgment.
For the reasons we have outlined in the reasons for decision in APL235-13, the matter of costs must be remitted to the Member for reconsideration. As is said in those reasons, the Member’s discretion did miscarry, because she did not allow the parties to make submissions. We make no comment about the respective strength of the submissions. Leave is granted on ground 13, the appeal is allowed, and the matter is remitted to the learned Member for determination.
Orders
The appellant, Mr Nichols, has only succeeded, as a matter of formality, in relation to the issue of costs. In relation to grounds 1 – 3, which concerned questions of law, his appeal is dismissed. Leave to appeal is refused on appeal grounds 4 – 12; leave to appeal is granted in relation to ground 13, the appeal is allowed with respect to that point, and the matter remitted to the learned Member to reconsider.
Costs of the Appeal
Subject to any application with respect to costs within 14 days by either party, the appellant pay the respondent’s costs on the appeal on a standard basis, by reference to the District Court scale, to assessed, or agreed.
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