Partington & Anor v Urquhart (No 2)

[2018] QCATA 120

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Partington & Anor v Urquhart (No 2) [2018] QCATA 120

PARTIES:

PHILLIP PARTINGTON
EVELYN PARTINGTON
(applicants/appellants)

v

JOHN URQUHART T/AS HART RENOVATIONS

(respondent)

APPLICATION NO/S:

APL131-13

ORIGINATING APPLICATION NO/S:

BDL072-10

MATTER TYPE:

Appeals

DELIVERED ON:

10 August 2018

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Howard, Presiding
Member Traves

ORDERS:

1.   The submissions filed by Phillip Partington and Evelyn Partington in July 2017 are struck out.

2.   Leave to appeal is granted.

3.   The appeal is allowed.

4.     (a)   Order 1 of the Tribunal decision dated 19 February 2013 is set aside.

(b)   In substitution for order 1 dated 19 February 2013:

(i)     The Appeal Tribunal declares that:

a.    John Urquhart t/as Hart Renovations is entitled to a quantum meruit in the sum of $160,162.89;

b.    Phillip Partington and Evelyn Partington are entitled to damages and interest of $171,938.50;

(ii)     The questions of whether interest may be awarded on a quantum meruit, and if so, whether it should be awarded, and if so, in what amount are reserved for further determination on the papers not before 4:00pm on 24 August 2018.

(iii)    The Appeal Tribunal directs that the parties may file in the Appeal Tribunal and serve on the other party written submissions limited to two (2) A4 pages in 12 point font about the issues referred to in (ii) above, by 4:00pm on 24 August 2018.

(iv)    The Appeal Tribunal directs that the parties must file in the Appeal Tribunal two (2) copies and serve on the other party written submissions limited to two (2) A4 pages in 12 point font about the form of the final orders to be made in substitution of Tribunal order 1 dated 19 February 2013, setting out details of payments made pursuant to the Tribunal order dated 19 February 2013 to be brought into account, by 4:00pm on 24 August 2018.

(v)     Further orders will be made in substitution of order 1 dated 19 February 2013 by the Appeal Tribunal not before 4.00pm on 24 August 2018.

5.   Order 2 of the Tribunal decision dated 19 February 2013 is confirmed.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – POINTS AND OBJECTIONS NOT TAKEN BELOW – QUESTIONS NOT RAISED ON PLEADINGS OR IN ARGUMENT GENERALLY – where matter remitted from Court of Appeal to Appeal Tribunal – where all issues not considered before the Appeal Tribunal as originally constituted – where newly constituted Appeal Tribunal to conduct rehearing

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – PERFORMANCE OF WORK REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF – whether enclosed stage completed at time progress claim made – whether non-compliant and defective works preclude stage from being complete – enclosed stage invoice not received – effect of variations not in writing – contract not properly terminated under clause 28 – whether contract terminated at law

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – REMEDIES FOR BREACH OF CONTRACT – REMUNERATION – RECOVERY ON QUANTUM MERUIT – IN GENERAL –  assessment of quantum meruit claim by builder – assessment of damages including cost of rectification by owner

Domestic Building Contracts Act 2000 (Qld), s 84
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 147, s 150

Bellgrove v Eldridge (1954) 90 CLR 613
Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184
Coulton v Holcombe (1986) 162 CLR 1
Harrison v Meehan [2017] QCA 315
John Urquhart t/as Hart Renovations v Phillip Partington, Evelyn Partington [2016] QCA 87
McGibbo Pty Ltd v Willex Projects Pty Ltd [2013] QDC 313
Miller v Lida Build Pty Ltd [2013] QCA 332
Ownit Homes Pty Ltd v Batchelor (1983) 2 QdR 124
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Simpson Steel Structures v Spencer [1964] WAR 101
Stojanovski v Australian Dream Homes Pty Ltd [2015] VSC 404
Tan Hung Ngyuyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178
Thompson Residential Pty Ltd v Hart [2014] QDC 132
University of Wollongong v Metwally (No 2) [1985] HCA 28

REPRESENTATION:

Applicant:

S McNeil instructed by Blue Fox Legal

Respondent:

SB Whitten instructed by Saal & Associates

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).

REASONS FOR DECISION

1. The primary issues on appeal concern the entitlement of a builder to make a progress claim for the enclosed stage under a building contract,[1] in circumstances that part of the work done did not comply with the plans and specifications and/or was defective or incomplete; the extent of defective or incomplete works; and the assessment of the costs of rectification. Other issues on appeal concern default interest and costs of an adjournment of the hearing of the proceeding.

   [1]Alteration, Addition and Renovation Contract (HIA QC3 2000) dated 4 August 2008 (the Contract).

2. Related issues arise in the disposition of the appeal proceedings, in relation to the termination of the contract; the builder’s right to claim damages in the event the progress payment was wrongly withheld; in the alternative, whether the builder was entitled to a quantum meruit and, if so, to interest; and the homeowners’ right to damages for incomplete and defective work.

3. The “homeowners” are Phillip Partington and Evelyn Partington (the Partingtons) and the builder is John Urquhart t/as Hart Renovations. The builder made a claim for a domestic building dispute against the homeowners, who then made a cross-claim.

   1. History of the matter

4. The Tribunal heard the application and cross-application over four days. At the commencement of the hearing, the parties identified the issues for determination by the Tribunal as follows:

   1.Did the building works reach the enclosed stage by 20 April 2009;

   2.Did the applicant lawfully terminate the contract on 18 February 2010;

   3.If ‘no’ to (1), what is the value of the builder’s quantum meruit claim, if any;

   4.If ‘no’ to (2), what is the value of the builder’s quantum meruit claim, if any;

   5.If ‘yes’ to (2), what damages flow from the homeowners’ breach including interest;

   6.What are the defects, if any, to the enclosed stage;

   7.What is the value of the cost to rectify or complete building work to the enclosed stage; and

   8.If the contract was unlawfully terminated by the builder what damages are claimed by the homeowners and what damages are recoverable.[2]

   [2][2013] QCAT 133, [8]; Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 4-8; Exhibit 6.

5. The hearing proceeded on the basis that the Tribunal was to deal with the issues identified. The Tribunal first delivered a decision in this matter on 19 February 2013. The decision ordered the Partingtons to pay the builder the sum of $214,946.00. The decision was reached in the following way.

6. The Tribunal held that:

   (a)     the enclosed stage had been completed and, accordingly, that the builder was entitled to the progress payment for the enclosed stage;

   (b)     the builder had correctly terminated the building contract;

   (c)     the homeowners were entitled to damages by way of rectification costs for defective work by the builder;

   (d)     the builder was entitled to default interest under the building contract at the overdraft interest rate plus 5%; and

   (e)     the builder was entitled to damages calculated by the Tribunal as follows:

   Cost of work and materials to date of termination   $189,913.00

   Contractor’s margin of 20%  $25,582.00

   Termination costs  $181.00

   Interest of outstanding money  $60,170.00

   Quantity Surveyor’s cost   $1,100.00

   Total   $276,946.00[3]

   [3][2013] QCAT 133, [87].

7. The Partingtons’ damages for rectification were assessed at $62,500.00[4] and later at $62,000.00.[5]

   [4]Ibid, [72].

   [5]Ibid, [88].

8. The sum of $214,946.00 was arrived at by deducting the sum of $62,000.00 from the builder’s award. The Partingtons were also ordered to pay the builder’s costs thrown away as a consequence of an earlier adjournment.

9. The Partingtons appealed those decisions.

10. On 19 May 2015 the Appeal Tribunal allowed the appeal. Noting that the front door was not affixed in April 2009 when the first enclosed stage invoice was issued,[6] it allowed the appeal, in essence, because the learned Senior Member had relied upon expert opinion about the stage being reached, rather than considering the proper construction of the contract and applying the facts to it. The Appeal Tribunal held that if the front door had not been affixed then the builder was not entitled to issue the progress claim. Further, it considered the Senior Member had not properly determined the meaning of ‘structural flooring’ contained in the definition of enclosed stage, nor decided what it referred to as ‘factual matters necessary’ to conclude whether the definition of enclosed stage was met. The Appeal Tribunal ordered that the claim and counter-claim be returned to the Tribunal for rehearing according to law.[7]

    [6]It had not been reached because the front door had not been affixed. In respect of the structural flooring issue it was said that the Tribunal below had erred in law when it decided, on the basis of opinion evidence, it did not extend to the primary flooring on the first floor. The Appeal Tribunal did not therefore make a decision as to the correct definition of “structural flooring” for the purposes of “enclosed stage”.

    [7][2015] QCATA 67, [110].

11. The builder appealed to the Court of Appeal.[8] The Court of Appeal granted leave to appeal and allowed the appeal on 8 April 2016, set aside the previous decision of the Appeal Tribunal and returned the matter to the Appeal Tribunal for determination according to law. The appeal was allowed by the Court of Appeal on the basis that neither the absence of the front door at the time of the first enclosed stage claim, given that it was installed by the time of the second enclosed stage claim,[9] nor the incomplete flooring to the first floor, as it was not structural flooring, precluded the enclosed stage from being reached. Because other matters raised before the Appeal Tribunal had not been determined by the Appeal Tribunal, including other issues relevant to whether the enclosed stage had been reached, the Court of Appeal remitted the matter to the Appeal Tribunal.

    [8]Queensland Civil and Administrative Act 2009 (QCAT Act), s 150(2)(b).

    [9]The Court of Appeal found that, although the installation of a front door was necessary for the completion of enclosed stage, it had been installed by the time the second enclosed stage invoice was issued.

12. On 8 May 2016, the Partingtons applied for special leave to appeal the decision of the Court of Appeal to the High Court. Leave was refused.

13. Unfortunately, the Appeal Tribunal as originally constituted (the original Appeal Tribunal) was unable to determine the proceeding remitted to it. The Appeal Tribunal was more recently re-constituted, a possibility foreshadowed by the Court of Appeal.

14. For the reasons explained in the paragraphs that follow, the appeal is allowed order 1 of the Tribunal dated 19 February 2013 is set aside. Order 2 of the Tribunal dated 19 February 2013 is confirmed. At this stage, we substitute our own orders in place of Order 1 by making declarations, as specified, having regard to our findings. Before we can finalise our orders in substitution of Order 1, further submissions from the parties are required. We make directions for the filing of submissions about the issues.

2. The task of the Appeal Tribunal

Preliminary Issue: the homeowners’ further submissions filed in July 2017

1. As a preliminary issue, following the remission of the proceeding by the Court of Appeal to the Appeal Tribunal, the homeowners (by this stage again representing themselves), filed further written submissions attaching a volume of documents in July 2017. The builder then shortly afterwards filed a miscellaneous application seeking orders that the homeowners’ further submissions not be taken into account in the Appeal Tribunal’s further deliberations. Regrettably, this miscellaneous application was not actioned by the original Appeal Tribunal.

2. That said, we do not intend to take into account the further written submissions of the homeowners filed in July 2017, nor the documents filed with them. Both parties, through their legal representatives and/or personally, filed voluminous documents and lengthy written submissions that were before the Tribunal at first instance. In the appeal proceedings, both parties’ legal representatives had previously filed lengthy written submissions and made oral submissions over the course of a day of oral hearing before the original Appeal Tribunal. The Court of Appeal considered that the Appeal Tribunal should further determine the appeal without the need for a further hearing or material from the parties, which would necessarily incur additional costs.[10] There was no direction of the Appeal Tribunal calling for additional submissions from the parties, nor an application from the homeowners seeking leave to rely upon fresh or additional evidence (if indeed it is fresh or additional evidence that is contained in the documents attached to the submissions). If it is not fresh or additional evidence, then it is already in evidence before the Appeal Tribunal.

   [10][2016] QCA 87, [91].

3. Accordingly, we make an order striking out the homeowners’ further submissions filed in July 2017.

   The grounds of appeal for determination

4. The Court of Appeal found error in the original Appeal Tribunal’s decision. It concluded that the front door had been affixed by the time of the second enclosed stage claim and that the structural flooring had been completed at the time the builder rendered the enclosed stage invoices. Accordingly, neither of those matters precluded the reaching of the enclosed stage.

5. The Appeal Tribunal must now decide the other issues argued before the original Appeal Tribunal but not decided by it in disposing of the appeal, as identified by the Court of Appeal.[11]

   [11][2016] QCA 87, [41], [45], [46], [86], [87].

6. In respect of Ground 1, we must consider whether the extent of the non-compliant and defective works precluded the enclosed stage from being met. The Appeal Tribunal must also consider Grounds 2, 3 and 4 of the appeal. Accordingly, the Appeal Tribunal must address the following issues in the Grounds of Appeal not determined by the original Appeal Tribunal and therefore unable to be determined by the Court of Appeal:

   1.       The Tribunal erred in law in determining the building had reached the enclosed stage for following reasons:

   a.The building work undertaken was not in accordance with the plans and specifications; and

   b.The building work undertaken was of such low standard that a significant portion of the work would have to be undone and redone.

   2.       The Tribunal erred in law in determining the extent of the defects and the cost of rectifying defects and the building work undertaken by Mr Urquhart.

   3.       The Tribunal erred in ordering the respondent/applicant for leave to pay default interest.

   4.       The Tribunal erred in law in ordering the respondent/applicant for leave to pay costs.

7. A fifth ground of appeal relating to alleged denial of procedural fairness was not argued, and is not therefore, considered.[12] A sixth ground, in essence, flagged that other grounds may arise after legal advice was taken. That said, there was no application made by the homeowners for leave to amend the application for leave to appeal or appeal seeking leave to add additional grounds.

   [12]Ibid [45].

8. We observe that the homeowners’ written and oral submissions in the appeal proceedings nevertheless sought to raise a number of issues not contained in the specified grounds of appeal[13] and some of which had not been agitated before the Tribunal.[14] In the absence of an application for leave to amend the application for leave to appeal or appeal, much less a grant of leave to amend, those issues are not properly before the Appeal Tribunal and are not considered.[15]

   The issues identified for determination by the Tribunal, the grounds of appeal and the rehearing process

   [13]Similarly, the Court of Appeal refers to the homeowners seeking to raise an argument about premature suspension of works before it, although it did not fall within the grounds of appeal: [2016] QCA 87, at footnote 49.

   [14]See generally, Homeowners’ Submissions filed 8 July 2013 and Transcript of Proceedings, Phillip Partington & Anor v John Urquhart trading as Hart Renovations (QCAT, APL131-13, Senior Member O’Callaghan and Member Favell, 15 September 2014) especially at I-62 to I-70.

   [15]Walker v Davlyn Homes Pty Ltd [2003] QCA 565; Rawcliffe v Bianco Hiring Service Pty Ltd [2002] SASC 430.

9. The grounds of appeal do not raise, in the event that the Appeal Tribunal finds that the enclosed stage was not reached, alleged error in the Tribunal’s finding that the builder lawfully terminated the contract and the damages awarded for breach of contract in favour of the builder nor the homeowners’ claims for damages including for non-completion of the work by the builder, rent and liquidated damages claims. However, the homeowners’ submissions in the appeal addressed those other issues.

10. The parties were directed to file submissions that were placed before the original Appeal Tribunal, about whether or not alleged error regarding termination was properly raised on appeal. The builder filed submissions to the effect that the homeowners could not now allege that the Tribunal erred in finding that the builder had lawfully terminated the contract in the event that the Appeal Tribunal concluded that the enclosed stage had not been reached. However, the original Appeal Tribunal did not consider whether termination could be or was raised in the appeal proceedings.

11. Issues about termination, the builder’s quantum meruit claim and damages of the homeowners necessarily arise if we reach a different conclusion than the Tribunal at first instance about whether the enclosed stage was reached. As the agreed issues for determination by the Tribunal at first instance envisage, this is inevitable because the Tribunal’s finding that the builder lawfully terminated the contract relies upon the homeowners’ substantial breach of the contract for non-payment of the enclosed stage invoice.

12. That said, the homeowners’ submissions on appeal include submissions that contend, in effect, that termination may have occurred at a time and as a consequence of events and in a manner not raised before the Tribunal.[16] This is problematic on appeal because the submissions raise questions of mixed law and fact that were not before the Tribunal for consideration. They involve a substantial departure from the manner in which the case was run by the homeowners and decided by the Tribunal, having regard to the agreed issues for determination.

    [16]Homeowner’s submissions filed in APL131-13 on 8 July 2013, see paragraphs [26], [28], [120]; and Transcript of Proceedings, Phillip Partington & Anor v John Urquhart trading as Hart Renovations (QCAT, APL131-13, Senior Member O’Callaghan and Member Favell, 15 September 2014) I-18

13. Had the propositions been advanced at first instance, the builder would have had the opportunity to address them in evidence and cross-examination and may have been able to defeat them. Accordingly, the homeowners should not be permitted to raise them now.[17] In civil proceedings, it is for the parties to run their case as they see fit. It is open to them to agree, in effect, the extent of the questions the Tribunal must decide. The parties will be bound by the conduct of their case.[18] In making the arguments referred to, the homeowners, in effect, seek to resile from the case they ran, and which the builder was prepared for and met at hearing. Although a rehearing is required if leave to appeal is granted, it is not a rehearing de novo. Accordingly, it is not now open to the homeowners to raise the issues discussed and effectively start again in presenting a different case to the Appeal Tribunal.

    [17]Coulton v Holcombe (1986) 162 CLR 1, 6-8; ALR 656; Franklin v Rabmusk Pty Ltd [1993] 1 Qd R 258.

    [18]Coulton v Holcombe (1986) 162 CLR 1, 7; University of Wollongong v Metwally (No 2) [1985] HCA 28, 483.

1. That said, if we were to reach a different conclusion about whether the enclosed stage was reached, but were constrained from considering termination and the consequences flowing from that conclusion based on the cases respectively presented by the parties before the Tribunal at first instance, an injustice would necessarily result. The Appeal Tribunal could not meet its obligation to act fairly and according to the substantial merits of the case[19] in conducting a rehearing, as mandated by s 147 of the QCAT Act, which for the reasons explained below, applies here.

   [19]QCAT Act, s 28(2).

2. We are satisfied that our obligation in conducting the rehearing entitles us to consider the consequences if the enclosed stage was not reached.

3. If we are wrong about that, we would accept that the grounds of appeal are deficient in failing to challenge the correctness of the Tribunal’s decision in relation to termination, the builder’s damages and other relevant issues in the event of success on the first ground of appeal, concerning enclosed stage completion. That said, although an application for amendment of the grounds of appeal was not made by the homeowners, we would allow amendment[20] to include, as contemplated by the homeowners’ submissions on appeal, challenge to the Tribunal findings that necessarily flow from a different conclusion about whether the enclosed stage was reached.  Any such amendments would be limited to issues that arise on the case presented to the Tribunal below and no further. We would consider this necessary in the interests of justice to overcome the irregularity in the notice of appeal and to enable us to decide the controversy according to the substantial merits of the proceeding. There would be no unfairness to the builder as he can be in no doubt as to the homeowners case agitated before the Tribunal, and subsequently (in their submissions) on appeal.

   [20]Pursuant to QCAT, s 64(2).

   What did the Court of Appeal find about the enclosed stage issue?

4. At the heart of the dispute is the issue of whether the builder was entitled to claim the enclosed stage payment.

5. The Court of Appeal determined in relation to the “enclosed stage” issue:

   (a)     The absence of a front door specifically required in the definition of enclosed stage was not excused in April 2009 at the time of the first enclosed stage claim on the basis, as argued by the builder, that there had been “satisfactory and effective performance, the failure allegedly being trivial”.[21] The omission of something expressly required for and so fundamental to the enclosure of a residential building was not trivial.[22]

   (b)     The front door had been affixed by the time the second enclosed stage invoice was issued.[23] The absence of the front door was therefore only a shortcoming at the time of issue of the first invoice and not the second. The Court of Appeal held that the Appeal Tribunal had erred in not considering the significance of the front door having been affixed by the time the second enclosed stage invoice was issued and that, had it done so, it could not have concluded there had been any error in the Senior Member’s ultimate conclusion on this aspect of the case.[24]

   (c)     The meaning of “structural flooring is laid” within the definition of “enclosed stage” does not extend to flooring on the upper levels, only the ground level. Therefore, the absence of flooring on the first floor did not mean “enclosed stage” had not been reached.[25]

   (d)     The homeowners’ lack of temporal concern about any particular incomplete works required for the enclosed stage, is not relevant to whether the works required for the enclosed stage as defined had been completed.[26]

   [21]John Urquhart T/as Hart Renovations v Phillip Partington, Evelyn Partington [2016] QCA 87, [74] & [77].

   [22]Ibid [73].

   [23]Ibid [81].

   [24]Ibid [80].

   [25]Ibid [69]-[70].

   [26]Ibid [73].

6. In relation to whether the “enclosed stage” was complete when the second invoice was issued, the Partingtons’ arguments on this appeal are therefore reduced to the other arguments advanced but not determined before the original Appeal Tribunal in support of Ground 1, namely that the Tribunal erred in concluding the enclosed stage was reached when:

   (i)      the building work undertaken was not in accordance with the plans and specifications; and

   (ii)     the building work undertaken was of such low standard that a significant portion of the work would have to be undone and redone.[27]

   [27]Ibid [87].

   Procedure on appeal

7. Although framed as errors of law on the basis that no reasonable arbiter of fact could have made the findings on the evidence, the homeowners’ submissions accept that the grounds of appeal raise questions of mixed law and fact.

8. We are satisfied that grounds of appeal 1 and 3 involve alleged errors of mixed law and fact. In each case, the facts as found must be applied to the contract as properly construed at law.  Ground 2 also raises disputed questions of mixed law and fact. Accordingly, leave to appeal is required.[28] If leave is granted, the appeal must proceed in accordance with s 147 of the QCAT Act. [29] Accordingly, the appeal must be decided by way of rehearing. ^[30] For other reasons, leave to appeal is required in relation to costs orders.[31]

   [28]QCAT Act s142(3)(b).

   [29]Ericson v Queensland Building and Construction Commission [2014] QCA 297; Albrecht v Ainsworth [2015] QCA 220; Harrison v Meehan [2017] QCA 315.

   [30]QCAT Act, s 147; Harrison v Meehan [2017] QCA 315, [19].

   [31]QCAT Act s142(3)(a).

9. An appeal by way of rehearing involves a new determination of the rights and liabilities of the parties, rather than a mere correction of errors made by the Tribunal below. That said, it is not a rehearing de novo. The Appeal Tribunal must make its own determination on the material before the Tribunal below, subject to any additional evidence if permitted,[32] having due regard for the findings of fact made by the Tribunal and due consideration of the advantages enjoyed by it.[33]

   [32]QCAT Act, s 147(2).

   [33]Harrison v Meehan [2017] QCA 315, [49]-[50].

10. A further issue arises in disposition of the appeal in light of our conclusion that the enclosed stage was not reached. It was submitted by counsel for the parties variously that if the Appeal Tribunal finds that the builder did not validly terminate the contract and was entitled to a quantum meruit and the homeowners are entitled to damages for breach of contract, then those issues must be remitted to the Tribunal for determination, as the learned Senior Member at first instance did not decide them,[34] and, at least in respect of the homeowners’ damages claim, that further evidence is necessary.[35] In relation to the homeowners’ claim for damages, the builder’s counsel submitted that there would need to be additional evidence about whether the homeowners were ready and willing to perform their contractual obligations: if not, the builder argues they are prohibited from making such a claim.[36]

    [34]Transcript of Proceedings, Phillip Partington & Anor v John Urquhart trading as Hart Renovations (QCAT, APL131-13, Senior Member O’Callaghan and Member Favell, 15 September 2014) I-3 lines 17-24; I-101 lines 21-45, I-102 lines 1-46.

    [35]Ibid.

    [36]Transcript of Proceedings, Phillip Partington & Anor v John Urquhart trading as Hart Renovations (QCAT, APL131-13, Senior Member O’Callaghan and Member Favell, 15 September 2014) page I-102, lines 20-45, relying on McConnell Dowell Constructors (Aust) Pty Ltd & Anor v QCLNG Pipeline Pty Ltd [2014] QSC 157, [39].

11. Notwithstanding that a rehearing is not a hearing de novo, it is open to us should we consider it necessary, to allow additional evidence and list the proceeding for an oral hearing in respect of those issues not fully explored at the Tribunal hearing.[37] As it transpires, we do not consider the interests of justice require that we should do so.

    [37]QCAT Act, s 147(2).

12. Section 147 of the QCAT Act does not provide for remission of issues to the Tribunal in disposition of an appeal on questions of fact or mixed fact and law. It provides for disposition by way of rehearing.[38] The Court of Appeal, in clarifying the manner in which the Appeal Tribunal must proceed in deciding appeals on questions of mixed law and fact or fact,[39] does not contemplate the course proposed by the parties in the event the homeowners are successful on appeal.

    [38]Cf QCAT s 146 concerning appeals decided on a question of law only.

    [39]Harrison v Meehan [2017] QCA 315; Ericson v Queensland Building and Construction Commission [2014] QCA 297; Albrecht v Ainsworth [2015] QCA 220; Urquhart T/as Hart Renovations v Partington [2016] QCA 087.

13. The parties each prepared and filed a very substantial body of evidence in respect of the claim and counter-claim. If they failed to address salient issues, that does not entitle them to ‘sure up’ their case on appeal. The Tribunal heard the claims over four days and received lengthy written submissions from both parties. The issues said to require remission to the Tribunal were squarely before the Tribunal for determination. The counsel representing them each at the original Appeal Tribunal may have presented and argued the case differently had they been involved at the Tribunal hearing. That is not the issue. We have concluded here that the builder’s quantum meruit and homeowners’ damages claim can, and should, be decided on the basis of evidence presented to the Tribunal as the parties expected at the time of the hearing.

14. In Harrison v Meehan[40] the Court of Appeal held that, in conducting an appeal by way of rehearing, the Appeal Tribunal was required to consider all of the questions raised by the applicant’s appeal.[41] In doing this however, each question did not have to be discussed distinctly. It was enough if the reasons sufficiently explained how the Appeal Tribunal reached its conclusion.[42] Accordingly, we consider below all of the issues raised by the appeal and discuss them as those issues logically arise. We return at the end of this process to make our conclusions regarding each ground of appeal.

    [40][2017] QCA 315.

    [41]Ibid [50].

    [42]Ibid.

    3. Background

15. On 4 August 2008 the builder and the Partingtons entered into a building contract to raise, build-in under and renovate the Partingtons’ residence in Sherwood.[43]

    [43]Alteration, Addition and Renovation Contract (HIA QC3 2000) dated 4 August 2008 (Contract), clause 4.

16. The contract documents comprised:

    (a)     The Building Contract;

    (b)     Plans by Nicole Western, architect, job no 0605102;

    (c)     Specification by Nicole Western, architect, job no 0606-102;

    (d)     Engineering by Morgan Consulting Engineers, job no 07M5034; and

    (e)     DA Approval Ref: A001641081.[44]

    [44]Contract, Schedule 1, clause 12.

17. Under the contract, the builder was to be paid a price of $483,742.00. There was provision for the making of progress payments at the completion of various stages of the work.[45] The agreed Progress Payment Table was as follows:

    [45]Contract, Schedule 2, Part B.

STAGE	PERCENTAGE	AMOUNT
1	Deposit	5%	$24,187.00
2	Raise House	10%	$48,374.00
3	Base	10%	$48,374.00
4	Frame	15%	$72,561.00
5	Enclosed	30%	$145,122.00
6	Fixing	15%	$72,561.00
7	Practical completion	15%	$72,563.00
TOTAL	100%	$483,742.00

1. The following payments were made by the Partingtons to the builder:

STAGE	PERCENTAGE	AMOUNT PAID	DATE PAID
1	Deposit	5%	$24,187.00	Inv 414 – 5/8/08
2	Raise House	8%	$41,762.20	Inv 415 – 11/9/08
3	Base	10%	$48,374.00	Inv 425 – 9/10/08
4	Frame	15%	$72,561.00	Inv 433 –  11/12/08

1. On 20 April 2009, the builder issued invoice no 449 for progress payment 5, being the enclosed stage (first enclosed stage invoice). The total amount of the first enclosed stage invoice was $151,669.41, comprising $145,122 (enclosed stage payment 30%) and $6,547.41 for variations.

2. The first enclosed stage invoice was not paid. Instead, the Partingtons provided to the builder a document headed “List of items to be rectified before enclosed payment is made”.[46] They claim the parties agreed on 23 April 2009 that the builder would undertake those works before the enclosed stage payment would become payable.[47] The Tribunal found, and the Court of Appeal agreed, that the evidence did not support the existence of any such agreement.[48]

   [46]Statement of Nick Newton, representative of Appellants, 12 August 2011, attachment “A”.

   [47]Response and counter-claim, 24 May 2010, [6].

   [48]John Urquhart t/as Hart Renovations v Partington & Anor [2016] QCA 87, [20].

3. On 7 May 2009, Mr Partington wrote to the builder to say he would like to see work done before he paid the “lock up payment”. On 11 May 2009 the builder wrote asking when the progress payment would be made. On 12 May 2009, Mrs Partington wrote to the builder to say she would authorise the financier to release the payment but still insisted that the outstanding items be attended to. On 13 May 2009 the builder told the Partingtons that he would recommence work upon receipt of the progress payment for the enclosed stage.[49] On 13 May 2009, Mrs Partington authorised the financier to release the payment. However, when the builder was not personally on site on 14 May 2009, she stopped the payment for the enclosed stage.

   [49]Affidavit of John Urquhart, 3 June 2011, [154].

4. On 26 May 2009, the Partingtons’ solicitors wrote to the builder outlining works which needed to be completed before the enclosed stage payment was due. The letter also said that no payment was due to the builder as the works had not reached the enclosed stage.

5. The builder’s solicitors replied on 5 June 2009 refusing to complete the nominated works and contesting that the works had not reached enclosed stage because the works met the definition of ‘enclosed stage’.

6. By about August 2009, the builder had removed his tools and workhorses from the site.

7. On 8 August 2009 the Partingtons made a complaint to the then Queensland Building Services Authority (QBSA). The QBSA informed the parties by letter of 13 August 2009 that it could not intervene because the contract was still on foot.

8. On 13 August 2009 a site meeting was conducted with the parties and representatives from the QBSA. A letter from the QBSA to the Partingtons was sent stating that works required to be done by the “enclosed stage” had been completed. The builder agreed to provide a work schedule.

9. On 25 August 2009, the builder claimed to have issued a second enclosed stage invoice to the Partingtons (invoice 468) by sending it to their nominated representative. The Partingtons claim they did not receive that invoice. This was accepted by the Tribunal.[50] The invoice was for $159,669.99 comprising $145,122.00 for work completed up to the ‘enclosed stage’ as well as $9,569.21 for variations and $4,978.78 for work completed since the issue of the first enclosed stage invoice in April 2009. The second enclosed stage invoice was not paid.

   [50][2013] QCAT 133, [57].

10. The builder claimed he issued the second enclosed stage invoice because the Partingtons had said the first did not comply with the contract because it did not include additions or subtractions as a result of variations or reconciliations of provisional items.[51] He then stated he was “rectifying that in a new invoice for the “enclosed” stage that should be available shortly”.[52] Curiously this statement was made in an email dated 31 August 2009.

    [51]Email from John Urquhart to Nick Newton dated 31 August 2009, [10].

    [52]The invoice did not include a variation to take into account the substitution of pine in place of hardwood chamfer boards.

11. On 29 January 2010 the builder gave the Partingtons a Notice to Remedy breach of contract under clause 28 of the contract which attached a copy of the second enclosed stage invoice. The Notice directed the Partingtons to remedy their “substantial breach” by paying the amount of $159,669.99 (including GST) by close of business on 12 February 2010.

12. On 18 February 2010, the builder purported to terminate the contract pursuant to clause 28.

13. The builder filed an application in the Tribunal on 19 March 2010 for money owed under the contract, damages, interest and costs for breach of contract. He later amended his claim to include, in the alternative, a claim for quantum meruit. The Partingtons filed a response contending that the works had not reached the enclosed stage, the contract was not lawfully terminated by the builder, and cross-claiming damages for defective and incomplete building work, liquidated damages and breach of contract generally.

    4. Did the building works reach the enclosed stage?

14. The Partingtons submit that the enclosed stage had not been reached by the time the progress claim for that stage was made because the building was not constructed in accordance with the contract and there was defective and incomplete work. The defective or incomplete work related both to work required to be done during the enclosed stage and also to work which had been done in prior stages. The builder contended to the contrary.

15. Some of the experts (Mr Groom and Mr Salmon) in the joint expert report identify defects which they say “affect the enclosed stage”. They do not identify the basis upon which the particular defect in question affects the enclosed stage. Another expert, Mr Wilde, disagrees. Again, he does not express an opinion as to why particular defects do not affect the reaching of the enclosed stage.

16. The oral evidence at hearing of Mr Salmon and Mr Groom is to the effect that some of the works will have to be undone and redone, and that there are too many defects in all to consider the enclosed stage complete. In part, they rely upon their own construction of contract terms, including “structural flooring”.[53] Mr Wilde’s oral evidence is to the effect that the scheme of the building contract, the building industry’s reliance on stage payments from which there is no right for a homeowner to withhold retention amounts and the practice for builders to later remedy defects, makes the defects irrelevant to the question whether the enclosed stage was reached.[54] Again, he relies to an extent upon his own construction of the building contract.

    [53]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) especially 254-267 (Mr Salmon) and 293-304 (Mr Groom).

    [54]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) especially at 194-195.

17. For convenience, we propose to deal first with the defects which appear to directly relate to work required to be done during the enclosed stage and then to consider other defects said by Mr Groom and Mr Salmon to affect the enclosed stage.

    Submissions of the Homeowners

18. The Partingtons submit that the enclosed stage was not reached because the building was not built in accordance with the contract. They refer to clause 36 and clause 11.1 of the contract which require, inter alia, that the works be carried out in accordance with all relevant laws and legal requirements and in accordance with the plans and the specifications forming part of the contract.

19. They submit that the works were not carried out in accordance with all relevant laws and legal requirements because, inter alia, the height of the ceiling in the master bedroom would necessarily be below legal height. They also contend that the chamfer boards did not match the existing chamfer boards as required by the plans and specifications.

1. The works, the Partingtons further submit, were not in “substantial compliance” with the plans and specifications given that the cost of rectification of the defective works was significant (they were assessed by the Tribunal to be $62,000.00). They argue that the extent of non-compliance with the plans and specifications was such that the “building” that was supposed to have reached the enclosed stage was not the “building” the builder was contracted to build. The Partingtons also submit that the extent of the rectification work required to give them the building they contracted for, means that the enclosed stage had not been reached. They refer here to the external cladding and rear concrete slab.[55]

   [55]Submissions of applicant, 8 July 2013, [101].

2. They submit that the work, because it had to be rectified, was therefore only “temporary” and that this was not contemplated for those aspects of the definition of enclosed stage. We observe that on appeal, the Partingtons also submit that the “frame stage” was not completed and that this affected whether the enclosed stage payment should be made. This argument is irrelevant in light of our conclusions.

   Submissions of the builder

3. The builder submits that where the works differed from the plans and specifications, this was done either in consultation with Mr Bowman (the certifying engineer on the project) or on the express authority from the Partingtons (changes to cladding, removal of ant capping, reduction in height of slab).

4. The builder submits that the majority of defects were minor and could have been dealt with in the defects liability period provided for in the contract (clause 27) or during the remainder of the contract period.

5. The builder takes issue with the fact that the argument with respect to the frame stage not being complete was raised in the appeal submissions for the first time and should not be considered. Putting that aside, the builder submits that the framing was certified and that the framing stage was reached well before the enclosed stage invoice was issued. Further, the builder submits that the stages were independent in any event and completion of one was not a condition for payment of another.

   4.1 Relevant terms of the contract

6. Clause 4 of the contract is headed Progress Payments. It provides:

   4.1 The owner must pay the contract price adjusted by any additions or deductions made under this contract progressively at each stage.

   4.2 The owner must pay the deposit stated in schedule 2 when the owner signs this contract.

   4.3 The contractor must give the owner a written claim for a progress payment for the completion of each stage.

   4.4 A progress claim is to state:

   (a)the amount claimed for the stage;

   (b) the amount of any addition or deduction for variations;

   (c) the amount of any addition or deduction due to a prime cost item or provisional sum item;

   (d) the amount of any other addition or deduction from the contract price made under this contract; and

   (e) the sum of the above amounts.

   4.5 The owner must pay a progress claim to the contractor within 5 working days of receiving the progress claim.

   4.6 The contractor is not required to give any certificate of approval from any relevant statutory or other authority to the owner as a precondition to the payment of a progress claim.

   4.7 The owner must ensure the lending body, if any, pays a progress claim by the due date. If payment is not made by the due date, the contractor is entitled to claim default interest under clause 33.

   4.8 Other than in relation to the final claim:

   (a)payment of a progress claim is on account only; and

   (b)the owner has no right of set off.

7. Clause 13 provides:

   13.1 The owner warrants the accuracy of the contract documents supplied by the owner and the suitability of the design, materials and methods of working each specified therein.

   13.2 If either party becomes aware of any error, ambiguity or inconsistency in or between the contract documents, that party must, within 5 working days of becoming aware, give the other party written notice detailing the problem.

   13.3 The owner must, within 5 working days of becoming aware of such a problem, give to the contractor such written instructions as are necessary to enable the contractor to proceed with the works.

   …

8. By clause 36, the builder relevantly warranted that:

   (a) all materials supplied by the contractor will be good and, having regard to the relevant criteria, suitable for the purpose for which they are used and that, unless otherwise stated in this contract, those materials will be new;

   (c) the works will be carried out in an appropriate and skilful way and with reasonable skill and care;

   (d) the works will be carried out in accordance with the plans and the specification to this contract

9. Clause 36.2 provides:

   The relevant criteria for materials for the purpose of paragraph 36.1(a) means:

   (a) generally accepted practices or standards applied in the building industry for the materials; or

   (b) specifications, instructions or recommendations of manufacturers or suppliers of materials.

10. Clause 27 provides:

    Defects Liability period

    27.1 The contractor must rectify any defects or other faults (except for minor settlement or minor shrinkage) due to the works not being in accordance with this contract that appear and are notified in writing by the owner to the contractor within 6 calendar months after the date of practical completion.

    4.2 The nature of progress claims and the meaning of completion

11. Clause 4.3 provides that the contractor must give the owner a written claim for a progress payment “for the completion of each stage”. “Completion” is not defined in the contract.

12. The work required by each stage is defined in the contract. “Enclosed stage” is defined in Schedule 2, Part A Prescribed Progress Payment Schedule. That definition applies to Part B Customised Progress Payment Schedule if the name of a stage in Part A is used and no different meaning is provided by the parties in the customised Table.[56]

    [56]Contract, Schedule 2, Part B.

13. The definition of the enclosed stage under the contract is:

    enclosed stage, for a building, means the stage when—

    (a) the external wall cladding is fixed; and

    (b) the roof covering is fixed, but without—

    (i)soffit linings necessarily having been fixed; or

    (ii)for a tile roof—pointing necessarily having been done; or

    (iii)for a metal roof—scribing and final screwing off necessarily having been done; and

    (c) the structural flooring is laid; and

    (d) the external doors are fixed (even if only temporarily), but, if a lockable door separating the garage from the rest of the building has been fixed, without the garage doors necessarily having been fixed; and

    (e) the external windows are fixed (even if only temporarily).

14. “External wall cladding” is not a defined term. 

15. Clause 4.8 provides that payment of a progress claim is on account only, and the owner has no right of set-off. The intention of a clause requiring payment on account, with no set-off, was considered in Miller v Lida Build Pty Ltd.[57] It reflects a contractual intention that there be an unimpeded flow of progress payments whilst the contract is on foot. The proposition presupposes that the stage for payment has been reached. If that be so, then a progress payment is not to be reduced by a sum which represents the cost of rectification of defects, a sum which will inevitably be difficult to quantify.[58]

    [57][2013] QCA 332.

    [58]Ibid.

16. The submission of a progress claim does not automatically entitle the contractor to payment of the amount claimed.[59] It is only if the enclosed stage works have been completed and a written claim issued which states the matters required by clause 4.4, that the obligation to pay will arise.[60]

    [59]Macquarie Homes Queensland Pty Ltd v Edge [1996] QBT 66,

    [60]Contract, clause 4.3.

17. The meaning of the word “completion” in clause 4.3 turns on the proper construction of the contract. In Thompson Residential Pty Ltd v Hart[61] it was held:

    Once the entitlement to a progress payment is based on the completion[62] of a particular stage as defined, it is satisfaction of that definition rather than practical or functional considerations which determines whether the enclosed stage has been achieved for that purpose. It is not enough to say that what has been done also achieves enclosure of the building in a practical sense, if the contractual definition has not been satisfied.[63]

    [61][2014] QDC 132.

    [62]Emphasis added.

    [63]Ibid [39].

18. Thus, the question whether the stage was “complete” and whether the builder was entitled to the enclosed stage progress payment depends on whether, on the facts and proper construction of the contract, the definition of enclosed stage was satisfied at the time the builder made the claim. For the reasons below, the contract terms make completion of each stage a condition precedent to payment of the progress payments. 

19. In reaching this conclusion, we considered whether the doctrine of substantial performance applies. Whether the doctrine of substantial performance applies is itself a question of construction of the contract.[64] It has been held that the doctrine of substantial performance does not apply to the question of whether individual progress stages have been completed.[65] However, there are decisions to the contrary.[66]

    [64]Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184, [95] citing Hoenig v Isaacs [1952] 2 All ER 176, 180-181.

    [65]Thompson Residential Pty Ltd v Hart [2014] QDC 132; McGibbo Pty Ltd v Willex Projects Pty Ltd [2013] QDC 313, [71] cf Bolton v Mahadeva [1972] 1 WLR 1009.

    [66]Tan Hung Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178, [79].

20. In our view, for the reasons below, the doctrine of substantial performance does not apply under this contract in assessing whether the payment stage has been reached. Whether a stage has been completed requires a common sense approach to the interpretation of the definition in the context of the contract as a whole. Such an approach has been held not to justify a substantial difference between what has occurred and what is required.[67] Conversely, a slight or trivial difference might mean that, in a practical sense, the definition has been satisfied.[68]

    [67]Ibid, [72].

    [68]Ibid.

21. McGill DCJ in Thompson Residential Pty Ltd v Hart[69] said as follows:

    The question therefore is whether the contract is to be construed as one where completion of a particular stage of the work is a condition precedent to payment of the progress payment in relation to that stage, or is one where a failure to complete is seen as a breach of a non-essential term not disentitling the builder to contractual payment. In circumstances where there is no separate obligation on the builder to complete the work required for each particular stage, a failure to do so cannot be characterised as a breach of a non-essential term: it is not a breach of a term at all. The position is simply that the contract provides that, if the builder does X, the owner is obliged to make a specific payment. In these circumstances, I cannot see how the doctrine of substantial performance can apply. Unless the builder does X, the obligation to make the payment does not arise.[70]

    [69][2014] QDC 132.

    [70]Ibid, [69].

22. That the doctrine does not apply here is also consistent with the fact that clause 4 does not permit any set-off. As McGill DCJ held in Thompson Residential Pty Ltd v Hart  in considering a similar clause:

    It has always been part of that doctrine that substantial performance would not give rise to an obligation to recover the whole of the price, but only the price subject to a reduction in one way or another in respect of the incomplete or deficient work. But cl 4 is clearly inconsistent with that approach, the amount payable is specified expressly in schedule 2 of the contract, and cl 4.8(b) provides expressly that the owner has no right of set-off. It is one thing to say that something less than strict and complete performance of the entire contractual obligation is sufficient to give rise to an obligation to pay the contract price with an adjustment for any deviation from the requirements of the contract, and another to say that something less than strict and complete performance will justify the obligation to pay the contract price without any reduction. In the circumstances it seems to me clear that this clause on its true construction provides a condition precedent to payment of the progress payments, at least in respect of all of them except the last, so that the approach adopted by Samuels JA in HDFI is applicable. The doctrine of substantial performance does not apply.[71]

    [71]Ibid, [71].

23. This was also the approach applied in Chelton Pty Ltd v Stanton[72] and McGibbo Pty Ltd v Willex Projects Pty Ltd[73] where the owners were held entitled to strict compliance with the contract requirements before a progress payment claim could be made.

    [72]Unreported, NSW District Court, 5875 of 2000.

    [73][2013] QDC 313, [71].

24. The rationale for requiring strict compliance rather than substantial compliance was discussed in Morgan v S & S Constructions Pty Ltd[74] where it was held:

    For where compliance with the standard of completion required by the contract, affects other obligations than payment, or affects the obligations of other persons than the parties to the contract, such as a guarantor (as in Eshelby v Federated European Bank Ltd, [1932] 1 KB 423; [1931] All ER Rep 840), there is no room for the application of a principle which substitutes substantial performance for the standard of a completion which is specified. It is a principle foreign to the considerations involved.

    [74][1967] VR 149, 156.

25. Other than guarantors, financiers’ obligations may similarly be affected.

26. Finally, this has been the approach applied in the Tribunal. In Perkins v Queensland Building and Construction Commission[75] it was held:

    In the case of stage payments it has been held that there is no scope for the application of any theory of substantial performance, excluding trivial failures or failures borne of impracticalities (Cardona v Brown [2012] VSCA 174, [74], referring with approval to Hudson’s Building and Engineering Contracts, 12th ed, Sweet & Maxwell, [3-076]). The approach has been described as a relatively strict one which only requires progress payments to be made where non-compliance with the documented requirements for that stage is “purely trivial” and, while “extreme exactitude” is not envisaged, “effective and satisfactory completion” of the stage is required. (Maples v Winterview Pty Ltd v Liu [2015] ACTSC 58, [77]). The strictness of this approach could be addressed by alternative drafting such as existed in the contract considered in Hometeam Constructions Pty Ltd v McCauley ([2005] NSWCA 303) which imposed an obligation to make a progress payment for the “substantial completion” of each stage.[76] 

    [75][2017] QCAT 283.

    [76]Ibid [50].

27. Here, the contract provides for a stage claim to be made after the completion of each specified stage of construction: clause 4. As a matter of construction, we are satisfied that the contract provides that completion of the stage in each case is a condition precedent to payment for that stage. Adopting the reasoning of McGill DCJ, we find that the doctrine of substantial compliance does not apply under the contract.

    4.3 Was the enclosed stage completed when the progress claim was issued?

28. We turn to consider whether the condition precedent of completion of the enclosed stage was satisfied. 

29. The Senior Member found that the enclosed stage was reached. In doing so, he relied, in particular, on the evidence of Mr Paul Riches, an Area Manager with the Building Services Authority (BSA) who also held a trade qualification as a carpenter. The Senior Member also relied upon the evidence of Mr Christopher Boyle, also from the BSA, who attended the site with Mr Riches. Mr Boyle held a builder’s open class licence. Finally, he relied upon the evidence of Mr Newton who conducts his own business as a consultant in the building industry. Each of those witnesses concluded that the enclosed stage had been reached.

30. The Senior Member rejected the conclusion of Mr Groom, building consultant, called on behalf of the Partingtons and the evidence of Mr Salmon, to the effect that the enclosed stage had not been reached.

31. The Senior Member found:

    The submissions from the respondents, and the evidence from Mr Groom and Mr Salmon, is not persuasive when compared with the consensus of the industry experts who attended the site meeting in August 2009 whose evidence can leave little doubt that the building had reached the enclosed stage. In the face of this evidence I have no alternative but to make a finding consistent with this evidence that the works had reached the enclosed stage.[77]

    [77]BDL072-10 Reasons, [48].

32. The Court of Appeal, while ultimately adopting the Tribunal’s conclusions about the front door (at the time of the second enclosed stage invoice) and the structural flooring, was critical of the reasoning of the Senior Member. In the decision of the Court of Appeal, Henry J said:

    The wording of that finding conveys the impression the Member felt bound to follow the predominant expert opinion rather than arrive at his own view.  The Member did not specifically articulate his own view as to why the initial absence of the front door and the absence of a section of upstairs floor boarding did not compel an opposite conclusion.  Nor did he express his own view as to what was actually meant by the term “structural flooring” in the definition of the enclosed stage – a matter which was for him, not experts, to determine and apply.  It is implicit in his reasons he thought the initial absence of the door was irrelevant because it was the owners’ responsibility to supply the door and because in any event the door had been installed prior to the issue of the second enclosed stage invoice.  It also appears to be implicit in his reasons he favoured the view, also expressed by a number of experts, that “the structural flooring related to the slab and not the upper floor which did not add anything structural to the house”.[78]

    [78]John Urquhart t/as Hart Renovations v Partington & Anor [2016] QCA 87, [37]

33. With respect to the learned Senior Member, although he articulated the contract definition of enclosed stage, [79] he did not consider the necessary requirements for “completing the stage” and failed to examine the actual state of construction against the requirement that the stage be “complete”. The Senior Member instead adopted expressions of opinion by witnesses who, themselves, do not appear to have turned their attention to the particular requirements of the clause. We would add that, in our view, the Senior Member erred by reasoning, in effect, that because something could be rectified in a defects liability period or related to an earlier stage, it followed that the defects should not be considered in determining whether the stage had been completed.[80]

    [79]BDL072-10 Reasons, [35].

    [80]Ibid, [35]-[48].

34. We find that the necessary exercise in determining whether the enclosed stage had been completed requires consideration of the actual state of work against the requirements of the clause. The Court of Appeal considered the issues raised on appeal concerning the front door and structural flooring. We adopt the findings and reasons of the Court of Appeal about those issues. We turn to consider the homeowners’ grounds of appeal relating to whether the building work was in accordance with the plans and specifications and/or of such a low standard that a significant proportion had to be undone and redone.

    The relevant Tribunal findings

1. Having regard to the Tribunal’s undisturbed finding that the homeowners did not receive the second enclosed stage invoice except as attached to the Notice to Remedy breach, we turn to consider whether the enclosed stage had been reached by 29 January 2010 which was when the Partingtons received the second enclosed stage invoice.[81]

   [81]The second enclosed stage invoice superseded the first enclosed stage invoice (of April 2009) but was not sent to the Partingtons until it was affixed to the Notice to Remedy on 29 January 2010.

2. The Senior Member set out the incomplete items and defects and, in the context of assessing the claim for rectification costs, made the following observations and findings.

   [71] Without being critical of the Partingtons submissions which are thorough and competently compiled, for ease of reference though I propose to follow the report of Mr Ray which both identifies the defect and includes the cost nominated by Mr Groom. These are also set out in Scotts Schedule in a methodical way but there is often a double up and it becomes confusing when trying to identify those items that have been referred to twice or more. The amounts I propose are in bold and include GST. Relevantly Mr Ray‘s report commences on page 30 s 11.

   a) 11.1 Remove and repair front entrance slab: I accept Mr Groom‘s evidence that the falls do not meet the requirements of the Building Code of Australia 2008 and either need to be repaired or replaced. This is also supported by the evidence of Mr Salmon. As I understand the evidence this rectification has been carried out by the owners and although Mrs Partington, in her submissions, suggest that the cost for this work was part of the base stage and she should be reimbursed a percentage of that payment, I prefer to adopt the evidence of Mr Groom or Mr Ray who agree the actual cost of rectification at $3,863.00.

   b) 11.2 Remove and replace western slab: agreed at $1,007.00

   c) 11.3 Remove and replace flashings: The applicant says that this could have been attended to during the balance of the build and did not affect the enclosed stage. This is probably correct but it is still defective work requiring rectification. Mr Groom says it will cost $4,493.50 to rectify and Mr Ray says $3,682.80. I propose to allow $4,000.00*

   d) 11.4 Install overflows to gutters: Similarly there is agreement of $280.00.

   e) 11.5 Install sarking to exterior fascia and reinstate blue board: It is a manufacturer‘s requirement that sarking be installed behind blue board. This needs to be rectified. Both costs are the same. I will allow $2,200.00.*

   f) 11.6 Front door not installed: Allow $200.00

   g) 11.7 Sheet flooring missing in master bedroom: Allow $1,200.00*

   h) 11.8 Install Laundry bracing. Clearly this should have been done as the job progress, it goes to structural integrity: Allow $435.00*

   i) 11.9  Pack and straighten wall to both levels of the house. This is work that the applicant says he would have attended to during the course the job. However rectification is necessary: Allow $858.00*

   j) 11.10 Jackhammer kitchen floor for electrical cable: Allow $542.00.*

   k) 11.11 Ponding water to rear patio slab (insufficient fall): Mr Urguhart blames the respondents for this problem because they insisted on the internal floor slab being dropped by 34mm but did not permit Mr Urguhart to drop the slab the equivalent amount thereby creating insufficient fall and allowing water to pond. Mr Urguhart says that he would have fixed this during the course of the construction by grinding off the slab and then laying tiles to gain sufficient fall. The difficulty here is that Mr Urguhart is the registered builder and responsible for the work. Clearly water is ponding on the slab or running towards the interior of the house, this is unsatisfactory and it must be fixed. The cost of this rectification varies significantly with Mr Ray suggesting a slab replacement would cost $8,981.00 and as and alternative re- levelling the slab would cost $4,567.00. Mr Groom on the other hand suggests that engineers advice would be required, there would necessarily be reinforcing protection and there would be the cost of the door removal and reinstatement. The total cost according to Mr Groom would be $33,350.00. Clearly the slab needs replacing rather than it being scrabbled and falls being adjusted with tiles. This would involve the removal of the slab and replacement. Mr Groom is concerned that as the internal floor slab and the outside slab has been poured as a monolithic slab and is unsure whether it is a simple case of cutting and removing the external slab. He suggests that engineering advice might be necessary to ensure structural integrity. I can appreciate Mr Groom‘s concerns but there is no evidence to support his concerns or his costings for this work. Mr Groom‘s estimate is, as I see it, is the worst case scenario whereas Mr Ray has costed each component part of the work. In this instance having regard to the method of costing I prefer Mr Ray‘s approach but I think I should make some addition allowance to take into account Mr Groom‘s concerns. Doing the best I can having regard to both estimates I propose to allow $15,000.00.

   l) 11.12 Roof, gutters and roof flashings: Once again this is work that the applicant says was in progress and would have been completed during the remainder of the build. However Mr Groom, whose evidence I accept, says that the roof is poorly installed contrary to the Building Code of Australia, HB39 and manufacturers recommendations. There are insufficient overflows to the gutters, insulation blankets are hanging in the gutters, spreaders are inadequate and the flashings are inadequate and incorrectly rely on silicone. This is defective work for which the applicant is responsible. There is a variation in the cost to rectify (Groom $4,026 and Ray $5,233). I propose to allow $5,000.00 .

   m) 11.13 Framing to Eastern blade wall. This is not to plan and is not plumb and therefore requires rectification (Groom $1,540 and Ray $2,320). Allow $2,000.00.*

   n) 11.14 Master bedroom ceiling height:   The master bedroom has not been built in accordance with the plans thereby reducing the height albeit minimally. It is supposed to be 2.400mm but is 2395mm. Mr Grooms says the certifier Mr Harris will not certify unless is 2400mm is maintained under the BCA. It will reduce further once plasterboard is applied to the ceiling, which is about 10mm thick. Mr Groom says the cost will be substantial with an estimate of $12,980.00. He does not give any detail as to how this is to be done or how it is made up. Mr Ray on the other hand sets what would be necessary to lift the height. A similar situation arose in Ownit Homes where the ceiling height was 2390mm with 2400mm specified. Thomas J (as he then was) considered the question of allowable tolerances in building work and concluded that the difference of 10mm was within accepted tolerances. However, here there is a question of certification. I find it difficult to accept, without hearing form Mr Harris who was not called, that a 5mm differential would not fall within acceptable tolerances resulting in certification. Having said that I am still prepared to allow the cost of rectification as recommended by Mr Ray, that is to dismantle the frame and rebuild the to gain the extra height. I also take into account that the respondents are entitled to have the room built in accordance with the plans and I propose to allow $1,617.00.*

   o) 11.15 Chamfer boards not installed as contracted: This also relates to a hole in one of the weatherboards. The cost of rectifying this is minimal however the larger issue is with respect to the fixing of the chamfer boards with the incorrect fixings and the supply of the incorrect boards. Mr Groom is of the opinion that the boards will have to be replaced and the proper fixing used instead of ‘T‘ nails as has been used by the applicant. This has lead to the boards splitting and installation done in a poor and unprofessional manner. Not only were the incorrect fixings used, also a cheap quality chamfer board was also supplied. To remove and replace the chamfer boards, Mr Groom estimates the cost will be $48,000.00 plus $7,000.00 for scaffold.

   Mr Ray has also provided a very detailed costing of this work. He has broken it down, as one would expect resulting in a cost of $15,247.36. Because the claim for this item is a significant amount, some breakdown from Mr Groom would have been preferable rather than a lump sum figure. The photographs would indicate that the work is defective and I accept Mrs Partington‘s evidence that the incorrect chamfer board was used. In the absence of any breakdown by Mr Groom I prefer Mr Ray‘s evidence on this point because it addresses the cost of all the component parts to remove and replace the chamfer boards and to carry out this rectification work. I will allow $15,247.00

   p) 11.16 Control Joint missing to eastern wall: The applicant blames the owners for this defect because he says they did not want control joints. It is his responsibility to build to insure structural integrity. There is a difference in opinion on cost of rectification (Groom $2,750 and Ray $1,617) and I propose to allow $2,000.00.*  

   q) 11.17 North eastern window leak: The cost to rectify varies (Groom $1,210 and Ray $488). I propose to allow $800.00.*

   r) 11.18 Blue-board clad areas: There are areas at the rear where blue-board has been fixed without sarking installed under the Blueboard. The BCA specifies that sarking should be installed behind Blue-board as does the Hardies sheet installation specification. The photographic evidence supports this contention. There is very little difference in the cost of rectification so I will allow $8,000.00.

   s) 11.19 Block wall on rear patio. There is no cost nominated for this or any commentary.

   t) 11.20 Thickness of the lounge wall not as per plan. The applicant says there was a discrepancy between the measurements on the plan and the actual sizes on site. This should have been addressed with the owners at the time or referred back to the architect. It is incumbent on the builder to follow the plans and if there is a discrepancy resolve it with the owners. This was not done and it needs to be rectified. In this instance I prefer Mr Ray‘s detailed costings for this rectification work because having regard to the photographs I can generally see the method of rectification suggested by him. I will allow $1,017.00.*

   u) 11.21  Thickness of the lintels. I will allow $285.00.

   v) 11.22 Access hatch missing from western riser. I will allow $130.00.*

   w) 11.23 Kitchen wall/column construction has been incorrectly installed resulting in a 215mmwide wall rather than a 90mm wall as designed:  The justification for this deviation from the plans is that the subject wall is load bearing and therefore it had to be widened. I can only assume the decision of the builder to widen the wall was for structural purposes. There is a vast difference in the cost of rectification with Mr Groom estimating $8,552 and Mr Ray $1,537. Again considering Mr Ray‘s detailed costing and the photo it is difficult to see how Mr Groom‘s figure in this instance can be justified, particularly when I harbour some doubt as to the need for rectification. I propose to allow $1,500.00.*

   x) 11.24 Windows to main bedroom. No cost nominated.

   y) 11.25 Upper window in lounge room reduced in height. No cost nominated 

   z) 11.26  Ant capping. To install ant capping I will allow $1,554.00.*

   [72] Total cost of rectification is $68,735.00. I indicated that there are some defects that the builder would have attended to during the next stage of the works which would have saved him on cost of rectification. I have identified those items with an asterisk above. They total about $20,000.00. Mr Urguhart would have saved at least the builder‘s margin and some savings on materials. In my view a fair discount for this saving would be to allow $6,000 on the cost of rectification and completion. This then reduces the respondents assessed damages to $62,500.00.[82]

   [82]Reasons, [71]-[72].

   The relevant evidence before the Tribunal

3. Some of the incomplete items or defects were identified by Mr Groom and Mr Salmon in the Joint Experts Report[83] as affecting the question of whether the enclosed stage had been reached as it is defined in the Domestic Building Contracts Act 2000 (Qld),[84] rather than as defined in the contract itself. That said, the definitions are in identical terms. The relevant incomplete items and defects identified by them as affecting the enclosed stage,[85] and adopting and including in bold for the moment, the amounts allowed by the Senior Member for completion or rectification of those defects where applicable, were set out in the following terms in the Joint Experts Report:

   [83]Exhibit 1 in BDL072-10, Joint Experts Report filed 24 August 2012.

   [84]Ibid [3].

   [85]In some instances, Mr Groom and Mr Salmon referred to the same matter on more than one occasion and have referred to other items as relevant or on some occasions as related.

   (a)     Item 3: Repair concrete to front and rear entrances ($3,863.00 and $1,007.00 respectively). Mr Salmon and Mr Groom said this needed to be fixed before proceeding further with the construction.

   (b)     Item 4: Grind rear slab to prevent water running towards house and make good ($15,000.00).

   (c)     Item 9: Build in all opened areas to house, e.g. flooring to upstairs toilet and wall in upper master bedroom eastern wall (these areas are entry points for large vermin).

   (d)     Item 10: Repair cladding to northern weatherboard.

   (e)     Item 12: Matter of termimesh not installed to block wall to be rectified.

   (f)      Item 17: Evidence of gaps in roof flashing to be sealed. (superseded – refer to item 76 for valuation).

   (g)     Item 21: Provide written evidence as to why owners were advised not to install ant capping to dwelling. (superseded – refer to Item 90 for valuation).

   (h)     Item 25: Install expansion joint in block wall (superseded valuation – refer to Item 80 for valuation).

   (i)      Item 27: Install moisture barrier behind cladding on fascia (superseded valuation – refer to item 69). ($2,200.00)

   (j)      Item 29 – Flashing on blade wall abutting the tiled roof at the rear of the building is to be correctly installed under the chamfer boards. The correct flashing material is to be used. (Refer to item 67).

   (k)     Item 30: Sisalation insulation not applied to parapet on extension roof on eastern side of building. (Refer to item 69 – install sarking to fascia and reinstate blueboard).

   (l)      Item 67: Remove and replace flashings. (See Items 17 and 29). ($4,000.00)

   (m)    Item 70: Front door not installed prior to enclosed stage payment request. ($200.00).

   (n)     Item 71: Sheet flooring missed from master bedroom. ($1,200.00).

   (o)     Item 76: Roof, gutters and roof flashings. ($5,000.00).

   (p)     Item 78: Master bedroom ceiling height.  ($1, 617.00).

   (q)     Item 79: Chamfer boards not installed as contracted and not installed to AS168 or industry standard. ($15,247.00).

   (r)      Item 80: Control joint missing to the eastern wall – wall substantially cracked. See item 25. ($2,000.00).

   (s)     Item 82: Blue board clad areas…are not sarked. See item 27. ($8,000.00).

   (t)      Item 90: Ant capping not installed as per Architect’s cover sheet or as per specifications. See item 12. ($1,554.00).

4. As discussed earlier, in the Joint Experts Report, Mr Wilde, architect, maintained that the works had reached the enclosed stage as defined by the contract and maintained that none of the items of complaint in relation to the work affected the question of whether the enclosed stage had been reached.[86]

   [86]BDL072-10 Exhibit 1, para 2.

5. As we have said, it is a matter for determination having regard to the facts in light of the definition of the enclosed stage whether the defects or incomplete items affect the enclosed stage.

6. For the purposes of the broad exercise (deducting the amount of $1200 allowed for the master bedroom sheet flooring that neither the learned Senior Member nor the Court of Appeal considered precluded the enclosed stage being reached), using the amounts allowed by the learned Senior Member  for rectification or completion of those items said by Mr Salmon and Mr Groom to affect the enclosed stage, the total cost of rectifying or completing the items is $59,688.00. This is approximately 40% of the total enclosed stage progress payment.

7. It is appropriate that we take account of the defects both individually and as a whole. While any one of the defects may or may not, of or by itself, amount to a failure to complete the stage, it is also appropriate, in dealing with the grounds of appeal, to consider whether the sum total of the effect and cost of all of the relevant defects may together constitute such a failure.

8. In the conduct of the Tribunal’s hearing, there was limited further expert evidence-in-chief, that is, in addition to the Reports and the Joint Expert Report, from the witnesses concerning the defects or incomplete work or cross-examination of the various expert witnesses concerning the nature and effect of the incomplete items and defects. Accordingly, so far as it may be relevant, the Appeal Tribunal is in as good a position as was the learned Senior Member to make relevant findings of fact concerning the evidence of the various experts.

9. We turn now to consider in more detail the more significant items of defective and incomplete work which we are satisfied are relevant to the enclosed stage and which we have concluded are more significant.

   4.4 The chamfer boards

10. There are two issues concerning the chamfer boards, one of which, for the reasons later explained, we have concluded goes to the issue of completion of the enclosed stage and the other which does not.

11. The first of the issues concerns the use by the builder, contrary to the specifications in the contract, of pine chamfer boards, rather than hardwood chamfer boards. We find, for the reasons below, that this was the consequence of an effective oral variation of the contract. 

12. The second of the issues concerns the method employed in affixing the chamfer boards.

    The first chamfer board issue: chamfer boards not in accordance with the contract

13. In the Specification under Claddings, Products it is provided:

    Boards (WB) Timber species: to match existing. Profile: to match existing. Thickness (mm): To match existing; width (MM): To match existing.

    Boards (WB1) Timber species: H3 pine. Profile: to match existing Brett’s catalogue No# 200802.

14. In the Specification under Timber Weatherboard Cladding it provides:

    Preparation

    Prime all faces of boards prior to installation.

    Nails:

    Hot dip galvanised to non-corrosive timbers

    Silica bronze or stainless steel to corrosive timbers

    Nailheads: Treat visible nailheads as follows:

    In stained or clear finishes: Drive flush.

    In opaque finishes: Punch below the surface and fill flush with putty after the surface has been primed.

    Joints

    Overlapping joints: Lap boards at least 30mm

    End grain joints: Install boards so that butt joints are in compression.[87]

    [87]Specification, 35, [3.3].

15. Drawings WD201, 202, 301, 302, 303 and 304 show where the hardwood is to be applied (indicated by WB). The only section to use pine (WB1) was the upper floor blade wall on the eastern side of the house.[88] We find that the contract provided for the use of hardwood chamfer boards in the areas identified, but that pine was used.

    Was there an effective oral variation to use pine chamfer boards instead of hard wood chamfer boards?

    [88]Statement of Evelyn Partington, 26 November 2010, [107]-[108].

16. The Tribunal at first instance found that the builder used the incorrect chamfer board. The Tribunal preferred Mrs Partington’s evidence on this issue to that of the builder.[89] However, in context, having regard to the overall evidence and the Tribunal’s reasons for decision, we are satisfied that the Tribunal’s finding was limited to the requirements of the contract. The Tribunal did not make findings about whether or not, having regard to a conversation between the builder and Mr Partington on 5 February 2009, there was an oral agreement to vary the contract by permitting pine chamfer boards rather than hardwood boards. (If we are wrong about the scope of the Tribunal’s finding, in any event, we would find that no reasonable arbiter of fact could have reached a different conclusion based on the evidence, discussed below, to the effect that it was common ground that the homeowners had agreed to the use of pine instead of hardwood chamfer boards).

    [89][2013] QCAT 133, [71](o).

1. Any reliance on the Barac and Michelsen quotes as evidence was abandoned by the Partingtons.[162] Mr Barac and Mr Michelsen were not witnesses and the basis for the quotes they provided was untested by cross-examination. It is not now appropriate or permissible to consider their quotes on appeal as the homeowners are bound by the case they presented.

   [162]Reasons, [85] regarding the Barac quote; and Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 282-284, regarding the Barac and Michelsen quotes.

2. Mr Bowman, the civil engineer engaged by the homeowners, considered that the slab could be replaced, ‘scrabbled back’ or just left alone.[163]

   [163]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 137-138.

3. The principal reason for the Senior Member accepting the evidence of Mr Ray over Mr Groom in a number of respects is the fact that Mr Ray provided greater detail in respect of the costs and the work to been done to undertake rectification.

4. Mr Ray is a quantity surveyor, not a builder. Mr Ray’s expertise is in analysis of construction costs. He was not asked to consider whether an alleged defect was genuinely defective, yet in some respects his estimates make judgments about the extent of the works necessary to rectify. For example, in the context of the slab, he does not allow for an engineer. Although at the time he prepared his initial report, Mr Ray had been unable to inspect the property[164] and said he had “relied on photographic evidence and invoices provided as evidence to make our assessments and findings”,[165] subsequently, he was able to inspect.[166]

   [164]Although he had driven by the property (Ray Report, [2.2]). It appears from the Transcript that sometime after signing his Report, he “walked the site” with Mrs Partington (Transcript BDL072/10 28.8.12R1, P-174).

   [165]Ray Report, [2.1].

   [166]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 174 lines

5. Mr Groom is licensed as an open builder and building certifier, although not an expert in costing. He inspected the site on two occasions before providing his report.[167] That said, his inspections and report, like Mr Salmon and Mr Ray’s, occurred considerably after the house had progressed to the practical completion stage. Accordingly, it would likely have been difficult to ascertain what work was done by the builder as opposed to someone else. Also, he is equivocal about the extent of the work required to rectify particular defects and did not provide a detailed breakdown of his costings, basing it on an hourly rate for the time he thought would be involved,[168] without specifying the work he considered was required, and at least in some instances, without a clear plan of the work required to be performed.[169] The Tribunal described Mr Groom’s estimate for replacement of the rear slab as a costing for the ‘worst case scenario’, in the absence of evidence to support his concerns.[170]

   [167]Groom Report, [5].

   [168]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 308, lines 36-40.

   [169]Groom Report, for example at [133].

   [170]Reasons, [71(k)].

6. The findings made by the learned Senior Member were open to him and not unreasonable on the evidence. There is no basis for disturbing the award.

7. Accordingly, we would leave the allowance at $15,000.00 for replacement of the back slab.

8. If we are wrong and the learned Senior Member ought to have accepted either Mr Ray’s estimate or Mr Groom’s estimate, for the reasons expressed by the Senior Member in preferring Mr Ray’s more detailed costs estimates, we would allow the amount estimated by Mr Ray of $8,981.00.

   (b) Master bedroom ceiling height

9. The Partingtons argue the Tribunal made a number of errors which affected its assessment of the cost of rectifying the ceiling height, namely:

   (i)      That the roof structure would need to be rectified, not just the ceiling height;

   (ii)      That the differential would have been more than 15mm once the ceiling lining and floor lining had been installed, as opposed to 5mm;

   (iii)     The evidence establishes that certification cannot be achieved if the height is not 2400mm;

   (iv)     The height could not be achieved by dismantling the frame and rebuilding because the roof structure was too low and not in accordance with the plans (which they submit was acknowledged by the Tribunal Senior Member). 

10. The Partingtons argue that given the changes to the roof structure required, that the Tribunal should have considered the quote from Peter Michelsen Building Service dated 12 June 2012 which quoted a price of $24,850.00 to “remove and replace roof to master bedroom inc box gutter, fascia’s all flashing” and quotes a further $26,690.00 to “re-construct roof and walls to raise ceiling heights incl. scaffolding. They also argue that the quote from Steve Barac dated 30 July 2011 should have been considered which quoted $28,383.00 for “Rectification for master bedroom, robe and ensuite. Ceiling and roof raise to achieve legal ceiling height of absolute minimum 2450mm bare floor to ceiling frame.”

11. As above, reliance on the Barac and Michelsen quotes was abandoned at the hearing,[171] and they cannot now be considered on appeal.

    [171]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 282-284.

12. We would not accept that the evidence before the Tribunal established that certification could not be achieved. The evidence about certification was unsatisfactory about whether certification can be achieved if the height is not 2400mm, but say 2385mm or 2390mm after floor coverings and plasterboard. If it was necessary to make a finding, we would conclude on the evidence discussed earlier that the homeowners had not established on balance that certification could not be achieved.

13. That said, the Tribunal found that the Partingtons were entitled to have the room built in accordance with the plans, as discussed earlier, in that a 2400mm ceiling height was to be achieved, and allowed $1,617.00 for the costs of rectification. The Senior Member said that this was for dismantling and rebuilding the ceiling frame. Mr Ray, whose estimate the Tribunal adopted, said in his Report that he assumed the roof framing and roofing would remain in place.[172]

    [172]Report of Ray, 38, [11.14].

14. Mr Groom’s estimated rectification costs, which take into account the costs of rebuilding the frame and roof, are $12,980.00.  The homeowners submit that the learned Senior Member accepted that the master bedroom/roof structure was not built in accordance with the plans. On a fair reading of the Tribunal’s decision, the Tribunal accepted only that the master bedroom was not built in accordance with the plans in that the ceiling height of 2400mm was not achieved. However, the internal frame (and the relevant part of the roof structure) were built according to the specifications provided for in the plan. As discussed earlier, due to an inconsistency in the plans, doing so did not achieve the requisite ceiling height specified in the plans.

15. The experts’ joint report[173] states that all experts agree it is defective work, but disagree as to whether it is ‘necessary or reasonable to tear the ceiling down in the context of the whole job’. The experts also all acknowledge there was a question about whether certification could be obtained. There is no mention of the roof. From the other notations, it is apparent that Mr Ray and Mr Groom agreed as to matters of scope and that it may be an engineering issue, but costs were not agreed. It is further noted that Mr Ray’s estimate was for ceiling raising only, not total roof replacement.

    [173]BDL072-10 Exhibit 1, Item of complaint 78.

16. Mr Bowman’s opinion was that rectification could be achieved by either raising the roof, trimming down the size of some of the members, or replacing the beam with a steel beam.[174] 

    [174]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 141,

17. The defect complained of here by the homeowners is the ceiling height, rather than a defect in construction of the roof. In any event, Mr Groom’s report states that his estimate is a ‘ball park figure’ only, and that engineering advice will be required. That is, the evidence suggests he does not know what is required to rectify the defect and has not costed it for particular tasks to be performed: he has taken a guess, albeit an educated one. In oral evidence, he told the Tribunal that he worked out his estimates based on an hourly rate (and, by inference, how long he considered it would take to perform the work).[175]

    [175]Ibid 308, lines 36-40.

18. Of the options Mr Bowman suggested for rectification, two of them did not involve raising the roof. Rectification that does not require raising the roof is consistent with Mr Ray’s estimate and explanation scope of works.

19. There is no basis upon which to disturb the Tribunal’s findings.

    (c) Chamfer boards not installed as contracted

20. The Tribunal allowed $15,247.00 to remove and replace the chamfer boards.

21. The Partingtons argue that the Tribunal made the following errors:

    (i)      Adopting Mr Ray’s estimate which was for the supply of hardwood weatherboards, not chamfer boards and which was for some 700Lm, as opposed to 1550Lm or 1700Lm which they variously submitted was required;

    (ii)      Not considering the quotes obtained from Bretts, Finlayson’s or Gill & Co Pty Ltd;

    (iii)     Not considering the increased costs of dealing with hardwood;

    (iv)     The real cost of the supply of the hardwood chamfer boards was $14,000.00 (excluding GST and builder’s margin).

22. We have previously found that the Partingtons are not entitled to the cost of hardwood chamfer boards in view of the oral agreement permitting substitution with pine. Accordingly, we do not find an error in failing to apply an increased rate for hardwood chamfer boards.

23. In relation to the meterage required, the argument on appeal also concerns an argument that the linear meterage quoted by Mr Ray is incorrect, based on a reference to a different meterage in a tax invoice filed in the material before the Tribunal.[176] That said, the plans suggest that pine chamfer boards were used elsewhere in the construction and were not confined to the area the subject of the rectification of the external cladding. Further, Mr Groom confirmed that Mr Ray’s calculation as to meterage was correct for the area concerned.[177]  

    [176]Transcript of Proceedings, Phillip Partington & Anor v John Urquhart trading as Hart Renovations (QCAT, APL131-13, Senior Member O’Callaghan and Member Favell, 15 September 2014) I-51-53.

    [177]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) 308-310.

24. Although the learned Senior Member included a cost for hardwood chamfer boards, given the broad nature of the exercise he was conducting, and the competing figure from Mr Groom which was significantly higher, we are disinclined to alter the figure allowed even though we have found that there was an effective oral variation providing for the use of pine boards. We have weighed this against the homeowners’ submission that Mr Ray’s evidence was in error as to the profile of board required. We do not accept the homeowners’ submission that the linear meterage required was 1550mm or 1770mm,[178] as Mr Groom agreed that the linear meterage specified by Mr Ray was correct.[179].

    [178]Transcript of Proceedings, Phillip Partington & Anor v John Urquhart trading as Hart Renovations (QCAT, APL131-13, Senior Member O’Callaghan and Member Favell, 15 September 2014) I-51-I-53.

    [179]Transcript of Proceedings, John Urquhart trading as Hart Renovations v Partington (QCAT, BDL072-10, Senior Member Oliver, 27 August 2012) I-308.

25. We accordingly find no error in the amount awarded for rectification of the chamfer boards. We adopt the Senior Member’s allowance of $15,247.00.

    (d) Kitchen wall/column construction

26. The Tribunal allowed $1,500.00 for the cost of rectifying the kitchen wall. The Tribunal reasoned that “considering Mr Ray’s detailed costing and the photo, it is difficult to see how Mr Groom’s figure in this instance can be justified, particularly when I harbour some doubt as to the need for rectification”. With respect to the learned Senior Member, the claim can be successfully made only if, on the balance of probabilities, the rectification is necessary.

27. The wall/column was constructed to result in a 215mm wall/column, rather than 90mm as the plan specified. The builder’s evidence was to the effect that the wall was load-bearing. However, as discussed earlier, under clause 13, the builder was obliged to provide notice to the homeowners and obtain instructions. We would accept, as did the Tribunal, that the rectification work was necessary to achieve construction in accordance with the plans, notwithstanding that the work itself was not defective.[180]

    [180]Joint Expert Report, Exhibit 1 in BDL072-10, item 87.

28. Mr Groom’s evidence was that the wall thickness and deviation from the plan significantly affected the intended use and functionality of the kitchen as it affected the installation of the cabinetry and appliances intended. The kitchen wall with the assistance of the engineer would need to be constructed as per the plans. Mr Groom estimated the sum of $7,775.00 excluding GST.

29. The estimate by Mr Ray for the work was $ 1,537.80, including GST. His estimate is incomplete in a number of respects, in particular, it does not include an amount for a dry wall plasterer for the re-instatement of the cornice or repair to the joinery unit. That said, having regard to the dimensions and the likely costs of those items it is unlikely that Mr Ray’s inclusion of them would have resulted in a significant change to the estimate.

30. We are not persuaded that the learned Senior Member made any material error.

    8.4 Summary of rectification costs

31. The Senior Member set out details of the rectification damages which he allowed at paragraph 71. As noted above, most of those items were not the subject of appeal. Accordingly, applying the Senior Member’s reasoning and having regard to our reasons above, the rectification costs are unchanged and may be summarised as follows:

    (a)     Remove and repair front entrance slab - $3,863.00

    (b)     Remove and replace western slab - $1,007.00

    (c)     Remove and replace flashings - $4,000.00

    (d)     Install overflows to gutters - $280.00

    (e)     Install sarking to exterior fascia and reinstate blueboard - $2,200.00

    (f)      Front door not installed - $200.00

    (g)     Sheet flooring missing in master bedroom - $1,200.00

    (h)     Install laundry bracing - $435.00

    (i)      Pack and straighten wall to both levels of the house - $858.00

    (j)      Jack hammer kitchen floor - $542.00

    (k)     Ponding water to rear patio slab - $15,000.00

    (l)      Roof gutters and roof flashings - $5,000.00

    (m)    Framing to eastern blade wall - $2,000.00

    (n)     Master bedroom ceiling height - $1,617.00

    (o)     Chamfer boards not installed as contracted - $15,247.00

    (p)     Control joint missing to eastern wall - $2,000.00

    (q)     North eastern window leak - $800.00

    (r)      Blue board clad areas - $8,000.00

    (s)      Block wall on rear patio – nil

    (t)      Thickness of lounge wall not as per plan - $117.00

    (u)     Thickness of the lintels - $285.00

    (v)     Access hatch - $130.00

    (w)     Kitchen wall/column construction - $1,500.00

    (x)     Windows to main bedroom – nil

    (y)     Upper window in lounge room – nil

    (z)      Ant capping - $1,554.00

    Total: $68,735.

32. The Tribunal discounted the amount by estimating savings the builder would have made to be $62,500.00 As we have decided the builder did not lawfully terminate the contract, the builder is not entitled to the benefit of those savings. Accordingly, the amount allowed is $68,735.00.

    8.5 Interest

33. The Partingtons’ damages comprise liquidated damages of $150.00 and damages for rectification of $68,735.00.

34. Section 77(1)(c) of the Queensland Building Services Act 1991 (Qld) empowers the Tribunal to award the Partingtons interest on damages at the prescribed rate, that being a rate prescribed in a Regulation. Regulation 34B provides:

    34B INTEREST

    (1) For section 77 (2) (c) of the Act, interest is payable on the amount of damages awarded—

    (a) if the parties have entered into a contract—at the rate specified under the contract; or

    (b) at the rate agreed between the parties; or

    (c) otherwise—at the rate of 10%.

    (2) The interest is payable on and from the day after the day that the amount became payable until and including the day the amount is paid.

35. There is no agreed rate of interest in the contract or between the parties in respect of the damages awarded to the Partingtons. Accordingly, and pursuant to reg 34B, the rate of 10% is to be applied.

36. It has been a period of some seven years and over five months since 18 February 2010, rounded to seven years.

37. We therefore allow interest on the Partingtons’ damages at the prescribed rate of 10% for seven years, in the sum of $48,156.50.

    9. Did the Tribunal err in ordering the homeowners to pay the costs thrown away?

38. Although each party was ordered to bear their own costs of the proceeding,[181] the Tribunal made an order that costs thrown away as the result of the hearing and an expert’s conclave to take place immediately before it being adjourned, be paid by the Partingtons.

    [181]Reasons, [102]-[106].

39. An appeal from a decision about costs, other than a decision about the amount of costs fixed or assessed, requires leave.[182] The clear intent of requiring leave is to ensure that the Tribunal’s balancing of discretionary considerations is not to be reconsidered on appeal except where the Appeal Tribunal has first addressed the question whether there is good reason to permit the exercise of that discretion to be reviewed.[183]

    [182]QCAT Act, s 142(3)(a)(iii).

    [183]Australian Securities and Investments Commission v Jorgensen [2009] QCA 20, [29].

40. The role of the Appeal Tribunal is not to consider whether it would have exercised the discretion differently, but to discover either some error of principle, a failure to consider relevant matters, a consideration of irrelevant matters or some other manifest mistake.[184]

    [184]State of Queensland v Bell [2016] QCATA 176, [11].

41. The Tribunal gave its reasons for awarding these costs at [93]-[101]. The primary reason for the decision appears to be that the Tribunal considered that the Partingtons’ late production of the report by Mr Groom dated 10 July 2011 was the real cause of the adjournment. This is because it led to the builder’s expert, Mr Wilde having to be given at least three weeks to consider it. The Tribunal considered the argument of the Partingtons that the real reason for the adjournment was the late quantum meruit claim made by the builder.[185] The Partingtons also argued that there was obfuscation by the builder with respect to the preparation of the joint experts’ report and the non-engagement of Mr Wilde in the process.[186]

    [185]Reasons, [98].

    [186]Ibid.

42. The Partingtons have not, in our view, demonstrated that the discretion of the Senior Member miscarried. The Senior Member weighed up the responsibility for the adjournment, directing his attention to circumstances relevant to a proper consideration as to an order for costs. In the circumstances, the appeal in respect of the costs issue is not allowed.

    Ground One

    The Tribunal erred in law in determining the building had reached the enclosed stage for the following reasons:

    (a)The building work undertaken was not in accordance with the plans and specifications; and

    (b) The building work undertaken was of such low standard that a significant portion of the work would have to be undone and redone.

1. For the above  reasons, we find that the Tribunal erred in finding that the building had reached the enclosed stage.

   Ground 2

   The Tribunal erred in law in determining the extent of the defects and the cost of rectifying defects and the building work undertaken by the builder.

2. For the above reasons, we find that the Tribunal did not err in its assessment of the costs of rectifying the defective building works, but did err in the assessment of the homeowners’ damages for completion and late completion.

   Ground 3

   That the Tribunal erred in ordering the homeowners to pay default interest

3. For the above reasons we find that the Tribunal erred in ordering the homeowners to pay default interest under the contract.

   Ground 4

   The Tribunal erred in law in ordering the homeowners to pay costs.

4. For the above reasons we find that the Tribunal did not err in ordering the homeowners to pay costs in respect of the adjournment.

   OUTCOME OF THE BUILDER’S CLAIM

5. For the reasons above, on the builder’s claim, the homeowners are liable to pay to the builder the following:

   (a)     Quantum meruit  $160,162.89

   (b)     Interest on quantum meruit to be decided after submissions

   TOTAL: provisionally $160,162.89

   OUTCOME OF THE HOMEOWNERS’ CLAIM

6. For the reasons above, on the homeowners’ claim, the builder is liable to pay to the homeowners the following:

   (a)     Damages for non-completion - $150.00

   (b)     Cost to complete - $54,834.00

   (c)     Damages for cost of rectification - $ 68,735.00

   (d)     Interest - $ 48,219.50.

   TOTAL: $171,938.50

   Conclusions and orders

7. For the reasons explained, we grant leave to appeal and allow the appeal.

8. If there is no basis in law upon which interest may be awarded to the builder on his quantum meruit, the overall result arising from the contractual dispute will be that the builder pay the homeowners the amount of $11,712.61.

9. Directions are made allowing both parties to make submissions about the Tribunal’s power to award interest on a quantum meruit; and if there is power, whether an order should be made and in what amount. Further, the Appeal Tribunal is unaware whether payments have been made by the parties pursuant to the orders of the Tribunal of 19 February 2013. Accordingly, the Appeal Tribunal invites further submissions from the parties on the final form of orders to be made on this appeal, which bring to account our decision and the effect of any payments already made. Those submissions are to be filed in the Appeal Tribunal by 4:00pm on 24 August 2018.

10. At this stage, declarations are made confirming our findings of the amounts payable on the application and cross-application, save and except any amount for interest on the quantum meruit is reserved for further consideration by us, together with the making of further orders in substitution of order 1.

11. Order 2 regarding the costs thrown away as a result of the adjournment is confirmed.