Stuart v Queensland Building and Construction Commission
[2014] QCAT 312
| CITATION: | Stuart v Queensland Building and Construction Commission [2014] QCAT 312 |
| PARTIES: | Andrew John Stuart (Applicant) |
| v | |
| Queensland Building and Construction Commission (Respondent) |
| APPLICATION NUMBER: | GAR327-12 |
| MATTER TYPE: | General administrative review |
| HEARING DATE: | 25 and 26 February 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Walker |
| DELIVERED ON: | 27 June 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Decision Maker of 12 September 2012 be set aside so far as it determined that the Contract was lawfully terminated by Mr Robert Barton. 2. That the matter be returned to the decision maker to determine whether Mr Stuart was in breach of the Contract as at the date of termination by mutual abandonment namely 4 April 2012. 3. In the event that this issue is determined in the affirmative, whether an insurance claim pursuant to the provisions of the Act is appropriate. |
| CATCHWORDS: | Application to review decision of Queensland Building Services Authority that contract had been determined by owner – where contract to complete partially constructed home – where no approved plans at the time of entering into contract – where dispute about the manner of construction of part of the works – where Owner purported to terminate contract pursuant to s 90 of the Domestic Building Contracts Act 2000 – where builder sought a review of the decision – where contract mutually abandoned Domestic Building Contracts Act 2000 (Qld), s 17, s 18, s 33, s 34, s 90 DTR Nominees Pty Ltd v Mona Homes Pty Ltd: (1978) 138 CLR 423 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Codd of Counsel instructed by Flehr Law |
| RESPONDENT: | Mr Thompson of Counsel instructed by Holding Redlich Lawyers |
REASONS FOR DECISION
Background
This dispute arises out of a contract entered into on or about 27 August 2011 between the applicant (as builder) and Robert and Priscilla Barton.
The contract was for a sum of $262,300 including GST and was effectively a contract to complete a partially constructed house.
At that time, the house was fully framed, the floors were in, the roof was on, the outside of the house however was not fully enclosed but merely had insulation paper on the outside.
At the time of entering into the contract, it is common ground that there were not any approved plans, though there were existing plans that had been approved in respect of the work already done.
It seems that building approval was finally received in or about late September and construction commenced on the date that is subject to disagreement but in any event, in early October 2012. It is notable that this approval did not include the deck area. The deck that had originally been approved did not contain the usual setback from the boundary which apparently was required by the new certifier.
These differences between the original and substituted plans were the subject of a considerable amount of evidence during the hearing, particularly so far as those changes impacted on construction techniques.
It would appear that there was never any final agreement as to construction of the deck by the applicant. He submitted a quotation for its construction but that quotation was never accepted by the owners.
Pursuant to the contract, the construction period was 120 days from commencement. The contract period included an allowance of 14 days for inclement weather and its effects.
There has been dispute between the parties as to delays and what is allowable under the contract and under s 17 of the Domestic Building Contracts Act 2000 (Qld) (‘DBC Act’).
In any event, construction continued and on or about 20 December 2011 a progress claim was made in the amount of $170,495.00. On or about 6 January 2012, the owners made full payment in respect of that progress claim. From January there was very little work that was thereafter done.
There was an exchange of correspondence between the applicant and the owners in their respective legal representatives culminating in a letter dated 11 May 2012 whereby the owners’ solicitors sent a letter to the applicant reportedly terminating the contract pursuant to s 90 of the DBC Act.
Subsequently, a complaint was made by the owners to the Queensland Building Services Authority on or about 18 May 2012.
Following receipt of that complaint, the Authority conducted enquiries. Ultimately, the Authority determined that the contract had been properly terminated by the owners pursuant to s 90 of the DBC Act and the applicant has sought a review of that decision.
Issues to be determined
I specifically sought the views of the parties with regard to the issues that need to be determined in respect of these proceedings. This issue was also the subject to an order of the Tribunal dated 19 December 2013 whereby Senior Member Oliver directed that the issue for determination at the hearing of the applicant is to be confined to whether Robert Barton lawfully terminated the building contract with Mr Andrew John Stuart. Having regard to that and the issues raised by the parties, it would seem that the following matters may require consideration:
a) Had the contract been mutually abandoned by the parties prior to the reported termination on 11 May, 2012;
b) Where the owners precluded from terminating on 11 May, 2012 pursuant to s 90(2)(a) of the DBC Act;
c) To what extent was the effective completion date subject to adjustment by reason of operation of s 18 of the DBC Act;
d) Having regard to these matters was the purported termination the subject of an entitlement of reason of the fact that more than 1.5 x the effective completion period had elapsed on or before the purported termination date.
Nature of the hearing
Review proceedings are conducted pursuant to s 20 the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) by a way of rehearing. The review is to be undertaken on the basis of the available material at the date of the hearing and the applicant has the opportunity to put his case afresh.
Legislation
The only basis upon which the owners expressly sought to justify the termination of the contract was pursuant to s 90 of the DBC Act. Other sections including s 18, s 33 and s 34 also need consideration when determining whether termination pursuant to s 90 is possible. These sections are as follows:
90Ending contract if completion time extended or contract price increased
(1)The building owner under a regulated contract may end the contract if-
(a)the contract price rises by 15% or more after the contract is entered into because of the operation of a cost escalation clause contained in the contract; or
(b)the subject work is not finished within a period that is 1.5 times-
(i) if the contract has an effective completion date - the period starting on the starting date for the contract and ending on the effective completion date; or
(ii) if the contract has an effective completion period - the period.
(2) However, the building owner may end the contract only if-
(a) the reason for the rise in price, or increase in time, could reasonably have been foreseen by the building contractor when the contract was entered into; and
(b) for a rise in price - the rise is not caused by a delay for which the building owner is responsible.
(3)To end the contract, the building owner must give the building contractor a notice under this section.
(4)The notice mentioned in subsection (3) must-
(a) be in writing; and
(b) be signed by the building owner; and
(c) state the building owner is ending the contract under this section; and
(d) state the ground on which the building owner is ending the contract; and
(e) give details of the ground.
(5)In this section-
starting date, for a regulated contract, means the date stated in the contract as the date the subject work is to start.
Section 18 of the DBC Act is in the following terms:
18Effective completion date or period
(1)The effective completion date, for a regulated contract that has a stated completion date, is the stated completion date, as adjusted under this section.
(2)The effective completion period, for a regulated contract that has a stated completion period, is the stated completion period, as adjusted under this section.
(3)For an allowance mentioned in section 33 for which a number of days is stated in the contract, the stated completion date or period must be adjusted to take account of any additional days required to be applied for the allowance for carrying out the subject work.
(4)If the carrying out of the subject work is affected by a delay that is not a delay of a kind for which an allowance is required to be made under section 33, the stated completion date or period must be adjusted to take account of the actual number of days involved in the delay.
(5)If the contract is varied and the building contractor has complied with the variation provisions for the variation, the stated completion date or period must be adjusted to take account of any additional days, or any reduction in the number of days, required to carry out the subject work.
(6)If the contract is varied but the building contractor has not complied with a variation provision for the variation, the stated completion date or period-
(a)must be adjusted to take account of any reduction in the number of days required to carry out the subject work; and
(b)may, with the tribunal's approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor, be adjusted to take account of any additional days required to carry out the subject work.
(7)However, subsection (3) applies only if the need for an allowance for the additional days could not reasonably have been foreseen by the building contractor when the contract was entered into.
(8)Also, subsection (4) applies for a delay only if-
(a)the contract contains a statement of the matters mentioned in section 34(2) for the delay; or
(b)the reason for the delay could not reasonably have been foreseen by the building contractor when the contract was entered into.
(9)Also, for subsection (5), if the variation is not a variation that was originally sought by the building owner, the subsection applies for an adjustment for additional days only if the ground of unforeseen circumstances applies.
(10)The tribunal may give an approval for subsection (6)(b) only if it is satisfied that-
(a)either of the following applies-
(i) there are exceptional circumstances to warrant an allowance being made for the additional days;
(ii) the building contractor would suffer unreasonable hardship if an allowance for the additional days were not made; and
(b)it would not be unfair to the building owner to make an allowance for the additional days.
(11)For subsection (9), the ground of unforeseen circumstances applies if the relevant variation became necessary because of circumstances that could not have been reasonably foreseen by the building contractor when the contract was entered into.
(12)In this section-
variation provision means section 79, 80, 82 or 83.
Section 18 introduces the concepts contained in s 33 and s 34 of the DBC Act which are as follows:
33Calculable delays
(1)This section applies to the building contractor under a regulated contract in calculating, for section 28(2)(h)-
(a)the date the subject work is to be finished; or
(b)if the starting date for the work is not known - the number of days that will be required to finish the work once it is started.
(2)The building contractor must make the following allowances-
(a)an allowance for the effect of inclement weather that is reasonable, having regard to the time of the year when the subject work is likely to be carried out;
(b)a reasonable allowance for days that are non-working days for the subject work;
(c)for any other matter that is reasonably likely to delay the carrying out of the subject work - an allowance that is reasonable, having regard to the nature of the contract.
Maximum penalty - 20 penalty units.
(3)However, the building contractor is required to comply with subsection (2) only if-
(a)for an allowance mentioned in subsection (2)(a) - there is a reasonable likelihood the time required to carry out the subject work will be affected by inclement weather; or
(b)for an allowance mentioned in subsection (2)(b) - there is a reasonable likelihood the time required to carry out the subject work will be affected by the occurrence of non-working days; or
(c)for an allowance mentioned in subsection (2)(c) - it is possible for the building contractor to adequately estimate the period of likely delay.
(4)For each type of allowance required to be made by the building contractor under this section, the building contractor must ensure the contract states the number of days allowed by the building contractor.
Maximum penalty for subsection (4) - 20 penalty units.
34Incalculable delays
(1)This section applies if—
(a)the building contractor under a regulated contract reasonably believes-
(i) the carrying out of the subject work will be delayed; and
(ii) that there is, or will be, a specific reason for the delay attributable to specific circumstances the building contractor reasonably believes exist, or will exist; and
(b)it is not possible for the building contractor to adequately estimate the period of likely delay.
(2)The building contractor must ensure the contract states-
(a)the reason for the likely delay; and
(b)that it is not possible for the building contractor to adequately estimate the period of likely delay; and
(c)the general effect the delay is likely to have on the carrying out of the subject work.
Maximum penalty—40 penalty units.
(3)Subsection (1) does not apply for a delay caused by-
(a)inclement weather; or
(b)the occurrence of non-working days.
Was the Contract Mutually Abandoned by the Parties?
It has been submitted by the Parties that the issue of whether there was mutual abandonment should be considered. This makes sense in that if the contract was terminated by mutual abandonment prior to a purported termination pursuant to s 90 and the DBC Act, that later purported termination cannot have been effective as there would not, in those circumstances have then been a contract to terminate.
What would follow from this is that the other issues for termination would, in the context of this hearing at least, cease to have any relevance and would not require determination.
At the time that decision by the Authority was made it was probably fair to infer that the only possible ground for termination for consideration was notice pursuant to s 90 of the DBC Act as that was the only ground then contended for by the owners and the Authority/Commission.
However at the hearing of this matter the additional possible ground was advanced by the applicant, namely termination by mutual abandonment. As I understand it the first time this issue was ever raised was in the opening by counsel on behalf of Mr Stuart.
This issue appears to have been approached differently by the respective parties. In simple terms the approach taken by the applicant appears to be that if there was termination by abandonment then the subsequent termination pursuant to s 90 cannot be valid. On the other hand the respondent argues that if there was mutual abandonment and at that time the builder was in breach then that is a termination sufficient to enliven the insurance provisions.
In submissions in reply Mr Stuart, through his legal representatives has said that to decide the whole of the proposition put by the respondent would be to exceed the extent of the decision made at the commencement of these proceedings. More importantly, it seems to me that it would exceed the parameters of the order made by Senior Member Oliver which is to decide whether the owners and only the owners terminated the contract.
Therefore, regrettable as it may seem, if there is a finding that the contract was terminated by mutual abandonment prior to, or even presumably by the giving of the notice, purportedly pursuant to s 90 of the DBC Act then it would not be termination pursuant to the actions of the owners, as mutual abandonment would require action, or perhaps lack of action, by both parties.
It would seem that there does not need to be a meeting of minds in this respect, merely a mutual state of mind. As the majority stated in DTR Nominees Pty Ltd v Mona Homes Pty Ltd:[1]
Thus the contract in the present case was still on foot on and after 25th July 1974. Neither party had effectively rescinded. But there can be no doubt that by 5th December 1974, when these proceedings were commenced, neither party, whatever may have their reasons, regarded the contract as still being on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract.
[1] (1978) 138 CLR 423 at 434.4.
It may well be the submissions on behalf of the Commission as to whether this can still found an insurance claim are correct. However Mr Stuart has not been in a position to answer the issue of whether he was in breach at the relevant time. Therefore, if it is found that the contract was abandoned then the only finding that I am in a position to make is that the contract was not determined in accordance with s 90 of the DBC Act despite the fact that it was at an end. Further, in those circumstances that it was not determined by the actions of the owners but rather as a result of the joint actions of the parties.
The Commission concedes that this argument in favour of mutual abandonment, advanced on behalf of Mr Nutley, is ‘at least arguable’.[2]
[2] Respondent’s submissions at [117]-[118].
Perhaps the most enlightening evidence as to the state of mind of the parties can be found by the exchange of correspondence that took place between the parties and/ or their legal representatives.[3]
[3] See Exhibit 7, annexures RB-27 to RB-36.
The first of these was from Mr Stuart to the Owner’s lawyer and contained statements such as ‘We are very frustrated as well …’ and ‘I don’t want to go over there and do a few days work as I have other work to do.’[4]
[4] Ibid, annexure RB-27.
The next letter in this group was from Terra Firma Law to Mr Nutley dated 7 March 2012.[5] This letter raised for the first time the possibility of termination by the owners, discussed outstanding issues and sought clarification of a completion date. No reply was received to that letter and they wrote again 14 March 2012.[6]
[5] Ibid, annexure RB-28.
[6] Ibid, annexure RB- 29.
On 20 March 2012 Mr Stuart responded[7] indicating that construction of the deck was not possible ‘as there is no way to dig the piers to the depth that Lindsay Reed wants.’ That letter went on to say that once agreement could be reached he would draw up a new contract for signature.
[7] Ibid, annexure RB-30.
In my view, from this it is clear that at least Mr Stuart had by this time determined that the old contract either couldn’t or wouldn’t be performed and that the only way forward was through a new contract. In my view this is a clear and unequivocal indication that the existing contract had been abandoned at this time at least by Mr Stuart.
His position is probably accurately summarised in [23] of his statement of evidence of 15 November 2013[8] where he stated:
When it became obvious that there had to be significant design changes and other major variations, the original Contract could not proceed in its then form particularly as there were no approved plans. Despite this I was faced with having their solicitor insist that I complete the work as per the original Contract which it was obviously illegal to do. I tried to suggest that all the outstanding items be resolved and a new contract entered, but it did not happen. For my part, I was not prepared to undertake further work on a Contract that was uncertain ass to its scope and price and in respect of which I have never been provided with duly approved “for construction” plans.
[8] Exhibit 2.
In the interim and for a short time subsequently it appears that there was an email exchange directly between the parties but by 4 April 2012 Terra Firma Law wrote again[9] and importantly that letter included the sentence, ‘Please submit a new contract for consideration by my clients.’ Again this would seem a clear indication that owners also considered that by this time the old contract was unworkable and that it was effectively abandoned by them as well. Indeed it seems clear that at this point at the latest both parties considered that the old contract would not be performed and a new one was the only way forward, particularly having regard to issues surrounding the construction of the deck.
[9] Exhibit 7, annexure RB-36.
After about 12 April 2012 until the date of purported termination being 11 May 2012 there was no apparent communication between the parties at all. The obvious inference from this is to reinforce the view that the contract had been mutually abandoned. From the point of view of the owners it seems, in the absence of a new contract being submitted from Mr Stuart that they were content to let matter slide until the point was reached where it was felt a s 90 termination could be achieved.
Accordingly in my view the contract had been mutually abandoned by the parties well prior to 11 May 2012. Accordingly the notice issued on that date cannot have had the effect of bringing a contract to an end where the parties’ actions had already affected that outcome.
Most unfortunately this decision, in the context of the order of Senior Member Oliver and in view of the complaints on behalf of Mr Stuart means that this matter is far from at an end. In particular, I note the decision of McGill SC, DCJ in Queensland Building Services Authority v Fox.[10] The end result of this application and that of McGill SC, DCJ effectively means that there will now need to be a determination of whether Mr Stuart was in breach at the time of abandonment. Having regard to the respondent’s submissions dated 21 March 2014[11] at the least it must be said that this is a very live issue.
[10] [2005] QDC 129.
[11] In particular see [111]-[115] and [122] thereof.
The other issues raised by the parties, in the light of this finding really become irrelevant. In particular it seems unnecessary to decide whether, other than for the issue of abandonment the termination pursuant to s 90 of the DBC Act would have been effective.
Accordingly, it becomes unnecessary to decide what was the commencement date of the works and whether 1.5 times the completion period had passed prior to the giving of the Notice.
Powers that are available to the Tribunal in these circumstances are governed by s 24 of the QCAT Act which is in the following terms:
24Functions for review jurisdiction
(1)In a proceeding for a review of a reviewable decision, the tribunal may-
(a)confirm or amend the decision; or
(b)set aside the decision and substitute its own decision; or
(c)set aside the decision and return the matter for reconsideration to the decision-maker for the decision, with the directions the tribunal considers appropriate.
(2)The tribunal's decision under subsection (1)(a) or (b) for a reviewable decision-
(a)is taken to be a decision of the decision-maker for the reviewable decision except for the tribunal's review jurisdiction or an appeal under part 8; and
(b)subject to any contrary order of the tribunal, has effect from when the reviewable decision takes or took effect.
(3)The tribunal may make, to the chief executive of the entity in which the reviewable decision was made, written recommendations about the policies, practices and procedures applying to reviewable decisions of the same kind.
(4)If the tribunal makes written recommendations under subsection (3) and the chief executive is not the decision-maker for the reviewable decision, the tribunal must give a copy of the recommendations to the decision-maker.
(5)In this section—
chief executive includes chief executive officer
It seems that the most appropriate course is for the decision of the decision maker to be set aside pursuant to s 24(1)(c) but that the matter be returned to the decision maker to determine whether at the time of termination, namely 4 April 2012, there were other circumstances that may give rise to an insurance claim and specifically if, at the relevant time Mr Stuart was in breach.
2
2
0