Vignarajah v Queensland Building and Construction Commission

[2021] QCAT 255

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Vignarajah v Queensland Building and Construction Commission [2021] QCAT 255

PARTIES:

SUBRAMANIAM VIGNARAJAH

THARUMADEVI VIGNARAJAH  
(applicants)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO/S:

GAR142-19

MATTER TYPE:

General administrative review matters

DELIVERED ON:

22 July 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Hughes

ORDERS:

The correct and preferable decision is to confirm the decision of the Queensland Building and Construction Commission dated 26 March 2019 to disallow the owners’ claim under the Queensland Home Warranty Scheme.

CATCHWORDS:

PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – where review of decision to disallow owners’ claim under statutory insurance scheme – where mutual abandonment - where Commission’s decision confirmed

Queensland Building and Construction Commission Act 1991 (Qld), s 3

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20

Arapoglou v Shkolyar [2011] VCAT 2213
Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2013] VSC 164
Cerda v Jacob [2020] QCATA 57
Clarke v Queensland Building and Construction Commission [2020] QCAT 88
Commonwealth Bank of Australia v Perrin [2011] QSC 274
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Rajagopal v Queensland Building and Construction Commission [2020] QCAT 154
Ryder v Frohlich [2004] NSWCA 472
Stuart v Queensland Building and Construction Commission [2015] QCATA 81
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Torua Pty Ltd v Sariklis [2012] VCAT 144
Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361
Yan v Brown Bros Cabinet Works Pty Ltd [2013] VCAT 1623

APPEARANCES & REPRESENTATION:

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. Subramaniam Vignarajah and Tharumadevi Vignarajah[1] contracted licensed builder KMV Constructions Pty Ltd to build a new home for $627,627.[2] KMV performed most of the work up to completion stage. Mr and Ms Vignarajah paid all progress payments, except for the completion stage valued at $31,381.00.

   [1]It should be noted that Ms Vignarajah has since deceased. However, to help with clarity and understanding, these reasons will refer to both Mr Vignarajah and Ms Vignarajah.

   [2]Contract dated 16 December 2016.

2. Before completion, Ms Vignarajah signed a document for Brent Vincent, a licensed builder and Director of KMV, to perform minor works to the home valued at $31,381.00.[3] In addition to having the same value,[4] these works substantially overlapped the outstanding works required to complete the original contract.[5]

   [3]Minor Works Contract dated 8 October 2018.

   [4]Applicant’s Submissions filed 24 June 2020, [22].

   [5]Commission’s Submissions filed 23 July 2020, [111]; Statement of Leean Shirley Tyler filed 4 November 2019; Email Tharumadevi Vignarajah to Preston Hoad dated 29 January 2019. 

3. Ms Vignarajah did not know that KMV’s builder licence had been suspended when she signed the minor works documents. When Mr and Ms Vignarajah discovered this two months later, their lawyers sent a notice to KMV of their intention to terminate the original contract.

4. Four days later, Mr and Ms Vignarajah made a non-completion claim to the Queensland Building and Construction Commission under the statutory insurance scheme. Three weeks after this, they terminated the original contract when KMV’s licence remained suspended.

5. Unfortunately for Mr and Ms Vignarajah, the insurance scheme does not cover contracts terminated by mutual abandonment.[6] The Commission found that the parties' conduct showed they intended to abandon the original contract. Because of this, it decided to disallow their claim.[7] 

   [6]Terms of Cover, s 4; Stuart v Queensland Building and Construction Commission [2015] QCATA 81, [14] - [20].

   [7]Decision dated 26 March 2019.

6. Mr and Ms Vignarajah applied to review the Commission’s decision. In a review application, the Tribunal’s purpose is to produce the ‘correct and preferable’ decision by way of a fresh hearing on the merits.[8]

   [8]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20.

7. Having considered the evidence and submissions from the parties, I am satisfied that the correct and preferable decision is to confirm the decision of the Commission dated 26 March 2019 to disallow the owners’ claim under the Queensland Home Warranty Scheme.

8. This is because I am satisfied that the objective conduct of the parties[9] shows that the parties mutually abandoned the original contract, rather than Mr and Ms Vignarajah terminating it on KMV’s default.

   [9]Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2013] VSC 164, [43] – [46].

9. The scheme policy compensates consumers for loss from a builder failing to complete a contract. Where a contract is abandoned, there is no continuing right to have the work performed, or receive compensation for the builder not performing the work: each party has discharged the other from performing their obligations.[10] In these circumstances, the homeowner has suffered no loss from the builder not completing the contract.[11]

   [10]Stuart v Queensland Building and Construction Commission [2015] QCATA 81, [18].

   [11]Stuart v Queensland Building and Construction Commission [2015] QCATA 81, [18].

10. Abandonment is inconsistent with a right to be compensated for a failure to perform obligations from which the other party has been discharged.[12] The effect of a second arrangement for works of identical value, that substantially overlapped the outstanding works required to complete the original contract, was to render the parties’ obligations to perform the original contract nugatory.

    [12]Stuart v Queensland Building and Construction Commission [2015] QCATA 81, [19].

11. The parties effectively replaced one legal entity (KMV) with another (Mr Vincent) as the builder to perform the work and receive the outstanding payment. KMV did not perform any further work or receive further payment.[13] This is inconsistent with the continuation of the original contract. Neither party wanted the original contract to proceed in its original form.[14]

    [13]Arapoglou v Shkolyar [2011] VCAT 2213.

    [14]Yan v Brown Bros Cabinet Works Pty Ltd [2013] VCAT 1623.

12. Although Mr Vignarajah did not sign the second document, his admission that he was aware that Ms Vignarajah signed the document[15] together with her signing for “Subramaniam and Tharumadevi Vignarajah”[16] in his presence and the history of correspondence[17] sufficiently establishes that she had implied authority to act on his behalf,[18] as their interests aligned.[19]

    [15]Affidavit of Subramaniam Vignarajah sworn 29 July 2019, [3] – [4].

    [16]Affidavit of Tharumadevi Vignarajah sworn 29 July 2019, [16]; Minor Works Contract dated 8 October 2018, owner signature.

    [17]Affidavit of Tharumadevi Vignarajah sworn 4 December 2019, [14], [25] – [111].

    [18]Commonwealth Bank of Australia v Perrin [2011] QSC 274, [119] – [120]; Affidavit of Tharumadevi Vignarajah sworn 4 December 2019, [25] – [111].

    [19]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 190.

13. Similarly, Kelly Vincent was a Director of KMV from 16 January 2018 to 8 October 2018. She dealt almost exclusively with Mr and Ms Vignarajah since the original contract.[20] By affixing her signature to the second document, she held herself out as acting on behalf of Mr Vincent.

    [20]Affidavit of Tharumadevi Vignarajah sworn 29 July 2019, [3], [5].

14. Whether the second document was an enforceable contract is not relevant.[21] Conduct can be inconsistent with the continuation of an existing agreement without amounting to an enforceable new agreement. Similarly, the relatively short period and the later conduct of the parties, including the issuing of a notice of breach, do not disqualify a finding of abandonment.[22]   

    [21]Unlike Cerda v Jacob [2020] QCATA 57 and Clarke v Queensland Building and Construction Commission [2020] QCAT 88 where one party was seeking to enforce a non-compliant contract rather than whether a contract was at an end for the purposes of the statutory insurance scheme.

    [22]Ryder v Frohlich [2004] NSWCA 472; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; Torua Pty Ltd v Sariklis [2012] VCAT 144; Yan v Brown Bros Cabinet Works Pty Ltd [2013] VCAT 1623; Arapoglou v Shkolyar [2011] VCAT 2213. 

15. Because the parties’ conduct is examined objectively, Mr and Ms Vignarajah’s understanding of the legal effect of their actions and whether the other parties acted in good faith are not relevant to abandonment. The legislative intent is not for the statutory insurance scheme to provide unfettered consumer protection.[23]

    [23]Queensland Building and Construction Commission Act 1991 (Qld), s 3; Rajagopal v Queensland Building and Construction Commission [2020] QCAT 154, [23], [34]; Stuart v Queensland Building and Construction Commission [2015] QCATA 81, [14] - [20].

16. This does mean Mr and Ms Vignarajah are without remedy.  It is still open for them to seek remedies for rights accruing to them before abandonment.[24]

    [24]Torua Pty Ltd v Sariklis [2012] VCAT 144; Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361, 379-380; Stuart v Queensland Building and Construction Commission [2015] QCATA 81, [19].