Critter Pty Ltd v Queensland Building and Construction Commission & Anor [2025] QCAT 25

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Critter Pty Ltd v Queensland Building and Construction Commission & Anor [2025] QCAT 25 PARTIES: CRITTER PTY LTD (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (first respondent) MARTIN HENDRY (second respondent) APPLICATION NO/S: GAR014-23 MATTER TYPE: General administrative review matters DELIVERED ON: 9 January 2025 HEARING DATE: 13 September 2024 HEARD AT: Brisbane DECISION OF: Member Burson ORDERS: The decision of the QBCC dated 9 December 2022 is set aside and replaced with a decision by the tribunal that the contract was not validly terminated. No order as to costs. CATCHWORDS: ADMINISTRATIVE LAW – GENERAL ADMINISTRATIVE REVIEW – application by Contractor to review a decision by Queensland Building and Construction Commission to determine that home owner validly terminated the contract allowing claim for completion under the Queensland Home Warranty Scheme Queensland Building and Construction Commission Act 1991 (Qld) Queensland Civil and Administrative Tribunal Act 2009 (Qld) Mitchamy Developments Pty Ltd v Adams and Anor [2010] QCAT 484 Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277 APPEARANCES & REPRESENTATION: Applicant: Mr M Shelford, Director Critter Pty Ltd -- 1 of 9 -- 2 Respondent: Mr S Seefeld, counsel instructed by HWL Ebsworth Lawyers REASONS FOR DECISION [1] Critter Pty Ltd (‘CPL’) applied to the tribunal on 6 January 2023 seeking review of the decision by the Queensland Building Construction Commission (‘QBCC’), dated 9 December 2022. The review concerns QBCC’s determination that the homeowner Mr Hendry had validly terminated the contract to build a home at Brookwater with CPL. [2] Mr M Hendry had applied for relief under the Queensland Home Warranty Scheme (‘Insurance Scheme’). The Insurance Scheme enables home owners to apply for assistance in completing building works where the original contractor is unable to do so. As part of accessing assistance, the Queensland Building and Construction Commission (‘QBCC’) must determine certain matters prior to allowing a homeowner access to the Insurance Scheme. [3] The parties lodged a hearing book with the tribunal on 2 September 2024. It contains the documents relied upon for the purpose of the hearing and I outline the documents below: 1. Application to review decision 6 January 2023 2. Statement of reasons for decision 1 March 2023 3. Notice of hearing 21 August 2024 4. Statement of Michael John Shelford including annexures 30 June 2023 5. Statement of Martin Hendry including annexures 4 October 2023 Legislation [4] Part 5 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘the Act’) establishes the Insurance Scheme. [5] Section 68H of the Act states: (1) Cover under the statutory insurance scheme comes into force if – (a) a consumer enters into a contract for the carrying out of residential construction work and – (i) the contract bears the licence number of a licensed contractor and, under the licensed contractor’s licence, the licensed contractor may enter into contractors with consumers to carry out residential construction work covered by the statutory insurance scheme; or (ii) the contract is with a licensed contractor and, under the licensed contractor’s licence, the licensed contractor may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme; or -- 2 of 9 -- 3 … (2) Subsection (1) applies whether or not an insurance premium has been paid, or a notice of cover has been issued for residential construction work under this part. [6] Section 67WA of the Act defines consumer, incomplete and residential construction work as follows: consumer, for residential construction work – (a) means a person who contracts with a licensed contractor to carry out the work; and (b) includes a person who purchases the work, once completed, if the work is primary insurable work. incomplete, in relation to residential construction work – (a) means work that has not reached practical completion, but (b) does not include – (i) work that does not comply with the contract because of a cosmetic difference; or (ii) work that is defective. residential construction work is – (a) primary insurable work; or (b) associated insurable work. [7] Section 67WC of the Act defines primary insurable work as follows: (1) Primary insurable work of the following building work if carried out by a licensed contractor and the value of he insurable work is more than the regulated amount – (a) the erection or construction of a residence or related roofed building; [8] Section 67Y of the Act states: The terms of cover under which a person is entitled to assistance under the statutory scheme are prescribed by regulation. [9] The Queensland Building and Construction Commission Regulation 2018 (Qld) current at 1 October 2020 was in force when CPL and Mr Hendry entered into the contract to build the Brookwater property. Schedule 6 of the QBCC Regulation – Term of Cover – applies. [10] Section 4 of the Terms of Cover is the relevant provision for the purposes of this review and states as follows: - (1) A fixed price residential contract ends if – (a) the contract is validly terminated on the default of the licensed contractor; or …. (2) In this section - -- 3 of 9 -- 4 validly terminated, for a fixed price residential contract, does not include mutual abandonment of the contract by the parties to the contact. [11] Section 71C of the Act further provides for our purposes – A person claiming to be entitled to assistance under the statutory insurance scheme must give notice of the claim to the commission in compliance with the requirements prescribed by regulation. [12] The parties agree and accept that they entered into a residential fixed price contract, and the Insurance Scheme applies. The determination for this tribunal is in relation to the decision of the QBCC finding that termination of the contract was valid. Overview [13] CPL and Mr Hendry entered into the contact on 11 March 2021, and practical completion was contracted to be completed on 19 February 2022. The contract was purported to be terminated on 20 July 2022 by Mr Hendry for purported substantial breaches of the contract or in the alternative repudiation of the contract by CPL. [14] CPL responded by way of letter dated 27 July 2022 that there was no substantial breach and that Mr Hendry had repudiated the contract and CPL was terminating the contract. The contract by 27 July 2022 had ended. [15] The first thing to determine is – Was there a substantial breach of the contract by CPL? [16] Mr Hendry stated that CPL failed to proceed with the Works with due diligence or in a competent manner. [17] The decision notice of the QBCC internal review relies on the following matters of the purported substantial breaches: (a) failing to proceed with the Works with due diligence or in a competent manner; (b) unlawfully suspending the carrying out of the Works. [18] There was a further purported breach “demanding payment of the stage payment when the stage had not been reached” but this was unsuccessful in the decision notice and this was not a matter ventilated at the hearing. [19] The QBCC has relied upon the failure of the CPL in not reaching practical completion at the contracted date as the basis for the substantial breach of the contract. Further the extension of time claims under clause 15 were not accepted by Mr Hendry and the QBCC determined that as the extension of time was not claimed in accordance with the contract, the date for practical completion remained unchanged. This was reiterated in the statement of reasons.1 [20] The breakdown of the relationship of the CPL and Mr Hendry was swift and occurred sometime in June 2022, approximately four months after practical completion was due. Failing to proceed with the Works with due diligence or in a competent manner [21] The parties throughout the contractual relationship communicated predominately by way of email, text message and speaking on the telephone. 1 Paragraphs 4.14 to 4.24 inclusive, Statement of Reasons dated 1 March 2023. -- 4 of 9 -- 5 [22] There were concerns regarding the timber trusses and frames. It is accepted by the tribunal that there was a miscommunication between the sub-contractor and CPL. It is accepted that CPL first ordered the timber trusses in April 2021. [23] Mr Hendry states that he was advised by CPL on a weekly basis that the timber trusses and frames were going to be delivered. He evidences a text message he sent to Mr Shelford on 28 September 2021 to support this. The message “Hopefully the frames are still due next week too?” There was no response from Mr Shelford by text message. [24] It is clear to the tribunal that Mr Hendry was aware of delays, notwithstanding his statement stating that he was never formally advised of delays for the delivery of material. The tribunal accepts that Mr Hendry was not formally advised of extension of time requirements in accordance with the requirements under clause 15 of the contract, until the letter of 18 July 2022 from CPL engaged solicitors, but nonetheless, Mr Hendry was aware of the delays to materials as outlined in the email dated 25 May 2022 at 5:16pm from Mr Hendry to Mr Shelford, Director for CPL. The email states: Mick as discussed today, below is a list of items you wanted to get back to me on: 1.Update on insulation costs, split down to both internal walls and lower floor ceiling/media room with square metres used. I will send pictures of where the insulation was removed from some of the walls by the plasterers. 2.Update on retaining wall cost to date, left hand side when looking at the front of the house. 3.Contact details for Person to fit drapes/curtains. 4.Date for tiling and stairs 5.Expected date of completion 6.I will send you the invoice for g to get the fire and you will pay remainder and transfer what’s left of the PC into my account. One thing I needed you to send me is an email stating when the move in date will be. The reason I need this is the Army gave me some money to build the house as it was an incentive for people to own their own homes. One of the terms is to move in within the year of build contract signature. As we have been delayed to to (sic) COVID all they need from me is an email from you, the builder stating we have been delayed completion due to COVID with material delays and also the expected date of completion. If you think August put down a month later say September. If we are early its all good as I need to send them the handover paperwork to prove I have moved into the house. Thanks, Martin (Emphasis added) [25] On 31 May 2022, Mr Shelford sent an email to Mr Hendry with the phone number for a curtain blinds lady. [26] A variation was sent to Mr Hendry outlining the costs of kitchen cabinetry on 2 June 2022. -- 5 of 9 -- 6 [27] Mr Shelford sent a further letter, purported to be a “without prejudice” letter dated 9 June 2022. This matter was discussed at the hearing between all parties and the tribunal and Mr Shelford decided to enable this letter to be provided to the tribunal. [28] The letter states as below: Dear Martin and Hanna This letter is to explain the unprecedented situation with material price increases and supply chain deficiencies currently experienced in the Residential Construction Industry. As you are possibly aware COVID, the Government Housing Grant and the current war situation has caused unprecedented conditions responsible for the massive price increases across all products in the construction industry. In addition, the demand for trades due to overloading the industry has continued to drive up trade services costs with increases not seen in over 30 years. Please find below the typical increase percentages since the start of your contract date: Timber- 42% Floor System – 52% Steel – 100% Windows – 21% Cladding- 22% Tiling -40% Tiles – 15.3% Concrete – 32.5% plus fuel levy increase Roof – 32% Plumbing-26% Plaster-14% Stairs and Balustrade -19% Cabinetry Materials-68% General Trades – 25% These are some of the main items, however items we buy day to day for construction have significant increases in cost which would reflect the typical values listed above. The lengthy delays for materials continues to increase company overhead costs and build times. It is with great regret that I need to inform you we cannot build your home to the current contract price of $839960.00 To complete your build on a cost only basis will require a further 25.5% increase to the current contract value. The calculated variation precentage (sic) reflects the unprecedented price increases which continue to be communicated across all facets of the media and throughout the industry. -- 6 of 9 -- 7 Whilst we completely acknowledge this will be a very stressful situation, and it is on our behalf as well, we are fully committed to working with you to complete your build. We have absorbed ongoing costs since the start of construction and unfortunately cannot continue without your help to fund the cost variation. Please note as stated, this is a cost only variation and we intend to complete your home on a “nil margin” basis. It is our recommendation that we work together to complete your build with your help on soaring industry costs. In addition, it is also the most effective way forward for both parties to achieve construction completion in a timely and cost effective way. We ask that you give consideration to the cost variation as detailed above to ensure your build can continue as scheduled. Please call to arrange a meeting at your convenience so I can explain and display the construction cost figures which will be fully transparent to you. Yours Sincerely Mick Shelford Director. [29] Mr Hendry had sent payment for cabinetry to CPL on 8 June 2022 and sought a return of this money on 9 June 2022 by return email. CPL returned this money to Mr Hendry on the same date. Mr Hendry in his statement confirms that he sought return of this money after reading the letter.2 [30] CPL and Mr Hendry had a meeting on 10 June 2022 and Mr Hendry reiterated (amongst other matters) that they were at the limits of their home loan and could not possibly pay any more to complete the build.3 [31] Further texts and emails were exchanged between the parties between 15 and 17 June 2022. The parties both confirmed that they were willing and able to complete the contract. Mr Hendry in his statement noted he received an email from Mr Shelford that CPL was sourcing labour and materials to complete the build within the terms of the contract but that this exercise could take some time and cause delays.4 [32] On 4 July 2022 Mr Hendry had engaged solicitors and a notice of intention to terminate was sent to CPL, in accordance with clause 20 of the contract, providing 10 business days. The letter states in part: Under the Contract, the date for Practical Completion was 19 February 2022. There has not been any request for an extension of time. There was a long delay when the slab was competed in May 2021 until when the frame arrived in January 2022. There has been no substantial work completed to the house since 24 May 2022. On 17 June 2022, the Contractor wrote an email which stated: We are also willing and able to perform your build as per the contract. We are currently sourcing labour and materials in an effort to ensure that the build is 2 Statement of Martin Hendry page 10 paragraph 72(c). 3 Statement of Martin Hendry page 11 paragraph 76(c). 4 Ibid page 12 paragraph 80. -- 7 of 9 -- 8 competed in line with the terms of the contract. Given the current difficult market conditions (both in terms of labour and material supply this exercise may take some time and cause delays to your build time. We will contact you as soon as possible to provide an update on the building schedule. However there has been no communication and no progress since that date. Practical Completion should have been achieved over 4 months ago (on a build period of 324 days) which demonstrates that the Contractor has not proceeded with due diligence. [33] CPL responded through their solicitors providing seven unsigned extension of time claims, denying that CPL had failed to proceed with due diligence and that they had continued to carry out work, including contacting Mr Hendry on 20 June regarding a window delivery. It is clear that they are unsigned, but could only have been sent to Mr Hendry’s solicitors on instructions. [34] The extension of claim forms are scant and do not provide any detailed reasoning for delay in the claim form. [35] The response from Mr Hendry’s solicitors is also scant and state for five of the seven claim forms that “The Contractor is responsible for obtaining the [material delay] and there is no explanation of why this would entitle the Contractor to an extension of time.” [36] Mr Hendry denies delay in relation to cabinetry choice and weather. [37] CPL and Mr Hendry were not communicating in the manner outlined by the contract. It was clear that there was a breach of the extension of time claim provision. Breach of this clause does not indicate that there is a material consequence to the homeowner. The contract provides for a dispute resolution clause under clause 28 of the contract. Given that there is a dispute resolution clause for extension of time, it cannot be relied upon by Mr Hendry as the basis for termination of contract or for a claim that CPL proceeded without due diligence and delay. [38] The contract was terminated by Mr Hendry through his solicitors on 20 July 2022 for failure to remedy the breach and unlawful suspension of work and in the alternative that CPL has repudiated the contract with Mr Hendry. [39] CPL solicitors replied to Mr Hendry’s solicitors on 27 July 2022 denying any substantial breach and alleging repudiation of the contact by Mr Hendry. [40] The tribunal finds that in all the circumstances CPL did proceed with due diligence. CPL continued in communication with Mr Hendry and that evidence provided to the tribunal demonstrates CPL’s continued work on the site at Brookwater. [41] It would be unfair to enable Mr Hendry to rely upon a claim of CPL proceeding without due diligence, when he was aware of the delays and acquiesced with the delays as noted by his email of 25 May 2022. [42] I find that there was not a failure by CPL and CPL did proceed with due diligence. Therefore, I cannot be satisfied that this was a substantial breach on this basis. Failure to complete by date for practical completion [43] CPL and Mr Hendry treated the contract as continuing until the issuance of the notice of intention to terminate was provided by Mr Hendry to CPL on 4 July 2022. This is -- 8 of 9 -- 9 commensurate with Mitchamy Developments Pty Ltd v Adams & Anor.5 CPL could not remedy a breach for a date that was in the past, as in Mitchamy. I find that Mr Hendry lost the right to terminate the contract on the basis of failure to reach practical completion on 25 May 2022, when acknowledging the delay by email and acquiescing to the delay. Unlawful Suspension [44] This has not been advanced by QBCC and I am in agreement that CPL did not unlawfully suspend the contract; there were at the time delays with supply of materials. I find that there is not a substantial breach on this basis. Repudiation [45] It was further alleged that CPL repudiated the contract. As opined by Lord Wilberforce, “Repudiation is a drastic conclusion which should only be held to arise in clear cases of a refusal in a manner going to the root of the contract to perform contractual obligations.”6 [46] There is no evidence that CPL was not willing or able to perform the contract. After advising Mr Hendry of the unprecedented cost impacts on 9 June 2022, CPL continued to advise Mr Hendry that they were willing and able to continue with the contract within the contract price. [47] There is no evidence that CPL did not communicate with Mr Hendry regarding delays. It is accepted that Mr Hendry was aware of delays. This does not demonstrate a repudiation of the contract. [48] Issuing seven extension of time claim forms that are not in accordance with the contract does not demonstrate repudiation of the contract. It shows that there is an intention to remain bound by the contract, notwithstanding that there has been a breach in issuing the claim forms outside of the ten business days contained within clause 15 for provision of the extension of time claim forms. [49] Failure to complete the works at Brookwater by the date for practical completion when considering all the circumstances does not demonstrate repudiation of the contract. [50] Looking at the conduct of the CPL and Mr Hendry as a whole, CPL has not demonstrated a repudiation of the contract. I find that CPL was ready and willing to perform its obligations under the contract. Order [51] The determination by the QBCC that Mr Hendry validly terminated the contract is set aside and replaced with the decision by the tribunal that the contract was not validly terminated. [52] There is no order as to costs. 5 [2010] QCAT 484 [47]. 6 Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277. -- 9 of 9 --