Cross v Queensland Building and Construction Commission & Anor [2024] QCAT 573

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Cross v Queensland Building and Construction Commission & Anor [2024] QCAT 573 PARTIES: PAUL CROSS (applicant) LIDIA CROSS (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (first respondent) KLINE INDUSTRIES INTERNATIONAL PTY LTD (second respondent) APPLICATION NO: GAR250-22 MATTER TYPE: General administrative review matters DELIVERED ON: 9 December 2024 HEARING DATES: 27, 28 September 2024 HEARD AT: Brisbane DECISION OF: Member McVeigh ORDERS: The Queensland Building and Construction Commission’s decision of 23 May 2022 rejecting the owners request for assistance under the statutory insurance scheme is set aside. The tribunal’s decision that Paul Cross and Lidia Cross are entitled to assistance under the statutory insurance scheme is substituted. CATCHWORDS: CONTRACTS - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION – where the contract expressly sets out the circumstances in which the contract price was subject to change – whether the owners validly terminated the contract on the default of the builder – whether the builder evinced an intention to no longer be bound by the contract and demonstrated that it did not intend to fulfill the contract in a manner substantially consistent with its obligations INSURANCE – DOMESTIC BUILDING CONSTRUCTION INSURANCE – whether the owners are entitled to assistance under the statutory insurance scheme -- 1 of 15 -- 2 APPEARANCES & REPRESENTATION: Applicants: T Duhig instructed by Enso Legal First Respondent: Second Respondent: Gadens Lawyers Self-represented at the hearing Submissions from KT Grimshaw instructed by Duncan & Duncan Solicitors REASONS FOR DECISION What is at issue? [1] On 11 May 2021 Paul and Lidia Cross (owners) entered into a contract with Kline Industries International Pty Ltd (builder). On 22 March 2022 the owners’ solicitors wrote to the builder terminating the contract on the basis of alleged repudiation by the builder. [2] On 23 May 2022 the Queensland Building and Construction Commission (Commission) rejected the owners’ request for assistance under the statutory insurance scheme on the basis that the owners had not validly terminated the contract on the default of the builder. [3] The issue to be resolved in these proceedings is whether the owners validly terminated the contract on the default of the builder. If they did, they are entitled to the return of their deposit under the statutory insurance scheme. Who’s who [4] Paul Cross and his wife Lidia Cross own property at Palm Beach. At the commencement of the hearing Mrs Cross consented to be added as an applicant in the proceedings. [5] Gaydon Kline is the principal of Kline Industries International Pty Ltd. Kline Industries International Pty Ltd is a building company licenced by the Commission. The law [6] The parties’ legal representatives do not disagree about the well-settled principles applying to repudiation and subsequent termination of a contract. Their views differ as to the application of the law to the facts. [7] In summary: (a) A party’s right to terminate may be exercised either at common law or pursuant to the terms of a contract unless those terms expressly remove the right of common law termination. (b) Repudiation may be found to have occurred if a party evinces an intention to no longer be bound by the contract, or shows that it intends to fulfill the contract only in a manner substantially inconsistent with its obligations. (c) It is not necessary that a repudiator make it plain that it will never perform its contractual obligations. -- 2 of 15 -- 3 (d) The test is an objective one. (e) All of the circumstances must be considered when considering whether conduct amounts to a repudiation of the contract. (f) The innocent party must make an election to accept the repudiation; i.e. must make a conscious choice to affirm or terminate, knowing all the relevant circumstances. (g) A party can later rely on a ground to justify termination if that ground was not relied on at the time of termination. (h) A party which rescinds an executory contract on account of the other party’s repudiation must show it was ready, willing and able to perform its obligations at the time of recission. [8] It is common ground that this contract did not exclude the right to terminate at common law. The circumstances to be considered [9] The parties provided a four-volume Hearing book which contained contemporaneous documents, as well as the Commission’s statement of reasons and statements of evidence from Mr Cross and Mr Kline. This section of my decision sets out facts which are not in dispute. The contract is made [10] The contract signed on 11 May 2021 was not the first engagement between the parties. They had previously signed a contract in March 2021 which was subject to finance. The owners could not borrow an amount sufficient to proceed with that contract. That contract was terminated by consent. [11] The parties continued to negotiate in the hope of finding savings and arriving at a contract price that would meet the approval of the financier. On 11 May 2021 they signed the contract which is the subject of these proceedings (contract). Terms of the contract1 [12] The contract documents included: (a) plans issue 6 dated 7 May 2021; (b) engineering plans; (c) formal tender dated 11 May 2021; and (d) client confirmation of building products. [13] The contract price was $675,000 (inc GST).2 The contract price is the sum of: (a) the fixed price component of $606,271; (b) prime cost allowances of $45,296.32; and 1 Hearing book p 76 – 137. 2 The amount the owners’ financier was prepared to lend in March 2021. -- 3 of 15 -- 4 (c) provisional sum allowances of $23,432. [14] The contract price was subject to change pursuant to clauses 9, 10, 11, 13, 15, 16, 19, 20, 21 and 23. [15] In clause 6.3 the owners warranted that all easements that may affect the carrying out of the works were disclosed. However, Item 12 of Schedule 1 was not completed by the owners. [16] Clause 11 deals with compliance with the requirements of the local authority. It establishes a process for notifying the owners of any extra work required to comply with requirements of the local authority and for requesting a variation under clause 20 to carry out the extra work. [17] In clause 13 the owners warranted the accuracy of the contract documents it supplied. The clause deals with discrepancies or errors in the contract documents. It establishes a process for resolution of errors, ambiguity or inconsistency in or between the contract documents. In certain circumstances it creates a deemed variation to be processed in accordance with clause 20. [18] Clause 20 deals with variations which are defined3 to be an omission, addition or change to the works; or a change in the manner of carrying out the works. [19] The process prescribed by clause 20 requires: (a) the builder to prepare the variation document identifying the work required, the date of the request, the price of the variation and the change to the contract price and a reasonable estimate of any delay to be caused by the variation. (b) the builder to give the owners the variation document before the first to occur of reaching agreement or starting work on the variation. (c) the owners to agree to a variation before the builder commences the variation works. [20] If the price for a variation was not agreed the builder was entitled to the reasonable price for the work, including margin. [21] The contract price was not subject to finance. However, the lending body was identified as Military Bank. [22] The builder was responsible for obtaining and paying for planning and building approvals. [23] The anticipated start date was to be ‘once commencement notice sent’. [24] The progress payment schedule called for a deposit of $33,750. [25] The owners acknowledged that the following items were not included in the contract price: (a) items not listed in the contract documents; 3 In clause 35. -- 4 of 15 -- 5 (b) any relaxation fees; (c) landscaping and fencing; (d) solar panels and air conditioning; (e) window coverings. [26] The special conditions were: • Owners to pay for electricity and connect account. • Emails between the parties on 11 May 2021 re deposit. • Due to Covid, the need may arise from time to time to limit trades on site and materials may not be readily available causing delays. The owners won’t late completion damages (sic) if delays have been caused by the builder is unable to source products or materials. Each party will indemnity (sic) the other for any time delays. [27] The chain of emails between the parties on 11 May 2021 regarding the deposit4 start at 7:32am. Mr Cross emailed Mr Kline saying: Thanks for getting back to me. So I was thinking that the contract would state $675,000 and in the contract draw down stage is for the deposit being 5% ($33,750) which upon invoice I will pay to you. Once we have all the documents ready the bank will provide us with the deposit of 5% back into our account. We would then pay you the difference between $701,400.60 (or whatever the new figure is due to price changes) and $675,000 which is $26,400.60 at present as a cash payment. As long as you are happy with this process? [28] At 9:04am Mr Kline replied: The Military Bank sure does things differently, normally a bank won’t pay the client a drawdown from a builder’s invoice, the bank will only pay the builder’s invoice. I’ve done a scenario below that probably works better so it keeps invoicing and the bank’s paperwork proper. Paul pays Graydon 5% deposit on signing contract $33,750. Kline Homes pays for the QBCC insurance, Q-Leave, Certifier and Council fees. Paul submits Kline Homes 5% invoice $33,750 to bank with the receipts from QBCC insurance, Q-Leave, Certifier and Council fees. At this point the bank is getting what it asks for and can continue paying Kline Homes invoices as they arrive… which is the normal procedure. The difference from the $701,400.60 is covered, then leaving a difference of $7,349.40 that would be used for the extra roofing cost. I believe the bank would feel more comfortable with this scenario and you wouldn’t have any headaches trying to move money around different accounts, please let me know your thoughts. [29] Six minutes later Mr Cross advised that he was happy with the scenario proposed by Mr Kline. [30] The owners paid the deposit of $33,750 in two stages on 11 and 12 May 2021. 4 Hearing book p 1119 – 1120. -- 5 of 15 -- 6 Submission of plans to the certifier and local authority [31] On 20 May 2021 Mr Kline advised Mr Cross that the plans had been submitted to the certifier.5 [32] A 225mm diameter sewer line runs 2m from the rear boundary of the owners’ property. The owners must have been aware of the existence of the sewer line as it was referred to in plans they had had prepared in 2020.6 Mr Kline must have been aware of the existence of the sewer line as he knew there were siting and relaxation issues to be addressed.7 [33] On 26 May 2021 Mr Kline advised Mr Cross that the certifier could not give building approval until he had obtained a relaxation from the council.8 [34] Mr Kline, the draftsman and the certifier made a series of changes to the plans to accommodate the council’s requirement that the dwelling be offset 2 metres from the centre of the sewer line. The certifier suggested that Mr Kline liaise directly with the council’s referring officer. That officer told Mr Kline that the council would look favourably at the proposal if the distance between the front boundary and the garage was 6m. Following that conversation the draftsman made amendments and issue 11 drawings were submitted to council. All of this was done without input from the owners. To Mr Kline’s surprise the council approved the drawings without requesting further changes.9 [35] On 5 July 2021 Mr Kline advised Mr Cross that amended plans had been approved.10 He described the changes in the following way: Home had to be moved forward due to the rear sewage pipe, then keep 6m setback from front boundary to the garage door. The easiest way to achieve this was to remove 300mm from bed 2, bed 3 and bedroom 4 and tweak the powder room. I hope this is ok with you… Mr Cross is not happy with issue 11 drawings [36] Mr Cross and Mr Kline then engaged in a series of increasingly acrimonious emails. Viewed through the kindest lens possible, counsel for the owners characterised the exchange as the parties being at cross purposes with Mr Cross requesting specific changes to the plans and Mr Kline seeking answers to 12 questions before giving instructions to the draftsman. [37] At 9:03pm on Sunday 11 July 2021 Mr Cross wrote: … contracts can be broken and you are heading down the right path for that to happen.11 [38] At 3:35pm on 12 July 2021 Mr Kline wrote: 5 Ibid, p 862. 6 Ibid, p 981. 7 Ibid, p 836. 8 Ibid, p 863. 9 Ibid, p 867. 10 Ibid, p 867. 11 Ibid, p 342. -- 6 of 15 -- 7 … you’ve clearly been upset that I altered your plans (issue 6) to get the council approval. … I think it’s best if we ignore all of this ever happened …Clearly you’re upset with issue 11 plans so we will terminate these.12 [39] Meanwhile the owners made a complaint to the Commission. It appears that the information provided to the owners by the Commission prompted the owners to agree to a re-set of the contract. New beginnings [40] On 21 July 2021 Mr Cross indicated that the owners would start from the beginning, being council’s ‘denial’ of the issue 6 drawings. He asked for a variation with the changes and associated costs, indicating he knew that there would be a lot of things on the list and that there would be associated costs. He asked whether he sent a list of changes the builder would be happy to comply with the requests.13 [41] Another round of emails follows in which, if the parties were not at cross purposes,14 they were certainly focussed on different questions. Mr and Mrs Cross were each attempting to ensure that the house which was to be built would have all the elements covered by the prime cost allowances and provisional sum allowances on their wish list, while Mr Kline was keen to receive agreement to pay the draftsman to revise the issue 6 drawings in order to submit the revised application for building approval. [42] At 4:04pm on 12 August Mr Cross asked for a variation document with his allowances which total $105,660 inclusive of GST.15 Mr Kline sent the variation the next day in order that it could be forwarded to the bank for approval. [43] The owners’ attention then reverted to getting their original plans (issue 6) through council. Mr Cross discovered that the front setback could be 5400mm from the front boundary, not 6000mm as was the case on issue 11 of the drawings. In an email dated 23 August 202116 he indicated that he: would like to amend the current drawings so as to have the front door of the garage at 5500mm, this would then allow the removed space (200mm) in the bathroom, living and alfresco to be reinstated as per the original drawings. Our new loan has been preapproved by the bank with the new amount, however an updated figure will be required once you have sent the approved plans to your suppliers. [44] The draftsman prepared revised drawings, the owners noted there were some errors and as requested marked up changes and corrections.17 [45] On 12 September 2021 Mr Cross advised that the bank was expecting a new payment schedule due to increase in costs once the plans were sent to suppliers. Mr Kline agreed to supply it.18 12 Ibid, p 346. 13 Ibid, p 891. 14 As submitted by the owners’ counsel. 15 Hearing book, p 928. 16 Ibid, p 933 – 934. 17 Ibid, p 935. 18 Ibid, p 835. -- 7 of 15 -- 8 [46] On 29 September 2021 the owners indicated that they were happy for the revised plans to be submitted to the council.19 [47] The plans were submitted and Mr Kline sent the revised plans to the builder’s suppliers for pricing confirmation. The industry goes crazy [48] On 12 October 2021 Mr Kline advised the owners that ‘the industry is crazy at the moment’ and warned of delays in obtaining price confirmation.20 [49] Mr Kline asked the owners to pay an outstanding account from the certifier. Mr Cross queried the account.21 Another acrimonious email exchange followed. [50] Mr Kline subsequently provided examples of the pricing issues being faced by his suppliers. On 29 October 2021 he wrote: It’s absolutely mad, builders are going broke at an alarming rate, the market is fuelled by demand yet there’s a huge material and labour shortage…. I’ll organise to meet with you once I have the new pricing…22 [51] On 10 November 2021 the owners emailed Mr Kline to advise that they had received the approved and stamped documents from the certifier and only needed the revised progress payment schedule to take to the bank to request formal approval of the loan.23 [52] On 17 November 2021 Mr Kline wrote to the owners: The attached variation 2 is what you presented to the bank back in August. I’ve deleted the insulation, Certifier costs, drafting etc because it’s already been paid, which brings the new total from $105,660 to $90,500… The new contract amount is $783,931.68 and with the addition of the $90,500 comes to a grand total of $874,431.68 which is attached in the new Part B progress payment schedule as requested. …24 The owners engage a lawyer [53] The owners engaged a lawyer. [54] On 19 November 2021 in response to the lawyer’s observation that there appeared to be a fundamental misunderstanding between the parties in relation to the increase in the contract price, Mr Kline advised that approximately $94,000 of the new contract price was due to plan changes, but that it was not relevant to break this amount down from the previous pricing.25 19 Ibid, p 835. 20 Ibid, p 939. 21 Ibid, p 954. 22 Ibid, p 955. 23 Ibid, p 392. 24 Ibid, p 395. 25 Ibid, p 957. -- 8 of 15 -- 9 [55] By letter dated 14 December 202126 the owners’ lawyer proposed a way forward which involved: (a) the builder providing a variation which priced the changes from the issue 6 contract plans to the issue 8 plans that were submitted to council on 25 October 2021 (which would not include price increases since signing the contract); (b) the builder providing a variation setting out increases in the provisional sums totalling $90,500; and (c) the builder providing an updated payment schedule that includes the cost of the variations. [56] When Mr Kline returned from holidays he responded in detail on 28 January 2022.27 The way forward he proposed was that: (a) the owners acknowledge his email of 17 November 2021; (b) if the owners accept the new contract amount they requested he would provide a further variation and work could start; (c) the owners could not double dip by expecting to have their home built under cost and yet have the value of their property increasing since May 2021. [57] On 3 February 2022 the owners’ lawyer responded disputing various comments made by Mr Kline. She called on him to: (a) provide a specific breakdown of the price increase of $108,931.68; (b) identify the clause of the contract relied upon to justify the price increase.28 [58] On the evening of 3 February 2022 Mr Kline sent four emails marked without prejudice, to the owners’ lawyer: (a) at 6:35pm, (b) at 7:05pm, (c) at7:07pm; and (d) at 7:19pm. The first email in the series concluded ‘see you in QCAT’.29 [59] On 7 February 2021 the owners’ lawyer advised Mr Kline that the builder’s continuing refusal to respond to numerous reasonable requests for information amounted to an act of repudiation.30 [60] The parties engaged in some without prejudice negotiations which did not culminate in a settlement. 26 Ibid, p 422 – 428. 27 Ibid, p 429 – 432. 28 Ibid, p 964. 29 Ibid, p 965. 30 Ibid, p 440. -- 9 of 15 -- 10 The contract comes to an end [61] On 22 March 2022 the owners’ lawyer wrote to the builder terminating the contract. The termination was said to be based on the builder’s conduct and emails of: (a) 17 November 2021; (b) 28 January 2022; and (c) the series of emails sent at 6:35pm, 7:05pm, 7:07pm and 7:19pm on 3 February 2022.31 [62] The owners made a claim under the statutory insurance scheme on 8 April 2022. [63] The Commission decided that the contract had been terminated by mutual agreement.32 [64] The owners filed this review application. At the hearing counsel for the owners submitted that the builder repudiated the contract by: (a) seeking planning approval for drawings which the owners had never approved and would never approve, without complying with clause 11.2 of the contract by obtaining a variation of the contract to comply with the Council’s requirement; and (b) seeking to charge for increases to the cost of the contract to reflect increased costs of materials, in circumstances where the contract did not permit it to do so. The task before me [65] In a review application the tribunal must conduct a fresh hearing on the merits in order to reach the correct or preferable decision. [66] I am not bound by the rules of evidence but must observe the rules of natural justice. [67] The owners need only establish that they properly terminated on one of the two alleged repudiations. I have first addressed the allegation that the builder repudiated by seeking to charge for increases to the cost of the contract to reflect increased costs of materials, in circumstances where the contract did not permit it to do so, that being the basis relied on at the time the contract was terminated by the owners. A new contract price? [68] It is not easy to reconcile the amounts referred to by Mr Kline in his email of 17 November 2021. He acknowledged as much in cross-examination. In his email he says that the new contract amount is $783,931.68 (the original fixed price component of the contract sum was $606,271). Despite the fact that the attached variation 2 was unchanged from $105,660 as presented in August, he said that $90,500 had been added to the new contract amount of $783,931.68 to give a grand total of $874,431.68 which was the total he used in the new Part B progress payment schedule. [69] It is common ground that the ‘new contract amount’ proposed by Mr Kline on 17 November 2021 included an amount that reflected the increase in cost of materials 31 Ibid, p 443 – 445. 32 Ibid, p 558, [51]. -- 10 of 15 -- 11 between May and November 2021 and that Mr Kline could not separate the part of the increase that related to changes made to the contract plans for submission to council on 29 September 2021 from the part of the increase that related to the rising cost of materials. This means that there is no breakdown of the $177,660.68 difference between the original fixed price component of the contract sum and the ‘new contract amount’ proposed by the builder. [70] Variation 2, which was included in the email of 17 November 2021 has no role to play in explaining the difference of $177,660.68. It relates to the owners’ changes in selection of prime cost and provisional sum allowance items. Although it referred to clauses 13.3, 13.6c and 20, it is obvious from the contents of the variation which is headed ‘details of prime costs & provisional sum variation allowances’ that the amount claimed cannot have been properly claimed pursuant to clause 13 as it has nothing to do with resolution of any errors, ambiguity or inconsistency in or between the contract documents. It clearly relates to the changes in the selections made by the owners in their wish list of prime costs and provisional sum items. [71] I reject the submissions for the Commission, endorsed by the builder, that the builder was entitled to ‘ask whatever price’ it wanted in exchange for agreeing to vary the contract. I also reject the submission that a term can be implied to the effect that the builder had an unconstrained right to ask any price it wanted for a variation that the parties had agreed would be made on 21 July 2021. A term cannot be implied if it is contrary to the express terms of a contract. This contract expressly sets out the circumstances in which the contract price was subject to change. Those circumstances are set out in clauses 9, 10, 11, 13, 15, 16, 19, 20, 21 and 23. [72] The builder referred to clauses 11, 13 and 20 in its correspondence. In order to justify its claim under the contract for an increase of $177,660.68 in the fixed price component of the contract sum the builder had to prove: (a) that the owners had requested an omission, addition or change to the works (clause 20); or (b) that extra work was required to comply with requirements of the local authority (clause 11); or (c) that there was an error, ambiguity or inconsistency in or between the contract documents the resolution of which called for extra work (clause 13). [73] There is no doubt that there were changes made between issue 633 and issue 834 of the plans and that the parties had agreed that changes would be made when on 21 July 2021 Mr Cross accepted Mr Kline’s offer to revert to the issue 6 version of the plans. The owners knew there would be costs associated with the changes. [74] However, no record was kept of all the changes. They included: (a) offsetting the house 2 metres from the centre of the sewer line to comply with requirements of the local authority which necessitated changes to the footing design; 33 The contract plans. 34 The second set of plans approved by the Council. -- 11 of 15 -- 12 (b) undoing changes made unilaterally by the builder in the course of creating version 11 of the plans which included having the front door of the garage at 5500mm and reinstating 200mm to the bathroom, living and alfresco; (c) changes required by the owners to correct errors in the plans issued for review on 26 August 2021; and (d) changes requested by the owners which in some instances were to restore changes made in the process of creating issue 11. [75] It became apparent during cross-examination that Mr Kline was not aware of the extent of the changes that had been made to produce the issue 11 plans until they were pointed out to him. They were not as simple as re-siting the house and removing 300mm from bed 2, bed 3 and bedroom 4 and tweaking the powder room. The overall floor area had been reduced by 20m 2 : not only had the area of bedrooms 2, 3 and 4 and the powder room been reduced but also the size of the kitchen-dining area and walk in pantry had been reduced. The owners cannot be held responsible for the ‘unwinding’ of the changes made unilaterally by the builder. [76] The builder did not give the owners a variation document identifying the work it believed was required by the changes to the plans between issue 6 and issue 8 as required by clause 20. [77] Save for noting the challenges faced by the building industry due to rapidly increasing prices when he sent the email on 17 November 2021, Mr Kline made no effort to explain the difference between the original fixed price component of the contract sum and the ‘new contract amount’. [78] The original fixed price component of the contract sum was based on prices supplied to the builder by its suppliers and subcontractors based on the issue 6 plans. The ‘new contract amount’ was also based on prices supplied to the builder by its suppliers and subcontractors, but based on the issue 8 plans. Mr Kline’s evidence was that approximately $94,000 of the new contract price was due to plan changes. If approximately $94,000 of the new contract price was due to plan changes, then arithmetic indicates that the difference of approximately $83,660 must be due to something other than changes reflected in the issue 8 plans. The only other reason provided by Mr Kline was that the price increase was due to the increase in cost of materials required to construct the home in accordance with the issue 8 plans. [79] Although the builder provided no evidence to support Mr Kline’s statement that approximately $94,000 of the new contract price was due to plan changes, if I assume that approximately $94,000 of the new contract price was due to plan changes, then I am left with no explanation for the balance of the difference between the original fixed price component of the contract sum and the ‘new contract amount’, other than it must be due to the increase in material costs. [80] In cross-examination Mr Kline accepted that in ‘normal circumstances’ a builder is not entitled to charge for material cost increases. Undoubtedly the circumstances of rapidly rising costs of materials and labour in the construction industry which flowed as a consequence of COVID-19 were not normal. However, such abnormal circumstances are not contemplated in this contract as a reason for increasing the contract price. -- 12 of 15 -- 13 [81] The Commission submits that the new contract price proposed by the builder included cost increases that did not entirely relate to the amendments sought by the builder. The Commission’s submissions were adopted by the builder’s counsel. I accept those submissions. Further, the Commission submits, endorsed by the builder’s counsel, that the contract did not give the builder any entitlement to claim or demand payment of additional money over and above the agreed contract price in respect of increase in prices of materials. I accept those submissions. [82] The owners’ lawyer made a number of requests35 for a variation document identifying the work required by the changes to the plans excluding price increases since signing the contract. The builder did not respond to those requests by providing an explanation. Mr Kline did not think it was relevant to provide that information. It was relevant because whether the claim for the increase was made pursuant to clause 11, 13 or 20 of the contract, or any other clause that might have been relied on by the builder, clause 20 of the contract required the builder to prepare the variation document identifying the work required, the price of the variation and the change to the contract price and a reasonable estimate of any delay to be caused by the variation. [83] I am satisfied that: (a) in presenting the new contract amount without any detailed explanation of the work to be carried out for that amount; (b) by including approximately $83,660 in the new contract amount that could only have been due to the increase in cost of materials required to construct the home which the builder acknowledged it had no entitlement to claim; (c) by subsequently refusing on a number of occasions to provide the owners’ lawyer with any explanation of the breakdown or contractual justification for the new amount; (d) by refusing to commence work until the owners agreed to the new contract amount; and (e) by saying ‘see you in QCAT’ the builder evinced an intention to no longer be bound by the contract and demonstrated that it did not intend to fulfill the contract in a manner substantially consistent with its obligations. [84] Accordingly, I find that the builder repudiated the contract. I find that the owners accepted the repudiation and validly terminated the contract. [85] For completeness, I note that saying ‘see you in QCAT’ in the context of the many acrimonious exchanges between the owners36 and Mr Kline, was not in itself sufficient to amount to repudiatory conduct. There were numerous intemperate emails in evidence, sent by both Mr Kline or Mr Cross, often in the early hours of the morning or late at night, which could not be regarded as being consistent with making every effort to keep the contract on foot. However, coming at the end of a protracted negotiation during which the parties were attempting to reach a mutual agreement to 35 19 November 2021, 14 December 2021 and 3 February 2022. 36 But not their lawyer, who demonstrated courtesy and professionalism in all her correspondence. -- 13 of 15 -- 14 terminate the contract, it signalled that the builder did not intend to fulfill its obligations under the contract. Were the owners ready, willing and able to perform their obligations at the time of recission? [86] In the letter terminating the contract sent on 22 March 2022 the owners’ lawyer wrote that the owners remained ready, willing and able to perform their obligations. That statement was challenged in submissions made by lawyers who had been engaged by the builder after the hearing. [87] It was submitted that in circumstances where the contract plans were not (and could not be) approved, the owners were not ready, willing or able to perform their obligations under the contract. This submission relies on an argument that the owners were in breach of essential obligations under the contract, in particular: (a) by failing to disclose the easement in breach of the warranty in clause 6.3; and (b) by supplying inaccurate plans in breach of the warranty in clause 13.2. [88] Counsel for the owners submitted that these submissions had the capacity to work fundamental and serious unfairness to the owners as the builder had not run these arguments as a positive case prior to or during the hearing. This meant that he did not, as he would have done if the argument was signalled before or at the hearing, cross- examine Mr Kline about the documents in the Hearing Book that showed the 225mm diameter sewer line running 2m from the rear boundary of the owners’ property or the plans the owners had had prepared in 2020. I accept those submissions. The rules of natural justice do not permit an argument that was obviously available to a party from the outset of the proceedings to be made for the first time in written submissions. [89] In any case, the facts indicate the argument was not sustainable. Any breach that the owners may have been responsible for37 had been cured by 10 November 2021 when the owners advised Mr Kline that they had received the approved and stamped documents from the certifier. The owners demonstrated their willingness to proceed by asking (through their lawyer) for the price of the variation between the issue 6 plans and the issue 8 plans. Builder’s unilateral application for building approval [90] Having found that the builder repudiated the contract by seeking to charge for increases to the cost of the contract to reflect increased costs of materials, in circumstances where the contract did not permit it to do so, there is no need for me to make findings as to whether it also repudiated by seeking planning approval for drawings which the owners had never approved and would never approve, without complying with clause 11.2 of the contract by obtaining a variation of the contract to comply with the Council’s requirement. [91] However, I observe that there were arguably two occasions when it might be said that the owners made a conscious choice to affirm the contract, knowing that the builder had sought planning approval for drawings which they had not approved: 37 I make no finding one way or the other. -- 14 of 15 -- 15 (a) on 21 July 2021 when Mr Cross indicated that the owners would start from the beginning and asked for a variation with the changes and associated costs; and (b) on 29 September 2021 when the owners indicated that they were happy for the revised plans to be submitted to the council. Orders [92] The Queensland Building and Construction Commission’s decision of 23 May 2022 rejecting the owners’ request for assistance under the statutory insurance scheme on the basis that the owners had not validly terminated the contract on the default of the contractor is set aside. [93] The owners are entitled to assistance under the statutory insurance scheme. -- 15 of 15 --