Allen v Queensland Building and Construction Commission [2023] QCATA 66

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Allen v Queensland Building and Construction Commission [2023] QCATA 66 PARTIES: REECE JUSTIN ALLEN AND CHANTELL RENEE MARIA TAYLOR (applicants/appellants) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent) APPLICATION NO/S: APL091-20 ORIGINATING APPLICATION NO/S: GAR136-18 MATTER TYPE: Appeals DELIVERED ON: 15 June 2023 HEARING DATE: 17 December 2021 HEARD AT: Brisbane DECISION OF: Judicial Member D J McGill SC ORDERS: So far as the appeal was on questions of law, the appeal is dismissed. Leave to appeal on questions of fact or mixed fact and law granted, limited to the issues of whether the appellants were in the circumstances entitled to terminate the building contract at common law for repudiation, or for sufficiently serious breaches of non-essential terms; otherwise leave to appeal refused. Appeal by leave dismissed. The appellants pay the respondent’s costs of and incidental to the appeal, on the scale appropriate for a matter in the District Court of Queensland, unless within twenty-eight days from the date of this decision the appellants provide to the associate to the Deputy President and to the respondent submissions in writing as to why such order should not be made. If such submissions are provided, the respondent may provide submissions in response to the associate and to the appellants within twenty-eight -- 1 of 68 -- 2 days from receipt of the appellants’ submissions. Subject to any further directions, the question of costs will then be decided without an oral hearing in accordance with the Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 32. CATCHWORDS: BUILDING ENGINEERING AND RELATED CONTRACTS – REMEDIES FOR BREACH OF CONTRACT – POWER TO SUSPEND OR DETERMINE – termination under contract – termination at common law – whether right to terminate arisen – whether substantial breach of contract – whether builder repudiated – whether substantial breaches of non-essential terms whether right to claim on statutory insurance Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 147(2) Queensland Building and Construction Commission Act 1991 (Qld) Part 5 Advance National Services Pty Ltd v Daintree Contractors Pty Ltd [2019] NSWCA 270 Aurizon Network Pty Ltd v Glencore Coal Queensland Pty Ltd [2019] QSC 163 Botros v Freedom Homes Pty Ltd [2000] 2 Qd R 377 Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd [2022] QCA 266 Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87 Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 CNY17 v Minister for Immigration and Border Protection [2019] HCA 50, (2019) 268 CLR 76 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Coulton v Holcombe (1986) 162 CLR 1 DCT Projects Pty Ltd v Champion Home Sales Pty Ltd [2016] NSWCA 117 Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 EMClarity Pty Ltd v BSO Network Inc [2022] QCA 177 Ergon Energy Corporation Ltd v Rice-McDonald [2009] QSC 213 FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202 -- 2 of 68 -- 3 Isbester v Knox City Council (2015) 255 CLR 135 Re JRL, ex parte CJL (1986) 161 CLR 342 Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48 Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2012] 2 Qd R 114 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, (2007) 233 CLR 115 Mazelow Pty Ltd v Herberton Shire Council [2003] 1 Qd R 174 Michael Wilson & Oakey Coal Action Alliance Inc v New Acland Coal Pty Ltd [2019] QCA 184 Mousa v Vukobratich Enterprises Pty Ltd [2019] QSC 49 Partners Ltd v Nicholls (2011) 244 CLR 427 R v Deputy Industrial Injuries Commissioner, ex parte Moore [1965] 1 QB 456 Sekler v Kim Carroll Investment Pty Ltd [2021] QSC 312 Smits v Cugola [2022] QCA 262 Tullock Brae Pty Ltd v Environmental Protection Equipment Pty Ltd [2021] QSC 213 Vision Eye Institute Ltd v Kitchen [2014] QSC 260 APPEARANCES & REPRESENTATION: Applicant: R J Allen in person Respondent: S E Seefeld, instructed by the respondent REASONS FOR DECISION [1] The appellants made a claim to the respondent in relation to incomplete domestic building work under the home warranty insurance scheme in the Queensland Building and Construction Commission Act 1991 (Qld) (“the Act”) Part 5. On 19 March 2018 the respondent rejected the claim, on the ground that the appellants had not validly terminated the contract with the builder. The appellants sought a review of that decision by the Tribunal, and on 27 February 2020 the Tribunal confirmed the decision of the respondent.1 The appellants now appeal against that decision of the Tribunal. There are separate proceedings in the Tribunal in relation to a claim for defective work. [2] The appellant is entitled to appeal to the Appeal Tribunal on a question of law, but requires the leave of the Appeal Tribunal to appeal on a question of fact, or of mixed fact and law.2 As a general proposition, when leave to appeal to the Appeal Tribunal 1 For convenience I shall refer to Mr Allen and Ms Taylor as “the appellants” and to the Commission as the respondent. The Tribunal was constituted by a Senior Member, but for convenience I shall refer to him as “the Member”. I shall use the term “the builder” to refer to either the building company which was a party to the contract, or the director of the company who gave evidence. 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”) s 142. -- 3 of 68 -- 4 is required, it will be granted only where there is a reasonable argument that the decision was attended by error and an appeal is necessary to correct a substantial injustice caused by that error, or where the appeal raises a question of general importance upon which further argument and a decision of the Appeal Tribunal would be to the public advantage.3 An Appeal Tribunal will not usually disturb findings of fact on appeal if the evidence is capable of supporting the finding, and it is not contrary to compelling inferences.4 If leave to appeal is granted, the appeal is by way of rehearing so far as it is against a decision on a question of fact, or of mixed fact and law: the QCAT Act s 147. Otherwise it is an appeal which will only correct an error of law: the QCAT Act s 146.5 Additional evidence [3] By an application filed in the appeal proceedings on 13 November 2020, the appellants seek to rely on additional evidence in the appeal, namely two additional reports by an expert who gave evidence for the appellants at the hearing, and an affidavit of Mr Allen. The Appeal Tribunal proceeds on the basis that the usual tests for fresh evidence, as set out for example in Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 at 408, must be met for such evidence to be admitted on appeal under the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”) s 147(2), at least in relation to additional evidence relevant to an appeal on a question of fact, or of mixed law and fact. [4] The appellants submitted that, because of the wording of s 147(2), which in terms conferred an unfettered discretion on the Appeal Tribunal, such an approach was too confining, and sought to fetter the statutory discretion. It was submitted that, in Clarke (supra), Thomas J distinguished between an appeal from a judgment after hearing a cause or matter upon the evidence and hearing an appeal generally, on the basis of the wording of O 70 r 10 of the then Rules of the Supreme Court. [5] The reason why additional evidence on appeal is confined as set out in Clarke (supra) in cases where there has already been the opportunity to put forward evidence at first instance is that otherwise the significance of the first proceeding is diminished, and it becomes just a preliminary to an appeal, where the full range of evidence is mounted.6 That is contrary to the efficient use of resources, and the principle that there should be an end to litigation, both of which apply as much to the Tribunal as to a court. So parties to a proceeding in the Tribunal are expected to put forward full evidence at a hearing on the merits, and it is appropriate that the discretion in s 147(2) be exercised in accordance with the fresh evidence rules in such cases. So far as this appeal is concerned, I propose to apply the fresh evidence rules to the additional evidence sought to be relied on by the appellants. [6] As to the first supplementary report of the appellants’ expert witness, that was sought and prepared after the decision and reasons of the Tribunal were available. The report largely consists of the expert’s reconsidering and confirming the opinions 3 Crime and Corruption Commission v Lee [2019] QCATA 38 at [12], citing appellate authority. See also Campbell v Queensland Building and Construction Commission [2021] QCATA 34 at [17]. 4 Craig v Mark Kelada Auto Sellers [2016] QCATA 48 at [13]. 5 See also Pivovarova v Michelsen (2019) 2 Q R 508 at [4], [9]. It is an appeal in the strict sense: Albrecht v Ainsworth [2015] QCA 220 at [94]. 6 Coulton v Holcombe (1986) 162 CLR 1 at 7. -- 4 of 68 -- 5 expressed in earlier reports which were before the Tribunal. This says nothing of consequence, and should not be admitted on appeal. The witness has already given that evidence. One part referred to some remedial work in relation to some windows, which had not been done at the time of the hearing, and said that when it was done it showed that windows had been installed without proper under-sill window flashing, and that one window had not been properly sealed. This could have been ascertained before the hearing if the windows had been removed. Further, as appears from the analysis later, this issue is not of significance to the outcome of the proceeding, and at best provides confirmation of evidence of a defect in construction.7 No part of this report will be admitted. [7] As to the further affidavit of Mr Allen, this covered a number of matters. One was said to be of certain events which occurred after the hearing, which were said to be relevant to his credit, which had been attacked during cross-examination. This is a collateral issue. One was an email about which he was cross-examined, and which he spoke about in “re-examination”, but which neither party tendered; that was their decision as to the conduct of the proceeding, and they are bound by it. It does not appear from the reasons of the Tribunal that the outcome of the matter turned on, or was significantly influenced by, the Member’s views of the credibility of Mr Allen. [8] The appellants seek to put in evidence additional photographs, which they concede existed at the time but were not put in evidence, as they are said to be relevant to the fair determination of the appeal and to correct an injustice. Some photos concern a particular defect complained about by the appellants, and raised at the hearing, but do not address the ground on which that issue was dealt with by the Tribunal, which was that there was a defect but the builder was seeking to address it, so that it was not a basis to terminate the contract: [70]. Some paragraphs concerned the work required to complete the pool and surrounds at the house. This sort of material was available at the time of the hearing but not put in evidence. This is what the approach in Clarke excludes. [9] The appellants sought to put in evidence a document from the Australian Bureau of Statistics as to the number of deaths in Australia associated with steps or stairs. Apart from the fact that this evidence was obviously available at the time of the hearing, it is irrelevant and inadmissible. What the appellants rely on is that there are certain requirements for stairs set out in the National Construction Code, not why they may have been put there. [10] The appellants also sought to rely on evidence of an encroachment by the builder across the boundary of the neighbouring property. Mr Allen in his affidavit said that after the hearing he had another survey done which confirmed his observation that the visible footings were over the boundary, an encroachment of 3 – 8 cm. In September 2020 building work started on the neighbouring property, which involved demolition and some excavation. This revealed that under a previous concrete surface beside the boundary there was a more substantial encroachment, about 7 metres long, up to 1 metre deep and .6 metre wide. Part of this sat on a pier which also encroached in part over the boundary. Subsequently the builder of the adjacent 7 The evidence of the builder was that the work on the installed windows was not finished at the time of termination of the contract: Day 2 p 69. On that basis, it was really incomplete work. -- 5 of 68 -- 6 property removed the encroachment of the foundations; the intention is that the encroaching pier be left in place, as it is below the level of the building works on the adjacent property. [11] Evidence of what was discovered in October 2020 satisfies the first test in Clarke (supra), since it could not be found without the demolition of a concrete driveway on the adjacent property, and it is apparently credible. Whether it should be admitted depends on whether it has an important influence on the issue of whether the building contract was validly terminated by the appellants. I will admit it for that purpose. The second additional report by the expert witness relates to the encroachment, and would be admissible if it said anything on which expert evidence is required. What is relevant for present purposes is that there was a breach of a contractual requirement that there be no encroachments. That there was an encroachment was proved by the evidence of Mr Allen and of the surveyor, to the extent that it is not obvious from the photographs. This is not something on which evidence from an expert in building construction is necessary; his report is therefore unnecessary and would be inadmissible in a court. I will not admit it. Grounds of appeal – apprehended bias [12] The appellants in the Annexure to the Application for leave to appeal or appeal relied on a failure to accord natural justice, and apprehended bias, on the part of the Tribunal, and also alleged 79 errors of law, and 43 errors of fact. It is appropriate to deal first with the issues of apparent bias,8 and failure to accord natural justice, because if established they are likely to lead to a rehearing before a different member. The test for apprehended bias is whether, in all the circumstances, a fair- minded lay observer with knowledge of the objective facts might entertain a reasonable apprehension that the Tribunal might not bring an impartial and unprejudiced mind to the resolution of the issues in the proceeding.9 [13] Some of the matters relied on as showing apparent bias were things that happened during the hearing, but no application was made for the member to disqualify himself. The appellant relied on the statement by Sofronoff P in Oakey Coal Action Alliance Inc v New Acland Coal Pty Ltd [2019] QCA 184 at [68] as showing that what happened during the hearing could be relied on if further statements in the reasons give rise to a fresh apprehension of bias. His Honour went on to consider the background to the reasons, including what was said at the hearing, before concluding that the test for apprehended bias was met: [103]. I accept that the appellants can rely on matters that happened at the hearing, indeed on all the circumstances of the matter.10 [14] The first matter relied on was that at the hearing the Member criticised the decision of another Member not to join the builder as a party to the proceeding. Because the 8 Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 at [2], [117]. 9 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [6]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [31]. This test applies to a proceeding in the Tribunal: Chandra v Queensland Building and Construction Commission [2014] QCA 335 at [83]. 10 CNY17 v Minister for Immigration and Border Protection [2019] HCA 50 at [135], where Edelman J also cautioned against assessing comments in the reasons against an assumption of a reasonable apprehension of bias. -- 6 of 68 -- 7 builder is subject to a statutory indemnity in favour of the respondent11 it would commonly be appropriate for the builder to be joined, but an issue can arise if the application for joinder is delayed; in such circumstances there will be a tension between the efficiency of conducting just one proceeding, and the prejudice associated with the delay, and how that is to be resolved is a matter on which minds may reasonably differ.12 The statement was made in a context where the Member appears to have been concerned about the respondent’s witness being difficult, and may have reflected an assumption that the witness would have been more cooperative if the builder had been joined. The comment is understandable, and I do not regard it as a matter of any significance in relation to apparent bias. [15] Next the appellants relied on what was said to be a statement that claims should only be available against the respondent under the insurance scheme if the builder were insolvent. It was submitted that this indicated that the Member believed that the appellants should not be entitled to claim or to pursue the proceeding. The first difficulty with that submission was that it is not what the Member said. Mr Allen was being cross-examined about the significance of progress payments, and accepted that the amount of a progress payment did not affect the amount the builder ultimately was paid, just the timing of the payment: Day 1 p 85. He then added the qualification that “It does not help if the builder goes broke” because in those circumstances the overpayment will not be recoverable in practical terms. The Member then commented “That’s why you have insurance.” That does not say or imply that insurance should be available only if the builder is insolvent. The submission is based on a false premise. [16] I also do not accept that apparent bias would have been shown if the Member had offered the opinion that the Act should permit claims only if the builder were insolvent. It is clear from the reasons that the Member was well aware of the terms and operation of the relevant Part of the Act. It is commonplace for judicial officers to comment on or to criticise the wording or operation of legislation relevant to matters which come before them.13 This does not suggest apparent bias, as long as they apply the Act as it is. [17] The appellants also relied on what was said to be a gratuitous apologia about this statement, calculated to defuse the earlier remark, and drew a parallel with the comments of the Land Court Member discussed by Sofronoff P in the New Acland Case (supra) at [93] to [96]. Again, this is not what happened. In re-examination Mr Allen said that it seemed to be implied that one could terminate only if the builder goes broke: Day 1 p 103. Someone, apparently the Member, said “I don’t think anyone is contending that.” Counsel for the respondent promptly said that he was certainly not contending that. Mr Allen then said “No-one is contending that. All right.” The Member then said that Mr Allen was the only one who raised that when he was talking about the progress claims, but said nothing about his views, nor 11 The Act s 71. 12 Just GI Pty Ltd v Pig Improvement Co Aust Pty Ltd [2001] QCA 48 at [17]. I assume the builder was not a necessary party, as discussed in China First Pty Ltd v Mt Isa Mines Ltd [2018] QCA 350, as a person affected by the decision because of s 71: Lange v QBSA [2012] 2 Qd R 457 at [73]. This issue has not arisen in this matter. 13 See for example MNM Developments Pty Ltd v Gerrard [2005] 2 Qd R 515 at [27]. -- 7 of 68 -- 8 sought to modify them. Again, the submission is based on a false premise. The reasons of the Member showed clearly that he was aware of the operation of the Act. [18] The appellants also relied on the Member having said to the witness for the respondent, a person associated with the builder, that it was a difficult site and a difficult job.14 They said this suggested that the Member believed that the contractor did not need to complete the contract work in the time agreed. There were also complaints about the Member having said he could not help having to call the witness back for further cross-examination on the third day of the hearing,15 thereby impliedly criticising Mr Allen for the length of and approach to his cross- examination. This was said to be expressing sympathy for the witness at the expense of the appellants. The Member was also criticised for failing to exclude unresponsive answers by the witness during cross-examination, despite objection; and by saying to the witness that he knew that the witness had a lot of things to say and was unhappy about all of this. [19] I have already mentioned that the witness was difficult, and was at times uncooperative under cross-examination. At one point the Member sought to calm down both the witness and Mr Allen, who were said to be both becoming heated, and asked them not to talk over each other.16 At the same time he asked the witness to confine his answers to the questions asked. I noted from the transcript that the witness had a tendency to give extended answers, which sometimes drifted off topic. [20] Tribunal members often have to deal with difficult witnesses who are not happy to be giving evidence, and a member may well feel that it is more helpful to appear sympathetic and to encourage the witness to cooperate rather that to adopt a more strict and hostile approach, which may simply prove counter-productive. In my experience taking a strict approach to unresponsive answers will often just waste time and provoke the witness more. There was no jury, and unresponsive answers can easily be ignored.17 I do not consider that a well-informed lay observer would have taken what occurred with this witness as more than an attempt by the Member to complete the witness’s evidence as efficiently as possible; it would not have suggested apparent bias. [21] In written submissions the appellants complained that the Member had answered the questions for this witness, and referenced some intervention by the Member in questioning of the witness about a certificate showing unsatisfactory aspects of the frame inspection, with a view to showing that further work done by the builder breached a statutory prohibition. The certificate spoke for itself, the questioning required to establish the appellants’ point was quite limited, and most of Mr Allen’s questioning on this topic was unnecessary. It is unsurprising, and appropriate, that the Member was trying to move things along. It does not suggest bias. [22] The appellants complained of a number of matters in the reasons for decision. It was said that the Member had been critical of hearsay evidence from Mr Allen, but 14 Day 2 p 56. If it comes to that, I can see from the architect’s drawings that this was no more than a statement of the obvious. 15 Day 2 p 110. 16 Day 2 p 48, something I have had to do myself countless times. 17 See the comment at Day 2 p 45 lines 14-16. -- 8 of 68 -- 9 had accepted and acted on hearsay from the respondent. Reference was made to the reasons at [145], [146], which as I read them are referring to three separate matters. Evidence from Mr Allen that he was suspicious about the quality and structural soundness of parts of the building does not prove anything, particularly when he had lost confidence in the builder.18 The quote from paragraph 60 of the affidavit does not appear to me to be relevant to anything; what might be relevant was whether the superintendent did in fact issue such a variation. [23] The problem with hearsay is that its reliability can vary enormously. In some circumstances evidence which is hearsay will be obviously reliable, or quite likely to be accurate, but in other circumstances there may be doubt about it, even substantial doubt. Hearsay on hearsay may easily compound these problems. In circumstances where the rules of evidence do not apply, it is a matter for the judgment of the Tribunal to decide what weight, if any, to give to any particular piece of evidence.19 That some of the evidence put forward by the appellants was not given any or much weight does not, in itself, suggest apparent bias. Similarly, that the respondent’s witness gave evidence of things he had been told does not in itself suggest apparent bias, particularly if the circumstances are such that it was likely that the people informing him of things would have been at least trying to be honest and accurate. When the reasons are considered as a whole, I do not consider that there is such a disparity between the way in which material not within the rules of evidence put forward by the appellants and that put forward by the respondent was treated as to suggest to a well-informed lay observer that there was bias against the appellants. [24] It was submitted that the finding that particular evidence of Mr Allen was unhelpful was used to justify a finding that all of his evidence about the work was of little assistance.20 This was not referenced, and I have not noticed the latter finding in the reasons. It is also difficult to see that there was such a difference in treatment of the evidence of Mr Allen and of that of the respondent’s witness as to suggest bias against the appellants. Where the evidence of witnesses is in conflict, it is inevitable that the evidence of one will be preferred to the other, but that does not show bias. It seems to me that the Member was cautious about the evidence of the respondent’s witness21 but the Member did accept some of his evidence, in a way which was not obviously inappropriate. [25] The appellants also submitted that apparent bias had been shown by the failure to accept the evidence of their expert witness, who was the only expert and independent witness; it was said that his evidence was largely ignored, or was not applied.22 The evidence of the appellants’ expert was referred to at times by the Member, generally in terms indicating that the Member accepted what was said by the expert.23 At other times the evidence of the expert was referred to, but the issue was not expressly resolved, because the Member decided the matter on another 18 Day 1 p 52: confidence was lost by 13 July 2017. 19 R v Deputy Industrial Injuries Commissioner, ex parte Moore [1965] 1 QB 456 at 488, which also said that rules of evidence are not part of natural justice. 20 Submissions in writing para 92. 21 See for example reasons [70], [130]. 22 Submissions in writing para 94. 23 See for example paragraphs [62], [65] -- 9 of 68 -- 10 basis.24 There was an instance where the Member accepted the evidence of a statement from the gasfitters involved about the significant of a fitting being left uncrimped in preference to the evidence on that subject of the expert, which strikes me as unsurprising in the circumstances: [132].25 [26] There was another occasion where the evidence of the manufacturer of particular sarking as to the suitability of a particular product was accepted in preference to the evidence of the expert, where the evidence of the expert was based on the interpretation of the manufacturer’s data sheet: [127]. The expert said that the sarking installed did not comply with the relevant part of the National Construction Code because it was not vapour permeable sarking.26 A 2014 technical data sheet shown in the report described it as a Medium Vapour Barrier, and the report does not identify any statement that it is impermeable to vapour. It had a vapour transmission of 1.44 grams per square metre, which the expert said was very low. The expert identified another sarking which was described as a vapour permeable membrane, and as having a very high water vapour transmission rate. Clearly it is much more vapour permeable, but I have difficulty in seeing how the expert concluded that the one used was not a vapour permeable sarking. [27] A copy of the National Construction Code in Appeal Book Vol 12 does not include any definition of vapour permeable sarking in Part 1.1, I have not found one elsewhere in it, and the expert did not identify one. In the absence of a definition, sarking is vapour permeable if it is not impermeable to water vapour, which the sarking installed was not. The fact that other sarking is more vapour permeable, and that the expert regarded it as more suitable in Brisbane, is irrelevant to whether there was a breach of the Code. Apart from this, the builder said that the product in fact installed was more vapour permeable than was shown by the 2014 data sheet, and exhibited a 2017 data sheet which showed a higher water vapour transmission rate.27 This point was not dealt with by the Member, but it would have been open to reject the expert’s conclusion on this ground also. [28] I have not identified any occasion when the evidence of the respondent’s witness was preferred to the evidence of the expert where there was a direct conflict identified by the Member, and the Member acknowledged that there was some force in the appellants’ submission that the former was not independent: [123].28 There was some of the expert’s evidence which was not referred to expressly in the reasons, apparently because the Member did not regard it as important to the 24 See for example paragraph [65], where the Member referred to the explanation offered by the expert for how the problem with the ensuite door arose, and want on to say at [66] that it was not necessary to decide this, since it was clear that a mistake had been made, but the true issue was decided on the basis that the builder was working with the superintendent to resolve the problem: [67]. See also [73], where his evidence on a different issue was treated in a similar fashion. 25 One would expect a gasfitter to know more about gasfitting than an expert in building in general. Besides, the passage quoted at [130] makes sense. 26 Day 3 p 36; National Construction Code 2016 Part 3.5.3.2(b)(iii), quoted in his supplementary report p 9, Appeal Book p 2563. 27 Under cross-examination the expert said that that product also did not comply with the code, he said because the manufacturer’s website said something different, which I do not understand: Day 3 p 39. 28 There was at least one direct conflict between the expert and Mr Allen. The expert said that an issue with the concrete hobs (discussed below) was an aesthetic issue – Day 3 p 48 – something Mr Allen denied: Day 1 p 77. -- 10 of 68 -- 11 resolution of the issues to be decided. The expert spoke about relatively few of the issues raised by the appellants.29 I do not regard the treatment of the evidence of the expert as suggesting apparent bias; the treatment seems to me to be consistent with the general basis on which the Member resolved the matter. [29] The appellants submitted that the Member said at [94] that the appellants had made a particular submission, when that submission had not been made. As I read [94], the Member was saying something about the effect of the appellants’ submissions, rather than just quoting a submission. This relates to the issue of overclaiming, where the submissions of the appellants were that, in view of the statutory context of a payment claim, to overclaim at all was a substantial breach, regardless of the response to the claim.30 I am not sure that the submission has the effect attributed to it by the Member in [94],31 but I do not consider that such a characterisation of the appellants’ submissions provides any indication of apparent bias. [30] The appellants complain that Mr Allen was not afforded appropriate respect as a litigant during the hearing. The submissions of the appellants do not explain the basis for this submission, even under the heading “Lack of respect for the applicants as litigants” on p 21, where the matters discussed to paragraph [206] all relate to the reasons for the decision. At p 30 there was a passage cited from the hearing when the Member stopped Mr Allen from taking the respondent’s witness through the terms of the building contract and aspects of the law, such as the National Construction Code. Certainly it was relevant to show that there were breaches by the builder, but that is shown by proving that the builder did, or did not do, particular things. That those acts or omissions amounted to breaches of contract, or of law, were questions of law, on which the views of the witness, indeed any witness, were irrelevant. The witness’s knowledge of the terms of the contract, or his acceptance of its terms in the witness box, was irrelevant. I agree with the Member that such cross-examination was a waste of time.32 It was appropriate for him to stop it. It is not disrespectful or inappropriate to prevent a litigant in person from wasting time, and it does not suggest apparent bias. [31] The appellants complained that the Member had been critical of the appellants or of Mr Allen in his reasons, in various respects: (a) Making submissions in reply that go further than the evidence: [65]. This concerned an attack on the evidence of the witness for the respondent as to how it came about that the ensuite door was too narrow, where it was said that the evidence of the witness that the architect had nominated a commercial 29 Apart from comments on damage from vandalism, three issues in the first report, and six in the second report. 30 See submissions at first instance, 15 July 2019, paragraphs [173] to [182]. 31 The Member’s point was I suspect that the quantity surveyor would consider whether and to what extent the claim was justified after it had been made: see reasons [89]. It was not that the builder was claiming for more than had already been assessed by the quantity surveyor. The appellants’ argument was that the claim had to be limited to what was really claimable under the contract. 32 To be fair, a certain amount of the cross-examination of Mr Allen just involved looking at and identifying documents already in evidence, and was also unnecessary. -- 11 of 68 -- 12 section for the frames was a lie.33 The appellants were entitled to refer to evidence before the Tribunal to show that this evidence was untrue, but they ought not to have been introducing new evidence at that stage in respect of this matter. To the extent that that occurred, any criticism was justified. (b) Not calling a witness from the superintendent (the architect): [143]. The respondent’s witness gave evidence that the superintendent (who was also the architect) had given various instructions to do various things, generally to make the design workable, and this evidence was not contradicted. This passage in the reasons occurred in a context where the builder relied on such an instruction, and Mr Allen had given evidence of what he had been told by a person from the superintendent. The Member preferred the former, on the basis that what Mr Allen said he was told did not directly contradict the other evidence, and no witness from the superintendent was called, a matter he said was noteworthy. The Member did not say that he drew any inference against the appellants because of such failure, and I will not assume that he did, but the omission was noteworthy in view of the issues raised by the appellants and by the builder, even if a number of documents from the Superintendent did go into evidence.34 (c) Including evidence in submissions in writing: [147]. The appellants pointed out that Mr Allen was both witness and advocate, but that did not justify the introduction of additional evidence in submissions. To the extent that any evidence was introduced for the first time in submissions, that should not have happened and the criticism was justified. It did not indicate apparent bias. (d) Filing multiple statements of evidence, said to be at [147]. That paragraph did say, correctly, that the appellants had filed a significant volume of evidence, and that much was repetitive. The appellants referred to the absence of pleadings, and to directions of the Tribunal. The Member commented that it was an onerous task to sift through the material, and to discern the substantive issues. No doubt it was. In this case I suspect it would have been of assistance to the Tribunal if there had been pleadings, or something like them, to identify the issues, but that is not how things are usually done in the Tribunal. In any case, there was no reference to “multiple statements”. (e) Omitting to criticise the respondent for the volume of its evidence, which was not that different from the volume of the appellants’ material. This was said to indicate unequal treatment of the parties, but the statements otherwise complained of were found largely in the conclusion of the reasons, where the Member was summarising the essential reasons why the appellants’ case had failed, despite the extensive evidence and large number of issues raised, and was emphasising his approach to the central issue. A fair-minded lay observer would expect this to focus on the case of the appellants, because it is important 33 Submissions in reply at first instance, paragraph [62]. There is a difference between evidence being untrue and its being a lie, and strictly speaking the appellants should not have made this submission unless the proposition that this was a lie had been put to the witness in cross-examination. 34 There was some material from the superintendent supporting an inference that, had they given evidence, it would not have assisted the appellants: Email from superintendent, at p 510 of first statement by builder, Appeal Book Vol 11 p 2923. -- 12 of 68 -- 13 that reasons explain why the case of the unsuccessful party has failed. This did not suggest apparent bias. (f) Being repetitive in evidence, when the respondent had also been repetitive: [147]. Repetitive material of the respondent was said to justify the repetition. I am not at all sure that that is a justification. There is a modern tendency for pleadings and similar documents which respond to do so in full by reference to each individual matter to which there is a response,35 which often leads to repetition. Properly done, this may help to clarify the precise case being made, but at least so far as it applies to factual matters, I expect that usually the only effect is to lead to longer documents and more voluminous material. In something which is just evidence, factual matters do not need to be repeated, whatever the state of the other party’s material. On the whole the criticism was justified, and does not suggest apparent bias. [32] The appellants also complained that bias was shown by sympathy for the builder and the respondent’s witness manifested in the reasons, by: (a) Finding that the relationship between the appellants and the builder had not deteriorated to the extent where the builder could reasonably expect termination of the contract: [31]. It was submitted that once the show cause notice was given to the builder termination could reasonably be anticipated, which may well be true, but the Member’s point at [31] is that until then the relationship had appeared not to have so deteriorated, because the context was the contrast with another case36 where there had been much criticism of the builder before the show-cause notice was issued. The relationship between owners and a builder can deteriorate very quickly, but in the absence of some specific trigger mechanism one would expect the relationship to deteriorate over time.37 Whether the state of the pre-notice relationship was relevant to the reasonableness of the response is another issue, but the making of this finding, even if adverse to the appellants, does not suggest apparent bias. (b) Criticising the actions of the appellants, in going onto the site and identifying as substantial defects things which would normally be attended to during completion of the works, as particularly unfair to the contractor, where there was an explanation for why the works were in that state, and where the contractor was ready, willing and able to complete the project: [148]. The appellants submit that any defects or other failures by the builder amounted to a breach of contract, and in some cases of statutory obligations, by the builder as soon as they occurred, and that they were entitled to enforce the contract, and their rights under the insurance policy. I shall return to this point. (c) Giving primacy to the evidence of the respondent’s witness, referring generally to the reasons of the Member. I have dealt with this point to some extent already. I do not consider that there was any pre-conceived primacy accorded to the evidence of that witness. There were a number of occasions 35 For example, a response of the kind that says: “In response to paragraph 17, (a) … (b) …” etc. 36 Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99 (“Dura”). 37 Thompson Residential Pty Ltd v Hart [2014] QDC 132 at [13], [14]. -- 13 of 68 -- 14 on which his evidence was accepted, and in each case reasons were given which appear plausible.38 The mere fact that on a number of occasions the evidence of a witness was accepted when another party has submitted that it should not be accepted does not suggest bias against that party. [33] In submissions the appellants identified what they said were a number of errors of law which they said indicated bias against them. I will consider separately whether these were errors of law, but the mere fact that the Tribunal made an error or errors of law does not demonstrate bias.39 One ground, 14(h), was not referenced to the transcript or developed in submissions, and I cannot take it any further, except to say that it does not obviously suggest bias. [34] The only matter which I consider might suggest bias against the appellants is the matter raised in ground 14(s)(ii), the comment about something being particularly unfair to the builder. It was not relevant for the Member to make any finding as to the fairness or otherwise of any particular conduct. The reasonableness of the response of the builder to the show-cause notice was an issue to be decided, but that did not involve the fairness of the action in giving the show-cause notice. On the question of whether the conduct of the builder, and its acts and omissions, collectively amounted to repudiation, the focus is on the objective assessment of what the builder has or has not done, and its expressed attitude to its contractual obligations, rather than on the fairness of the other party’s conduct. [35] Courts have in the past sometimes expressed some dissatisfaction with the result which they have been forced to come to by the strict application of the law,40 but usually by expressing sympathy for the unsuccessful party.41 To characterise the conduct of an unsuccessful party in this way does give rise to some concern, but the real issue is whether it suggests that the attitude to the fairness of the appellants’ actions influenced the findings made, or whether it was simply a comment that the outcome could be seen as satisfactory in terms of broader concepts of justice.42 [36] The fair-minded lay observer may be taken to have also read the earlier reasons, where relevant issues were identified, and various conclusions were reached. Some of those conclusions are challenged by the appellants, but in this context what matters is the analysis in fact set out in those reasons. On the face of it the reasons appear to address the relevant issues and resolve them in a rational way on evidence referred to in the reasons, and lead to the conclusion that the appellants’ case on the review was unsuccessful. I do not consider that they would suggest apparent bias. [37] In this context, I do not consider that this comment might be enough to lead a fair- minded lay observer to entertain a reasonable apprehension that the Member had not brought an impartial and unprejudiced mind to the resolution of the issues in the proceedings. To do otherwise would be to attribute too much significance to a 38 So far as I can tell from the transcript, most of the builder’s evidence was at least superficially plausible, and Mr Allen achieved relatively little in lengthy cross-examination. 39 Nicholls (supra) at [67]. 40 An example is the hostility courts have in the past manifested to reliance on the Statute of Frauds as a defence, particularly in its former application to contracts for the sale of goods. 41 Comment adverse to the unsuccessful party is not unknown: for example, Pohlmann v Harrison [1995] 2 Qd R 59 at 62. 42 Broader concepts of fairness and justice are not irrelevant in the Tribunal: the QCAT Act s 28(2). -- 14 of 68 -- 15 single comment. A finding of apprehended bias is not to be reached lightly.43 There is some authority that decisions of Tribunals should not be scrutinised too closely to detect error, even when there is an obligation to give reasons.44 I appreciate that apparent bias can be shown by much less than the sort of evidence required to show actual bias, but I do not consider that, in context, this comment is enough, particularly when the reasons are read in full. Apparent bias has not been shown. Breach of Natural Justice [38] The appellants relied on thirteen reasons in support of the proposition that the Tribunal failed to afford them natural justice, apart from the issue of apparent bias, with which I have already dealt. To some extent the submissions covered matters already discussed in relation to apparent bias, such as failing to accept the evidence of Mr Allen and the expert witness (grounds 1, 6, 8), or affording excessive weight to the evidence of the respondent’s witness: grounds 7, 8. Such matters do not give rise to any natural justice issues. The reasons contain frequent references to the evidence of Mr Allen, and a number of references to the evidence of the expert, and they were obviously considered. The mere fact that some was not accepted does not show that the consideration was not proper, genuine and realistic. [39] The appellants complained of the failure to make available for cross-examination the authors of two documents admitted into evidence, where the content of the documents was accepted in preference to the expert witnesses, as discussed at [24], [25] above, and referred to the QCAT Act s 95(1)(b).45 That section requires the Tribunal to allow a party a reasonable opportunity to cross-examine witnesses. It applies to persons called as witnesses at a hearing, as appears from the use of the word “witnesses” and the terms of the balance of that section, and does not apply when evidence in a document is put before the Tribunal, even if that evidence has not been proved in accordance with the rules of evidence.46 There was no requirement to produce the authors of these documents for cross-examination. [40] The appellants complained that the evidence of the respondent’s witness had been “elevated” to the status as if the builder were a party to the proceeding: ground 4. Nothing said by the Member suggests that the evidence of this witness was treated as if the builder were a party, and where his evidence was accepted it was for other reasons stated by the Member, which are on the face of it plausible.47 I do not understand a complaint that his evidence was treated as if it was the respondent’s submissions: ground 5. Since he was the respondent’s witness, one would expect some conjunction between his evidence and its submissions. It was submitted that the reasons were written as if the builder were a party.48 That is not how I read them. Given that the issue was whether a contract between the appellants and the builder had been properly terminated, it was inevitable that what happened between 43 Re JRL, ex parte CJL (1986) 161 CLR 342 at 371; CNY17 v Minister for Immigration and Border Protection [2019] HCA 50, (2019) 268 CLR 76 at [55] 44 See also Isbester v Knox City Council (2015) 255 CLR 135 at [22]. 45 Grounds 9, 10. 46 In fact one of the documents would appear to have been admissible under the Evidence Act 1977 (Qld) s 92, as the maker of the statement was overseas. See also the QCAT Act s 95(4)(a). 47 I suspect the appellants’ point is that UCPR r 424(1)(a) did not apply. The UCPR did not apply anyway. 48 Submissions on appeal [177]. -- 15 of 68 -- 16 the parties to that contract would be central to the case, particularly because of the basis on which the appellants supported their termination of the contract. [41] The appellants complained that a finding, that the defects in existence as at 21 November 2017 would have been remedied by the builder if the contract had not been terminated, was based on mere speculation: ground 12. I cannot identify a finding in those terms in the reasons, although there were a number of findings about specific defects,49 and a comment that the existence of a defects liability period under the contract showed that the possibility of defects existing after the appellants went into possession, with the defects to be fixed when identified, was contemplated by the terms of the contract: [121]. It was not relevant to make a finding about whether all defects would have been remedied by the completion of the works by the builder. This does not involve a natural justice point. [42] The remaining grounds, 2, 3, 11 and 13, alleged that matters relied on by the appellants were not considered by the Member. This is a natural justice point, although the grounds identify only one such matter, that the superintendent was mistaken as to the reason for the defect in the stairs, at [146]: ground 13. This was a reference to the submissions in reply by the appellants, to the proposition that the excessive riser height in the top flight of stairs had been allowed by the superintendent as a deviation. The points made in reply were, apparently, that the builder was not relieved of responsibility for the defect because the superintendent was mistaken, and that there were other problems with the stairs, such that all the stairs have since been replaced.50 [43] I can understand why the Member described the submissions as confusing. Why the approval of the deviation by the superintendent was ineffective was not explained, and there was a reference to Mr Allen having been told something by the certifier, which added nothing to the expert’s opinion, was hearsay, and should not have been included in submissions.51 This does not show that the submission was not considered, just that it did not prove persuasive, which is not a natural justice issue. [44] In submissions on appeal the appellants outlined the experience of Mr Allen in construction law, but that was not a matter of significance in considering the weight of his factual evidence. It was not for him to be giving evidence about the relevant law; that was a matter for submissions. I reject the submission in paragraph [162]. The appellants criticised52 the statement by the Member at [145] that Mr Allen’s belief as to the quality or structural soundness of the work, such as a garage slab, is of little assistance, but that was based on its being just a matter of belief, rather than there being any evidence of any factual basis for such concern. I doubt if even an engineer can tell just by looking at a garage slab if it is structurally sound; there is no reason to think that a solicitor who specialises in construction law can do so. [45] The statement in the reasons at [144], that part of Mr Allen’s affidavit was perplexing because it did not set out evidence of what was discussed, was also relied 49 For example, reasons [135], [136], [137]. 50 Submissions in reply of applicants [162] – [167]. I deal with the issue of the stairs further below. 51 It was not referenced to any evidence, and may have been an illustration of the Member’s complaint of evidentiary material in submissions. 52 Submissions on appeal [163]. -- 16 of 68 -- 17 on under this ground.53 This was apparently a reference to the affidavit of Mr Allen sworn and filed 23 May 2019 paragraphs 43 to 52. I have looked at this material, and perplexing, although not the term I would use, is a reasonable description. It contains a mixture of submissions and speculation, with little relevant factual matter; for example, it does not state either the ceiling height required by the contract, or the ceiling height as constructed. It speculates about the effect of a change in thickness of the slab above the ceiling, but does not contain evidence on the point, such as the design height and the “as constructed” height of whatever is above the slab. It also contains evidence about what in fact was done later to reconstruct the ceilings, which involved demolishing the ceiling, moving the services to bulkheads at the sides, and installing ceilings very close to the concrete slab.54 [46] Much of the submissions about natural justice were directed to other issues, that findings were not open on the evidence or that errors of law were made, which are not natural justice issues. It is not a breach of natural justice to prefer the evidence of a non-expert to the evidence of an expert witness, nor is it a breach to reject the evidence of an expert witness on a particular matter, even if it was not contradicted by another expert witness. Evidence about what the builder did and why it did it, and what it was intending to do, was properly given by the respondent’s witness, and is not opinion evidence. Even if that witness did give opinion evidence, it was not on that account inadmissible.55 It was not a breach of natural justice to accept other evidence in preference to the evidence of the expert witness on particular points. [47] The appellants also submitted that it was a breach of natural justice to fail to take deemed admissions into account.56 This was referenced to ground of appeal 54, challenging the finding that there was an explanation for the state of the works when in many cases the defects were admitted, or the builder had not responded to them, and were therefore taken to be admitted. I do not understand that proposition. It is not for the builder to make admissions on behalf of the respondent, and a failure by the builder to answer an allegation about a defect in the works cannot bind the respondent. There are no pleadings or notices to admit in this proceeding, so there can be no such thing as a deemed admission. There was no breach of natural justice in failing to take into account something that did not exist. [48] As to the proposition that the Member failed to consider all of the grounds advanced, the appellants identified sixteen bases on which they said they had an entitlement to terminate,57 and said the Member had given only some consideration to six of these grounds. The count of sixteen was wrong; even on the appellants’ approach. Even if the six grounds in the Notice to Show Cause are treated as six separate grounds, there were only five further bases for termination relied on: termination at law on the six grounds; termination for repudiation; termination for defects; termination for illegality; and termination for breach of the implied term of 53 Submissions on appeal [164]. 54 This was something the builder was discussing doing with the architect anyway when the contract was terminated: Day 2 p 46 line 40+. 55 The QCAT Act s 28(3)(b). This is not a natural justice point, and the weight of the evidence was a matter for the Member: R v Deputy Industrial Injuries Commissioner, ex parte Moore (supra) at 488 56 Submissions on appeal [173]. 57 Submissions on appeal [186]. -- 17 of 68 -- 18 reasonable diligence. Termination for use of unapproved sub-contractors was one of the six Grounds in the Notice, not an independent ground. [49] At one point the argument was advanced that proper, genuine and realistic consideration had not been given to the six grounds in the notice either.58 For example, it was said that the matters raised in Grounds 2, 3 and 6 in the Notice to Show Cause had not been properly considered because the three grounds had been considered together. I do not consider that there was any breach of natural justice because the grounds were considered together; all three related to the issue of delay, and there was a substantial overlap of the relevant factual matters. [50] The submissions here also relied heavily on what were said to be errors of fact or law, and it is convenient to deal with those as separate issues. But the fact that such an error has been made does not in itself mean that there was a breach of natural justice in failing to consider the case advanced, otherwise every error would turn into a natural justice point. Natural justice is concerned with procedural fairness, not with substantive correctness. [51] Grounds 2 and 3 both related to delay, and were considered by the Member by reference to extensions of time for the works, which had been granted, or which the Member considered ought to have been granted. Extensions of time are directly relevant to Ground 3, and they are also relevant to Ground 2, as shown by a decision frequently relied on by the appellants in submissions, Dura.59 That decision was also considered, and distinguished, by the Member. The fact that the Member did not reach the conclusion sought by the appellants does not mean that he did not consider the submissions relating to these grounds. [52] The appellants complained that in his consideration of these Grounds the Member ignored Ground 6, which relied on what was said to be a substantial breach of a different provision of the contract. That is true, but it is clear from the appellants’ submissions in writing below in relation to this Ground that it was based on a failure to adhere to the time for practical completion stated in the contract.60 Given the Member’s conclusion as to the extent to which the time for completion had been and ought to have been extended, this Ground necessarily fell away, and on that approach it did not require further consideration. [53] The appellants complained that the Member did not consider their argument that the breaches identified in the Notice to Show Cause gave an entitlement to terminate at common law, preserved by the terms of the contract. In reasons [114] the Member referred to the appellants’ reliance on the approach in Sheppard’s case, and, after considering whether there was repudiation by the builder, addressed a number of additional defects relied on as having been discovered later. He then concluded at [148] that all the grounds of termination did not, individually or collectively, constitute a substantial breach that would give rise to a right of termination. That finding dealt with both the argument that there was a right to terminate at law because of the matters raised in the Notice to Show Cause, and termination based on them and on the other matters raised by the appellants as defects discovered later. 58 Submissions on appeal [187]. 59 At [426] and [430], as cited by the appellants at submissions at first instance paragraph 70(b). 60 Submissions at first instance [190] to [196], especially [193]. -- 18 of 68 -- 19 So two of the grounds said not to have been addressed by the Member were in fact considered. [54] The Member certainly addressed the ground of repudiation, and the appellants’ criticism of this was based on the proposition that the Member did not address it the way they wanted it addressed, that is, he arrived at the wrong conclusion on it. As to the argument that repudiation was shown by the accumulation of defective work, that was dealt with by the rejection of the proposition that that accumulation amounted to a substantial breach entitling the appellants to rescind. If it was not that, it necessarily did not amount to repudiation. [55] As to termination for illegality, this was raised in submissions at first instance as a further ground justifying termination, but was not in those submissions developed in any coherent way.61 Reference was made to a complaint made by Mr Allen to the respondent, and to a term of the contract that the builder comply with legal requirements, said also to be implied by statute. The submissions proceeded on the basis that there was no evidence from the respondent of any response to that complaint, which was relied on as amounting to the acceptance by the respondent that there had been such illegality, which is wrong. [56] The submissions did not identify the legal requirements said to have been breached by the builder, or the evidence that that had occurred, and did not even make clear whether what was relied on was that this justified termination under the contract, or that the effect of the statutory provisions relied on was that the further performance of the contract was prohibited. Some indication of what was in issue was given in the submissions by the respondent.62 None of the deficiencies in the appellants’ submissions were remedied in the submissions in reply.63 From the respondent’s submissions, it emerges that many of these raised matters otherwise complained of by the appellants, and dealt with in the reasons separately. [57] It is not for the Tribunal, confronted with a bald allegation of illegality, to have to dig around to identify some relevant legal provision and then consider whether there was any evidence of breach of it, and if so, what the consequences were under the relevant legislation.64 I suspect that some, perhaps a lot, of the legal requirements said to have been breached were really requirements as to the state of the premises at the completion of the project. It appears that one of the allegations related to the failure to clamp or crimp a gas pipe where it was fitted to a particular fitting, dealt with by the Member at reasons [128] – [132] on the basis that the work on the gas system had not been completed and the gas not connected when the contract was terminated. I expect that any regulatory requirement as to the state of the gas reticulation system would refer to the system in its finished state, not when it is still under construction. [58] It is true that the Member did not deal specifically with termination for illegality. It is difficult to see however what the Member could have usefully said, in view of the submissions made. The appellants had not shown a proper basis for termination 61 Submissions at first instance [214] to [220]. 62 Paragraphs [156] to [159]. 63 Paragraphs [181] to [183]. 64 Cf Smits v Cugola [2022] QCA 262 at [16]. -- 19 of 68 -- 20 under a legislative provision, and in so far as matters said to be breaches of contract anyway also breached the provision requiring the builder to comply with legal requirements, it is not clear that it added anything to the argument based on the other breach. The appellants’ submissions were framed as if any breach of Schedule 1B clause 21, or special condition 7, gave a right to terminate. Plainly they did not; apart from anything else, they were expressed as warranties, not conditions. [59] I expect that the short answer to this complaint is that the appellants’ submissions on illegality did not deserve to be dealt with. There is authority that there is no obligation on a decision maker in giving reasons to deal with every point raised, so long as the true basis for the decision is disclosed. If there was a technical breach of natural justice here in relation to the illegality ground, it was clearly of no consequence in the outcome of the proceedings before the Member. [60] The remaining ground, said not to have been addressed, was termination on the ground of breach of an implied term to proceed with due diligence. What was said in the submissions65 was that if a failure to proceed with due expedition or a failure to proceed without delay was established, then a failure to proceed with reasonable diligence was also thereby established. This was tucked away in submissions in support of the second ground relied on in the Notice to Show Cause, and it is by no means clear from those submissions that it was being relied on as a separate ground. If it was, then in terms it was relied on only if Ground 2 were made out; but it follows from the reasons of the Member that Ground 2 was not made out. In those circumstances, there was no need to deal with this ground. If an argument is advanced conditionally and the condition is not met, it is unnecessary to deal with it. [61] In submissions on appeal the appellants argued that this ground should have been addressed because it was derived from an implied term in Schedule 1B s 25, and the respondent is the regulator of that section: [198]. Although the proceeding was between the appellants and the respondent, what was in issue was the state and consequences of the contractual rights between the appellants and the builder. The position of the builder under the contract has nothing to do with the status of the respondent as regulator, nor has the obligations of the Tribunal in giving reasons. [62] The appellants’ submission that there was a breach of the rules of natural justice has therefore not been made out. It follows that Grounds 1 to 14 in the annexure to the application for leave to appeal or appeal have been dealt with. The annexure then listed a number of alleged errors of fact, followed by a number of alleged errors of law. The appellants are entitled to appeal on a question of law, but require leave to appeal on a question of fact, or of mixed law and fact, so it is convenient to deal first with the alleged errors of law relied on.66 Questions of Law [63] The grounds alleging errors of law start at number 58. The first two grounds simply alleged that the Tribunal erred in failing to find that the appellants lawfully terminated the building contract. That does not raise a question of law. In this 65 Submissions at first instance [71], [72]. 66 The appellants submitted at the hearing that the question of leave to appeal should be decided before considering the appeal on questions of law, and cited Edwards v Sovereign Homes (Qld) Pty Ltd [2020] QCATA 146. In that appeal also questions of law were decided first: [29]. -- 20 of 68 -- 21 broad form, these are at least questions of mixed fact and law. It is certainly not the case that on the primary facts found by the Tribunal the only conclusion open as a matter of law was that the appellants had lawfully terminated the contract. [64] Ground 60 was that the Tribunal failed properly to consider the terms of the contract, including those terms implied by Schedule 1B of the Act or adopted by Special Condition 7 and Clause 11.1 of the contract. The Act in Schedule 1B Part 3 incorporates certain warranties into regulated contracts: Schedule 1B s 19. Special Condition 7 provided to the same effect, I expect unnecessarily, while General Conditions Clause 11.1 imposed a prima facie obligation to comply with all legislative requirements. I am not sure that Clause 11.1 “adopted” terms of the contract; it was a term of the contract, but any legislative requirement operated of its own force. In any case, without identification of which term or terms the Tribunal failed to have regard to, this Ground is too general to be meaningful. The submissions on appeal provided no particulars. No error of law has been shown. [65] Ground 61 was that the Tribunal erred in finding that it was a sufficient response to a Notice to Show Cause under General Condition Clause 39 of the contract to respond to the particulars in the Notice. This ground appears to have been based on a sentence in the Reasons [59] which referred to the builder’s “response to the particulars of the Notice.” Under Clause 39.3(c) the builder is required to show cause in writing why the Principal should not exercise a right referred to in Clause 39.4, with that right arising if the builder “fails to show reasonable cause” in accordance with that provision. Obviously cause can be shown in a variety of ways depending on the nature of the complaints and what the builder in fact says in response to them. Ground 1 of the Notice referred to three specific examples of what was said to be defective work, and the Member addressed each separately. [66] For example, as to the alleged defects in the plasterwork, which were said by the Member to have been unparticularised, the plasterwork had been inspected by specialists selected by the builder and by the architect, and been found to be satisfactory save for some minor defects. That was the basis of the response about the plasterwork, which the Member regarded as reasonable: [58]. The appellants in submissions referred to a passage from Dura (supra) at [386], that the response need not be in the form of rectification, but is primarily concerned with future performance. In a matter where the existence of the breach is not in dispute I would agree, but if the builder’s position was that a particular defect relied on was not present, or was not his fault, there is no reason why that cannot be a reasonable response, and be part of a process of showing reasonable cause, at least if it is true. Whatever particular responses are made to particular matters relied on in a Notice to Show Cause, the ultimate issue is whether reasonable cause has been shown not to act under Clause 39.4. No error of law has been shown. [67] In submissions from [221] the appellants sought to develop an argument that the builder, in responding to a Notice to Show Cause, needed to respond to any existing defect known to it, not just those identified in the notice. Dura was cited, but it is not authority for that proposition, which is clearly wrong.67 The process of showing 67 See, for example, Vision Eye Institute Ltd v Kitchen [2014] QSC 260 at [240]; FPM Constructions (infra) at [174]. -- 21 of 68 -- 22 cause must respond to the particular matters in the notice, which must be in terms sufficient to identify to the builder, in the prevailing circumstances, what cause has to be shown.68 It need not, and cannot sensibly, respond to matters not properly raised in the notice. In the present case, it seems to me that the particulars given were inadequate in some respects, but that issue was not decided by the Member. [68] In other submissions the appellants again raised the proposition that they were not confined by the particulars in the Notice to Show Cause. I do not agree; the Notice must clearly identify what is alleged to be a substantial breach, and the particulars are to show what is relied on for that purpose. I do not accept that breaches of contract discovered afterwards can be relied on by the appellants in this way. [69] In the submissions Grounds 62, 64 and 113 were dealt with together. Grounds 64 and 113 are in substance the same; Ground 62 asserted that a wide range of matters had not been considered, but I take it from the submissions that this Ground was advanced to support the appellants’ argument that the effect of Clause 11.1 of the insurance policy was that there was a right on the part of the appellants to terminate the building contract for any breach of contract by the builder.69 The Member quoted Clause 1.2 of the policy, which provided that the respondent was liable to pay for incomplete work only if the insured, here the appellants, have “properly terminated the contract with the contractor.” What “properly terminated” meant was explained in Clause 11.1 as “lawfully under the contract or otherwise at law, upon the contractor’s default which extends to, but is not limited to, (relevantly) any breach of the contract by the contractor.” The appellants’ submission was that the effect of these words was that they had a right to terminate the building contract for any breach of contract by the builder, at least for the purposes of the Policy. In effect, the contract could be “terminated” for the purposes of the policy even though it was not terminated as between the owners and the builder. [70] This proposition needs only to be stated to be rejected. The insurance policy, although operating under a statute, was in effect a contract between the appellants and the respondent. It contained a condition for the respondent’s liability which depended on the termination of the contract between the builder and the appellants, which had to be done “lawfully under the contract” – that is, the contract between the appellants and the builder – “or otherwise at law”. A term in the insurance contract cannot affect the extent or operation of termination rights under a different contract, between the appellants and the builder. Obviously it takes whatever rights exist under that contract for the insured to terminate, and makes it clear that it is only when that contract has been lawfully terminated for default70 that such a termination counts. Clause 11.1 does not create or modify any rights of termination by the insured; it simply requires that a right of termination lawfully arising under the contract or otherwise at law has been exercised. Whether such a right existed, and was lawfully exercised, depends on the terms of the building contract, and the general law of contract. 68 Yendex Pty Ltd v Prince Constructions Pty Ltd [1988] QSCFC 62 at p 2, 3. Clause 39 uses the word “stated” rather than “specified”, but the reasons requiring the relevant breaches to be identified still apply, and I consider that the meaning is much the same. 69 Emphasis in submissions [228]. 70 No doubt that was inserted to prevent sweetheart deals between the insured and the builder exposing the respondent to liability under the insurance policy. -- 22 of 68 -- 23 [71] The home warranty insurance scheme may be a mechanism for consumer protection but it is obvious from its terms71 that it is quite limited in its scope. If there were some relevant statutory ambiguity the objects and context of the Act and its consumer protection nature would be relevant matters for consideration; I cannot see how the National Construction Code, the Building Act 1975 (Qld) and regulations under it would be relevant to that issue. But the relevant words lack any ambiguity. The Member made no error of law in not giving effect to this submission. [72] Ground 63 assumed that the incorrect interpretation of the policy advanced by the appellants was correct, and asserted that the real issue was whether there had been some hypothetical termination for any breach by the builder for the purposes of the policy. For the reasons just given, there was no such error of law. [73] Ground 65 in substance alleged an error of law in considering what the builder would have done if the contract had not been terminated by the appellants. There was no error of law involved in this; the passage from the decision in Dura (supra) at [386] cited earlier by the appellants72 shows that, at least in some cases, future performance by the builder is relevant. In the case of the door in the ensuite, for example, there was no dispute that the door as installed was not in accordance with the drawings, but the matter was resolved on the basis that the builder and the architect were working out how best to rectify it.73 Even if the details of that had not been finalised, that they were working this out suggests that the matter would have been resolved if the contract had not been terminated. For the purposes of the claim on the policy, what mattered was whether the building contract was lawfully terminated as between the parties to it. It was very much a termination dispute, and no error of law has been shown. - Termination under Clause 39 [74] In the submissions Grounds 65, 66 and 67 were dealt with together, under the heading of “Evidence regarding termination”. The submission was that the Member had in effect allowed the builder to show cause in response to the notice twice, by giving explanations in evidence which had not been advanced in the response to the notice to show cause, and in applying an objective test to the question of whether the builder had shown cause, rather than a subjective test. As to the latter point, the appellants cited the decision in FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 at [164], but that paragraph was about whether the validity of a show cause notice alleging a particular substantial breach depended on the objective existence of the substantial breach, or the subjective view (in good faith) of the principal that there had been a substantial breach. What was said there suggested that the latter was the favoured view, but the paragraph did not contain a clear decision on what was the correct view. [75] On the other hand, at [174] Bastan JA said: “The relevant legal issue depended, however, solely on whether there had been a breach of contract justifying termination by the Council or there had not. … I would not be satisfied that the 71 And from the decision of the Court of Appeal in Schneider v Queensland Building and Construction Commission [2021] QCA 155, where the scheme is explained. 72 Appellants’ submissions [222]. 73 I will discuss the door issue further later. -- 23 of 68 -- 24 contract was terminated for any reason going beyond the matters identified in the show cause notice … .” That looks as though his Honour was applying an objective test to the existence of grounds to terminate, and that the grounds for termination under the relevant clause in the contract were confined to the issues raised in the notice to show cause. His Honour pointed out that once an entitlement to terminate existed, there was no basis to challenge the exercise by the Council of the discretion to terminate. [76] In Dura (supra) at [566] Dixon J did appear to apply a subjective test to the question of whether the contractor had shown reasonable cause, describing the issue as whether the principal had decided that reasonable cause had not been shown honestly and in good faith. Little explanation for the use of a subjective test at this point was given by his Honour, although reference was made to Clause 44.4 (the relevant clause) at [564] that “in order to act under [it] the principal must first be satisfied that the contractor has failed to show reasonable cause.” The wording of the clause was not quoted there, and I have not been able to find it elsewhere in the reasons. At [566] he also said that the power to act under the clause fell within the second category in “Tote Tasmania”. That was apparently a reference to the decision of the Full Court in Tote Tasmania Pty Ltd v Garrott [2008] TASSC 86 where the Court at [17] referred to different categories of case in the context of implying a requirement that a power be exercised in good faith. That was in a context where a clause in a contract made satisfaction of a condition precedent dependent on whether something was “acceptable to” one party. [77] There can be a termination clause where the right to terminate depends on the opinion of the party giving a notice to show cause as to the reasonableness of the response to it, and I can only assume that Clause 44.4 considered in Dura was one of them. Clause 39.4 is not. I consider that on the face of it Clause 39.4 of the General Conditions of contract, by making the existence of the power of the principal (relevantly) to terminate the contract dependent on a failure to show reasonable cause in a timely way, imposes an objective test. If the issue is whether one party has validly terminated a contract under the general law, the existence of circumstances entitling that party to terminate is always determined objectively.74 If the intention had been to provide a different test under this contract, I would expect it to provide that the power to terminate arose if “in the opinion of the principal” the contractor had failed to show reasonable cause, or something to that effect. I am not persuaded that the appellants have shown that the application of an objective test involved an error of law by the Member. [78] Grounds 76 to 78 alleged error in imposing on the appellants an obligation to act reasonably in considering whether the builder had shown cause. There is authority supporting that approach, in particular decisions of the NSW Court of Appeal;75 those and other decisions were discussed by Jackson J in Aurizon Network Pty Ltd v 74 See for example Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 657-8 per Deane and Dawson JJ, re repudiation. 75 See for example Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 263, 279. See also Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87 at [154] – [160], a decision too recent to be considered in Aurizon v Glencore (supra). As to Renard Constructions, see also QNI Resources Pty Ltd v North Queensland Pipeline No 1 Pty Ltd [2022] QCA 169 at [120]. -- 24 of 68 -- 25 Glencore Coal Queensland Pty Ltd [2019] QSC 163 at [227] – [240], in a discussion focused on whether there was an implied term of good faith and fair dealing.76 This issue arises only if the true interpretation of the contract is that the question of reasonableness is one for the appellants, that is, the test is subjective. In my opinion, under this contract the test for whether the builder had shown reasonable cause is objective, and a matter for the Tribunal, and as I interpret the reasons of the Member, that was also his approach. On that approach the issues in these grounds do not arise. If a different view is taken elsewhere, that question of law can be decided at that point. [79] As to the complaint that the Member acted on evidence which went beyond the material in the response to the Notice to Show Cause when determining if the response was reasonable, my reading of the reasons indicated that in each respect the Member referred to the content of the response when assessing its reasonableness, although he did have regard to the situation of the works generally at that time, and other matters which would have been known to both parties at the time, when assessing the matters to be determined. No error of law has been shown in this respect. [80] Ground 68 alleged that the Member erred in law in failing to “admit” evidence of further breaches or particulars after termination to establish the degree of the alleged breach in the notice to show cause. In submissions this was developed as failing to act on evidence from Mr Allen and the appellants’ expert to prove the breaches alleged in the Notice to Show Cause. Although the submissions do not link this complaint to any finding on the part of the Member, this may be a reference to the statement in reasons at [59] that defects in the plasterwork discovered later were not relevant to the builder’s response to the particulars in the notice to show cause. The Notice to Show Cause, in the particulars of the first breach relied on, said of the plasterwork only that it was “the subject of defects and does not in all respects meet the standards of work under the contract.” That in my opinion does not amount to proper particulars, but there had been an issue between the parties as to whether the plastering had been done properly, and the supervisor had issued a defect notice about the plastering. That led to an inspection by two specialists who concluded that, save for some minor defects, the plasterboard had been fixed in accordance with the manufacturer’s specifications: reasons [56]. The Member concluded that in these circumstances, a response relying on that report was reasonable. [81] It is difficult to see how the builder could have been expected to respond to any other complaints about the plastering when notice of them had not been given by the appellants.77 The response to the Notice to Show Cause can only respond to matters raised by the notice, which must be understood by reference to the common understanding of the parties as at the date it was given. It is one thing to say that the appellants were entitled to gather evidence after termination to prove allegations of substantial breach identified in the Notice to Show Cause. It is a different matter to say that the appellants were entitled to rely, for the purposes of termination under 76 On appeal the Court upheld the judgment but on a different basis: [2020] QCA 182. McMurdo JA, with whom the other members of the Court agreed, described the discussion of the authorities by Jackson J as “illuminating” – [125] – but said that it was not necessary to express a concluded view on this issue, although he had some difficulty with the finding of breach of any implied term: [135]. 77 See Dura (supra) at [396], and decisions cited earlier on this point. -- 25 of 68 -- 26 Clause 39, on matters not specified in the Notice to Show Cause in order to show an absence of a reasonable response by the builder. The passage referred to earlier from the judgment in FPM Constructions shows that the question of termination under the contract has to be decided by reference to the matters in the Notice to Show Cause. His Honour rejected suggestions in the judgment at first instance that the approach in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 could be applied to such a process of termination. I respectfully agree, and consider it clear that it cannot. [82] In Shepherd Dixon J spoke of a right in a party terminating a contract for breach to rely on a breach of condition which existed but of which the party was unaware at the time: p 377-8. A breach of condition is a breach entitling the other party to terminate, but clause 39 does not make the right to terminate under that clause dependent on a breach of contract alone, but upon the failure of the builder to show reasonable cause in response to a notice to show cause. If the principal purported to terminate under Clause 39 and there was then a separate breach of condition entitling the principal to terminate at common law, the approach in Shepherd would apply, but Shepherd does not entitle the principal to add to the matters raised in the Notice to Show Cause for the purpose of supporting termination under Clause 39. I am not persuaded that the Member made an error of law in the approach adopted in [59]. In no other particular was the issue of extra defects discovered later relevant. [83] Ground 69 alleged error in finding that the appellants contended that defective building work was the only ground justifying termination at common law, whereas the appellants submitted many other grounds justifying termination at common law. That is difficult to reconcile with the reasons [113], and at [148] the Member said that he had considered all the grounds for termination put forward by the appellants. The Member also dealt specifically with the appellants’ submissions that there was a right to terminate for repudiation. I have already said something about the grounds advanced at the hearing to justify termination. This ground did not identify and establish any error of law on the part of the Member. [84] Ground 70 alleged that the Member erred in law in construing Clause 39 as requiring a “two stage test”, requiring the appellants to prove that agreed substantial breaches were really substantial, contrary to authority.78 The submissions referred to the reasons [38], where the Member, after citing passages from Dura (supra) at [447] and Stojanovski (supra) at [55] said that it was against these criteria that the Tribunal will determined whether the breaches alleged by the appellants in the notice “are substantial and give rise to an entitlement to terminate under Clause 39.” I do not read this as posing a two stage test, rather as saying that, if a breach is substantial, it will give rise to a right to terminate. In Dura at [440] Dixon J said that a two stage approach was appropriate to determine if there was a substantial breach of a requirement to proceed with due expedition and without delay: “First, has a failure to proceed with the work with due expedition and without delay been shown? And if so, second, does it constitute a substantial breach?” What his Honour said is consistent with the proposition that the second stage of the two stage test might be answered, in an appropriate case, by saying that it was a substantial breach 78 Relying on Dura (supra), FPM Constructions (supra), and Stojanovski v Australian Dream Homes [2015] VSC 484. -- 26 of 68 -- 27 by definition. If the Member had posed a two stage test, it would not have been inconsistent with this authority. [85] The submissions also referred to the reasons [36] where the Member said “An example of what might be a substantial breach is set out in Clause 39 itself but that is not exhaustive.” The appellants’ point is that Clause 39.2 identifies a list of things which are, rather than “might be” substantial breaches. This strikes me as an example of the kind of overly pedantic analysis of the wording of the reasons of a tribunal which has often been criticised by courts in the past.79 [86] In submissions at [257] the appellants quote a statement from Dura (supra) at [447]: “The requirement for a substantial breach is not that high” as though this proposition stood alone. His Honour was there commenting on a passage from Mazelow Pty Ltd v Herberton Shire Council [2003] 1 Qd R 174 at 182, where McPherson JA distinguished between the acts or omissions covered by a definition of “substantial breach” and repudiatory conduct. The point of the comment was that the requirement for a substantial breach was not as high as the requirement for conduct showing repudiation of the contract. The passage quoted by the Member from Stojanovski (supra) at [37] ended with the proposition that it is preferable to apply the language chosen by the parties, which is clearly right. In cases which were not substantial breaches by definition, the question is, was the breach substantial, and that is the test the Member applied. He made no error of law in doing so. [87] Clause 39.2 of the General Conditions lists eight things which are included in the concept “substantial breaches”, although the concept is not limited to them. Most are things which have either happened or not happened, and some incorporate qualifiers, such as the requirement in (c) “substantial departure from a construction programme…”.80 Paragraph (a)(iv), “failing to use the materials or standards of work required by the contract” is curious, in that it is not difficult to imagine a case where there would be such a failure of a trivial nature, depending on the width of meaning attributed to the terms “materials” and “standards of work”. I suppose if a trivial failure to use the materials or standards of work required by the contract is notified, it will be easy enough for the builder to show reasonable cause (at least on an objective test), but this part of Clause 39.2 still strikes me as odd. [88] This issue however is not determinative of the outcome. In respect of the grounds in the Notice to Show Cause, the only finding of the Member relevant to this ground of appeal was the alternative finding in relation to the defective window in the ensuite. The Member found at [70] that the response of the builder in relation to this was reasonable, and then said that it did not amount to a substantial breach of the contract. If this was a failure to use the materials or standards of work required by the contract, and if clause (a)(iv) means that any such failure was substantial, that was an error. However, because it was an alternative basis for rejecting the appellants’ case on this point, it was not determinative of the outcome, and not a ground to allow the appeal. 79 See for example Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287; Cypressvale Pty Ltd v Retail Shop Leases Tribunal [1996] 2 Qd R 462 at 485; Ergon Energy Corporation Ltd v Rice-McDonald [2009] QSC 213 at [11] – [17]. 80 So a departure is a substantial breach by definition if it is substantial. This document must have been drafted by a committee. -- 27 of 68 -- 28 [89] Ground 71 was that the Tribunal erred in establishing the wrong test as to the requirement to show cause as established in Dura (supra). I do not consider that Dura establishes any specific test for the requirement to show cause, and comments there about how cause could be shown need to be read in the light of the circumstances of that case. I do not consider that the only way a builder can show cause, in a case where there really is a defect, is to admit that there is a defect and say it has been (or will be) fixed, although obviously that would be one way. The test is whether the cause shown is reasonable, about which I have had something to say already. This ground is not made out. - Extension of Time, due expedition and delay [90] Grounds 72, 73, 74, 75, 84, 98, 100, 101, 102 103 and 110 were dealt with together in submissions, under the heading “Extensions of Time”.81 These covered a number of arguments about the approach of the Member to questions of extensions of time under the contract, all of which approach the question of assessing claims for extensions of time strictly in accordance with the contract provisions governing such extensions for the purpose of changing the date for practical completion under the contract. The appellants relied in particular on certain statements in Dura (supra). The difficulty with these submissions is that the issue was not one of what extensions of time the builder was entitled to under the contract in the circumstances. The issues were whether the builder had failed to proceed with due expedition and without delay, and whether the builder had shown reasonable cause. [91] In Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 the Court had to consider whether the principal was entitled to terminate for breach by the builder of a requirement to proceed with the works with due diligence. The Court stated a number of propositions relevant to that issue: (a) The onus of proving the builder was in substantial breach of the contract was on the principal: [166]. (b) The meaning of a contractual requirement to proceed with “due diligence” was not clear [170] which makes the task of showing a breach more difficult: [172]. (c) Whether a contractor is proceeding with due diligence is a question of fact: [176]. (d) It was relevant to consider what was a reasonable time, in all the circumstances, and to the extent that the builder had failed to do the work in that time, whether the explanations for the failure were acceptable: [179]. (e) A lack of due diligence can be shown by reference to a lack of activity on site over a significant period that could not be satisfactorily explained: [181]. (f) A failure to seek a formal extension of time cannot be determinative of whether the works were performed with due diligence: [194]. (g) If there had been a breach of the contractual obligation, the builder could remedy it, by working diligently before the termination of the contract: [279]. 81 There were also further submissions later in support of ground 100. -- 28 of 68 -- 29 [92] As far as I am aware, that decision remains authoritative. It was cited recently for the proposition that a reasonable time means a reasonable time under the circumstances.82 It was cited in submissions in DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] NSWCA 117, a decision about repudiation. I am also aware of the decision in Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9, where the Court adopted a flexible construction of Clause 33 of a contract dealing (in different terms) with termination so as to give effect to its commercial purpose: [34].83 [93] In my opinion the concept of due diligence is similar to the concept of due expedition and without delay, or at least sufficiently similar for the propositions stated by the Court in Hometeam to be applicable. They show that what is due expedition is to be determined in the context of the work required to be carried out under the contract, and the time allowed under the contract for the work, which can be adjusted under the contract for various reasons. If the proprietor relies on a comparison of the time allowed to practical completion under the contract with the amount of work done to prove lack of due expedition and delay, it becomes relevant to consider, firstly, to what extent the terms of the contract allow any extension of that time, and to what extent the builder ought to be allowed an extension of time, even if the relevant extension of time has not been allowed under the contract, for one reason or another (as well as whether there was in practical terms a reasonable explanation for the delay). If it was relevant for the Court in Hometeam to take into account a potential extension of time which had not even been applied for, it must have been appropriate for the Member in this case to take into account extensions of time which had been applied for, whether or not rejected, if he considered them to be reasonable. [94] In later submissions, the appellants said that the Member erred in not taking into account delay which had been the subject of applications for extension of time which had been agreed to at the time, on the basis that it was delay throughout the project which was relevant to this issue, relying on Hometeam. Certainly delay throughout the project can be relevant, but, where there has been an extension of time agreed to, I consider that the delay the subject of that extension does not count as “delay” for the purposes of Clause 39, or show a want of due diligence on the part of the builder. That was the approach of the Member, and I consider that there was no error of law in his doing so. Indeed, I consider that it would have been an error of law if he had approached the question in the way outlined in the appellants’ submissions. [95] I consider that “due expedition” means such expedition as it is reasonable for the builder to have exercised in all the circumstances. That was essentially the approach in Hometeam, and I consider it was the practical approach adopted by the Member. The relevant issue did not depend on whether the technical requirements for an extension of time had been complied with, but whether in the circumstances the time taken was or was not consistent with due expedition on the part of the builder. If under the general conditions of the contract the builder was reasonably entitled to an 82 Armada Balnaves Pty Ltd v Woodside Energy Julimar Pty Ltd [2022] WASCA 69 at [552]. 83 See also Tullock Brae Pty Ltd v Environmental Protection Equipment Pty Ltd [2021] QSC 213 at [15], for authorities on giving a commercial construction to ambiguous terms in a contract. -- 29 of 68 -- 30 extension of time, I do not consider that the appellants can put the builder in breach of this clause by exercising their power to refuse to agree to that extension.84 To allow that would I consider be to adopt an interpretation of this contract which was not reasonable or commercial. [96] It is convenient at this point to interpolate a reference to Ground 92, which asserted that the fact that the Member found that only 70% of the work required to be done under the contract had been completed at the time of termination meant that, as a matter of law, the Member was bound to find that there had been a failure to proceed with due expedition and without delay. It is sufficient to say that I consider that the propositions stated in Hometeam are inconsistent with such an approach, and that the proposition advanced in this ground is wrong. It all depends on the circumstances. [97] The question of what is meant by delay in clause 39.2(d) involves some ambiguity. There are several possible meanings, ranging from any delay at all, through delay which involves a breach of contract by the builder, to unreasonable delay which is the fault of the builder. The appellants in submissions appeared to approach the matter as if any delay was enough to trigger this provision, and was a substantial breach by definition. Such a construction does not have regard to the provisions of the contract as a whole. [98] The term “delay” is not defined in the contract. Clause 34 deals with Time and Progress. Clause 34.2 requires notice to the Superintendent of anything which will probably cause delay. Clause 34.3 says that “the contractor shall be entitled to such extension of time for carrying out” the works as the Superintendent assesses, if the delay in reaching practical completion is due to a qualifying cause of delay, and the contractor gives a written claim for an extension of time. Clause 34.4 provides that, in assessing such a claim, the Superintendent shall disregard whether the contractor can nevertheless reach practical completion without an extension of time, or whether the contractor can accelerate the work, a provision which is inconsistent with some of the appellants’ submissions. [99] The term “qualifying cause of delay” is defined as any act, default or omission of the Superintendent, the Principal or its consultants, agents or other contractors not employed by the builder, or “other than (i) a breach or omission by the contractor; (ii) industrial conditions or inclement weather occurring after the date for practical completion; and (iii) stated in Item 23.” Presumably this means “a cause of delay other than” as stated. Item 23 assumed that there was an allowance of ten days for delay due to inclement weather built into the contractual date for practical completion, and excluded an extension of time for this until the ten days had been exhausted. It would be inconsistent with the provisions under which the builder is “entitled” to an extension of time under the contract, and with the notion that ten days delay is to be built into the time for completion, for any delay to give rise to an entitlement to the appellants to terminate for substantial breach. 84 That power is implied by the Act Schedule 1B s 42. I have difficulty in accepting that this section means that the owner has an unfettered discretion to refuse to agree to a reasonable request for an extension of time in accordance with the contract, in the light of the objects of the Act. -- 30 of 68 -- 31 [100] Further, “delay” in Clause 39 must take some colour from the fact that it is part of a definition of “substantial breach”, and from the other parts of that definition. In order to give a practical, commercial interpretation of the contract which fits in with the other parts dealing with delay, it must mean unreasonable delay on the part of the builder. Such an approach is consistent with the authorities on similar terms concerning due diligence. [101] In these circumstances the technical requirements for an extension of time are not relevant to the question of whether there has been a substantial breach under clause 39. It follows that the submissions of the appellants in relation to these grounds of appeal were not directed to the relevant issues, and the grounds are not made out. [102] Grounds 89, 90 and 94 were dealt with together in submissions, and relate to Ground 2 in the Notice to show cause. The first, that this Ground was not dealt with by the Member, has already been dealt with in substance as it was relied on as part of the breach of natural justice submissions.85 The Member did deal with it. Ground 90, alleging that the Member applied the wrong test for failing to proceed with due expedition and without delay, I have just dealt with. The submissions of the appellants appear to be based on the proposition that it was sufficient for them to show any delay, by reference to the original date for completion under the contract. I do not agree with that approach, which is inconsistent with Hometeam (supra), as explained. That decision shows that extensions of time which have been or ought to have been granted are relevant when assessing this, which was the approach of the Member. [103] Ground 94 was that the Member erred in finding that delay by the appellants relieved the builder of any breach of this provision. I do not consider that the Member approached the matter in that way. I do consider however that in principle any delay by the appellants which had the effect of causing delay for the builder would be relevant in determining whether there had been unreasonable delay on the part of the builder. Grounds 89, 90 and 94 are not made out. [104] Ground 84 was that the Member erred in taking into account an extension of time which had not been agreed to by the appellants, as required by the Act schedule 1B s 42, and special condition 10.3. I have already said something about this. The argument is inconsistent with the reasoning in Hometeam (supra). Whether there was a failure to proceed with due diligence or delay does not depend on whether an extension of time has actually been granted under the contract, but on whether the circumstances leading to the application for the extension provided a justification or excuse for any delay. [105] Appeal Grounds 111 and 112 were also concerned with the technical working of the contract provisions for extensions of time. In view of the approach adopted by the Member, which I consider to have been correct, these grounds are also beside the point. - Defective Work [106] Grounds 79 and 80, which were addressed together in submissions, concerned the approach of the Member to Ground 1 in the notice to show cause, concerning defects 85 Supra [49] – [51]. -- 31 of 68 -- 32 in the work. The first submission was that the appellants were not confined to the particulars given in the notice to show cause. I do not agree; it is clear from the authorities discussed already, and from the terms of the contract, that, in relation to the show cause procedure, the appellants are confined to the terms of the notice, both as to grounds and as to particulars. [107] The approach of the Member to the issue of the ensuite door was that the builder was working on a solution with the architects, and in those circumstances there had been a reasonable response, that the issue was being attended to. In evidence the builder explained that the contract specified commercial sections for this window, which included a glass door, and that the effect of using commercial sections was that the door ended up much narrower than as shown on the plan. A detail drawing had been provided later, which required something to be done86 but which in the response the builder claimed was a variation.87 The builder said in evidence that at the time they were working with the architects to solve the problem of the door. That was not expressed very clearly in the response to the notice,88 but that response did refer to the instructions from the architect, and implied that work would be done in response to that notice, although the builder was in effect reserving its rights in respect of a variation claim. The question of whether the builder has shown reasonable cause must be decided by reference to the situation as at the date of termination of the contract; it would not help the builder to be reasonable, or more reasonable, later. Nevertheless, I consider that it was open to the Member to accept that this was a reasonable response. No error of law has been shown. [108] One issue which appears to have been glossed over however is whether building the door too narrow amounted to a failure to use the materials and standard of work required by the contract. The problem with this installation was not that the wrong materials were used, or that it was not constructed to the required standard;89 it was that the dimensions were wrong. Clause 39.2(a)(iv) was not intended to cover any defect in the works, because that was covered by Clause 39.2(a)(iii), although by reference to a failure to comply with a direction of the Superintendent under Clause 29.3. That clause covers work not in accordance with the contract, and requires notice from the Superintendent, and if the matter is not rectified, a direction from the Superintendent. It seems to me that this part of Ground 1 did not fall within Clause 39.2(a)(iv) at all, but that point does not seem to have been raised before the Member, and no finding was made on it. It was raised in appeal ground 79, and I suspect it was an error of law, involving the construction of the contract, but if so, it was an error in favour of the appellants, and they cannot complain about it. [109] Ground 80 was that the Member erred in treating the potential remedy of defects after the Notice to Show Cause was given or after practical completion as an answer to Ground 1 in the Notice to Show Cause. That the former could be a sufficient 86 Appeal Book Vol 7 p 2075, an email from the architects to the builder on 17 November 2017. 87 The appellants characterized this as a refusal to fix the door unless additional payment was made, Read carefully, it was not that, but a claim that there was an entitlement to additional payment as a variation, which depended on an agreement that it was a variation, or such a finding on dispute resolution. 88 See Appeal Book Vol 1 p 944. 89 The expert witness called by the appellants said that there was nothing wrong with the workmanship, and no breach of the National Construction Code: Day 3 p 37. -- 32 of 68 -- 33 answer was shown by the decision in Dura (supra), where it was said that cause could be shown by admitting the defect and agreeing to remedy it. In the present case, the builder denied there were defects but said that, if there were, they were minor or would be remedied by it in the completion of the work. The contract does provide for a period after completion during which the builder is to rectify any defects: Clause 35, which contemplates the existence of defects at the date of practical completion. I do not accept that the way in which a builder can show reasonable cause in response to the notice is confined in the way alleged by the appellants. [110] Ground 81 was grouped in submissions with grounds 121 to 128, 130 and 136, dealt with under the heading “Temporary Disconformity”. I do not think that the Member ever used the term “temporary disconformity” in his reasons, but the appellants’ argument was that, if something has been done incorrectly, it amounted to a breach of contract even if it might well be rectified by the builder in the course of completing the works, or during the defect liability period. That is correct, although rectification is relevant to the issues of whether a breach is substantial, and whether the response to the notice was reasonable, but it is not the full story. There is a difference between something which has been done incorrectly and something which has not been done yet.90 Plumbing and electrical work for example are commonly “roughed in” at one stage in the process, and are then finished off at a later stage. In that situation, the fact that the roughing in has been done without also finishing off does not mean that there has been any breach of the contract. [111] That was of some relevance in this matter, as one issue raised by the appellants was a failure to crimp the end of a gas pipe, which was found not to be a defect on the bases that the gas installation had not yet been finished off, and that the crimping would be done in connection with that. There was some conflict of evidence on this, but on the evidence the Member accepted, that was the situation.91 It followed that there was no breach in failing to crimp the gas pipe. Other defects were dealt with however on the basis that there was at the relevant time no defect covered by the Notice (in the case of the plasterwork), or that the response of the builder was reasonable, as the builder was rectifying, or was going to rectify, the defect relied on. That was the relevant issue for the purposes of termination under Clause 39. [112] When considering the issue of repudiation, it is relevant to consider the attitude of the builder at the time of the alleged repudiatory conduct, so the builder’s attitude to breaches of the contract which have been raised with it is relevant in showing whether or not the builder is repudiating. A breach of contract which the builder indicates a willingness to rectify would ordinarily not support an allegation of repudiation, and the existence of breaches of contract which have not been drawn to the attention of the builder would support one only if they were so numerous and substantial as to amount to repudiation in themselves. The presence in the contract of clause 29 is relevant here. As to whether a breach was a sufficiently serious breach of a non-essential term to give a right to terminate, the contract contemplates 90 This was the approach in Mousa v Vukobratich Enterprises Pty Ltd [2019] QSC 49, discussed below, where some matters were regarded as not defects if they could have been examples of incomplete work. 91 I discuss this matter and the evidence later. -- 33 of 68 -- 34 that the benefit to the owners will accrue at the end of the construction process. It follows that it will be more difficult to show that a breach of a non-essential term is sufficiently serious to justify termination of the contract if the builder has the opportunity, during the balance of the construction work, to rectify the breach. [113] A breach of contract may give a right to terminate under the contract, depending on the nature of the breach and what happens when the procedure in the contract is followed,92 and will give a right to terminate if the breach is of a condition. The tests for repudiation and termination for a sufficiently serious breach of a non- essential term are more complicated. That a defect which is a breach of contract may be able to be described as a “temporary disconformity” will, depending on the circumstances, not necessarily be irrelevant to the question of whether there is a right to terminate. These grounds are not made out. [114] Grounds 82 and 83 were grouped in submissions with grounds 120, 134 and 135, under the heading “Defects at Law”. The point was that the Member had failed to appreciate the true legal significance of defects in the work, although to some extent these submissions have already been dealt with. Ground 82 complained of a failure to consider the requirements of the contract, Schedule 1B of the Act, the National Construction Code, the Building Act 1975(Qld) and the common law in relation to defects. This appeared to be based on the appellants’ argument that the effect of the Act was to give a right to terminate for any defect in the work, which I have already rejected. [115] The argument was also presented on the basis that the appellants wanted a strict and precise compliance in all respects with the contract, including the plans and specifications, so that any such defect was a breach of an essential term. This is related to Ground 117, that, in determining whether certain terms of the contract were conditions (or essential terms), the Member had failed to apply the test in “Tramways”, presumably that expressed by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641-2:93 The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. [116] It is immediately apparent from its terms that the test focuses on the terms of the contract, and what can be inferred about the attitudes of the parties from them. That was confirmed by the judgment of Stephen, Mason and Jacobs JJ in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 431: The quality of essentially depends … on a judgment which is made of the general nature of the contract and its particular provisions, a judgment which takes close account of the importance which the parties have attached to the 92 The decisions cited by the appellants were both concerned with termination under the contract. 93 This decision was reversed on other grounds by the High Court but the test has been subsequently endorsed by that Court. -- 34 of 68 -- 35 provisions evidence by the contract as applied to the surrounding circumstances. [117] On the basis of this test, the various terms relied on by the appellants have not been shown to be essential. This is because there is nothing in the contract which shows that the parties have attributed particular significance to any particular term or terms of the contract, apart from Clause 39, which contains its own mechanism for termination. What provisions of a contract are essential so that any breach of them gives rise to a right in the other party to terminate depends on the terms of the contract, not the assertion of subjective attitudes of one party to the contract. Often the contract will identify particular terms as essential, but if it does not, the matter is one for construction in the light of the terms of the contract as a whole. In the case of this contract, it may be noted that: (a) There is a specific mechanism in Clause 39 giving a right to terminate, which is dependent on giving a notice to show cause to the builder, and contemplates that the builder may show reasonable cause in response. (b) There is a provision in Clause 29.3 dealing with defects, providing for the superintendent to give the builder notice of a defect, and (assuming the defect is not remedied) allowing the superintendent to give a direction for the defect to be remedied, with consequences under Clause 39 to follow if it is not remedied. (c) There is a defects liability period, with provisions for the builder to remedy defects of which notice is given. [118] If the presence of any defect in the work gave the appellants an immediate right to terminate the contract, all these terms would be unnecessary. In those circumstances, it seems to me that the argument of the appellants on this point cannot be right. I do not consider that there is any substance to grounds 82 or 83. It also follows that the Member has not been shown to have erred in failing to apply the Tramways test, as alleged in ground 117. [119] Ground 120 alleged that there was an error of law in failing to consider all of the defects raised by the appellants, including the evidence of the appellants’ expert in relation to them. There was no obligation on the Member to refer to all of the evidence led, or to deal with all the submissions of the appellants, so long as the reasons for his decision were clear enough.94 To overlook critical evidence is an error of law,95 but to advance such a ground the appellants need to identify specific evidence overlooked, and why it was critical. That was not done in relation to Ground 120. I have already said something about the evidence of the appellants’ expert witness. [120] In submissions to the Member, the appellants did not identify the defects relied on, simply relying in general terms on all the defects in the work.96 Certain specific 94 Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9 at [66]; Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd [2022] QCA 266 at [103], [104]. 95 Ibid, at [68]. 96 See also Allen Day 1 p 94. The only defects the existence of which was supported by expert evidence were those nine covered by the reports of the appellants’ expert witness. -- 35 of 68 -- 36 defects, apart from those identified in the Notice to Show Cause, were identified in the respondent’s submissions to the Member, and the appellants replied to these submissions. These were the main defects which were in fact litigated at the hearing. The appellants had included in their material lists of defects which were very long. I have looked at part of one of them, and it included many items which were, or could have been, properly classified as uncompleted work rather than defects, and many defects which were quite trivial, and could not be relevant to termination at common law.97 It was a matter for the appellants to identify what their case was for termination at common law, which involved at least identifying a list of defects of some significance. This ground is not made out. [121] Grounds 134 and 135 also appear to be based on the incorrect proposition that any breach entitled the appellants to terminate. It is true that the term “substantial breach” is given a defined meaning and particular significance under Clause 39 of the contract, and for that reason it might have been better, when discussing termination at common law, for the Member to have used different terminology, but in substance he applied the correct test for termination at common law, which is what matters. These grounds are not made out. [122] Ground 85 was that the Member erred in failing to follow sufficiently the decision in Dura (supra), presumably by not coming to the same result as was reached in that case. The Member did have regard to it, and did cite some passages from it, as have I, but thought it was distinguishable on the facts, for reasons he gave. Whether there was an error of law in the reasons of the Member depends on whether some proposition he stated was wrong in law, or whether his analysis was such that an error of law was demonstrated. That is not shown simply by arguing that the Member did not follow a particular earlier decision closely enough. [123] The factual basis for the distinction drawn by the Member was the reasonable expectation by the builder in Dura of steps to terminate on the part of the owners prior to the notice to show cause being given. Obviously in the present case when the Notice to Show Cause was given, the builder could reasonable anticipate at least a threat of termination. I think the Member’s real basis for the distinction was that in Dura there had been a long period of acrimony between the parties, possibly aggravated by the fact that it was a case of friends who had fallen out, before notices to show cause issued, whereas here the relationship between the parties had been fairly cordial, or at least a functioning working relationship, before the Notice to Show Cause was issued: Reasons [28].98 [124] Ground 86 was that the Member had erred in applying a proposition of law on the basis of Dura (supra) which was not stated in Dura. It is true that the proposition stated at reasons [32], for which Dura at [525] – [537] was cited, does not appear in terms in Dura; but the proposition stated was a description of some of the things Dixon J discussed, and presumably took into account as relevant, in that part of the 97 See also the evidence of the builder, Day 2 p 11: the majority of the “defects” on the appellants’ list were uncompleted work. 98 It appears that things began to go bad after Mr Allen read a decision in another matter involving the builder, but it took some time before this was manifested to the builder: Affidavit of Allen sworn 3 September 2018 paras 83, 84, Appeal Book Vol 4 p 1160. See also Allen Day 1 p 52: By 13 July 2017 he considered that he may need to terminate. -- 36 of 68 -- 37 judgment. In submissions the appellants referred to something said in Dura at [522] about the need for a communication between the parties in response to a notice to show cause, so that reasonable cause would not be shown by rectifying the relevant defect if there was no formal advice that that had occurred. That point does not arise in this case, but my initial impression is that, whatever may have been the position with the contract in Dura, Clause 39.4 does not require cause to be shown in any particular way, and if the relevant defect has in fact been rectified it is not obvious to me that cause has not been shown so long as the owners are in fact aware that that has occurred. There is no substance in either of these grounds. [125] Grounds 87 and 88 were directed to the way in which the Member dealt with the various grounds in the Notice to Show Cause issued by the appellants. The same points were raised as aspects of the argument in support of a breach of natural justice, in failing to consider all the matters raised by the appellants. For the reasons given earlier, there is no substance to these grounds. These particular grounds do not raise any specific error of law said to have been made in the course of dealing with the grounds. [126] Ground 91 was that the Member erred in failing to consider ground 6 in the Notice to show cause at all. I have already dealt with this ground under the heading of breach of natural justice.99 Because of the basis on which the ground was argued before the Member, it necessarily fell away as a consequence of his approach to grounds 2 and 3. [127] Ground 93 asserted an error of law in failing to consider and to find that the six grounds in the Notice to show cause justified termination at common law. The Member certainly did consider whether termination at common law was justified, by reference to the grounds in the notice to show cause, with or without a consideration of additional defects relied on by the appellants. The question of whether there was any error of law in that consideration was argued is respect of other grounds; this ground was not clarified in submissions, and does not otherwise identify any specific question of law for me to consider. [128] Ground 99 was that the Member erred in finding that the failure to achieve practical completion by the date for practical completion was not fault based. I have some difficulty understanding that ground, but it appears from the submissions that the point was that the contractual obligation to achieve timely practical completion did not depend on whether the builder was at fault in some other way, causing that failure. Reference was made to Bartlett v Contrast Constructions Pty Ltd [2016] QCA 119 at [25] and [36], but that was a case about an entitlement to liquidated damages for delay in completion, which was said to be a contractual right to be paid something under the contract. That did depend on the date for practical completion as extended, and subject to any further claims for extension of time, which were said to be for the member in that case to decide: [25]. It did not depend on whether the owner should have terminated the building contract sooner than he did. There was no duty to mitigate the claim for liquidated damages. [129] The approach of the Member in the present case was that there had been no failure to complete by the date for practical completion, because on his view the builder 99 See [52] above. -- 37 of 68 -- 38 ought to have been entitled to extensions of time which took that date to after the date of termination by the appellants. Such a finding was a complete answer to this claimed basis for termination. Hence the question of fault on the part of the builder did not arise. [130] The appellants also relied on the decision in Hopper v Queensland Building and Construction Commission (No 2) [2019] QCAT 212. That was a case where a failure to complete by the date for practical completion was relied on in a notice to show cause. The builder argued that requests for extension of time had been made and not responded to, but the Tribunal found that the requests had not been given to the owners, and were otherwise defective. The Tribunal noted substantial delay, including for more than six months after the contract before work even started, the building was described as relatively modest and unremarkable in terms of complexity, and the notice to show cause was given over two months after the date for practical completion. I have found the decision a little confusing about the basis for termination, but it appears that the breach constituted by the failure to complete by that date was regarded as sufficiently serious to amount to a substantial breach, and also amounted to repudiation and a sufficiently serious breach of the term to justify termination at common law. [131] The Tribunal in Hopper noted that in an earlier decision, Mitchamy Developments Pty Ltd v Adams [2010] QCAT 484, it had been said that a failure to reach practical completion on time does not, in itself, amount to a substantial breach of contract. A failure to reach practical completion by the date for practical completion is not one of the breaches made a substantial breach by definition in Clause 39, so that, in order to rely on this as a ground for a notice to show cause, the owner had to show not merely that this contractual obligation had been breached, but that it was a substantial breach. On the approach of the Member in this case, there was no such breach, and this issue did not arise. This ground is not made out. - Illegality [132] Ground 95 alleged that the Member erred in law in failing to consider the appellants’ submissions that they were entitled to terminate on the ground of illegality by the builder. I have mentioned this issue as part of the grounds relating to alleged breach of natural justice. Ground 97 alleged that the Member erred in law in failing to uphold that submission. The short answer to that ground, as I pointed out earlier, is that there was no proper submission advanced before the Member for termination for illegality, because the illegality relied on was not identified by the appellants. Even before me, the written submissions do not state specifically what conduct was relied on for this purpose, and how it was said to be illegal. [133] Their oral submissions on appeal did however identify as relevant provisions the Building Regulation 2006 (Qld) s 28 and s 34. The former applied if a builder for assessable building work had given a notice for inspection for a stage of the work, and provided that the builder must not start the next stage of the work until the builder has been given a certificate of inspection for the relevant stage stating that the stage complied with the building development approval. A penalty was provided. The term “relevant stage” was explained by s 24; it was any stage at which inspection was required by the terms of the building development approval, -- 38 of 68 -- 39 together with the stages set out in s 24(3).100 A builder was to give a notice to the building certifier that a relevant stage was ready for inspection: s 27. If on the inspection the stage was found not to comply with the building development approval, the inspector was to give a non-compliance notice to the builder (s 33) and the builder was then obliged to ensure that the stage complies with the development approval: s 34. [134] The consequences of not complying with the obligation in s 34 are set out in s 35. That section does not refer to any consequences for the contract between the owners and the builder. Nor, so far as I can see, does the Building Act 1975 (Qld); I was not referred to any relevant provision. This however is by the way; the appellants’ argument was based on the proposition that a breach of this provision gave an entitlement at common law to terminate the contract, on the ground of illegality. [135] Courts do not readily interpret statutes which prohibit conduct, and provide a penalty for breach, as impliedly rendering illegal any contract in breach of the prohibition, or indeed, any entitlement to recover under a contract for work done in breach of such a provision, without some indication in the statute of a legislative intention to bring about that result.101 The leading case is Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410, which was applied by the Court of Appeal in Botros v Freedom Homes Pty Ltd [2000] 2 Qd R 377 to conclude that a contract in breach of the Queensland Building Services Authority Act 1991 (Qld) s 58 was not thereby invalidated.102 [136] The appellants referred to Byers v Dorotea Pty Ltd (1986) 69 ALR 715 as an example of a case where a term of a contract requiring the builder to be licensed was characterised as a condition. That was a dispute between a developer and some purchasers of units “off the plan” seeking to escape from the contracts. It was held that they had been induced to enter into them by statements in breach of the Trade Practices Act 1974 (Cth) s 52, and that there was an implied condition of the contract that the building to be constructed would be built by a licensed builder, which had been breached. The point was different from the point in the present case. [137] As well, in the case of an unlicensed builder the relevant legislation does expressly provide civil consequences for a breach: the builder is unable to recover remuneration on any basis for the work done, and has to repay any amount paid,103 although the builder is entitled to recover reasonable remuneration for work done 100 As well, s 25 permits a local government to exempt particular assessable building work from particular stages of inspection. Section 24 does not depend on the progress payment stages under the contract. One difficulty here is that it is not clear that the appellants were speaking about a “frame stage certificate” by reference to the requirements of the approval or the regulation, rather than by reference to a term of the contract. 101 Cheshire and Fifoot’s Law of Contract, (8th Aust Ed, 2002) p 843-4. 102 See also Schiliro v Peppercorn Child Care Centre Pty Ltd [2000] QCA 18 and the authorities cited at [10], [11] for the related question of whether a statutory provision creates a cause of action for breach. 103 The Act s 42; Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd [2009] QCA 75 at [53]. -- 39 of 68 -- 40 which is within any licence in fact held by it, and can recover limited remuneration under a statutory modification of quantum meruit in respect of other work.104 [138] The appellants’ submissions were based on the proposition that there was an entitlement to terminate at common law. There is nothing in the contract to the effect that Clause 11.1, which requires the builder to satisfy all legislative requirements, was to be regarded as a condition. It was not included in the provisions breach of which were under clause 39 made a “substantial breach” by definition.105 The term “legislative requirements” was in clause 1 of the contract defined very widely, and clearly could apply to a wide range of requirements many of which could have no possible significant impact on the owners.106 The appellants did not refer me to any authority to the effect that such a provision was a condition of the contract. In the circumstances, I consider it clear that Clause 11.1 of the contract was not a condition in the relevant sense. [139] The appellants also relied on the terms implied into the contract by the Act Schedule 1B, as was recognised by special condition 7 of the contract. As I have mentioned previously, these are described in the Schedule as warranties, which is applied to a term of a contract where the only remedy for breach is damages. There is nothing in the Act to indicate that a failure to comply with any of them on the part of the builder gives a right to the owners summarily to terminate the contract. Schedule 1B s 44 provides expressly that a breach does not render the contract illegal, void or unenforceable. That the statutory warranties give a right to damages for breach only is made clear by the provisions in Division 4 of Part 3 of the Regulation, particularly s 29. [140] The remaining issue is whether this can be characterised as a sufficiently serious breach of an “intermediate” term, so as to entitled the owners summarily to terminate. The appellants relied on the decision of Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, (2007) 233 CLR 115 where the Court adopted the approach of an earlier decision of the English Court of Appeal.107 The Court held that, where there had been a joint venture agreement between the parties for the development of land, and numerous breaches of a term dealing with the generation and provision by the respondent of proper financial records for the joint venture, the breaches were sufficiently serious to allow the appellant to terminate the contract. The test for this was whether the effect of the breach was to deprive the innocent party of substantially the whole benefit it was intended to obtain under the contract.108 In Koompahtoo that was determined by the Court essentially on the analysis of the terms of the contract itself.109 104 Chapel of Angles Pty Ltd v Hennessy Building Pty Ltd [2020] QCA 219. 105 I note that Clause 39.11 gave a right to terminate without going through the show cause procedure in certain, limited circumstances, not including illegality. It is not necessary to consider whether this amounted to a substantial breach on another basis, because it was not relied on in the Notice to Show Cause, and because clause 39 is not otherwise relevant. 106 For example, breach of a local government by-law prohibiting parking on a footpath. 107 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 108 See for example Sekler v Kim Carroll Investment Pty Ltd [2021] QSC 312 at [28]. 109 That appears to have been the approach also in Sekler (supra); in Gough v South Sky Investments Pty Ltd [2012] QCA 161 the court had regard to the terms of the contract, and to some extent also to the practical consequences of the breach. -- 40 of 68 -- 41 [141] In submissions to the Tribunal the appellants claimed that the requirement to comply with all legislative requirements was an essential term of the contract, ie a condition, or in the alternative that it was a sufficiently serious breach of the term to justify termination, on the basis that it rendered the house unfit for occupation. It was not made clear how not obtaining frame stage approval in itself had that result; certainly continuing to work in breach of the Regulation s 28 could not have that effect. According to the submissions of the respondent, there were three things preventing the issue of the frame stage certificate, two of which were simple matters to address110 and one of which (the ceiling height issue) was being sorted out with the architects at the time the appellants terminated the contract. [142] In the appellants’ submissions on appeal reference was made at [374] to Instyle Homes (Qld) Pty Ltd v Middler [2017] QCAT 376 at [41] as if that decision was authority for the proposition that continuing to work without frame stage certification was a matter justifying termination at common law. It is not. In that case a notice of default was given under a term of the contract by reference to a number of grounds, including failing to carry out the work under the contract competently, the Member found that the defects had not been rectified as required, and the builder had not addressed the issue of a premature claim, so that the owner was entitled to terminate under the contract. The decision is of no present relevance. [143] There was evidence about this matter given by Mr Allen, but it was confined to asserting breach of a number of provisions of the Act, many of which were not made offences.111 In the case of those that were, the matters complained of were generally matters which would have no significant effect on the process of providing a functioning dwelling for the appellants. Breach of them did not deprive the appellants of the substantial benefit of the contract, in the sense contemplated by the authorities. [144] The builder in a statement of evidence annexed the report of the certifier dated 31 July 2017.112 This confirmed that the issues were the ceiling height in one room (this was 2380 mm when it should have been 2400 mm), tie-down in the upper level (triple grips on trusses and location rods not secure) and wall bracing panels not completed. The builder maintained that the room had been constructed in accordance with the plans in the contract, and this had not been sorted out before termination.113 One matter noted was that termite protection certificates had not been sighted. The builder annexed to the statement copies of such certificates in Form 16, in respect of parts of the work, dated 19 and 28 January 2017. [145] There is nothing I can locate in the material (and I have not been referred to any evidence by the appellants) which shows how they seek to establish that the house is 110 The builder said that both had been addressed before termination: Day 2 p 50. 111 Affidavit of Allen sworn 3 September 2018 paras 245, 246; Exhibit RJA31: Appeal Book Vol 4 p 1195, Vol 5 p 1601. 112 Annexure BCD13; Appeal Book Vol 7 p 2169 – 2171. 113 Appeal Book Vol 7 p 1892, 3. The appellants said that, when a concrete floor above the room was made thicker by 50 mm, the builder had maintained the prior level of the top of the floor, instead of maintaining the prior level of the bottom of it. This was not resolved by the Tribunal, but is wrong. I return to this point later. -- 41 of 68 -- 42 unable to be occupied as a result of a breach by the builder of this provision. In an affidavit of Mr Allen sworn 19 October 2018 he explained that, as they did not have all the certificates they required, it was necessary for various inspections to be done again.114 In submissions on the appeal, Mr Allen complained that, although at the hearing the builder and the respondent had said they held various relevant certificates, they had never been produced to the appellants. I cannot see how this involved any error by the Member, or is relevant to the appeal. The evidence does not establish that the absence of certificates rendered the house unable to be occupied. At most, it showed that, with a relatively small amount of trouble, any such absence could be overcome by further inspections. [146] Accordingly whether one looks at the matter with the focus on the terms of the contract, or whether one looks also at the practical consequences of the breach, what was relied on by the appellants did not satisfy the test in Koompahtoo for a sufficiently serious breach to justify termination for breach of a non-essential term in a contract. The case presented by the appellants to the Member was not capable, as a matter of law, of sustaining an entitlement to terminate the contract on the ground of illegality. Grounds 95 and 97 are not made out. [147] Ground 96 alleged that the Tribunal had erred in law in failing to consider a submission that termination was justified by the builder’s failure to comply with the obligation implied by the Act Schedule 1B s 25 to proceed with reasonable diligence. That was correct in that it was not dealt with specifically as a separate point, but the implied obligation is in substance the same as the obligation in Clause 39 to proceed with due expedition and without delay. The Member did consider that issue, and rejected it, and in substance this dealt with the submission based on the implied term as well. This ground is not made out. - Overclaiming [148] Ground 104 – 106 were dealt with together in the submissions for the appellants, under the heading “overclaiming”. They relate to Ground 4 in the Notice to show cause. This asserted that the relevant breach consisted of claiming payment: (a) In excess of the value of the work under the contract. (b) For unfixed plant and materials. (c) Not directly related to the progress of the carrying out of the subject work at the building site. (d) Not proportionate to the value of the subject work. [149] Reference was made to Clauses 37.1 and 11.1 of the contract, and the Act Schedule 1B s 34. I cannot see anything in Clause 37.1 limiting the amount which can be claimed, and it expressly contemplates that a claim may include any other money said to be payable to the contractor.115 Clause 37.3 excludes payment for unfixed plant and materials, but does not in terms prohibit a claim for payment for them. 114 Paragraphs 23 – 25, Appeal Book Vol 6 p 1752. The builder said it was the usual practice for all the certificates to be provided to the owners at the end of the construction: Appeal Book Vol 7 p 1894 para 46. But as to certificates of the building certifier, see the Act Sch 1B s 17(2). 115 The appellants’ submissions at [382] involved a misreading of Clause 37.1. -- 42 of 68 -- 43 The Act Schedule 1B s 34 covers the other two matters, which are made offences by that section, but they are not within the warranties implied into the contract. Nor are they covered by s 21, since s 34 is not a statutory requirement for carrying out the subject work, but s 34 would be covered by Clause 11.1 of the contract, so that potentially there could be a breach of contract in this way. The particulars given related to payment claims 10 – 14. [150] The Member dealt with this on the basis that it was not a substantial breach, because the amount paid depended on the amount found to be payable by a quantity surveyor employed by the appellants, who assessed the correct value of each claim, which was then certified by the superintendent (except for the last one116), with the builder then invoicing for the amount so certified, which was paid. That was consistent with the response to the Notice to Show Cause of the builder. [151] The submissions on appeal of the appellants proceed on the basis that a breach of s 34 by the builder was necessarily a substantial breach of contract. I do not agree. It was not made a substantial breach by definition, and in view of the fact that payment was by reference to the amount certified, any “overclaiming” was necessarily harmless to the appellants. It did not affect the amount they actually paid. It was a technical breach only. For the same reason, it could not possibly satisfy the test in Koompahtoo for a breach entitling the appellants to terminate, and I have already said that Clause 11.1 was not a condition. [152] The proposition that overpayment of the builder could adversely affect the owners under a claim on the statutory insurance scheme was not relevant, because that relates to amounts paid, not amounts claimed. The hypothetical possibility of an excessive claim being allowed because of the absence of a timely response by the superintendent is of no relevance in this case. The appellants referred to Instyle Homes (supra) but in that case there were a number of breaches which were regarded as much more serious than the breach here. There is no substance to these Grounds. - Unapproved subcontractors [153] Appeal Grounds 107, 108 and 119 all related to matters arising in respect of Ground 5 in the Notice to Show Cause, subcontracting part of the work under the contract without the approval of the superintendent. This was based on Clause 9.2 in the contract, and the particulars referred to the engagement of a plastering subcontractor and a painting subcontractor by the builder. The failure to obtain prior written approval was not a substantial breach by definition, and the Member found that this did not amount to a substantial breach for the purposes of Clause 39. He found that the superintendent did ultimately give approval for the plastering subcontractor, and that the painting subcontractor was just a painter employed to do some touch-up jobs, so that his involvement in the project was not of significance. [154] Ground 107 alleged an error of law, but did not identify the error. Ground 108 was based on a misunderstanding of the Member’s reasons. He did not find that Clause 116 The last progress claim lodged by the builder had been assessed by the quantity surveyor and was ready to be certified by the Superintendent when the contract was terminated: Builder Day 3 p 21, 2. As a result, the builder has received no payment for the work done in the last six weeks before termination. It is unsurprising that the builder was unhappy about having to give evidence. -- 43 of 68 -- 44 9.2 did not apply, but that the breach was not substantial. He did comment on the prevalence of the use of contractors rather than employees in the building industry, and that almost anyone who did any work on the site would be a “contractor”, so that if prior written approval was needed for each of them the consequence would be considerable delay to the project,117 but he did not decide that the clause did not apply to the painter, only that the breach was not substantial. The proposition that every such person would require prior written approval of the superintendent does seem, at best, to be an “uncommercial” arrangement, but whether that is the correct interpretation does not arise in this appeal. For reasons given earlier, I do not accept that breaches of Clause 9.2 discovered afterwards can be relied on by the appellants for termination under Clause 39. [155] Reference was made to the decision in Advance National Services Pty Ltd v Daintree Contractors Pty Ltd [2019] NSWCA 270, which the appellants concede was given after the decision of the Member. In that case it was said to be an essential term of the contract between the parties that the work to be done under the contract was to be performed by the contractor itself, unless prior approval had been obtained for assignment or subcontracting. Such a conclusion in that case was not difficult: the relevant clause stated expressly that any breach of it would be a fundamental breach entitling the other party to terminate at once. That matter was not in issue in that case; the issue was whether the party in breach was entitled to payment under the contract for work done by the unauthorised subcontractors. The question of termination of the contract did not arise. The decision is of no relevance to this appeal, except by way of contrast to this contract. [156] The appellants also submitted that Clause 9.2 was a condition (or fundamental term) which entitled them to terminate summarily, or that what occurred was a sufficiently serious breach of Clause 9.2 to entitle them to terminate, matters said not to have been considered by the Member. I do not agree that he did not consider this, although it was considered as part of the overall argument that there was an entitlement to terminate at common law, which was rejected. In any case, I do not regard Clause 9.2 as a condition. It is not said to be one, and there is nothing in the contract to suggest that it was treated that way by the parties. Breach of it was not made a substantial breach by definition by Clause 39, nor did that clause give a right of summary termination. In the context of the building industry, where subcontracting is rife and it is commonplace for almost every person who does any actual work on a building site to be a contractor rather than an employee, it would not be a commercial construction of the contract to treat Clause 9.2 as a condition. [157] The appellants complained that the Member ignored their evidence of the importance to them of having only approved subcontractors.118 If so, he was correct to do so. The subjective intention of one of the parties to a contract as to its operation is not relevant in the interpretation of the contract.119 The respondent in 117 Particularly since, under Clause 9.2, the Superintendent was allowed fourteen days to respond to any request for approval. 118 Allen Day 1 p 47; he did not explain why. 119 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352. There was no suggestion that this represented a mutual agreed understanding. -- 44 of 68 -- 45 submissions pointed to the builder’s evidence that the original list of subcontractors approved in the contract was almost entirely created by it.120 [158] As to whether it was a sufficiently serious breach of a non-essential term to justify termination, I do not consider that it meets the test in Koompahtoo. Whether or not a particular subcontractor is approved will not in itself deprive the appellants of any substantial benefit of the contract. As well, the plastering contractor was ultimately approved, and the timing of the approval cannot be of any real significance to the appellants. The painter was a sub-sub-contractor, and had only a very small role in the overall construction process, and failing to have him approved cannot be regarded as a matter of any real consequence. [159] I may add that it is by no means clear to me that the contract, and Clause 9.2, operated in the way the appellants alleged anyway. Clause 9.2 provided, so far as is relevant: The contractor shall not without the Superintendent’s prior written approval (which shall not be unreasonably withheld): a) Subcontract or allow a subcontractor to subcontract any work described in Item 17. b) Allow a subcontractor to assign a subcontract or any payment or any other right, benefit or interest thereunder. [Reference was made to the process for gaining approval, and the clause continued:] Approval may be conditional upon the subcontract including … provision that the subcontractor shall not assign nor subcontract without the Contractor’s written consent. [160] So the clause is concerned with the subcontracting of work “described in Item 17.” Item 17 appears in Annexure Part A to the general conditions of contract, in these terms: 17 Subcontract work requiring approval (subclause 9.2): All subcontract work other than the pre-approved subcontractors for the category or subcontract work stated in Section 4 and selected subcontractors named in the finishes and fixtures schedule. [161] I expect that the word “or” in Item 17 should be the word “of”, although if I am wrong about that, the practical effect is the same. The function of Item 17, according to Clause 9.2(a), is to identify the work the subcontracting of which is the subject of the restriction in that clause. Item 17 starts with “all subcontract work’, but then contains an exception, for the subcontract word stated in Section 4 subcontracted to the pre-approved subcontractors in Section 4. This is a reference to Section 4 to the general conditions of contract, which contains a long list of categories of work, and “nominated” subcontractors, presumably the pre-approved ones. It seems to me that work the subject of a subcontract with a subcontractor 120 Submissions in writing of respondent [106], citing the statement of reasons of the respondent at p 793. The appellants sent a draft list of nominated subcontractors to the builder which contained only seven names, including one supplier, and invited it to fill in the remaining nineteen spaces, including by multiple names if desired: Appeal Book Vol 6 p 1886. -- 45 of 68 -- 46 listed in Section 4 was in the exception in Item 17. Hence it was not subject to the restriction in Clause 9.2(a). [162] It follows that, not only did the builder not require approval to subcontract the relevant category of work to a subcontractor listed in Section 4, but the builder did not require approval to allow that subcontractor to further subcontract any part of that subcontractor’s work. It does not appear whether the unapproved painter was subcontracted by a nominated subcontractor, but if so, I consider there was no breach at all. This issue does not appear to have arisen before the Member, and I have not received submissions on it, so I specifically do not decide this aspect of the appeal on this basis. - Repudiation [163] Appeal Grounds 115 and 116 related to the rejection by the Member of the submission that the builder had repudiated the contract, although Ground 116 was expressed as a conclusion and did not identify a question of law. The Member at [116] referred to the decision in Koompahtoo (supra) and correctly stated the test stated there for repudiation. The appellants complained that the Member had not referred to a decision cited to him, Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202 at 205-6, where it was held that repudiation could be found on the basis of persistent breaches in several different respects of the provisions of the relevant agreement. However, the Member at [115] expressly recognised that the appellants were complaining about the attitude of the builder in its performance throughout the contract as amounting to repudiation. Clearly the Member was conscious that repudiation could be established in such a way. [164] In Hudson Crushed Metals (supra) the Court upheld a finding that a party with the benefit of a grant of a right for two years to excavate and remove material from land had repudiated the agreement. This was on the basis that that party had failed to comply in four respects with the conditions on the grant of permission to do this by the local authority, in breach of the contract,121 something which imperilled the whole enterprise; failed to construct a cattle grid at the access point to the property;122 and failed, despite persistent requests, to provide tally sheets for the material extracted, which were the records from which the royalty payments due under the contract could be calculated or checked, copies of which were by the contract required to be provided. There were found to be breaches of eleven different obligations, some of which had continued for a considerable period, and one in particular, the provision of copies of tally sheets, the appellant was effectively refusing to carry out. [165] Interestingly, the Court also held that a breach of a clause to report the size and depth of the excavation was of no practical consequence, because the other party was well aware of the situation, and (presumably) that breach did not contribute to the repudiation of the contract. The trial judge had expressed an adverse view of the manager of the appellant, describing him as irresponsible as a witness, and in his 121 By failing to pay six monthly road maintenance contributions, failing to provide visibility widening at the point of access, failing to widen a culvert at the point of access, and working outside the permitted hours of operation. 122 Of importance because this operation was carried out within the respondent’s cattle station. -- 46 of 68 -- 47 dealings with the respondent: p 205. It was said that the behaviour of the appellant indicated that it was prepared to carry out its part of the contract only if and as it suited it, and that it showed an almost complete disregard of its obligations under the contract: p 207. Thomas J, agreeing, stressed the importance of the obligation to provide copies of tally sheets, which was constantly and almost totally breached: p 208. Overall, that was a much stronger case for repudiation than was the present. [166] That decision was applied by McPherson J in Aquamere Pty Ltd v Exelman Pty Ltd [1988] QSC 329 to find repudiation by a franchisee who had persistently breached the provisions of the agreement relating to the shelf life of ingredients, the payment of correct award wages, and the payment of a royalty based on gross takings. His Honour analysed the significance of the breaches in terms of their potential for an adverse effect on the franchisor, and noted that the third breach, effected by artificially depressing the amount of gross income by money taken from the till by the franchisee, was systematic and deliberate, and not the result of inadvertence or oversight. The franchisor had an interest in protecting the good name of businesses in the overall group, and the payment of the royalty was the principal practical benefit to it of the agreement. Again, a much stronger case for repudiation. Another example of persistent breaches of contract amounting to repudiation is Tulloch Brae Pty Ltd v Environmental Protection Equipment Pty Ltd [2021] QSC 213, a contract for the provision of services, where the level of performance was persistently inadequate: [55]. The trial judge accepted evidence that the party in breach could have done more to perform the contract. [167] The Member also cited Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2012] 2 Qd R 114, where the Court upheld a finding that a tenant had not repudiated a lease notwithstanding non-payment of rent, non-payment of outgoings, non-payment of rates and breach of a covenant to insure. There were particular circumstances surrounding these breaches. The rent was nominal, the lessor had failed to advise the amount of the outgoings (which was said not to remedy the breach but to be relevant when assessing the tenant’s conduct), the leased land was vacant and nothing was being done on it, and the obligation to provide confirmation of cover had been remedied, albeit late. Muir JA, with whose judgment the other members of the Court agreed, said at [56] that repudiation was a serious matter not to be lightly found or inferred, and stated the tests for repudiation in terms of the existing authorities at [57] and [58], including that it depended on the objective assessment of the conduct and what it would convey to a reasonable person. In that case the Court, in assessing whether the conduct amounted to repudiation, had regard to various difficulties facing the tenant. [168] A fairly recent appellate authority on repudiation of a contract to do building work is the decision of the New South Wales Court of Appeal in DCT Projects Pty Ltd v Champion Home Sales Pty Ltd [2016] NSWCA 117. Gleeson JA, with whom the other members of the Court agreed, said at [39] to [43]: For the conduct of a party to constitute a renunciation of its contractual obligations it must be shown that the party is either unwilling or unable to perform its contractual obligations, that is, it has evinced an intention to no longer be bound by the contract, or stated that it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and in no other way: Shevill v Builders Licensing Board [1982] HCA 47; 149 CLR 620 (Shevill) at 625-626 (Gibbs CJ); Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; 166 CLR 623 at 634, 647-648, -- 47 of 68 -- 48 658; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; 233 CLR 115 (Koompahtoo) at [44]. Repudiation is a serious matter and is not to be lightly found or inferred: Shevill at 633 (Wilson J). Where inability to perform is declared the conduct amounts to a refusal to perform and the innocent party need not prove that the other party was actually unable to perform when the time for performance came: Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 at 437. A renunciation can be made either by words or conduct, provided it is clearly made: Universal Cargo Carriers Corporation v Citati at 436. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it: Koompahtoo at [44]; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 659 (Deane and Dawson JJ) and 647 (Brennan J). So far as factual inability to perform is concerned, what needs to be shown is that the party in question has become wholly and finally disabled from performing the essential terms of the contract altogether: Rawson v Hobbs [1961] HCA 72; 107 CLR 466 at 481; Almond Investors Ltd v Kualitree Nursery Pty Ltd [2011] NSWCA 198 at [62] (Bathurst CJ; Giles JA and Handley AJA agreeing). It is well accepted that factual inability must be proved “in fact and not in supposition”: Universal Cargo Carriers Corporation v Citati at 450. [169] In that matter there was some conflict between the parties, and allegations that the work was proceeding too slowly, for which excuses were offered, and that some other breaches of contract had occurred. The Court upheld a finding that repudiation had not been proved, adopting what strikes me as a pragmatic approach to the question of delay. What matters more are the statements of principle set out above. [170] Overall I do not consider that any error of law on the part of the Member has been exposed in his consideration of the issue of repudiation. Whether the builder’s conduct overall amounted to repudiation is a question of fact, or of mixed law and fact, and is not appropriate for consideration at this point. In the light of my conclusion later about that issue, it is clear that the evidence was not such that the Member was bound as a matter of law to find repudiation. Termination for serious breach [171] Ground 118 was that the Member failed properly to apply and follow the alternative test for termination at common law, for a sufficiently serious breach of a non- essential term of the contract. Reference was made to Koompahtoo at [47]. At that point in the decision the majority was speaking about the traditional distinction between conditions and warranties, and cited the analysis of Sir Frederick Jordan CJ in the Tramways case. It was later that the majority adopted the analysis in Hong Kong Fir, of a sufficiently serious breach of a non-essential term to justify termination, and at [55] said that the test was whether the breach was such as to deprive the injured party of a substantial part of the benefit to which that party is entitled under the contract, said to depend primarily on the terms of the contract. [172] The Member, at [147], after considering in some detail the various defects relied on by the appellants to show a right to terminate at common law, found that he was not satisfied that, individually or collectively, they constituted a substantial breach which would give rise to a right to termination. That finding was expressed in -- 48 of 68 -- 49 general terms, and was sufficient to cover both termination for breach of an essential term, and termination for a substantial breach of an inessential term. The Member had previously rejected termination for repudiation, at [117]. [173] Although the Member did not specifically reference Koompahtoo his finding covered it, and that is all that is required. He referenced Koompahtoo in relation to repudiation at [116], so he was aware of the decision, and in any case, having considered myself the breaches relied on, none of them would in my opinion be capable of being found to be a sufficiently serious breach of a non-essential term to justify termination; none of them had the effect of depriving the appellants of a substantial part of the benefit to which they were entitled under the contract. Ground 118 is not made out. - Other grounds of appeal [174] I cannot understand Ground 129, which appears to be a complaint about the way the Member dealt with delay on the part of the supplier of pivot doors, referenced to reasons [140] – [142]. The Member did discuss pivot doors at that point in the reasons, but said nothing about delay; he did say that the builder was responsible for the doors, as between it and the appellants. It appears from the evidence that there was an issue about whether the pivot doors could be certified for the purposes of the National Construction Code, since they were not waterproof.123 The appellants admitted that the front door could not be installed until after the joinery had been installed, something that did not occur before termination, so if there was any delay installing the front doors, it was not in fact a problem. This was really not an issue, and no error has been shown. [175] Ground 131 was that the Member erred in failing to accept the evidence of the appellants’ expert witness in relation to the allegation of defective stairs. This does not raise a question of law, as the Member was not obliged as a matter of law to accept that evidence. In any case, it is not clear that the evidence was not accepted. The Member accepted that the stairs were constructed in accordance with a direction of the Superintendent, which the builder was obliged to follow: [133]. That on its face is a complete answer to this complaint, regardless of the evidence of the expert. There is no substance to this ground. I consider the factual position in relation to the stairs later. [176] Ground 132 alleged that the Member had failed properly to consider the appellants’ submissions in reply, on the ground that they went beyond a reply, which was not correct. The appellants’ written submissions in reply were structured so as to relate to specific parts of the submissions for the respondent, and as a result their overall structure was much clearer than the original written submissions for the appellant, which have limited structure. They certainly referred to a large amount of factual material not contained in the original submissions in writing. [177] I believe that at one time it was the practice of courts to confine submissions in reply to submissions of law, but I do not understand that that applies as a rule of practice in the Tribunal. Nevertheless, it is preferable for factual material to be included in the original submissions of the applicant, in order to give the respondent a fair 123 Reference is made to the relevant evidence at [242] below. -- 49 of 68 -- 50 opportunity to respond to it. There was really no opportunity to respond to such material raised for the first time in the reply. The Member’s complaint may have been poorly expressed, but the following reference, to sifting through the material to discern the substantive issues, shows that it did not lead him to disregard the content of the submissions in reply. The appellants’ real complaint is that their submissions were unsuccessful. No error of law of any consequence has been shown. [178] Ground 133 raised the proposition that it was an error of law to describe the possession of the builder of the building site as exclusive,124 because of the terms of the contract and of the Schedule to the Act. The contract provided in Clause 24.1 that the appellants shall give possession of the site or part of the site to the builder. Although the adjective “exclusive” was not used, the existence of Clause 24.2, providing for access to the site by the appellants, subject to conditions, indicates that otherwise the possession is exclusive of the appellants. [179] The appellants also referred to the Act s 109, which requires a builder to allow a consumer, here the appellants, reasonable access to a building site, at their request. Again, the existence of such a provision assumes that otherwise the builder has exclusive possession of the site. If the owners retained possession, or some possession, there would be no need for such a provision. It allows “access”, not possession, only reasonable access, not unfettered access, and there must be a request to the builder first, although the section does not require the request to be in writing. The question of what is reasonable access might be difficult to define in general, but I expect that any access which had the effect of impeding the progress of the work, as mentioned in Clause 24.2, would not be reasonable. [180] That does not mean that the builder has the sort of right of exclusive possession of the site that would be enjoyed by an owner or lessee. The builder has no interest in the land constituting the site,125 and the right of a builder has been described for a long time as a licence.126 But the builder had under the contract exclusive possession of the site, except to the extent that that right was cut down by contract or statute.127 The appellants had rights of access by contract and by statute, but that fell short of possession of the site. [181] In a sense then what the Member said was right, although it did not describe the position fully. In so far as the Member’s point was that the possession was (or perhaps ought to have been) exclusive of the appellants, so that they had no right to come onto the site at all, that was not the legal position of the builder as against the owners. This error however was of no consequence to the outcome of the proceeding. It was just part of the Member’s critique of what he regarded as a petty accumulation of a large number of inconsequential “defects” by the appellants, in an exercise of attempting to manufacture a justification for termination of the contract. That was not the basis of the decision, so any error was of no consequence, and this ground is not made out. 124 Reasons [147]. 125 The Act Schedule 1B s 43(1). 126 Cowell v Rosehill Racecourse Co Pty Ltd (1937) 56 CLR 605 at 621 per Latham CJ, in dicta which has been widely followed, eg in Duzenli Developments Pty Ltd v Benuga Pty Ltd [2020] NSWSC 1667 at 28. 127 See also Bailey “Construction Law in Australia” (4th Ed, 2018) p 247 [9.210]. -- 50 of 68 -- 51 [182] Appeal Ground 109 as written is almost unintelligible, but appears to take issue with a finding that the fact that more work would have been done under the contract to achieve practical completion had it not been terminated relieved the builder of liability for a prior breach of contract justifying termination. That was not what was found at all. What the Member concluded at [112] was that there was no right to terminate in response to the Notice to Show Cause under Clause 39, either because there were no breaches as relied on, the breaches were not substantial breaches, justifying termination or the response of the builder was reasonable. This was after he had dealt with the various grounds relied on by the appellants, and was simply a general summary of his earlier findings. I have already discussed the operation of Clause 39, and will not repeat what I have said. There is no substance in this ground. [183] Appeal Ground 114, concerned with the question of whether incorrect sarking was used, did not raise a question of law. As expounded in the submissions, it was a challenge to a finding of fact by the Member, and is covered by other, more appropriate grounds. Leave to appeal [184] It follows that the appellants have failed to show that the Member made any error of law which justifies allowing the appeal. The next issue is whether leave to appeal should be granted. I have already said something about the tests for leave. In respect of one matter, it is appropriate to give leave to appeal, in order to consider whether there was an entitlement to terminate at common law because of the encroachment by part of the concrete foundations onto the neighbouring land. Since the hearing, work on that land exposed such an encroachment, more extensive that what had been suspected by the appellants previously. This was covered in the admitted fresh evidence.128 Leave to appeal should be given in order to consider that issue. [185] As to the various grounds in the annexure to the application for leave to appeal and appeal, some such as ground 15 simply assert that factual conclusions were wrong. Others assumed a view of the legal position different from that I have set out earlier. For example, a number of findings about extensions of time were challenged on the basis of an assumption that all that was relevant was extensions validly granted, which I regard as wrong. Most of the rest just listed factual findings adverse to the appellants, and asserted that they were wrong. As well, the substance of many of the grounds has been dealt with already earlier in this decision. [186] Grounds 16, 17 and 19 challenged the finding about the timeliness of the builder’s notice showing cause, based on the proposition that the respondent had the onus of proving that the notice was given within time. That is not correct. To the extent that it is appropriate to speak of onus in this context, the appellants had the onus of showing that their claim on the policy was good, which relevantly means that the contract was validly terminated. If they sought to show that that occurred because of a failure of the builder to show cause within time, they had to show that the notice showing cause was not given within time. Any onus was on the appellants, and no error has been shown. 128 Affidavit of Allen sworn 13 November 2020, bundled separately. -- 51 of 68 -- 52 [187] Ground 18 challenged the finding that the builder intended to remedy defects and non-conformities, because the builder did not. To some extent this missed the Member’s point, which was that the termination of the contract deprived the builder of the opportunity to do further work under the contract, including work which would have remedied such matters as contemplated by the contract. But in its own terms, the submission in support of this ground relied on isolated propositions cited out of context. As to door W3.09, the position of the builder was that a remedy was being worked out with the superintendent, and although there was a claim for this as a variation, that was not identified as a pre-requisite to fixing the door, as mentioned earlier. The same applied to the state of the roof top hobs, where the statement relied on in the submissions on appeal was actually evidence of an intention to do further work on them.129 Reliance on the AWCI report was in the context where no issue had arisen as to backblocking.130 The fact that additional defects were discovered later says nothing about the intention of the builder. The appellants have no plausible challenge on this ground. [188] I have already dealt in substance with Grounds 21 and 22, where the same issue was raised as an error of law. Ground 23 challenged the finding about the appearance of the concrete hobs on the roof, on the basis that they did not satisfy the applicable Australian Standard. There was evidence from the appellants’ expert witness that the finished appearance did not meet the finish specified in the Australian Standard for a visually exposed exterior concrete surface; he recommended four possible means of rectification, including just painting,131 The builder maintained that he was working on this at the time of termination and was prepared to do more work on this, including if necessary removing the hobs and recasting them.132 There was some issue about the wording of the response by the builder, but the Member accepted, I think correctly, that it showed a willingness to do further work on this, which the Member regarded as reasonable. I agree. Strictly speaking this was a failure to comply with an applicable standard, but the response was reasonable and as an aesthetic issue only, which was potentially easily fixed, it was really a minor matter. [189] Appeal Ground 24 challenged a finding about the involvement of Mr Allen in supervising the work, as having “effectively” taken over the role of the superintendent, as if the finding did not include the word “effectively”. It does, so this ground is misconceived. Mr Allen admitted that he became further involved in supervising the work,133 and for example by 8 November he was approving a subcontractor,134 something which under the contract was a matter for the Superintendent: Clause 9.2. The finding made was clearly open on the evidence. [190] Ground 25, although listed under errors of fact, actually alleged an error of law, about the significance of a finding that the concrete hobs did not comply with the applicable Australian Standard in a matter of aesthetics. The issue as I have said 129 Paragraph 436(b). See also builder Day 2 p 10. 130 This also deals with appeal grounds 20 and 44. 131 Affidavit of Allen sworn 3 September 2018 Exhibit RJA 40, Vol 5 p 1736. 132 Day 2 p 10. The builder said the hobs were not in fact constructed as part of the roof, but separately, so they could be removed without any impact on the structure of the building: Day 2 p 6. 133 Day 1 p 25; affidavit of Allen sworn 3 September 2018 para 118, Appeal Book Vol 4 p 1164. 134 Second statement of builder Attachment 21, Appeal Book Vol 11 p 3063. -- 52 of 68 -- 53 turned on the finding that the response was reasonable, so this point is not relevant to the outcome of the matter. [191] Ground 26, dealing with requests for information, and Ground 29, concerning the percentage of work completed, are complaints about findings of fact which are not central to the resolution of the dispute between the parties, and therefore do not justify a grant of leave. Grounds 27, 28, 33 and 36 are concerned with details of things said about requests for extensions of time. As explained previously, a precise analysis of this issue was also not central to the resolution of the dispute, so the position is the same here. Grounds 30 and 31, about the significance of requests for extension of time accepted by the appellants, do not raise questions of fact but issues of law, and are based on a misinterpretation of the reasons of the Member. [192] The submissions in relation to Ground 32, 34 and 35 were advanced on the basis that the appellants were not responsible for the delay associated with the refusal of the original cabinet work subcontractor to do the work.135 Such an event is outside the control of the builder, who cannot force the subcontractor to do the work, and the process of obtaining a replacement subcontractor for this work was bound to take some time, and involve some delay, depending on the circumstances. The requirement to have a replacement subcontractor approved by the appellants can only increase any such delay, and if the work is then taken out of the hands of the builder136 and the appellants deal with the replacement cabinetmaker direct, it would be natural enough for that to produce further delay for the builder. The submissions for the appellants do not suggest to me that there was any error in the finding of the Member about this. Whether or not it justified an extension of time under the contract, it was not what I would regard as the sort of delay relevant to Clause 39, or showing a want of due expedition. [193] Ground 37 is curious. It challenged a finding that it was reasonable for the builder to delay tiling the kitchen area because it was usual for cabinets to be installed before floor tiles were laid, said to be contrary to a drawing which seemed to show tiles covering the whole area including the footprint of the cabinets, as the builder admitted: Day 3 p 18, 9. In fact the area was ultimately tiled before termination of the contract. The evidence that it was usual to install cabinets first was uncontradicted and plausible, in view of the risk of damage to tiles during the installation work, and because that would reduce the area of tiling required, so there was no reason not to accept it. Laying the tiles first does not necessarily follow from the drawing, but the builder accepted that he was (at some point) instructed to lay the tiles first, and that was what he then did: Day 3 p 18. All the builder admitted was what the drawing showed on its face. In any case, this finding is mixed up with the issue of delay, and I consider the technical justification of requests for extension of time is not relevant. [194] Grounds 39, 40 and 41 concern what are said to be factual errors in relation to the issue of overclaiming in progress claims. I have already dealt with the legal position 135 According to the builder, the nominated subcontractor closed its cabinetry division: First statement para 55, Appeal Book Vol 7 p 1896. 136 The variation to achieve this from the Superintendent was dated 9 November 2017: Appeal Book Vol 12 p 3182. -- 53 of 68 -- 54 in relation to progress claims, and as a result of my analysis the detail of any factual finding in relation to such claims is irrelevant. [195] Ground 42 was another ground which really alleged an error of law, in failing to have regard to the Act Schedule 1B s 34, which regulated the entitlement to claim progress payments. The situation here is that the contract contained a mechanism for quantifying the entitlement to progress payments, and the contract did not become illegal void or unenforceable even if there was a breach of s 34 involved in complying with it.137 That is consistent with the ordinary assumption of courts, that when a statutory requirement imposes a penalty for breach that is the only consequence of a breach, as discussed above. As mentioned earlier, it may have amounted to a breach of clause 11.1 of the contract, but I regard it as no more than a technical breach. This ground is not made out. [196] Ground 43 claimed that the failure to obtain prior approval for the plastering sub- contractor remained a breach of contract, even though that contractor was approved after it had started work. The Member’s point about the late approval of the plastering subcontractor was not that it waived the original breach, but that it meant that the breach was not substantial, a proposition I regard as obvious. [197] Ground 47 complained about a reference to the builder having done certain work in the reasons of the Member, when it was said someone else actually did it. The point here was an issue of whether the work was defective, and the Member was obviously speaking of the builder having done the work in the sense that it was done as part of the work under the contract. The Member went on to accept evidence about the state of the work, which was at that stage in substance only “roughed in”, and would have been finished off before connection to the gas supply had the contract not been terminated. The submissions provide no reason to doubt this finding. [198] Ground 48 complained about the finding made by the Member about a complaint about defective internal stairs in the house, which the Member dealt with on the basis that the superintendent had approved risers which were slightly over-height (1.4 mm over the limit of 190 mm). The difficulty arises here because of the inadequacy of the submissions made by the appellants to the Member. The specific complaints about the internal stairs were not raised until the submissions in reply, although the issue as to the internal stairs was addressed by the respondent in its submissions, which referred to there being other issues with the stairs. The respondent’s approach was that any defects with the stairs were not sufficiently serious to justify termination at common law. The appellants’ complaint was that the problems with the stairs were more extensive than the issue dealt with by the Superintendent, and that in any case the Superintendent had been mistaken in accepting the riser height. Since I propose to reconsider the issue of termination at common law anyway, as mentioned earlier, this can be dealt with at the same time. [199] Ground 49 challenged the finding of the Member that the breach in the termite barrier was not a ground entitled the appellants to terminate at common law. There was evidence that the termite barrier had originally been installed properly, and that it had subsequently been breached, something which no doubt could be remedied 137 The Act Schedule 1B s 44. -- 54 of 68 -- 55 one way or another.138 To some extent these submissions appear to be based on the proposition that the appellants were entitled to terminate for any defect or breach of contract, which I do not accept, and even accepting that termites can be a real problem in Brisbane, there is nothing in the submissions which suggests that this could amount to grounds for termination at common law. [200] Ground 50 challenged a finding that the builder intended to rectify defects in existence at the date of termination. A finding in those terms was not made by the Member, the reference being to a finding that at that date the builder was ready willing and able to complete the work. The point of that finding was that the builder was not repudiating the contract, and was willing to proceed with it in the usual way. It is common enough for there to be defects in the work identified, and remedied, before or indeed after practical completion, and the contract provided for a defect period. Whether they would have all been rectified, so as to satisfy the appellants, may be another issue, and some claimed defects may have been the subject of a dispute anyway, but it does not follow that the appellants were entitled to terminate. There is no reason to investigate a finding that was not made. [201] Ground 51 challenged a finding that the builder intended to remedy a defect allowing water penetration to a small number of windows. In evidence the builder accepted that this was a defect, and what the Member was saying was that this was the sort of thing one would expect to be remedied in the ordinary course of finishing the job. But the important finding was that the matter was not sufficiently serious to entitled the appellants to terminate, which was the real issue at that point. [202] Ground 53 asserted that the Member erred in failing to take into account further defects found or admitted by the builder would cause further delay, when deciding whether there had been a failure to perform the work under the contract with due expedition and without delay. If there was no finding, no question of fact or mixed fact and law arises, although there may be a question of law as to whether this was a relevant consideration. If so, it was clearly not. The effect of the Notice to Show Cause was to assert that there had been a lack of due expedition, and delay, and that was the issue for the purpose of termination under the contract. The appellants were not entitled to rely on possible future delay to strengthen their argument on this point.139 The position is the same for termination at common law. There could be an anticipatory breach of contract which, if sufficiently serious, could justify termination, but nothing of that kind existed here. It is also not clear that the appellants raised this proposition before the Member. There is no substance to this ground. [203] Ground 54 was also based on a misinterpretation of the reasons of the Member, treating a statement that there was an explanation as if it were a finding that there was not a defect. Ground 55 is a re-hash of a ground I have previously dealt with, about the absence of timely certification. I do not need to consider it again. Ground 56 challenged something said in the course of distinguishing the circumstances of 138 The expert recommended that a report on remediation be obtained from a pest control specialist, but no such report was put in evidence by the appellants. There was no evidence that remediation was not possible. 139 The position is the opposite: an earlier lack of due expedition can be remedied by the builder’s working with due expedition more recently, as shown by Hometeam (supra): see [91](g) above. -- 55 of 68 -- 56 this matter from those under consideration in Dura (supra), saying that unlike that case there had been no significant defects identified or defects lists submitted to the builder: [31]. The challenge was based on the proposition that a defects list was provided to the builder on 23 October 2017, which was true, but the work had been carried on for over eighteen months at that stage, and the Notice to Show Cause was issued less than three weeks later, on 10 November. That is a very different background from that in Dura, and the Member’s point was a good one. [204] Ground 57, as developed in submissions, in effect complained about the failure of the Member to have regard to the fact that the Insurance Policy issued by the respondent expired two years after work commenced under the contract, so that the appellants had to terminate the contract or lose the benefit of the policy. It is true that the conditions of the insurance policy provided in clause 1.7 that the respondent was liable to pay only if the contract was properly terminated within two years from the date of the payment of the premium, or the date of entering into the contract, whichever is the earlier.140 The relevance of this however to the process of termination under the contract or at common law is not at all clear. [205] It could not be relevant to the question of whether or not a term of the contract was a condition, because that depends on the terms of the contract, not the terms of a separate contract entered into with a different party. Even if this limitation on the standard insurance policy were known to both parties when the building contract was entered into, there is no provision in the building contract to the effect that, notwithstanding any extensions of time, it was an essential term that the work be completed within a period of time less than two years, and no such term could be implied. [206] Whether there has been repudiation of the contract by the builder is to be assessed objectively, and I consider that the same applies to the question of whether there has been a sufficiently serious breach of an intermediate term. In neither case could the existence of a collateral motive on the part of the owner for wanting the contract terminated be relevant. It follows that this matter was irrelevant to the question of whether the appellants had validly terminated the contract at common law, and was correctly disregarded by the Member when considering that point. [207] As to termination under the contract, if I am correct that the reasonableness of the response to the show cause notice has to be assessed objectively, again this issue is irrelevant. If, as was held by the New South Wales Court of Appeal in Bundanoon Sandstone (supra),141 there is an implied obligation on the owner to act reasonably and in good faith in giving a notice to show cause, it could be argued that the existence of this collateral motive for giving the notice showed that the appellants were in breach of that obligation; but that point does not seem to have been argued before the Member. [208] What was argued before the Member was the closely related point, that there was such an implied obligation in assessing the reasonableness of the builder’s response 140 Appeal Book p 175. I do not know the date on which the premium was paid, but the contract was dated 17 February 2016. The existence of such a clause reinforces the proposition that the “consumer protection” aspect of this insurance scheme is decidedly limited. 141 [2019] NSWCA 87 at [154] – [160]. -- 56 of 68 -- 57 to the notice, which was breached if the attitude of the appellants was that, come what may, they were going to terminate because of the time limit in the insurance policy. This was argued by the respondent, and could have provided another reason why the appellants had not validly terminated the contract under the contract. If however the Member approached the issue on the basis of an objective assessment, as I do, it ceased to be relevant. On my approach, there was no error of law in disregarding this point; on the alternative approach, any error was one in favour of the appellants, so they can hardly complain about it. [209] Overall therefore the various errors of fact, or mixed law and fact, sought to be raised by the appellants (apart from the specific issue referred to above) do not suggest that there is a sufficient likelihood that any finding of fact, which was of importance in the final outcome before the Member, would be overturned in the event of a rehearing, to justify a grant of leave to appeal. Accordingly, there will be leave to appeal only on the question of whether, taking into account the encroachment over the side boundary of the concrete now shown to have occurred, the appellants were entitled to and did terminate the building contract at common law, for either repudiation or sufficiently serious breaches of non-essential terms. That the appeal is by way of rehearing. It is well established that, on an appeal by way of rehearing, the Appeal Tribunal is required to conduct a real review of the hearing, and the Member’s reasons, and make its own determination of relevant facts in issue from the evidence, giving due deference and attaching a good deal of weight to the Member’s view.142 Nevertheless, in order to succeed on such an appeal, the appellants must establish some legal, factual or discretionary error.143 Termination at common law [210] The test for repudiation of a contract is, relevantly, conduct evincing an intention to fulfill the party’s contract only in a manner substantially inconsistent with the party’s obligations, so as to convey to a reasonable person in the situation of the other party, renunciation of a fundamental obligation under the contract.144 Such a situation can arise with a building contract, although it is well established that repudiation is something not lightly found, and where, as here, the owners rely on defects in the work constructed, they must collectively amount to something a good deal more serious than just the usual collection of defects and deficiencies which might easily occur in connection with the construction of any dwelling. The Court of Appeal has held that contracts have not been repudiated despite frequent and persistent breaches of terms, and emphasized that repudiation is not lightly found.145 If something done by one party can be characterized as effectively a refusal to perform it will amount to repudiation, but it needs to be fairly clear and relate to all 142 Fox v Percy (2003) 214 CLR 118 at [25]; Rowe v Kemper [2009] 1 Qd R 247 at [3]; White v Commissioner of Police [2014] QCA 121 at [6]; McDonald v Queensland Police Service [2018] 2 Qd R 612 at [47]. 143 Fox v Percy (supra) at [27]; Teelow v Commissioner of Police [2009] 2 Qd R 489 at [4]; Commissioner of Police v Al Shakarji [2013] QCA 319 at [7], [65]; White v Commissioner of Police (supra) at [8]; McDonald v Queensland Police Service (supra) at [47]. 144 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at [44], as quoted in Gramotnev v Queensland University of Technology [2019] QCA 108 at [207]. 145 Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2011] QCA 379, admittedly a case about a long lease at a nominal rent. See also Wash Investments Pty Ltd v SCK Properties Pty Ltd [2016] QCA 258 at [35]. -- 57 of 68 -- 58 or at least a substantial part of the obligations under the contract.146 I have already discussed a number of decisions on repudiation, and will not repeat that discussion. [211] The test for a sufficiently serious breach of a non-essential terms, also established in Koompahtoo (supra), is that it has the effect of depriving the injured party of “a substantial part of the benefit to which he is entitled under the contract.”147 In the previous paragraph the majority referred to the relevance of the adequacy of damages as a remedy for breach. They also said that this depended on the terms of the contract. - Encroachment [212] I have referred earlier to the fresh evidence about the extent of the encroachment exposed in the course of building work on the neighbouring property. I suspect what happened was that, when the foundations were being excavated, the side of the cut fell in, and this was then not blocked off with formwork, but this does not really matter. In the event this was rectified by cutting off the encroaching bulge of concrete, although a further encroachment, by the end of a pier at a lower level, was left in place as it did not interfere with the works on the other property. I suspect it will never be touched. The presence of the encroachment did not affect the structural integrity or liveability of the house built by the builder, and the only consequence was a liability for the cost of the removal work undertaken, which has not been disclosed. It follows that damages are an adequate remedy, so it was not itself a breach serious enough to justify termination, and is obviously not a repudiation of the contract. [213] The next issue is whether, taken with the other matters raised during the hearing, the builder had repudiated the contract or committed sufficiently serious breaches of inessential terms to entitle the appellants to terminate the contract at common law. In relation to this, the appellant have unhelpfully not focused their submissions on the more significant breaches, and have sought to rely on all defects in the work for this purpose. After the hearing the written submissions of the respondent identified a list of breaches other than the matters referred to in the notice to show cause, and these were addressed by the appellant in the reply, and in submissions for the appeal. I expect these were the matters actually litigated at the hearing, or at least the more significant of the defects. I do not propose to trawl through the material to identify and address everything that the appellants have ever referred to as a defect in the work amounting to a breach of contract. - Notice to Show Cause issues and backblocking [214] Most of these individual matters have already been addressed in the course of these reasons. With regard to the matters referred to in the Notice to Show Cause, the first covered three alleged defects, plasterwork, the ensuite door and the concrete hobs. [215] There had been some complaint about the plasterwork, investigated by experts who found only minor defects, of no significance in this context. The appellants also rely on the later discovery of an absence of backblocking, as shown by the evidence of 146 EMClarity Pty Ltd v BSO Network Inc [2022] QCA 177; Wash Investments (supra) at [33]. 147 Koompahtoo (supra) at 140; cited in Gough v South Sky Investments Pty Ltd [2012] QCA 161 at [31]. -- 58 of 68 -- 59 the building expert called by them. As clarified in cross-examination, there was an absence of backblocking in the upper level ceiling, although it was present in the ceilings of the master bedroom and nursery.148 It was also absent from the library and bedroom 2. The remedy was to remove the ceilings without backblocking, and replace them with it. I accept that this was a matter of some significance, and could contribute to a case justifying termination, although insufficient on its own. [216] The next matter was the incorrect size of the ensuite door. The true position here was that the builder was working with the architect to identify a suitable solution, indicating that the defect would be remedied. The fact that the builder claimed an entitlement to payment for a variation under the contract for this does not amount to repudiation, as it was asserting a right under the contract, not insisting on something regardless of the contract. This was something which required fixing, either by the builder or someone else, but in the overall scheme of things, it was not a major problem, and damages are an adequate remedy.149 The third issue was a visual deficiency in the concrete hobs of the rooftop terrace. This is something which was of no structural significance, did not prevent the occupation and use of the house, and should have been easily remedied.150 Apart from the backblocking, none of these matters was of any real significance. - Delay etc [217] The second ground in the notice, failing to proceed with due expedition and without delay, has already been addressed. I do not regard it as a matter contributing much to a case of repudiation. There was no apparent abandonment of the project, or any lengthy period when no progress was made with the works (except at the beginning, when there was a redesign because of an issue with a neighbour)151, a number of extensions of time were given, and in other cases the refusal of extension of time did not show an absence of due expedition or unreasonable delay. This was obviously a complicated and difficult project, being constructed on a steep slope, and one where there were a large number of changes to the design in the course of the works, many of them in response to problems identified by the builder.152 The same applied to ground 3. At the time the notice was given, the work was only about one month past the date for practical completion as extended by agreed extensions. I do not accept that the appellants can manufacture a ground for termination by refusing to agree to requests for extension of time which were reasonable. Ground 6 is really in the same category, and was largely dependent on grounds 2 and 3. 148 Day 3 p 42 – 46. 149 The appellants’ expert estimated that rectification would take two men half a day: Day 3 p 49. 150 According to the expert, one way to fix it was by painting the hobs: Affidavit of Allen sworn 3 September 2018 Exhibit RJA 40, Vol 5 p 1736. The expert said it was not necessary or reasonable to replace the concrete hobs: Day 3 p 48. 151 Builder Day 2 p 52. 152 There were 106 formal requests for information to the Superintendent (Vol 7 p 1899) and the builder said that there were many more informal ones: Day 3 p 16. Many revisions to the drawings were issued, particularly in June, July and August 2017: Appeal Book Vol 8 p 2459, 60. Mr Allen said that one fundamental drawing was reissued 27 times: Day 1 p 83. See also builder first statement para 65, Vol 7 p 1898. -- 59 of 68 -- 60 - Overclaiming and subcontractors [218] Ground 4 was the claims for payment in excess of the amount actually payable. I have discussed this ground already, and regard these as mere technical breaches, which are irrelevant for present purposes. Ground 5 was failing to obtain prior approval for subcontracting. I have also discussed this ground earlier, and regard these as little more than technical breaches as well, of no significance for present purposes. None of the matters properly covered by the Notice to Show Cause amounted to a sufficiently serious breach of non-essential terms, or made a significant contribution to a plausible case of repudiation. [219] The appellants submitted that there were twenty-four other subcontractors who had not been approved,153 and that this was a more substantial issue than was indicated at the time of the Notice to Show Cause, and showed that the builder was not willing to comply with this obligation under the contract. The builder said that most of these covered quite small amounts of work, usually just one man doing a bit of work.154 Even if these were breaches of the contract, it is difficult to see that the absence of approval had any significant effect on the delivery to the appellants of the substantial benefit of the contract. On their own, I regard the breaches in this category as of little significance. They would not contribute much to a case for repudiation by the builder. - Other Defects relied on - Sarking [220] Turning to the other issues litigated, the first was the complaint about the use of sarking said not to comply with the National Construction Code. This was said to be significant because to remedy it required the removal of the timber cladding and replacement of the sarking, and the cladding. I have mentioned the evidence on this topic earlier.155 Having considered it, including the oral evidence of the appellants’ expert witness, I agree with the Member that the appropriate conclusion is that there was no breach of the Code, and hence no breach of contract by the builder at all. The evidence showed that another sarking was more vapour permeable than the one used, but that did not mean that the one used was not vapour permeable. The one used was described as a Medium Vapour Barrier according to the expert. On the data sheet produced by the builder it was more vapour permeable than the product said by the expert to have been used, but in either case, the sarking was not impermeable to vapour, so it was vapour permeable. The expert did not provide any reason, such as a reference to a definition in the Code, to show that that was not so.156 Even if the expert regarded the other sarking as more appropriate for use in this context, his evidence did not show a breach of the Code. I consider this was not proved to be a breach of contract at all. 153 Day 1 p 31. 154 Day 2 p 92. 155 See [26], [27] above. 156 I found his evidence as to what was vapour permeable membrane at Day 3 p 36 confusing. -- 60 of 68 -- 61 - Uncrimped gas pipe join [221] The next issue was the failure to crimp an end of a gas pipe which had been installed. Again I have already mentioned this issue. There was a short length of copper piping which ran between the outside of the house near the corner of the garage into an area above part of the ceiling of a room immediately below that part of the garage, a store opening off the home office.157 The length of copper pipe was quite short, and penetrated the concrete through a bored hole, then ran into a connection with a different type of gas pipe as installed in the building, described by the expert as PEX poly-pipe. There was to be a connection to the gas meter and hence to the gas supply, but none of that had been done when the contract was terminated. A photograph in his report showed the poly-pipe connection to the connector had been crimped, but that the connection with the copper pipe had not been crimped.158 [222] Accepting that the connection had been covered by the plasterboard, I consider that this is properly regarded as an instance of incomplete work, an unfinished part of the process after “roughing in” the gas piping. The evidence was that this piece of copper pipe was really a “place filler” until they were in a position to connect the gas to the external meter, which had not yet occurred.159 It was only when that connection was put in that the need for crimping arose. That makes sense, and is supported by evidence, and I accept it. I am not persuaded that it is a defect and breach of contract at all; it is simply an example of uncompleted work. Even if it were a breach, and crimping this connection had been overlooked, it was quite a minor matter to rectify, since it was simply a matter of accessing the connection through the plasterboard and crimping the end. This would have been picked up on pressure testing before the gas was turned on, and really posed no risk.160 - Internal stairs [223] The next issue was the internal stairs, which the appellants say were constructed contrary to the National Construction Code and applicable standards, and have had to be demolished and rebuilt. The expert identified problems with the stairs, that at one point the head clearance was below the minimum of 2 m, and that some risers were above the maximum of 190 mm.161 As well, there were gaps between the tops and bottoms of the treads which were greater than permitted by the Construction Code.162 He apparently did not check all the stairs, and by the time he saw the house again, the stairs had been demolished. The builder agreed with the expert’s figures, and said that there were problems with the stairs, caused by the design of the stairs and changes in the levels of the slabs, and that he had been working with the 157 Report of expert Appeal Book Vol 9 p 2569. The site dropped steeply from the road, and the garage was on a level above the level of the store room and the rest of the “ground floor”. 158 Report of the expert Appeal Book Vol 9 p 2570. 159 Letter from gasfitter Appeal Book Vol 11 p 2991. 160 Ibid. 161 Report of the expert in Appeal Book Vol 9 p 2574. 162 It is not clear from the report whether this last problem was due to an absence of the detailed edge upstand along the back edge of the treads, mentioned in the report, or that it was inadequate, as explained below. -- 61 of 68 -- 62 architects to try to work out a solution.163 The stairs had not been finished when the contract was terminated. [224] My examination of the plans demonstrated to me that there were design issues with the stairs. I have looked at the design details for the stairs in the plans.164 The elevation showed four flights of stairs, including two below the Ground Level, which had risers of 180 mm; but the flights up and down from the (higher) Garage Level were shown with risers of 190 mm. The Garage Floor level was shown as 44800, but there was a step down to 44620 to a landing at the top of the stairs down to the Ground Level. Those stairs had only five steps before they passed under the floor above the Ground Level, at 190 mm each, a drop of 950 mm. On the drawing the landing had clearance to the base of the First Level of 1340 mm, giving a head clearance of a minimum of 2290 mm. [225] There must have been further changes, however, because the builder included in his second statement part of Revision A of a drawing, which showed the garage floor level of 44.700, although the floor level below remained at 42.100 m.165 The drawing does not show the slab thickness, but I suspect this was before it was increased to 250 mm.166 That occurred because the builder pointed out that the office on the level below the garage extended beyond the garage door, and something needed to be done to waterproof the slab at this point.167 This was passed on to the engineers, and in the event the garage slab was increased in thickness to 250 mm. If the top of the slab had been 44.700 and the slab was 200 mm think, that would have allowed exactly 2400 mm clearance above a floor at 42.100. That a battened and lined ceiling produced a clearance of 2380 mm shows that the garage slab was actually moved up in connection with these changes, not down as the appellants suggested.168 But the real point here is that design changes were needed because of deficiencies in the original design, which were not the builder’s fault. [226] Subsequently on 15 September 2917 the architects gave a direction to the builder to provide risers of 191.4 on the step down to the landing, and on the steps up from the landing to the First Level.169 At some point as well, it appears that the level of the garage floor was raised by the architect, perhaps by 100 mm,170 and as a result the landing was raised, and that caused difficulties with the stairs down to the Ground Level, as identified by the expert. As a result, the two flights of steps really required redesigning, but that was not done before the contract was terminated. The problem here is that the levels changed, but how this affected the stairs was not worked out by the architects at the time, as it should have been.171 163 Day 2 p 29, 30. 164 Drawings 614 and 615, Appeal Book Vol 4 p 1275, p1265. See also Plan A3, at p 1243. 165 Appeal Book Vol 11 p 2782. 166 The original thickness was 200 mm: Engineers drawing 4.0 (Revision J), Appeal Book Vol 12 p 3150. Increased to 250 mm: Drawing 5.0 (Revision G) Appeal Book Vol 12 p 3156. 167 Email builder to architect 27 March 2017, Appeal Book Vol 11 p 2964. A solution was proposed to the architects: p 2963, 4. 168 Affidavit of Allen sworn 23 May 2019 para 44; Appeal Book Vol 12 p 3109. 169 Appeal Book Vol 11 p 2295, p 2296. 170 Builder Day 2 p 28, 9. 171 See also letter architects to Mr Allen 22 May 2019, Appeal Book Vol 12 p 3116. -- 62 of 68 -- 63 [227] An examination of drawing 615 shows how the architects proposed originally to ensure that the steps would be compliant with the maximum gap requirement. There was to be a backboard 70 mm by 20 mm fixed to the back of each tread, so that the gap above the backboard was 118 mm, within the 125 maximum. (The treads tapered slightly from the front underneath.) Unfortunately this detail was based on a tread spacing of 180 mm. If the tread spacing was 190 mm, unless the backboard was changed, the gap would become 128 mm, non-compliant. Increasing the tread spacing to 191.4 mm would only make this worse. The builder said in evidence that the expert’s figures were correct, and he had raised the gap with the architects, and they were proposing to put something in to narrow the gap again: Day 2 p 29, 30.172 [228] The builder said that the architects believed that they could get approval for the over-height and changing risers, and the low ceiling, the latter on the basis that the relevant rooms were not habitable rooms, but that did not occur.173 So far as the variation in the stair risers was concerned, there was some justification for this, in view of an email from the certifier on 11 September 2017.174 The builder was confronted with the problem that the garage floor was changing, and hence the levels were changing, and essentially this was because deficiencies in the design emerged during construction. The builder has to follow the instructions of the architect, who was also the superintendent, and it seems to me that essentially that was what the builder was doing. After the termination of the contract, the stairs were rebuilt to a different design.175 That shows that the real problem here was one of design, and that the design issues had not been finalised at the time the contract was terminated. I am not persuaded that this issue involved any breach of contract by the builder at all, and this issue does not contribute anything to a case for termination at common law. [229] The appellants, in submissions on appeal para 513(a), said that the design issue was in relation to the stairs leading up from the garage, not down to the kitchen level. Those stairs had design faults, but that was not the stairs the expert was speaking of in relation to the 2 m clearance issue. In relation to the stairs up from the Garage Level, it is clear that the builder was just following directions of the architect, as it was bound to do, and any problems were the fault of the architect, and involved no breach of contract by the builder. The appellants’ submissions do not answer the real point. [230] The contract required the builder to construct the works in accordance with the plans and specifications: Special condition 6.1. It also required the builder to comply with all legislative requirements: Clause 11.1. In the event of an inconsistency, the matter was to be referred to and resolved by the Superintendent: Clause 8.1. As well, at the start of the architects’ drawings there is a General Note including the statement that the architect’s interpretation of the contract documents shall be final.176 As the architect was the Superintendent, both applied, and it follows that, in 172 Mr Allen said he would not have approved what the architect was proposing: affidavit sworn 23 May 2019 Appeal Book Vol 12 p 3112. This was a matter between him and the architect. 173 Builder second statement Appeal Book Vol 11 p 2782; Day 2 p 47 174 Appeal Book Vol 11 p 2992, stating tolerances in assessment of compliance of risers. 175 Affidavit of Allen sworn 23 May 2019 para 49; Appeal Book Vol 12 p 3110, 1. See also Report of the expert in Appeal Book Vol 9 p 2576. 176 Appeal Book Vol 4 p 1225. -- 63 of 68 -- 64 essence, under the contract the builder had to do what the architect said to do, even if it was contrary to the National Construction Code. Doing so involved no breach of contract by the builder. It follows that it was not helpful for the appellants to argue (as they did) that the architect had made a mistake, even if that were true. [231] In my opinion, it follows that the demolition and reconstruction of the stairs was essentially the result of design errors and changes made by the architects, and even if the builder contributed to the problems in some small way, which I have not identified, the reconstruction would have been necessary anyway and was not made necessary by any breach of contract by the builder. Certainly the builder cannot be blamed for doing what the architect instructed, and that cannot be part of a case for termination. I doubt if there was a breach of contract at all, but it cannot contribute to a case of repudiation. It was reasonable for the builder to have proceeded on the basis that compliance with the design would satisfy the relevant legislative requirements until the contrary emerged. It seems to me that, if the builder was just doing what the Superintendent directed, the builder was not in breach of the contract at all, because of Clause 8.1. At the very least, because the builder was trying to comply with the contract, this could not amount to part of a case of repudiation. Any problems sourced to the builder were not the major problems, and this also cannot contribute to a case of substantial breach of inessential terms. - Wet area work [232] The next issue was what was said to be defective or incomplete work in wet areas.177 This largely consisted of a failure to install metal angles at the edges of wet areas, where the tile floors would abut other floors. Such angles are certainly required, but in circumstances where the tiling had also not yet been installed, the required angles could easily have been installed, by the tiler or by someone else, before the tiles were installed.178 This is an example of incomplete work, rather than defective work. [233] Apart from this, the expert identified a couple of areas where the waterproofing had small penetrations, either nail holes or a corner scraped off.179 Accepting that these were really defects, they were obviously minor and could not really contribute to a case of repudiation, or of substantial breach. - Water penetration at windows [234] The next issue is some water penetration, to two areas of the house. The expert identified some indicia of water penetration near the eastern windows of the library on the first floor, and offered the plausible opinion that this had been driven through inadequate sealing by north-easterly winds.180 He said that scaffolding or a cherry- picker would be required to identify and reseal the leaks, although I cannot see from the plans how a cherry-picker could be brought to the necessary position. At the time the contract was terminated, scaffolding was in position to access these windows from outside, so any absence of scaffolding is not the builder’s responsibility. 177 As described by the expert, Appeal Book Vol 9 p 2577 – p 2580. 178 As the builder said was intended: Day 2 p 19. 179 The builder disputed that it was responsible for these: Second statement Appeal Book Vol 11 p 2789. 180 Appeal Book Vol 9 p 2584. -- 64 of 68 -- 65 [235] The other area identified was in the home office, which is located at the western end of the ground level, essentially under the garage.181 There was evidence of water staining on the plasterboard identified by the expert, at the bottom of a wall, and on the ceiling next to a window, and the expert said the latter was typical evidence of water penetration due to defective or omitted flashing or other sealing at the top of the window frame. This could have also caused the other water problem, or it may have been due to a waterproof membrane outside the retaining wall being penetrated or otherwise failing to exclude water from the interior. The builder said that these were examples of incomplete work, and final sealing had not yet occurred.182 The Member said that rectification of them was the builder’s responsibility: [137]. The expert witness said that he would have expected windows to be properly sealed before plasterwork was put in place inside them.183 That makes sense, and I expect that it was a mistake on the part of the builder to do the internal plasterwork as soon as it did, for this and other reasons.184 There was no expert evidence however that the plasterwork had been done too early. The Member seems to have accepted that this was defective work, and I shall assume that it was. [236] This water penetration was a matter of some significance, but not of great significance. I assume it required proper sealing of the windows, and replacement of the damaged plasterboard. It was certainly not grounds for termination alone; it may contribute to grounds for termination, depending on the overall collection of relevant defects. - Penetrations of termite barrier [237] The next issue was that there were penetrations to the termite barrier, which was in the form of a chemical impregnated polymer sheet which lined the relevant walls. The expert reported that on his inspection he saw multiple small punctures to the sheets, likely to have occurred in the course of carrying out other work, and that there had been larger penetrations to route gas, plumbing, electrical and air- conditioning lines through vertical surfaces.185 He recommended that the installer investigate the barrier, and carry out all necessary remedial work. Presumably that was done, but there was no evidence about the extent of the work or how substantial it was.186 In the circumstances, I assume that the necessary repair work was not particularly substantial. [238] It was submitted that this was really an example of incomplete work, as one would expect penetrations to the termite barrier, including some clearly deliberate, would entail subsequent rectification of the barrier. The Member appears to have treated it as an example of defective work, and on that basis it could amount to a part, albeit a small part, of a case for termination. I would expect however that, in a situation where there had been only limited certification of the termite proofing to that point, 181 Appeal Book Vol 9 p 2585, 2586. 182 Builder Day 2 p 69; second statement para 45; Appeal Book Vol 11 p 2789. This was supported by the glaziers: Appeal Book Vol 11 p 2938. The appellants’ evidence was that the relevant windows were finished, even if others were not: affidavit sworn 23 May 2019 para 21. 183 Day 3 p 50. 184 The builder may have felt under pressure from the appellants to expedite the job. 185 Appeal Book Vol 9 p 2588. 186 Reports from the pest control specialist exhibited to the affidavit of Mr Allen sworn 26 March 2019 as RJA 108 and RJA 109 Appeal Book Vol 10 p 2735, 2738, deal with other matters. -- 65 of 68 -- 66 further termite-proofing work would have been done on the house before completion and it may well have been convenient to have rectified these penetrations at that point.187 In any case, there was no expert evidence that the penetrations of the termite barrier were not susceptible to reasonable repair. It was not suggested that the significant wall penetrations shown in the photographs were not in accordance with the design, and if so, there was not much else the builder could have done. Overall, in my opinion this is an example of incomplete work. - Unapproved subcontractors [239] There were some other matters relied on by the appellants as grounds for termination, or as contributing to an overall case for termination. The appellants relied on additional instances of unapproved sub-contractors. As I said before, I really cannot regard this as a matter of any great importance, since the important objective of the contract was to provide the appellants with the house in accordance with the contract, and it is difficult to see how they are worse off in any practical sense if some work is done by unapproved subcontractors, so long as it is properly done. If it was not properly done, that is the real issue, not whether or not the subcontractor was approved. I do not regard this as contributing to a case for termination at common law. It certainly did not deprive the appellants of a substantial part of the benefit to which they were entitled under the contract. - Other issues [240] Some other issues seem to have been at least ventilated at the hearing. The appellants complained that the house as built was too close to the boundaries in breach of the development approval, requiring an application for amended approval, which was granted.188 Given the absence of any significant consequences, this is really not a relevant issue, as the Member said: Day 2 p 43. In any case, it was not claimed that the house was not built in accordance with the design, and if the house was not designed to fit the required set-backs, that was a defect in the design, not the fault of the builder. [241] The appellants complained that the windows supplied were not the brand specified. That was true, because, according to the builder, the nominated window supplier stopped dealing with that brand, and used a different brand instead, said to be just as good.189 That last point was not contradicted, and if true this was a technical breach only and could not contribute to a case for termination. [242] The appellants complained about the failure to install the pivot doors at the front and one side.190 These were frameless glass doors, and said by the builder (and by the supplier) to be uncertifiable under the National Construction Code as they were not waterproof.191 Mr Allen disputed this, but on my reading the Code does not provide 187 The builder said that additional termite protection work was to be done: Day 2 p 109. 188 Affidavit of Allen sworn 13 November 2020 Exhibits RJA150, RJA151. 189 Builder second statement, Appeal Book Vol 11 p 2778. 190 Affidavit of Allen sworn 23 May 2019 para 30, Appeal Book Vol 12 p 3107. In this case, he seems to be insisting on the drawings and specifications in preference to the requirements of the National Construction Code. 191 Builder Day 3 p 25 – 30. As well, he was waiting for details about the type and location of the lock: Second statement para 10, Appeal Book Vol 11 p 2780. Supplier: Appeal Book Vol 11 p 2938. -- 66 of 68 -- 67 for frameless glass doors as a waterproofing method. However, Mr Allen admitted that the front door could not be installed until the cabinetwork had been delivered, to allow access for it,192 which had not occurred when the contract was terminated. This was therefore not an issue, and at best an example of incomplete work. [243] There was a complaint about the thickness of the external fibre cement sheeting, covered by the Member at reasons [143]. The position was as he described, and I agree with his conclusion. This is not an issue. As to the issues of illegality, the only one identified of any real significance was continuing to work before obtaining a clear certificate at the frame stage, discussed earlier, and the only adverse consequence was that an inspection or inspections had to be done again. I do not regard this as contributing to a case for termination, in view of the absence of evidence of impact on the appellants. [244] There were complaints that some gas lines had not been run as required by the drawings, and that some of the electrical work was defective.193 This does not appear to have been raised with the builder in cross-examination, or to be supported by other evidence, or evidence about rectification, and in those circumstances I cannot draw any conclusions about it as a matter of any real significance. This is a consequence of the appellants’ failure properly to identify the factual basis for their case for termination. As I have said, I am not going to dig around in the material to attempt to identify any other examples of defects or other breaches which would be capable of making a real contribution to a case for termination. Consideration and conclusion [245] I have mentioned a number of cases dealing with, and to some extent applying, the relevant legal principles, generally cases involving different types of contracts. Those principles were applied, in a case involving a domestic building contract, in Mousa v Vukobratich Enterprises Pty Ltd [2019] QSC 49. In that matter the builder was found to have repudiated the contract by an inability to perform. A large number of individual defects, found to be the fault of the builder, were identified in the decision. The major ones were inadequate waterproofing of retaining walls leading to water seepage (rectification cost estimated at $223,642), inadequate undercroft retaining walls (rectification cost $42,268), groundwater collection at undercroft (rectification costs $19,511), extensive water penetration of external doors and windows (rectification cost $160,000 if the doors and windows can be reused), extensive problems in the roof construction (rectification costs $116,000), inadequate structural support for the atrium glass wall (rectification costs $22,500), cracking of the concrete pool (rectification costs $21,195), spalling of a blockwork wall (rectification cost $18,500), ceiling height lower than specified in the contract (rectification costs $44,348) and poor external painting (rectification costs $65,494). There were a further eighteen more minor defects, and the total cost of rectification of all defects was found to be $818,227 plus GST. [246] The cost of completing the construction of that house as required by the contract was found to be $1,145,661.67, not including rectification costs, although there was a deduction of $575,130.62 as the unpaid balance of the contract amount. The 192 Affidavit of Allen sworn 26 March 2019 page 21, Appeal Book Vol 10 p 2623. 193 Affidavit of Allen sworn 19 October 2018 paras 44 – 59, Appeal Book Vol 6 p 1756, 7. -- 67 of 68 -- 68 original contract sum was $2,100,000, and there were found to be a number of variations for which an additional $180,758.51 was allowed. By contrast, in the present case the builder said that there was $778,893.99 owing for work done but not paid for,194 covering six weeks work, the last progress claim having been due to be certified just after the contract was terminated.195 He also said there was another $600,000 left to claim in the contract.196 Mr Allen said that the estimated cost of his brother’s finishing the house was $761,000.197 [247] In Mousa the owners terminated for repudiation in December 2015, and that entitlement was upheld by his Honour. The owners relied on the defects, and on unjustified claims for variations, non-compliant progress claims and unfounded claims for sundries. The evidence was that the builder sought payment of various amounts from time to time, not related to the scheme for payment under the contract. But repudiation was found on the basis of the extensive defects providing “overwhelming evidence of repudiation”, showing that the construction was beyond the builder’s competence: reasons [193]. [248] Obviously that represents a very clear case of repudiation, and does not represent a necessary standard of default to be attained. But it stands as a very marked contrast to the present case, where the only significant defects were the encroachment onto the neighbouring land, the absence of backblocking in parts of the plaster ceilings, and to a lesser extent water penetration through inadequately sealed windows. There were some additional minor matters, but on the whole they do not show either a refusal, or an inability, to perform the contract other than in a manner substantially inconsistent with its terms. Applying the approach in the authorities referred to earlier, in my opinion the behaviour of the builder in the present case has not been shown to have amounted to repudiation of the contract, so as to give rise to an entitlement to terminate on that basis at common law. [249] As for the alternative ground, on the basis of a collection of breaches amounting to sufficiently serious breaches of non-essential terms, I do not consider that the breaches of contract which have been demonstrated, taken together, amount to a sufficiently serious set of breaches of non-essential terms to entitle the appellants to terminate on that basis at common law, since they did not deprive the appellants of a substantial part of the benefit which they were entitled to under the contract. I consider that damages were an adequate remedy for such breaches as have been proved by the appellants. It follows that, on this basis as well, the appellants were not entitled to terminate the building contract at common law. [250] There is therefore no reason to interfere with the conclusion of the Member, that the appellants had not validly terminated the contract with the builder, and accordingly the decision of the respondent to reject their claim under the insurance policy was correct. The decision of the Appeal Tribunal is that the appeal is dismissed, and although leave to appeal was granted, limited to one ground, the appeal by leave is also dismissed. Otherwise, the application for leave to appeal is refused. I shall give directions as to any dispute as to costs. 194 First statement para 79, Appeal Book Vol 7 p 1900. 195 Day 3 p 21, 2. 196 Day 2 p 76. 197 Day 1 p 94. The figure was presented as if it included rectification of existing defects. -- 68 of 68 --