CJM Innotrack Pty Ltd v Liang & Wang [2022] QCAT 53

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: CJM Innotrack Pty Ltd v Liang & Wang [2022] QCAT 53 PARTIES: CJM INNOTRACT PTY LTD (applicant) v YONG CONG LIANG (respondent) XIAOFEI WANG (respondent) APPLICATION NO/S: BDL304-17 MATTER TYPE: Building matters DELIVERED ON: 15 February 2022 HEARING DATE: 10 March 2020 11 March 2020 19 October 2020 20 October 2020 21 October 2020 17 December 2020 18 December 2020 (closing submissions filed 16 June 2021, 1 October 2021, 12 November 2021 and 13 December 2021). HEARD AT: Brisbane DECISION OF: Member Browne ORDERS: 1. Xiaofei Wang is removed as second respondent from the proceedings. 2. Yong Cong Liang must pay to CJM Innotrack Pty Ltd the sum of $243,703.13 (inclusive of GST) within sixty (60) days from the date of this order. THE TRIBUNAL DIRECTS THAT: 3. Any application for costs together with written submissions in support must be filed in the Tribunal and a copy given to the other party, by: 4:00pm on 18 March 2022. 4. Any written submissions in response must be filed in the Tribunal and a copy given to the other party by: 4:00pm on 8 April 2022. -- 1 of 39 -- 2 5. Unless otherwise ordered and in the absence of a request for an oral hearing, any application for costs will be heard and determined by the Tribunal on the papers by written submissions filed by the parties and without an oral hearing on a date not before: 4:00pm on 14 April 2022. CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY ON QUANTUM MERUIT – IN GENERAL – where owners engaged builder to develop site – where builder unlicensed during discussions to develop site – whether there is one agreement partly oral and written – whether the builder performed unlicensed building work – whether builder compliant with the Queensland Building and Construction Commission Act 1991 (Qld) – whether builder reached practical completion – whether builder lawfully suspended the works – whether builder entitled to recover on quantum meruit – whether builder entitled to claim for variations not put in writing – whether owner entitled to recover rectification costs, other costs and liquidated damages – whether builder entitled to claim interests on remuneration PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PARTIES AND REPRESENTATION – PROPOER OR NECESSARY PARTY AND STANDING – where respondents are joint owners of property – where land developed by applicant builder – whether applicant builder contracted with respondent owners – whether respondents are in partnership – whether respondents are jointly and severally liable – whether second respondent should be removed as a party Queensland Building and Construction Commission Act 1991 (Qld), s 42, s 43, s 77(1) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 42 Sustainable Planning Act 2009 (Qld), s 580(1) Planning Act 2016 (Qld), s 164 AJ Lucas Operations Pty Ltd v Gladstone Area Water Board and Anor [2015] QCA 287 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd Ors (1986) 40 NSWLR 622 Bellgrove v Eldridge (1954) 90 CLR 613 Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 153 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd -- 2 of 39 -- 3 (1982) 149 CLR 600 Cannon Street Pty Ltd v Karedis [2004] QSC 104 Cascol Constructions Pty Ltd v Blanchard & Anor[2013] QCAT 270 Chapel of Angels Pty Ltd v Hennessey Builder Pty Ltd & Anor [2018] QDC 218 Chapel of Angels Pty Ltd v Hennessey Builder Pty Ltd & Anor [2020] QCA 219 Cochrane v Lees [2021] QCATA 74 Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (Formerly Stork Food Systems Australia Pty Ltd) [2009] QCA 75 Dart Holdings Pty Ltd v Total Concept Group Pty Ltd and Ors [2012] QSC 158 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640 Evans v Federal Commissioner of Taxation (1989) 89 ATC 4540 Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1 at 29 GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 Hawley Partners Pty Ltd v Commissioner of Stamp Duties (1996) 33 ATR 430 Hopkins v Prescott 4 CB 578 Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11 Love & Stewart v S Instone & Co (1917) 33 TLR 475 Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560 Masters v Cameron (1954) 91 CLR 353 Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 Robinson v Harmon [1848] ER 135 Scott & Co v Naughton (1929) 43 CLR 310 Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272. APPEARANCES & REPRESENTATION: Applicant: DC Kissane instructed by Chris Toogood Legal Respondent: CH Matthews instructed by Thomson Geer Lawyers REASONS FOR DECISION The issues to be decided in this matter arise from the performance of building work by the applicant associated with the development of a site owned by the respondents, Mr Liang and Ms Wang. -- 3 of 39 -- 4 The applicant seeks payment from the respondents for the cost of works associated with the development of the site, the balance of the contract price for the construction of a duplex on the site and additional money claimed to be owing for variations to the scope of works, plus interest. There are further alternative claims made by the applicant which arise as a consequence of the respondents’ counter- claim. The applicant claims that it entered into two agreements with the respondents for the work performed on the site being a wholly oral agreement and a written agreement. Although the written agreement was signed only by Mr Liang, the applicant contends that Mr Liang and Ms Wang are in partnership together, Mr Liang signed the written agreement on Ms Wang’s behalf and the respondents are therefore jointly and severally liable under the written agreement and the oral agreement.1 The respondents counter-claim for damages for breach of contract.2 The respondents argue that there is a single agreement by reason of the verbal terms that were reduced into writing and the applicant undertook to carry out all of the work in contravention of s 42 of the Queensland Building and Construction Commission Act 1991 (Qld) (the Act).3 Further to that, the respondents seek an order for the return of money paid by Mr Liang to the applicant pursuant to s 42 of the Act on the basis that the applicant was not licensed to perform certain work. The respondents submit that the contract is one which falls within the first or fourth class of Masters v Cameron.4 Further, the parties entered into verbal terms in about March 2015 with the intention to make a further contract, in substitution of the first agreement, with additional terms.5 The respondents also apply to remove Ms Wang as a named respondent from the proceeding.6 Following a 7-day oral hearing before this Tribunal, the parties filed over 200 pages of written submissions on 16 June 2021, 1 October 2021, 12 November 2021 and 13 December 2021, respectively, addressing the many contested factual and legal issues.7 The parties have also settled an agreed list of issues for determination.8 The Tribunal is assisted by expert evidence from two quantity surveyors, Jock Barnes of GRC Quantity Surveyors for the applicant and Paul Burgess of Burgess Mitchell Brandtman for the respondents.9 1 See further amended application for domestic building dispute filed 19 October 2018, exhibit 3. 2 See response to further amended application and counter-application filed 24 October 2018, exhibit 3. 3 Respondent submissions filed 1 October 2021, p 10. 4 (1954) 91 CLR 353, see respondent submissions filed 1 October 2021, p 10. 5 See respondent’s submissions filed 1 October 2021, p 10. 6 Application filed on 11 March 2020 and see Tribunal’s Directions dated 24 April 2020 pursuant to s 42(2) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). 7 See Tribunal Directions dated 17 December 2020, 26 March 2021, 16 August 2021, 11 October 2021, 17 November 202 and applicant’s closing submissions filed 16 June 2021, respondent’s closing submissions filed 1 October 2021, applicant’s submissions in reply filed 12 November 2021 and respondent’s submissions in reply filed 13 December 2021. 8 See agreed list of issues for determination by the Tribunal prepared on behalf of the parties and filed on 15 October 2020. The parties filed a joint hearing brief marked exhibit ‘3’. 9 See joint expert report dated 19 August 2019, exhibit 3, p 1463. -- 4 of 39 -- 5 I am satisfied that the Tribunal has the power to hear and determine this matter for the purposes of s 77(1) of the Act. It is convenient to set out below the relevant background to this matter and some of the contested factual and legal issues. Relevant background Mr Liang and Ms Wang acquired a site on the Gold Coast in or about April 2014 with plans to demolish the existing property and to build a duplex. The respondents made enquiries about developing the site with Dixon Homes who prepared plans and a quotation for the work. Mr Matthew Xiu, Director of the applicant company, was introduced to the respondents through a mutual friend sometime in late 2014. At various times in late 2014 and early 2015, Mr Xiu and Mr Liang had discussions about developing the site. The applicant provided services to the site between mid to late 2015, inclusive, for the benefit of the respondents (the ‘preliminary works’). Importantly, the applicant did not hold a building licence until 24 August 2015. The parties do not agree as to whether the applicant performed the preliminary works as the principal contractor for which a building licence is required, whether the preliminary works were performed under a separate oral agreement prior to signing a written agreement; and whether the applicant was to retain the funds for the preliminary works (‘the retention scheme issue’). In or about December 2015, Mr Xiu and Mr Liang signed a written HIA agreement for the construction of the duplex. After construction of the duplex commenced, the applicant issued progress claims to the respondents for payment. A claim for the practical completion stage issued on 20 February 2017. The parties fell into dispute about payment for the work and the building work performed. Attempts to resolve the dispute failed and proceedings followed in the Tribunal. Was there one or two agreements for work to be performed by the applicant? The applicant contends that there are two agreements between the applicant and the respondents. The first being a wholly oral agreement formed in March 2015 during discussions between Mr Xiu and Mr Liang on behalf of the respondents that was limited to providing assistance to the respondents up to, but not including the building approval stage.10 Further to that, the applicant asserts that there was no agreement between the parties in late March 2015 for the applicant to build the duplex for the respondents.11 The applicant contends that there is a written HIA contract that was executed in December 2015 between Mr Xiu on behalf of the applicant and Mr Liang on behalf of the respondents. 10 Applicant’s closing submissions filed16 June 2021, p 9, 11-18. 11 Applicant’s closing submissions filed16 June 2021, p 18. -- 5 of 39 -- 6 The respondents submit that there is one agreement partly oral and written that falls within the first or fourth class of Masters v Cameron, the fourth class as discussed in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd Ors.12 Alternatively, if there are two distinct agreements, the written agreement is said to be unenforceable by the applicant because it was a lump sum agreement which included building work which was both undertaken to be carried out and in fact carried out prior to the applicant obtaining the appropriate licence.13 The relevant passages from Masters v Cameron in respect of the different class of contract is set out below: Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. …14 In Baulkham Hills15 a fourth class Masters v Cameron contract was discussed: There is in reality a fourth class of case additional to the three mentioned in Masters v Cameron, as recognised by Knox CJ, Rich J and Dixon J, in Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317, namely, ‘…one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms”. Their Honours refer to the speech of Lord Loreburn, in Love & Stewart v S Instone & Co (1917) 33 TLR 475 at 476, where his Lordship said that: ‘It was quite lawful to make a bargain containing certain terms which one was content with, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with the full expectation that one would by consent insert in it a number of further terms. If that were the intention of both parties, then a bargain had been made, none the 12 (1986) 40 NSWLR 622. 13 Respondents’ submissions filed 1 October 2021, p 10. 14 Masters v Cameron, 360-361. 15 GR Securities, per McLelland J, at 628. -- 6 of 39 -- 7 less that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain.’ Relevant to the issue of whether the parties intended to be bound by certain terms upon acceptance and offer and, further to that, whether the intention of the parties was that the written agreement replace any pre-existing contract, is the evidence of Mr Xiu and Mr Liang. Mr Xiu’s evidence is that he had two site meetings in March 2015 with Mr Liang. In early March 2015, Mr Xiu says he and Mr Liang walked the site and Mr Liang informed him that he was not happy with the Dixon Homes plans, did not have the cash to build on site yet and intended to borrow the money to pay for the construction.16 Mr Xiu says that he told Mr Liang that he does not have a building licence yet, the applicant could possibly help out with some development of the site up to but not including the building approval stage but he had to discuss this with the other owners of the applicant company.17 Later in March 2015, Mr Xiu says he had a second site meeting with Mr Liang during which an agreement was reached for the applicant to assist the respondents on a limited basis.18 Mr Xiu says that Mr Liang agreed to reimburse the applicant for its help for the associated outlays and that he (Mr Liang) would reimburse the applicant for any outlays after he has the finance approved and the applicant would be his preferred builder assuming that a building licence is obtained and the quote is acceptable.19 Based on the evidence of Mr Xiu, the applicant contends that there was a binding agreement reached between the applicant and respondents in late March 2015 on three terms: (a) The applicant would provide consultancy service to the respondents to assist them with the development of the site up to but not including the building approval stage; (b) The respondents were to pay the applicant for its time providing that assistance and to pay for any outlays that the applicant pays on behalf of the respondents; and (c) The respondent owners were obliged to pay the applicant once they obtained their finance for the development.20 In my view, the evidence does not support a finding that there is a single agreement partly oral and partly written with the applicant, as contended by the respondents.21 The evidence about the discussions between Mr Xiu and Mr Liang do not support a finding that the parties intended to have terms restated in a written agreement or that 16 Applicant’s closing submissions filed16 June 2021, p 15. 17 Statement of Mr Xiu dated 29 November 2018, exhibit 3, document 10, p 652. See also applicant’s submissions filed 16 June 2021, p 16. 18 Ibid. 19 Ibid. 20 Ibid, p 17. 21 Respondent’s submissions filed 1 October 2021, p 9. See also submissions in reply filed 13 December 2021. -- 7 of 39 -- 8 one or more of the terms discussed in early 2015 was conditional upon the execution of written agreement or contract. It is established law that in determining what are the terms of a contract that is said to be partly written and partly oral, the surrounding circumstances can be looked at to find what in substance the parties agreed.22 The conduct of the parties must be capable of proving all of the essential elements of an express contract.23 In Brambles Holdings Ltd v Bathurst City Council24 Heydon JA in citing McHugh JA in Integrated Computer Services Pty Ltd25 said: …Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words….The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract…’.26 I am satisfied based on the evidence before me that Mr Xiu and Mr Liang met twice in 2015. For reasons further explained below, I prefer and accept Mr Xiu’s evidence about what he says was discussed with Mr Liang. I find that in March 2015, Mr Liang agreed orally to certain terms such as, amongst other things, to pay the applicant for its time in providing assistance up to but not including the building approval stage. The terms discussed between Mr Xiu and Mr Liang were sufficiently clear to bind the parties.27 I accept the evidence of Mr Xiu that he told Mr Liang that he had started a building company and did not have a building licence.28 Mr Xiu’s evidence that he told Mr Liang that he did not have a building licence is supported by the witness Sitong Li. Mr Li is a friend of both Mr Xiu and Mr Liang. Mr Li witnessed a conversation take place between Mr Xiu and Mr Liang in December 2014. Mr Li’s evidence is that he heard Mr Xiu tell Mr Liang that he had started a building company referring to them as introducing themselves.29 I do not accept, as contended by the respondents, that Mr Li’s evidence is unhelpful or ambiguous by reason of the answers given by him at the oral hearing.30 Mr Li was assisted in giving his evidence at the hearing by an interpreter. During re- examination Mr Li confirmed his evidence that he heard Mr Xiu tell Mr Liang that he does not have a builder’s licence.31 I accept Mr Li’s evidence and find that Mr 22 Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at [90], per Campbell J and with whom the other members of the Court agreed. See applicant’s submissions filed 16 June 2021, p 13. 23 Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 153 at 178 per Heydon JA referring to Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11. See applicant’s submissions filed 16 June 2021, p 13. 24 Ibid. 25 (1988) 5 BPR 11. 26 Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 153 at 178. 27 Ibid. 28 Exhibit 3, p 652. 29 Statement of Sitong Li dated 28 May 2019, exhibit 3, p 931. 30 Respondent’s submissions filed 1 October 2021, [72]. See Transcript 19.10.2020, 1-22. 31 Transcript 19.10.2020, 1-23, L45. -- 8 of 39 -- 9 Xiu told Mr Liang in late 2014 words to the effect that he did not have a builder’s licence. I do not accept, as contended by the respondents, that the evidence including oral and written communications as between the applicant and the respondents supports a finding that the parties had an intention to create legal relations that was later put in writing in December 2015.32 As observed by Lyons J in AJ Lucas Operations Pty Ltd v Gladstone Area Water Board and Anor33 in citing McHugh JA in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd34 the decisive issue in determining whether there was an intention to be bound is whether such an intention can in fact be ‘objectively ascertained from the terms of the document when read in light of the surrounding circumstances’.35 In AJ Lucas Operations Lyons J went on to say that the surrounding circumstances include the conduct of the parties as well as the correspondence and other words used.36 The respondents rely on an exchange of communication between Mr Liang and the applicant in late 2014 for the supply and installation of flooring and other associated work for an unrelated property.37 The respondents say that the applicant provided Mr Liang a quotation for the supply and installation of flooring, tiling and ducted air-conditioning for the unrelated property.38 The respondents submit that contemporaneous quotes for building work are consistent with a builder operating as if they had a licence.39 I accept that Mr Xiu may have been undertaking certain work as evidenced by the various quotations provided to Mr Liang for an unrelated property. Indeed, Mr Xiu’s evidence given at the hearing about the relevant quotations provided by the applicant to Mr Liang in late 2014 is that he (Mr Xiu) believed that the building work did not require him to hold a licence.40 Mr Xiu concedes that he did not tell Mr Liang he would be engaging trade contractors to carry out the building work.41 The evidence does not support a finding that the parties intended to be bound by certain verbal terms settled upon between Mr Xiu and Mr Liang in meetings that took place between them in late 2014 and 2015 and later put in writing in December 2015. There is no certainty regarding the essential elements such as, amongst other things, contract price and scope of the works, of the alleged contract for the construction of the duplex until December 2015 when the agreement was put in writing. 32 Respondent’s written submissions filed 1 October 202, p 11. 33 [2015] QCA 287 at [28] citing GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634 and see respondent’s written submissions filed 1 October 2021, p 11. 34 40 NSWLR 631. 35 Ibid. 36 [2015] QCA 287 at [28] citing Muir J in Cannon Street Pty Ltd v Karedis [2004] QSC 104. 37 Respondent’s written submissions filed 1 October 202, p 14. 38 Ibid. See statement of Yongcong Liang dated 28 June 2019, exhibit 3, p 1314 and p 1320. 39 Ibid. 40 Transcript 19.10.2020, 1-43, p 39 L8 to 9. See respondent’s written submissions filed 1 October 202, p 15. 41 Transcript 19.10.2020, 1-43. See also respondent’s written submissions filed 1 October 2021, [77] to [79] and see the applicant’s submissions filed 16 June 2021, [409 to [414]. -- 9 of 39 -- 10 The evidence does not support a finding that there are contractual relations that have retrospective effect to a date before that on which the formal contract was executed or event concluded.42 Further to that, the evidence does not support a finding that there is a Masters v Cameron contract in the first or fourth class in which the parties were bound immediately before work commenced on the site such that the development of the site should be governed solely by the provisions of the written contract executed after the preliminary works were undertaken by the applicant.43 I find on the evidence that there are two separate agreements, an oral agreement formed in March 2015 during discussions between Mr Xiu and Mr Liang and a separate written agreement being a HIA contract signed by Mr Xiu and Mr Liang in December 2015. In relation to the oral agreement, I find the following: (a) Mr Xiu told Mr Liang in late 2014 words to the effect that he did not have a builder’s licence; (b) In or about March 2015, Mr Xiu told Mr Liang that the applicant would provide consultancy service to the respondents to assist them with the development of the site up to but not including the building approval stage and such costs were to be paid to the applicant by the respondents; (c) The respondent owners were obliged to pay the applicant once they obtained their finance for the development; and (d) The applicant was unlicensed to perform building work. Did the parties agree on a retention scheme? Mr Liang’s evidence is that during a meeting with Mr Xiu in March 2015, Mr Xiu made certain representations to him such as, amongst other things, the applicant was able to offer an attractive retention scheme whereby the applicant builder would not bill all or part of its initial progress claims which Mr Liang would hold as security for the applicant’s work.44 There is evidence before me of an email exchanged between the applicant and Mr Liang in early 2015 in relation to the work performed by the applicant on the site. It is clear from the email that Mr Liang gave the Dixon Homes plans to the applicant on 27 February 2015.45 The Dixon Home plans were prepared for Ms Wang in 2014.46 As discussed above, I accept Mr Xiu’s evidence that he first met with Mr Liang on site in early 2015. As evidenced by the exchange of emails in early 2015, Mr Xiu and Mr Liang met after Mr Liang had forwarded the Dixon Home plans to Mr Xiu. 42 Hawley Partners Pty Ltd v Commissioner of Stamp Duties (1996) 33 ATR 430 per Macrossan CJ and McPherson JA at 434 and Byrne J at 437 and see respondent’s written submissions filed 1 October 202, p 13. 43 See respondent’s written submissions filed 1 October 202, p 13. 44 Hearing brief, exhibit 3, volume 3, para 15, p 997. See respondent’s submissions filed 1 October 2021, p 16. See also Transcript 17.12.2020, p 6-39, L45. 45 Exhibit 3, p 1013 46 Ibid, para 16 to 19, p 997. -- 10 of 39 -- 11 I accept Mr Xiu’s evidence that he did not tell Mr Liang at the first site meeting in early 2015 that the applicant was prepared to offer an attractive retention scheme. When questioned about the retention scheme issue at the hearing, Mr Xiu said that he did not say that (meaning the retention scheme) to Mr Liang because he did not know anything about the project and Mr Liang’s circumstances. Mr Xiu stated that he and Mr Liang had only just met and they had not established a relationship of trust.47 In my view, Mr Xiu’s evidence about the retention scheme is plausible having found that Mr Xiu had recently received the Dixon Homes plans when he first met with Mr Liang to discuss the project in early March 2015. I had the opportunity to observe and listen to Mr Xiu and Mr Liang give their oral evidence at the hearing. I found Mr Liang’s evidence about his meetings with Mr Xiu in 2014 and 2015 was at times vague and uncertain. When giving his evidence about the retention scheme, Mr Liang accepted that if there was such a scheme then the terms must be put in writing. Mr Liang accepted, however, that in the present matter the agreed terms for the alleged retention scheme were not put in writing. Mr Liang’s evidence given at the hearing is that the retention scheme was attractive for him and would cover the difference between the contract price and the borrowings from the bank.48 The applicant’s submission that it is implausible that a builder would agree to the quantum of the retention being determined by the owners is compelling.49 It is open for me to draw the reasonable inference that had the parties agreed on a retention scheme, Mr Liang who has commerce and accounting experience, would surely insist upon the important terms of the retention scheme, to be put in writing. Indeed, Mr Liang accepts that the retention scheme would cover the extra money needed for the development. It is open for me to draw the reasonable inference that had there been a retention scheme agreed upon, Mr Liang would surely have insisted that the important terms be put in writing. Further to that, when questioned at the hearing about the proposed retention scheme issue, Mr Liang accepted that if there was such a scheme then the applicant builder could be waiting some years after construction was completed for payment of the retention should the respondent decide to hold the units in the duplex. Mr Liang accepted that the scheme, as put to him is ‘extraordinary’.50 Mr Liang said: …Yeah. That’s why I go for CJM even they [sic] don’t have experience. It’s very attractive profile for me.51 When questioned about applicant’s quotation for work received later in 2015 and the fact that there was no mention of a retention scheme, Mr Liang accepted that nothing was put in writing. Further, Mr Liang accepted that he did not send an email to the 47 Transcript 19.10.202, p 41. 48 Transcript 17.12.2020, p 36. 49 Applicant’s submissions filed 16 June 2021, p 25. 50 Transcript 17.12.20, p 6-38, L 26 to 33. 51 Transcript 17.12.20, p 6-38, L 26 to 33. -- 11 of 39 -- 12 applicant about the retention scheme. Mr Liang’s evidence is that he trusted the applicant.52 Mr Liang also said that the retention scheme is for his benefit.53 There is no objective evidence before me as to the existence of the retention scheme. Relevantly, there is no mention of the retention scheme in a letter sent on 18 April 2017 by the respondents’ solicitors to the applicant builder outlining purported breaches of the agreement.54 On balance, I prefer Mr Xiu’s evidence about his discussions with Mr Liang including discussions about the retention scheme. I am not satisfied that the applicant agreed to a retention scheme with Mr Liang. Indeed, Mr Liang concedes that the pleaded retention scheme would contravene s 16 of the Building and Construction Industry Payments Act 2004 (Qld), as it applied at the relevant time, if the retention could be withheld after the proposed duplexes were sold.55 I accept Mr Xiu’s evidence that at the second site meeting with Mr Liang in March 2015 they talked about the project and Mr Xiu had at that stage recently received and reviewed the drawings or plans for the development of the site. I accept Mr Xiu’s evidence that during the second site meeting Mr Liang told Mr Xiu that he was not in a good financial situation and wanted the applicant to provide preliminary funds. When questioned about the conversation between him and Mr Liang, Mr Xiu said that the conversations were in Mandarin but they would use English for some technical terms to communicate with each other. It is open for me to prefer Mr Xiu’s evidence about his discussions with Mr Liang in responding to the assertion made by the respondents that there was an agreed retention scheme. I find that there was no retention scheme agreed between Mr Xiu on behalf of the applicant and Mr Liang. The preliminary works and payment of fees - the oral agreement The respondents identify 13 items of preliminary works performed by the applicant. Mr Liang more generally describes the 13 items of preliminary works as being essential to obtain all necessary approvals and to prepare the site for construction of the new dwelling.56 The 13 items of preliminary works include the building approval; development approval and fees (or council approved fees); local council sewage application; local council lands and vegetation fee; town planning and drafting; 3D graphic perspective; demolition of existing house and any demolition approval fees; gully pit relocation; engineering fees; soil testing and footing design; surveyors fees; home owners warranty; and water meter fee.57 52 Ibid, p 44. 53 Ibid. 54 Hearing brief, exhibit 3, document 19(z), p 1211 and see applicant’s submissions filed 16 June 2021, p 27. 55 See respondent’s written submissions filed 1 October 2021, p 17. 56 Statement of evidence of Mr Liang, exhibit 3, volume 3, para 20, p 997. 57 Ibid. -- 12 of 39 -- 13 Mr Xiu accepts that he had some part in co-ordinating the preliminary works and that he was involved in relaying information from the respondents regarding the design though to the town planner and to the architect, John McDonald.58 Mr Xiu also accepts that he discussed some of the items of preliminary work with Mr Liang during their two site meetings such as, town planning and drafting, development approval application and fees, demolition of the existing premises, surveyors fees, the soil testing and engineering footing design, engineering fees and the building approval.59 I accept Mr Xiu’s evidence that other items such as 3D graphic perspective, the homeowner’s warranty, the council sewage application (not operational works approval), the local council land and vegetation fee were discussed with Mr Liang at a later meeting in 2015.60 Relevantly, Mr Xiu says and I accept that Ms Wang arranged to get the quotation for the 3D graphic perspective and he did not know about it until she emailed him in September 2015.61 On balance, I am satisfied that these items also fall within what was to be the preliminary works performed by the applicant pursuant to the oral agreement. This seems plausible given that, as submitted by the respondents, the home warranty must be paid prior to the demolition works being undertaken.62 I do not accept the applicant’s contention that it was mainly responsible for paying the invoices.63 As discussed above, Mr Xiu accepted during cross-examination at the hearing that he had some part in coordinating the relevant works such as relaying information through to the town planner and the architect.64 The evidence about what role the applicant played with respect to the preliminary works is important because any person who carries out or undertakes to carry out building work must hold a contractor’s licence of the appropriate class.65 Relevantly, s 42 of the Act, provides that it is unlawful to carry out unlicensed building work. If a person contravenes s 42 of the Act they are precluded from any entitlement to monetary or other consideration for carrying out building work subject to statutory ability to claim reasonable remuneration for the work under subsection (4). It is settled law that s 42 of the Act is aimed at unlicensed performance of building work and prohibits the formation of the contract itself.66 The result is to make the contract unenforceable.67 Section 42(3) of the Act prohibits recovery by the builder on a quantum meruit basis for the unlicensed work.68 The limitations as to the 58 Transcript of hearing 19.10.20, p1-51, L8 and transcript dated 20 October 2020, p 2-58, LL8 to 2-60, L 15. See applicant’s submissions filed 16 June 2021, p 18. 59 Hearing brief, exhibit 3, volume 2, doc 12, para 11(c) and (d), p 857. Applicant’s submissions filed 16 June 2021, p 24. 60 Ibid. Applicant’s submissions filed 16 June 2021, p 25. 61 Ibid, para 11(e). 62 Respondents submissions filed 1 October 2021, p 16. 63 Applicant’s closing submissions filed 16 June 2021, p 18. 64 Ibid and see transcript 19.10.20, p 1-51, L8 and see Transcript 20.10.20, p 2-58, L 8 to 2-60, L 15. 65 See the Queensland Building and Constructions Commission Act 1991 (Qld). 66 Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196, [3] and [6]. 67 Ibid. 68 Chapel of Angels Pty Ltd v Hennessey Builder Pty Ltd & Anor [2018] QDC 218 upheld on appeal before the Court of Appeal, see Chapel of Angels Pty Ltd v Hennessey Builder Pty Ltd & Anor [2020] QCA 219. -- 13 of 39 -- 14 amount which can be claimed by the builder under s 42(4) applies to the building work for which the contractor did not have the appropriate licence.69 I do not accept, as submitted by the respondents, that the applicant has contravened s 42 of the Act and triggered the preclusion in s 42(3) by entering into a contract when unlicensed and has carried out building work under a lump sum written contract which includes the unlicensed work.70 As discussed above, there are two agreements, an oral agreement for the preliminary works and a written agreement for the construction of the duplex. I prefer Mr Xiu’s evidence that he told Mr Liang that the applicant would provide consultancy service to the respondents to assist them with the development of the site and such costs were to be paid back to the applicant. Further to that, as discussed above, Mr Xiu told Mr Liang that the applicant was unlicensed in late 2014 and the applicant was unlicensed to perform building work in relation to the oral agreement. The applicant was, however, doing more than assisting the respondents with respect to the preliminary works. I am satisfied that the applicant carried out building work that includes carrying out the work, directly or indirectly carrying out the work or carrying out building work services.71 Schedule 2 of the Act provides that building work services is administration services, advisory services, management services and supervisory services. Administrative services includes calling and selecting tenders, arranging and conducting on-site meetings and inspections, arranging payment of subcontractors, arranging for certificates, including certificates from a local government to be issued. The Act also defines management services as coordinating the scheduling of the work by building contractors including as agent for another person. Supervisory services includes the coordination or management of person undertaking the supervision of work, the personal supervision of the work and any other supervision of the building work.72 Mr Xiu’s evidence is that he was acting as the ‘middleman’ and assisting the respondents up to the building approval stage. As discussed above, Mr Xiu previously provided to the respondents a quotation for work on an unrelated property and Mr Xiu said that if the quotation was accepted he would have engaged a licensed contractor to perform the work.73 Mr Xiu accepted, when questioned at the hearing about his involvement that he coordinated work with the demolition contractor, arranged time for the work and paid the fees. In addition to paying the invoices for the preliminary works, the applicant assisted in applying for the Development Application approval in July 2015. There are a number of emails from Mr Jerome Fang of Oasis Town Planning that identify the applicant as the only contact person for the building approval. The 69 Dart Holdings Pty Ltd v Total Concept Group Pty Ltd and Ors [2012] QSC 158, [40]. 70 Respondent’s submissions filed 1 October 2021, p 24 and reply fled 13 December 2021. 71 Respondent’s submissions filed 1 October 2021, p 26. 72 See Schedule 2 and definitions under the Act. 73 Applicant’s submissions filed 16 June 2021, [409]. -- 14 of 39 -- 15 applicant helped with paying the costs.74 The building approval also identifies the applicant’s name. Further to that, Mr Xiu met with Mr Fang on site in March 2015. The applicant sent a tax invoice received from Oasis Town Planning to the respondents in April, May and June 2015, respectively. Importantly, Mr Xiu accepted when questioned at the hearing that he did not confirm in any email with Oasis that he was acting in his capacity as a consultant.75 The applicant has failed to convince me that Mr Xiu was acting, as stated by Mr Xiu at the hearing, ‘the middleman’. The evidence supports a finding that the applicant directly or indirectly performed unlicensed building work when it assisted the respondents by paying invoices, coordinating the works and relaying information that more broadly includes building work services. I do not accept, as contended by the applicant, that the respondents knowingly engaged the applicant to perform unlicensed building work in contravention of s 42 of the Act.76 Further to that, I do not accept as submitted by the applicant that the respondents may be held to be pari delicto (in equal defence) with the applicant builder so as to be outside the class of people for whose benefit a right of recovery is made available in consequence of the operation of s 42(3) of the Act.77 As discussed above, I accept that Mr Xiu told Mr Liang that the applicant could provide assistance with the preliminary works. For reasons discussed below, Mr Xiu was doing more than simply acting as the ‘middleman’ when he agreed to terms that form part of the oral agreement including to assist Mr Liang with the preliminary works. I am not satisfied that the respondents knowingly engaged the applicant to perform unlicensed building work. On balance, I accept that the respondents engaged the applicant to assist them with the 13 items of preliminary works on the terms discussed in early March 2015. I reject the respondents’ claim that the applicant is required to disgorge the respondents’ payments made to the applicant under the written agreement.78 As discussed above, the building work was performed on terms agreed under an oral agreement that sit outside the written agreement. Further, the applicant signed a written contract for the construction of the duplex when it was licensed to perform the work. I am satisfied based on the evidence before me that the applicant performed unlicensed building work in contravention of the Act when Mr Xiu undertook to directly or indirectly carry out the preliminary work in March 2015.79 As discussed 74 Hearing Brief, exhibit 3, volume 3, pp 1019 to 1021 and volume 2, p 824. 75 Transcript 19.10.2020, p 47. 76 See respondent’s submissions filed 1 October 2021, p 28. 77 Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (Formerly Stork Food Systems Australia Pty Ltd) [2009] QCA 75 at [58] and [59]. See applicant’s submissions filed 16 June 2021, p 76 and see respondent’s submissions filed 1 October 021, p 28. 78 Applicant’s submissions filed 16 June 2021, p 77 and respondent’s submissions filed 1 October 2021, p 26. 79 Applicant’s submissions filed 16 June 2021, [403]. -- 15 of 39 -- 16 below, the applicant is entitled to recover reasonable remuneration for the impugned building work that it carried out while it was unlicensed. The requirement to hold a building licence and the costs of the preliminary works I am satisfied that Mr Xiu was aware of the requirement to hold a building licence. Mr Xiu was cross-examined at the hearing about the requirement to be licensed. When questioned about whether he would be in breach of the law if he provided assistance to the respondents to the building approval stage, Mr Xiu said, ‘yes’.80 Despite Mr Xiu’s evidence that he was fully aware of his obligations as director of the applicant company to be licensed before performing building work, I am satisfied that the applicant performed unlicensed building work. Further, I am satisfied that the unlicensed work included coordinating the building approval for the respondents. I accept Mr Xiu’s evidence that he did not send the invoices for payment to the respondents because Mr Liang wanted him (Mr Xiu) to pay the fees. I find that the unlicensed work was performed by the applicant on the understanding that Mr Liang would, as contended by the applicant, pay for any outlays that the applicant had paid on behalf of the respondents and the respondents would pay the applicant once they obtained their finance for the development. I am satisfied, however, that Mr Xiu failed to inform Mr Liang prior to performing the items of preliminary work that Mr Liang would be charged for the consultancy services or preliminary works outside any agreement. A quotation prepared by the applicant included in the written contract for the preliminary works includes some of the preliminary work items such as demolition costs for the existing house. Mr Xiu said that the demolition costs were included in the lump sum contract price (the written agreement) because he had those fees so he had to show the fees in the written contract to get them back. When asked if he was claiming for money paid when he did not have a building licence, Mr Xiu said that the only reason for including the fees was to get the money back. Mr Xiu accepted, when questioned, that he charged as part of a lump sum contract price for work that he coordinated prior to holding a licence.81 Similar evidence was given by Mr Xiu when questioned about other items of work such as the 3D perspective work and soil testing. Mr Xiu’s evidence is that some of the preliminary work items were included in a quotation (the Bill of Quantities) prepared by the applicant and sent to the respondents on 7 December 2015 as office overheads because he wanted to ensure the applicant was reimbursed.82 The relevant evidence given by Mr Xiu at the hearing is now set out below83: Question: And the quote is dated the 28 th of November 2015? 80 Transcript 19.10.2020, p 46. 81 Transcript 19.10.20, p 1-58. 82 Transcript 19.10.20, p 1-58, L 37 to 39, p 1-59, L 1-2. See Exhibit 1, p 1080 to 1097 and the respondents submissions filed 1 October 2021, p 17. 83 Transcript 19.10.20, p 58-59. -- 16 of 39 -- 17 Mr Xiu: Yes Question: And you’re quoted for a lump sum price of $676,888.31? Mr Xiu: Yes Question: And that lump sum price covered all of the items identified in the quote from pages 1060 through to 1077 Mr Xiu: Yes Question: Now, if we look at page 1060…would you agree with me that the office overheads and preliminaries for demolishing the existing house…you arranged and coordinated that before you had a building licence? Mr Xiu: Just as I said before, I was only doing some coordination work. The reason I put it down there was because he hadn’t paid me back, so I wanted to show it up there. Question: So you were charging Mr Liang for work you had performed prior to having a building licence? Mr Xiu: No, I didn’t charge….I paid those fees and I had to get the money back. That’s why I needed to show in the building contract Mr Xiu’s evidence is that it was not until he prepared the quotation in October or November 2015 that he decided to include those items meaning the items of work associated with preparing the site and that this was not discussed with Mr Liang in the March 2015 meeting.84 Notably there are a number of items of preliminary work omitted from the applicant’s quotation provided to the respondents such as the town planning services, fees payable to the Gold Coast Council for the development application, real estate marketing campaign fees, engineering services provided by Knobel Consulting and landscape design fees.85 I do not accept, the applicant’s contention that the practical effect of s 42(3) and subsection (4) of the Act and relying on Cascol Constructions Pty Ltd v Blanchard & Anor,86 is that any work carried out by the builder on or after it is licensed will not be impugned under the Act such that the builder is entitled to all of its remuneration under the contract.87 As held in Dart Holdings Pty Ltd v Total Group Pty Ltd and Ors88 the limitations as to the amount which can be claimed, consistently with s 42(4), applies only to building work for which the contractor did not have the appropriate class of licence.89 In Dart McMurdo J said, the builder is entitled to be paid upon a restitutionary basis, for the work which it lawfully performed under its licence.90 McMurdo J said that where a contract was a lump sum contract for which the 84 Transcript 20.10.20, p 2-80, L 15 to 16 and p 2-78, L 25 to 32. 85 Applicant’s closing submissions filed 16 June 2021, p 21. 86 [2013] QCAT 270. 87 Applicant’s submissions filed 16 June 2021, p 78. See also the respondents’ submissions filed 1 October 2021, p 22. 88 [2021] QSC 158. 89 Ibid, [40]. 90 Ibid. -- 17 of 39 -- 18 subcontractor did not hold the appropriate class of licence the work could not be severed from the contract, the consequence is that a court will not enforce the contract. McMurdo J cited Hopkins v Prescott91 and said that s 42(1) affects the contract as a whole rendering it unenforceable. Further, s 42(1) has the consequence of precluding the enforcement of such provision or provisions of the contract which would otherwise entitle the defendant to payment.92 In the present matter the applicant performed unlicensed building work pursuant to verbal terms agreed with Mr Liang. The costs of the preliminary works that were performed when the applicant was unlicensed will be caught by s 42 of the Act. This includes those items of preliminary work included in a quotation prepared by the applicant included in the written agreement on the basis that the applicant could get paid. The preliminary works performed by the applicant under the oral agreement are caught by s 42 of the Act and are rendered unenforceable by the applicant. That said, s 42 is not engaged here to apply to the entire written contract for the construction of the duplex.93 The facts in the present matter can be distinguished from Chapel of Angels Pty Ltd v Hennessey Builder Pty Ltd & Anor94 that concerned a builder who undertook to carry out building work without the appropriate class of license in breach of s 42(1) of the Act. Here, the applicant was licensed to perform the work when it contracted with Mr Liang to construct the duplex pursuant to the terms of the written contract. I accept Mr Xiu’s evidence that he included the costs of the preliminary works in a quotation included in the written contract and he had not discussed this with Mr Liang. In my view, had the parties intended for there to be one agreement that is partly oral and partly written then presumably all of the preliminary work items would be included in the quotation and the lump sum contract price. The applicant’s claim for expenses in relation to the oral agreement in the total amount of $19,022.01 does not include all of the work that I have found is unlicensed work that forms part of the oral agreement.95 I accept the applicant’s submission that it is possible to severe the work the subject of the oral agreement from the scope of works payable under the written contract.96 I am not satisfied, however, that any remuneration received after the applicant obtains the appropriate licence will not fall within the ambit of a contravention of s 42(3) of the Act because some of the work was performed under the oral agreement as preliminary work that was unlicensed work. The applicant claims and I accept that even if there was no binding agreement then it may still seek payment of expenses it has incurred for the unlicensed preliminary work on a quantum meruit basis in accordance with the principles in Pavey & 91 4 CB 578 at 595-6. 92 Dart, [39]. 93 See respondents’ reply filed 13 December 2021. 94 [2018] QDC 218. 95 Applicant’s submissions filed 16 June 2021, p 40 to 42. 96 Applicant’s reply submissions filed 11 November 2021, p 12. -- 18 of 39 -- 19 Matthews v Paul.97 Such remuneration even on a quantum meruit basis is limited by s 42(4) of the Act because I have found that the applicant performed unlicensed building work. The applicant relies on Cascol Constructions Pty Ltd v Blanchard & Anor98 and submits that any remuneration received after the applicant obtains its licence will not fall within the ambit of a contravention of s 42(3) of the Act. The facts in Cascol Constructions are very different to the present matter. In Cascol Constructions representations were made to the home owners that the works would be performed by registered builders. In Cascol the Tribunal found that after registration as a builder the contractor was not working in breach of s 42 and any money paid after registration by the homeowners are not moneys recoverable pursuant to s 42(3).99 The Tribunal did, however, recognise that some payments made by the contractor after the date of registration should be taken into account in determining reasonable remuneration on the basis that the money was paid in advance prior to registration.100 In the present matter, there are some invoices relatable to unlicensed work performed with respect to the preliminary work items under the oral agreement included in the lump sum written contract. I am not satisfied that the applicant’s claim of $19,022.01 represents reasonable remuneration for all of the work that is captured by the oral agreement. The issue now is what is a reasonable remuneration for the 13 items of preliminary work performed under the oral agreement. I am assisted by the expert evidence of each of the quantity surveyors, Mr Burgess and Mr Barnes. Both experts assess the work performed by the applicant up to 24 August 2015 the date the applicant obtained its building licence. Mr Barnes relies on invoices for work up to 24 August 2015. On the other hand, Mr Burgess relies on invoices for work up to 24 August 2015 that includes work that would have been done before 24 August 2015 thus relying on the assumption that invoices in the construction industry are usually submitted after the works are complete. The difference between the assessments is that Mr Burgess has included five additional items of work demolition works, advertising and related costs with the Base 3D. The applicant’s contention that the five additional costs were incurred at a time when the applicant was licensed is rejected.101 It matters not when the invoices were dated because the applicant agreed to assist the respondents with the 13 items of preliminary works pursuant to the oral agreement when it was unlicensed. I prefer and accept Mr Burgess’ assessment of the unlicensed work in the amount of $35,584.01 (exc GST). 97 (1987) 162 CLR 221, see applicant’s submissions filed 16 June 2021, p 44. 98 [2013] QCAT 270. 99 Ibid, [43]. 100 Ibid, [45]. 101 Applicant’s submissions filed 16 June 2021, p 79, p 80. -- 19 of 39 -- 20 I am satisfied that Mr Burgess’ assessment includes items of work that form part of work to be performed under the oral agreement.102 Those items relate to the demolition works, advertising costs and related costs with the Base 3D that found form part of the preliminary works.103 I am satisfied that the amount of $35,584.01 (exc GST) less profit margin in the amount of $2,846.72 is reasonable remuneration for unlicensed work carried out by the applicant Who are the parties to the oral agreement and written contract? In December 2015, the applicant and Mr Liang signed a HIA written agreement.104 It is uncontroversial that the respondents owned the site that was developed by the applicant. Further to that the respondents were both the borrowers and guarantors of the loan facility with the relevant bank to fund the construction of the duplex.105 The objective evidence including invoices and emails exchanged between the applicant and the respondents identify Ms Wang as the site owner. Mr Xiu was obviously aware at the time of signing the written agreement that Ms Wang’s name was missing. Indeed, Mr Xiu concedes that he was negligent in not including Ms Wang as a guarantor.106 Mr Xiu’s evidence is that he filled out the relevant details on the contract such as the price, builder details, scheduled items and planning and building approval details. I am satisfied that Mr Liang’s wife is not a party to either the oral agreement or written agreement. As discussed above, Mr Xiu and Mr Liang met on site in 2015 to discuss the preliminary works. Further to that, the contract was signed by Mr Xiu as Director of the applicant company. Mr Xiu accepted when questioned at the hearing about the written contract that only Mr Liang signed the deed of guarantee and only Mr Liang’s name appears in the contract. Further to that, Mr Xiu accepted when questioned that Mr Laing’s wife was involved before the written contract was signed. When questioned about why he (Mr Xiu’s) did not insist that Ms Wang sign the HIA contract, Mr Xiu said that he assumed they, meaning Mr Liang and Ms Wang, were a couple and held joint assets.107 The applicant has failed to convince me that the respondents are in partnership and therefore jointly and severally liable with respect to the building work performed by the applicant.108 As discussed above, Ms Wang was involved in the project particularly in relation to the preliminary works. The evidence in my view supports a finding that only Mr Liang contracted with the applicant. Mr Liang’s evidence that the proceeds of sale would go to his personal account and be used for his family’s benefit, not for a business is in my view consistent with the objective evidence such as the written 102 Applicant’s reply submissions filed 11 November 2021, p 27. 103 See applicant’s submissions filed 16 June 2021, p 79. 104 Hearing Brief, exhibit 3, volume 2, para 35, doc 10, p 655 and see pp 722 to 792, inclusive. 105 Respondent’s submissions filed 1 October 2021, p 50. 106 Ibid, p 1-65, L 22-23. 107 Transcript 19.10.20, p 1-65. 108 Ibid. -- 20 of 39 -- 21 contract that was only signed by Mr Liang and the applicant.109 If, as contended, by the applicant the respondents are in business there needs to be objective evidence determined by the nature and extent of the activities carried on.110 There is no objective evidence before me of a partnership, business address or tax returns. That said, Ms Wang was involved in the project in the early stages including obtaining a quotation from David Wright Properties for demolition costs and sending emails to the applicant in relation to some of the items that form part of the preliminary works. On balance, I am satisfied that Ms Wang’s involvement in the development of the site is as the wife of Mr Liang and in her capacity as joint owner of the site with Mr Liang. I do not accept, as contended by the applicant, that the respondents are jointly and severally liable under the oral agreement nor the written contract. Mr Xiu was aware of Ms Wang’s involvement when he signed the contract with Mr Liang. Mr Xiu signed the contract without Ms Wang’s name as appearing in the contract.111 The applicant has failed to convince me that Mr Liang and Ms Wang are jointly and severally liable with respect to the work performed by the applicant in developing the site owned by the respondents. I will allow the respondents’ application to remove Ms Wang as a named respondent to the proceeding pursuant to section 42(2) of the QCAT Act. I am satisfied that Ms Wang is not a proper or necessary party to the proceeding.112 I order that Ms Wang is removed as a second Respondent from the proceeding. I will, however, for continuity in my reasons, continue to refer to the relevant parties and their respective claims as the applicant and the respondents. The written contract I find that the written HIA contract entered into between the applicant and Mr Liang is solely for the construction of the duplex that was not intended to include the preliminary works undertaken by the applicant. Indeed, correspondence sent by Mr Liang’s former solicitors to the applicant on 18 April 2017 makes reference to a building contract to construct the duplex entered into in December 2015.113 In the relevant letter the solicitors state as follows: We are instructed that you entered into a building contract with our client on 1 December 2015 (“the contract”) to construct two units (“the works”) at [the property].114 I find that the HIA contract is a complete contract that was executed by Mr Xiu and Mr Liang on 15 December 2015.115 The HIA contract includes essential elements for the construction of the duplex such as a lump sum amount, scope of works and specifications, a promise by the applicant to undertake the work and a commitment by Mr Liang to pay the contract 109 Transcript, 19.10.20, p 50, Transcript 17.12.2020, p 6-72, L45 to 47 and p 6-73, L1 to 10. 110 See Evans v Federal Commissioner of Taxation (1989) 89 ATC 4540 at 4556. See also the respondent’s submissions filed 1 October 2021, p 49. 111 Transcript 19.10.2020, p 1-64, L 20 to 45. 112 QCAT Act s 42 (2) (b) 113 Applicant’s closing submissions filed 16 June 2021, p 22, Hearing brief, exhibit 3, doc 19(z). 114 Ibid. 115 Applicant’s closing submissions filed 16 June 2021, p 10. -- 21 of 39 -- 22 price. Although the contract includes some of the items of work that fall within the preliminary works to be performed under the separate oral agreement, I accept Mr Xiu’s evidence that he included those items because he wanted to get paid. It is established law that an incomplete agreement being no more than an agreement of the parties to agree is unenforceable.116 I am satisfied the evidence supports a finding that the parties agreed on essential terms such as the scope of works and amongst other things a promise by the applicant to perform the work as to be bound by the written agreement or contract.117 I accept Mr Xiu’s evidence that prior to the contract being signed, the applicant provided its quotation to the respondents to build the proposed duplex on 7 December 2015 such that this was an offer to perform the works and he and Mr Liang did not agree in March 2015 that the applicant would undertake the building works.118 When read as a whole the wording used in the quotation supports a finding that, as contended by the applicant, it (the quotation) was clearly an offer to perform the work.119 The quotation states that if builders are offering different designs and different inclusions, then the price will be different.120 Mr Xiu’s accepts when questioned at the hearing that work under the written contract commenced at the latest by 7 March 2016 when the footing work was inspected. I find that the applicant did not give Mr Liang notice as required under clause 2.9 of the contract after commencement of the work. I accept the applicant’s contention that based on Mr Liang’s evidence who asserts that there is only one agreement partly oral and partly written that binds the parties, the contract price is uncertain such that there was no agreement regarding how much the contract price would be.121 A finding that the contract price is uncertain presuming there is only one agreement as contended by Mr Liang, is consistent with the evidence given by Mr Liang who said that he wanted a detailed quotation to be provided. Mr Liang conceded during cross-examination that there was no contract price agreed upon with the applicant during the March 2015 meeting and that the quotation was only necessary to match against what had already been agreed, which he was unable to recall.122 Mr Liang’s evidence about the contract price is that the price was already decided by a rate per square metre and he needed it to be written down in a quote because it was a six-digit number and at the time, they did not have a computer or a pen and paper 116 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 604 per Gibbs CJ and Murphy and Wilson JJH. See applicant’s submissions filed 16 June 2021, p 20. 117 Ibid. 118 Hearing Brief, exhibit 3, Volume 2, doc 10, p 654 and doc 10(g). See applicant’s closing submissions filed 16 June 2021, p 19 to 21. 119 Applicant’s closing submissions filed 16 June 2021, p 20 to 21. 120 Ibid, p 21. See Hearing brief, exhibit 3, p 689, doc 10(g). 121 Ibid, p 30. 122 Transcript dated 17.10.20, p 6-44, L1-2 and p 6-49, L 20-25. -- 22 of 39 -- 23 to enable them to do the sum.123 Mr Liang could not recall a particular rate nor the various other items that needed to be added to the figure.124 I find that the written contract is a complete agreement for the construction of the duplex. Further to that, the obligation to pay for the work performed by the applicant under the written contract sits outside any other obligation for Mr Liang to pay for the unlicensed work under the oral agreement.125 Did the applicant reach practical completion for the purposes of the written contract? The applicant asserts that practical completion was reached on 20 February 2017 and it accrued the right to payment for the stage 6 progress claim on that date.126 The total amount said to be owing for that stage is $101,533.20.127 Practical completion under the written contract is the day the works were completed. Clause 1.1 of the contract requires the applicant to complete the works in accordance with the contract and comply with all lawful requirements of any statutory or other authority with respect to the carrying out of the works.128 I accept, as submitted by the respondents, that statutory requirements applying to the work includes compliance with Development Approval.129 Further, the work must comply with all relevant laws and plans and specifications for the work that form part of the contract. The respondents assert that practical completion was not reached because the works had three major defects identified as follows: (a) the sewer inspection opening was continuously flowing from the cover to duplex 1; (b) the stormwater inspection opening had ‘opposed open’ from previous rain events to duplex 1; and (c) the driveway drainage was not adequate causing dampness to the side entry from water runoff to duplex 1.130 The respondents rely upon and I accept the evidence of Brad Neaves of Excel Property Consultants who inspected the property on 29 March 2017 and 8 May 2017, respectively, and prepared a report in relation to the inspection.131 At the oral hearing, Mr Neaves was questioned about his experience. Mr Neaves said that he is a carpenter by training and holds a licence grade of nominee supervisor. He also has 9 years’ experience in supervising plumbing work. 123 Ibid, p 6-43, L30 to 23. 124 Applicant’s submissions filed 16 June 2021, p 30. 125 See applicant’s submissions in reply filed 11 November 2021, p 12. 126 Applicant’s closing submissions filed 16 June 2021, p 45. 127 Ibid. 128 See clause 35.1 of the contract for the meaning of a ‘statutory or other authority’. 129 Respondent’s submissions filed 1 October 2021, p 32 and see s 580(1) of the Sustainable Planning Act 2009 (Qld) and s 164 of the Planning Act 2016 (Qld). 130 Respondent’s submissions filed 1 October 2021, p 33. 131 Exhibit 3, p1417 to 1461. -- 23 of 39 -- 24 I accept Mr Neaves is suitably qualified for the purposes of giving evidence about the works he inspected and the three alleged defective items of work. Mr Neaves confirmed his evidence during cross-examination about the items of work. In relation to the sewer, Mr Neaves said that there was evidence of brown water.132 When questioned about the driveway drainage Mr Neaves said that driveway drain was a foot short from the edge which caused the interior corner of the garage to be wet.133 I accept the respondents’ submission that it ought not be necessary for Mr Neaves to hold a plumber’s licence to identify overflowing from a sewer inspection point which should not be overflowing.134 Mr Neaves’ evidence about what he saw during his inspection particularly in relation to water overflowing is relevant to the issue of defects. Carl Hagar from Knobel Consulting (Engineers) also gave evidence about the sewer connection and relocation of the water meter. Mr Hagar’s evidence is relevant to the issue of whether the applicant has complied with all laws and lawful requirements for any statutory or other authority with respect to carrying out the works and carrying out the works in accordance with the written contract including the Development Approval issued by the council.135 Mr Hager identified that the applicant failed to construct the sewer connection in accordance with the council’s approved and stamped drawings.136 The respondent contends and I accept based on Mr Hager’s evidence that the consequence of the failure to complete the upgraded 150mm sewer connection in accordance with the council drawings or apply and receive retrospective approval for the use of the existing 100mm sewer connection was that the applicant could not obtain a certificate of classification from the builder certifier and thereby could not reach practical completion.137 Indeed Mr Liang undertook the exercise himself of obtaining approval from council for the existing connection.138 On balance, I am satisfied that as at 20 February 2017, the works had defects and the applicant did not comply with all relevant laws particularly in relation to the sewer connection. Further to that, it is open for me to find on the evidence that the applicant continued to purchase materials and carry out work at the property after the alleged date of practical completion. Mr Xiu conceded during cross-examination that the applicant was carrying out work under the written contract after it had purportedly suspended the work and reached practical completion.139 Mr Xiu accepted when questioned that James Boakes, site 132 Transcript 17.12.2020, p 6-58. 133 Transcript 17.12.2020, p 5-59. 134 Respondent’s submissions filed 1 October 2021, p 33. 135 Ibid. 136 Exhibit 3, p 1330. 137 Respondent’s submissions filed 1 October 2021, p 34. 138 See applicant’s submission in reply filed 11 November 2021, p 14. See also the respondents submissions in reply filed 13 December 2021, p 5. 139 Transcript, 20.10.2020, p 2-21 to 2-24. -- 24 of 39 -- 25 supervisor employed by the applicant, performed work onsite after 1 March 2017 and that the work was building work under the written contract.140 There are a number of invoices dated after 20 February 2017 that evidence materials purchased by the applicant from Bunnings and other suppliers for the purchase of materials used on site.141 The reasonable inference to be drawn from the objective evidence is that the applicant continued building work after the alleged date of practical completion. I accept the respondents’ contention that the applicant failed to achieve practical completion on 20 February 2017. I find that the applicant continued to carry out building work under the written contract after purporting to reach practical completion on 20 February 2017. Further to that, I find that progress claim 6 and the applicant’s assertion that practical completion was reached on 20 February 2017 was premature and not issued pursuant to a contractually accrued right.142 The applicant’s claim for the work is therefore limited to a claim on a quantum meruit basis. Did the builder lawfully suspend the works? The applicant contends that the works were suspended under Clause 19.1(a) of the written contract on 8 February 2017 when Mr Xiu handed Mr Liang the notice of suspension.143 The applicant contends that the suspension of works arose from the respondents’ failure to pay progress claims 1, 2 and 3.144 Mr Liang agrees that he had not paid the applicant for progress claims 1, 2 and 3 and says that he was entitled to withhold payment in accordance with the ‘verbal terms’ that Mr Liang says he agreed upon with Mr Xiu with respect to the retention scheme.145 Further, it is contended that the applicant could not insist on payment for progress claims 1, 2 and 3 and the same were being retained until the applicant obtained a certificate of classification or all disputes subject to the work were resolved.146 Mr Liang disputes that the applicant suspended the works. The respondents submit that Mr Xiu’s evidence that he hand delivered a notice of suspension to Mr Liang in early February 2017 should be rejected.147 As discussed above, the respondents’ contention that there was an agreed retention scheme is rejected. Further, I have found that there were outstanding issues in relation to the works as at 20 February 2017, the date the applicant says it reached practical completion. With respect to the delivery of the notice of suspension, it matters not whether the notice was properly delivered to Mr Liang in early February 2017. There is evidence before me that the applicant continued to purchase materials and supplies and carry 140 Ibid. 141 See Exhibit 3, pp 459 to 461, p 465, 462, 487, 464, 466, 468. 142 See Respondent’s submissions filed 1 October 2021, p 36. 143 Applicant’s submissions filed 16 June 2021, p 60. 144 Ibid. 145 Respondent’s submission filed 1 October 2021, p 29. 146 Ibid. 147 Ibid. -- 25 of 39 -- 26 out work after the purported suspension in early February 2017. At the oral hearing, Mr Xiu conceded that he continued to carry out work after issuing the purported notice.148 Further to that, Mr Xiu said that he marked the progress claims 1, 2 and 3 as ‘paid’ on 30 June 2016. Mr Xiu’s evidence is that he did this because Mr Liang told him that the bank would not release the payments unless he confirmed the progress claims for stages 1 and 2 were paid.149 I accept Mr Xiu’s evidence that he repeatedly asked Mr Liang to pay the applicant and he did not issue invoices for payment at the time the relevant stage was completed because Mr Liang did not have his loan approved. Mr Xiu maintained his evidence at the hearing that he repeatedly asked Mr Liang to pay the applicant and he (Mr Xiu) knew that Mr Liang did not have the money to pay. I find that the works were not lawfully suspended in February 2017. Even if the notice was validly given by the applicant, I find that the applicant waived the suspension by continuing to carry out work immediately after 8 February 2017. Was there a variation to omit works by reason of the respondents’ conduct? The applicant contends that it was not required to complete the balance of any work under the written contract on 25 September 2018 when it issued a variation to omit works in accordance with clause 26.3(c), 26.6 and 25 of the general conditions.150 The applicant says that Mr Liang engaged various contractors and consultants to remedy defects on his behalf between May 2017 and January 2018, inclusive, the effect of which was to take control of, possession of, or use of the works or part of the works.151 Further to that, the effect of the variation document was to retrospectively omit that part of the works that had not been carried out and completed by the applicant as at the date that the respondents first engaged the consultants and contractors in breach of clause 26.1152 I have found that the builder did not lawfully suspend the works and that practical completion was not reached on 20 February 2017. Further to that, I have found that despite the applicant’s purported suspension of works in early February 2017, the applicant continued to complete building work. In my view the evidence supports a finding that the applicant had an opportunity to attend to any rectification and completion of building work until at least 15 August 2017 when Mr Liang says that he changed the locks.153 I accept the respondents’ submission that the applicant had 6 months within which to complete the work it had not carried out.154 Indeed, the applicant had an opportunity to complete work after receiving correspondence from the respondents’ solicitors in April 2017.155 Relevantly, on 18 April 2017 the respondents’ solicitors wrote to the applicant identifying a number of issues in relation to the development of the site and building 148 Transcript, 20.10.2020, p 2-18, L 6. 149 Exhibit 3, p 861, [21]. 150 Applicant’s submissions filed 16 June 2021, p 62. 151 Ibid. 152 Ibid. 153 Respondents’ submission filed 1 October 2021, p 36. 154 Respondents’ submission filed 1 October 2021, p 36. 155 Ibid. -- 26 of 39 -- 27 works. In the letter dated 18 April 2017 the applicant is put on notice that it is in substantial breach of the contract and pursuant to clause 28.3 it is required to rectify the breaches within the stipulated timeframe.156 I find that the right conferred to the applicant in clause 26.3 cannot be exercised in circumstances where the applicant is in breach of the written contract by failing to complete the works by the date of practical completion. Is the applicant entitled to restitution for the completed works on a quantum meruit basis? It is uncontroversial that the applicant is entitled to a claim in quantum meruit for the work carried out at the property.157 The applicant’s entitlement to recover payment for the incomplete stages on restitution upon a claim for quantum meruit is supported by established authority in Mann v Paterson Constructions Pty Ltd.158 Here, the respondents have had the benefit of the work performed by the applicant. Further, they have built on the work done by the applicant including attending to rectification of some of the works that form part of their counter-application. The applicant is entitled to recover the fair and reasonable value of the work performed to be determined according to all of the circumstances.159 Consistent with my earlier findings, the applicant’s quantum meruit claim in respect of the oral agreement for the unlicensed work is limited by s 42(4) of the Act. The respondents’ submit that the applicant is entitled to a common law quantum meruit claim for the work carried out after 24 August 2015.160 The value of the work assessed on a quantum meruit basis is a fair commercial rate for that work.161 The inquiry to arrive at a ‘just sum’ in every reasonable remuneration claim is a principled one.162 Further, the assessed amount for the quantum meruit claim should not exceed a fair value calculated in accordance with the contract price or the appropriate part of the contract.163 The applicant contends that the reasonable value of the works performed for the practical completion stage is equal to the value of that completed stage under the contract that is $101, 533.20.164 Further, the applicant contends that this valuation is consistent with the opinions of both quantity surveyors Mr Burgess and Mr Barnes, excluding variations. On the other hand, the respondents assert that the applicant’s entitlement to recover on a quantum meruit basis should be limited in circumstances where the builder did not have a duly appointed nominee under the Act.165 156 Exhibit 3, p 1213. 157 Respondents’ submission filed 1 October 2021, p 37. 158 (2019) 267 CLR 560. 159 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 263. 160 Respondents’ submissions filed 1 October 2021, p 37. 161 Ibid, p 38. 162 Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1 at 29, [92]. 163 Mann, at 584, [31]. 164 Applicant’s submission filed 16 June 2021, p 64. 165 Ibid, p 39. -- 27 of 39 -- 28 The respondents rely on Mr Burgess assessment with some reductions. The respondents assert that the applicant failed to appoint a nominee who holds a contractor’s licence or nominee supervisor’s licence to carry out building work or undertake to carry out building work under the builder’s class of licence.166 The respondents say that the appointed nominee (Mr Peter Schrader) was not an officer nor employee of the applicant builder.167 Put simply, the respondents seek to water down the expert quantity surveyor’s assessment of the works that includes an amount of $6,769.00 for alleged supervision of the project by Mr Schrader.168 Further, the respondents contend that the applicant was required to complete the work under the written contract by 20 July 2016 and any costs for ongoing overheads after this date should not be allowed.169 There are reductions sought by the respondents including, amongst others, no inclusion of the builder’s margin, a reduction for a claim for wages paid to Mr Boakes that the respondent says was reduced to $35,971.85 on the basis that the applicant had other jobs that Mr Boakes was supervising at the relevant time. A reduction of $15,289.25 for ongoing overheads after the date for practical completion is claimed. There are further costs of $8,014.86 that the respondents say Mr Burges, expert for the respondents identified as being unsubstantiated by way of an invoice.170 Reductions are also claimed for certain out of pocket expenses and invoices considered by both expert witnesses. The respondents claim that the proper assessment of the work carried out (excluding variations) on a quantum meruit basis is $619,335.35 after taking into account the various reductions claimed.171 Both expert quantity surveyors adopt different methodologies in assessing the work performed by the applicant. Mr Burgess did a benchmark analysis and an elemental costs analysis and valued the works at $635,857.67 including margin and excluding GST.172 Mr Burgess determined the actual costs incurred as $699,443.44 plus a profit margin of 8%.173 On the other hand, Mr Barnes did a comparison between the invoices claimed by the applicant broken down by individual trades.174 Mr Barnes valued the works at $643,872.53 including margin and excluding GST. Mr Barnes determined the actual costs incurred as $708,259.78 plus a profit margin of 8%.175 I prefer and accept Mr Burgess assessment of the work. At the oral hearing, Mr Burgess explained that his methodology included taking a sample of similar projects between 2014 to 2017, inclusive. Mr Burgess said his methodology would have been 166 Ibid. 167 Respondent’s submissions filed 1 October 2021, p 39. 168 Ibid. 169 Ibid, p 41. 170 Respondent’s submissions filed 1 October 2021, p 42. 171 Ibid, p 44. 172 Exhibit 3, Hearing Brief, volume 4, p 1399. 173 Transcript 18.12.2020, p5-69. 174 Ibid, volume 3, p 955. 175 Ibid. -- 28 of 39 -- 29 to look at the total cost and then to do a quick bench mark analysis to determine whether those costs are reasonable or not and that analysis demonstrated that the average cost is approximately $1,600 per square metre whereas the actual costs are coming in at $1590 per square metre.176 When questioned about Mr Barnes’ assessment, Mr Burges said that the assessment is $1850 per square metre which is 17% higher than the actual costs. Mr Burgess said that Mr Barnes’ estimate had some flaws because the costs are significantly higher.177 The respondent has failed to convince me that Mr Burgess’ assessment of $635,857.67 for the licensed work should be reduced. Both Mr Barnes and Mr Burgess agreed at the oral hearing that the actual costs incurred by the builder were reasonable and that the contract sum specified is $676,888.30.178 In relation to the assessed work, both experts confirmed that an amount of 8% profit margin is in addition to the actual cost of the work assessed.179 I am not satisfied that there is any detriment to the respondents by reason of any, as contended by the respondents, failure by the applicant to have a duly appointed nominee under the Act. Although Mr Burgess identified a component of the applicant’s labour costs as supervision, he also confirmed during cross-examination that the longer the project takes, the higher the costs that relate to supervision, management and labour costs on site. Mr Burgess’ evidence is that he assumed the actual costs for labour or supervision would be higher because the project, as he understood it, took longer than was originally intended.180 Mr Burgess confirmed that when he did his independent costs assessment he specified the construction period to be 19 weeks.181 Mr Barnes accepted when questioned at the hearing that if the building contractor went over the 19 week period the contractor would have to pay supervisor expenses past the date for practical completion.182 I am not satisfied that there should be a deduction for the overheads incurred after the date of practical completion. It is noncontentious that the applicant held the requisite licence to perform the work from 24 August 2015. I have found that the applicant continued work after 20 February 2017, being the date the applicant says it reached practical completion. The respondents have failed to convince me that there should be further deductions for Mr Boakes’ wages ($26,885.44), the missing invoices for costs claimed by the applicant ($8,014.86), reductions for invoices attributable to defects and value of tools ($3,954.45) and invoices issued by Mr Boakes ($18,679.53).183 Each of the items identified by the respondents clearly fall within the ambit of the applicant’s claim for quantum meruit which is unrestrained by s 42(3) and (4) of the Act. I have carefully considered the evidence of the expert quantity surveyors. I am 176 Transcript 18.12.2020, p 5-56. 177 Ibid, p 5-57. 178 Transcript 18.12.2020, p 5-61. 179 Ibid, p 5-68. 180 Ibid, p 5-83. 181 Ibid. 182 Ibid, p 5-85. 183 See respondent’s submissions filed 1 October 2021, p 42. -- 29 of 39 -- 30 satisfied that Mr Burgess’ assessment of the work should be allowed without reduction. As discussed above, Mr Burgess further explained his methodology when giving his evidence at the oral hearing. Mr Burgess assessed the work based on his methodology to arrive at a figure that is a fair and reasonable price for the works. I allow the amount of $635,857.67 (exc GST) for the total cost of the work performed by the applicant builder. To determine remuneration payable for the licensed work under the written contract, it is necessary to deduct the profit for the remuneration I have found payable to the applicant for the unlicensed work carried out under the oral agreement from the reasonable costs of the work assessed by Mr Burgess. This is because I have found that some of the unlicensed work was invoiced after the applicant obtained its licence and Mr Xiu included items for payment that included the preliminary works in the written contract. As discussed above, Mr Xiu conceded that he did not discuss with Mr Liang that he would seek payment for the preliminary works outside any agreement. Further, Mr Xiu included some of the preliminary work items in the written contract outside any earlier discussions with Mr Liang about who he would seek to recover payment. I prefer and accept Mr Burgess’ assessment of remuneration for all of the work using a methodology that looked at the total cost of the project and similar projects built during the relevant time of construction. Doing the best I can with the evidence before me and having preferred Mr Burgess’ methodology, the applicant’s remuneration for the licensed work should in all of the circumstances be adjusted to ensure that it does not exceed the contract price because some of the unlicensed work is included in Burgess’ assessment. I adopt the applicant’s calculation of the remuneration for the licensed work now set out as follows:184 Value of works performed (inc GST) $ 635,857.67 LESS value of unlicensed work $ 35,584.01 LESS 8% profit margin185 $ 2,846.72 Subtotal $ 597,426.94 Total (inc GST) $ 657,169.63 The amount of restitution payable to the applicant cannot exceed the written contract price of $676,888.30. The applicant’s quantum meruit claim for the licensed work performed under the written contract must be further reduced to ensure that when added to the quantum payable for the unlicensed work, the total remuneration will not exceed $676,888.30. Again I adopt the applicant’s assessment now set out as follows:186 184 Applicant’s submissions in reply filed 11 November 2021, p 24. 185 This accounts for any profit margin that would have been applied to the works carried out by the applicant prior to the licence registration date and is based on 8% of Mr Burgess’ value of the unlicensed work calculated at $35,584.01. 186 Applicant’s submissions in reply filed 11 November 2021, p 24. -- 30 of 39 -- 31 Remuneration for unlicensed work (inc GST) $ 38,854.38 Adjusted figure for licensed work (inc GST) $ 657,169.63 Subtotal $ 696,024.01 Combined non-contractual claim187 (inc GST) $ 19,135.71 Based on Mr Burgess assessment, there needs to be a further reduction of $19,135.71 resulting in a quantum meruit claim for the licensed work being $638,033.92.188 I am satisfied and find accordingly that the amount of $638,033.92 represents reasonable remuneration for the licensed work performed by the applicant. The applicant is entitled to reasonable remuneration assessed at $638,033.92 (inc GST and profit margin) less any other claims or deductions I allow. For reasons discussed below, the respondents have a right to off-set the payments already made under the written contract in the amount of $409,977.10. This leave a balance of remuneration payable to the applicant under the written contract for the works carried out by the applicant after the licence registration date of $228,056.82.189 The applicant’s entitlement to variations under the written contract The applicant seeks payment for the reasonable value of the work that it performed at the request of the respondents for five variations on a quantum meruit basis.190 The expert quantity surveyors each agree as to the value of the variations now set out below:191 (a) Sliding door to duplex 2 garage between laundry and garage valued at $470.00 (b) Remove two installed windows in the living room in duplex 1 valued at $710.00. (c) Add a toilet to room in duplex 1 valued at $6,770.00 (d) Enlarge the toilet in duplex 2 on the first floor and add shower valued at $6,888.00 (e) Add a toilet into bathroom on the first floor of duplex 2 valued at $1,220.00 Subtotal = $16,058.00 Margin agreed at 20% = $3,211.60 Subtotal = $19,269.60 PLUS GST in the amount of $1,926.96 TOTAL = $21,196.46 187 Ibid, this is the amount combined that exceeds the contract price. 188 Ibid. This figure represents the amount of $657,169.63 less $19,135.71. 189 See applicant’s submissions filed 16 June 2021, p 94 and submissions in reply filed 11 November 2021, p 25. 190 Applicant’s submissions filed 16 June 2021, p 52. The applicant abandons its claims for payment with respect to the gully pit, change of brick to rendered brick for the external wall and the upgrade to the garage doors for duplexes 1 and 2. 191 See applicant’s submissions filed 16 July 2021, p 52. -- 31 of 39 -- 32 The first issue to be considered with respect to the claims for variations is whether the former Domestic Building Contracts Act 2000 (QLD) (DBC Act) prior to the repeal of the DBC Act on 1 July 2015, applied at the relevant time. As discussed above, there are two agreements. The written contract was entered into on 15 December 2015 after the repeal of the relevant DBC Act. The DBC Act does not apply to the applicant’s claims for the variations. The respondents dispute that the applicant is entitled to payment for variations on a quantum meruit basis as a consequence of non-compliance with the Act.192 Put simply the respondents argue that the relevant s 40 and s 41 of the Act, as it applied at the relevant time, gives rise to an implied statutory prohibition against recovery for the variations by the applicant. Further, the respondents contend that if the Tribunal finds that the applicant is entitled to its reasonable costs for the variations they should be limited to the cost without the inclusion of any margin for the same reasons expressed in relation to the applicant’s quantum meruit claim as discussed above.193 The respondents calculate the adjusted figure for the variations as follows: (a) $16,058.00 for the cost of the variations claimed by the applicant. (b) ADD 10% for GST equalling $17,663.80. It is noncontentious that the applicant failed to comply with the Act in that the variations were not put in writing. Indeed, it is fair to say that having heard and observed Mr Xiu give his oral evidence, he made many concessions about the applicant’s non-compliance with the Act in a number of respects with the written contract. On balance, I am satisfied that Mr Liang requested the changes to the work that form part of the variations and that the respondents benefited from each of the variations claimed by the applicant. In relation to the sliding door item, Mr Liang concedes during cross-examination that he did request the change, the change was important and that the door was not included in the original design.194 Mr Liang disputed, however, that Mr Xiu gave him an estimate for the door.195 In relation to the windows in duplex 2, Mr Liang concedes during cross-examination that he requested the change.196 I am satisfied that the relevant approved drawings and plans show the dimensions of the existing windows that were replaced with a larger window to allow the extra light.197 Mr Liang accepts that he had told Mr Xiu that the room was too large, he thought the windows were too small and the removal of the two windows to be replaced with ‘one big one’ would increase the light in the room.198 192 Respondent’s submissions filed 1 October 2021, p 45. 193 Ibid, p 48. 194 Transcript, 17.12.2020, p 6-76. 195 Ibid. 196 Transcript 17.12.2020, p 6-76. 197 See applicant’ submissions filed 16 June 2021, p 57. 198 Transcript 17.12.2020, p 6-77. -- 32 of 39 -- 33 In relation to the variations required for the toilets in both duplex 1 and 2, I am satisfied that Mr Liang requested the changes so that the duplex would be comparable to other properties that were in the market, as contended by Mr Xiu.199 Further, I prefer Mr Xiu’s evidence about the timing of the requested change by Mr Liang. On a fair reading of the written quotation provided to Mr Liang that only two bathrooms and two ensuites in total are provided for in the development.200 Further, the approved plans do not include the additional toilets and showers.201 I am satisfied that the applicant is entitled to payment for the variation works on a quantum meruit basis. I do not accept, as contended by the respondents, that the relevant s 42 of the Act gives rise to an implied statutory prohibition against recovery.202 In the absence of a statutory intention that prohibits a non-compliant builder’s right of recovery for a non-compliant variation at common law, the applicant builder may seek to recover any non-compliant variations on a quantum meruit basis where recovery under the contract is not available.203 I am satisfied that the applicant is entitled to payment for the variation works in the amount of $21,196.56 as assessed by the expert quantity surveyors. For reasons discussed above, I am not persuaded that the applicant’s entitlement to profit should be reduced. The respondents have benefited from the work performed by the applicant. The expert quantity surveyors have assessed the applicant’s reasonable remuneration for the work performed in the amount of $21,196.56 including GST and margin as agreed at 20%.204 The applicant has failed to convince that it is entitled to interest at the rate of 5% for the assessed variation works. Indeed, the applicant concedes that there is no power to award interest in relation to a quantum meruit claim.205 Here, the applicant is non- compliant with the relevant provisions of the Act with respect to the variations. Even if there is power to award interest under the Act, the applicant has failed to convince me that I should allow interest in circumstances where there is non-compliance with the Act. The applicant’s claim for interest is refused. The respondents’ entitlement to rectification costs The respondents claim the total sum of $21,771.27 as costs incurred to rectify defects following the applicant failing to reach practical completion and unlawfully suspending the work under the written contract.206 The respondents submit and I accept that the applicant warranted that the works would be carried out with reasonable diligence.207 As discussed above, the applicant did not lawfully suspend the works and had an opportunity to attend to rectification and completion of any works. Further, the applicant was on notice from 16 April 199 Transcript 17.12.2020, p 6-76. 200 See applicant’s submissions filed 16 June 2021, p 59 and exhibit 3, p 688. 201 Ibid, exhibit 2 and exhibit 3, p 135(A) to 135(K). 202 See Cochrane v Lees [2021] QCATA 74, [161] to [168]. 203 Ibid, [168]. 204 Applicant’s submissions filed 16 June 2021, p 52 and see joint expert report, exhibit 3, p 1470. 205 Applicant’s submissions in reply filed 11 November 2021, p 37. 206 Respondent’s submissions filed 1 October 2021, p 57. 207 Exhibit 3, clause 36 of the written contract, p 758. -- 33 of 39 -- 34 2017 when it received the respondents’ notice to remedy, that there were defects to the driveway drainage and sewer and wastewater outlets.208 I accept that it was necessary for Mr Liang to engage contractors to rectify the defective work at the property completed on 20 July 2017.209 Mr Liang deposes to the costs incurred for the expenses in obtaining the retrospective approval for the water connections and relocation. The costs incurred include the amount of $2,178.00 for Knobel Consulting in relation to the sewer connection and $726.00 for the amended water meter location and inspection on 15 June 2017. Further costs in the amount of $3,427.22 for the water meter relocation and $777.00 for Survey Mark to locate the new water meter and perform a survey for the stormwater, were incurred by Mr Liang.210 I also accept Mr Liang’s evidence in relation to further defective work which was required to be rectified that is supported by the relevant invoices for the work.211 Mr Liang is entitled to be restored to the position which he would have been had the wrongful act not occurred.212 The damage is the loss which Mr Liang sustained by failure of the applicant to perform its contractual obligations and can be measured by determining the amount required to rectify the defects.213 I am satisfied that the amount of $21,771.27 are necessary and reasonable costs in all of the circumstances to rectify the work I have found is defective. The work was reasonable and necessary to rectify the sewer inspection opening that was continuously flowing, the stormwater opening that had opened from previous rain events and the driveway drainage that resulted in dampness to the side entry of the property.214 The applicant’s entitlement to payment for unpaid progress claims It is noncontroversial that the respondents did not pay to the applicant the progress claims for stages 1, 2, 3 and 6 when the applicant says the claims were due and owing under the written contract. The applicant contends that the total amount owing is $266,911.20 comprising:215 (a) Stage 1 (deposit stage) being progress claim dated 15 January 2016 and given on 29 June 2016 in the amount of $33,844.40; (b) Stage 2 (base stage) being progress claim dated 20 April 2016 and given on 29 June 2016 in the amount of $101,533.20; (c) The balance of $30,000 owing for stage 3 (frame stage) being progress claim dated 15 June 2016 and given on 29 June 2016 (the total value of this progress claim was $135,377.66); and 208 Respondent’s submissions filed 1 October 2021, p 57. 209 Exhibit 3, p 1007. 210 Ibid, p 61 and see Exhibit 3, pp 1260, 1296, 1297, 1271 and 1305. 211 See exhibit 3, pp 1262 to 1267 and respondent’s submissions filed 1 October 2021, p 61. 212 Robinson v Harmon [1848] ER 135 and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272. 213 See Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, [15]. 214 See Bellgrove v Eldridge (1954) 90 CLR 613. See also respondent’s submissions filed October 2021, p 59. 215 Applicant’s submissions filed 16 June 2021, p 50. -- 34 of 39 -- 35 (d) Stage 6 (practical completion stage) progress claim initially claimed on 20 February 2017 in the amount of $101,533.20. As discussed above, the applicant unlawfully suspended the works and did not attend to rectification of defective work despite being given an opportunity to do so after it received the respondents’ notice to remedy. Further, the applicant waived any non-compliance by Mr Liang with the written contract. I am not satisfied that the applicant is entitled to any of the amounts claimed under the written contract for unpaid progress claims and is limited to claiming any outstanding money on a quantum meruit basis. Further, I reject the applicant’s claim for interest for the unpaid progress claims pursuant to the terms of the contract for reasons as discussed above. The respondents’ entitlement to reimbursement of various fees Mr Liang claims the amount of $28,000.00 being the infrastructure charge that he says he was required to pay to the Gold Coast Council for a notice issued on 6 February 2017.216 The issue before me now is whether the infrastructure charge is payable by the applicant builder on the basis that it forms part of the contract works. This is to be determined by reference to the written contract alone.217 If an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances cannot be adduced to contradict its plain meaning.218 It is established law that the meaning of a commercial contract is to be determined by what a reasonable business person would have understood those terms to mean.219 It will require a consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract.220 In my view the infrastructure charge clearly falls within the exclusion identified in item 2 of Schedule 1 of the written contract such that it is a cost for conveying services to the site, connecting or installing services for use at the site, or issuing a development approval or similar authorisation that are related to the carrying out of the works. The City of Gold Coast website provides relevant information about the meaning of infrastructure charge that is now set out below as follows: Infrastructure charges help fund essential infrastructure such as local roads, parks, stormwater, water supply and sewerage for new and growing communities. Infrastructure charges are levied on approved developments. Infrastructure charges and development approvals attach to the land. They are binding on the owner and subsequent owners of land title. 216 Respondents’ submissions filed 1 October 2021, p 54 and see exhibit 3, pp 1160-1166. 217 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116. 218 Ibid, [48] and see the respondents’ submissions filed 1 October 2021, p 55. 219 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640 at 656-7, [35]. 220 Ibid. -- 35 of 39 -- 36 On a fair reading of the exclusion identified above in item 2 of Schedule 1 of the written contract, the infrastructure charge clearly relates to the conveying of services to the site and therefore falls within the exception referred to in item 2 of Schedule 1. Mr Liang has failed to convince me that it was the intention of the parties that the infrastructure charge would form part of the contracted works based on the ‘bill of quantities’ prepared by the applicant and provided to Mr Liang. The relevant quotation lists a number of council and approval fees including more generally ‘council approval fees’ in the sum of $30,800.00.221 As discussed above, the quotation provided to Mr Liang by the applicant was an offer to perform the work. On balance, Mr Liang has failed to satisfy me that the written contract included an obligation on the applicant to pay the infrastructure charge and that the amount claimed is payable. Mr Liang also seeks reimbursement of surveyor’s fees in the sum of $1,540.00 being a fee incurred for the preparation of an as-constructed survey in May and June 2017.222 As discussed above, the applicant unlawfully suspended the work and failed to attend to rectification and completion of work after receiving a notice to remedy issued by the respondents. I will allow the claim for surveyor’s fees in the amount of $1,540.00 on the basis that the fee was necessary to achieve practical completion and obtain the necessary final certificate from the local council. The respondents’ claim for liquidated damages It is noncontentious that Mr Liang is entitled to liquidated damages for the late completion of the works.223 Further, clause 32 of the written contract provides that the owner is entitled to be paid a liquidated sum of $50.00 per day if the applicant builder did not reach practical completion by the end of the building period. As discussed above, the work commenced under the written contract at the latest on 7 March 2016. This finding is supported by the evidence. The engineers carried out a pre-construction inspection of the footings on 7 March 2016 and Mr Xiu conceded that the applicant commenced work under the written contract at the latest by 7 March 2016. Allowing for 135 days after the date of commencement, as provided under item 13 of Schedule 1, the applicant was required to reach practical completion by 20 July 2016. As discussed above, Mr Liang completed the defects on 20 July 2017 and took possession of the property on 1 August 2017 by changing the locks. I accept the 221 See exhibit 3, pp 709-718. 222 Respondents’ submissions filed 1 October 2021, p 63. 223 Applicant’s submissions filed 16 June 2021, p 656 and respondents’ submissions filed 1 October 2021, p 61. -- 36 of 39 -- 37 respondents’ assessment for late completion damages in the amount of $18,250.00 representing the payment of $50.00 per day.224 Conclusion I am not satisfied that a further oral hearing is necessary for the purposes of determining any consequential orders arising my findings.225 Both parties have prepared and filed extensive written submissions addressing the many contested factual and legal issues. It is desirable to bring this matter to an end and to make final orders arising from my findings, some of which are now set out below:226 (a) There are two agreements. An oral agreement made in March 2015 for the preliminary works and a separate written agreement being a HIA contract signed by Mr Xiu and Mr Liang in December 2015 for the construction of the duplex. (b) The applicant was unlicensed to perform building work when it agreed to assist the respondents with the preliminary work pursuant to the oral agreement. (c) The respondents’ contention that there is a retention scheme is rejected. (d) Mr Liang and Ms Wang are not jointly and severally liable with respect to the work performed by the applicant in developing the site. Ms Wang is removed as a second respondent from the proceedings. (e) The respondents’ claim that the applicant is required to disgorge the respondents’ payments under the written contract pursuant to s 42 of the Act is rejected. The applicant was licensed to perform the work when it signed the written contract. The preclusion in s 42(3) of the Act is not triggered here because the work performed under the written contract was licensed work, save for some of the items of preliminary work that Mr Xiu included in the lump sum contract so that he could get paid. (f) The written HIA contract entered into between the applicant and Mr Liang is solely for the construction of the duplex. Some items of the preliminary works were included in the lump sum written contract because Mr Xiu wanted to get paid for the work. (g) The applicant performed unlicensed building work for the purposes of the Act when it paid invoices and coordinated the preliminary works pursuant to the oral agreement. The applicant’s claim that the respondents knowingly engaged the applicant to perform unlicensed building work in contravention of s 42 of the Act is rejected. I do not accept as submitted by the applicant that the respondents may be held to be pari delicto (in equal defence) with the applicant builder so as to be outside the class of people for whose benefit a right of recovery is made available in consequence of the operation of s 42(3) of the Act. 224 Respondent’s submissions filed October 2021, p 62. 225 See respondent’s submissions filed October 2021, p 66 and applicant’s submissions in reply filed 11 November 2021, [225]. 226 The summary is not intended to displace any of the findings I have made in the preceding paragraphs of my reasons. -- 37 of 39 -- 38 (h) Mr Liang has had the benefit of the work performed by the applicant. The applicant is entitled to a claim in quantum meruit for the unlicensed work carried out under the oral agreement that is limited by s 42(4) and a common law quantum meruit claim for licensed work carried out pursuant to the written contract. Any quantum meruit assessment cannot exceed the contract price. (i) The applicant is not required to repay the sum of $409,977.10 paid by the respondents pursuant to the written contract. I am satisfied that that the applicant did not give an undertaking to carry out work that forms part of the written contract until it was licensed to do so. (j) The applicant is entitled to recover the amount of $36,011.02 (inc GST) for the preliminary works on a quantum meruit basis under the oral agreement. (k) The works did not reach practical completion for the purposes of the written contract as contended by the applicant. Further, the applicant did not accrue the right to payment for that stage. (l) The applicant did not lawfully suspend the works due to the respondents’ failure to pay progress payments. There is no variation to omit that part of the work not carried out or completed by the applicant. (m) The applicant is entitled to reasonable restitution for the works completed calculated on a quantum meruit basis. (n) The value of the completed licensed works performed is assessed at $638,033.92 (inc GST). The amount of $409,977.10 being the payments made by the respondents after the applicant obtained its licence should be deducted from applicant’s claim for remuneration for the work. (o) The applicant is entitled to payment for the variations on a quantum meruit basis assessed at $21,196.56. (p) The balance of the unpaid progress claims is off-set from the money payable by the respondents. (q) The applicant is not entitled to interest on the money found to be payable by the respondents on a quantum meruit basis. (r) The respondents are not entitled to be reimbursed for the various fees they say the applicant remains liable to pay in the amount of $28,000.00 for the infrastructure charge. The respondents are entitled to the amount of $1,540.00 for surveyors fees. (s) The respondents are entitled to the rectification costs or costs to complete the work assessed in the amount of $21,771.27. (t) The respondents are entitled to liquidated damages in the amount of $18,250.00. (u) The applicant is in breach of the contract for failing to reach practical completion, unlawfully suspending the work and failing to rectify defective work. The applicant is not entitled to recover the final payment owing under the contract. The respondents are entitled to a remedy for the applicant’s breach. -- 38 of 39 -- 39 The assessment of the claims for the application and counter-application that I have allowed are set out below as follows: Reasonable renumeration for work performed by the applicant (including GST and profit as adjusted with respect to the amount of unlicensed building work) $638,033.92 LESS payments made by the respondents - $409,977.10 Balance payable to the applicant $228,056.82 PLUS variations payable to the applicant $21,196.56 LESS rectification costs payable to Mr Liang - $21,771.27 LESS surveyor’s fees payable to Mr Liang - $1,540.00 LESS liquidated damages payable to Mr Liang - $18,250.00 TOTAL $207,692.11 Mr Liang is required to pay the amount of $36,011.02 (inc GST) for the preliminary works as assessed by Mr Burgess in addition to the licensed work performed under the written contract that I have assessed in the amount of $207,692.11. The final order is that Mr Liang pay the total amount of $243,703.13 (inclusive of GST) to the applicant within sixty (60) days from the date hereof in full and final satisfaction of all work performed by the applicant. -- 39 of 39 --