Cochrane v Lees [2021] QCATA 74

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: PARTIES: Cochrane v Lees [2021] QCATA 74 In APL307-19: VINCENT COCHRANE (first applicant) TAMARA COCHRANE (second applicant) v DANIEL LEES (respondent) In APL195-20: DANIEL LEES (applicant) v VINCENT COCHRANE (first respondent) TAMARA COCHRANE (second respondent) APPLICATION NO/S: APL307-19 APL195-20 ORIGINATING APPLICATION NO/S: BDL249-18 MATTER TYPE: Appeals DELIVERED ON: 15 June 2021 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Brown Member Howe ORDERS: In APL307-19 1. The applications to adduce fresh evidence filed 1 April 2020 and 20 April 2020 are refused. -- 1 of 31 -- 2 In APL307-19 and APL195-20 1. Leave to appeal is granted. 2. The appeal is allowed. 3. The decision of the Tribunal dated 24 October 2019 is set aside. 4. Vincent Cochrane and Tamara Cochrane must pay to Daniel Lees $3,918.13 within 28 days of the date of this decision. 5. The counter application by Vincent Cochrane and Tamara Cochrane is otherwise dismissed. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – ADMISSION OF FURTHER EVIDENCE – where the applicants hired the defendant builder to build their new house and pool deck – where the applicants did not appear at the hearing – where the applicants sought to rely on a doctor’s certificate dated four months after the date of hearing to show reasonable excuse for not attending – where at first instance the applicants were ordered to pay a sum to the respondent – where the applicants apply to adduce photographs and additional documents – where these documents were available at the time of the initial hearing– whether the evidence should be adduced CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY ON QUANTUM MERUIT – IN GENERAL – where the applicants hired the defendant builder to build their new home and pool deck – where the home contract is an entire contract – where the contract for the pool deck is not an entire contract – where most of the building work complete – where defendant builder has not obtained approval for the building works as required under the contract – whether the builder is entitled to recovery on quantum meruit CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTIULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – where the applicants hired the defendant builder to build their new house and pool deck – where the applicants claim that the variations are invalid as they are unsigned – whether the variations should be excluded from the calculation of damages Acts Interpretation Act (1954) (Qld), s 14B Queensland Building and Construction Commission Act 1991 (Qld), Sch 1B -- 2 of 31 -- 3 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 147 Hoenig v Isaacs [1952] 2 All ER 176 Lumbers v W Cook Builders Pty Ltd (In Liq)(2008) 232 CLR 635 Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560 Tan Hung Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178 Thompson Residential Pty Ltd v Hart & Anor [2014] QDC 132 REPRESENTATION: Applicant: Self-represented Respondent: Self-represented APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) REASONS FOR DECISION [1] Mr and Mrs Cochrane (‘the Cochranes’) owned land at Eumundi. In early 2017 they entered into a contract with Stirling Homes for the construction of a house on their land. The frame and part of the roof had been constructed when the Cochranes fell into dispute with that company and the contract was terminated. [2] On 30 June 2017 the Cochranes signed a contract with another builder, Mr Lees, to complete the build. The contract was a QBCC New Home Construction Contract for a fixed price of $262,084.90.(“the house contract”) At the same time the Cochranes entered into a separate contract with Mr Lees for construction of a pool deck at a cost of $18,835.45 (“the pool deck contract”). This was a QBCC Level 1 Renovation, Extension and Repair Contract. Both contracts provided for a start date of 17 July 2017. [3] Work commenced on the house contract around 17 July 2017. The allowed construction time was 110 work days. Work on the pool deck commenced later around December 2017. The allowed construction time on that was also 110 work days. [4] The parties fell into dispute. The Cochranes gave notice to terminate the contract on 27 March 2018. [5] Mr Lees commenced proceedings in the Tribunal on 14 September 2018 claiming $47,962.13 of which $10,137.73 was for variations. [6] The Cochranes filed a response and later an amended response, the latter challenging the amount claimed by Mr Lees. [7] The matter came on for hearing on 30 September 2019. The Cochranes failed to attend the hearing. They advised the Tribunal that they would not attend on the day of the hearing. -- 3 of 31 -- 4 [8] Mr Lees appeared and made submissions. The learned member took into account statements of evidence filed by both parties and reserved his decision. He subsequently ordered the Cochranes to pay Mr Lees the sum of $23,970.40. [9] Both the Cochranes and the Mr Lees have filed applications to appeal the decision. Fresh evidence [10] The Cochranes have filed two applications for leave to adduce fresh evidence in the appeal. The first application involves evidence regarding Mrs Cochrane’s state of health at the time of the first heading, photographs of the building works and documents from a solicitor. The second application relates to evidence of the sale by the Cochranes of the property. [11] Turning to the first application, on the morning of the hearing below Mrs Cochrane emailed the registry to advise that the respondents would not be appearing. The reasons given for that are rambling and somewhat vague, as is most of the Cochranes’ material in both the matter below and the appeal, but in the email mention is made of the lack of available witnesses and also a claim about the general futility of the proceedings according to the perception of the respondents. [12] In the first application it is now asserted that Mrs Cochrane was ill and could not attend the hearing. This is new evidence, given there was no mention of illness preventing attendance in the email of 30 September 2019. [13] Mrs Cochrane provides a General Practitioner’s certificate in support of that claim. There is no explanation from either Mrs Cochrane or the medical practitioner about how, some four months after the critical date of the hearing, the medical practitioner was in a position to offer the Tribunal an opinion that “… an anxiety attack meant that she was unable to be present at her court hearing on 30/09/19 as she would have preferred.” [14] The photographs of the building work are said to be relevant to the issue of variation works. It is clear from the first application that the Cochranes seek to rely upon the evidence to bolster their case. There is nothing to suggest that the evidence was not available at the time of the hearing. The Cochranes’ simply elected not to rely upon the photographs, a decision they now appear to regret. [15] The solicitor’s documents are said to evidence the ‘deviousness’ of Mr Lees’ conduct resulting in, inter alia, Mrs Cochrane’s health condition. It seems clear from the first application that these documents were available at the first hearing. Again, the Cochranes elected not to rely upon them and now regret that decision. [16] In the second application, the Cochranes seek to rely upon evidence of the sale of their property. This evidence is said to be relevant to rebut Mr Lees’ suggestion that the Cochranes remain residing at the property. How any of this is relevant in the present appeal is not made clear. [17] In the context of a reopening application in Minor Civil Dispute proceedings by a party who failed to attend a hearing, the former President of the Tribunal said this: [9] It is common knowledge that the jurisdiction is a busy and demanding one, in which parties are expected to present their own cases, and act in their own interests. QCAT’s resources for the resolution of disputes serve, as the High Court has recently observed, the public as a whole and not merely the parties to proceedings. The QCAT statutory regime itself places obligations upon parties -- 4 of 31 -- 5 to take care in their dealings with Tribunal matters and to act in their own best interests. [10] The legislation, and the demands upon public resources which fund QCAT, necessarily impose an expectation and an obligation upon a party that it will ensure that it acts in its own best interests, or accept the consequences. A failure to attend in the circumstances advanced for the applicant here is not, in those contexts, a ‘reasonable excuse’ under QCAT Act, s 137(a).1 [18] The matter at hand was a building dispute, not a Minor Civil Dispute, however parties in all matters before the Tribunal, including in complex building matters, are expected to take action in their own interests. Parties choosing not to attend a hearing by choice are not acting reasonably in their own interests. In such circumstances it will be a rare case where fresh evidence will be allowed to be adduced from such a party on appeal explaining their failure to appear. [19] Generally fresh evidence will only be allowed on appeal when it could not, by reasonable diligence, have been obtained for the original hearing, the evidence might have produced an opposite result and is the evidence apparently credible.2 [20] The fresh evidence sought to be led now on appeal is not fresh evidence. In the first application the Cochranes say this: The fresh evidence was not available to the Tribunal as we believed the existing evidence we presented regarding the unsigned, disputed variations … was sufficient evidence. Basically we did not anticipate that the member would award monies for the variations as the evidence we provided clearly demonstrated these variations breached both the conditions of the contract and the legislation. [21] There is no suggestion the evidence now sought to be presented was not available for the hearing. Had the Cochranes attended the hearing they would have been given an opportunity to challenge the evidence of the applicant builder and if necessary, at the discretion of the presiding Member, be allowed to give additional evidence to refute the builder’s claims raised at hearing. If they had attended the hearing, they would also have been allowed to address the learned Member on the law concerning variations, but they forewent that opportunity. [22] What the respondents truly seek to do with the applications for fresh evidence is relitigate issues that were in dispute at the hearing but now thought by the Cochranes not to have been adequately addressed by them in their statements of evidence. That oversight, if there be such, is a consequence of the way in which the Cochranes conducted the proceedings and their failure to attend the hearing, which was a matter entirely of their choice. [23] The claimed fresh evidence could have been led at the hearing below. The opinion offered by the medical practitioner does not change that, nor is it persuasive of much in any case. The applications to adduce fresh evidence are refused. 1 The Pot Man Pty Ltd v Reaoch [2011] QCATA 318 [9] [10] 2 Jonathan v Mangera [2016] QCA 86 [12] citing Pickering v McArthur [2010] QCA 341 [22]; and see PS Business Holdings Pty Ltd v Duncan & Anor [2010] QCATA 19 [16] citing Council of the City of Greater Wollongong v Cowan (1955) 93 CLR 435. -- 5 of 31 -- 6 The grounds of appeal [24] Where parties act in building disputes without the benefit of legal representation, there is often an unfortunate tendency to either uninformative brevity and omitting basic relevant evidence or alternatively swamping the Tribunal with voluminous, often irrelevant, evidence deflecting attention from the relevant issues. [25] The Cochranes approached both the hearing below and this appeal in the latter fashion with long and discursive submissions lacking precision which makes their material hard to read or follow sensibly. [26] Their initial application for leave to appeal or appeal identified two “parts” of the decision below which are contested. In subsequent submissions however3 they challenged three “parts” of the learned member’s decision. What follows then is, in reality, an attempt to relitigate various issues or differences between the parties that were raised in the material submitted in the hearing below rather than focus on what they claim as the errors in the learned member’s decision. [27] Attempting to bring the Cochranes’ grounds of appeal into focus the following distillations emerge: Ground 1 – The member erred in failing to determine the issue of termination of the building contract which reduced or denied the Cochranes’ claim to recover the full costs of rectification against Lees. Ground 2 – The member erred in allowing Lees’ claim for variations not agreed which breached the requirements of s 40 of Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) and the general conditions of contract. Ground 3 – The member erred in allowing Lees’ claim for agreed variations which breached the requirements of s 40 of Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) and the general conditions of contract. Ground 4 – The member erred in the calculation of the costs of rectification of the applicant’s defective building work. [28] By contrast, Lees provided limited information in the building claim brought below and even less in the appeal, either in support of his application or responding to the Cochranes’ appeal. He was directed to file an appeal book containing any additional documents relevant to the appeal not contained in the appeal book filed by the Cochranes. The Cochranes did not add to their appeal book any of Lees’ statements of evidence or other relevant material relevant to the hearing below. Despite that, Mr Lees chose not to file an appeal book. [29] Mr Lees’ grounds of appeal are extremely brief and hard to understand but they encompass claims of two errors made by the member in relation to his calculation of the monies payable to him by the Cochranes: Ground 1 – the member erred in omitting from the award of monies in his favour $9,417.73 for the final progress payment due on the pool deck contract and a variation of $720; 3 Filed 4 March 2020 -- 6 of 31 -- 7 Ground 2 – the member erred in omitting from the award of monies in favour of Mr Lees the sum of $700 paid by him to a painter. [30] We note that the material relied on by the parties in the hearing below proved challenging to comprehend sensibly but despite that, the learned member understood that he had to do the best he could on the evidence.4 Similarly the Appeal Tribunal must do the best it can on the material submitted to it. [31] Under the QCAT Act, whether the grounds of appeal involve questions of law or questions of fact or questions of mixed law and fact determines how appeals are heard and decided. Questions of law may be determined without a rehearing of the matter and generally without leave to appeal being necessary.5 Questions of fact or mixed law and fact need not only leave to appeal first, but must, if leave is granted, be determined by way of rehearing with or without the hearing of additional evidence as decided by the Appeal Tribunal.6 [32] The distinction between questions of law and fact and mixed law and fact is not always clear, but a Canadian decision has been commented on favourably in the Tribunal showing the differences as follows: Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.7 [33] The Cochranes’ grounds of appeal 1 and 4 and both of Lees’ grounds of appeal involve questions of either fact or mixed law and fact. They are therefore appropriately considered first because if leave to appeal is granted for any of these grounds of appeal then the appeal must proceed by way of rehearing on the evidence below. Cochranes’ Grounds of appeal 1 and 4 [34] Grounds 1 and 4 can be conveniently determined together. [35] Ground of appeal 1 asserts that the member erred in failing to determine the issue of termination of the building contract which reduced or denied the Cochranes’ claim to recover the full costs of rectification against Mr Lees. Ground of appeal 4 asserts that the member erred in the calculation of the costs of rectification of the defective building work performed by Mr Lees. [36] The learned member said this in his reasons for decision: The construction work was not without its difficulties and there were various disputes between Mr Lees and the Cochranes to the point where the Cochranes gave notice to terminate the contract on 27 March 2018. It is unnecessary for me to determine whether the contract was lawfully terminated because most of the work had been done by that stage and the Cochranes had taken up occupation of the house.8 4 Lees v Cochrane [2019] QCAT 321 [26] 5 s 142(3) QCAT Act eg appeal of a decision in a minor civil dispute proceeding 6 s 147(2) QCAT Act 7 Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748 [35] per Iacobucci J cited in Bradlyn Nominees Pty Ltd v Saikovski [2012] QCATA 39 [12] 8 Above n 4, [3] -- 7 of 31 -- 8 [37] The Cochranes say that Mr Lees never achieved practical completion. They say that they terminated the contract, meaning the house contract, before practical completion was reached. In most building disputes, including the matter at hand, determining which party repudiated their obligations under the contract and which party was entitled to terminate has significant bearing on the entitlement to recover monies due as provided for by the contract or as general damages or to claim other relief. The termination of the contracts [38] The Cochranes gave notice of intention to terminate both the house contract and pool deck contract on 9 March 2018 and then notice of termination of both on 27 March 2018. It is hard to understand from the parties’ material what stages the builds had reached by then. [39] Under the house contract there was a deposit, six stage payments and a final practical completion payment to be made. By the pool deck contract there was a deposit and two stage payments. [40] Leaving aside the variations, according to the Responses filed by the Cochranes9 the final progress payments for practical completion under both contracts were unpaid when the notices of intention to terminate both contracts were given by the Cochranes. [41] Looking to the calculations set out by the Cochranes in the Responses they filed in the proceedings below, all the work had been completed but there were complaints about defective work and the Responses deal with the cost of rectifying that. Hence, apparently, the learned member’s comment that it was not necessary for him to determine whether the contracts had been lawfully terminated because most of the building work had been done. [42] Both contracts required Mr Lees achieve practical completion by a fixed date. To do that it was necessary for Lees not only to complete the work, save for minor defects and omissions, but also to be able to produce “satisfactory written evidence that all relevant inspections and approvals required by the Sustainable Planning Act 2009 and the Building Act 1975 and by any body having the relevant jurisdiction have been satisfactorily completed….”10 However it seems the statutory requirement to obtain all necessary certificates including a final inspection certificate in Form 21 was never completed. [43] That issue was the subject of emails and complaint between the parties. The certifier sent an email to Mr Lees on 26 March 201811 advising what was necessary to achieve a final inspection certificate for the house following an attendance by the certifier to inspect on 15 March 2018. Amongst other things, the certifier noted there had not been a frame inspection certificate yet and he set out various things required before a final certificate would be given, including issues about perimeter drainage, guttering and making good balustrading. The certifier said once those things were attended to a final certificate would issue. [44] It seems a final certificate was also lacking for the pool deck construction. In the notice of intention to terminate given in respect of the pool deck contract, reference is made 9 Response filed 30 October 2018 pages 3-4, Amended Response filed 20 December 2018 page 2 10 House contract clause 28.2; pool deck contract clause 22.2 11 Response annexure 7 -- 8 of 31 -- 9 to unsatisfactory work and outstanding matters preventing final approval by the certifier. [45] Without final inspection certificates, neither construction was complete. A final inspection certificate evidences a successful final mandatory inspection which is a requirement under the legislation.12 In addition, the building approval usually requires issue of a final certificate as a condition of approval. The absence of a final inspection certificate may present substantial difficulties ahead for an owner.13 [46] It seems none of the requirements of the certifier were met by Lees before the notice of intention to terminate given by the Cochranes expired on 26 March 2018 and they terminated the contracts. Lees does not challenge the terminations. [47] The contracts were therefore lawfully terminated by the Cochranes on 27 March 2018. At the hearing below Lees conceded the rectification work identified by the Cochranes was necessary. He did not challenge the costs of the contractors engaged by the Cochranes to rectify the defective work, but simply asserted he could have done the work cheaper because he could have done it himself without the costs of paid labour. [48] The estimated cost of the work by the Cochranes in their first Response was $4,894.07 for the house and $5,093 for the pool deck. [49] In their Amended Response the actual costs of rectification were known and the claim for the cost of rectifying the house defects increased to $6,523.14 The costs of rectification of the pool deck stayed at $5,093, making a total claim of $11,616. [50] Mr Lees’ costs of rectification based on his saving of labour was suggested by him at hearing to be $6,000 in respect of both contracts. That was accepted by the member as the appropriate award due to the Cochranes. [51] Given the lawful termination of the contracts by the Cochranes, Mr Lees was not entitled to return to the property to rectify defective work. His only entitlement under the contract was to return to the property to perform rectification work during any extant defects liability period, but none otherwise. [52] Accordingly, the Cochranes were entitled to engage their own contractors to perform the rectification work and claim that cost. [53] The learned member should not have accepted Mr Lees’ reduced estimate of the cost of the rectification work in lieu of the actual costs incurred by the Cochranes. [54] This was an error of mixed law and fact by the member. The Cochranes are entitled to leave to appeal. Before proceeding to conduct the Cochranes’ appeal by way of rehearing, we will consider the appeal by Lees. Mr Lees’ grounds of appeal [55] Mr Lees’ first ground of appeal is that the learned member erred in omitting from the award of monies in his favour $9,417.73 for the final progress payment due on the pool deck contract and a claimed variation of $720.00. 12 Section 24(3)(f), Building Regulation 2006 (Qld). 13 Refer Rowan v Betnale Pty Ltd [2020] QCAT [49]; Saunders v Roberts [2016] QCATA 145. 14 Receipts from Nicol Watson Electrical $308, Exact Building and Construction $2,937 and $1,100 and D Francis Painting Contractor $2,178 -- 9 of 31 -- 10 [56] The following exchange occurred between the member and Lees at the hearing: MEMBER: Okay. All right. So – all right. So you’ve given me that document and I’ve got that document, so what I’m going to do – that’s pretty much it, isn’t it? MR LEES: Yes. MEMBER: So your claiming for – your total claim of 47,000 includes all these variations. MR LEES: Yes. MEMBER: So, essentially, when we go back to what the Cochranes have put in in their response - - - MR LEES: Yes. MEMBER: - - - that reconciliation on page 3 is a fair reconciliation of the cost of the works, except you don’t agree with the amounts. MR LEES: I’m very sorry, but I didn’t understand that question. MEMBER: Oh, no, I’ll say it again. MR LEES: So that my – is that my reconciliation from my bookkeeper? MEMBER: No, that’s the Cochrane’s reconciliation - - - MR LEES: Yes. MEMBER: - - - where she’s got - - - MR LEES: So we’re on the same document, could I just ask, please, Member Brown (sic), is that the – from the 31st of October that we were on before? Page 3? MEMBER: Yes. MR LEES: Okay. MEMBER: So in terms of a reconciliation, she’s got a final progress claims 58, not – you say it’s 47. MR LEES: No, the final payment was 58,920 as per the contract. Now, let me check that because - - - MEMBER: But you’ve got 47 on your application. You say in your application that you filed in the tribunal that you are owed $47,000. MR LEES: Now, I don’t know – yes, that’s right. MEMBER: Okay. MR LEES: So – which would say on that page, that I took a while to find, the very top payment would be 58,920. MEMBER: Yes. MR LEES: And then the subtractions from that. MEMBER: Right. So there’s an argument about the variations. MR LEES: Yes. -- 10 of 31 -- 11 MEMBER: It’s an argument about the cost of rectification, but you accept the rectification work was necessary. MR LEES: Well, yes, it was. Yep.15 [57] The reconciliation on page 3 of the Response document referred to extends to a fourth page. On page 4, the pool deck contract figures are set out by the Cochranes. They list there the reconciliation for the pool deck contract. The final payment for the pool deck contract of $9,417.73 is shown as being unpaid. [58] Mr Lees made a claim for the balance owing under both the house contract and the pool deck contract in the originating building dispute application. There was nothing before the tribunal to suggest that he had abandoned the claim for the balance owing under the pool deck contract. [59] In the learned member’s calculation of money owed to Mr Lees, an amount of $58,920.10 for the house contract is noted. The final payment for the pool deck contract however is not. [60] By clause 20.3 of the General Conditions of the pool deck contract it was provided: If the contract is terminated pursuant to this condition the owner must pay the contractor the reasonable value of any work properly carried out by the contractor prior to that termination and which has not been the subject of previous payment. [61] For reasons given below, this entitlement to receive payment for the reasonable value of any work performed with respect to the pool deck contract was something requiring consideration by the member. In failing to address it the learned member fell into error of fact. Leave to appeal should be granted. Rehearing [62] As leave to appeal has been granted in both the appeal by the Cochranes and the appeal by Lees, we will now proceed to decide both appeals by way of rehearing. A rehearing pursuant to s 147 of the QCAT Act is not a rehearing de novo. It is a rehearing on the record, without rehearing of witnesses although in exceptional cases additional evidence may be admitted.16 [63] In rehearing the matter we have adopted the learned member’s primary findings of fact other than where those findings have been challenged in these appeals or where there is some doubt as to the findings made.17 The Appeal Tribunal does not, in undertaking a rehearing, sit as a ‘second trial court’ and consider as if presented for the first time arguments advanced by the parties.18 We have carefully considered the evidence in accordance with the relevant principles applicable in appeals by way of rehearing on the record of proceedings below. 15 Transcript 1-18 L3 – T1-19 L19 16 QCAT Act, s 147(2). 17 Harrison and Anor v Meehan [2016] QCATA 197 and see Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCR 1833 18 Cadwallader v Bajco Pty Ltd [2002] NSWCA 328. -- 11 of 31 -- 12 [64] In undertaking the rehearing we will address, inter alia, the matters raised in the respective parties’ grounds of appeal, at least to the extent that we have not already done so. [65] The first issue to consider is whether the building contracts were entire contracts or divisible. Where a contract is entire, nothing is due the builder until all of the work under the contract has been completed by him. Complete performance of a builder’s obligations under the contract is a condition precedent to payment. [66] By contrast, a building contract may be divisible, which is to say the builder is entitled to be paid for completing any work done under the contract. [67] Many building contracts are entire contracts. Whether a building contract is such depends on the construction of the contract.19 [68] We shall deal with the pool deck contract first. The builder’s claim under the pool deck contract [69] We have dealt in part with this issue in granting Lees leave to appeal in respect of his first appeal ground. The learned member erred in failing to take into consideration the balance owing to Mr Lees by the Cochranes in respect of the pool deck contract. [70] This contract (containing substantially different terms to the house contract), we find, was not an entire contract. [71] Clause 20 of the pool deck contract dealt with termination. If a party was in substantial breach, and subject to compliance with the provisions of clause 20.1 and 20.2 of the contract, the party not in breach was entitled to terminate. In the event of termination, clause 20.3 provided: If the contract is terminated pursuant to this Condition the Owner must pay the Contractor the reasonable value of any work properly carried out by the Contractor prior to that termination and which has not been the subject of previous payment. [72] The effect of a provision in a building contract similar to clause 20.3 was considered by the Appeal Tribunal in Carter & Anor v HK Developments Pty Ltd.20 The Appeal Tribunal referred to the decision of Tan Hung Nguyen v Luxury Design Homes Pty Ltd21 where the contract provided: …the owner may end this contract by giving written notice to that effect to the contractor…. If the reasonable cost of completion of the work exceeds that which would have otherwise been due under the contract the difference will be a debt payable by the contractor to the owner. Should the reasonable cost of completion be less than otherwise due under the contract the difference will be a debt payable to the contractor…. [73] The Appeal Tribunal noted that in Tan Hung Nguyen the Court concluded the clause disclosed an intention that the contract was not intended to be an entire contract. The Appeal Tribunal, adopting the reasoning of the Court of Appeal, concluded that the 19 Hoenig v Isaacs [1952] 2 All ER 176, 181. 20 [2016] QCATA 65 21 [2004] NSWCA 178 -- 12 of 31 -- 13 contract there was also not entire, and that the builder was entitled to reasonable remuneration on a claim in quantum meruit for the value of his work done despite termination of the building contract by the owners as entitled because of the builder’s breach. [74] In our view, clause 20.3 of the pool deck contract evinces a clear similar intention that the pool deck contract was not intended to be entire, but divisible, allowing Mr Lees to claim fair recompense for the work he performed notwithstanding the works had not reached final completion. The builder’s claim under the house contract [75] There is no similar or equivalent provision to clause 20.3 of the pool deck contract to be found in the house contract. [76] Lump sum building contracts routinely provide for payment of the contract price by way of stage payments. That does not prevent them being an entire contract.22 Here the house contract entitled Mr Lees to claim a progress payment upon completion of each of the various agreed stages set out in the contract. Once the work was done in respect of each stage, the builder was entitled to payment for the agreed price of the respective stages concerned, but not before. [77] The house contract provided that the contract price comprised the fixed price component, the prime cost items component (if any) and the provisional sum component (if any). The fixed price component was $247,564.90 and the prime cost items component $14,520.00. There were no provisional sums. The total contract price was $262,084.90. [78] Clause 19 of the contract set out how the contract price was to be paid. Mr Lees was entitled to claim a progress payment when he had achieved each identified stage of the build. The progress payments were subject to adjustment in respect of prime cost items, provisional sum items and claimed variations. [79] With the exception of the final stage payment, and to the extent that they did not dispute a claimed progress payment, the Cochranes were required to pay each progress payment, or such part of it as was not disputed, within 5 business days of the claim being submitted. Clause 19(b) made clear that a claim to a progress payment could only be submitted when Mr Lees had completed one of the stages listed in the Schedule to the contract. [80] Clause 28.5 dealt with payment of the final progress claim for the practical completion stage. It required written evidence being produced of compliance with all relevant inspections and approvals and production of a defects document and production of a Certificate of Practical Completion as well as handover of the work to the Cochranes. [81] Clause 26 dealt with termination. By clause 26.1, if a party considered the other party to be in substantial breach of the terms of contract, notice to remedy the breach could be given to the other party and if the breach was not remedied within a stipulated period the party was entitled to terminate the contact. In the event of termination, the innocent party was entitled to recover from the other party “all damages, loss, cost or expense” and was entitled to “set off such claim against payment otherwise due by the party so terminating”. 22 Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124 -- 13 of 31 -- 14 [82] In our opinion clause 26.1 evinces clear intention that complete and full performance of work under the stages of construction was a precondition to the builder’s entitlement to be paid the agreed stage payments as noted in the schedule to the contract. [83] The expression “payment otherwise due” used in clause 26.1 should be understood as a reference to accrued rights extant as at date of termination.23 [84] What accrued rights had the builder as at date of termination? He had performed and completed the various stages of work and been paid for them save for the final, practical completion stage. It appears that he had performed most of the physical work necessary for the stage, but what he had not done was to obtain final certification and perform those steps necessary and stipulated to be done by clause 28.2. That was no small thing, as referred to above. [85] By clause 28.5, only when Mr Lees had satisfied all the obligations under clause 28.2 were the Cochranes required to immediately pay him the progress claim for the Practical Completion stage. Mr Lees did not do that and accordingly he was not entitled to recover the Practical Completion stage payment. Substantial Performance of the house contract [86] Mindful of the finding below by the learned member that most of the work had been done when the contracts were terminated, we must consider whether Mr Lees is entitled to payment for the Practical Completion stage on the basis that he had substantially performed the house contract. [87] The doctrine of substantial performance operates to mitigate the application of the entire obligation rule. In order for the doctrine to operate, a builder must establish that the contractually stipulated works have been performed save for defects of a minor character. [88] According to the learned authors of Hudson’s Building and Engineering Contracts,24 citing Romer LJ in Hoenig v Isaacs:25 This doctrine is that payment is due in an entire contract if there is substantial performance, that is “a man fully performs his contract in the sense that he supplies all that he agreed to supply but what he supplies is subject to defects of so minor character that he can be said to have substantially performed his promise. [89] In Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd26 Bathurst CJ said: In the case of contracts which at least on their face appear to be entire contracts, particularly lump sum building contracts, courts have been reluctant to construe complete performance of the works as an essential pre-condition for payment. Rather, in circumstances where there has been substantial performance, they have treated a failure to complete as a breach of a non-essential term of the contract not disentitling the builder to contractual payment for the work done 23 CG and HG Windsor Pty Ltd v Waterman [2013] QCAT 618 [91] 24 2020 14th Edition at 3-066; The learned authors also note that it was in the field of construction contracts that the courts evolved the doctrine of substantial performance 25 [1952] 2 All ER 176 26 [2012] NSWCA 184. -- 14 of 31 -- 15 but, rather, giving the proprietor a right of setoff or claim for damages for the cost of completing the work or rectifying any defects.27 [90] In DTR Nominees Pty Ltd v Mona Homes Pty Ltd28 the High Court said the following about what is an essential term: Whether a term of a contract is essential or not is a question of construction which is to be answered with due regard to the general nature of the contract considered as a whole and to its particular terms. See Tramways Advertising Pty. Ltd. v. Luna Park (N.S.W.) Ltd., where Jordan C.J. said: ‘The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor: Flight v. Booth; Bettini v. Gye; Bentsen v. Taylor, Sons & Co. [No. 2]; Fullers’ Theatres Ltd. v. Musgrove; Bowes v. Chaleyer; Clifton v. Coffey. If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight.’ This statement of the law, which was approved in Associated Newspapers Ltd. v. Bancks, emphasizes that the quality of essentiality depends for its existence on a judgment which is made of the general nature of the contract and its particular provisions, a judgment which takes close account of the importance which the parties have attached to the provision as evidenced by the contract itself as applied to the surrounding circumstances. [91] In Thompson Residential Pty Ltd v Hart & Anor29 McGill DCJ considered the authorities on substantial performance under an entire contract, including Hoenig v Isaacs. [92] He considered the proposition (said to be formulated from Hoenig v Isaacs) that the authorities say that the promise to complete the work should be construed as a term of a contract rather than a condition, so that only a breach going to the root of the contract would entitle the other party not to pay the contract price. [93] McGill DCJ rejected that proposition. Instead he suggested the following question should be asked: whether the contract is to be construed as one where completion of a particular stage of the work is a condition precedent to payment of the progress payment in relation to that stage, or is one where a failure to complete is seen as a breach of a non-essential term not disentitling the builder to contractual payment.30 [94] It should be noted that McColl JA in the New South Wales Court of Appeal decision of Tan Hung Nguyen v Luxury Design Homes Pty Ltd31 pointed out that Hoenig v 27 Ibid [94] 28 (1978) 138 CLR 423, 430 (footnotes omitted) 29 [2014] QDC 132 30 Ibid [69] 31 Above n 21 -- 15 of 31 -- 16 Isaacs was not a construction contract dispute. Hoenig v Isaacs concerned a contract to make and supply furniture for a flat. McColl JA said: The reason building contracts are construed as being entire, even where there is no express undertaking to that effect, is plain. It is of the essence of such a contract that the consideration for the payment of the contract sum is “entire and indivisible”. A partially completed building is of little use to the owner of the land upon which it is to be constructed.32 [95] The obligations set for Mr Lees to achieve practical completion were stated in clause 28.2 of the house contract: (a) To produce to the Cochranes satisfactory written evidence that all relevant inspections and approvals required by the Sustainable Planning Act 2009 and the Building Act 1975 and by any body having relevant jurisdiction had been satisfactorily completed; (b) To complete and sign a Form 6 defects document or similar identifying agreed and non-agreed minor defects and minor omissions; (c) Say when he would remedy the agreed matters; (d) Give the Cochranes a completed and signed form 7 Certificate of Practical Completion stating that date as the date of practical completion; (e) Hand over the works to the Cochranes. [96] He did none of that. In our opinion his failure in these matters cannot be treated as a breach of a non-essential term. His failures amounted to breach of an essential term and as such it disentitled him to payment for any part of the practical completion stage. The entitlement of Mr Lees to recover on a quantum meruit in respect of the house contract [97] The issue that must also be addressed, consequent on a finding that a construction contract is a lump sum or entire contract, is whether the builder, having done work under the contract but not having finished the job, should be paid something for that work by way of quantum meruit claim.33 [98] The right to claim on a quantum meruit does not today depend upon an implied contract between the parties that a reasonable amount would be paid, but is based on a claim for restitution or unjust enrichment. Surprisingly, whilst there is ample considered authority for a builder making such claim in circumstances of the owner’s repudiation of the contract, there appears very little judicial consideration given to the entitlement and circumstances of a builder in breach of his obligations under an entire contract, who makes such a claim. [99] In Hoenig v Isaacs Denning LJ stated that the right of a “contractor” to claim on a quantum meruit basis for work performed only arose where it was the proprietor who had prevented completion: On any lump sum contract, if the work is not substantially performed and there has been a failure of performance which goes to the root of it, as, for instance, when the work has only been half done, or is entirely different in kind from that 32 Ibid [27] 33 Sumpter v Hedges [1898] 1 QB 673 et al. -- 16 of 31 -- 17 contracted for, then no action will lie for the lump sum. The contractor can then only succeed in getting paid for what he has done if it was the employer’s fault that the work was incomplete, or there is something to justify the conclusion that the parties have entered into a fresh contract, or the failure of performance is due to impossibility or frustration … In such cases the contractor can recover in an action for restitution such sum as he deserves …34 [100] As noted above, Hoenig v Isaacs was not a construction contract dispute. [101] In Partington v Urquhart (No 2)35 the builder purported to terminate the contract when the owner did not make a stage payment. The QCAT Appeal Tribunal held that the builder had not lawfully terminated. Despite this, the builder was found to be entitled to claim on a quantum meruit basis for the work carried out in respect of the relevant stage. Unlike Hoenig v Isaacs however, Partington did not address whether the building contract concerned was entire. [102] There is an obvious tension between the strictly limited entitlement of a builder to recover payment for work done under an entire contract, and the principles applicable to claims for recovery by a builder on a quantum meruit basis. If a builder is disentitled from claiming the unpaid balance under an entire contract on the basis that the condition precedent to payment, the completion of the entirety of the works, has not been satisfied, permitting the same builder to recover on a quantum meruit basis would clearly seem to undermine the bargain entered into between the parties in the contract. [103] Gageler J in Mann v Patterson36 commented that where it is the defaulting party who seeks to recover the value of services rendered to the innocent party it is a more difficult category of case.37 He referenced Steele v Tardiani,38 a case concerning a contract for cutting timber, and Lumbers v W Cook Builders Pty Ltd (In Liq).39 In Lumbers the High Court said: In Steele v Tardiani, which in one sense was a simpler case than the present because there was only one contract involved, Dixon J explained the problems of identifying, for the purpose of a quantum meruit claim not based on the contract, a "benefit" conferred on a building owner by the performance of work otherwise than in accordance with the contract. He accepted that, where building work is done outside the contract, and the benefit of the work is taken, there may arise an obligation to pay for the work. He went on to refer, however, to "the dilemma in which a building owner is placed". He quoted Collins LJ who said, in Sumpter v Hedges: "Where, as in the case of work done on land, the circumstances are such as to give the defendant no option whether he will take the benefit of the work or not, then one must look to other facts than the mere taking the benefit of the work in order to ground the inference of a new contract ... The mere fact that a defendant is in possession of what he cannot help keeping, or even has done work upon it, affords no ground for such an inference." 34 Above n 25, 181-182 35 [2018] QCATA 120 36 (2019) 267 CLR 560 37 Ibid, 598 - 599 38 (1946) 72 CLR 386 39 (2008) 232 CLR 635 -- 17 of 31 -- 18 The reference to an "inference of a new contract" may reflect an approach since overtaken by Pavey & Matthews Pty Ltd v Paul, but the problem involved in identifying a conferring or accepting of a benefit remains. (footnotes omitted)40 [104] With respect to the acceptance of the benefit, the following footnote is to be found in Lumbers:41 The word "free" has been used in this context to direct attention to whether the recipient of a benefit had an opportunity to accept or reject the benefit. Cf Munro v Butt (1858) 8 El & Bl 738 [120 ER 275]; Sumpter v Hedges [1898] 1 QB 673; Forman & Co Pty Ltd v The Ship Liddesdale [1900] AC 190. Writing in successive editions of Chitty, Beatson suggested that English law "appears hostile to claims for services rendered or work done in the absence of a contract (express or implied) between the parties [and that] [t]he mere receipt of a benefit, when the defendant had no real option to accept or reject it, does not justify a claim for quantum meruit" (footnotes omitted)42 [105] Carter on Contract43 offers the following commentary regarding the entitlement of a plaintiff to recover on a quantum meruit where it is the plaintiff who is in breach: Where the plaintiff is the party in breach a restitutionary claim for the value of partial performance will not usually be available. The general principle is therefore that where the plaintiff was the party whose breach or repudiation led to termination, a restitutionary claim to recover as on a quantum meruit is not available unless the benefit of the work done has been freely accepted. Since the defendant's request (as expressed in the contract) has not been satisfied, it is open to the defendant to deny that any benefit was received from the plaintiff's performance, or to deny that retention of the benefit is unjust. Thus, where an employee is lawfully dismissed under a lump sum employment contract, the employer is not at common law obliged to pay for the employee's service prior to dismissal. The classic decision is Sumpter v Hedges, where the plaintiff abandoned a building contract after doing work on the defendant's land. It was taken for granted that, as the contract was entire, the plaintiff was unable to recover on the contract. The plaintiff's claim to a quantum meruit was rejected because it was impossible to imply a right of recovery while the contract between the parties governed their rights and obligations. In addition, the defendant had no choice but to accept the work as it had been done on his land. Therefore, no obligation to pay could be implied from the receipt of partial performance. However, when completing the work himself the defendant had used certain building materials which the plaintiff had left on the ground. As the defendant had clearly accepted the benefit of the materials which could have been returned, the plaintiff was entitled to be paid. Nothing was said on appeal to doubt the correctness of that aspect of the trial judge's decision. 44 40 Ibid 656 41 Lumbers v W Cook Builders Pty Ltd (In Liq) Per Gummow, Hayne, Crennan and Kiefel JJ footnote 72 42 Gummow, Hayne, Crennan and Kiefel JJ footnote 72 43 JW Carter, LexisNexis, Carter on Contract (online at January 2021) 44 At [44-330] -- 18 of 31 -- 19 [106] Sumpter v Hedges found approval in the High Court in Steele v Tardiani and at least to the extent that it concerns the principles governing the right of recovery by the party in breach, remains good law. The principles apply in respect of entire contracts.45 [107] Accordingly, where a builder is in breach and seeks to recover for work performed on the basis of a quantum meruit, it is not sufficient that the builder establishes that building work has benefited the owner. The builder must establish that the owner had a free choice as to whether to accept or reject the alleged benefit. We will return to this issue later. [108] The terms of the contract between the parties are also directly relevant when considering a builder’s claim in quantum meruit. In Mann v Paterson Constructions Pty Ltd46 the High Court, referring to the right of a builder to recover on a quantum meruit without reference to the contract between the parties, said that: To allow a restitutionary remedy by way of a claim for the reasonable value of work performed unconstrained by the terms of the applicable contract would undermine the parties' bargain as to the allocation of risks and quantification of liabilities, and so undermine the abiding values of individual autonomy and freedom of contract.47 … (this would) allow a windfall to the respondent that is distinctly inconsistent with the respect due to the contract made by the parties as the charter whereby their commercial risks were allocated between them and their liabilities limited. To allow a restitutionary claim would be to "subvert the default remedial regime of contract law, to which the parties, by contracting, have submitted", and accordingly to subvert the contractual allocation of risk.48 [109] Putting to one side the fact that here it was Mr Lees the builder who was the defaulting party, the statement in Mann is relevant for present purposes. The house contract, being an entire contract, required completion of the works by Mr Lees before he was entitled to the contract price. To enable Mr Lees, in circumstances where because of his breach the contract was terminated and the building works were therefore left incomplete, to recover on a quantum meruit would be to impermissibly subvert the contract between the parties which required entire performance of the building works as a condition precedent to payment. The allocation of risk in the contract was clear. Mr Lees was not entitled to be paid unless he performed the building works in accordance with the contract. [110] This is sufficient to dispose of Mr Lees’ entitlement to recover on a quantum meruit for any part of the unpaid house contract price, including variations claimed which were not agreed. However even if we are not correct in thus concluding, we are not satisfied that the Cochranes freely accepted the benefit of the work performed by Mr Lees. [111] The work performed by Mr Lees in respect of the practical completion stage was not completed in accordance with the contract. On the evidence before us, the Cochranes had no choice but to accept the work done as performed, given it was work on their land. As such there cannot be said to have been any choice about it. We make this 45 Steele v Tardiani (1946) 72 CLR 386; Forman & Co Pty Ltd v The Ship `Liddesdale’ [1900] AC 190; Cooper v Australian Electric Co Ltd (1922) 25 WALR 66 46 (2019) 267 CLR 560 47 Ibid [20] per Keifel CJ, Bell & Keane JJ 48 Ibid [21] -- 19 of 31 -- 20 finding in the absence of evidence from Mr Lees about the circumstances in which the variation works came to be performed. Had Mr Lees led evidence that, for example, the Cochranes had acquiesced in the works being undertaken, we may have formed a different view as to whether they had freely accepted the benefit of the variation works. The outcome is, in large part, the consequence of the way in which Mr Lees conducted his case. [112] Accordingly, Mr Lees has no entitlement to claim recovery on a quantum meruit in respect of the work performed under the house contract. This includes the variations. [113] For the same reasons we find that Mr Lees is not entitled to recover an amount for pool variation 2. This variation was not agreed between the parties and Mr Lees offers no evidence about how the variation work came to be performed. As with the house contract variations that had not been agreed, we conclude that the Cochranes had no choice but to accept the work the subject of pool variation 2. [114] This outcome may seem unjust. However as stated in the 11th edition of Hudson’s Building and Engineering Contracts: Thus where the contract is entire, the owner may get the benefit of valuable works not entirely completed by the builder without having to pay for them, unless the circumstances are such as to justify a quasi-contractual remedy. So a builder who has not fully completed the work, through no fault of the owner, cannot overcome his difficulty by ignoring the contract and sue on a quantum meruit for the work he has done. However, the rigours of this rule are often considerably reduced because, in a large number of cases where there is not entire performance, the owner may decide to sue the builder for damages for breach of contract. If he does, he will, on general principles of damages for breach of contract, have to give credit for what he would have had to pay had the contract been properly performed. But in a case where the owner decides not to sue he may derive considerable advantage from the foregoing rules, which are, however, an essential and necessary sanction to discourage the deliberate breaking or abandonment of contracts, which would be absent if in such cases the builder was entitled to demand partial payment notwithstanding his own breach … But it remains true that an owner should weigh carefully the damages recoverable, on the one hand, against the advantage he may derive under the [entire contract rule] from the builder's inability (depending on the state of the accounts) to sue for the balance of the price of the work, on the other, since if the owner decides to sue for damages he will have to give credit under the basic Robinson v Harman … principle … for what the work would have cost him if properly completed or performed.49 [115] This matter of giving credit for the cost to the owner of work if it had been completed or performed becomes relevant below, given the Cochranes claimed damages from Mr Lees. Consequences of Mr Lees being entitled to recover reasonable value of work done under the pool deck contract [116] We have determined that Mr Lees was entitled to be paid the reasonable value of his work properly carried out on the pool deck prior to termination. 49 11th edition at [4.007] and [8.114] -- 20 of 31 -- 21 [117] Strangely enough, the pool deck contract does not address any entitlement of the party validly terminating the contract to claim for loss associated with failure to complete the contract. There would of course be a claim available under the common law for breach of contract (and if the builder, quantum meruit50), but the contract is silent on the point. [118] The pool deck contract was subject to two variations, a negative variation of $660.00 (pool variation 1) which is not disputed and a positive variation of $720.00 (pool variation 2) which is. [119] Leaving aside the disputed variation, as set out above, the contract price was $18,835.45, reduced by the negative variation to $18,175.45. The Cochranes paid Mr Lees $8,757.72 by way of deposit and a stage payment, leaving a balance unpaid of $9,417.73. [120] Subject to the right of set off by the Cochranes for defective work, Mr Lees is entitled to recover that amount of $9,417.73. Consequences of Mr Lees not being entitled to recover any additional amount under the house contract [121] We have found that the house contract was entire. The consequence of this is that Mr Lees is not entitled to recover the final stage payment. Nor is Mr Lees entitled to recover any amount for variations. The claims by the Cochranes i. Defective and incomplete work [122] In their amended response and counter application, the Cochranes claim rectification costs totalling $11,616.00 comprising: (a) House contract: (i) Carpentry work - balustrades $2,937.00 (ii) Painting work $2,178.00 (iii) Carpentry work – various doors $1,100.00 (iv) Electrical work $ 308.00 Total $6,523.00 (b) Pool deck contract (i) Carpentry $2,255.00 (ii) Painting work $2,838.00 Total $5,093.00 [123] Before the proceedings below were commenced, the Cochranes complained to the QBCC about defective building work. The QBCC inspected the works and prepared a report.51 The report identified the following defective and incomplete work: 50 Above n 47 51 Appeal Book, p 92. -- 21 of 31 -- 22 (a) Rear verandah gutters – various issues (b) Rear deck balusters end fixing and stainless steel wires – various issues (c) Hole in door lining in walk in robe (d) Hole in door lining in ensuite (e) Wardrobe doors (various rooms) – incomplete screw caps and bumpers (f) Linen cupboard doors – incomplete screw caps and bumpers (g) Incomplete light fitting – entry wall (h) Privacy lock – powder room (i) Missing laundry cupboard door (j) Balustrade to pool deck defective (k) Cosmetic defects – plain finish pool balustrade (l) Pool deck boards – additional fixing required [124] The learned member took Mr Lees to the allegations of defective and incomplete work contained in the amended response and counter application. Mr Lees conceded that the rectification works were required.52 [125] Mr Lees’ evidence was that the cost of the rectification works would have been reduced had he been given the opportunity to undertake the works. His evidence was that the total cost of rectification works, relating to both contracts, would have been in the order of $6,000.00 had he undertaken the work. 53 [126] We find that the works identified by the Cochranes in the amended response and counter application were either defective or incomplete. The findings in the QBCC report supports this conclusion as does the evidence of Mr Lees. [127] As to the cost of rectification and completion, the Cochranes attached to their response and counter application various quotes and invoices supporting the claims for amounts paid, or which will be incurred, in having rectification or completion works undertaken: (a) Painting – maintenance (house) $ 880.00 (b) Remove and fix wardrobes (house) $1,100.00 (c) Painting – house balustrades, door frames, verandahs $2,178.00 (d) Replacing fan controllers and wall light in entry (house)$ 308.07 (e) Repair rafter tails and balustrading (house) $2,937.00 (f) Repair pool decking and balustrades (pool) $2,585.00 (g) Removal and replacement of decking screws (pool) $1,106.60 (h) Painting – repair and repaint balustrades (pool) $2,838.00 52 Transcript T1-10, lines 10 – 13. 53 T1-12, line 11. -- 22 of 31 -- 23 [128] Mr Lees says that any amount for rectification and completion works should be assessed on the basis of his cost to undertake the work, rather than a third party contractor. We reject this submission. Lees breached the contract resulting in the termination by the Cochranes. Lees was not entitled to return to the site. The Cochranes are entitled to recover the reasonable and necessary costs of having third party contractors undertake the required remedial works. [129] In their appeal submissions, the Cochranes say that the total amount they should recover for the rectification and completion works in respect of the house contract is $7,556.07. The amounts as per the various quotes and invoices referred to above (as they relate to the house contract) total $7,403.07. The total amount claimed by the Cochranes in the response and counter application is $6,523.00. We are unable to reconcile these differing amounts. [130] Doing the best we can, we find as follows. [131] The claim for $880.00 for painting appears related to general maintenance. In the absence of cogent evidence that the amount relates to rectification or completion work this amount is not allowed. The other itemised amounts to which we have referred above are allowed on the basis that the works were required and the amounts claimed are both reasonable and necessary. We allow $6,603.07 being the cost of rectifying and completing the works under the house contract. [132] In respect of the pool deck contract we are satisfied the Cochranes incurred the amount of $2,838.00 in undertaking rectification or completion works. In respect of item (f) above, the Cochranes claim a reduced amount of $2,255.00. It is not entirely clear why the amount is reduced however we allow the amount as claimed. We allow a total amount of $6,199.60 being the reasonable and necessary costs in respect of rectifying and completing the works under the pool deck contract. ii Claim for liquidated damages [133] The Cochranes claim $10,600.00 in respect of liquidated damages for delay. This relates to both contracts. The learned member did not allow the claim on the basis that the evidence did not demonstrate that the contract extended beyond the contract dates and, further, no allowance for liquidated damages was made under contract. [134] In both the house contract and the pool deck contract the stated amount in respect of liquidated damages was ‘N/A’. Although the contracts stipulated that if liquidated damages did not apply the word ‘NIL’ should be inserted, it is clear that the parties intended ‘N/A’ to have the same effect. Accordingly, the claim for liquidated damages is not accepted. Summary of findings Claim by Lees for final payments under the house contract and the pool deck contract [135] We have found that the house contract was entire and that Mr Lees is not entitled to claim the final stage payment under the house contract. We have found that Lees is not entitled to claim on a quantum meruit in respect of the final stage payment. [136] We have found that the pool deck contract was not entire and that Mr Lees is entitled to recover the reasonable value of any work properly carried out prior to termination in respect of the final stage payment. Claim by Lees for variations -- 23 of 31 -- 24 [137] In respect of the house contract, in light of our finding that the contract was entire, we have found that Mr Lees is not entitled to recover any amount for variation works whether approved or not. [138] The pool deck contract was not entire. We have found that in order to be entitled to recover on a quantum meruit in respect of variation 27, Lees must establish that the Cochranes’ freely accepted the works. We have found that they did not. We have found that Lees is not entitled to claim any amount for variation 27. Claim by Cochranes for rectification and completion costs and liquidated damages [139] We have found that the total cost of rectification and completion costs incurred by the Cochranes is $12,802.67. We have found that the Cochranes are not entitled to liquidated damages. Damages [140] In calculating the Cochranes entitlement to damages, the starting point is to identify the total contract price, including agreed variations. [141] While Lees is not entitled to recover this amount, at least in relation to the house contract, the amount must be taken into consideration in calculating the Cochranes’ claimable loss.54 [142] The Cochranes are entitled to an award of damages that places them in the same position they would have been in had the contracts been performed by Lees, less any amount unpaid to Mr Lees. The amount unpaid includes the final stage payment and agreed variations. [143] The Cochranes produced thirty-three variation documents in their material, some signed and some not.55 The details of the signed variation documents (the approved variations) are as follows: Variation number56 Date Details of variation Amount (+/-) 1 4.1.17 Two front verandah posts + $622.00 3 7.12.17 Cost of finial - $66.00 4 7.12.17 Garage door - $4,328.00 5 7.12.17 Roof vents/louvres - $1,320.00 7 4.1.18 Flashings + 650.00 8 4.1.18 Electrical meter box + $319.00 10 4.1.18 Curtain noggins + $330.00 54 CG and HG Windsor Pty Ltd v Waterman [2013] QCAT 618, [100] – [106] 55 There was no variation document numbered 31. -- 24 of 31 -- 25 11 4.1.18 Front door delivery + 120.00 12 4.1.18 Swing chair beam + $132.00 15 4.1.18 Sound proof insulation + $204.00 16 4.1.18 Kitchen alcove + $324.00 17 7.12.17 Painting works - $14,470.00 18 7.12.17 Primer and nails - $59.95 19 7.12.17 Fireplace - $4,180.00 20 7.12.17 Mirrors and shower screens - $6,270.00 21 7.12.17 Gutter ends - $135.00 22 4.1.18 Additional electrical work + $2,365.00 23 7.12.17 Forklift hire - $105.00 26 4.1.18 Additional concrete work + $440.00 32 4.1.18 Additional concrete work + 200.00 33 23.1.18 Adjustment for payment to plumber directly by owners - $4,220.00 34 12.2.18 Adjustment for payment to tiler directly by owners - $3,645.75 TOTAL - $33,093.70 [144] The positive variations total $5,706.00. This accords with the figure set out in the letter from the Cochranes’ solicitor to Mr Lees. [145] The negative variations total $38,799.70. [146] In addition to the above amounts, the Cochranes refer to an amount in respect of ‘change of painter cost’. In a letter from the Cochranes’ solicitor to Mr Lees this amount is stated to be $3,630.00 incurred by the Cochranes in completing painting works. In the amended response and counter application the claimed amount is $8,960.00. [147] The details of the unsigned variation documents (the unapproved variations) are: -- 25 of 31 -- 26 Variation number Date Details of variation Amount (+/-) 2 27.12.17 Insurance + $2,097.00 6 27.12.17 Aprons in cement board + $3,120.00 9 27.12.17 Extra ceiling battens + $1,775.00 13 27.12.17 Starter bars in fireplace + $617.00 14 27.12.17 Bath frames + $429.00 24 27.12.17 Bulkhead stacker doors + $1,067.00 25 27.12.17 Toilet hire + $900.00 27 27.12.17 Extra breast boards + $720.0057 28 27.12.17 Plumbing + $500.00 29 27.12.17 Excavation works + $1,000.00 30 27.12.17 Additional woodwork + $870.00 TOTAL + $13,095.00 [148] The total value of the unsigned variations is $13,095.00. The difference between this figure and the amount referred to in the letter from the Cochranes solicitor to Mr Lees of $12,375.00, is attributable to variation 27 ($720). Variation 27 is the same as that described earlier in these reasons as pool variation 2. It is not disputed that pool variation 2 was not signed by the Cochranes. [149] The Cochranes dispute all of the unapproved variations. [150] As with numerous other aspects of this confusing dispute, there is no precision in either the claim by Lees nor the responses by the Cochranes. [151] The Member relied on the solicitor’s letter which, as we have noted, addressed the issue of variations in some sensible fashion. The Cochranes relied on and adopted their solicitor’s comments about variations because they wrote across the front of each unsigned variation exhibited to their material the words “Not signing see solicitor’s letter”. [152] At hearing Mr Lees handed up an additional document he claimed was provided to him in September 2017 by the Cochranes listing five unpaid variations which are 57 Pool variation 2. -- 26 of 31 -- 27 claimed by Mr Lees. That document is unsigned. The contents of the document were conveniently set out by the Member as follows: Additional Charges Four x new posts (2 x back & 2 x front) = $ Insurance policy (not QBCC – other) = $ Extra noggins for VJ sheeting = $ Cement board/flashing around base of house = $ Bulkhead over stacker doors/nib wall on end/raised deck = $ [153] There was no price noted for any of these variations. [154] Those variations appear as variations 1, 2, 9, 6 and 24 in the Cochranes’ bundle of variations.58 There they have been given the following values: Variation # Description Amount 1 Four x new posts (2 x back & 2 x front) $1244 2 Insurance policy (not QBCC – other) $2097 9 Extra noggins for VJ sheeting $1775 6 Cement board/flashing around base of house $3120 24 Bulkhead over stacker doors/nib wall on end/raised deck $1067 Total $9303 [155] With the exception of variation 1, all of these unsigned variations form part of the unapproved variations. Half of variation 1, that is an amount of $622.00, was agreed to be paid by the Cochranes.59 That left the price for the remaining two posts outstanding, that is $622.00. [156] Attempting to reconcile the contract price in respect of the two contracts, the payments made by the Cochranes, the variation amounts and the claims made is extremely difficult given the way in which the parties argued their respective cases below and the confusing state of the evidence. [157] The contract price under the house contract of $262,084.90 was payable by eight progress payments. It is not disputed that the final practical completion payment of $58,920.10 remains unpaid. [158] Mr Lees says that the balance owing under the house contract is $37,824.40. We are unable to reconcile the evidence below with the amount claimed by Mr Lees. On the evidence it would appear that Mr Lees’ claim, assuming an outcome entirely favourable to him and without reference to the claim by the Cochranes, may be calculated as follows: Final progress payment $58,920.10 58 Ex 6 “Annex 13” 59 Ex 6 annex 13 -- 27 of 31 -- 28 Add approved (+) variations $ 5,706.00 Deduct approved (-) variations $38,799.70 Sub total $25,826.40 Add unapproved variations $12,375.0060 Balance $38,201.40 [159] The primary basis for rejection of unsigned variations by the Cochranes is the absence of their signatures. They do not contest the paid variations. [160] In the Cochranes’ first Response to Mr Lees’ claim they refute the claim for unsigned variations not only because they are not signed by them but also because they say they are not true variations but are claims to cover the costs of his mistakes or oversights during construction. These are bare allegations without supporting evidence such as approved drawings. The Cochranes bear the onus of proving such a claim and fail to come up to proof. Their claim is not accepted. [161] Additionally, the Cochranes say they were not told how much the variations would cost before the work was done. In this appeal the Cochranes also say that Mr Lees did not comply with the requirements set out in Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) (“the QBCC Act”) relating to variations with the result that Mr Lees is thereby prevented from recovering any amount for such non-compliant variations. [162] The contract required all variations to be reduced to writing and signed by the parties before the variation works commenced. The variation document was required to comply with Schedule 1B of the QBCC Act.61 [163] Part 6 of Schedule 1B of the QBCC Act deals with variations. The effect of the provisions contained within Part 6 is that variations must be in writing, must contain certain stated information, must be given by the builder to the owner before building work relating to the variation commences, and must be agreed to by the owner. Part 6 does not require the owner to sign the variation. These provisions reflect a marked change to the somewhat draconian provisions governing undocumented variations that applied to domestic building contracts entered into before 30 June 2015 under the Domestic Building Contracts Act 2000 (Qld) (repealed)(‘DBC Act’). [164] Unlike the DBC Act which prescribed severe consequences for non-compliance by a builder with the statutory variations regime, Part 6, in our view quite deliberately, does not impose a bar upon the recovery by a builder of an amount for a non-compliant variation. Rather, the consequence of a builder’s non-compliance with the requirements of Part 6 is the imposition of a statutory penalty. Once a statutory penalty has been prescribed for an offence, the role of the common law in determining the legal consequences of the commission of the offence is thereby diminished.62 [165] The approach to interpreting Part 6 commences with the presumption of statutory interpretation against abrogation or curtailment of common law rights. A statutory intention to remove a common law right must be clearly expressed. The provisions of Part 6 are clear on their face. A builder is not prevented from recovering an amount 60 Does not include pool variation 2 61 Contract clauses 21.1 – 21.3 62 Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 -- 28 of 31 -- 29 in respect of a variation that does not comply with the requirements of ss 41, 42 and 43 of Schedule 1B of the QBCC Act. [166] Reference to extrinsic material is permitted as an aid to statutory interpretation to confirm the interpretation of a provision conveyed by the ordinary meaning of the provision.63 Extrinsic material may include a repealed provision.64 As we have observed, the DBC Act prohibited the recovery by a builder of variations that did not comply with the Act other than where the tribunal, on application by the builder, permitted such recovery. That these prohibitions did not find their way into Part 6 of Schedule 1B supports our view that the legislature intended ss 41 to 43 to have a quite different effect to the provisions of the DBC Act, one far less severe for a builder who fails to comply with the statutory requirements for variations. [167] Finally, we note that by s 44 of Schedule 1B, unless the contrary intention appears in the Act, a failure by a building contractor to comply with a requirement under the Act in relation to a domestic building contract does not make the contract illegal, void or unenforceable. [168] The effect of this construction of the provisions contained in Part 6 of Schedule 1B may be expressed as follows. (a) First, an agreement in relation to variation work that does not strictly comply with the requirements of Part 6 of Schedule 1B does not render such agreement illegal, void or unenforceable; (b) Second, a payment made by an owner to a builder in respect of a variation that does not comply with Part 6 of Schedule 1B is not, without more, required to be disgorged by the builder;65 (c) Third, in the absence of a statutory prohibition on the right of recovery by a builder of an amount for a non-compliant variation, and in the absence of either an expressly articulated statutory intention to abrogate the right of a builder to claim quantum meruit or a clear legislative intent to that effect implied in the provisions of the QBCC Act, there is no impediment to a builder seeking to recover for non-compliant variations on a quantum meruit basis where recovery under the contract is not available.66 [169] It is clear that the unapproved variations did not comply with the requirements of Part 6 of Schedule 1B of the QBCC Act. For the reasons we have outlined, this does not of itself prevent recovery, or here, have their value taken into account in assessing the Cochranes’ claim. Variations 2, 6, 9 and 24 [170] We have referred earlier in these reasons to unapproved variations 2, 6, 9 and 24. Mr Lees’ evidence was that the Cochranes gave him a list of variations that included these items. This evidence was given at the hearing. As a consequence of the Cochranes’ failure to attend the hearing that evidence went unchallenged. In their appeal submissions the Cochranes raise various challenges to the learned member’s finding that they agreed to the variations notwithstanding that the amounts of the variations 63 Acts Interpretation Act (1954) (Qld), s 14B(1)(c). 64 R v Lavender (2005) 222 CLR 67. 65 Greer & Anor v Mt Cotton Constructions Pty Ltd [2018] QCATA 196 66 CMF Projects Pty Ltd v Riggall & Anor [2014] QCA 318 -- 29 of 31 -- 30 had not been agreed. The Cochranes say that the evidence of Mr Lees should not have been accepted. The difficulty facing the Cochranes is that much of what they say in their submissions is an attempt to introduce fresh evidence. Had the Cochranes appeared at the hearing, they could have challenged the evidence of Mr Lees. They did not do so and it is now not open to them to challenge the learned member’s findings of fact which relied upon the uncontested evidence of Mr Lees. [171] We accept that the document with the list of variations was provided to Mr Lees by the Cochranes in September 2017. We accept the evidence of Mr Lees that he was told by the Cochranes that they agreed to the variation works referred to in the document. We accept the evidence of Mr Lees that an amount for each of the variation works was not included in the document as the works had not at that time been undertaken. We find that in providing the document to Mr Lees, the Cochranes agreed to variations 2, 6, 9 and 24 being undertaken notwithstanding that no amounts for the variations had been agreed. We find that the Cochranes thereby agreed to waive strict compliance with the provisions of the contract in relation to the variations. In agreeing to the variations, the Cochranes accepted that they were required to pay a fair price to Mr Lees for the variation work. As we have observed, non-compliance with the variations provisions in Schedule 1B of the QBCC Act does not prevent recovery by a builder for the variation works. [172] The total amount of variations 2, 9, 6 and 24 is $8,059.00. In relation to variation 1, we note that this was approved by the Cochranes in a formal variation document in the amount of $644.00. We find that the Cochranes, in fact, agreed to the entire amount of variation 1, that is, $1,288.00. Variations 13, 14, 25, 27, 28, 29 and 30 [173] There is no evidence that the Cochranes agreed to waive compliance with the requirements of the contract in respect of variations 13, 14, 25, 27, 28, 29 and 30. We find that these variations were not approved by the Cochranes as required by the contract nor did the Cochranes waive compliance with the requirements of the contract in relation to the variations. Final assessment [174] The final assessment in respect of the contract price and variations for the house contract and the pool deck contract is: House contract Contract price $262,084.90 Approved variations (negative) - $ 32,471.1767 $229,613.73 Add agreed variations (additional charges) $ 8,059.00 Total varied contract price $237,672.73 67 The total of the agreed variations taking into consideration the additional $644.00 (positive variation) in respect of variation 1. -- 30 of 31 -- 31 Pool deck contract Contract price $ 18,835.45 Less variation 1 $ 660.00 Total varied contract price $ 18,175.45 Less amount paid by Cochranes (both contracts) $192,656.8468 Sub total (balance unpaid) $ 63,191.34 [175] We have allowed the Cochranes the amount of $6,603.07 for the cost of rectifying and completing defective work under the house contract. However, the unpaid balance under the house contract must be taken into account. The Cochranes are therefore not entitled to recover any amount for the rectification works relating to the house contract. [176] With respect to the pool deck contract, the unpaid amount is $9,417.73. We have found that this is the reasonable value of the work performed by Mr Lees which he is entitled to recover. However, we have found that $6,199.60 is the reasonable and necessary cost to rectifying and complete the work under the pool deck contract. This leaves a balance payable to Mr Lees of $3,218.13. [177] Finally there is the claim by Mr Lees for $700 in respect of paint purchased by him. The learned member dealt with the claim in this way: He also made a claim for $700 being paint supplied by his painter for work on the house in circumstances where after the paint was supplied, and he was left with it, the Cochranes wanted to engage another painter. Mr Lees acquiesced to this request but said he remains liable to the painter for $700. It would seem to me that this amount is recoverable.69 [178] The Cochranes say that there is no evidence Mr Lees has actually incurred the cost claimed and that any claim allowed should be much reduced. The evidence of Mr Lees at the hearing was that he had not paid the painter the amount of $700 however he was ‘was hoping to be able to claim it to give me the opportunity to pay him.’70 The Cochranes appeal submissions in effect seek to adduce further evidence in response to the claim. This is impermissible. The claim by Mr Lees should be allowed. Conclusion [179] In respect of the house contract, the Cochranes must pay Mr Lees $700.00. [180] In respect of the pool deck contract, the Cochranes must pay Mr Lees $3,218.13. 68 As per General Ledger – Appeal book, page 263. The amount includes only sums paid by the Cochranes 69 Reasons at [10] 70 T1-6, lines 37-38. -- 31 of 31 --