CapFF Pty Ltd v Queensland Building and Construction Commission and Anor [2020] QCAT 408

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: CapFF Pty Ltd v Queensland Building and Construction Commission and Anor [2020] QCAT 408 PARTIES: CAPFF PTY LTD (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (first respondent) PACIFIC DEVELOPMENTS GROUP PTY LTD (second respondent) APPLICATION NO/S: GAR392-19 MATTER TYPE: Building matters DELIVERED ON: 26 October 2020 HEARING DATES: 30 September 2020 and 1 October 2020 HEARD AT: Brisbane DECISION OF: Member McVeigh ORDERS: The Queensland Building and Construction Commission’s decision reference number 563341 made on 18 September 2019 be set aside. The owner, CapFF Pty Ltd, is entitled to indemnity under the statutory insurance scheme. CATCHWORDS: ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – where a statutory insurance scheme is in place pursuant to s 67X of the Queensland Building and Construction Commission Act 1991 (Qld) – where a claim has been made in relation to termination of a contract of a dwelling house under the insurance policy conditions – whether termination is valid Queensland Building and Construction Commission Act 1991 (Qld), s 67X Thompson Residential Pty Ltd v Hart [2014] QDC 132, applied -- 1 of 13 -- 2 APPEARANCES & REPRESENTATION: Applicant: J Hughes instructed by McCullough Robertson First Respondent: R Ensby of Gadens Lawyers Second Respondent: J Dudley instructed by Crouch and Lyndon REASONS FOR DECISION Introduction [1] This is an application to review a decision of the Queensland Building and Construction Commission (QBCC). [2] By contract dated 31 August 2019, CapFF Pty Ltd (owner) engaged Pacific Developments Group Pty Ltd (contractor) to construct a home (contract). [3] On 9 February 2019 representatives of the owner and the contractor signed a revised payment schedule (payment schedule). In addition to a deposit and payment on practical completion, the owner was to pay on completion of 16 designated stages (the deposit and payment for the first four stages was noted as made on the payment schedule). [4] On 22 March 2019 the contractor issued an invoice for ‘Balance on stage 16, electrical fit off, plumbing fit off and solar installed.’ [5] The owner did not pay that invoice. [6] On 7 April 2019 the owner wrote to the contractor listing 38 ‘outstanding items’. [7] On 8 April 2019 Mr Hudspith (the governing mind of the contractor) emailed Mr McDonell (the governing mind of the owner) advising that ‘as the invoices are about 10 days overdue there will be no further works undertaken till such time as they are paid’. [8] By letter dated 16 April 2019 the owner’s solicitors gave the contractor notice of intention to terminate pursuant to clause 20 of the contract, unless the contractor remedied alleged substantial breaches of the contract within 10 business days of receipt of the notice. The alleged substantial breaches were failing to proceed with due diligence and unlawfully suspending the works. [9] Mr Hudspith responded by letter dated 20 April 2019. He maintained that the owner was in breach of contract due to failure to pay outstanding invoices and that the builder was entitled to ‘halt works until such time [as the owner] has paid all amounts outstanding as per the … schedule…’. [10] By letter dated 7 May 2019 the owner’s solicitors gave the contractor a notice of termination. [11] By letter dated 31 May 2019, the contractor’s solicitors accepted the owner’s alleged repudiatory conduct (purporting to terminate while in substantial breach, having failed to pay progress claim 16) and terminated the contract. [12] The owner made a non-completion claim under the statutory insurance scheme. -- 2 of 13 -- 3 [13] The QBCC decided that the owner had validly terminated the contract and accepted the insurance claim (initial decision). On 25 July 2019 the QBCC advised the contractor of the initial decision. [14] The contractor applied to the QBCC for an internal review of the initial decision. [15] On review the QBCC overturned the initial decision (decision). On 18 September 2019 the QBCC notified the owner that it had decided that the contract had not been validly terminated by the owner. [16] On 16 October 2019 the owner filed this application to review the decision. [17] On 14 January 2020 the contractor was joined as the second respondent. Issue [18] The ultimate issue is the entitlement of the owner to claim for non-completion under the statutory insurance scheme. If the owner validly terminated, it is entitled to make the claim. [19] The contractor argues that the owner did not validly terminate because the owner was in substantial breach of contract as it had not paid the claim for the Stage 16 works within the period prescribed by the contract. [20] The owner accepts that it had not paid the claim for the stage 16 works, but denies it was obliged to pay, on the basis that the contractor was not entitled to make progress claim 16 on 22 March 2019 as it had not completed the Stage 16 works by 22 March 2019. Law [21] The Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) establishes a statutory insurance scheme to provide assistance to consumers of residential construction work that is incomplete.1 [22] The statutory insurance scheme provides cover if a contract is validly terminated on the default of a licensed builder.2 [23] The QBCC’s decision that the contract was not validly terminated by the owner on the default of the builder is a reviewable decision under section 86(1)(i) of the QBCC Act. [24] Thompson Residential Pty Ltd v Hart3 is an analogous decision. It sets out the test to be applied in assessing whether a staged payment claim has been made prematurely. The doctrine of substantial performance does not apply.4 When considering whether the work in question had reached the enclosed stage, His Honour Judge McGill SC stated:5 … once the stages are defined by reference to particular work having been completed, or having reached a particular point, then what matters is whether that work has been completed or reached that point, not whether the work on 1 Section 67X(2), Queensland Building and Construction Commission Act 1991 (Qld). 2 Section 4 of Schedule 6 of the Queensland Building and Construction Commission Regulation 2018 (Qld). 3 [2014] QDC 132. 4 Ibid, [70]. 5 Ibid, [39]. -- 3 of 13 -- 4 the project has reached a stage which could reasonably be characterised in terms of ordinary business practice as the equivalent of that. This follows from the fact that the stage is defined in some detail. Once the entitlement to a progress payment is based on the completion of a particular stage as defined, it is satisfaction of that definition rather than practical or functional considerations which determines whether the enclosed stage has been achieved for that purpose. … [25] Applying the law to the facts of the particular case, His Honour noted:6 There remains the question … of just what is required before what has been done matches the description of the condition precedent in the contract. That I think is best resolved essentially as a practical question of fact, but it is necessary to ask the right question. The practical question is not whether what has been done can properly be described as a completion of “the enclosed stage”, but whether what has in fact been done can be said to constitute satisfaction of the definition of “enclosed stage” in the contract. Commercial contracts are usually to be interpreted in a commonsense practical way, and building contracts in particular need to be interpreted in a practical and workable fashion. But I do not think that justifies any substantial difference between what has occurred and what is required. Obviously the difference between what has occurred and what is required might be so slight or trivial that it could be said that in a practical sense the definition had been satisfied. Thus, if the owner could find one loose tile on the roof I do not think that it could be said that that in itself meant that it was not correct to say that the roof covering was fixed. [26] In addressing a submission that industry practice should be taken into account when assessing whether or not a particular stage of work had been completed, His Honour observed:7 The difficulty with this argument however is that I cannot see how the existence of a practice, however widespread, can have the effect of modifying the terms of the contract, … I am concerned with the legal rights of the parties in this situation. Evidence of what has proved to be a practical way of overcoming a practical problem in other cases is not helpful in determining what the legal rights of the parties are. The contract [27] Relevantly the contract8 provides: (a) the Contract Price was $727,736, as adjusted under the contract; (b) the Works were as described in ‘plans dated 8/2/2017’ and ‘tender documents’;9 (c) the Specifications were contained in 27 pages prepared by Rufus Design Group;10 6 Ibid, [72]. 7 Ibid, [41]. 8 The most legible version of the contract is attachment MH-2 to the statement of Michael Hudspith (Exhibit 13). 9 Item 5. 10 Item 7(b). -- 4 of 13 -- 5 (d) the contractor was entitled to claim payment progressively on completion of the stages set out in Addendum A;11 (e) progress payments were to be made five business days after the date on which the owner received the claim;12 (f) the owner had no right to set-off against a progress payment that was due;13 (g) the owner must not give directions to the contractor’s employees or subcontractors;14 (h) the owner had a right to give notice of intention to terminate if the contractor failed to proceed with due diligence, unlawfully suspended the carrying out of the Works or was otherwise in Substantial Breach of the contract;15 (i) if the contractor failed to remedy the breach within the notice period, the owner could terminate the contract;16 (j) however, the owner could not terminate if it was in Substantial Breach of the contract;17 (k) the contractor was entitled to suspend performance of the Works if the owner was in Substantial Breach of the contract;18 (l) the definition of Substantial Breach included failure by the owner to make payment on time.19 [28] The specifications prepared by Rufus Design Group20 included Section 1600 which described the scope of electrical work. It included: (a) supply and installation from new mains turret to meter box at the top of the driveway; (b) with underground supply to the switchboard in the house; (c) coordination with solar panel installation subcontractor; (d) installation of lights and GPO supplied by the owner; (e) supply and installation of a wifi hub; and (f) supply and installation of air conditioners (ducted to the first floor, split systems on the ground floor). [29] The parties agreed a revised payment schedule dated 9 February 2018.21 Its preamble stated that ‘Progress payment claims must reflect the progress in the completed works 11 Clause 11.6. 12 Clause 11.7 and Item 20. 13 Clause 11.8. 14 Clause 11.13. 15 Clause 20.1. 16 Clause 20.2. 17 Clause 20.3. 18 Clause16.1. 19 Clause 1. 20 Item 7(b) of the contract. 21 Attachment MH-4 to the statement of Michael Hudspith (Exhibit 13). -- 5 of 13 -- 6 at the stages designated in the contract. The value of the payment claim must not be in excess of the value of the construction of the home as it stands.’ Stage 16 was described as ‘5% Fixtures and fittings completed stage including Electrical fit offs, Plumbing fit off, Solar system installed.’ What work had not been done when the contractor made the claim for Stage 16? [30] I heard evidence from a number of witnesses regarding the status of the works. Generally, I give more weight to the evidence of witnesses who were physically present,22 have relevant qualifications,23 who described physical work rather than applied percentages to it and who were available for cross-examination. [31] Based on the credible evidence, I find: (a) the electrical cables had not been run underground from the meter box to the switchboard in the house;24 (b) the permanent mains water pipe had not been installed;25 (c) the oven had not been installed;26 (d) no condensers had been supplied or installed for the split systems or the main ducted air conditioner27 (photos 8 and 11 attached to the statement of Mr Wilson show various cables and wires dangling at the connection points); (e) the split air conditioning system in the rumpus room and downstairs bedroom did not have pipes, cables and switches fitted;28 (f) there was air conditioning ducting hanging from the ceiling in the kitchen/ living room;29 (g) the wifi hub had not been supplied or installed;30 (h) the solar system was not connected to the power supply31 and the solar system components were incomplete;32 (i) external strip grates were not connected to outlet pipes;33 22 McDonell, McCubbin, Wilson, Rasmussen, Hudspith. 23 McCubbin, Wilson, Rasmussen, Hudspith. 24 [11] statement of Greg Wilson (Exhibit 11), [9(b)] statement of Trevor McCubbin (Exhibit 7), [46(b)] statement of Michael Hudspith (Exhibit 13). 25 [16] statement of Greg Wilson (Exhibit 11), [9(a)] statement of Trevor McCubbin (Exhibit 7), [46(a)] statement of Michael Hudspith (Exhibit 13). 26 [12] statement of Greg Wilson (Exhibit 11), [9(b)] statement of Trevor McCubbin (Exhibit 7), [46(b)] statement of Michael Hudspith (Exhibit 13). 27 [15] statement of Greg Wilson (Exhibit 11), [9(d)] statement of Trevor McCubbin (Exhibit 7), [46(b)] statement of Michael Hudspith (Exhibit 13). 28 [14] statement of Greg Wilson (Exhibit 11), [9(b)] statement of Trevor McCubbin (Exhibit 7), [46(d)] statement of Michael Hudspith (Exhibit 13). 29 [12] statement of Greg Wilson (Exhibit 11), [9(b)] statement of Trevor McCubbin (Exhibit 7). 30 [9(d)(ii)] statement of Trevor McCubbin (Exhibit 7). 31 [8] statement of Greg Wilson (Exhibit 11), [9(c)] statement of Trevor McCubbin (Exhibit 7). 32 [5] statement of Kelvin Rasmussen (Exhibit 9). 33 [15] statement of Greg Wilson (Exhibit 11). -- 6 of 13 -- 7 (j) storm water drains were not terminated;34 (k) the waterproofing to the external floors had not been done;35 and (l) the drain on the upper deck had not been completed.36 [32] The Sedgwick report37 was of no assistance. The author of the report did not give evidence. The report failed to describe the work that had not been completed and did not identify adjustments to the scope that had been agreed between the owner and contractor. It would be dangerous to rely on the Sedgwick report either to form an accurate view of the work remaining to be done under the contract or to assess the reasonable cost of the work to complete, given the variations removing work from the scope of the contract. What work had to be completed in order for the contractor to make a claim for Stage 16? [33] This question must be answered by taking the approach described by McGill SC DCJ: does what has been done constitute satisfaction of the definition of Stage 16? Stage 16 was defined as ‘5% Fixtures and fittings completed stage including Electrical fit offs, Plumbing fit off, Solar system installed.’ [34] For the reasons set out in the following paragraphs, I find that in order to satisfy the definition and thus to be entitled to make the claim for the Stage 16 works as defined, the contractor had to have completed the following work: (a) permanent power supply to the switchboard (which would permit the solar system to become operational); (b) lights and GPOs installed; (c) the oven installed and fitted off; (d) a wifi hub installed; (e) air conditioners installed and fitted off; (f) permanent water supply to the house; and (g) waterproofing to the external deck. [35] The contract requirements for electrical work are set out in the specification. In order to complete the electrical fit off as specified, the contractor was required to have: (a) supplied and installed underground power from new mains turret to meter box at the top of the driveway to the switchboard in the house; (b) coordinated with the solar panel installation subcontractor; (c) installed lights and GPOs supplied by the owner; (d) supplied and installed a wifi hub; and 34 [15] statement of Greg Wilson (Exhibit 11). 35 [10(a)] statement of Trevor McCubbin (Exhibit 7). 36 [10(b)] statement of Trevor McCubbin (Exhibit 7). 37 SJN-2 to the statement of Steven Noble (Exhibit 12). -- 7 of 13 -- 8 (e) supplied and installed air conditioners (ducted to the first floor, split systems on the ground floor).38 [36] Counsel for the contractor submitted that connection of the power to the switchboard in the house might not have been part of the Stage 16 works, relying on evidence from Mr Wilson during cross-examination. At its highest Mr Wilson’s evidence was that it was a possibility that connection of permanent power might not be within the description of electrical fit-off in this case. However, earlier in his cross-examination Mr Wilson had defined fit-off as the state of being ‘finished so it can be used’. I accept that that is the general meaning of the expression and see no reason that the general meaning is not applicable in this case. [37] Mr Hudspith did not deny that connection of the power to the switchboard in the house was part of the Stage 16 works. His evidence was that, due to limited site access, the permanent mains could not be run underground until the driveway had been excavated.39 [38] Installation of the solar system is not part of the electrical scope. The contractor’s obligation was merely to coordinate with the solar panel installation subcontractor. The contractor did not argue that coordination with the solar panel installer was not part of the Stage 16 works. Nor was there any argument that the solar system was not operational. Mr Hudspith’s evidence was that mains power was necessary to complete the solar system installation and that due to limited site access the permanent mains could not be run underground until the driveway had been excavated.40 [39] The contractor did not argue that installation of lights and GPOs was not part of the Stage 16 works. Mr Hudspith’s evidence was that most of the electrical work had been completed and that he assumed that anything not fitted was as a result of the owner’s direct request to the electrician.41 [40] The oven is a fixture. Installation of the oven by an electrician is part of the electrical fit off. The contractor did not argue that installation of the oven was not part of the Stage 16 works. Mr Hudspith’s evidence was that the oven had not been fitted off because it was not practical to have the electrician install the oven until after the floors had been sanded and polished (the owner having changed from a wall-mounted oven to a free-standing oven).42 [41] The contractor argued that the supply and installation of a wifi hub was not part of the Stage 16 works because the electrician does not supply wifi hubs.43 I reject this argument. The electrical specification requires supply and installation of a wifi hub. [42] In oral evidence Mr Hudspith denied that the installation of air conditioners was part of the Stage 16 works on the basis that air conditioning is a separate sub-trade to electrical and plumbing. Such a denial flies in the face of the electrical specification. Installation of air conditioners is clearly part of the work required to complete Stage 16. In written evidence Mr Hudspith explained that some of the air conditioning units 38 Specifications prepared by Rufus Design Group Item 7(b) of the contract. 39 [46(b)] statement of Michael Hudspith (Exhibit 13). 40 [46(b)] statement of Michael Hudspith (Exhibit 13). 41 [46(b)] statement of Michael Hudspith (Exhibit 13). 42 [46(b)] statement of Michael Hudspith (Exhibit 13). 43 [46(c)] statement of Michael Hudspith (Exhibit 13). -- 8 of 13 -- 9 had not been fitted off because the walls against which they were to be placed had not been painted by the owner’s painter.44 [43] Plumbing fit off requires a permanent water supply to the house. The contractor did not argue that installing a permanent water line to the house was not part of the Stage 16 works. Mr Hudspith’s evidence was that due to limited site access the permanent mains could not be run underground until the driveway had been excavated.45 [44] The contractor did not argue that the waterproofing to the external floor was not part of the Stage 16 works. Mr Hudspith’s evidence was that the waterproofing could not be completed until the owner’s balustrade supplier had completed installation of the posts.46 [45] The owner argued that the stormwater drainage was incomplete. Mr Hudspith’s evidence was that the ‘incomplete external plumbing’ identified in photographs were drain lines from the retaining walls, storm water and pool deck which could not be completed until the owner had made landscaping decisions.47 I accept that evidence and find that the incomplete external drainage identified in photographs was not part of the Stage 16 works. [46] The owner argued that the drain on the upper deck had not been completed. Mr Hudspith’s evidence was that the drain on the upper deck was part of the solution to a design error, with the cost to be borne by the designer or its insurer, hence that work could not fall within Stage 16.48 I accept that evidence. [47] I also accept his evidence that the downpipes were to be connected to tanks, not to the stormwater drains, and hence were not part of plumbing fit off required to complete Stage 16. [48] While I accept Mr Hudspith’s evidence that as a matter of construction logic: (a) the permanent power and water lines could not be laid until the driveway was excavated; (b) the oven could not be fitted off until the floor had been sanded and polished; (c) the air conditioning units could not be fitted off until the walls against which the condensers were to be placed had been painted; and (d) waterproofing could not be completed until the owner’s balustrade supplier had completed installation of the posts, I cannot find that matters of construction logic have the effect of modifying the terms of the contract. To reiterate the words of McGill SC DCJ, it is satisfaction of the contractual definition rather than practical or functional considerations which determines whether the defined stage has been reached. Were the omissions slight or trivial? [49] Having identified the work included in Stage 16 as defined and having identified the work that had not been done when the Stage 16 claim was made, the next question to 44 [46(c)] statement of Michael Hudspith (Exhibit 13). 45 [46(a)] statement of Michael Hudspith (Exhibit 13). 46 [47] statement of Michael Hudspith (Exhibit 13). 47 [46(a)] statement of Michael Hudspith (Exhibit 13). 48 [47] statement of Michael Hudspith (Exhibit 13). -- 9 of 13 -- 10 be answered, taking the approach described by McGill SC DCJ, is to consider whether the difference between what was done and what was required was so slight or trivial that it could be said that in a practical sense the definition had been satisfied. If so, the claim will not have been made prematurely. [50] The contractor does not contend that when the claim was made, the Stage 16 works were 100% complete. The contractor contends the omissions were minor. Counsel for the contractor drew attention to the contract definitions of Practical Completion, Enclosed Stage and Fixing Stage, each of which defined the stage but made allowance for ‘minor defects or minor omissions’. He submitted that read as a whole the contract permitted the contractor to make a progress claim if all matters falling within the definition of the stage were complete except for minor defects or minor omissions. I reject that submission. The parties chose not to use the stages for payment defined in the contract. They agreed their own staged payment schedule. Neither the introductory words nor the description of Stage 16 in revised Addendum A made allowance for minor defects or minor omissions. I cannot import words into the contract. The Stage 16 work was either complete or the omissions were so slight or trivial that it could be said that in a practical sense the definition had been satisfied. [51] Unsurprisingly, Mr Hudspith’s evidence49 was that no item of work left undone required much to be done to be completed, for example: (a) all that was required to connect the solar system was to run a wire half a metre to the inverter; (b) the wiring for the air conditioning system had to be run and two screws put in the back of the plug; (c) an electrician would have two hours’ work to run the permanent power cables to the switchboard after the trench had been dug beside the driveway; (d) it would not take an electrician and gasfitter long to connect the oven once it had been moved into place after the floors had been sanded and polished; (e) it would take a plumber less than an hour to roll out water pipe and connect it to the valve near the laundry and the water meter after the trench had been dug beside the driveway; (f) all the air conditioning fit-off would be done in a single visit by the installer after the walls had been painted and the condensers and head units delivered to site; and (g) it would take less than an hour to visit an electrical store to purchase a wifi hub and then to install it by plugging it in. [52] It may well be the case that the work left to be done would not have taken long or cost much if the contractor had done it. However, there is an obvious difference between the extent of work on this list and McGill SC DCJ’s example of ‘one loose tile on the roof’. [53] Mr Noble, a technical officer with the QBCC, changed his initial view that the commissioning of the air conditioning units was minor in nature50 after he had an opportunity to read all the material filed in the proceedings. During cross-examination 49 During cross-examination on 1 October 2020. 50 [6] statement of Steven Noble (Exhibit 12). -- 10 of 13 -- 11 he explained that his approach was neither to have regard to quotes to complete, (which is appropriate because the cost of completion will inevitably be greater than the costs if the original contractor and subcontractors performed the work) nor to consider what each trade had to do in isolation, but rather to gain an overall picture. I accept this is the correct approach. [54] While there may have been some items of work that, had they been the only item left undone, might be considered slight or trivial, I find that that viewed cumulatively the difference between what was done and what was required was more than slight or trivial so that it could not be said that in a practical sense the definition had been satisfied. Was the contractor entitled to suspend performance of the Works? [55] I accept that Mr Hudspith genuinely believed that he had good reason for making the claim when he did, notwithstanding the Stage 16 work was not 100% complete. He acted relying on a previous course of conduct, however this is not a civil case in which matters of equity are open for argument. In cross-examination he conceded that he did not have a right to early payment, despite having an expectation that the precedent set for previous claims, ie. that there would be a fair discussion about the value of the work done and that he would be paid a fair amount, would be followed. [56] I can only depart from strict interpretation of the contract if the contractor’s departures from the defined scope of work for Stage 16 were slight or trivial. I have found they were not. Accordingly, it follows that the contractor was not entitled to make the Stage 16 claim on 22 March 2019. [57] As the contractor was not entitled to make the Stage 16 claim, the owner was not obliged to pay the amount claimed. Accordingly, it follows that the contractor was not entitled to suspend work based on the owner’s failure to make payment on time. Was the owner in substantial breach? [58] Counsel for the contractor submitted that the owner had interfered with, or hindered, the contractor in carrying out the works, contrary to the requirements of clause 11.12 of the contract. He also submitted that the owner had given directions to subcontractors, contrary to the requirements of clause 11.13 of the contract. [59] When the project commenced it appears that the relationship between the parties was co-operative. Mr McDonell lives next door to the property and attended site regularly to water plants. He did this with the knowledge and consent of Mr Hudspith. [60] Mr Hudspith’s evidence was that Mr McDonell was frequently on site, giving instructions to subcontractors.51 [61] By December 2018, as the relationship became strained, Mr McDonell agreed that he would only access the site after making phone or written contact with Mr Hudspith.52 [62] In cross-examination Mr McDonell agreed that he had spoken to the contractor’s employees and subcontractors on occasion, but maintained that he had done so at the request of Mr Hudspith, eg. he had gone around the walls with Ryan to point out locations of light switches and power points, he had arranged with suppliers to deliver products to site and he had spoken to the concreter about the layout of the driveway. 51 [9] statement of Michael Hudspith (Exhibit 13). 52 Attachment 6 to the statement of Neil Thomas McDonell (Exhibit 1). -- 11 of 13 -- 12 On the balance of probabilities it seems more likely than not that conversations Mr McDonell had with subcontractors and suppliers were either natural interactions between people who had known each other for months during the course of construction or were at the request of Mr Hudspith to progress the works. On the evidence before me I cannot find that the owner acted in breach of the requirements of clause 11.12 and clause 11.13 after December 2018. [63] Counsel for the contractor submitted that failure to adhere to the requirements of clause 11.12 and clause 11.13 could be considered to be substantial breaches of contract. This argument is based on a suggested reading of clause 21.1, which sets out the circumstances in which the contractor might give notice of intention to terminate. The list includes failure to comply with obligations under clause 11 and concludes with a catchall circumstance of ‘is otherwise in Substantial Breach of the Contract’. It was submitted that on a construction of clause 21.1 the catchall phrase at the end makes each of the listed circumstances a substantial breach. [64] I need not consider this interesting argument as I have found that the owner was not in breach of the requirements of clause 11.12 or clause 11.13. Was the owner entitled to give the contractor notice of intention to terminate? [65] The notice of intention to terminate dated 16 April 2019 identified two alleged substantial breaches: (a) failing to proceed with due diligence, and (b) unlawfully suspending the works. The contractor was given 10 business days to remedy the alleged breaches. [66] For the purpose of determining the issue before me it is not necessary to consider the first ground. There may well have been good reasons why the work proceeded at the rate it did. [67] However, there can be no doubt that on 8 April 2019 Mr Hudspith wrote advising that ‘as the invoices are about 10 days overdue there will be no further works undertaken till such time as they are paid’.53 [68] In the absence of any evidence that work was done after 8 April 2019, I find that the contractor suspended work on and from 8 April 2019. The suspension was based on failure to pay. I have already found that the contractor was not entitled to suspend work based on the owner’s failure to make payment on time, hence the suspension was unlawful. Accordingly, I find that the contractor was in substantial breach, thus entitling the owner to give notice of intention to terminate. Was the owner entitled to terminate? [69] The contractor had 10 business days to remedy the breaches. It could have resumed work, in particular attending to at least some of the outstanding things in the Stage 16 scope that Mr Hudspith conceded had been left undone. 53 MH-8 to the statement of Michael Hudspith (Exhibit 13). -- 12 of 13 -- 13 [70] Mr McDonell’s evidence was that between 16 April and 7 May 2019 no work was done on site.54 Mr Hudspith could not recall any work being done on site between 16 April and 7 May 2019.55 [71] I find that on the balance of probabilities the breach had not been remedied by lifting the suspension. Accordingly, I find that the owner was entitled to terminate. Was the owner entitled to cover under the statutory insurance scheme? [72] As the owner validly terminated, it was entitled to cover under the statutory insurance scheme. [73] I note that in reaching its decision the QBCC posed the wrong questions. The decisionmaker asked ‘whether the works undertaken under Stage 16 were substantially complete…’.56 McGill SC DCJ was clear: the doctrine of substantial performance does not apply to staged claims.57 The decisionmaker also asked whether the work was ‘…complete, other than minor omissions that are slight or trivial in nature’. The definition of Stage 16 in this contract makes no allowance for minor omissions. Hence the approach taken should have been that outlined by McGill SC DCJ: ‘the difference between what has occurred and what is required might be so slight or trivial that it could be said that in a practical sense the definition had been satisfied’.58 Costs [74] The usual rule in this tribunal is that each party must bear its own costs.59 Subject to any submissions that the parties may make, I do not think that it would be in the interests of justice to require any party to pay the costs of any other party. [75] The competing claims of the owner and the contractor were finely balanced. The owner and the contractor were each afforded natural justice by the QBCC. The owner will have the benefit of the statutory insurance scheme, while the contractor may suffer significant financial hardship if it is pursued by the statutory insurer for the reasonable costs of completion by others. Orders The orders are as follows: 1. The Queensland Building and Construction Commission’s decision reference number 563341 made on 18 September 2019 be set aside. 2. The owner, CapFF Pty Ltd, is entitled to indemnity under the statutory insurance scheme. 54 Re-examination 30 September 2020. 55 Cross-examination 1 October 2020. 56 Page 5 Decision Notice. 57 [2014] QDC 132, [70]. 58 Ibid, [72]. 59 Section 100, Queensland Civil and Administrative Tribunal Act 2009 (Qld). -- 13 of 13 --