Colagrande & Anor v D A Radic Pty Ltd trading as David Radic Prestige Homes [2019] QCATA 176

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Colagrande & Anor v D A Radic Pty Ltd trading as David Radic Prestige Homes [2019] QCATA 176 PARTIES: CES COLAGRANDE AND REBECCA COLAGRANDE (applicant\appellant) v D A RADIC PTY LTD TRADING AS DAVID RADIC PRESTIGE HOMES (respondent) APPLICATION NO/S: APL081-18 ORIGINATING APPLICATION NO/S: BDL118-16 MATTER TYPE: Appeals DELIVERED ON: 11 December 2019 HEARING DATE: 16 November 2018 HEARD AT: Brisbane DECISION OF: Senior Member Brown Member Olding ORDERS: 1. The appeal is allowed. 2. The decision of the Tribunal made 12 March 2018 is set aside. 3. Ces Colagrande and Rebecca Colagrande must pay D A Radic Pty Ltd trading as David Radic Prestige Homes SEVEN THOUSAND, TWO HUNDRED AND FIFTY DOLLARS ($7,250) within fourteen (14) days of the date of this decision. 4. The parties must file and exchange written submissions in respect of the question of costs of the appeal within twenty-eight (28) days of the date of this decision. CATCHWORDS: APPEALS AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – WHEN APPEAL LIES – ERROR OF LAW – WHAT IS – GENERALLY – whether material before tribunal admitted of the conclusion that respondent -- 1 of 36 -- 2 had established ‘exceptional circumstances’ and ‘unreasonable hardship’ CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY – where the parties entered into a building contract for construction of a luxury home – where disputes arose as to variations and as to the amount payable for the works – where builder non-compliant with requirements for contractual variations under the Domestic Building Contracts Act 2000 (Qld) – whether builder should be permitted to recover amounts for non-compliant variations – whether exceptional circumstances– whether unreasonable hardship CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – where builder non-compliant with requirements for contractual variations under the Domestic Building Contracts Act 2000 (Qld) – whether liquidated damages payable for delays in practical completion – whether builder made an application to adjust completion date under s 18(6) of the Domestic Building Contracts Act 2000 (Qld) Domestic Building Contracts Act 1995 (Vic), s 38 Domestic Building Contracts Act 2000 (Qld) s 3, s 7, s 16, s 18, s 79, s 80, s 81, s 82, s 83, s 84, s 92, s 93, sch 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 142, s 147 Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Better Homes Queensland Pty Ltd v O’Reilly [2012] QCATA 37 Cachia v Grech [2009] NSWCA 232 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd [1993] FCA 322 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112 Ericson v Queensland Building Services Authority [2013] QCA 391 Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 Hayler v Hart [2013] QCAT 252 Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47 Hope v Bathurst City Council (1980) 144 CLR 1 -- 2 of 36 -- 3 Lida Build Pty Ltd v Miller (No 2) [2010] QCAT 431 Mahmudov v Goncalves [2012] QCAT 629 Mann v Paterson Constructions Pty Ltd (2019) 93 ALJR 1164 McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 Piper v Hookham Constructions Pty Ltd [2015] QCATA 77 Poiner v Quirk [2007] QDC 299 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41 Ross v Rangel [2004] QCCTB 98 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 Applicant: Mr J Faulkner instructed by Barron & Allen Lawyers Respondent: Mr Hitchcock, solicitor, AJ & Co Lawyers REASONS FOR DECISION [1] D A Radic Pty Ltd trading as David Radic Prestige Homes (‘Radic’) built a home for the applicants. The parties fell into dispute. Radic commenced proceedings in the Tribunal to recover from the applicants monies it said were due and owing in respect of the building works. The applicants counter claimed for, among other things, liquidated damages and negative contractual variations. [2] The Tribunal ordered the applicants to pay Radic $59,477.83 (the decision).1 The applicants appeal the decision. The background to the dispute [3] The applicants and Radic entered into a contract to construct a new home on the Gold Coast. The contract price was $2,291,136.00. During the building works it was decided that the scope of works would be varied by constructing a roof deck structure. The applicants paid an additional cash amount to Radic in respect of the works. There was a dispute about the amount of the payment and the amount payable in respect of the variation works. [4] The building work commenced on 28 May 2014 and was completed by 18 December 2015 when the building was handed over. [5] Radic sought payment of a final amount of $191,482.73 at the time of handover. The amount comprised $114,556.80 being the practical completion stage payment and $76,925.93 being a combined variation claim and contract adjustment. 1 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112. -- 3 of 36 -- 4 [6] The applicants paid the final payment after deducting an amount of $53,047.30 said to comprise $27,177.63 for a number of variations and $25,250.00 for liquidated damages. The statutory framework – appeals to the Appeal Tribunal [7] An appeal to the Appeal Tribunal on a question of law is as of right.2 An appeal on a question of fact or mixed law and fact may only be made with the leave of the Appeal Tribunal.3 [8] If an appeal is one against a decision on a question of fact only or a question of mixed law and fact, and leave to appeal is granted, the appeal must be decided by way of rehearing with or without the hearing of additional evidence as decided by the appeal tribunal.4 In deciding the appeal, the appeal tribunal may confirm or amend the decision or set aside the decision and substitute its own decision.5 [9] The relevant principles to be applied in determining whether to grant leave to appeal are: is there a reasonably arguable case of error in the primary decision?;6 is there a reasonable prospect that the applicant will obtain substantive relief?;7 is leave necessary to correct a substantial injustice to the applicant caused by some error?;8 is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?9 [10] If an appeal involves a question of law, unless the determination of the error of law decides the matter in its entirety in the appellant’s favour, the proceeding must be returned to the tribunal for reconsideration.10 Building disputes – the statutory framework [11] This appeal involves a consideration of the (repealed) Domestic Building Contracts Act 2000 (Qld) (‘DBC Act’).11 [12] The stated purpose of the DBC Act is found at s 3: The purpose of this Act, in regulating domestic building contracts, is – (a) to achieve a reasonable balance between the interests of building contractors and building owners; and (b) to maintain appropriate standards of conduct in the building industry. 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), s 142(1). 3 Ibid, s 142(3)(b). 4 Ibid, ss 147(1), (2). 5 Ibid, s 147(3). 6 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41. 7 Cachia v Grech [2009] NSWCA 232, [13]. 8 Ibid. 9 Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388, 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577, 578, 580. 10 Ericson v Queensland Building Services Authority [2013] QCA 391. 11 The DBC Act was repealed on 1 July 2015 however the Act continues to apply to domestic building contracts entered into before the repeal. Accordingly, the provisions of the DBC Act apply to the dispute the subject of this appeal. -- 4 of 36 -- 5 [13] By s 7(1) of the DBC Act ‘domestic building contract’ includes a contract to carry out domestic building work. By s 6(2), the ‘contract price’ for a domestic building contract is the total amount payable under the contract for the contracted services. By s 6(5), if a contract is varied the reference in s 6(2) to the total amount payable under the contract is a reference to the total amount payable under the contract, as varied. [14] The meaning of ‘variation’ is found at s 16 of the DBC Act: 16 Meaning of variation (1) A variation, of a domestic building contract, is – (a) an addition of domestic building work to the subject work; or (b) an omission from the subject work. (2) However, for a cost plus contract, an addition or omission is a variation only if the addition or omission is not reasonably contemplated by the contract. [15] ‘Subject work’ as referred to in s 16(1) is defined as:12 (a) the domestic building work carried out, being carried out or to be carried out under the contract; or (b) the domestic building work the carrying out of which has been, is being or is to be managed under the contract. [16] Section 79 deals with the requirement for contractual variations to be in writing: 79 Variations must be in writing (1) The building contractor under a regulated contract must ensure any variation of the contract agreed to between the building contractor and building owner is put into written form – (a) within the shortest practicable time; and (b) for a variation consisting of an addition to the subject work—before any domestic building work the subject of the variation is carried out. Maximum penalty—20 penalty units. (2) Subsection (1) does not apply to a building contractor for a variation of a contract if – (a) the variation is for domestic building work that is required to be carried out urgently; and (b) it is not reasonably practicable, in the particular circumstances, to produce a variation document before carrying out the work. (3) Subsection (4) applies if – 12 DBC Act, sch 2 (definition of ‘subject work’). -- 5 of 36 -- 6 (a) a proposed variation of a regulated contract has not yet been agreed to between the building contractor under the contract and the building owner, but is proposed to come into existence on the signing of a variation document by the owner and the contractor; and (b) the variation document is to be the first and only agreement between the building contractor and the building owner for the particular variation. (4) If the proposed variation consists of an addition to the subject work, the building contractor must ensure that no domestic building work the subject of the proposed variation is carried out until the variation document has been signed. Maximum penalty—20 penalty units. (5) When the variation document is signed, the following provisions do not apply for the variation – (a) subsections (1) and (2); (b) section 82; (c) section 83(1)(b); (d) section 84(2)(a) and (3)(a)(i), to the extent the provisions concern sections 82 and 83(1)(b). [17] Sections 80 and 81 deal with the contents of a variation document. Section 80 provides: 80 General contents of variation document (1) The building contractor under a regulated contract must ensure a variation document for the contract complies with the formal requirements for a variation document. Maximum penalty—20 penalty units. (2) A variation document complies with the formal requirements for a variation document if the document – (a) is in English and is readily legible; and (b) describes the variation; and (c) if the variation was sought by the building contractor—states the reason for the variation; and (d) if the variation will result in a delay affecting the subject work—states the building contractor’s reasonable estimate for the period of delay; and (e) for a fixed price contract—states the change of the contract price because of the variation, or how the change of the contract price is to be worked out; and (f) for a cost plus contract—states a fair and reasonable estimate of the costs associated with the addition or omission the subject of the variation; and -- 6 of 36 -- 7 (g) if the contract provides for progress payments—makes appropriate provision for payments under the contract to reflect any change of the contract price caused by the variation. [18] Sections 82 and 83 deal with the requirements for a variation document to be signed and a copy given to the building owner: 82 Variation document must be signed As soon as practicable after an appropriate variation document is made, the building contractor must— (a) sign the document; and (b) take all reasonable steps to try to ensure the document is signed by the building owner. 83 Copy of variation document for building owner (1) As soon as practicable (but within 5 business days) after a variation of a regulated contract is agreed to between the building contractor and building owner, the building contractor must give the building owner— (a) a readily legible signed copy of an appropriate variation document for the variation; or (b) if acceptable circumstances apply to the building contractor—a readily legible copy of an appropriate variation document for the variation, signed by the building contractor. (2) For subsection (1)(b), acceptable circumstances apply to the building contractor if the building contractor has taken all reasonable steps to try to ensure an appropriate variation document for the variation is signed by the building owner, but the building owner has not signed the document. [19] Section 84 deals with the recovery by a building contractor of an amount for a variation and provides: 84 Right of building contractor to recover amount for variation (1) This section applies if – (a) the building contractor under a regulated contract gives effect to a variation of the contract; and (b) the variation consists of – (i) an addition to the subject work; or (ii) an omission from the subject work that results in the building contractor incurring additional costs. (2) If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation – (a) only if the building contractor has complied with sections 79, 80, 82 and 83; or -- 7 of 36 -- 8 (b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor. (3) If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation – (a) only if – (i) the building contractor has complied with sections 79, 80, 82 and 83; and (ii) the ground of unforeseen circumstances applies; or (b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor. (4) The tribunal may approve the recovery of an amount by a building contractor for a variation only if the tribunal is satisfied that – (a) either of the following applies – (i) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation; (ii) the building contractor would suffer unreasonable hardship by the operation of subsection (2)(a) or (3)(a); and (b) it would not be unfair to the building owner for the building contractor to recover an amount. (5) For subsection (3)(a)(ii), the ground of unforeseen circumstances applies if the variation became necessary because of circumstances that could not have been reasonably foreseen by the building contractor when the contract was entered into. (6) If the building contractor is entitled to recover an amount for the variation of a fixed price contract, the amount is – (a) the increase in the contract price stated, or worked out in the way stated, in the appropriate variation document for the variation; or (b) if paragraph (a) does not apply—the cost of carrying out the variation plus a reasonable profit. (7) If the building contractor is entitled to recover an amount for the variation of a cost plus contract, the amount is the amount worked out in the way stated in the contract. [20] Part 9 of the DBC Act deals with other matters relating to contracts. Relevant to this appeal is s 92 which provides: 92 Effect of failure by building contractor to comply with requirement -- 8 of 36 -- 9 Unless the contrary intention appears in this Act, a failure by a building contractor to comply with a requirement under this Act in relation to a domestic building contract does not make the contract illegal, void or unenforceable. [21] Section 18 deals with the completion date under the contract and adjustments to the completion date where there is variation work that does not comply with a variation provision.13 Specifically, s 18(6) provides: If the contract is varied but the building contractor has not complied with a variation provision for the variation, the stated completion date or period— (a) must be adjusted to take account of any reduction in the number of days required to carry out the subject work; and (b) may, with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor, be adjusted to take account of any additional days required to carry out the subject work. (emphasis added) [22] Section 18(10) deals with the approval by the tribunal of an application by a building contractor to adjust the completion date where there is non-compliant variation work: The tribunal may give an approval for subsection (6)(b) only if it is satisfied that— (a) either of the following applies— (i) there are exceptional circumstances to warrant an allowance being made for the additional days; (ii) the building contractor would suffer unreasonable hardship if an allowance for the additional days were not made; and (b) it would not be unfair to the building owner to make an allowance for the additional days. [23] Section 93 relevantly provides: (1) A domestic building contract is void to the extent to which it— (a) is contrary to this Act; or (b) purports to annul, exclude or change a provision of this Act. 13 A ‘variation provision’ means ss 79,80, 82 or 83 of the DBC Act. -- 9 of 36 -- 10 The decision at first instance [24] Relevant to the present appeal the learned member found: (i) There were nine (9) variations in dispute, each variation having been requested by the applicants and each variation being a necessary part of the works;14 (ii) The circumstances of the subject build were relevant when considering the variations claimed;15 (iii) The applicants and Radic were sophisticated persons with experience in business at a high level;16 (iv) Radic would suffer hardship by not being paid the amount of $58,927.63, of which the amount for variations of $40,144.83 was the most significant part;17 (v) To be not paid for the variations would cause unreasonable hardship to Radic;18 (vi) The applicants were not arguing that all of the variations which did not comply with the DBC Act should be disallowed and were seeking to avail themselves of the provisions of the DBC Act where it suited them and where they sought to challenge the quantum of the charge for the item and not the making of the charge for the item in itself;19 (vii) There would be no unfairness to the applicants in having to pay a proper amount for variations that they requested, had the benefit of, and which had been properly completed;20 (viii) There were exceptional circumstances to warrant Radic recovering an amount for variations;21 14 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [54]. 15 Ibid, [60]. 16 Ibid. 17 Ibid, [62]. 18 Ibid. 19 Ibid, [66]. 20 Ibid, [67]. 21 Ibid, [68]. -- 10 of 36 -- 11 (ix) It would not be unfair to the applicants for Radic to recover for the variations.22 (x) The contract provided for a completion period of 420 days for the original contract works;23 (xi) The period of 55 days allowed for in the contract for ‘calculable delays’ did not include delays as a result of variation works;24 (xii) An additional period of 55 days should be allowed for variation works;25 (xiii) The adjusted completion date, allowing for delays, was 21 December 2015;26 (xiv) The applicants had no entitlement to claim liquidated damages.27 The grounds of appeal [25] The applicants rely upon a number of grounds of appeal.28 Essentially however the appeal requires the determination of two principal issues: (i) Whether the learned member correctly applied s 84 of the DBC Act; (ii) Whether the learned member erred in refusing to allow the applicants’ claim for liquidated damages. [26] The applicants say that the learned member erred in finding that Radic had established exceptional circumstances and unreasonable hardship entitling Radic to recover an amount for variations not complying with s 84 of the DBC Act. [27] In determining the first issue it is necessary to consider a number of discrete issues which we will address separately. Did the learned member correctly apply s 84 of the DBC Act? [28] Where the DBC Act applies, a building contractor who gives effect to a variation of a building contract may only recover an amount for the variation if the builder brings themselves within s 84 of the Act. [29] A builder may bring themselves within s 84 in two ways. [30] Firstly a builder may comply with sections 79, 80, 82 and 83 of the Act. These provisions detail the requirements for compliant contractual variations. 22 Ibid. 23 Ibid, [13], [216]. 24 Ibid, [217]. 25 Ibid, [220]. 26 Ibid. 27 Ibid, [222] - [223]. 28 Application for leave to appeal or appeal, filed 9 April 2018. -- 11 of 36 -- 12 [31] Where a builder is non-compliant with those sections, the builder must apply to the tribunal to recover an amount for the variation. The builder must satisfy the tribunal that: (i) There are exceptional circumstances to warrant conferring upon the builder an entitlement to recover an amount for the variation; or (ii) The builder would suffer unreasonable hardship if recovery of the amount was not permitted; and (iii) It would not be unfair to the building owner for the building contractor to recover an amount.29 [32] The meaning of ‘exceptional circumstances’ was considered by the Court of Appeal in Allaro Homes Cairns Pty Ltd v O’Reilly & Anor (‘Allaro’)30 where it was held: The phrase “exceptional circumstances” is not defined. It is found in an act whose purpose or object is to achieve a reasonable balance between the interests of building contractors and building owners and to maintain appropriate standards of conduct in the industry. It may be vague but the matters that might be considered relevant to such an inquiry will be indicated by the particular way in which the Act was not complied with and the circumstances particular to the dispute. In this Act, it directs attention to those circumstances which are exceptional and warrant conferring upon the building contractor an entitlement to recovery for the variation which its conduct, by failing to meet the obligations imposed by the statute, deprived it. It would therefore suggest, in the context of this dispute, attention might be directed to the circumstances that applied that prevented compliance or explained non-compliance with s 80(2)(e), which required the building contractor to state the change of the contract price because of the variation or how the change in price might be worked out. Circumstances such as an unanticipated event requiring work to be done urgently might, for example, afford an explanation and constitute an “exceptional circumstance”. But this comment should not be regarded as exhaustive, the term is broad and it is not desirable to attempt an exhaustive statement of what might be in any given dispute an exceptional circumstance.31 [33] In Poiner v Quirk McGill DCJ considered the entitlement of a builder to recover for non-compliant variations which had been requested by the owner: The Tribunal found that there were no exceptional circumstances surrounding the claim, and it does not appear from the written submissions on behalf of the appellant that any exceptional circumstances were even alleged: p 13. Indeed those submissions do not address the requirements of s 84 at all; they proceed on the basis that it is sufficient that the work was carried out on instructions from and with the knowledge of the respondents, which is not enough to satisfy s 84.32 [34] In Ross v Rangel the meaning of s 84 was considered: In the use of this terminology the DBC Act must envisage circumstances somewhat above the normal, that is something out of the ordinary: Fay v Fay 29 DBC Act, s 84(4) 30 [2012] QCA 286. 31 Ibid, [15] (citations omitted). 32 [2007] QDC 299, [73]. -- 12 of 36 -- 13 [1982] All ER 922 at 926 per Lord Scarman; Re: Washington [1967] QWN 10 per Hart J. It is not exceptional (nor can it be in terms of Part 7 and section 84 of the DBC Act) for a homeowner or, indeed, a builder to raise a variation to the works. It is a common occurrence. Given that, the legislature sets down a scheme which is expected/demanded of a builder, if the builder is to be compensated.33 [35] Ross v Rangel has been cited with approval in a number of decisions.34 [36] In Hayler v Hart35 the Tribunal held that the raising of variations was a common occurrence and not, in itself, exceptional. [37] In Allaro the Court of Appeal also considered the meaning of ‘unreasonable hardship’: Turning to the question of “unreasonable hardship”. The evidence before the Appeal Tribunal was scant but included the contract price, the cost of and findings with respect to the cost of the variation and the circumstance that the work had been performed but not paid for. In addition, there was evidence from the director of the applicant of the turnover of the applicant’s business. Plainly, it was a substantial building company with a turnover varying over three years between $11,000,000 and $17,000,000. There was no evidence going to the consequences for the applicant of non-payment. The circumstance that a builder might be unpaid for work done does not necessarily lead to an inference that hardship is suffered. Something more than non-payment should be demonstrated to establish “unreasonable hardship” suffered from the operation of the Act. Both the Tribunal and the Appeal Tribunal concluded that the applicant had demonstrated neither hardship nor that it was unreasonable. That conclusion is dictated by the evidence in this case and I can see no error of fact or law in that conclusion.36 [38] In Poiner v Quirk37 McGill DCJ was also required to consider the meaning of ‘unreasonable hardship’: On the face of it, if this work was required by the respondents, the appellant simply did not comply with the requirements of the statute. He ought to have required them to sign a variation before he did the work. There cannot be said to be unreasonable hardship just because he incurred some additional cost which 33 [2004] QCCTB 98, [64] – [65]. 34 See for example, Lida Build Pty Ltd v Miller (No 2) [2010] QCAT 431; Mahmudov v Goncalves [2012] QCAT 629. 35 [2013] QCAT 252. 36 [2012] QCA 286, [20] – [21]. 37 [2007] QDC 299, [74]. -- 13 of 36 -- 14 he cannot recover, one would expect that this is precisely what the legislature intended in such circumstances. There was nothing to indicate that he would have suffered unreasonable hardship from enforcing the requirement that he comply with ss 79, 80, 82, and 83. In my opinion, there was no proper basis on which the Tribunal could have held in the circumstances of this matter that the appellant had satisfied the requirements of s 84 to recover payment for this amount, even assuming that the work was carried out on instructions from and with the full knowledge of the respondents. If the tribunal had found that the respondents had not requested that this work be done, it seems to me that this would simply be a further impediment to satisfaction of the requirements of s 84, since I cannot see how in those circumstances the Tribunal could have concluded that it would not be unfair to the respondents for the appellant to recover an amount for this work. [39] In Better Homes Queensland Pty Ltd v O’Reilly38 the QCAT Appeal Tribunal considered what was required to satisfy ‘unreasonable hardship’: The test of unreasonable hardship requires an assessment of the impact of that sanction on the builder in the circumstances in which the noncompliance occurred. That is both a subjective and an objective enquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs. The magnitude of the sum that cannot be recovered is a relevant consideration in both respects. Subjectively, the inability to recover an amount may or may not cause hardship to the builder, depending on its financial circumstances. A small sum for a sole operator whose margins are slim might have a greater financial impact on that builder than a much larger sum would have on an enterprise with a large turnover and good profit margin. Objectively, the amount the builder is out of pocket will be one of many possible factors to consider in determining whether the hardship would be unreasonable. Other factors include the conduct of each of the builder and the owner in explaining why the variation was not documented and any discussions they had about the matter. [40] In Mann v Paterson Constructions Pty Ltd39 the High Court had this to say regarding provisions in the Domestic Building Contracts Act 1995 (Vic) analogous to s 84: The apparent purpose and legislative effect of these provisions is that a builder shall not be permitted to recover any money in respect of owner-initiated variations (other than for prime cost items and by way of provisional sums) except in accordance with these provisions. As such, they function as protective provisions, designed to prevent the kinds of problems likely to arise where domestic building contract variations are dealt with informally, as by oral request by an owner for a variation and compliance by the builder without first agreeing with the owner on the price and other consequences of giving effect to the variation; in particular, to avoid the surprises and consequent disputation likely to arise where plans and specifications under a major domestic building contract are varied without the degree of formality mandated by s 38(1) and (2) or (3). Hence, subject to only one exception, they prohibit a builder recovering any money in respect of owner-initiated variations unless the required degree 38 [2012] QCATA 37, [29] – [31]. 39 (2019) 93 ALJR 1164. -- 14 of 36 -- 15 of formality has been observed. The one exception reflects a legislative recognition that there can sometimes be instances of non-compliance which are in themselves exceptional or would result in the builder suffering exceptional hardship and in which it is not unfair to require the owner to pay a reasonable recompense for the variation, namely, the cost of the variation and a reasonable profit margin in accordance with s 38(7).40 [41] In the proceedings below, Radic relied upon both limbs of s 84(4)(a) of the DBC Act. In its amended Application for domestic building disputes Radic said: 12. At all material times the Respondents gave all instructions and communications for contract work to be performed through the Male Respondent, who requested the work of the variations, instructed the work to be performed, but as a practising cosmetic surgeon asserted that he did not have the time for the administration and execution of variation documents, and/or failed or refused to respond to the Applicants documents concerning those variations, and threatened damages claims for late completion. 13. The conduct of the Respondent leading to completion represented exceptional circumstances to warrant the conferring of an entitlement on the building contractor for the recovery of the amount being that (sic) the reasonable value of the work performed. 14. The Applicant would suffer unreasonable hardship by the operation of the act (sic), and it is not unfair to the building owner for the Applicant to recover the amount being the reasonable value of the work performed on the instruction of the Respondents pursuant to s 84(4) of the Domestic Building Contracts Act 2000, or alternatively by way of Quantum Meruit. [42] In their amended response, the applicants neither admitted nor denied that they had requested the variation works. In his statement of evidence however Dr Colagrande said that some of the variation works were not instructed by him to be performed.41 [43] Despite the evidence not being entirely clear on the point, it appears from the parties’ written submissions below that it was not disputed that the variation works had been requested by the applicants.42 The learned member made this finding.43 The finding is not appealed. Exceptional circumstances [44] In their grounds of appeal the applicants say that the learned member erred in finding that there were exceptional circumstances entitling Radic to recover for the non- compliant variations. The particulars of this ground, relied upon by the applicants, are: there was no evidence of exceptional circumstances; no pleading by Radic of exceptional circumstances; no submissions by Radic as to what constituted the exceptional circumstances; and no analysis by the learned member of what constituted exceptional circumstances in the context of the decision. 40 Ibid, 1197 [157] (citations omitted). 41 Exhibit 9, 46(a) 42 Applicants’ submissions at [15] - [35] 43 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [54]. -- 15 of 36 -- 16 [45] The applicants say that as a result of the asserted errors by the learned member, they were denied procedural fairness. [46] The applicants say that the learned member failed to properly analyse what constituted ‘exceptional circumstances’. Failing to give adequate reasons is an error of law. However at the hearing of the appeal, Counsel for the applicants declined to seek an amendment to the grounds of appeal to include a failure by the learned member to give adequate reasons. [47] At the hearing of the appeal, Counsel for the applicants submitted that there was no evidence, or no probative evidence, upon which the learned member could have been satisfied that Radic had established exceptional circumstances. [48] Whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law.44 Where a statute uses words according to their ordinary meaning and the question is whether the facts as found fall within those words, where it is reasonably open to hold that they do, then the question whether they do or not is one of fact.45 If facts fully found are within the spectrum of reasonableness, the question is a mixed question of fact and law.46 Whether there is evidence of a particular fact is a question of law. A finding of fact in the absence of evidence to support the finding is an error of law.47 [49] In Vetter v Lake Macquarie City Council the High Court held:48 Whether facts as found answer a statutory description or satisfy statutory criteria will very frequently be exclusively a question of law. To put the matter another way, indeed, as it was put by Priestley JA in his judgment, whether the facts found by the trial court can support the legal description given to them by the trial court is a question of law. However, not all questions involving mixed questions of law and fact are, or need to be susceptible of one correct answer only. Not infrequently, informed and experienced lawyers will apply different descriptions to a factual situation. That is why the test whether legal criteria have been met has been expressed in language of the kind used by Jordan CJ in The Australian Gas Light Co v Valuer-General: "[I]f the facts inferred ... from the evidence ... are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law". [50] In Hope v Bathurst City Council Mason J held:49 Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. One example is the judgment of Fullagar J in Hayes v Federal Commissioner of Taxation, where his Honour quoted the comment of Lord Parker of Waddington in Farmer v Cotton's 44 Vetter v Lake Macquarie City Council (2001) 202 CLR 439; Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47, 51; Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389, 394 – 395; 45 Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd [1993] FCA 322. 46 Ibid. 47 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321. 48 202 CLR 439, 450 [24] (citations omitted). 49 (1980) 144 CLR 1, 7 – 8. -- 16 of 36 -- 17 Trustees, which was adopted by Latham CJ in Commissioner of Taxation v Miller, that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J then said: '... this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The "facts" referred to by Lord Parker ... are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law.' However, special considerations apply when we are confronted with a statute which on examination is found to use words according to their common understanding and the question is whether the facts as found fall within these words. Brutus v. Cozens (1973) AC 854 was just such a case. The only question raised was whether the appellant's behaviour was "insulting". As it was not unreasonable to hold that his behaviour was insulting, the question was one of fact. The judgment of Kitto J. in N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation (1956) 94 CLR 309 is illuminating. Kitto J. observed that the question whether certain operations answered the description "mining operations upon a mining property" within the meaning of s. 122 of the Income Tax Assessment Act 1936, as amended, was a mixed question of law and fact (1956) 94 CLR, at pp 511-512 . He went on to explain why this was so: "First it is necessary to decide as a matter of law whether the Act uses the expressions 'mining operations' and 'mining property' in any other sense than that which they have in ordinary speech." Having answered this question in the negative, he noted that the "common understanding of the words has . . . to be determined" as "a question of fact". He continued (1956) 94 CLR, at p 512 : "The next question must be whether the material before the Court reasonably admits of different conclusions as to whether the appellant's operations fall within the ordinary meaning of the words as so determined; and that is a question of law (1941) 65 CLR, at p 155 : see also per Isaacs and Rich JJ. in Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation (1923) 33 CLR 416, at p 419. If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact: see per Williams J. in the Broken Hill South Case (1941) 65 CLR 150, at p 160 ." [51] In Vetter v Lake Macquarie City Council the majority held:50 In Hope v Bathurst City Council, Mason J pointed out that when it is necessary to engage in a process of construction of the meaning of a word (or phrase) in a statute a question of law will be involved, but that the question may be a mixed one of fact and law. His Honour's reasons make it clear that a question exclusively of law arises, as the respondent sought to argue was the position in this case, if, on the facts found only one conclusion is open. 50 (2001) 202 CLR 439, 451 [27]. -- 17 of 36 -- 18 [52] For the reasons that follow we conclude that the learned member erred in law in finding that, on the facts found, Radic had established exceptional circumstances for the purposes of s 84(4)(a)(i) of the DBC Act. [53] The learned member found that the variations had not been signed by the applicants prior to the work being carried out. He found that the variation documents had been prepared by Radic on about 7 December 2015 and forwarded to the applicants on 15 December 2015.51 [54] The learned member referred to the relevant provisions of the DBC Act dealing with contractual variations.52 The learned member found that the applicants had requested the variation works and that the variations were ‘a necessary part of the requested works’.53 The latter finding is somewhat opaque however we understand the finding to mean that the building works performed were necessary to give effect to the variations. In any event these findings are not appealed. [55] The learned member then went on to address the total cost of the variations,54 Radic’s financial circumstances55 and the evidence about the impact upon Radic of the unpaid variations.56 The learned member referred specifically to Mr Radic’s evidence about the ‘huge financial burden’ on the builder. [56] The learned member went on to consider the test for establishing unreasonable hardship, referring to Better Homes Queensland Pty Limited v O’Reilly & Anor.57 The learned member referred to the following circumstances of the construction as being ‘relevant’: (a) The building works involved a very expensive architect designed luxury house; (b) The house was built for a professional person by an experienced builder of luxury homes on the Gold Coast; (c) The parties were sophisticated persons having experience in business at a high level.58 51 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [46]. 52 Ibid, [51] – [53]. 53 Ibid, [54]. 54 Ibid, [55]. 55 Ibid, [56]. 56 Ibid, [57] – [58]. 57 Ibid, [59]. 58 Ibid, [60]. -- 18 of 36 -- 19 [57] The learned member did not explicitly state whether the matters to which he referred were relevant to exceptional circumstances, unreasonable hardship or both. [58] The learned member observed that Radic’s apparently high annual profit based simply on turnover and a supposed margin did not show that Radic would not suffer hardship by not being paid the variations. The learned member then speculated about various matters that might impact Radic’s financial position.59 [59] The learned member went on to find that Radic would suffer unreasonable hardship if it was not paid for the variations.60 [60] The learned member considered whether it would be unfair to the applicants for Radic to be paid for the variations, concluding that it would not be.61 This finding is not appealed. [61] The learned member found that both limbs of s 84(4)(a) had been made out by Radic.62 The relevant finding by the learned member in relation to exceptional circumstances is found in the following passage: I therefore consider that the requirements of section 84 of the DBC Act are made out:- that there are exceptional circumstances to warrant the conferring of an entitlement on the builder for recovery of an amount for variations; that the builder would suffer unreasonable hardship if the variations were not paid for; and that it would not be unfair to the owners for the builder to recover for the variations.63 [62] The ‘exceptional circumstances’ relied upon by Radic in its amended application was the following conduct of the Colagrandes: (i) Requesting the work of the variations; (ii) Instructing the work to be performed; (iii) Failing and/or refusing to respond to the applicants’ ‘documents’ concerning the variations; (iv) Threatening the applicants with a claim for damages for late completion. 59 Ibid, [61]. 60 Ibid, [62]. 61 Ibid, [63] – [67]. 62 Ibid, [68]. 63 Ibid. -- 19 of 36 -- 20 [63] In his statement of evidence filed in the proceedings below, Dr Colagrande said that he did not instruct the performance of some of the works the subject of the variations.64 In cross examination at the hearing, Dr Colagrande was asked a series of questions about whether he had requested the performance of the variation works. Dr Colagrande’s evidence in this regard was somewhat equivocal. [64] The evidence of Mr Radic was that there were exceptional circumstances applying in respect of the variation works. He stated that ‘a lot of the work’ happened ‘in the last few weeks of the job’.65 Mr Radic’s evidence, when asked why the variations were not documented, was that his wife ‘… does all that side of the work, to be honest.’66 Mr Radic said that he was ‘not 100 per cent sure’ whether a variation document was required to be issued prior to the commencement of the variation works. Somewhat tellingly, the evidence of Mr Radic was: We’ve always had the understanding that if a client asks for something and it’s – it’s on a text or some, you know, written – it’s somewhere, then it forms the basis for you to do the work. If – and the majority of people we deal with or – I could say pretty much all of them bar one have been happy to operate that way.67 [65] The evidence of Mr Radic was that the variation works were undertaken at the request of Dr Colagrande.68 He stated that some of the variation works were ongoing at the time the variations were submitted by Radic to the applicants.69 Mrs Radic’s evidence was that the variation works were commenced prior to the variations being submitted to the applicants ‘but a lot of them weren’t completed until close to the date of the 7 th .’70 [66] Mr Radic gave evidence regarding the circumstances relevant to the variations.71 There was no evidence by Radic’s witnesses that the variation works were required to be carried out urgently thus rendering compliance with the requirements of the DBC Act not possible, impractical or otherwise explicable. [67] Circumstances involving a request by a building owner to have variation works carried out and instructing the builder to carry out the works will not, generally 64 Statement of Ces Colagrande, dated 20 January 2017, [46]. 65 Transcript of Proceedings, D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors (QCAT BDL118-16, Member Paratz, 29 March 2017) 59. 66 Ibid, 60. 67 Ibid, 61. 68 Ibid, 95. 69 Ibid, 111. 70 Ibid, 10. 71 Statement of David Radic, dated 29 June 2016, [112] – [154]; Supplementary statement of David Radic, dated 14 February 2017, [12] - [30]. -- 20 of 36 -- 21 speaking and without more, be exceptional where there is non-compliance with the requirements of s 84 of the DBC Act. The evidence of Radic was that it only built luxury homes of the type constructed for the applicants. Mr Radic’s evidence was that: We solely build luxury homes of this type. Owners are spending a lot of money on a dream home. We therefore work with the owners and accept them changing their minds and last minute changes.72 [68] The evidence would certainly suggest that variations were not uncommon in the context of the nature of the building work performed by Radic. It goes without saying that Radic should have been aware of the requirements of the DBC Act regarding variation works. [69] The evidence about whether the applicants threatened Radic with a claim for damages for late completion can be found in Mr Radic’s statement: In a telephone call on the 17 (sic) December 2015 of December 2015 (sic) he73 threatened that if it was not handed over for Christmas he would sue me for huge damages and we wouldn’t get a cent from him of our final payment.74 [70] It is difficult to apprehend how a conversation that took place after the variation documents had been submitted could be relevant to a consideration of exceptional circumstances. [71] Radic asserted that the applicants had not responded to the ‘documents’ concerning the variations. This appears to be a reference to the variation documents prepared by Radic on or about 7 December 2015 and received by the applicants on or about 15 December 2015. Again, it is difficult to apprehend how the failure by the applicants to provide written approval for the variations at such a late stage of the build could be relevant to exceptional circumstances. [72] As the Court of Appeal observed in Allaro one might expect the evidence regarding ‘exceptional circumstances’ to be directed to the circumstances preventing compliance or explained non-compliance with s 80(2)(e), requiring the building contractor to state the change of the contract price because of the variation or how the change in price might be worked out. The relevant provisions of the DBC Act are protective in nature and, as was observed by the High Court in Paterson, designed to prevent the kinds of problems likely to arise where variations are dealt with informally, and to avoid the disputes likely to arise where variations are undertaken without the formality required by the Act. [73] It is appropriate to briefly consider the variations and whether there was evidence to support a finding that there were exceptional circumstances warranting conferral upon Radic an entitlement to recovery. In particular it is appropriate to consider whether there was evidence about particular circumstances preventing compliance or explaining non-compliance with the Act including for example work required to be undertaken urgently as a result of an unanticipated event. [74] We confine our consideration to those variations allowed by the learned member. 72 Statement of David Radic, dated 14 February 2017, [41]. 73 Dr Colagrande 74 Statement of David Radic, dated 29 September 2016, [36]. -- 21 of 36 -- 22 Porcelain sheet [75] The learned member’s findings in relation to this item are found at reasons [71] to [89]. The applicants advised the builder in August 2015 that they wanted to use porcelain sheets in the living room and main ensuite. The applicants ordered the sheets on 29 October 2015 which were delivered to site on 12 November 2015. The laying of the sheets was completed on 4 December 2015.75 There is no evidence by Mr Radic about why the variation provisions of the DBC Act were not, and could not have been, complied with by the builder. The learned member allowed the variation in the amount of $17,616.50. There was no evidence of exceptional circumstances relating to this variation. Tap install [76] The learned member’s findings in relation to this item are found at reasons [93] to [94]. The builder installed 3 zip taps. Mr Radic’s evidence was that the applicants supplied the taps. There is no evidence by Mr Radic about why the variation provisions of the DBC Act were not, and could not have been, complied with by the builder. The learned member allowed the variation in the amount of $330.00. There was no evidence of exceptional circumstances relating to this variation. Insinkerator install [77] The learned member’s findings in relation to this item are found at reasons [95] to [96]. Mr Radic’s evidence was that the applicants instructed the builder to supply and install five insinkerators. The applicants provided these instructions in August 2015. There is no evidence by Mr Radic about why the variation provisions of the DBC Act were not, and could not have been, complied with by the builder. The learned member allowed the variation in the amount of $475.00. There was no evidence of exceptional circumstances relating to this variation. Doors vestibule [78] The learned member’s findings in relation to this item are found at reasons [97] to [98]. Mr Radic’s evidence was that the applicants instructed him to install a wall and door not included on the plans and to ‘charge [the applicants] at a later date’.76 The learned member allowed the variation in the amount of $420.00. The obligations contained in the DBC Act relating to variations are cast upon the builder. That a homeowner may advise a builder to raise a charge for a variation at a later date does not, without more, constitute exceptional circumstances. There was no evidence of exceptional circumstances relating to this variation. Plumbing labour [79] The learned member’s findings in relation to this item are found at reasons [99] to [100]. Mr Radic’s evidence was that the applicants decided in June 2015 to include additional rooms in the basement of the building. Plans were drawn up and provided to the builder in July 2015. Mr Radic’s evidence was that in July 2015 the applicants agreed to the variation works being charged, essentially, on a cost plus basis.77 Mr 75 Statement of D Radic at 96 - 98 76 Statement of D Radic at 123 – 124. 77 Statement of D Radic at 125 – 126. -- 22 of 36 -- 23 Radic says that the applicants dispute only the plumbing labour cost. The learned member allowed the variation in the amount of $5,880.33. For the reasons outlined in relation to the ‘doors vestibule’ item, there was no evidence of exceptional circumstances relating to this item. Extra render [80] The learned member’s findings in relation to this item are found at reasons [101] to [102]. Mr Radic’s evidence was that during the construction of the concrete block boundary fences the applicants instructed the builder to increase the overall height of the fence by 200mm. The evidence of Mr Radic was that the applicants provided these instructions while the trades were on site and that a variation could not be processed before the work was done.78 The evidence of Dr Colagrande was that the builder was not instructed to undertake the works.79 The learned member allowed the variation in the amount of $2,134.00. [81] Notwithstanding the instructions provided by the applicants it was open to the builder to comply with the obligations imposed by the DBC Act. There is no evidence to suggest, for example, that the work was required to be undertaken as a matter of urgency. Rather it seems that the decision not to comply with the variation provisions was born of expediency and convenience. There was no evidence of exceptional circumstances relating to this item. Stainless steel grate [82] The learned member’s findings in relation to this item are found at reasons [103] to [104]. Mr Radic’s evidence was that this variation, relating to changes to garden beds, was necessitated following instructions provided by the applicants in August 2014. Mr Radic’s evidence is that, following receipt of the applicants’ instructions, he advised the applicants that additional drainage would be required. Mr Radic advised the applicants that the cost of the variation would be on a cost plus basis. He says that this was agreed to by the applicants.80 The learned member allowed the variation in the amount of $4,290.00. [83] There is no evidence by Mr Radic about why the variation provisions of the DBC Act were not, and could not have been, complied with by the builder. It is, in our view, no satisfactory answer for the builder to assert that the applicants accepted a credit relating to the variation works but dispute the claim by the builder. As we have 78 Statement of D Radic at 130 – 131. 79 Statement of C Colagrande at 81 80 Statement of D Radic at 133 – 135. -- 23 of 36 -- 24 observed, the onus is upon the builder to comply with the variation provisions. There was no evidence of exceptional circumstances relating to this item. Blockwork raised [84] The learned member’s findings in relation to this item are found at reasons [105] to [106]. Mr Radic’s evidence was that, at the request of the applicants, additional block work was added to raise a window. Mr Radic said that he advised the applicants that the block layers would be required to return to the site to undertake the work and that the applicants would be charged the cost in this regard. As with a number of the disputed variations the builder says that the applicants agreed to this.81 The evidence of Dr Colagrande was that the builder was not instructed to undertake this work.82 The learned member allowed a variation of $252.00 for this item. Again, there is no evidence by Mr Radic about why the variation provisions of the DBC Act were not, and could not have been, complied with by the builder. There was no evidence of exceptional circumstances relating to this item. Aluminium louvre [85] The learned member’s findings in relation to this item are found at reasons [107] to [108]. The evidence of Mr Radic was that the applicants requested that the fence be reconfigured and that an additional fence be added for privacy reasons. The request by the applicants was made in August 2014. Mr Radic says that the applicants provided the design for the screens ‘around 10 November 2015’. Attached to Mr Radic’s statement is an invoice dated 27 November 2015 in respect of the manufacture of the screens. The learned member allowed a variation of $1,753.00 for this item. While this work may be have been undertaken relatively late in the build, there was no evidence that the builder could not have obtained a quote for the cost of the manufacture of the screens and submitted variation documents to the applicants. There was no evidence of exceptional circumstances relating to this item. Tiling play area [86] The learned member’s findings in relation to this item are found at reasons [109] to [110]. The learned member allowed an amount of $2,495.00 for this variation. There was no evidence given by the builder about this variation. There was no evidence of exceptional circumstances relating to this item. Stone column [87] The learned member’s findings in relation to this item are found at reasons [111] to [112]. Mr Radic’s evidence was that in November 2015 the applicants requested the installation of stone over two columns in the living room. Mr Radic’s evidence was that this occurred ‘only a couple of weeks away from the handover’. Mr Radic says that he told the applicants that the amount charged by the tiler for laying the stone would be charged to the applicants and that the applicants agreed to this.83 The amount allowed by the learned member for this variation was $924.00. As with the variation relating to the aluminium louvre, while this variation work may be have been undertaken relatively late in the build, there is no evidence that the builder could not 81 Statement of D Radic at 138 – 139. 82 Statement of C Colagrande at 81 83 Statement of D Radic at 146. -- 24 of 36 -- 25 have obtained a quote for the cost of laying the stone and submitted variation documents to the applicants. There was no evidence of exceptional circumstances relating to this item. Plumbing, splashback [88] The learned member’s findings in relation to this item are found at reasons [113] to [116]. The learned member allowed a total of $2,621.00 for these variations. There was no direct evidence given by Mr Radic in relation to these variations. There was no evidence of exceptional circumstances relating to these items. BBQ fabricated frame, benchtop frame, fabricated counter frame [89] The learned member’s findings in relation to this item are at reasons [121] to [128]. The learned member did not allow the claimed variations for the benchtop frame and fabricated counter frame. These findings are not disputed. In relation to the BBQ fabricated frame the evidence of Mr Radic was that this variation was requested by the applicants in various emails dated 2 November 2015, 3 November 2015 and 11 November 2015. The learned member allowed $2,805.00 for the variation. Again, and as with the variation relating to the aluminium louvre and the stone column, the variation work was undertaken late in the build, however there is no evidence that the builder could not have obtained a quote for the cost of the work and provided variation documents to the applicants. There was no evidence of exceptional circumstances relating to this item. Door handle [90] The learned member’s findings are at reasons [129] to [130]. The evidence of Mr Radic was that the request for this variation was not made by the applicants until 27 November 2015 and the manufacturer’s invoice was not provided until 8 December 2015.84 The learned member allowed $1,309.00 for the variation. The hand over was arranged to take place on 18 December 2015. We accept that the request for the variation work was made late in the build. However the response by the builder was consistent with all of the variation works. That is, the builder did not attempt to comply with the variation provisions notwithstanding that there was an opportunity, albeit a limited one, to do so. There was no evidence by the builder regarding why the variations provisions could not be complied with. There was no evidence of exceptional circumstances relating to this item. Robinhood iron [91] The relevant findings are at reasons [131] and [132]. The evidence of Mr Radic was that the applicants requested the installation of an ironing centre on 1 December 2015. Mr Radic’s evidence was that he advised the applicants he would purchase the item and add the cost to the final variations.85 The learned member allowed $360.00 for this item. There was no evidence of exceptional circumstances in relation to this item. Summary of the evidence in relation to exceptional circumstances 84 Statement of D Radic at 150 85 Statement of D Radic at 151 -- 25 of 36 -- 26 [92] The evidence did not support the conclusion that there were exceptional circumstances to warrant conferring upon Radic an entitlement to recover amounts for any of the disputed variations. The builder made no attempt to comply with the variation provisions of the DBC Act. In undertaking the variation works in the absence of compliance with the Act, Radic proceeded at its peril. [93] The evidence to which the learned member referred in the reasons went to the issue of unreasonable hardship rather than exceptional circumstances. Indeed, the learned member’s reasons are limited in their consideration of the relevant issues to unreasonable hardship.86 There was no analysis by the learned member of the principles relevant to the determination of whether there were exceptional circumstances for the purposes of s 84(4)(a)(i) of the DBC Act nor do the reasons reveal how the learned member came to conclude that there were exceptional circumstances in relation to the variation works. [94] The evidence before the learned member did not, in our view, reasonably admit of different conclusions as to whether the circumstances relied upon by Radic were exceptional circumstances. In our view only one conclusion was open on the facts. That conclusion was Radic had failed to establish exceptional circumstances. A question exclusively of law arises if, on the facts, only one conclusion is open. We find that the learned member erred in law in finding that exceptional circumstances applied for the purposes of s 84(4)(a)(i) of the DBC Act. Unreasonable hardship [95] The applicants say, in relation to the finding that Radic would suffer unreasonable hardship if it was not permitted to recover for the variations: there was no evidence to support the finding; the learned member failed to apply the correct legal test; the learned member reversed the onus of proof. [96] The relevant finding by the learned member regarding unreasonable hardship is found in the following passage: The mere fact that the builder appears to make a high annual profit based simply on turnover and a supposed margin does not show that the builder would not suffer hardship by not being paid for variations in the amount of $40,144.83. The builder may have debt obligations, or there may be many other factors that impact upon its overall financial position. I accept the evidence of Mr and Ms Radic that the builder would suffer hardship by not being paid the amount of deducted amount of the final claim for 86 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [54] – [70]. -- 26 of 36 -- 27 $58,927.63, of which the amount for variations of $40,144.83 is the most significant part, and consider that to be not paid for the variations would cause unreasonable hardship in the circumstances.87 [97] The evidence before the learned member about the financial hardship Radic would suffer if not permitted to recover an amount for the non-compliant variations was limited. [98] In his statement of evidence Mr Radic said: Because we are a small business and operate on small profit margins the $59k that we have not been paid has been a huge financial blow to us and burden on our family as we have 2 small children under the age of 7.88 [99] Perhaps unsurprisingly, in light of Radic’s evidence in chief and the paucity of evidence about financial circumstances, Mr Radic was not cross-examined about the financial hardship the company would suffer if recovery of the amounts for the variations was not approved. [100] In her statement of evidence Mrs Radic said: We did not accept the payment of $138,435.43 on 18 December 2015 as full and final payment. Mr Colagrande did not say that and the money was not given to us on that basis. What he actually said was that he had been advised we could not refuse hand over if he paid that amount. He proceeded to tell us if we have an issue with the final payment he was making, then we would have to pursue it through QCAT. We said to Mr Ces Colagrande that we would be pursuing the balance owing, through QCAT. He said “we have lots of information about you, my father was on site all the time, he saw what went on here, we have lots of evidence, we will have a big counterclaim, my barristers will deal with you, and you won’t get a cent.” It was a tense and heated meeting. Ces Colagrandes (sic) father was also present at the time and said to us “You think you’re smarter than us, but you aren’t and you will never beat us.” The last words said by us as we left the meeting were, we will see you in the tribunal. We would never accept this a (sic) final business as we are such a small business and cannot afford to be out of pocket $59k. This has been a huge financial burden on us and caused a lot of stress for me and my family. (emphasis added) 89 [101] Mr Radic gave evidence at the hearing about the respondent’s financial circumstances: 87 Ibid, [61] – [62]. 88 Statement of David Radic, dated 29 September 2016, [30]. 89 Statement of Natasha Radic, dated 29 September 2016, [9]. -- 27 of 36 -- 28 Mr Ledger: So you’re doing pretty – you did pretty well 2014/15 year, didn’t you? And you’re doing pretty well now? Mr Radic: Nothing’s really changed in my life. We just continue on. We pay our bills and we keep working. Yep.90 [102] Mr Radic was asked a series of questions about the company’s turnover. The solicitor for the applicant, addressing the Tribunal during cross examination, said: And, as you know, part of the Act provides that, as a test, he needs to be suffering financial hardship, and he’s clearly not. He’s clearly not suffering financial hardship. It’s one of the requirements under section 84(4), I think it is.91 [103] There can be no doubt that the parties were, in the proceedings below and at the hearing, well and truly alive to the issues regarding whether Radic would suffer unreasonable hardship as a result of the application of s 84(2)(b) of the DBC Act. [104] Evidence was given at the hearing by both Mr and Mrs Radic about the financial affairs of the company. Mr Radic gave evidence that in the 2014/15 financial year, ‘it could be’ correct that the company had a turnover of $5,707,070.92 When asked whether in the 2016/17 financial year the company turnover would be $12,851,618 Mr Radic’s evidence was that this figure was correct.93 Mr Radic’s evidence was that ‘turnover is not profit’94. Mr Radic gave evidence that the company’s margin averaged 15 per cent. [105] Mrs Radic gave evidence that the company held a category 2 builder’s licence which ‘allowed’ the company to ‘perform’ a turnover of between ‘3 million and up to 12 million during the 2016 and 2017 year.’95 Mrs Radic gave evidence that the turnover of the company was ‘in the millions’ but questioned the relevance of this fact stating that ‘(t)urnover and profit…has no relevance to each other’.96 Regarding the company’s profit margin, Mrs Radic’s evidence was that the amount varied, that it ‘can be less generally’ than 15 per cent97 and was ‘far less’ than 15 per cent on the subject contract.98 [106] There is evidence about the contract price and the cost of the variations and the circumstances in which the work had been performed but not paid for. The learned member made findings about these matters. [107] As in Allaro, there is some evidence from Mr and Mrs Radic of the turnover of the business although this was evidence given under cross examination and Radic filed no statements of evidence or supporting documentation addressing the issue. The only evidence going to the consequences for Radic of non-payment for the variations is 90 Transcript of Proceedings, D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors (QCAT BDL118-16, Member Paratz, 29 March 2017) 65. 91 Ibid, 63. 92 Ibid, 63. 93 Ibid, 63. 94 Ibid, 63. 95 Transcript of Proceedings, D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors (QCAT BDL118-16, Member Paratz, 20 July 2017), 8. 96 Ibid, 8. 97 Ibid. 98 Ibid, 9. -- 28 of 36 -- 29 found in the statements by Mr and Mrs Radic to which we have referred which was limited to the assertion that the consequences of the non-payment of the amount for the variations was ‘a huge financial burden’ and ‘a huge financial blow’. [108] Radic was required to satisfy the tribunal that, subjectively, it would suffer hardship if recovery for the variations was not approved and that, objectively, the nature and extent of the hardship was unreasonable in the circumstances. [109] There was no evidence before the learned member about whether the inability to recover the amount may or may not have caused hardship to Radic other than the very brief statements by Mr and Mrs Radic. Radic led no other evidence about the impact upon it of the non-payment of the variation amounts. In our view, the bare statement by a builder that non-payment of an amount for a non-compliant variation will result in a ‘huge’ financial burden or blow, without more, is not capable of satisfying the requirements of s 84(4)(a)(ii) of the DBC Act. [110] The learned member observed that the builder may have debt obligations, or there may be many other factors that impacted upon its overall financial position. There was, however, no evidence before the Tribunal about these matters. [111] The learned member considered the circumstances of the construction to be relevant including that the build involved a luxury house and the builder and applicants were sophisticated persons with experience in business at a high level. It is not immediately apparent from the reasons how these matters could be relevant to the consideration of unreasonable hardship. The learned member, after citing a passage from the decision of the QCAT Appeal Tribunal in Better Homes Queensland Pty Limited v O’Reilly & Anor, held:99 Objectively, the amount the builder is out of pocket will be one of many possible factors to consider in determining whether the hardship would be unreasonable. Other factors include the conduct of each of the builder and the owner in explaining why the variation was not documented and any discussions they had about the matter. [112] The Appeal Tribunal in Better Homes clarified what circumstances, objectively, may be relevant in determining whether unreasonable hardship had been made out. These circumstances included the amount the builder is out of pocket and the conduct of each of the builder and the owner in explaining why the variation was not documented and any discussions they had about the matter. These were not matters referred to by the learned member. [113] The relevant findings of fact by the learned member regarding unreasonable hardship are limited to a finding that the builder would suffer unreasonable hardship if not permitted to recover an amount in respect of the variations.100 The learned member made no findings about how or why such hardship would be suffered. It is implicit in the reasons that the learned member accepted the evidence of Mr and Mrs Radic about the consequences of the non-payment of the amount for the variations. However, as we have observed, the mere assertion by a builder that hardship will be suffered if 99 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [59] (citations omitted). 100 Ibid, [61] – [62]. -- 29 of 36 -- 30 recovery of an amount for non compliant variations is not permitted will be insufficient to satisfy the requirements of s 84(4)(a)(ii) of the DBC Act. [114] In our view, the material before the Tribunal below did not reasonably admit of different conclusions as to whether Radic had established unreasonable hardship. The only conclusion open on the facts was that Radic had failed to establish that it would suffer unreasonable hardship if it was not permitted to recover an amount for the non- compliant variations. [115] The learned member erred in law in so finding. Unfairness [116] In light of our findings, it is not necessary for us to deal with whether the learned member erred in finding that it would not be unfair to the applicants for Radic to recover an amount for the non-compliant variations. However for the sake of completeness we will address the ground of appeal. [117] The learned member found: 64 The owners clearly have significant financial means and have increased the cost of the home as the works progressed (for example, by adding an entire roof deck that was not in the initial plans). There is no evidence that proper payment by the owners, for the benefit they have received from the variation works being completed at their request, would place them under financial stress, or be unfair to them. 65 The owners agreed to pay, and did pay on handover, for some variations that were not the subject of signed variations. They have selected some other variations which they have chosen to dispute, not as to their being requested or as to adequate performance, but only as to quantum. They have paid substantial moneys (either $160,000.00 or $165,000.00) for the roof deck without any written variations being signed. 66 The owners therefore are not arguing that all of the variations which were not signed should be disallowed – rather they have paid, and do not question, some items, but object to paying others. The owners are thereby seeking to avail themselves of the provisions of the DBC Act where it suits them, but do not seek to do so where it does not suit them, and where they in reality wish to challenge the quantum of the charge for the item, not the making of the charge for the item in itself. 67 I do not consider that there would be any unfairness to the building owners in having to pay a proper amount for variations that they have requested, that they have the benefit of, and which have been properly completed, in all the circumstances.101 [118] The applicants say that the learned member erred in finding that it would not be unfair to them to be required to pay for the non-compliant variations. Their principal complaint is that, as the learned member erred in finding that Radic had established exceptional circumstances and unreasonable hardship, he could not go on to find as he did in relation to s 84(4)(b) of the DBC Act. 101 Ibid, [64] – [67]. -- 30 of 36 -- 31 [119] The applicants say that the findings by the learned member at reasons 64 and 67 were not relevant factors in considering whether unfairness was established and that the learned member engaged in speculation as to the applicants’ financial circumstances. [120] We accept that there was no direct evidence before the learned member as to the financial circumstances of the applicants. It is relevant however that the building project involved a luxury home of substantial proportions and particular specifications. It is also relevant that the contract price was in excess of two million dollars and that the contract was not subject to finance. The male applicant was a cosmetic surgeon operating a medical clinic. The applicants made a significant cash payment in the order of $160,000 to the builder for a non-compliant variation. These matters all pointed to the applicants’ financial standing. [121] There was no error by the learned member in taking into consideration that the applicants had requested the variation works. Whether variation works have been requested by a building owner is relevant in considering whether it would be unfair to permit recovery of an amount for the variation. It was also relevant for the learned member to take into consideration that the applicants had not disputed other non- compliant variations particularly in circumstances where the learned member found that the variations, the subject of the dispute, had been requested by the applicants. As we have observed, this finding is not challenged on appeal. [122] We find no error by the learned member. The liquidated damages claim [123] The learned member found: (a) The contract provided for a completion period of 420 days for the original contract works;102 (b) The period of 55 days allowed for in the contract for ‘calculable delays’ did not include delays as a result of variation works;103 (c) An additional period of 55 days should be allowed for variation works;104 (d) The adjusted completion date, allowing for delays, was 21 December 2015;105 (e) The applicants had no entitlement to claim liquidated damages.106 [124] The applicants say that the learned member erred in not allowing the liquidated damages claim and say that: (a) Radic did not make an application pursuant to s 18(6) of the DBC Act; (b) Radic did not satisfy the requirements of s 18(10) of the DBC Act. 102 Ibid, [13], [216]. 103 Ibid, [217]. 104 Ibid, [220] 105 Ibid. 106 Ibid, [222] – [223]. -- 31 of 36 -- 32 [125] The applicants’ written submissions raise a further ground of appeal: the learned member erred in failing to consider that an extension of time under the contract required the builder to adopt the process set out under the contract. [126] To the extent that it is necessary to do so, and in the absence of any objection by the respondent, we give leave for the applicants to amend their grounds of appeal to include the further ground. [127] The learned member observed that the matter concerned disputes as to variations and liquidated damages.107 He referred to the relevant contractual provision relating to liquidated damages.108 The learned member referred to the claim by the applicants for liquidated damages as articulated in their closing submissions.109 [128] It is apparent from the reasons that the learned member found 55 business days was an appropriate assessment in respect of the time required for the builder to undertake the variation works.110 That finding is not appealed. [129] The contract provided that if the builder failed to achieve practical completion by the date specified in the contract, the builder was required to pay the owners liquidated damages at the rate of $250 per day.111 The contract stated the completion period for calculating the date for practical completion.112 By clause 13 of the contract the builder was required to achieve practical completion by the date for practical completion or ‘any extended date under Condition 14 or under Condition 7.’113 [130] Condition 14 of the contract dealt with extensions of time of the date of practical completion. The contract provided that if the builder wished to claim an extension of time for practical completion, the builder was required to give to the owners a QBCC Form 2 with the particulars completed ‘or other written notice’. The notice was required to: (a) be given within 10 business days of the occurrence of the relevant cause of delay; (b) identify the cause of the delay; 107 Ibid, [23]. 108 Ibid, [15]. 109 Ibid, [21]. 110 Ibid, [219]. 111 QBCC New Home Construction Contract, dated 21 May 2014, cl 19, sch, item 12. 112 Ibid, sch, item 6. 113 Ibid, cl 13.1. -- 32 of 36 -- 33 (c) state the period of the extension of time claimed; (d) attach supporting documents.114 [131] The owners were required to respond to the claim within 10 business days of receipt by giving a written notice either accepting the claim or rejecting the claim, with reasons.115 [132] In their amended response the applicants said that Radic had failed to complete the building work within the time stipulated in the contract116 thus entitling them to recover liquidated damages.117 In its amended response and reply, Radic said that the time for practical completion had been extended by express agreement ‘and/or’ the (applicants) seeking additional work.118 [133] The learned member considered whether the unsigned variations, which he had allowed, should be given a time allowance.119 The learned member referred to the contract in determining that the contract provided for a period of 420 days for construction of the work from the commencement on 28 May 2014 which ended on 22 July 2015.120 The learned member found that Radic was seeking ‘a further 55 business days allowance for the unsigned variations.’121 The learned member allowed the additional 55 business days for the unsigned variations. [134] The applicants say that the learned member erred in not considering the relevant provisions of the contract and, if he had, the absence of compliance by Radic with the terms of the contract relating to extensions of time meant that the date for practical completion could not have been extended. In addition, the applicants rely upon s 18 of the DBC Act and say that Radic did not comply with the requirements of the Act. [135] Radic says that it is clear the learned member extended time under the statutory power conferred by the DBC Act and not under the contract. [136] It is not clear from the reasons the precise basis upon which the learned member undertook consideration of the applicant’s entitlement to liquidated damages. The 114 Ibid, cl 14.4. 115 Ibid, cl 14.5. 116 Amended response, dated 5 October 2016, [28]. 117 Ibid, [31]. 118 Amended response and reply, dated 17 October 2016, [1]. 119 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [214]. 120 Ibid, [215]. 121 Ibid, [219]. -- 33 of 36 -- 34 learned member does not refer in the reasons to the relevant contractual provisions or to s 18 of the DBC Act. [137] The evidence before the learned member was that the extension of time claim form stipulated by the contract was not provided by Radic to the applicants until 15 December 2015122 and was rejected by the applicants.123 It seems readily apparent that in failing to comply with the provisions of the contract relating to extending the date of practical completion, Radic could not, and did not, bring itself within the terms of the contract. Accordingly, insofar as the learned member relied upon the provisions of the contract in finding that the time for completion had been varied, any such finding was unsupported by the evidence and by a proper construction of the contract and was an error of law. [138] It is not contentious that the subject contract was varied and that Radic had not complied with a variation provision for the variation. Accordingly, s 18(6) of the DBC Act was enlivened.124 [139] Whether Radic had applied to the tribunal to adjust the completion date as required by s 18(6)(b) of the DBC Act was the subject of submissions at the appeal hearing. Mr Hitchcock for Radic submitted that the application was to be found in the amended Application for domestic building dispute filed 16 May 2016. The following relief was sought by the applicants in the amended Application: A. a Declaration authorising payment of variations 9-14 B. a Declaration as to the Contract Term and Contract completion date C. orders for payment of $58,927.63 D. interest E. costs [140] Mr Hitchcock submitted that the application to extend time pursuant to s 18 was the ‘request for the variation – for the declaration of the effective time of the contract’.125 Mr Hitchcock expanded upon this submission. Referring to paragraph 21 of the schedule accompanying the Amended application, Mr Hitchcock relied upon the Schedule to the amended Application and paragraph 21 thereof: The Applicant seeks a declaration as to the proper calculation of time under the contract. [141] Mr Hitchcock submitted that the ‘function of that request a declaration of the time period of the contract’126 was the application to extend time pursuant to s 18(6)(b) of the Act. [142] In our view, Radic’s submission cannot be accepted. This was a building dispute, of some legal and factual complexity, in which both parties were legally represented. 122 Statement of David Radic, dated 29 September 2016, [21]. 123 Ibid. 124 Piper v Hookham Constructions Pty Ltd [2015] QCATA 77. 125 Transcript of Proceedings, Colagrande & Ors v D A Radic Pty Ltd t/as David Radic Prestige Homes (QCAT APL081-18, Senior Member Brown, Member Olding, 16 November 2018), 41, lines 8-9. 126 Ibid, 42, lines 15-16. -- 34 of 36 -- 35 The issues in relation to variations and the date of practical completion were vigorously contested. Notwithstanding Radic’s submissions, the amended Application makes no reference to s 18 of the DBC Act. On no reasonable view of the Amended application is it apparent that there was an application by Radic pursuant to s 18(6)(b) of the DBC Act. We are not satisfied that there was any such application. [143] In the absence of an application by Radic pursuant to s 18(6)(b) of the Act, it was not open to the learned member to adjust the completion date. To the extent that the learned member relied upon s 18(6)(b) of the Act in finding that the date for practical completion was extended, there was an error in law. Conclusion [144] We have found errors of law by the learned member. [145] The orders sought by the applicants are to set aside the decision below and to substitute a decision in the following terms: (a) A declaration that the applicants are entitled to set off the amount of $13,000 against the final payment claimed by Radic being the liquidated damages pursuant to clause 19 of the contract; and (b) An order that the applicants pay to the respondents $12,250. [146] At the hearing of the appeal, Counsel for the applicants submitted that the correct figure in respect of the liquidated damages calculation was $18,000.00 and that the final order sought was that Radic pay the applicants $7,250.00. The calculations were not disputed by Radic’s solicitor. [147] If the determination of the questions of law decides the appeal entirely in the applicants’ favour, we may set aside the decision below and substitute our own decision. [148] There is no cross appeal by Radic. [149] We have concluded that it was not open to the learned member to approve the non- compliant variations. The learned member allowed $32,985.83 in respect of the non- compliant variations.127 [150] We have found that in the absence of a contractual entitlement to do so or an application by Radic in accordance with s 18(6)(b) of the DBC Act there was no basis to adjust the completion date. The learned member found that the date for practical completion pursuant to the contract was 22 July 2015.128 The learned member adjusted the date to take into consideration the agreed variations. The additional time allowed by the learned member for the agreed variations was from 22 July 2015 until 7 October 2015. [151] The finding by the learned member, that 55 additional days be permitted in respect of the agreed variations, and thus adjusting the date for practical completion to 7 October 2015 is not challenged. 127 D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112, [145]. 128 Ibid, [215]. -- 35 of 36 -- 36 [152] It is uncontentious that, in the absence of a finding that the date for practical completion was extended in respect of the non-compliant variations, the date for practical completion was 7 October 2015. It is also uncontentious that practical completion was achieved on 18 December 2015. The contract provided for the payment of liquidated damages at the rate of $250.00 per calendar day in the event the builder failed to achieve practical completion by the due date. [153] The delay in achieving practical completion was 72 calendar days. Undertaking the required arithmetical exercise the calculation of liquidated damages is $18,000.00. The learned member calculated the relevant period from 7 October 2015 to 18 December 2015 as being 52 business days. However the contract provides for the payment of liquidated damages calculated by reference to calendar days not business days. [154] The applicants are entitled to recover liquidated damages in the amount of $18,000.00. It is uncontentious that the applicants withheld the amount of $25,250 from the final progress payment. [155] We have found errors of law by the tribunal below. The determination of the appeal on the questions of law resolves the matter entirely in the applicants’ favour. The appeal is allowed and the decision below set aside. The applicants must pay to the respondent $7,250.00. We order accordingly. [156] We will make directions for the parties to file submissions on costs. -- 36 of 36 --