Avilake Pty Ltd v Tucker and Anor [2012] QCATA 211

CITATION: Avilake Pty Ltd v Tucker and Anor [2012] QCATA 211 PARTIES: Avilake Pty Ltd (Applicant/Appellant) v William Tucker Julie Jean Tucker (Respondents) APPLICATION NUMBER: APL032-12 MATTER TYPE: Appeals HEARING DATE: 13 August 2012 HEARD AT: Brisbane DECISION OF: Richard Oliver, Senior Member Sandra G Deane, Member DELIVERED ON: 19 October 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The Tribunal decision of 6 January 2012 dismissing the applicant’s claim is set aside. 2. Instead, it is ordered that the respondents pay to the applicant $24,562.00 plus interest of $8,324.25, by 4:00pm on 14 December 2012. 3. The applicant must file and give to the respondent any submissions of costs of the hearing in BD486-09, by 4:00pm on 31 October 2012. 4. The respondents must file and give to the applicant any submissions on costs in reply, by 4:00pm on 23 November 2012. 5. The application for costs will be determined on the papers without an oral hearing by the Member who conducted the hearing in BD486-09. 6. The applicant must file and give to the respondent any submissions of costs of the appeal in BD486-09, by 4:00pm on 31 October 2012 -- 1 of 7 -- 2 7. The respondents must file and give to the applicant any submissions on costs of the appeal, by 4:00pm on 23 November 2012. 8. The application for costs of the appeal will be determined on the papers without an oral hearing. CATCHWORDS: APPEAL – question of law – whether claim for damages for breach of contract was open – claim for interest on damages Queensland Civil and Administrative Tribunal Act 2009, ss 3, 28, 142, 146 Queensland Building Services Authority Act 1991, s 77(2)(c) Queensland Building Services Authority Regulation 2003, s 34B GO & MJT Nominees Pty Ltd v Hollywells Homewares Pty Ltd [2010] QCA 368 Ownit Homes Pty Ltd v Bachelor [1983] 2 Qd R 124 QLine Interiors Pty Ltd v Jezer Construction Group Pty Ltd & Ors [2002] QSC 088 Chelbrooke Homes Pty Ltd v Russell & Anor [2011] QCAT 278 APPEARANCES and REPRESENTATION (if any): APPLICANT: Avilake Pty Ltd represented by Mr Kym Flehr of Kym Flehr Legal Solutions RESPONDENT: William Tucker and Julie Jean Tucker (in person) REASONS FOR DECISION [1] Avilake Pty Ltd and Mr and Mrs Tucker entered into a written Queensland Master Builders Association contract on 23 November 2008 under which Avilake agreed to construct a new house for the Tuckers at Macleay Island. The contract price was $170,000.00 with a construction time of 250 days. In the usual way, the contract also provided for various stage payments during the course of the build. [2] Although there were some issues between the parties during the construction of the house, a serious dispute arose towards the end when Avilake gave the Tuckers a Practical Completion Notice on 29 July 2009 nominating 5 August 2009 as the date of practical completion under the -- 2 of 7 -- 3 contract. It also delivered an invoice for the final progress claim of $25,500.00. [3] The Tuckers disputed Avilake’s assertion that the house had reached the practical completion stage because a spa bath supplied by them had not been installed. Avilake admits not installing the spa bath but says it did not come with any specification to confirm it complied with the Building Code so both Avilake and the subcontractor plumber could not be satisfied that the house would get final certification. As a consequence of this the Tuckers did not accept the date for practical completion and did not pay the final invoice. [4] To deal with this issue, on 11 August 2009 Avilake withdrew the Notice and delivered a notice of breach and suspension of works contending that the Tuckers were in breach in failing to supply a spa bath that complied with the Building Code and Australian Standards. It gave them 10 days to remedy the breach. Alternatively, it gave the Tuckers an opportunity to take full responsibility for the installation of the spa bath, in writing, to ensure the builder was not responsible for any non compliance. [5] Correspondence between the solicitors for both parties continued with the Tuckers’ solicitors supplying a copy of the Australian Standard and a test conducted by SGS Australia Pty Ltd for “whirlpool baths and whirlpool spas.” [6] After an inspection of the house by the Tuckers on 15 September 2009 they gave Avilake a Notice of Intention to Terminate unless certain breaches were remedied. The breaches included unlawfully suspending the works, failing to complete the works, abandoning the works and failing to allow the Tuckers access to the property. These assertions were contested by Avilake and then on 29 September 2009 the Tuckers terminated the contract, changed the locks and took possession of the house on 3 October 2009. [7] Avilake rejected the Tuckers’ termination as lawful and regarded their conduct as a repudiation of their obligations under the contract and elected to terminate. Avilake also contended that, pursuant to the terms of the contract, by taking possession the works were deemed to have reached practical completion. [8] Avilake then commenced a proceeding in the Tribunal claiming the balance payable for the practical completion stage of $25,500.00 plus interest under the contract. [9] When the proceeding came on for hearing there were a number of issues raised by both parties requiring determination by the Tribunal. They included whether the respondents lawfully terminated the contract; whether the respondents were entitled to a refund of part of the monies paid under the preliminary contract; whether there was defective and incomplete building work and whether the applicant was entitled to the final stage payment. -- 3 of 7 -- 4 [10] On the 6th January 2012 the learned Member delivered reasons and dismissed both parties’ respective claims. Avilake’s claim for the balance of the money due under the contract was rejected because the claim was formulated as a claim for money due where in truth, the learned Member found, the claim was for damages for breach of contract which was not pleaded. [11] On the 10th February 2012 Avilake filed an application for leave to appeal or appeal. Avilake contends that it did formulate an alternate claim in damages and further the learned Member made an error of law in not assessing damages in circumstances where she found that the Tuckers were in breach and liable for Avilake’s loss. [12] As there is no cross appeal by the Tuckers the only issue in this appeal is whether the learned Member erred in not assessing damages if such a claim was in fact made by the applicant in the proceeding. [13] The reasons demonstrate that the reason the learned Member did not assess damages is because she considered that as Avilake’s claim for relief was money payable under the contract for the practical completion stage, and as it not had reached that stage either under the contract or under s 67 of the Domestic Building Contracts Act 2000, it was not entitled to payment and she could not then make an order in its favour. The applicant says that despite that conclusion, it had framed its claim in damages, in the alternative, and she should have, and was in a position to, assess damages for breach. In respect of its claim, the learned Member made an error of law in not concluding, despite the fact that she considered the claim, as formulated, was for money owing for the final stage, she should have, in the alternative, assessed damages for breach of contract where breach was found. [14] Avilake contends that in its original application it not only sought payment of an amount owing but also ticked the box to signify that that sum was also claimed as damages and/or interest. No amount was set out beside the item for damages and/or interest but ordinarily the amount claimed for damages will depend upon the evidence adduced at the hearing but obviously no evidence had been led at that time other than, in simple terms, there was $25,500.00 outstanding under the contract. [15] In response the Tuckers contend that as a claim for damages for breach of contract was not formulated by Avilake the learned Member was correct in not determining such a claim.1 The Tuckers also contend that although Avilake ticked the box on the application form Avilake did not set out an amount beside the item for damages and/or interest and that the hearing focussed on the amount payable under the contract. [16] There is no requirement for formal pleadings in either the previous Tribunal in which this proceeding was commenced or in this Tribunal. It is expected that the issues will be usually formulated in the application and 1 [188] of the Reasons. -- 4 of 7 -- 5 response and also to be discerned from the statements of evidence and directions made.2 The purpose of this is to ensure that the Tribunal is able to deal with matters in a way that is accessible, fair, just, economical, informal and quick3 and to act with as little formality and technicality as an enabling Act or the rules and a proper consideration of the case permit.4 This is particularly so where parties are self represented. However, pleadings do provide some advantage to ensure that the Tribunal and the parties are clear on what issues require determination. It would be contrary to the current practice of the Tribunal to dismiss a claim simply because the relief sought had not been precisely formulated or pleaded, here damages for breach of contract as opposed to money due under the contract. [17] Despite that, there was still sufficient indicia to alert the Tribunal to the issues in dispute. The Tribunal’s direction dated 21 September 2010 identified questions to be determined by the Tribunal which included “whether the Tuckers lawfully terminated the contract” and “the loss and damage that flows from the above determination”. This not only includes a claim for damages by the Tuckers if they lawfully terminated but also a claim for damages by Avilake if the Tuckers did not lawfully terminate. [18] In addition both parties led evidence in relation to the Tuckers’ purported termination and Avilake’s purported acceptance of that termination as a repudiation. Both parties made submissions in relation to termination and damages that flowed. The learned Member did not raise with the parties whether or not a claim for damages by Avilake was sought to be pursued or whether it only pursued a debt owing under the building contract. Had she done so we have no doubt that the applicant would have clarified its position and pressed the alternate claim. [19] The building contract provided for progress payments at various stages of the works. They were not dependent upon another party’s certification. In such circumstances where the contract is terminated the entitlement to progress payments merge in the right to recover damages.5 [20] Where there is a wrongful repudiation of a building contract the measure of damages has been held to be the difference between the contract price less any amounts for progress claims received and less the costs to complete the works and rectify any defective works.6 [21] In these circumstances a claim by Avilake for damages for breach of contract was in our view clearly an issue open for determination by the learned Member and in coming to the conclusion that it was not constituted an error of law. 2 GO & MJT Nominees Pty Ltd v Hollywells Homewares Pty Ltd [2010] QCA 368. 3 QCAT Act, s 3(b). 4 QCAT Act, s 28. 5 Ownit Homes Pty Ltd v Bachelor [1983] 2 Qd R 124. 6 QLine Interiors Pty Ltd v Jezer Construction Group Pty Ltd & Ors [2002] QSC 088 at [112]; Chelbrooke Homes Pty Ltd v Russell & Anor [2011] QCAT 278 – where liquidated damages were also deducted. -- 5 of 7 -- 6 [22] Leave to appeal is required on a question of fact or mixed fact and law.7 We find that the learned Member erred on a question of law and that leave is not therefore required. [23] In deciding an appeal on a question of law the appeal tribunal may confirm or amend the decision, set aside the decision and substitute its own decision, set aside the decision and return it to the Member who made the decision for reconsideration or make any other order it considers appropriate.8 [24] The learned Member found that the Tuckers did not lawfully terminate the contract and that Avilake was entitled to damages. There did not seem to be any dispute that Avilake was entitled to the final payment subject to any set off for compensation for the cost of any rectification work or cost to complete. [25] The Tuckers counterclaimed for various matters including defects and incomplete works. Those claims were dismissed by the learned Member. The Tuckers did not also seek to appeal the findings of the Tribunal. [26] Avilake concedes that there was a small amount of work required to complete the installation of the spa bath and consequently the vanity and other minor fit offs and quantified that as a maximum of $300 based upon the evidence of Mr Jones. [27] Avilake also concedes that there were a small quantity of defects and that the reasonable costs of rectification in the sum of $638 based upon the evidence of Mr Hawkins ought to be set off against the amount claimed. [28] In these circumstances we consider it appropriate to set aside the decision and to substitute our decision that Avilake is entitled to damages for breach of contract in the sum of $24,562, being the difference between the contract price less any amounts for progress claims received and less the costs to complete the works and rectify any defective works. [29] Avilake claims interest at the rate of 15% per annum calculated daily from the date of occupation (3 October 2009) until payment pursuant to clause 11.9 of the Contract and Item 19 of the Appendix. Clause 11.9 relevantly provides that if the Owner fails to make payment within the time for payment under the Contract the Builder is entitled to interest payable from the time for payment until the date of payment. [30] The damages award is not an amount payable under the Contract. [31] The Tribunal is vested with the jurisdiction to resolve building disputes by awarding damages and interest on the damages at the rate and calculated in a way prescribed under a regulation.9 The Queensland Building Services Authority Regulation 2003 provides that for the purposes of 7 QCAT Act, s 142(3)(b). 8 QCAT Act, s 146. 9 Queensland Building Services Authority Act 1991 (QBSA Act), s 77(2)(c). -- 6 of 7 -- 7 section 77(2)(c) of the QBSA Act interest is payable on the amount of damages awarded at the rate specified under the contract10 and is payable on and from the day after the day that the amount became payable until and including the day the amount is paid.11 [32] The right to damages for wrongful termination arose when the Tuckers repudiated the Contract by taking possession on 3 October 2009. The right to claim interest on damages therefore arose on and from 4 October 2009 at the rate of 15% per annum calculated daily until and including the day the amount is paid. [33] The awarding of interest is in the Tribunal’s discretion. If the learned Member had not erred interest would likely have been payable up to 6 January 2012. It follows that we should allow interest on and from 4 October 2009 until 6 January 2012, on our calculation a period of 825 days. At the rate of 15% per annum or $10.09 per day this equates to $8,324.25. [34] Avilake also applied for costs. That decision is best made by the Member who conducted the hearing having regard to our decision and the matters set out in Division 6 of the QCAT Act. Another factor for consideration by the Member is, as we were informed during the hearing of the appeal, certain offers of settlement had been made which may also be relevant to the award of costs. In those circumstances it is appropriate to return the question of costs to the learned Member. We will make directions about the delivery of submissions as to costs. [35] The decision of the Appeal Tribunal is that the appeal is allowed and the Tribunal’s decision of 6 January 2012 is set aside and instead there will be an order that the respondents pay to the applicants the sum of $32,886.25 by 14 December 2012. 10 Section 34B(1)(a). 11 Section 34B(2). -- 7 of 7 --