C & E Pty Ltd v CMC Brisbane Pty Ltd (Administrators Appointed) [2004] QCA 60 [2004] 2 Qd R 244

SUPREME COURT OF QUEENSLAND CITATION: C & E P/L v CMC Brisbane P/L (Administrators Appointed) [2004] QCA 60 PARTIES: C & E PTY LTD ACN 086 482 840 (applicant/appellant) v CMC BRISBANE PTY LTD (ADMINISTRATORS APPOINTED) ACN 069 532 967 (respondent/respondent) FILE NO/S: Appeal No 9562 of 2003 SC No 6944 of 2003 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 12 March 2004 DELIVERED AT: Brisbane HEARING DATE: 1 March 2004 JUDGES: McMurdo P, McPherson JA and White J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. Allow the appeal 2. Set aside the order made at first instance and instead declare that the building contract dated 21 September 2001 entered into between the appellant as proprietor and the respondent as contractor is a regulated contract under the Domestic Building Contracts Act 2000 (Qld) 3. The respondent is to pay the appellant’s costs of and incidental to the application and of the appeal to be assessed CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – OTHER MATTERS – where contract for construction of 10 separate houses – whether regulated contract under the Domestic Building Contracts Act 2000 (Qld) STATUTES – ACTS OF PARLIAMENT – INTERPRETATION ACTS AND CLAUSES – PARTICULAR ACTS AND ORDINANCES – QUEENSLAND – whether words "a detached dwelling" in the Domestic Building Contracts Act 2000 (Qld), s 7, should -- 1 of 7 -- 2 be read as including the plural, there being no sufficient indication to the contrary for the purposes of the Acts Interpretation Act 1954 (Qld), s 32C. Acts Interpretation Act 1954 (Qld), s 4, s 14B, s 32C Domestic Building Contracts Act 2000 (Qld), s 3, s 7, s 8 Queensland Building Services Authority Act 1991 (Qld) COUNSEL: R M Kelly for the appellant P W Hackett for the respondent SOLICITORS: Lees Marshall Warnick for the appellant Crouch & Lyndon for the respondent [1] McMURDO P: The appellant entered into a contract on 21 September 2001 with the respondent, a builder, to build ten houses at 53 Paragon Street, Yeronga, with associated road works, services and landscaping for a total sum of $4,040,000 plus GST. Each of the ten houses is separately classified under the Building Code; separately insured for $402,000; designed as a separate residence; is on land with a separate certificate of title and will be offered for sale separately. Work on the project began in October 2001 and a notice of practical completion issued on 21 February 2003. Disputes arose between the parties under the contract and the appellant applied to the Supreme Court for a declaration that the contract is a "regulated contract" under the Domestic Building Contracts Act 2000 (Qld) ("the Act"). This appeal is from the learned primary judge's refusal to make that declaration, dismissing the application with costs to be assessed. The scheme of the Act [2] The purpose of the Act in regulating domestic building contracts is to achieve a reasonable balance between the interests of building contractors and building owners1 and to maintain appropriate standards of conduct in the building industry.2 [3] The Act makes specific provision as to regulated contracts,3 including that implied warranties in regulated contracts run with the building and are passed on to subsequent home purchasers for six years and six months after the work is finished or the stated completion date of the subject work.4 The term "regulated contract" is defined as a "domestic building contract" for which the contract price is more than the regulated amount, $3,300.5 [4] Section 7(1) of the Act relevantly provides: "A 'domestic building contract' is a contract – (a) to carry out domestic building work; …" [5] The meaning of "domestic building work" is given in s 8 of the Act: "(1) Each of the following is 'domestic building work' – (a) the erection or construction of a detached dwelling; … 1 The Act, s 3(a). 2 Above, s 3(b). 3 Above, Pt 3, Div 1 (Form and Content); Div 2 (Details About Delays Affecting Time Estimates), Pt 5 (Statutory Restrictions). 4 Above, Pt 4 (Implied Warranties), esp ss 49-51. 5 Above, sch 2, definition "regulated amount". -- 2 of 7 -- 3 (3) 'Domestic building work' includes – (a) work ('associated work') associated with the erection, construction, removal or resiting of a detached dwelling; …" [6] The term "detached dwelling" is defined as: "(a) a single detached dwelling; or (b) a duplex."6 The learned primary judge's decision [7] The learned primary judge observed that the ordinary natural meaning of the expression "domestic building contract" would lead to the conclusion that this agreement was such a contract. On the other hand, the construction of ten houses under the contract was a development for more than a single detached dwelling or duplex; the use of the singular in the definition of "detached dwelling" suggested that as this contract was not to construct a single detached dwelling, it may not be a "domestic building contract" as defined. His Honour was assisted by the Explanatory Notes to the Bill preceding the Act,7 which referred to helping "consumers avoid pitfalls in procuring building services". This did not suggest the Act was intended to apply to building contracts on this scale. His Honour determined that the Explanatory Notes had the effect of excluding from application to the definition of "detached dwelling" s 32C of the Acts Interpretation Act 1954 (Qld), (that words in statutes in the singular include the plural). Reading the Act as a whole and bearing in mind the Explanatory Notes, his Honour concluded that the contract entered into by the parties was not for "domestic building work", (construction of a single detached dwelling or duplex); it was not a "domestic building contract" or a "regulated contract" under the Act. Grounds of appeal [8] The appellant's submission is that s 32C Acts Interpretation Act 1954 (Qld) is not displaced by any contrary intention in the Act and that, in any case, the use of "Each" in s 8(1) of the Act means that the construction of each of the houses constitutes domestic building work8 so that the contract is a "domestic building contract"9 for each of the ten houses and a regulated contract as defined in the Act.10 (a) The application of s 32C Acts Interpretation Act 1954 (Qld) [9] The purpose of the Act11 makes clear that protection of building owners is a significant consideration of the legislature in passing the Act. An important consumer protection provision under the Act is that a person who is the owner for the time being of the building, but not necessarily the first owner, has the same protection of the implied warranties under the Act as the original owner who contracted with the builder, for six years and six months after the work is finished or stated to be finished.12 [10] The Explanatory Notes to the Bill which preceded the Act provide: 6 Above, sch 2. 7 By way of s 14B, Acts Interpretation Act 1954. 8 The Act, s 8. 9 Above, s 7(1). 10 Above, Sch 2. 11 Above, s 3 and see [2] of these Reasons. 12 Above, Pt 4 (Implied Warranties), esp ss 49-51. -- 3 of 7 -- 4 "Objective of the legislation The legislation is designed to help consumers avoid pitfalls in procuring building services. For most consumers, signing a large building contract for a new home, extensions or renovations will be something experienced once or twice in a lifetime. For building contractors, it is an everyday occurrence. This disparity in knowledge and understanding of contractual principles between the parties frequently disadvantages consumers. This Bill seeks to address these market inequalities by – • requiring building contractors to obtain and provide all necessary information about the building work and domestic building contracts generally; • mandating fair standard contractual provisions; • implying standard warranties into all domestic building contracts regulated by the Bill; • outlawing and/or voiding unconscionable contractual provisions; and • providing a cooling-off period during which a consumer may withdraw from a domestic building contract without significant penalty.13 Reasons for the Bill The Bill arises from a process of review of existing building industry regulatory arrangements that has been ongoing for some years. It achieves specific results for consumers in legislative implementation of the outcomes of this review process. Hitherto, regulation of domestic building contracts has formed part of the Queensland Building Services Authority Act 1991 ('the existing Act'). This location emphasised the role of the Queensland Building Services Authority ('QBSA') as industry regulator and in enforcement of consumer rights. This Bill, however, appropriately enshrines consumer rights as distinct and enforceable apart from the role played by the QBSA. The Bill- • removes regulation of domestic building contracts to a discrete legislative environment; … • defines domestic building contracts subject to this Bill ('regulated contracts') as being those over $3,000 in value for the construction of single detached dwellings or duplexes … • sets out the mandatory elements of regulated contracts; • sets out contractual and related documents that the building contractor must give to the consumer and defines when they must be given; • defines implied warranties for all regulated contracts; • … ." (my emphasis) 13 The learned primary judge relied on this portion of the Explanatory Notes. -- 4 of 7 -- 5 [11] The Act and the Explanatory Notes read together suggest the legislature intended to protect not only consumers contracting to build a single detached house or duplex with a builder, but also that the implied warranties14 in a regulated contract run with the building and are passed on to subsequent home purchasers for a limited time. The interpretation given by the learned primary judge would have the effect that a purchaser of one of the appellant's new detached houses built by the respondent would not have the benefit of those implied warranties. Although there is ambiguity and a rational argument to support either view, it is more likely that the legislative intent imputed from a reading of the Act and its Explanatory Notes is that the operation of s 32C of the Acts Interpretation Act 1954 (Qld) was not excluded and the contract is a "domestic building contract" and a "regulated contract" under the Act. (b) Section 8 of the Act [12] The second limb of the appellant's argument is also persuasive. The use of the singular in s 8(1)(a) of the Act and in the definition of "detached dwelling"15 follows from the use of "Each" in s 8(1) of the Act. This use of the singular does not necessarily demonstrate an intention to exclude from the consumer-protecting umbrella of the Act contracts for the erection or construction of more than one detached dwelling. Here, the construction of each detached dwelling was "domestic building work" and the contract insofar as it concerned the construction of each house was a "domestic building contract" and, hence, a "regulated contract" within the meaning of the Act. In any case, the operation of s 32C of the Acts Interpretation Act 1954 (Qld) puts the matter beyond doubt. Orders [13] I would allow the appeal, set aside the order made at first instance and instead declare that the building contract dated 21 September 2001 entered into between the appellant as proprietor and the respondent as contractor is a regulated contract under the Domestic Building Contracts Act 2000 (Qld). The respondent is to pay the appellant's costs of and incidental to the application and of the appeal to be assessed. [14] McPHERSON JA: The relevant statutory provisions, principally ss 7 and 8 of the Domestic Building Contracts Act 2000, are set out in the reasons of the President, which I have had the advantage of reading. Considering ss 7 and 8 in conjunction, the question for determination here is whether the building contract between the appellant building owner and the respondent building contractor is a contract to carry out the construction of “a detached dwelling”. If it is, then because the contract price is admittedly for more than $3,300 it is a regulated contract in terms of s 9(1) to which various other provisions of the Act, implying statutory warranties and the like, apply. [15] In a general way, it may be said that the primary object of the Act (which is not the first legislative attempt of its kind) is to provide “consumer protection” for a person contracting to have a house constructed by a builder. Viewed in that light, the Act might perhaps be expected to be concerned with a contract for the construction of a single house. The problem which has arisen here is that the 14 See fn 4 and cf Bryan v Maloney (1995) 182 CLR 609. 15 Above, Sch 2. -- 5 of 7 -- 6 parties’ contract provided for construction by the builder not of only one house but of 10 houses each on a separate registered allotment in Paragon Street, Yeronga, for a total price of a little over $4 million. [16] Is this a contract for the construction of “a detached dwelling”? Stating the question in that form suggests it is not. There are 10 houses, not one, to be built under the contract. But this is to leave out of account the operation of s 32C of the Acts Interpretation Act 1954 which, in a form that is familiar, provides that in any Act “words in the singular include the plural”. Why, then, should the provisions of ss 7 and 8 of the Domestic Building Contracts Act not be read as including a contract like this to carry out construction of a number of “detached dwellings”? [17] The presumption of plurality, if it may be called that, created by s 32C of the Acts Interpretation Act is, however, subject to s 4 of that Act, which states that the application of the Act, “may be displaced, wholly or partly, by a contrary intention appearing in any Act”. This initiates a search for the appearance of such a contrary intention in the Domestic Building Contracts Act. The learned primary judge thought that some hint of such an intention might perhaps be found in Schedule 2 of that Act, where the expression “detached dwelling”, is defined to mean: “(a) a single detached dwelling; or (b) a duplex.” His Honour remarked that, had the construction contended for by the appellant been intended, it might have been better achieved by expressing it as a “detached single dwelling” rather than a “single detached dwelling”. [18] Whether or not that is so, it is, I think, plain that the definition in question was adopted in order to include not only a single dwelling that is detached but also a duplex. Presumably another intention in, or effect of, adopting that definition is to exclude what counsel in argument described as a “triplex”, or a row of terrace houses such as one sometimes sees in Brisbane and more commonly in Sydney. The word “duplex” is, I suspect, a comparatively recent importation from the United States, an impression which receives some support from the entry for the word in the Macquarie dictionary. According to Webster’s, it is used in America to denote a house with two apartments, which is the sense in which it is used in the definition in Schedule 2. In England, and in the South Africa of my youth, such houses were commonly referred to as “semi-detached” as combining two residences or dwellings under one roof which were divided in the middle by a vertical party wall. The Schedule 2 definition was evidently designed to label such buildings as “detached” for the purposes of ss 7 and 8 of the Act, even though they might sometimes be spoken of as semi-detached. [19] I doubt, therefore, if the point of distinction suggested by the learned judge in reference to “single detached” and “detached single” dwellings helps to reveal a contrary intention of the kind being sought in this Act. His Honour also found support for his interpretation in the Explanatory Notes accompanying the Bill in Parliament. The President in her reasons shows that those Notes are susceptible of a conclusion opposite to that reached by his Honour. Her Honour gives a cogent reason for saying that, if the primary judge’s preference for what may be called the -- 6 of 7 -- 7 “singular” interpretation is valid, it would deprive subsequent purchasers from the appellant of any of the 10 single dwellings that were built here of the statutory warranties, implied in favour of the building owner by ss 45 and 46, that are extended to subsequent owners by s 49 of the Act. For my part, I do not think that, in this respect, more is to be gathered from the Explanatory Memorandum than is already to be found in the Act itself. To my mind, the language contained in the former is a mixture of “nuspeak” and what are sometimes denigrated as “motherhood” statements, which tend to obscure rather than illuminate the more precise provisions of the Act itself. [20] In any event, I am not persuaded that in determining whether the application of s 32C of the Acts Interpretation Act is displaced by a contrary intention satisfying s 4, it is legitimate to resort to an explanatory note of the kind identified in s 14B(3)(e) of the Act. Section 4 enables the presumption created by s 32C to be displaced by a contrary intention “appearing in any Act”; and the Explanatory Notes are a form of extrinsic material which do not themselves appear in the Domestic Building Contracts Act. The warranties implied by ss 45 and 46 and extended by s 49 of the Act do, however, appear “in” that Act, and may therefore be used in the search for such an intention and ultimately for the conclusion that it is absent. [21] In the end, however, the question is not whether the Domestic Building Contracts Act discloses an intention that the statutory presumption of plurality, as I have called it, under s 32C of the Acts Interpretation Act does apply, but whether there is anything to the contrary in the Domestic Building Contracts Act that shows that it does not. I can find nothing in the Act that demonstrates an intention to displace the interpretative presumption created by s 32C. Reference to the texts by Professor Pearce and Mr Bennion, and the authorities they both discuss, suggests that provisions corresponding to s 32C have not always been enthusiastically applied by the courts. But the statutes considered in those decisions vary so widely in context and content from the relevant provisions of the Domestic Building Contracts Act that there is little to be gained from them in deciding this case. As those learned authors' comments imply, no really useful general principle emerges from judicial statements in the authorities on this subject. [22] That being so, and there being no identifiable appearance of a contrary intention in the Act, it follows that s 32C continues to occupy the field; and therefore that, the words “detached dwelling” in s 8(1) of the Act are to be interpreted as including the plural “detached dwellings”. Everything else follows from that, including the conclusion that the appeal should be allowed. [23] I agree with the orders proposed by the President. [24] WHITE J: I have read the reasons for decision of the President and McPherson JA and agree with them that nothing in the Domestic Building Contracts Act 2000 displaces the operation of s 32C of the Acts Interpretation Act 1954. [25] I agree with the orders proposed by the President. -- 7 of 7 --