Barragan v Queensland Building and Construction Commission [2025] QCAT 338

Queensland Civil and Administrative Tribunal Act 2009 (Qld)

• [1] The Applicant, Omar Barragan, seeks a review of the decision of the Queensland Building and Construction Commission ('the Commission') dated 6 October 2022 to wholly disallow his claim for non-completion of building work under the statutory warranty scheme ('the Scheme') on the basis that the building contract had not been validly terminated. Essentially, the claim is for a refund of the deposit.
• [2] Where a Non-Completion Claim is lodged for works not commenced, a consumer is entitled to claim assistance under section 5(2) of Schedule 6 of the Queensland Building and Construction Commission Regulation 2018 (Qld) ('QBCC Regs') for refund of the insurable deposit of the Contract that is not otherwise refunded to the consumer under the Contract.
• [3] The Contractor, DC Living Pty Ltd ('the Contractor'), was joined as a party pursuant to a direction of the Tribunal on 12 May 2023 but has not filed any material in accordance with that direction or subsequent directions. I was informed from the bar table that it is in liquidation and that no appearance was expected.

• [4] On 1 April 2022, Mr Barragan entered into a QBCC New Home Construction Contract[1] ('the Contract') with the Contractor to construct a home at Oxley Terrace, Corinda. The contract price was $557,159.00 (including GST). The starting date was 60 days after signing of Contract namely, 30 May 2021.[2]
• [5] Whilst the Contract required a 5% deposit ($27,875.95) upon its execution, the Applicant says that it was agreed by both parties that partial payments would be allowed to continue the works of the contract. Payments were made by the Applicant as follows:

(a) $8,000.00 on about 10 April 2021 for "initial deposit";

(b) $1,800.00 on or about 8 March 2022 for "contract fee claim";

(c) $7,300.00 on or about 26 April 2022 for "insurance & Costs claim".

• [6] On 27 April 2022, the Contractor lodged the Building Approval, Plumbing and Build Over Sewer applications with the certifier.
• [7] On 3 June 2022, Urban Utilities approved the Build Over Sewer application.
• [8] On 14 July 2022, the Building Approval was received by the certifier.
• [9] On or about 19 July 2022, the Contractor issued Variation DD1 'Notice - Delay Damages' to the Applicant in the amount of $56,858.00 ('Delay Damages Notice').
• [10] On or about 22 July 2022, the parties had a meeting, however an agreement was unable to be reached with respect to the request for payment of the Delay Damages Notice.
• [11] On 25 July 2022, the Contractor sent an email to the Applicant advising that the Contractor chooses to end the Contract pursuant to Clause 2.5(a) of the Contract.
• [12] On 23 August 2022, the Applicant lodged a Non-Completion Claim Residential Construction Work Claim Form with the Commission in respect of incomplete work at the Property ('Claim').
• [13] On 6 October 2022, the Commission advised the Applicant and the Contractor of its decision to wholly disallow the claim under the statutory insurance scheme on the basis that the delayed payment of the deposit amount caused the delay of obtaining Building Approval and subsequently delayed the anticipated start date of the works.
• [14] On 10 November 2022, the Applicant sought an internal review of the Decision, however, the internal review was rejected as the Commission failed to review it within time.
• [15] On 24 November 2022, the Applicant filed this application to review.

• [16] The Commission submitted in the decision under review that it could not be satisfied that the Contract ended because of the default of the builder. It found that the work had not commenced at the Property as the Applicant had only partly paid the deposit and therefore, was in breach of the Contract.
• [17] A claim under section 5(2) of Schedule 6 of the QBCC Regs requires the following to be satisfied:

(a) the claimant is a "consumer";

(b) the relevant work was to be carried out under a "fixed price residential contract";

(c) the work under that contract has not commenced; and

(d) the contract ends within 2 years after the contract was entered into.

• [18] The matters (a), (b) and (c) are conceded as satisfied by the Commission.
• [19] Section 4 of the QBCC Regs defines the circumstance as to when a contract ends. The only relevant circumstance here is that it ends when the contract is validly terminated on default of the builder.[3]
• [20] The Commission relies upon Clause 4.2 of the General Conditions of the Contract which required the Applicant to pay the deposit when signing the Contract.
• [21] As appears earlier in these reasons the Applicant paid the deposit in various instalments and at the time the Contract came to an end he had not paid the full amount of the deposit. Consequently, the Commission considered that the Applicant was in breach of the Contract.
• [22] The Contract was purportedly terminated by the Builder in the following circumstances:

(a) On 27 April 2022, the Contractor lodged the Building Approval, Plumbing and Build Over Sewer applications with the certifier.

(b) On 3 June 2022, Urban Utilities approved the Build Over Sewer application.

(c) On 14 July 2022, the Building Approval was received by the certifier.

(d) On or about 19 July 2022, the Contractor issued the Delay Damages Notice to the Applicant. The Notice noted that the construction could not commence by the anticipated start date due to "unforeseen circumstances" (including material, logistics and labour), and sought a price increase and change to the start of the anticipated start date. The variation referred to Clause 15 of the Contract and noted that the Applicant had 5 working days from the date of the variation to agree to the request for delay damages, and further, if an agreement could not be reached, the Contractor may exercise their rights and terminate the Contract in accordance with Clause 2.2.

(e) The anticipated start date was 31 May 2022 (being 60 days from the date of the Contract).

(f) On or about 22 July 2022, the parties had a meeting, however an agreement was unable to be reached with respect to request for payment of the Delay Damages Notice.

(g) On 25 July 2022, the Contractor sent the Contractor's Termination to the Applicant advising, noting that the Contractor chooses to end the Contract pursuant to Clause 2.5(a).

(h) Clause 2.5(a) of the Contract provides that if the necessary planning approval and/or building approval permits are not obtained by the anticipated start date, then if neither party is at fault, either party may bring the Contract to an end by giving notice in writing to the other party.

(i) Accordingly, the Commission was satisfied that the Contractor had validity terminated the Contract (by the issuing of the Contractor's Notice).

• [23] The Applicant disputes the circumstances whereby the Builder was entitled to terminate the Contract and submits that the cause for the delay was due to oversights by the Builder in failing to get building approvals
• [24] The Applicant says he was pressured into signing the Contract on 30 March 2021 to avoid a new price increase. The Applicant had already experienced significant increases in the proposed building cost during the tender process.
• [25] On 30 March 2022 the Applicant emailed the Builder requesting an extension of the anticipated start date in the Contract from 60 days to 90 days as he felt that there was not sufficient contingency within the 60 days to obtain all approvals.[4]
• [26] Although, the Applicant's concern was twofold as he was waiting on approval from his bank as well as the Council additionally he had concerns as to the ability of the Builder to manage the process.
• [27] It is clear from the material that the Builder acquiesced in the payment of the deposit by instalments and as such it waived that requirement of the Contract. I note that Special Condition 7 of the Contract provided that:

7.0 IN THE INSTANCE THE CLIENT DOES NOT PAY THE BALANCE OF THE 5% DEPOSIT OR THE QBCC INSURANCE PREMIUM WITHIN 10 DAYS OF THE CONTRACT BEING SIGNED THE CONTRACT CAN BE VOIDED.

• [28] At no time did the Builder voice concern or take any action under Condition 7 to void the Contract.
• [29] The Builder invoiced the Applicant for $7,300.00 for QBCC insurance and Costs Claim. See receipt dated 26 April 2022.[5]
• [30] Other individual claims for payment by the Builder which were met by the Applicant were for Contract fees of $1,800.00 and the initial deposit of $8,000.00.
• [31] The Applicant was anxious to have building commenced and gave every impression of meeting all reasonable requests for payment of the remainder of the deposit.

• [32] Under the Contract the Builder was responsible for all building approvals.[6] The Builder lodged all building approvals with the certifier on 27 April 2021.
• [33] The Brisbane City Council issued its planning approval on 3 May 2021.
• [34] Subsequent variations to the Contract to rectify design mistakes and oversights were agreed as follows:

(a) Variation 3 hot water system change from electrical to Gas due to BCC requirements on 11 May 2021 for $3,027.00;[7]

(b) Variation 3 air conditioning design change on 20 May 2021 for $1,145.00;[8]

(c) Variation 4 Carport construction including a raft slab to suit revised build over sewer - 23 May 2021.[9]

• [35] The Applicant says that the first two matters were not an issue and caused no delay.[10] That appears to be the case.
• [36] The major variation was Variation 4 which resulted from the Builder's engineers advising that the carport slab would not work over the sewer line.[11] However, Queensland Urban Utilities ('QUU') did not require it to be redesigned and had approved the original design on 3 June 2022. Nevertheless, the engineers redesigned or changed the methodology of constructing the slab. That required a new approval from the QUU. Mr Beitz who was the Builder's Client Service Officer at the time could not explain why a further approval was necessary.[12]
• [37] The approval of 3 June 2021 was communicated to the Builder on 6 June 2022, but the Applicant alleges that this was not communicated to him and the Builder did not lodge a new application until 21 June 2021.
• [38] Building approval was obtained on 14 July 2022. The Builder gave a notice dated 19 July 2022 claiming delay damages. The Notice was not served until 21 July 2022.
• [39] The Commission argues that the Builder cannot be held responsible for the engineer for the change in design. The engineer was retained by the Builder as part of the Builder's responsibilities under the Contract to obtain all building approvals. Hence it is liable for delays caused by the engineer's change of plans. It is surprising that Mr Beitz believed that delays on Building and BOS approvals deliverables were the responsibility of the builder.[13]
• [40] The delay in the anticipated start date was because of the action or inaction of the Builder in obtaining approvals, something that had concerned the Applicant back at the time he was being encouraged to sign the Contract.
• [41] It is patently clear from the evidence including Mr Beitz's evidence that because of the cost pressures being experienced by the building industry at the time the Builder was not interested in continuing with the Contract. On the other hand, the Applicant wanted to resolve the problem by modifying the project.
• [42] I am also satisfied that the delay was caused by the Builder who did not comply with his obligations under Clause 2.3 of the Contract and did not take all reasonable steps to obtain the approvals required.
• [43] Clause 15 of the Contract provided:

Where commencement is delayed for longer than four weeks on and after the anticipated start date due to a cause of delay for which the builder is not responsible, the owner must pay to the builder, as a debt due and payable, the higher of the amount:

(a) of the reasonable costs incurred by the building because of the delay; and

(b) representing 0.125% of the contract price for each week or part of a week of the delay after the first four weeks of the delay.

• [44] The Builder gave Notice of Delay Damages on 19 July 2022 (emailed on 21 July 2022) claiming the amount of $56,858.00.[14] The basis upon which it was determined is unknown even to Mr Beitz.[15]
• [45] A meeting was held between the parties on 22 July 2022. The meeting was with David Beitz. The Applicant says that they were unable to explain why the cost of the house was increased by 10% other than they would not build the house for free.[16] The applicant wanted to find solutions to bring the house back to budget. The Applicant left the meeting on the understanding that he wanted to think about it. I accept that was the case.[17] That was a Friday, and he received the cancellation of the Contract the following Monday. The Applicant, at that time, had not rejected the variation and was within the five days allowed for him to consider the variation.[18]
• [46] The Notice gave the Applicant five days to respond. The Builder was premature in acting upon the Notice (as it was served by email on 21 July 2022).
• [47] It follows that the decision of the Commission that the Applicant was in breach of the Contract was wrong. I find that the basis for issuing the Delay Damages Notice was not justified and, even if it was justified, the Applicant had been given insufficient notice to comply with it. Consequently, the Builder had wrongfully terminated the Contract. As the time for performance had not arrived (as the time for compliance with the Notice had not expired) it was not necessary that the Applicant be able to show a readiness and willingness to perform.[19]
• [48] I find that the Contract was terminated on default of the Builder and in those circumstances the Applicant is entitled to claim assistance for the amount of the insurable deposit.
• [49] I make the following orders:

(a) That the decision of the Queensland Building and Construction Commission dated 6 October 2022 to disallow Omar Barragan's claim under the Statutory Home Warranty Insurance Scheme be set aside.

(b) That Omar Barragan's claim under the Statutory Home Warranty Insurance Scheme be allowed.

[3] QBCC Regs sch 6 s 4(1)(a).

[4] Hearing Book 822 email to builder dated 23 March 2022.

[11] Hearing Book email dated 23 May 2022 David Beitz to Applicant.

[17] Hearing Book 136 email dated 28 July 2022.

[19] J.W. Carter, Breach of Contract (Sydney: Law Book Co. Ltd, 1984) paragraph 371.