Clarke v Queensland Building and Construction Commission [2020] QCAT 88

N Glen, Senior Lawyer, Queensland Building and Construction Commission

[1] Latitude Construction Consulting Pty Ltd ('the builder') carried out domestic building work for the applicant, Mr Clarke. The work mainly involved constructing a new house at the rear of Mr Clarke's land as well as some work related to an existing house on the land.

[2] Mr Clarke alleges the builder failed to complete three other agreed items of work relating to the existing dwelling ('the disputed works'). The builder says their contractual arrangements did not require the disputed items to be undertaken.

[3] Mr Clarke asked the Queensland Building and Construction Commission ('the Commission') to issue a direction to rectify to the builder requiring the builder to complete the work. The Commission declined to issue the direction.

[4] The Commission confirmed that decision on internal review. Mr Clarke has applied to the Tribunal for review of the internal review decision.[1]

[5] The power to direct a person who carried out building work to rectify the work is found in s 72 of the Queensland Building and Construction Commission Act 1991 (Qld) ('QBCC Act') which in accordance with s 72(1) relevantly applies if the Commission, and thus the Tribunal on review, is of the opinion that the building work is 'incomplete'.

[6] There is no definition of 'incomplete' for this purpose, but since the disputed works were not commenced it is not in dispute that, if they were required to be undertaken, the works were incomplete.

[7] Where s 72 applies because, so far as this matter is concerned, works are incomplete, the Commission 'may' direct the person who carried out the building work to rectify the work: s 72(2).

[8] There were various 'contracts' in evidence. The difficulty is that none of the 'contracts' were signed by the builder.

[9] Mr Clarke says that one of them, which includes in his handwriting a reference to the disputed works, reflects his agreement with the builder. The builder's representative, Mr Quinlivan, says that he has never seen this 'contract' with the handwritten addition of the disputed works added. He maintains that, because he did not sign any of the contracts, there was no written contract, but rather an oral contract the terms of which were ultimately limited to carrying out work in detailed plans relating to the new house. Mr Clarke says this is not credible evidence because in fact the builder did carry out other work relating to the existing house.

[10] The parties approached the matter on the basis that the Tribunal could determine what were the contractual arrangements between Mr Clarke and the builder. The Commission submitted that the builder's version should be preferred and on that basis it could not be said that the works were incomplete as the builder had not contracted to carry out the disputed works. Mr Clarke submitted that his account should be accepted and since the disputed works were not carried out a direction to rectify should be issued.

[11] At the hearing, I noted that s 14(2) of Schedule 1B to the QBCC Act states, in respect of a level 2 regulated contract,[2] that:

The contract must be in written form, dated and signed by or on behalf of each of the parties to it.

[12] I invited the parties to make submissions regarding the impact of this. Mr Clarke did not address the issue. In written closing submissions filed after the hearing in accordance with a direction of the Tribunal, the Commission submitted that the fact that the 'contract' did not comply with s 14(2) did not make it void or unenforceable.

[13] The Commission referred to Schedule 1B, s 44 of the QBCC Act which states:

Unless the contrary intention appears in this Act, a failure by a building contractor to comply with a requirement of this Act in relation to a domestic building contract does not make the contract illegal, void or unenforceable.

[14] On this basis, the Commission submitted that s 14(2) does not make the contract void or unenforceable and the Tribunal could determine the scope of the contractual agreement between the parties.

[15] However, s 44 is subject to the contrary intention appearing in the Act. In that regard, s 14(10) of Schedule 1B states:

The contract only has effect if it complies with subsection (2).

[16] In my view, that is an unequivocal expression of an intention that is contrary to the general principle in s 44. A contract that is does not have effect is of no effect and therefore 'void or unenforceable'. Thus the general rule in s 44 is displaced by this specific rule that level 2 regulated contracts are only of effect if in writing, signed by or on behalf of both parties and dated.

[17] I therefore conclude that any 'contract' between Mr Clarke and the builder is of no effect. It follows that I cannot turn to a contract to determine whether the disputed works were incomplete.

[18] When deciding whether to give a direction, the Commission, and therefore the Tribunal on review, is not limited to consideration of the contract. Section 72(3) states:

In deciding whether to give the direction, the commission may take into consideration all of the circumstances it considers are reasonably relevant and, in particular, is not limited to a consideration of the terms of the contract for carrying out the building work (including the terms of any warranties included in the contract).

[19] I doubt that the particular application of the general rule in s 72(3) encapsulated in the statement that the Commission 'is not limited to a consideration of the terms of the contract' contemplates consideration of what would have been a contract but for a purported contract being void and of no effect. As the word 'contract' in that part of the subsection is preceded by the definite article, the more natural reading is that it contemplates that where there is such a contract the Commission is not limited to consideration of the terms of the contract.

[20] Nevertheless, under s 72(3) the Commission, and therefore the Tribunal on review, may take into consideration all circumstances that it considers are reasonably relevant. Although the provision says that such circumstances 'may' be taken into consideration, it is difficult to envisage a circumstance that would be reasonably relevant but not appropriately be taken into consideration. I approach my task on the basis that I should take into consideration any circumstance that is reasonably relevant to whether to give a notice to rectify.

[21] What is reasonably relevant must be determined in the context of the matter under consideration. This is not a case where work has been commenced and from that circumstance it might be inferred that the work was incomplete. Nor is it a case where the intended agreement between an owner and a builder is clear, but the agreement has been rendered unenforceable by failure to comply with the requirement for a written contract that is signed and dated. [3] The terms of the arrangement between the parties are hotly contested.

[22] On the view that I have taken what would have been the contractual arrangements but for s 14(10) is not a relevant circumstance to take into consideration. Accordingly, it is not necessary or appropriate to make findings regarding the intended terms of the 'contract'.

[23] In the end, I am left with this. Whether building work that has not been commenced is incomplete can only be tested against the contract between the owner and the builder. Here, by force of s 14(10), there is no contract. The contractual documents not being signed by both parties are of no effect. There is no other means of determining whether the work is complete or not complete.

[24] In those circumstances, I am unable to determine whether the work is incomplete and it follows that I am unable to be satisfied that the power to give a direction to rectify is enlivened.

[25] The alternative of considering what would have been the contract but for s 14(10) would not be coherent with the QBCC Act as a whole. If, for example, I were to determine that the builder would have been bound to carry out the disputed work[4] but for s 14(10), and give a direction to rectify requiring the work be carried out, that would be tantamount to enforcing what the Parliament has unequivocally stated to be of no effect and thus unenforceable - a level 2 regulated contract not signed by both parties.

[26] Mr Clarke may consider this result to be unfair, especially since he says he signed the alleged contract but the builder, who should be familiar with relevant legislative requirements, did not. As the Commission observed, the builder may have committed an offence by undertaking the work without a signed contract; however, it is no part of the Tribunal's role to comment on that.

[27] More to the point, level 2 regulated contracts are significant contracts. The statutory requirement for them to be in writing, dated and signed by or on behalf of both parties is there for a self-evident reason - to minimise disputes, of which the current matter is an example, about the terms of such contracts. There is obviously a consumer-protection element to the evident policy of the legislation, but there is also a broader public interest in the minimisation of disputes the resolution of which, through publicly-funded mechanisms such as the Commission's and Tribunal's review processes, comes at a cost to the general public. It is prudent for owners entering into significant arrangements with builders to ensure they have a written contract signed by both parties and dated. Parliament's plain intention is that owners or builders who fail to observe that requirement do so at their peril.

[28] For these reasons, I must confirm the internal review decision.

[1] The Tribunal's jurisdiction is found in the Queensland Building and Construction Commission Act 1991 (Qld), s 87.

[2] It is not disputed that the monetary amounts under either version of the alleged 'contract' mean it would be a level 2 regulated contract.

[3] I make no observation regarding how, if at all, s 72(3) would apply in either such circumstances.

[4] Lest there be any doubt, I confirm that I make no such finding.