Judd v McPhail [2022] QCAT 125

• [3] Mr McPhail has not filed a response to Ms Judd's application.
• [4] I am satisfied as to the following and make findings accordingly:

(a) Ms Judd is a building owner;

(b) Mr McPhail is a building contractor;

(c) The work undertaken by Mr McPhail was domestic building work;

(d) Prior to commencing these proceedings Ms Judd complied with the requirements of s 77(2) of the Queensland Building and Construction Commission Act 1991 (Qld);

(e) The dispute between the parties is a domestic building dispute;

(f) The Tribunal has jurisdiction to decide the dispute;

(g) Service of the application for domestic building dispute has been effected upon Mr McPhail;

(h) Mr McPhail has, without reasonable excuse, failed to comply with tribunal directions, including being directed to file a response, and is thereby causing unnecessary disadvantage to Ms Judd who is entitled to progress her claim to completion;

(i) Ms Judd is entitled to a final decision in the proceedings.

• [5] In accordance with Tribunal directions, Ms Judd has filed a statement of evidence. Ms Judd's evidence is not contested and I accept her evidence in full.
• [6] Ms Judd says that Mr McPhail provided a quote in respect of the construction of the retaining wall. A copy of the quote, dated 7 March 2018, is before the Tribunal. It is not signed by the parties. The quoted price is $47,795.23 inclusive of GST. Ms Judd says in her statement that 'we must have had a verbal agreement that we would like to go ahead with building the retaining wall as I can't find any text or email confirming it and 20% deposit was requested on 30.05.18 and paid on 30.5.18.'
• [7] Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act) is concerned with domestic building contracts. A domestic building contract includes a contract to carry out domestic building work.[1] Where the contract price is more than $3,300.00, a domestic building contract is a 'regulated contract'.[2] A 'level 1 regulated contract' is one where the contract price is more than $3,300.00 but less than $20,000.00. A level 2 regulated contract is one where the contract price is $20,000.00 or more. Unless a level 2 regulated contract is in writing, dated and signed by the parties the contract is of no effect.[3] This means that the contract cannot be enforced by either party.
• [8] I accept the evidence of Ms Judd that the parties had a verbal contract for the construction of the retaining wall. The contract was a level 2 regulated contract. However, as the contract does not comply with the requirements of the QBCC Act, it is of no effect and cannot be enforced. Ms Judd cannot therefore rely upon the contract.
• [9] The unenforceability of the contract is however not finally determinative of the matter.
• [10] I now turn to consider whether Ms Judd may have a claim in negligence against Mr McPhail.
• [11] The relationship of a builder to a homeowner is a special category of relationship whereby a duty of care is owed by the builder to the homeowner. The High Court has held:

In particular, the ordinary relationship between a builder of a house and the first owner with respect to that kind of economic loss is characterized by the kind of assumption of responsibility on the one part (i.e. the builder) and known reliance on the other (i.e. the building owner) which commonly exists in the special categories of case in which a relationship of proximity and a consequent duty of care exists in respect of pure economic loss.[4]

• [12] Proximity is no longer the relevant test. 'Vulnerability' is now the guiding consideration.[5] Central to the determination of 'vulnerability' is a consideration of whether a building owner is capable of protecting themselves from the consequences of a building contractor's lack of reasonable care. In this case, the issue for determination is whether Ms Judd is 'vulnerable' in the sense that she falls into the class of home owners generally unaware of the need for, and how to obtain, adequate contractual protections that were against structural weakness and who expect building work to be undertaken without substantial defects.[6] No duty of care will be imposed upon a building contractor unless it can be shown that the building owner is 'vulnerable'.
• [13] I find that Mr McPhail assumed responsibility to undertake the construction of the retaining wall in an appropriate and skilful way and with reasonable care and skill. I find that Mr McPhail knew or ought to have known that Ms Judd relied upon his expertise as a builder. I find that Ms Judd was unable to protect herself from the risks associated with Mr McPhail failing to undertake the works in a competent manner free from defects. Ms Judd was not a sophisticated commercial property investor. She was a home owner who had previously had a dwelling constructed by Mr McPhail and who appears to have had little or no experience or expertise in construction matters. As such, Ms Judd would not have been alerted to, nor appreciated the significance of, the availability of protections that a contract may have afforded. I am satisfied that Ms Judd was 'vulnerable'.
• [14] Having found that Ms Judd satisfies the 'vulnerability' requirement, I now turn to the consideration of the duty of care owed by Mr McPhail to Ms Judd.
• [15] The Civil Liability Act 2003 (Qld) (CLA) is relevant to any consideration of Ms Judd's claim in negligence. A claim in negligence by a building owner against a building contractor is subject to the provisions of the CLA.
• [16] For Ms Judd to succeed in a claim in negligence against Mr McPhail she must establish the following:

(a) that Mr McPhail owed Ms Judd a duty to avoid a foreseeable and not insignificant risk of harm;

(b) that Mr McPhail breached the duty; and

(c) that Ms Judd suffered loss and damage as a consequence of the breach.

• [17] I find that, in the circumstances of the relationship between the parties being domestic building owner and building contractor, Mr McPhail owed Ms Judd a duty to take reasonable care and exercise reasonable skill in undertaking the construction of the retaining wall to avoid a foreseeable and not insignificant risk of harm.
• [18] I turn now to the evidence about the retaining wall.
• [19] Ms Judd's evidence is as follows:

(a) In July 2020 she became aware that the local authority had not been informed about the construction of the retaining wall;

(b) Mr McPhail had previously advised Ms Judd that the local authority had been informed about the works and that the appropriate paperwork had been lodged;

(c) The local authority required payment by Ms Judd of an amount of $766.00 in respect of approval of the works and also required her to engage a structural engineer to prepare a design and plans for the retaining wall (the design works);

(d) Ms Judd paid a total of $4,400.00 to the engineer in respect of the design works;

(e) In November 2020, Ms Judd was notified that part of the retaining wall constructed by Mr McPhail was encroaching on an Ergon energy easement requiring the removal and reconstruction of the retaining wall;

(f) Mr McPhail was aware of the existence of the easement and had discussed with Ms Judd the construction of the retaining wall so as to avoid encroaching on the easement. Boundary pegs were placed by Mr McPhail and he used laser levels to ensure that the boundary of Ms Judd's property and the easement was accurately identified;

(g) One quarter of the wall remains incomplete;

(h) The wall as constructed is required to be moved to ensure that it does not encroach upon the Ergon easement.

(a) Boundary re-survey cost: $1,485.00. This amount was paid by Ms Judd to a surveyor in April 2021. I accept that this expense was incurred as a result of the identified encroachment issue and the necessity to ensure that a survey was conducted to identify the boundary of Ms Judd's property and the Ergon easement;

(b) Structural engineer costs: $4,400.00. This is referred to above;

(c) Anticipated costs of structural engineer in undertaking inspection of the retaining wall while it is being constructed: $242.00;

(d) Local authority fees: $766.00. This is referred to above;

(e) Anticipated costs associated with the reconstruction and completion of the wall: $19,690.00;

(f) Anticipated cost of additional blocks to complete construction of the retaining wall: $9,559.00;

(g) Search fee paid to local authority: $50.00.

• [21] The total amount claimed by Ms Judd is $36,192.00.
• [22] The object of an award of damages in a claim for negligence is to restore the claimant to the position the claimant would have been in had the wrongful act not been committed.[7] Damages may include the cost of rectification of defective building work.[8]
• [23] I find that in breach of the duty owed to Ms Judd, Mr McPhail failed to carry out the construction of the retaining wall so as to avoid a foreseeable and not insignificant risk of harm to Ms Judd:

(a) Mr McPhail failed to obtain necessary local authority approvals before undertaking construction of the retaining wall;

(b) Mr McPhail failed to have the wall designed and certified by an engineer before commencing construction of the wall;

(c) Mr McPhail failed to construct the wall in accordance with properly designed and certified plans prepared by an engineer;

(d) Mr McPhail failed to construct the wall so as to ensure that it did not encroach on the Ergon easement.

• [24] As a result of the identified breaches Ms Judd has sustained, and will sustain, financial loss. I will address each of the amounts claimed by Ms Judd:

(a) Boundary re-survey cost: $1,485.00. This relates to the failure by Mr McPhail to avoid constructing the wall on the Ergon easement. I accept the evidence of Ms Judd that Mr McPhail had placed boundary pegs in place before commencing construction of the wall. I accept that whatever steps were undertaken by Mr McPhail in this regard, he either failed to properly identify the property boundary or failed to construct the wall within the boundary of Ms Judd's property or possibly both. In any event, the amount claimed is the consequence of Mr McPhail's breach of duty and is allowed in full;

(b) Structural engineer costs: $4,400.00. This relates to the failure by Mr McPhail to obtain council approvals and to have the wall designed and certified by an engineer. Had there been an enforceable contract between the parties, the amount claimed would likely have been recoverable on the basis that it was an implied term of the contract that all necessary council and other approvals would be obtained which would have required engineered drawings, etc. However, and for the reasons I have set out, Ms Judd is not entitled to pursue a claim in contract. I referred earlier in these reasons to the necessary elements of a claim in negligence. I accept that Mr McPhail breached the duty he owed to Ms Judd to ensure that the wall was constructed in accordance with appropriately engineered designs and plans. However Ms Judd must also prove that as a result of the breach of duty, she has suffered loss. Whilst I accept that the amount claimed is a considerable expense, it is nevertheless a cost Ms Judd would have incurred in any event even if Mr McPhail had not breached the duty he owed to Ms Judd. There is no evidence, for example, that the amount paid to the engineer was more than the amount that would otherwise have been paid had the necessary engineering works been undertaken before the construction of the wall was undertaken. As such, the claim is not analogous to a claim for the rectification of defective work where work has actually been undertaken and must be remedied. The amount claimed is disallowed;

(c) Anticipated costs of structural engineer in undertaking inspection of the retaining wall while it is being constructed in order for a final certificate to be issued upon completion: $242.00. For the reasons outlined above relating to the claim for the engineer's fees, this claim is disallowed;

(d) Local authority fees: $766.00. This is the fee charged by the local authority for the necessary approval for the construction of the wall. Again, for the reasons outlined above, the claim is disallowed;

(e) Search fee paid to local authority: $50.00. This amount was paid by Ms Judd to undertake a search of council records to ascertain whether necessary building approvals had been obtained by Mr McPhail. I allow the amount claimed in full.

• [25] I turn now to the claim for the costs associated with the reconstruction and completion of the wall and the cost of additional blocks to complete construction of the wall.
• [26] I accept the evidence of Ms Judd that the existing wall must be rebuilt. I accept the evidence of Ms Judd that the existing wall comprises some 75% of the total wall structure Mr McPhail was to construct. I accept that the amount of the quote relied upon by Ms Judd prepared by Keppel Coast Paving being $19,690.00 represents the reasonable and necessary costs associated with the relocation of the existing wall within the boundaries of Ms Judd's property. The amount claimed is allowed in full.
• [27] Ms Judd claims an amount of $9,559.00 for the cost of blocks required to be purchased to complete the construction of the wall. I accept that Ms Judd paid to Mr McPhail an amount of $47,795.23 for the construction of the wall. I accept the evidence of Ms Judd that the wall was only 75% completed by Mr McPhail.
• [28] In my view, Ms Judd is entitled to restitution in respect of the amount paid by her to Mr McPhail for work that he did not undertake. A claim for restitution arises independent of contract and is based upon unjust enrichment. Put simply, restitution is a claim to restore to person A a benefit conferred on person B at the expense of person A in circumstances which make it unjust that person B should retain that benefit.
• [29] I am satisfied as to the following:

(a) Mr McPhail has been paid an amount of money by Ms Judd (the enrichment);

(b) The amount relates to work Mr McPhail did not perform, namely, the unfinished 25% portion of the wall (the benefit obtained at the expense of Ms Judd);

(c) It would be unjust for Mr McPhail to retain the benefit of monies he received from Ms Judd for work he failed to perform (the unjust enrichment).

• [30] The total amount paid by Ms Judd to Mr McPhail was $47,795.23. Doing the best I can and adopting a broad brush approach, it seems to me that 25% of the amount paid by Ms Judd represents the extent to which Mr McPhail has been unjustly enriched. Ms Judd claims 20% of the amount paid to Mr McPhail but this claim seems to be premised upon a claim only for the cost of blocks to complete the wall. In my view, this is not the correct approach to the quantification of the restitutionary claim.
• [31] I therefore allow $11,948.80 in respect of Ms Judd's claim for restitution.
• [32] The damages recoverable by Ms Judd are calculated as follows:

(a) Boundary re-survey cost $ 1,485.00

(b) Council search fee $ 50.00

(c) Costs of reconstruction of relocated wall $19,690.00

(d) Restitution $11,948.80

• [33] I order that Mr McPhail pay to Ms Judd $33,173.80 within 28 days of the date of this decision.
• [34] As this is a building dispute, costs may be awarded.[9] I order that Mr McPhail must pay to Ms Judd costs fixed in the amount of $345.80 within 28 days of the date of this decision.

[1] Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) sch 1B, s 3(1).

[2] Ibid sch 1B, s 5.

[3] Ibid sch 1B, s 14(2), s 14(5).

[4] Bryan v Maloney (1995) 182 CLR 609, 624.

[5] Brookfield Multiplex Ltd v Owners Corp Strata Plan 61288 [2014] HCA 36.

[6] Olindaridge Pty Ltd v Tracey [2016] QCATA 23.

[7] Kaze Constructions Pty Ltd v Housing Indemnity Australia Pty Ltd (1990) 10 BCL 63.

[8] Campbelltown City Council v Mackay (1989) 15 NSWLR 501.