Singh v The Dirt Guys Pty Ltd [2019] QCAT 85

[9] The relevant enabling Act is the QBCC Act.

[10] The tribunal has jurisdiction to hear and decide building disputes.[6] A building dispute may be a domestic building dispute or a minor commercial building dispute or a major commercial building dispute.[7] A domestic building dispute includes a dispute between a building owner and building contractor relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work.[8] Both 'building contractor' and building owner' are defined in the QBCC Act.[9] Reviewable domestic work means domestic building work under Schedule 1B, s 4 of the QBCC Act. Domestic building work includes associated work.[10] Associated work includes the construction of retaining structures.[11]

[11] In deciding a building dispute the tribunal may award damages and may order the payment of an amount found to be owing by one party to another.[12]

[12] Where the tribunal considers a respondent in a proceeding is acting in a way that unnecessarily disadvantages the applicant by not complying with a tribunal order or direction without reasonable excuse, the tribunal may make its final decision in the proceeding in the applicant's favour.[13]

[13] I will address first the issue of the jurisdiction of the Tribunal to hear and decide the dispute. I am satisfied and find that the work TDG contracted to undertake, and undertook, was domestic building work. I am satisfied and find that the parties entered into a level 1 regulated contract for the performance of the building work by TDG. I am satisfied that the contract was in writing, dated and signed by the parties and thus complied with s 13(2) of Schedule 1B of the QBCC Act. I am satisfied that, as a result, the contract has effect.[14] I am satisfied and find that Mr Singh is a building owner and that TDG is a building contractor. I am satisfied and find that the dispute between the parties is a domestic building dispute. I am satisfied and find that the Tribunal has jurisdiction to hear and decide the dispute.

[14] I am satisfied and find that service of the application for domestic building dispute has been properly effected upon TDG.[15] TDG has failed to comply with any direction made by the tribunal including failing to file a response to Mr Singh's application. I am satisfied and find that TDG has paid no monies to Mr Singh in respect of the amount claimed.[16] I am satisfied and find that in failing to comply with any tribunal directions TDG has unnecessarily disadvantaged, and continues to unnecessarily disadvantage, Mr Singh. That disadvantage is principally Mr Singh's entitlement to have the matter heard and finally determined. I am satisfied that it is appropriate to exercise my discretion and make a final decision in the proceeding in favour of Mr Singh.

[15] I turn now to the assessment of damages.

[16] Mr Singh says that after the footings were poured on 10 April 2018, TDG performed no further building works. He says that after terminating the contract he engaged a consultant engineer who advised him that the footings poured by TDG were inadequate. As a result, says Mr Singh, the footings were required to be re-done.

[17] Mr Singh says that he has incurred the following costs to complete the construction of the retaining wall:

• (a) Additional gravel $ 250.00[17]
• (b) Reinstatement of sediment barrier $ 165.00[18]
• (c) Construction of retaining wall $ 12,885.50[19]
• (d) Hire of mini combo earthmover $ 466.62[20]

[18] I find as follows:

• (a) At the time Mr Singh entered into the contract for the construction of the retaining wall TDG held the appropriate class of building licence;

• (b) At the time that Mr Singh paid to TDG the amount of $6,000.00, TDG held the appropriate class of building licence;

• (c) TDG's building licence was suspended by the QBCC on 23 March 2018 and cancelled on 30 April 2018;

• (d) At the time TDG performed building work on 10 April 2018, TDG's building licence had been suspended;

• (e) At the time Mr Singh paid to TDG the amount of $2,000.00, TDG's building licence had been suspended.

[19] By s 42(1) of the QBCC Act, a person must not carry out, or undertake to carry out, building work unless the person holds a contractor's licence of the appropriate class under the Act. By s 42(3) of the QBCC Act, a person who performs unlicensed building work is not entitled to any monetary or other consideration for doing so. Any monetary or other consideration paid to an unlicensed builder must be repaid.[21]

[20] I find that TDG was in breach of s 42(1) and s 42(3) of the QBCC Act when it performed building work on 10 April 2018 and received payment from Mr Singh in the amount of $2,000.00. I find that TDG was not in breach of s 42(1) or s 42(3) of the QBCC Act at the time the contract was entered into, when it received payment of the amount of $6,000.00 from Mr Singh or when it performed building work prior to 23 March 2018.

[21] I am satisfied, in the absence of evidence to the contrary, that the amount paid by Mr Singh to TDG on 10 April 2018 was in respect of the further building work carried out by TDG on that date. I find that the payment by Mr Singh on 10 April 2018 was made to TDG for building work performed by TDG when its licence was suspended. I find that TDG was not permitted to carry out the building work nor was TDG entitled to any monetary consideration for so doing. There is no application before the Tribunal by TDG pursuant to s 42(4) of the QBCC Act. TDG must repay to Mr Singh the amount of $2,000.00. This amount is in addition to any assessed damages for TDG's breach of contract.

[22] I find that TDG was in substantial breach of the contract in failing to hold the appropriate licence to complete the building work. I find that as a result of the substantial breach by TDG and the failure by TDG to remedy the breach, Mr Singh was entitled to terminate the contract and that the contract was properly terminated by notice given by Mr Singh's solicitors on 11 May 2018.

[23] Where a party sustains a loss by reason of a breach of contract, the party is, so far as money can do it, entitled to be placed in the same situation, with respect to damages, as if the contract had been performed.[22] The measure of damages recoverable by a building owner for breach of a building contract is the difference between the contract price for the work and the cost of making the work conform to the contract, subject to undertaking the work necessary to achieve conformity being a reasonable course to adopt.[23] In any claim for the recovery of the cost of completing building works, credit must be given for the unpaid balance of the contract price. In Mertens v Home Freeholds Company ('Mertens')[24] it was held:

"The Referee has adopted what I think is the true measure of damages - namely, 'what it cost the plaintiff to complete the house substantially as it was originally intended, and in a reasonable manner, less any amount that would have been due and payable' to the builder by the building owner, that is to say to the defendant by the plaintiff, had the defendant 'completed the house at the time agreed by the terms of his contract'."

[24] Mr Singh claims an amount of $13,767.12 for the cost of completing the wall. The evidence relied upon by Mr Singh is not as comprehensive as might be expected at a contested hearing. The evidence of loss is contained in Mr Singh's statement, in which he says he has expended the amount claimed to complete the wall, and to which statement are attached a number of supporting invoices and emails. The Appeal Tribunal has previously held that reliance by the tribunal upon quotes as evidence of a party's loss and the absence of the authors of the quotes being called to give evidence may result in a failure to afford procedural fairness to the other party.[25]

[25] In these proceedings TDG has failed to engage in any way including by failing to comply with any tribunal directions. Where damages fall for assessment on the papers in what is essentially a default judgment, it is a matter of the weight to be given to Mr Singh's statement and the various invoices attached to the statement. In the absence of TDG's engaging in the proceedings, there can be no question of a lack of procedural fairness as was the focus of the Appeal Tribunal in Olanderidge. I must be satisfied that the evidence relied upon by Mr Singh is sufficiently cogent and can be afforded appropriate weight. In the circumstances I am so satisfied subject to what I have to say regarding the claim for additional gravel.

[26] Mr Singh claims an amount of $250.00 for additional gravel. It is unclear what this additional gravel was for and I note that the amount was incurred before the contract with TDG was terminated. I am therefore not satisfied that it is reasonable to allow this sum.

[27] As to the balance of the amounts claimed by Mr Singh as referred to in these reasons,[26] I find that these amounts are reasonable and represent the cost incurred by Mr Singh in completing the retaining wall. I allow the amounts claimed in full.

[28] Mr Singh also claims his legal costs associated with the termination of the contract. Mr Singh does not refer to any provision of the contract which would entitle him to recover such costs consequent upon a breach. Nor am I persuaded that the amounts can be claimed as consequential losses. I will address the recovery of the legal costs later in these reasons when considering whether to award Mr Singh his costs of the proceedings.

[29] The contract price was $12,000.00 of which Mr Singh has paid $8,000.00. As I have noted, the measure of Mr Singh's loss is the cost of completing the building works in accordance with the contract less any amount payable to TDG had the works been completed by TDG. TDG's licence was suspended and ultimately cancelled. As a result of its licence suspension and cancellation TDG could not complete the works. It was prohibited from performing unlicensed building work and, if it had, the work carried out would have been unlicensed work in respect of which TDG had no entitlement to monetary consideration. What then is the effect upon the assessment of Mr Singh's entitlement to damages of the suspension and then cancellation of TDG's license after entering into the contract and commencing building work and before completing the work?

[30] The mischief at which s 42 of the QBCC Act is directed is a particularly serious one and strikes at the heart of the consumer protection purpose of the Act. Unlicensed building work, as the authorities note, has serious consequences for consumers and for the building insurance scheme in Queensland generally. The legislature clearly intended the most serious of consequences for building contractors performing unlicensed building work. It is well established that a contract entered into by an unlicensed builder is illegal and a builder who performs unlicensed building work is not entitled to any monetary or other consideration for so doing. Here however the contract entered into between the parties is not illegal. TDG held the appropriate class of licence at the time the contract was entered into. Nor was all of the building work performed by TDG carried out when it did not hold a licence. It was only that work performed on and after 23 March 2018 which was unlicensed. How then should the question of the balance of the contract price be dealt with?

[31] The present circumstances are different to those where, for example, an unlicensed builder enters into a contract and performs building work. The contract is illegal ab initio and the builder not only has no entitlement to any payment (subject to the operation of s 42(4) of the QBCC Act), he or she is not entitled to retain any money they are paid for the work.. In those circumstances, and where the contract price has not been paid in full, there can be no question of any amount being due and payable to the builder where the contract entered into between the parties is illegal and the builder had no entitlement at any stage to monetary consideration for performing the unlicensed building work. Where, as here, the contract is neither illegal nor unenforceable the approach must be different.

[32] The amount due and payable under the contract between the parties is the relevant consideration. In Greer & Anor v Mt Cotton Constructions Pty Ltd ('Greer')[27] the respondent builder had performed building works in accordance with variations that did not comply with Part 7 of the Domestic Building Contracts Act 2000 (Qld). The Appeal Tribunal held that there was a distinction to be drawn between, on the one hand, the contract price (as varied) agreed by the parties payable by the building owner to the builder, and on the other, the amount the builder was entitled to recover in respect of non-compliant variation works. In Greer the Appeal Tribunal held that, despite the builder having failed to comply with the variation provisions in the DBCA, such non-compliance did not render void or illegal any agreement between the parties in respect of the performance of non-compliant variation work. The amount payable under the contract was the amount agreed between the parties including for non-compliant variation works. The builder's right to recover an amount in respect of such non-compliant variation works was a separate and distinct issue. In assessing the home owner's entitlement to damages for the builder's breach of contract, the balance of the contract price payable to the builder, as agreed, was required to be taken into consideration in accordance with the principle in Mertens.

[33] The decision in Greer is relevant for present purposes in this respect: the parties here entered into a legally enforceable contract for the performance of building work for an agreed amount. The amount payable under the contract if the builder had performed the building works in accordance with the contract was $12,000.00. The fact that the builder is now unlicensed and has no entitlement to monetary or other consideration for performing building work is not relevant in assessing Mr Singh's entitlement to damages. It is the amount payable under the contract that is relevant.

[34] Mr Singh has paid a total of $8,000 to TDG in respect of the contract price. The balance payable under the contract is $4,000.00. An allowance for this amount must be made in assessing the entitlement of Mr Singh to recover the cost of having the building works performed in accordance with the contract.

[35] I therefore assess damages as follows:

Costs incurred in completing the building works $13,517.12

[36] Mr Singh claims an amount of $1,452.00 he paid to his solicitors associated with the termination of the contract.

[37] The tribunal may award costs in building disputes.[28] The discretion to award costs is a broad general one which must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation.[29]

[38] The costs claimed by Mr Singh were incurred prior to the present claim being commenced in the Tribunal. A person's costs of proceedings do not commence at the time when an application is filed.[30] In Re Gibson's Settlement Trusts[31] it was held:

Neither the fact that at the time when the costs were incurred no writ or originating summons had been issued, nor the fact that the immediate object in incurring the costs was to ascertain the prospective litigant's chances of success, will per se suffice to exclude the costs from being regarded as part of the costs of the litigation that ensues. Of course, if there is no litigation there are no costs of litigation. But if the dispute ripens into litigation, the question then arises how far the ambit of the costs is affected by the shape that the litigation takes.[32]

[39] In the third edition of Law of Costs, Professor Dal Pont says:

Drawing the line between what is, and what is not, in allowable in respect of pre-proceeding costs is not capable of precise determination simply by statements of principle; the matter remains based in the discretion of the taxing officer on the particular facts of each case.[33]

[40] Here, the dispute between the parties resulting in the termination of the contract did, to use the words of Megarry VC in Gibson's Settlement Trusts, ripen into litigation. The litigation was the direct result of the breach by TDG resulting in the termination of the contract by Mr Singh. It is relevant that the temporal connection between the various events was a close one. The contract was terminated on 18 May 2018 and the Application for domestic building disputes filed by Mr Singh on 7 June 2018.

[41] The legal costs incurred by Mr Singh in respect of the termination of the contract were reasonable and necessary to enable him to pursue his legal entitlements as a result of TDG's breach. The amount claimed by Mr Singh is the total of two tax invoices rendered by his solicitors. To permit recovery of the amount claimed would however be to award Mr Singh costs on an indemnity basis. The usual order is that costs are ordered to be paid on the standard basis. Departure from this practice and the awarding of costs on an indemnity basis should not be undertaken absent some special or unusual feature.[34] There is no such feature present in this case and costs will be allowed on the standard basis.

[42] If the tribunal makes an order for costs under the QCAT Act or an enabling Act, the tribunal must fix the costs if possible.[35] I adopt a figure of 65% of the amount claimed for the solicitors' fees. Mr Singh is also entitled to recover the filing fees on the application. I fix the total costs payable by TDG in the amount of $1,270.60.

[43] There will be a final decision for Mr Singh as follows:

• (a) Damages $9,517.12
• (b) Repayment of monies for unlicensed building work $2,000.00
• (c) Costs $1,270.60

[1] A building contractor must not demand or receive a deposit exceeding 10% of the contract price in respect of a level 1 regulated contract.

[4] Letter Aitchison Reid to TDG dated 11.05.18.

[5] Letter TDG to applicant dated 16.05.18.

[9] Ibid, (definition of 'building contractor; definition of 'building owner')

[13] Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48.

[15] Affidavit of Service of the applicant filed 04.09.18.

[16] Statement of applicant filed 29.11.18.

[17] Tax invoice Simon O'Carroll Swimming Pools Pty Ltd dated 13.02.18

[18] Quote for variation GJ Gardner Homes dated 29.05.18.

[19] Quotes for variations GJ Gardner Homes dated 23.05.18, 26.06.18 and 23.08.18.

[20] Tax invoice Eagle Alliance Earthmoving dated 30.08.18.

[21] Cook's Construction P/L v SFS 007.298.633 P/L (formerly trading as Stork Food Systems Australasia P/L) [2009] QCA 75 (3 April 2009).

[22] Robinson v Harman [1848] EngR 135; (1848) 1 Ex 850; 154 ER 363.

[23] Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613.

[24] [1921] 2 KB 526.

[25] Olindaridge Pty Ltd & Anor v Tracey & Anor [2014] QCATA 207 at [41].

[27] [2018] QCATA 196 (21 November 2018).

[29] Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 (23 June 2011) citing Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 557.

[30] Chow v Chow (No 2) [2015] NSWSC 1348 (18 September 2015).

[31] [1981] Ch 179.

[33] Dal Pont, G E, Law of Costs, (Lexis Nexis, 3rd ed, 2013) 568.

[34] Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 118 ALR 248; Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151; [1996] FCA