SKJ Qld Pty Ltd v Turul Building Services & Anor [2024] QDC 109

[4] The first category of issue relates to allegations by the plaintiff home owner that progress claims were made under the "contractual suite" (I will explain that, presently) which were in breach of section 34 of schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act).

(1) The building contractor under a regulated contract must not claim an amount under the contract, other than a deposit, unless the amount -

(a) is directly related to the progress of carrying out the subject work at the building site; and

(b) is proportionate to the value of the subject work that relates to the claim, or less than that value.

The claimed amount is for half of the contract price for a regulated contract, less a 5% deposit, and is demanded after the completion of half of the subject work.

[6] It is not in dispute that the contracts in this case are regulated contracts; although it is in dispute whether the whole of the work under those contracts is subject to various obligations in schedule 1B. For present purposes, I do not have to worry about that point. It is the plaintiff's case that each contract is a regulated contract, and although there are many matters raised by the defence, it does not say that the plaintiff does not properly plead that the contracts are regulated contracts.

[7] I should say something briefly about what I described as the "contractual suite". This dispute arose out of renovation and construction work of a domestic premises owned by the plaintiff.

[8] On the 6th of April 2022, the builder and the plaintiff entered into a Master Builder's form of contract for renovation of an existing home (the First Contract), with a fixed-price sum of $726,000, or so. The commencement date for the works was 11 April 2022. Without wanting to descend into contentious issues, it seems that there were substantial amendments, variations and additions which significantly increased the scope of works as work went on between April and August 2022. The solution to that, in broad terms, seems to have been to enter into a second contract. It seems to be accepted that a second contract was entered into, on 2 September 2022 (the Second Contract), in respect of the renovations work which substantially replaced the First Contract.

[9] The Second Contract reflected the substantial increase in the scope of work from that contemplated by the First Contract. The Second Contract was for a price of $2,447,000-odd, consisting of:

(a) a fixed price component of building works in the sum of $1.11348777, or about $1.1 million;

(b) a total allowance for prime cost items in the amount of about $1.3 million;

(c) a small allowance for provisional sum items of about $3,000; and

(d) the home warranty insurance premium in the sum of about $12,000.

[10] The source of the dispute appears to have been dissatisfaction by the home owner with the basis upon which the builder claimed amounts as payable under both the First Contract and the Second Contract, which ultimately resulted in, on 7 October 2022, the home owner terminating the Second Contract on various grounds.

[11] On the same day, the builder disputed the grounds for termination, stated it was willing and able to complete the work, and treated the home owner's conduct as repudiation - which, if the termination was not lawful, it would have been - and itself then terminated the contract. What has then followed, in very broad terms, is a claim by the home owner against the builder that it has been overcharged for work done.

[12] One issue that arises relates to s. 34(1) of schedule 1B to the QBCC Act. The statement of claim alleges that that section is incorporated, by reference, into the terms of both contracts based on clause 10.1 of the general conditions of both contracts, entitled "Statutory Requirements", which provides:

a) Unless agreed otherwise elsewhere in the Contract, the Contractor must:

i) comply with all Statutory Requirements relating to the Works;

[13] "Statutory Requirements" is inclusively and broadly defined. There is, in my respectful view, a reasonable argument that s. 34(1) is a Statutory Requirement within the scope of clause 10.1. Therefore, when the section says the builder "must not claim an amount under the contract unless ... the amount is directly related to the progress of the work and proportionate to the value of the subject work" that statutory obligation becomes a contractual obligation of the builder.

[14] Mr Campbell, who appeared for the plaintiff, submitted that the same follows from s. 21 of schedule 1B. That is also, in my view, arguable.

[15] To the extent Mr Taylor, who appeared for the defendants, submitted that the claims based on s. 34(1) should be struck out because the obligations in that provision were not obligations under the contracts, I disagree, at least for the purposes of a strike-out application. Frankly, it seems to me that, by far, the better view is that Mr Campbell's submission, about the incorporation of that section as an obligation of the contract, is correct.

[16] I now turn to the four pleaded breaches of the obligations allegedly imposed by s. 34(1).

[17] The statement of claim alleges two contract progress claims under the First Contract, being one at 6 April 2022, and one at 22 April 2022 (designated "claims 2 and 3" in the pleading). At paragraph 13, the plaintiff makes two distinct allegations about those two progress claims. By paragraph 13(a), the plaintiff contends that both claims breached clause 25.1(b) and (c) of the General Conditions.

a) This Clause applies if Method A or Method B is stated in Item 19 of the Schedule.

b) The Contractor may submit a Progress Claim to the Owner on the following reference dates:

1. on completion of the Stages set out in the applicable Method in Part D of the Appendix; and
2. if, after the Works reach Practical Completion and prior to the expiration of the Defects Liability Period, the parties agree to a Variation to the Works, on the completion of the work which is the subject of the Variation.

1. The Progress Claim must set out:
   1. Details of:

1. the Stage that has been completed and/or the work that has been carried out by the Contractor to which the Progress Claim relates; 2. the amount that the Contractor claims for payment by the Owner for that work; and

1. any other amount arising out of, or in connection with, the Contract that the Contractor claims for payment by the Owner; and 2. the total amount that the Contractor claims for payment by the Owner,

[19] Paragraph 13(a) of the statement of claim relevantly alleges in that respect:

(a) by claim numbers 2 and 3 (invoices 254 and 257), breached clause 25.(b) and 25.1(c) of the General Conditions as:

(1) neither claim otherwise included any details of the work that had been completed or of the work that had actually been performed by Turul to which that claim related;

(2) neither claim was for work Turul had actually performed; and

(3) the value of the work performed by Turul was not at least for the amount for that Designated Stage identified in each claim;

[20] To the extent that relies on an assertion that those two claims did not include information which was contractually required for a valid claim, that is clearly a properly pleaded proposition. There is no challenge by the defendant, as I apprehend it, to the validity of the pleading of the proposition that the invoices did not meet the formal requirements of clauses 25.1(b) and (c).

[21] Paragraph 13(a)(3) of the statement of claim might be thought, however, to engage the more substantive issues that are raised in respect of the reliance on s. 34(1) QBCC Act pleaded in paragraph 13(b). Paragraph 13(b) alleges:

(b) By claim numbers 2 and 3 (invoices 254 and 257), breached section 34 as neither claim

(1) was directly related to the progress of carrying out work at the Property;

(2) provided any detail to inform SKJ of how the amount claim was calculated nor how it was proportionate to the value of the work that had been carried out;

(3) claimed payment of an amount proportionate to the value of the work that had been carried out;

[22] There is a legal question about whether it is a breach of s. 34(1) not to provide information to allow the recipient of the claim to work out if an offence had been committed under s. 34(1) or not. My view is that there is no basis to imply any such obligation, in contrast to the express requirements of clause 25 of the contract. I did not understand Mr Taylor to seek that that specific allegation be struck out, for that reason; it is just an allegation of law that turns on a question of construction which involves the same factual question as that arising under clause 25.1.

[23] The real point from the defendants' perspective, relates to paragraph 13(b)(3) of the statement of claim, which states that neither of claim 2 nor claim 3 "claimed payment of an amount proportionate to the value of the work that had been carried out".

[24] The particulars of that allegation are in paragraph 46 of the statement of claim, which refer to Annexure A to the pleading. Annexure A is a global calculation of the total value of work performed under the Second Contract, including, as it did, the work under the First Contract, as compared to the amount paid.

[25] That is not technically a global claim, but a global figure for the whole project, calculated as at 7 October 2022. Mr Taylor's principal (and I think, best) point was that such a calculation does not provide particulars of the specific allegation relying on s. 34(1), being that claim number 2 or claim number 3 breach s. 34. I agree with that submission.

[26] Claim 2 was provided on 6 April 2022. It claimed an amount of $218,000. If it is to be proved by the plaintiff that, in fact, the amount was claimed was an amount that was not proportionate to the value of the subject work that relates to that claim, then to make good that proposition, the plaintiff has to plead, in respect of the work the subject of that claim, calculated at the time of that claim, the extent to which, or how it is, that the claim fails to meet the requirements of s. 34(1)(b) (and probably s. 34(1)(a) of the QBCC Act, as well).

[27] Mr Campbell ultimately accepted that those claims have to be particularised in that way. I should say, the same goes for claim number 3. Again, particulars have to be given in respect of that claim, at the time it was made, to make good one or both of the propositions in ss. 34(1)(a) or (b). Again, Mr Campbell, in my respectful view, after legal argument, accepted rightly that such particulars are required to make good that specific allegation.

[28] Mr Taylor advanced the same arguments in respect of the two claims relating to s. 34(1) made solely under the Second Contract. That was a progress claim as at 2 August 2022 under Invoice 294 for $377,000-odd, and a progress claim made a month later under Invoice 297 for $122,000.

[29] Mr Campbell rightly observed that there is a second string to the bow of the argument that s. 34(1) was breached by those two invoices, which is set out in paragraph 35(b)(1), (2) and (3), more or less, of the statement of claim. Those paragraphs advanced the proposition that those two invoices breached s. 34(1)(b) because, as the contract had not commenced in the case of Invoice 294 and had only commenced on the day of Invoice 297, it was impossible that, whatever work it related too, it was work undertaken under the Second Contract. Mr Taylor's point does not apply in respect of those allegations. Whether the allegation is right or not, I make no comment, but there is no proper basis to strike it out, in my view.

[30] However, paragraph 35(b), sub (4) of the statement of claim advances the same kind of argument as in 13(b); and 35(b)(4)(A), (B) and (C) requires the same form of particularisation. Again, Annexure A - which is a global calculation of the value of work and the amount paid as at 7 October 2022 - does not particularise a case specifically for breach of s. 34(1)(b), as a term incorporated by reference into the First and Second Contracts. Particularising in that way may be difficult.

[31] As I said, Mr Campbell advanced the argument, alternatively - which is, to be fair, set out in his pleading - that it is, in any event, a breach of s. 34 not to include information to permit the assessment of compliance with that section. As I said, I disagree with that construction. Construction must be text based. There is no text that can be tortured into imposing such an obligation, and one would be very hesitant to do so, in any event, given that, as seems to be the fashion with the QBCC Act, breach of the obligation is not only a breach of contract, but a criminal offence.

[32] Mr Taylor made the argument that the particularisation was also necessary because it is said that each progress claim was falsely represented to have been in compliance with section 34(1) and, in pleading that that was misleading, it is necessary to particularise what the representation was for the defendant properly to respond to the allegation.

[33] For those reasons, the allegations need to be particularised in the way I have described, and based on the acceptance of that obligation, Mr Taylor did not press his strike out, which I also think was correct. Whether it can be properly particularised is a matter for another day.

Whether certain works fall outside the scope of 34(1) QBCC Act

[34] The second category of issue concerns the defendants' submission that, in respect of the s. 34(1) case, there is work under the contracts that is not regulated within the meaning of the various definitions in s. 4 and 5 of the QBCC Act because, in broad terms, it does not relate to domestic building work.

[35] Mr Taylor submits that the contracts, on their face, indicate some such items. Some items are pleaded in the defence, in response to the plaintiff's allegation that, in effect, the whole of the contract is a regulated contract under the statute.

[36] It seems to me that while the defendants' point may give the plaintiff cause for pause in the way it articulates the work under the contract, in the broader sense, that seems to me presently to be not a pleading point, but a point of substance for evidence at the trial.

[37] If the plaintiff, having turned its attention to the specific identification of the work - as required by the previous section of this judgment - forms the view that there is not any excluded work, in the broad sense, well, that is a matter for it, and a matter for the defendant to respond to.

[38] Sufficiently identified particulars of the various alleged breaches of s. 34(1) of the QBCC Act will facilitate a response by the defendant, in circumstances where, even if they are put forward as particulars, it is obviously in the interests of justice that they would plead to the particulars.

[39] I now turn to the next substantive issue, which is the challenge by the defendant to the adequacy of the pleading of the alleged representations as part of the Australian Consumer Law (ACL) case advanced against both defendants.

[40] The alleged representations are set out in in paragraphs 15 and 37 of the statement of claim. Mr Taylor advances the proposition that, in broad terms, the alleged representations are just not sufficiently articulated. I agree, and it is not a question of particulars.

15. In the premises pleaded in paragraphs 1(f) and 14 and by making each of Claims 2, 3, and 5 and Invoice 285 Turul and Mr Lazar represented to SKJ by the content of each progress claims that:

(a) Turul had actually performed work to the value claimed in each of those progress claims, and to the total cumulative value of all progress claims that had been made, at the time each of claim was made;

(b) The amount of each progress claim was directly related to the progress of work actually performed;

(c) Further or alternatively, that each claim as proportionate to the value of works that had been performed;

(d) Each progress claims was made, alternatively claimed to have been made, in compliance with General Condition 10, Section 34 and the terms of the First Contract;

(e) That Turul was entitled to receive and SKJ was obliged to make payment of the amount claimed each progress claim pursuant to the First Contract.

[42] The allegation of the representations in paragraphs 15 and 37 are rolled up allegations in respect of all the claims they refer to. That is not, in my respectful view, a proper plea of representations for the purposes of an ACL claim.

[43] Not only should they be articulated individually, but also, they should articulate in respect of, for example, in paragraph 15, claim 2, what is said to have been represented by that claim; not a conclusory allegation about what is in that claim.

[44] That is important, not only because of the importance of specifically identifying the representation which is said to amount to "conduct" for the purposes of the statute, but also because it will be necessary to plead that any loss identified is caused by reason of the conduct. Different losses could arise, depending on which parts of which conduct are specifically established.

[45] Indeed, it is a somewhat intimidating process to think how a proper plea of loss by reason of individual causes of action under s. 18 of the ACL could be pleaded in the absence of individual pleading of each act that is said to be represented by the delivery of each claim; and the pleading specifically why that matter or representation arising from the delivery of that claim is specifically misleading or false. The chain of causation between each such cause of action and a loss would not necessarily be the same, as they are separated in time, separated in amount, and separated by the events that kept happening to both parties as this project unfolded.

[46] For that reason, I strike out paragraphs 15 and 37 of the statement of claim. Mr Taylor did not oppose leave to re-plead, and, therefore, I strike out those paragraphs with leave to re-plead claims under that Act of the kind contemplated by those parts of the statement of claim.

[47] The defendants next challenged the adequacy of the plea of accessory liability of Mr Lazar, pleaded, amongst other places, in paragraphs 48(e) and 53 of the statement of claim.

[48] Their submission began with the proposition that the allegations of breach of s. 18 of the ACL against the company had been struck out and needed to be repleaded with a great deal more specificity. They submitted, correctly, that in those circumstances, the allegations against the second defendant, Mr Lazar in the balance of pleading would have to be, themselves, redrafted.

[49] They also submitted an alternative argument that leave to replead against Mr Lazar should be refused, and the claim against Mr Lazar be struck out.

[50] The point was that the allegation of accessory liability in the current pleading necessarily involved the assertion of actual knowledge of facts, which amounted to dishonesty, and that given that that had not properly been articulated in the current pleading and given the seriousness of those allegations and the implications for Mr Lazar personally, it was an appropriate case for me to strike out the statement of claim and claim against him. There is no realistic prospect of a limitation period arising, and therein the subtlety of the suggestion arises.

[51] The effect of striking out the claim and statement of claim against Mr Lazar would be that the applicants could bring a further proceeding, but would have to seek leave, in substance, to joining Mr Lazar as a party to this proceeding and, in seeking leave, would have to demonstrate (particularly in the light of these reasons) that a proper case was disclosed before Mr Lazar had to plead to such a case. I had some attraction to that argument. However, Mr Campbell, in effect, submitted there is several ways that the claim against Mr Lazar might ultimately be articulated - be it directly, somehow, or by accessory liability - and that the precise character of what needs to be alleged would depend on how the claims are ultimately reframed. I think that is correct.

[52] If this was the third or fourth attempt properly to plead personal claims against Mr Lazar, the defendants' submission may have been a good deal more persuasive. But it is not. It seems to me that the correct course is to strike out paragraphs 48E and 53 of the statement of claim and leave it to Mr Campbell to attempt to reformulate them consistent with the principles in York v Lucas (1985) 158 CLR 661. Such a pleading would then provide a concrete standard against which its adequacy could be judged.

[53] For that reason, I decline to strike out the proceedings against Mr Lazar, but of course these reasons will inform the response to a future pleading against him, which can be shown to be materially insufficient.

[54] For the reasons above, I make the orders as drafted and agreed to by the parties.

[1] These reasons were delivered ex tempore across two hearing dates and now compiled for publication.