Jennifer McVeigh (LinkedIn profile) and Lauren Crome have analysed a recent decision of the Queensland Court of Appeal - Ryan v Worthington [2015] QCA 201, an appeal from decision of Queensland Civil and Administrative Tribunal (QCAT) Appeal Tribunal (Appeal Tribunal).

Significance

When construing a contract QCAT must construe each clause as a question of law, not as a matter of fact.

Facts

Dr Ryan, the owner (applicant) and Mr Worthington, the builder (respondent) entered into a building contract. The contract ended badly.

The contract permitted the applicant to terminate for delay if the works were not completed within 1.5 times the initial contract period and the reason for the delay was something that could have been reasonably foreseen by the respondent when the contract was made. The applicant purported to terminate on that basis.

The respondent purported to terminate on the basis that he had not been paid and the applicant had failed to provide access.

The respondent commenced proceedings in QCAT to recover amounts allegedly owed to him.

QCAT found in favour of the respondent. In reaching this conclusion, the QCAT member (member) interpreted the clauses of the contract as a matter of fact.

The applicant appealed to the QCAT Appeal Tribunal which set aside the member's orders and remitted the matter for determination. In remitting the matter, the Appeal Tribunal found that the construction of a contract is a question of fact and the member had correctly construed the termination and extension of time clauses on that basis. 

The applicant appealed the Appeal Tribunal's decision.

Decision

The Court of Appeal granted leave to appeal, but ultimately dismissed the matter and remitted it for determination according to law. 

The court held that the construction of a contract is a question of law, not a question of fact, observing that the Appeal Tribunal had adopted an incorrect approach to that question as it had failed to properly consider the construction of the clauses of the contract. The court found 'the need to ensure that QCAT proceeds on the correct legal basis when dealing with questions of construction of contracts' was sufficient to warrant leave to appeal. 

The court provided guidance to the member who would rehear the matter by interpreting the termination and extension of time clauses as a matter of law.