Jennifer McVeigh (LinkedIn profile) and Lachlan Jolly have analysed this recent decision of the Queensland Court of Appeal. It is significant as the court held that a builder who commits an offence pursuant to Section 67G of theQueensland Building and Construction Commission Act 1991 (Qld) (Act) by entering into an oral building contract will not be precluded from enforcing the contract because of that contravention.
A company controlled by Mr Nichols (applicant) entered a contract with Earth Spirit Home Pty Ltd (respondent) for the construction of 10 houses. That contract was terminated and the applicant and respondent made an oral agreement to complete the project.
A dispute arose as to payment of the respondent's project management fee. The applicant argued that the wholly oral building contract was rendered unenforceable by section 67G of the Act, which provides that a building contractor who enters into a building contract that is not in writing commits an offence.
The Queensland Civil and Administrative Tribunal (QCAT) dismissed the applicant's contention both at first instance and on appeal, ordering that $250,000 in security held by the Master Builders Association be paid to the respondent.
The applicant sought leave to appeal.
Boddice J (Margaret McMurdo P and Philippides JA concurring) granted leave and dismissed the appeal.
The court of appeal held that section 67G of the Act did not impliedly render the contract unenforceable, finding support for this conclusion on the following bases:
- the provision did not prescribe any consequences of entering a contract not in writing, save for that an offence had been committed;
- in contrast, other provisions of the Act specify that particular contractual provisions are void;
- section 67E(1) provides that if a party offends against section 67G, that fact does not have the effect of making the contract void or voidable; and
- section 67E(2), which provides a building contract only has effect to the extent that it is not inconsistent with the provisions of the Act, is directed to inconsistencies in the content or nature of a contract, as opposed to its form.
The court also dismissed the applicant's argument that the contract was unenforceable because it was contrary to public policy to allow a builder who had committed an offence against the Act to enforce the contract giving rise to that offence. The court found that the respondent had not deliberately attempted to circumvent the Act and its conduct did not otherwise justify a conclusion that principles of public policy should render the contract unenforceable.