RJ Neller Building P/L v Ainsworth  QCA 397 (9 December 2008)
The Applicant (Ainsworth) was the owner of a residential property at Noosa Heads. Ainsworth entered into a Queensland Master Builders Association Minor Works Contract with the Respondent (Neller) to carry out renovations to the property. Ainsworth claimed that the works were defective and refused to make all payments claimed by Neller.
Neller submitted a payment claim for $59,907.09 under the Building and Construction Industry Payments Act 2004. This was disputed by Ainsworth and the matter proceeded to adjudication. On 28 March 2007, it was adjudicated that Ainsworth was obliged to pay Neller the sum of $50,771.74.
Ainsworth then commenced action in the District Court against Neller, seeking orders that the adjudication be set aside in addition to damages for breach of contract for the defective building work. Neller then obtained an enforcement warrant in relation to Ainsworth's property based upon the adjudication. Ainsworth applied to the District Court for a stay of the enforcement warrant, pending the determination of his claim. Both applications were dismissed by the District Court.
Ainsworth sought leave to appeal those decisions to the Court of Appeal division of the Supreme Court of Queensland.
The purpose of the appeal was to seek an order for the stay of the enforcement warrant pending determination of the District Court claim.
The Court considered Ainsworth's prospects of success in the District Court claim in considering whether to grant a stay. In doing so, the Court considered whether Ainsworth was a "resident owner" as the Act does not apply to a contract between a builder and resident owner. This is a matter to be established at the time of the making of the contract between the parties.
The Court viewed the evidence of Ainsworth's intention to live in the unit once complete (which would satisfy the definition of "resident owner") as unsatisfactory. Further the evidence was contradictory – Ainsworth swore an affidavit declaring an intention to live in the premises, however he also ticked the box on the contract form which declared that he was not "a resident owner". Ainsworth's private intentions as to future residence were irrelevant to the question whether the contract between the parties engaged the operation of the Act. For example, it is arguable that the parties contracted on the footing that, for the purpose of their respective rights under the contract, Ainsworth was not to be considered a "resident owner".
The Court held:
"It is arguable that the [Act] does not intend that a building owner may not make a binding statement of his intention, one way of the other, as to residence at the time of contract, or that the parties may not bargain on the footing that the owner's statement of intention is binding upon the parties so as either to attract or to exclude the operation of the [Act]. Indeed, it may be said that it would be odd if the legislature intended that whether or not the [Act] should apply to any given contract should depend upon the private and subjective intention of one party, which might be kelp as a secret from the other party, to be announced so as to either attract or exclude the operation of the [Act] as it might suit the first party, when the contract had been performed wholly or in large part".
The Court then considered whether Ainsworth's District Court action would be rendered nugatory if an enforcement stay weren't granted. Ainsworth argued that the warrant should be stayed pending determination of the District Court claim due to the risk that his action may be rendered worthless by the possible inability of Neller to meet a judgment in its favour. The Court explained that the purpose of the Act was to "provide a speedy and effective means of ensuring cash flow to builders...an assured cash flow is essential to the commercial survival of builders." The Court then went on to say that "an interruption of a builder's cash flow may cause financial failure of the builder before the rights and wrongs of claim and counterclaim between builder and owner can finally be determined by the courts." Therefore, the purpose of the Act was to preserve the cash flow to the builder, notwithstanding the risk that the builder may need to refund the cash at a time when it may not be in a position to do so (eg. it may be insolvent). This is a risk that the Act has assigned to the owner.
The Court held that this risk alone is not a sufficient ground to order a stay of the warrant, without other factors coming into play (such as deliberate delay on the part of the builder).
The application for leave to appeal was rejected on the basis that the learned primary judge's decision was correct.
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