Builder’s appeal dismissed after home warranty cover for owners who ended a fixed-price build (QCAT, 2026)

What happened

The owners and the builder signed a standard Housing Industry Association contract on 11 May 2021 for a fixed price. The work was described as a new single-storey dwelling on poles, built to the "Issue 6" working drawings dated 7 May 2021. The contract schedule item that asked for matters affecting the land, including easements, to be disclosed was left blank. The contract also contained express clauses about errors in the contract documents, unforeseen circumstances, complying with the requirements of a local authority, and how variations to the work and the price had to be requested and agreed in writing.

A sewer main protected by an easement ran across the owners' land, and the local council would not issue building approval for the Issue 6 plans. Updated plans were produced at the builder's direction to give the sewer the required set-back and were lodged with the council without the owners being consulted. Those plans were approved around 5 July 2021. A further set of plans, which the owners had been consulted on, was approved on 10 November 2021 (the "Issue 8" plans). The owners accepted there would be costs from the plan changes, and they also asked for some changes of their own that the sewer set-back did not require.

Over several months the parties went back and forth about the cost of the redrawn work. The plans reached an "Issue 11" version but no price was ever agreed. On 17 November 2021 the builder put forward a "new contract amount" that included the rise in the cost of materials between May and November 2021, and it could not separate the part of the increase caused by the plan changes from the part caused by material prices. The owners' solicitor wrote on 22 March 2022 ending the contract, pointing to the builder's conduct and to emails of 17 November 2021, 28 January 2022 and 3 February 2022 as showing the builder no longer intended to be bound by the contract. That letter also said the owners remained ready, willing and able to perform their side of the contract.

The Queensland Building and Construction Commission refused the owners' claim under the statutory insurance scheme, taking the view that the contract had simply ended by mutual agreement and that the parties were then free to negotiate a new deal. At the first hearing the Tribunal rejected that view, set the Commission's decision aside and substituted a decision that the owners were entitled to relief. The first Tribunal found the builder had sought an increase of $177,660.68 in the fixed-price part of the contract sum, that on the builder's own evidence about $94,000 of that related to plan changes, and that the remaining roughly $83,660 could only be explained by rising material costs, which this contract gave no right to charge. It also found the builder never gave the owners a variation document identifying the extra work, as the variation clause required. The builder then appealed.

What each side wanted

The builder argued three things on appeal: that the contract had been frustrated (brought to an end by law because it became impossible to perform) as soon as it emerged that the sewer main stopped the agreed plans being approved, so there was nothing left to repudiate; that the Tribunal denied it a fair hearing by refusing to consider its argument, first made in submissions after the hearing closed, that the owners were not ready, willing and able to perform; and that there was no evidence at all to support the finding that the owners were ready, willing and able. The builder said all three grounds were questions of law, so no leave to appeal was needed. The owners said the frustration point had never been run at the first hearing and that meeting it for the first time on appeal was unfair, and that readiness and willingness was a question of fact. The Commission maintained its view that the contract ended by mutual agreement and said two of the grounds raised mixed questions of law and fact needing leave.

What the tribunal decided

The Appeal Tribunal refused leave to appeal on ground 1 and dismissed the appeal on grounds 2 and 3. Its final orders were that leave to appeal is refused and the appeal is otherwise dismissed.

That left the earlier decision in place: the Commission's refusal of the owners' insurance claim was set aside and replaced with a decision that the owners were entitled to relief under the Queensland Home Warranty Scheme. No money order and no costs order appear in the appeal decision.

Why the tribunal decided it that way

Under sections 142, 146 and 147 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld), a party can appeal a QCAT decision on a question of law as of right, but needs the Appeal Tribunal's permission (leave) to appeal a question of fact or of mixed law and fact. The Appeal Tribunal held that whether conduct amounts to repudiation (treating a contract as at an end by showing you will not be bound by it) and whether a contract has been frustrated are at least mixed questions of law and fact, because they depend on what the parties knew and did. So the frustration ground needed leave. The fair hearing ground was a question of law and did not. The "no evidence" part of the third ground was also treated as a question of law.

Leave was refused on the frustration ground for two reasons. First, frustration was a brand new argument never run at the first hearing, and the authorities are clear that an appeal is not a chance to re-run a case on a new basis; it would be unfair to the owners to make them meet it for the first time on appeal. Second, the Appeal Tribunal did not think the argument had merit anyway. Frustration requires a supervening event that, without either party's fault, makes performance something radically different from what was promised. Where a contract already has machinery for errors, omissions, unforeseen circumstances and variations, as clauses 13, 15 and 20 of this contract did, the risk was foreseen and provided for. Redrawn plans for the same single-storey home on poles could still be approved and built, even at more cost or inconvenience, and extra cost or difficulty is not frustration.

On the fairness ground, the Appeal Tribunal held the first Tribunal was entitled to refuse to entertain a challenge raised for the first time in written submissions after the hearing closed, when the owners could no longer give evidence or cross-examine about it. Procedural fairness means a reasonable chance to put your case; parties are expected to look after their own interests, and the Tribunal's duty to help parties does not extend to building or perfecting a party's case. Being unrepresented at the first hearing was not an excuse for not running the argument then.

On the last ground, the Appeal Tribunal applied the rule that a party does not have to prove it was ready and willing to perform unless the other side puts that in issue. The owners' solicitor's letter of 22 March 2022 positively asserted they were ready, willing and able, and the builder never challenged it before or during the hearing. The owners asking, through their solicitor, for the price of the variation between the Issue 6 and Issue 8 plans was evidence of willingness to go on with the contract, not of refusal, because it was exactly what the contract's variation process called for. A wrong finding of fact is not an error of law unless there was no evidence for it, and here there was evidence, so the ground failed.

What this means if you are in a similar position

If you are in a similar position, this decision shows two things about how the rules are applied. The first is about the contract's own machinery. Where a building contract spells out what happens if plans are not approved, if the contract documents contain an error, or if unforeseen site conditions appear, those clauses are the path the parties are expected to follow: a written notice, a written variation request setting out the extra work and the price change, and the owner's agreement before that work starts. A contract that contains that machinery is much harder to describe as frustrated, and the fact that a job has become dearer or harder is not the same as it becoming impossible. It also shows that a fixed price is a fixed price unless a clause lets it move; a general rise in the cost of materials was not something this contract allowed to be passed on.

The second is about when you say things. An appeal looks at whether the Tribunal made an error on the material that was in front of it. An argument kept back until after the hearing, or raised for the first time on appeal, may not be heard at all, because the other side never had the chance to answer it with evidence. The same applies in reverse: if you do not challenge the other side's statement that they were ready and willing to perform, the Tribunal can accept it without them proving it. Representing yourself does not change that expectation.

For home warranty cover in Queensland, the decision also shows why the way a contract ends matters so much. The scheme can assist where a fixed-price residential contract was lawfully ended because of the contractor's default, so the question of whether the owners terminated lawfully, or whether the job simply petered out by agreement, decided the whole claim. In this kind of dispute most people start by putting the problem in writing to the other side, setting out which clause they say was breached and what they want done by when, and only then go to the tribunal if it is not resolved.

How to apply: our step-by-step guide to a QCAT application. More decisions: QCAT cases and builders and building defects.

Source: Kline Industries International Pty Ltd v Cross [2026] QCATA 139 (read the full decision). This summary was prepared from the published decision for general information. It is not legal advice, and the tribunal’s own reasons are the authoritative record.