Bach v Majestic Pools & Landscape Pty Ltd
[2012] QCAT 132
•26 March 2012
| CITATION: | Bach and Anor v Majestic Pools & Landscape Pty Ltd [2012] QCAT 132 |
| PARTIES: | Russell Edward Bach Clare Veryan Bach |
| v | |
| Majestic Pools & Landscape Pty Ltd |
| APPLICATION NUMBER: | BD243-07 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 18, 19, 20 and 21 April 2011, Directions given on 2 December 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mark Plunkett, Member |
| DELIVERED ON: | 26 March 2012 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The Tribunal orders pursuant to s 77 of the Queensland Building Services Authority Act 1991: (a) The Applicants pay to the Respondent the sum of $5,413.73 plus interest at 10% calculated from 17 November 2006, such sum to be paid within 30 days; (b) The Respondent: (i) pay to the Applicants the sum of $500 for rectification for shaving the 40 mm wall encroachment, such sum to be paid within 30 days; (ii) make rectification: · by repairing the control joint in the west wall; · as set out by Mr Wenck for the counterfort wall at the north-western corner of the swimming pool as detailed in the drawings that accompany the Form 15 prepared by Leisure Engineering Pty Ltd; (c) the Amended Application of the Applicants and the Amended Defence of the Respondent are otherwise dismissed. 2. No order is made as to costs. |
| CATCHWORDS: | Building dispute – domestic pool – breach of warranty – provisional sum – role of certifier – demolition – rectification |
APPEARANCES and REPRESENTATION:
| APPLICANT: | Self represented Ms Clare Bach |
| RESPONDENT: | Self represented Mr Andrew Jakovac |
REASONS FOR DECISION
Introduction
Russell Edward Bach and Clare Veryan Bach (the Applicants) are home owners of a residence located at 33 Hipwood Ave, Coorparoo, Brisbane, Queensland.
Majestic Pools & Landscape Pty Ltd (the Respondent) is a licensed building contractor (licence no. 44312) under the provisions of the Queensland Building Services Authority Act 1991 (the QBSA Act) and carries on business as a pool builder in a full range of projects ranging from simple pool and coping to complex jobs involving decks, gazebos, retaining walls and other structures.
On 11 August 2006 the Applicants and the Respondent entered into a contract for the installation and construction of a domestic swimming pool, retaining walls and landscaping for the sum of $178,000 at their residence (the Contract).
The date for practical completion of the Contract was 11 March 2007.
At the end of February 2007, as the project was approaching completion, a dispute about extra excavation and extra concrete costs in the amount a few thousand dollars cascaded into a series of other disputes concerning the engagement of the certifier, the certification process, unsatisfactory professional conduct of the certifier, the state of the engineering plans, allegations of defective retaining walls, allegations of unlawful suspension of work, and breaches of the Building Regulation 2006. The Applicants made complaints about the Respondent to the Swimming Pool and Spa Association of Queensland (SPASA), the Queensland Building Services Authority (QBSA), the Board of Professional Engineers, the Office of Fair Trading and the Brisbane City Council (BCC).
By mid-March 2007 the working relationship between the parties deteriorated and the near completed works came to a standstill.
On 29 May 2007 the Applicants filed a Domestic Building Dispute Application with the Commercial and Consumer Tribunal (the CCT) claiming damages for breach of contract, distress and inconvenience and loss of enjoyment together with costs for experts consulted in the preparation of the claim.
Jurisdiction of QCAT for Building Matters
The CCT has amalgamated into the Queensland Civil and Administrative Tribunal (QCAT). QCAT hears and decides all matters previously dealt with by the CCT: s 256 Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act). Where a matter to which the transitional provisions of the QCAT Act apply, QCAT has the functions and decision making power that existed in the CCT: s 217 of the QCAT Act.[1]
[1] Smith v Condie [2010] QCAT 365.
Justice Alan Wilson, President observed in Avenell v Oxygen Pools Pty Ltd & Anor [2010] QCAT 284:
[9] In its transitional provisions, addressing the disbandment of previous tribunals and their absorption into QCAT, the QCAT Act distinguishes between the final decisions of former tribunals, and pending proceedings before them at the time they ceased to operate.
[10] A pending proceeding, defined in s 245 of the QCAT Act, is an existing proceeding in the former Tribunal which that Tribunal had not begun to hear, or had begun to hear but in which it had not started to consider the evidence for the purpose of making its final decision. Those proceedings are taken to be proceedings before QCAT, with which it has jurisdiction to deal: s 256.
[10] In accordance with ss 9 and 10 of the QCAT Act, the QCAT has original jurisdiction, including jurisdiction conferred upon it under an enabling Act.
[11] The enabling Act in the present instance is the QBSA Act. By virtue of s 77 of the QBSA Act, the QCAT has the power to make orders in an endeavor to resolve this dispute.[2]
[2]MSN Shop & Office Fitting Pty Ltd v Cox t/a Gi Gi Beauty Clinic[2010] QCAT 582, Member Jarro at [2]; Bach v Majestic Pools & Landscapes Pty Ltd [2010] QCAT 581, Senior Member Kerrie O’Callaghan at [21].
[12] Relevantly, by s 77 of the QBSA Act it is provided as follows:
“77 Tribunal may decide building dispute
(1) A person involved in a building dispute may apply, as provided under the QCAT Act, to the tribunal to have the tribunal decide the dispute.
(2) Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers--
(a) order the payment of an amount found to be owing by 1 party to another;
(b) order relief from payment of an amount claimed by 1 party from another;
(c) award damages, and interest on the damages at the rate, and calculated in the way, prescribed under a regulation;
(d) order restitution;
(e) declare any misleading, deceptive or otherwise unjust contractual term to be of no effect, or otherwise vary a contract to avoid injustice;
(f) avoid a policy of insurance under the statutory insurance scheme;
(g) order rectification or completion of defective or incomplete work;
(h) award costs.”
[13] By definition in Schedule 2 and s 4 of the QBSA Act:
“building dispute” means a domestic building dispute;
“building contractor” means a person who carries on a business that consists of or includes carrying out building work, and includes a subcontractor who carries out building work for a building contractor;
“domestic building contract” means a domestic building contract under the Domestic Building Contracts Act 2000;
“domestic building dispute” means
(a) a claim or dispute arising between a building owner and a building contractor relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work;
(b) a claim or dispute arising between 2 or more building contractors relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work; or
(c) a claim or dispute in negligence, nuisance or trespass related to the performance of reviewable domestic work other than a claim for personal injuries;
“domestic building work” see the Domestic Building Contracts Act 2000, schedule 2;
“reviewable commercial work” means tribunal work other than reviewable domestic work;
“reviewable domestic work” means domestic building work under the Domestic Building Contracts Act 2000, except that for applying section 8(8) of that Act, the definition excluded building work in that Act is taken not to mean anything mentioned in paragraph (b), (c) or (d) of the definition.
[14] By s 7 of the Domestic Building Contracts Act 2000 (the DBC Act):
“A domestic building contract” is:
(a) a contract to carry out domestic building work; or
(b) construction management contract under the Queensland Building Services Authority Act 1991 for the provision of building work services for domestic building work; or
(c) another contract to manage the carrying out of domestic building work.
[15] By s 8(3) of the DBC Act:
“Domestic building work” includes--
(a) work (associated work) associated with the erection, construction, removal or resiting of a detached dwelling; and
(b) work (associated work) associated with the renovation, alteration, extension, improvement or repair of a home
(4) Without limiting subsection (3), associated work includes--
(a) landscaping; and
(b) paving; and
(c) the erection or construction of a building or fixture associated with the detached dwelling or home.
Examples of buildings and fixtures for subsection (4)(c)--
retaining structures, driveways, fencing, garages, carports, workshops, swimming pools and spas
[16] Hence the QCAT has jurisdiction in “building disputes” under s 77 of the Queensland Building Services Authority Act 1991[3] which includes disputes about the construction of retaining structures, fencing, and swimming pools.
[3]French v NPM Group Pty Ltd [2008] QSC 48; Callum Constructions v Anderson [2011] QCAT 37, Member Ms Forbes at [2]; and respect to the former Tribunal see: Skaines v Kovac Enterprises Pty Ltd[2006] QSC 120, Fraser Property Developments Pty Ltd v Sommerfeld & Ors[2004] QSC 363.
[17] The procedure for a proceeding is at the discretion of the QCAT, subject to this Act, an enabling Act and the rules: s 28(1).
[18] In all proceedings, the QCAT must act fairly and according to the substantial merits of the case: s 28(2).
[19] By s 28(3) of the QCAT Act in conducting a proceeding, the QCAT:
a)must observe the rules of natural justice; and
b)is not bound by the rules of evidence, or any practices or procedures applying to courts of record, other than to the extent the tribunal adopts the rules, practices or procedures; and
c)may inform itself in any way it considers appropriate[4]; and
d)must act with as little formality and technicality and with as much speed as the requirements of this Act, an enabling Act or the rules and a proper consideration of the matters before the tribunal permit; and
e)must ensure, so far as is practicable, that all relevant material is disclosed to the tribunal to enable it to decide the proceeding with all the relevant facts.[5]
[4]MR v Adult Guardian and The Public Trustee of Queensland [2011] QCATA 211 Justice Alan Wilson, President, Clare Endicott, Senior Member, Patricia Hanly, Member.
[5]Lyons v Dreamstarters Pty Ltd [2011] QCATA 142.
[20] The words of s 28 of the QCAT Act must be read in context. In addition to an obligation to act fairly, it must also promote the consistency of tribunal decisions (s 3(c)), enhance the consistency of decisions (s 3(d)) and ensure like cases are treated alike (s 4(d)).
[21] As observed by Member Peta Stilgoe in Clarke v Cascade Pools (Qld) Pty Ltd [2010] QCAT 323 at [3]:
“The Queensland Civil and Administrative Tribunal Act (“QCAT Act”) intends that parties conduct their own proceedings in this tribunal. The Act also intends that proceedings in this tribunal are to be informal and that the tribunal is not bound by the rules of evidence. Further, the QCAT Act makes it clear that the tribunal has an inquisitorial function. For these reasons, no member expects a self-represented party to present a case in the same way as would be expected from a member of the legal profession. There are, however, limits. In the face of poorly prepared material, the tribunal cannot make assumptions or guess at facts and events or the meaning or importance of material. The tribunal cannot make findings of fact where there is no evidence. It cannot award damages if there is no material that points to the quantum of the damage suffered. Parties must take responsibility for the preparation of their own case.”
The Pleadings
[22] On 14 January 2010 the Applicants filed an Amended Claim with QCAT for:
a)damages for negligence and breach of contract in an amount to be quantified;
b)damages for distress and inconvenience and loss of enjoyment in an amount to be determined;
c)an alternate claim for demolition and replacement of the pool and retaining walls;
d)costs.
[23] The Amended Claim, relying upon the provisions of the Contract, implied warranties, provisions of the DBC Act and Building Act 1975, set out the Applicants’ grounds under headings as follow:
a)failure in relation to compliance with the engineering drawings;
b)substantial breach in relation to variations;
c)breach of warranty in relation to provisional sum allowance/s;
d)breach of contract in relation to extension of time;
e)breach of contract in relation to time of completion;
f)failure to rectify defects;
g)construction of defective block retaining walls;
h)breaches in relation to provision of engineering drawings;
breaches by respondent in relation to engagement of certifier;
j)failure by respondent to notify owners of engagement of certifier;
k)failure by respondent to notify owners of certifier’s requirement;
l)breach of Building Regulations;
m)unlawful suspension of work by contractor;
n)repeated unlawful entry to Applicant’s property after termination of the contract;
o)breach of duty of care owed to the Respondent by the Applicant (sic);
p)loss and damage suffered by the Applicants as a result of the Respondent’s breach of contract;
q)orders.
[24] The Applicants’ case proceeded on the basis that the Respondent:
a)failed to obtain engineering plans prior to construction;
b)failed to carry out construction according to any engineering plans;
c)failed to carry out the works in an appropriate and skilful way, with reasonable care and skill;
d)carried out defective work which requires:
i) demolition and replacement; or
ii) rectification.
[25] In final submissions the Applicants sought orders from the Tribunal that the Respondent pay to the Applicants:
a) the costs of demolition of the entire pool and walls and the cost of building a replacement estimated to be between $233,525 and $243,891;
b) in the alternative, the cost of rectification of defects and completion of the pool and wall structure in the amount of $74,231.60;
c) reimbursements for:
i) Completing the contract (filling pool water and pool accessories not provided $5,105.00
ii) Securing premises (locks) $44.00
iii) Correcting leaks $4,546.00
iv) Excavation, concrete and pool equipment $21,063.00
d) Costs of:
i) expert reports in the amount of $30,390.50
ii) miscellaneous (application fee, copying, parking) $836.00
[26] On 22 March 2010 the Respondent filed an amended Defence denying the allegations of the Applicant.
[27] The Respondent admitted that the contract comprised:
a) SPASA domestic swimming or spa pool instruction/construction contract no. C19227;
b) Drawing by Neville Cox labelled “Perspective”, undated (par 4 of Defence referring to par 3 of the Claim);
c) Appendix A dated 7 August 2006;
d) Appendix B dated 7 August 2006 together with an application for insurance.
[28] The Respondent acknowledged that the DBA Act provides for warranties to be implied into all domestic building contracts but denied that it breached them.
[29] The Respondent asserted that it discharged its obligation to carry out the works in an appropriate and skilful way, with reasonable care and skill, and in accordance with the plans and specifications.
[30] The Respondent argued that if there was any breach of obligation or warranty arising out of the engineering of the footings of walls (which was denied) then it was the certifier and not the Respondent that was liable.
[31] The Respondent sought an order dismissing the Applicants’ claim and by way of a counter claim seek an order that the Applicants pay to the Respondent the:
a) balance of the excavation and extra concrete costs $2,240.00
b) extra supervision costs $1,623.60
c)the cost of the increase of their claim wall size $1,550.73
d)the cost of the wall assessment report $3,278.00
e)interest on these amounts calculated pursuant to the contract.
The Extra Excavation and Extra Concrete Costs
[32] A threshold dispute that has vexed this protracted conflict has been the cost of:
a) excavation above the provisional estimate of $4,000; and
b) extra concrete cost.
[33] Twelve years prior to entering into the Contract, the Applicants had obtained technical advice on excavation of earth at their residence for a carport and retaining structures which envisaged the construction of a swimming pool on the subject site at some stage in the future.
[34] On 14 November 1994 the Applicants had obtained a Soil Test Report from Soiltest Australia Pty Ltd which revealed the presence of extremely weathered rock at .8 metre and weathered rock within a depth at 1 metre below the surface from two test drills conducted at the proposed pool site.
[35] The Applicants say from the outset they were uneasy about entering into the Contract and were concerned to ensure they were doing business with a reputable builder. They searched the licence details of the Respondent and found that there had been no complaints recorded on the web site of the Building Services Authority against the Respondent. From the outset Mrs Bach said she was anxious about what would happen if they did not get on well with the works supervisor for the project.
[36] Before signing the contract the Applicants had active discussions on site with Mr Neville Cox, a salesperson for the Respondent and Mr John Jakovac, the Managing Director for the Respondent. Mr Cox stated that it was company policy to put a margin on top of excavations in excess of $1,000. He stated that he had written an amount of $4,000 in the Contract as a nominal sum for excavation, knowing that this figure was provisional only because they were dealing with an uncertain substrate, although he knew at an indeterminate depth there may be weathered shale and rock. Mr Jakovac said it was impossible to ascertain an accurate cost of excavation because at some unknown level shale turns to more solid rock. Accordingly it was decided to charge the Applicants for the actual cost below $4,000 or to charge for actual costs above $4,000 at cost price only.
[37] The Applicants wanted accuracy in the formation of a realistic estimation of the provisional costs of excavation. They recall offering to locate for Mr Cox the 1994 soil test report from a nearby room, as other prospective pool contractors had requested it, but the Applicants say this was declined.
[38] On 11 August 2006 the parties signed the Contract.
[39] The Provisional Sums Schedule (clause 13) set out:
“Standard Dig Allowance” provides for the estimated costs of a standard excavation to accommodate the structural shell, together with the cost of carting any excavated material to a suitable ‘free cost” tip site, located within 5km by road from the site” in the provisional sum of $4000.00.
[40] A handwritten entry provided:
“Any lessor amount shall be refunded & costs incurred above $4000 will be invoiced at cost price.”
[41] Under NOTES CONCERNING EXCAVATION:
“Excavation & Disposal (including re-location of material, or, removal of overburden) to be carried out by [TICK] machine…..Details of excavating equipment including trucks: To be determined by Project Manager”.
[42] The Contract also set out ADDITIONAL CHARGES which provided:
“Additional Rates (for items not included in the Contract Price) are to be paid by the Customer at the Contractor Cost, or as agreed by written Variation to the Contract, or in accordance with the following rates: Mechanical excavation, incl.: removal relocation; $80 per M3 (minimum charge $200) Manual excavation, incl.: removal relocation; $200 per M3 (minimum charge $200) Rock excavation, incl.: removal relocation; $200 per M3 (minimum charge $200) …..”
[43] The Contract provided that tree removal was to be arranged by the customer with a side note reading:
“NOTE: MAJESTIC CAN ORGANISE TREE REMOVAL AT COST AS PART OF THE DIGGING PROCESS.”
[44] For CONTRACTOR’S MARGIN, the Contract provided:
“For the purpose of Variations, Prime Cost items & Provisional Sums Schedule, the Contractor’s Margin is [BLANK SPACE]% (15% unless otherwise stated).”
[45] The Applicants were keen to proceed with the installation of the pool hoping to enjoy its use by summer and they waived the five (5) day cooling off period.
[46] Things did not get off to a good start, however.
[47] On 7 September 2006 the workmen arrived at the site and waited for the supervisor to arrive to mark out the pool excavation area. The Applicants observed that the workers not working on site, and they became concerned because they were paying for the workers at an hourly rate. They raised this with the supervisor and the workmen became indignant. That evening the Applicants installed video cameras over the site with a view to recording the construction work.
[48] The next morning, the workers complained about the cameras recording them on site. After they objected and some discussion the Applicants removed the video surveillance. Mr Bach explained that he felt most uneasy about the contractors they employed because “I considered that they were not worthy of my trust.” Both the Applicants stated that they “felt very uncomfortable about the events proceeding on our property.”
[49] Work commenced. As the diggings got underway the workers hit weathered rock and eventually hit hard rock. Heavy machinery had to be brought in to effect the excavation.
[50] Two days later, Mr Jason Jakovac for the Respondent advised the Applicants that the $4,000.00 nominated provisional sum had been exhausted and that approximately $10,000.00 may be required for excavation.
[51] The work and cost performed from 6 September 2006 to 18 September 2006 for excavation and extra concrete costs totalling $21,313.15 was forwarded to the Applicants on 17 October 2006. From this amount the allowance of $4,000 was deducted. The extra concrete was $5,694.
[52] The excavation cost and the extra concrete costs were hotly disputed and the trigger for other on-going conflicts that marred the entire project.
[53] The Applicants say that they were over-charged for excavation costs in diggings for the pool by the Respondent:
a) for an extra $19,619.15 for excavation; and
b)the Respondent failed to present a document of variation for the additional costs.
[54] By a letter dated 5 November 2006 the Applicants stated that they were astounded that an experienced pool company could have under estimated the cost of the excavation by a factor of five.
[55] By a letter dated 20 November 2006 the Respondent advised that excavation cost estimates were an impossible science, especially given that rock was involved.
[56] The Respondent said that the Contract expressly excluded pre-cut, cartage of top soil, cartage in excess of 5km of the site, tip fees, additional machine and truck time/supervision costs, and tree removal.
[57] The Applicants obtained their own advice on these amounts and produced engineering reports that a reasonable estimate for excavation would have been in the order of $11,000 to $22,000. Mr Brett Mills of Mills Engineering Pty Ltd considered a proper estimate of cost was $25,203. These estimates of cost were based on volumetric excavation varying from 233m3 (Mr Mills), 278m3 (Mr Bradtman) and 400m3 (Mr Morgan).
[58] The Respondent observed that this wide disparity in after the event range of estimates demonstrates the unreasonableness of the Applicant’s case and the reasonableness of the Respondent’s “provisional estimate”.
[59] Further the Respondent pointed out that tree removal was never included in the provisional sum. The note to the ADDITIONAL CHARGES stated that the tree removal would be at cost as part of the digging process.
[60] The Respondent submitted that the Applicants’ experts included items that are specifically excluded from the $4,000.00 provisional sum and have set out a comparable analysis chart to demonstrate the unreasonableness of these post facto estimates.
[61] The Applicants complained that they were over-charged for the laying of concrete for the pool shell by the Respondent:
a) for an extra $5,694.00 for concrete laid on 23 September 2007 with $2,774.00 outstanding;
b) and the Respondent failed to present a document of variation for the additional concrete costs.
[62] The Applicants submitted that:
a)the imposition of both additional amounts was in breach of the warranty in relation to provisional sum allowances in ss 48, 59 and 61 of the DBC Act;
b)the Applicant should not have to pay these additional sums by reason of clause 11 of the Contract concerning variations and the provisions of ss 79, 82 and 83 of the DBC Act.
[63] The Respondent:
a) submitted that the contact special conditions provide that the excavation allowance was only an estimate as actual costs which are extremely difficult to estimate;
b) said actual excavation costs can vary from the initial allowance from unforeseeable circumstances including:
i) difficulty to extract or dump that material;
ii) type of material being excavated;
iii) distance to tip site;
iv) rejection of material from the tip site;
v) traffic on the day of dumping;
c) observed that the excavation of rock and shale was excluded from the contract price;
d) denied a breach in relation to the excavations because the extra costs were provisional sums expressly included in the contract;
e) asserted that excavation and disposal costs were excluded from the contract and contract price;
f) submitted the provisional cost for excavation was not an unreasonable estimate giving the expressed inclusions and exclusions contained in the contract and information available at the time and that excavation of rock and shale was excluded;
g) rejected the Applicants’ engineering evidence of the Applicants’ reasonable estimates, even in hindsight, because they:
i) are widely variable by as much as 45m3;
ii) included excluded items, rocks and trees;
iii) were hypothetical compared to the actual excavation carried out by the Respondent;
h) denied any breach of s 59 of the DBC Act because the provisional sum was reasonable in the circumstances;
i) said additional work and concrete was required because of cavities created by rock fallout and the nature of the rock also incurring extra costs pumping, shaping, spraying, extra steel, extra steel fixing costs, drilling into rock, supply and installing extra gravel and supervision at a rate of $390m3 for materials and labour;
j) observed that the extra-costs for excavation and concrete:
· are the costs actually incurred;
· are not a variation because a provisional sum has been given for the cost in the contract as being provisional;
· not governed by Clause 11 of the general conditions of the contract or ss 79, 82 and 83 of DBC Act.
[64] The work was required to be carried out in accordance with relevant laws and legal requirements including the Building Act 1973 and s 43 of the DBC Act.
[65] The works were also required to be carried out by the Respondent in an appropriate and skilful way with reasonable care and skill: s 44.
[66] By s 48(2) of the DBC Act the Respondent warranted that provisional sums were calculated with reasonable care and skill, having regard to all the information reasonably available when the contract is entered into (including information about the nature and location of the building site).
[67] A provisional sum, for a domestic building contract, is an amount that is an estimate of the cost of providing particular contracted services: s 14(1) of the DBC Act. However, this requirement applies only to contracted services for which the building contractor, after making all reasonable enquiries, cannot state a definite amount when the contract is entered into: s 14(2) of the DBC Act.
[68] The Respondent could not enter into a regulated contract stating a provisional sum that was less than the reasonable cost to providing the contracted services to which the sum relates: s 59(1)(b).
[69] In deciding what is a reasonable cost, regard must be had to the information the building contractor had, or reasonably should have had, when the contract was entered into and the nature and location of the building site: s 59(3).
[70] The Respondent was not permitted to enter into a regulated contract providing for a prime cost item or provisional sum unless the contract contained a separate schedule stating required details for each item or sum: s 61(1).
[71] The Tribunal may on an application by the building owner, reduce the building owner’s liability, for the item or contracted services to which the stated amount or sum relates, to the extent the tribunal considers appropriate: s 60(3).
[72] By Clause 1(1): “The Contractor must carry out the Works and accordance with the Contract, and must, unless the Contract provides otherwise, supply everything necessary for the carrying out of the Works”.
[73] By Clause 1(3) “the following statutory warranties are incorporated in the Contract under Part IV of the Act:
a) The Contractor will carry out the Works:
i) In an appropriate and skilful way;
ii) With reasonable care and skill;
iii) In accordance with the plans and specifications and any other contract document described in the Contract Schedule: and
iv) In accordance with all relevant laws and legal requirements. (Clause 3(a)).”
[74] By Clause 1(3)(c) “prime costs items and provisional sums have been calculated with reasonable care and skill.”
[75] By the terms of the Contract the Respondent undertook an obligation to carry out the works in an appropriate and skilful way, with reasonable care and skill, and in accordance with the plans and specifications: Clause 1.3(a).
[76] By Clause 13(1) the Contract Price includes the items of work shown in the Provisional Sums Schedule, which sets out the Contractor’s allowance of the cost of carrying out each item of work which the Contractor cannot give a definite price.
[77] The Contractor may, at is discretion, allow the Customer a reasonable opportunity, upon the given of adequate notice, to be present at the site during the performance of any work included as a Provisional Sum in order to verify the actual cost of work: Clause 13(2).
[78] If the actual cost for a Provisional Sum is greater than the amount allowed, the excess amount, together with the Contractor’s margin on the excess amount is to be added to the Contract Price: Clause 13(4).
[79] Unless otherwise agreed in accordance in writing by the parties, any adjustments to the Contract Price in accordance with this clause are to be claimed or allowed in the next progress payment: Clause 13(5).
[80] The Contractor must provide a copy of any relevant invoice; receipt or other document evincing the cost of the work at the time payment is requested: Clause 13(6).
[81] The Schedule to the Contract sets out:
“PROVISIONAL SUMS
”Standard Dig Allowance” provides for the estimated cost of a standard excavation to accommodated the structural shell, together with the cost of any carting any excavated material to a suitable “free cost” tip site, located within 5Km by road from the site $4000
Any lesser amount shall be refunded & costs incurred above $4000 will be invoice at cost price.Total Provision Cost Amounts $4000.”
[82] The Schedule to the Contract sets out:
“SPECIAL CONDITIONS
SPECIAL CONDITIONS & CONTRACTUAL EXPLANATIONS
EXCAVATIONS: As per page 8 of the Contract, your evacuation allowance is only an estimate, and factual costs are extremely difficult to estimate. Therefore, factual costs may or may not reflect the actual costs incurred when the work is complete. Actual excavation costs can vary from the initial allowance for may unforeseeable reasons, including but not limited to distance to tip site, rejection of material at the tip site, traffic on the day, type of material being evacuated and difficulty to extract or dump that material, access or ease or operation around the dig site or other travel areas, etc. In summary, all subsurface material and consequential costs associated with it are the complete responsibility of the customer, and if factual costs arrive lower than the allowance, then Majestic will forward a refund for the difference.”
[83] The Schedule to the Contract sets out:
“EXCLUDED ITEMS
Unless stated elsewhere in the Contract, the following items are excluded from the Contract and Contract Price:
…… excavation of rock, shale or other unforeseeable items and/or disposal of additional overburden, disposal or handling of spoil, levelling or spreading of excavated material, pumping to remove water, formwork and back filling below existing ground level, shoring or retaining walls or other means of stabilisation to ensure stability or overburden, excavation and/or to protect adjacent buildings, pierings or other special structural requirements below existing ground level…”
[84] A variation, of a domestic building contract, is an addition of domestic building work to the subject work or an omission from the subject work: s 16(1) of the DBC Act. For a cost plus contract, an addition or omission is a variation only if the addition or omission is not reasonably contemplated by the contract: s 16(2) of the DBC Act.
[85] Any variation of the contract agreed to between the building contractor and building owner is put into written form within the shortest practicable time: s 79(1).
[86] As soon as practicable after an appropriate variation document is made, the building contractor must sign the document and take all reasonable steps to try to ensure the document is signed by the building owner: s 82.
[87] As soon as practicable (but within five business days) after a variation of a regulated contract is agreed to between the building contractor and building owner, the building contractor must give the building owner a readily legible signed copy of an appropriate variation document for the variation: s 83.
[88] Section 84 of the DBCA provides that a building contractor may only recover an amount for a variation if, relevantly, sections 79 and 80 of the Act have been complied with or with the Tribunal’s approval, given on application by the building contractor.
[89] Section 84(4) of the DBCA provides that the Tribunal may approve recovery of an amount by a building contractor for a variation only if the Tribunal is satisfied that:
a)there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation; or
b)the building contractor would suffer unreasonable hardship by the requirement for a written variation; and
c)it would not be unfair to the building owner for the building contractor to recover an amount.
[90] Clause 11 makes provision for variations and provided that the work to be done, or the materials used, under the Contract may be varied:
a)by agreement between the parties;
b)where there is a Latent Condition, in order to overcome the Latent Condition; or
c)where due to requirement of a private certifier, statute, local authority or other body having jurisdiction of the carrying out of the Works, in order to comply with the requirement.
[91] Clause 11(13) sets out the procedures for variation. It provides:
“Before commencing any work comprising of variation, the Contractor must ensure that the details of the variation are put in writing in a Variation document signed by both parties, and initialled as necessary by the Customer.”
[92] Clause 11(14) the Variation document must:
a)describe the variation of the work to be carried out;
b)if the variation was requested by the Contractor, state the reason for the variation;
c)state the Contractor’s estimate of any delays;
d)state the change to the Contract Price involved, or how the price of the variation will be calculated; and
e)state when any adjustment to the Contract Price is to be claimed or allowed (which must be initialled by the Customer).
[93] By Clause 11(16) where appropriate, the price or the variation is to be calculated in accordance with the additional dates set out in the Schedule.
[94] By Clause 11(17) any claim for an extension of time due to a variation must be made in accordance with Clause 9.
[95] Before commencing any work comprising a variation, the plaintiff had to ensure that the details of the variation were put in writing in a variation document signed by both parties and initialled as necessary by the applicant: Clause 11(13).
[96] By setting a provisional cost in a contract the parties do not try to price the works accurately with any precision at all. They simply include a sum as their best guess only.
[97] By definition there is an inherent risk in using provisional sums. The cost of the proposed works cannot, and is not, exactly determined, so the costs of the works are including as a provisional sum. As the works proceed, the provisional sums are to be replaced with the actual costs of the work done, where the final cost may go up or down.
[98] Plainly, by the terms of agreement, the parties agreed that a provisional sum would eventually, after the excavation, be replaced by the actual cost of the work.
In the result, the Respondent would be entitled to a refund of the actual cost, less than the provisional cost, or the contractor is entitled to the provisional sum, plus the actual cost involved.
The fact of the matter is that the pool cavity had to be excavated as a first step in the project. The provisional cost nominated was no more than an estimate as the actual cost which could not be calculated until the actual digging works were completed. The diggings encountered rock which incurred labour and other costs beyond that originally nominated as a provisional cost of $4,000.
The actual costs of excavation incurred were accurate and reasonable as demonstrated by the after the event cost estimates provided by the engineers for the Applicants.
The terms of the Contract expressly set out that the evacuation allowance was only an estimate because factual costs are extremely difficult to estimate.
The special conditions warned that, factual costs may or may not reflect the actual costs incurred when the work is complete and that actual excavation costs can vary from the initial allowance for many unforeseeable reasons.
The Contract expressly excluded certain items from the Contract and Contract Price which included excavation of rock, shale or other unforeseeable items.
The Tribunal finds given these exclusions and special conditions the $4,000 provisional sum was reasonable.
However, even if the Contract did not contain such special conditions and exclusions, the Tribunal finds the $4,000 provisional sum was arrived at with sufficient care and skill based on reasonable inquiry as to reasonably estimate the likely cost in all of the circumstances.
On the site before entering into the Contract the parties engaged in mutual discussions about estimating the provisional sum. If Mr Cox did decline the Applicants’ offer to collect it from the nearby room and/or if the Applicants chose not to collect it and put it under his nose, the provisional estimate was still reasonable as the exact sum was unknowable at the time.
The Applicants, Mr Cox and Mr Jakovac knew the site would have contained shale and that at some stage it would or may turn in to variable stages of weathered rock, to extremely weather rock and to hard rock. The soil test report would have confirmed this obvious fact and made little difference to the reasonableness of the provisional estimate. Given the limited nature of 1994 testing for the soil test report (two drills on a slope), having the report before the Respondent would not have altered the reasonableness of the estimate. The Tribunal is not satisfied of the Applicants’ assertion that they would not have entered into the Contract had they known the ultimate cost of the excavation. Within months they were prepared to pay the increased costs of tiles of a substantial amount and showed themselves prepared to engage engineers at some cost to check on the Applicants.
The pool site was on a slope which was required to be cut into in order to create a flat base foundation. No contour survey had been carried out. No one was able to prepare a final price for the earthworks needed to provide a level site for the pool. By its nature the provisional sum was a nominated amount of money, where the exact scope and cost of specific work could not be determined at the start of the contract, because it involved the removal of an unknowable amount of weathered shale and rock.
On 21 March 2007 the Applicant engaged Mr Robert Morgan, an engineer of Morgan Consulting Engineers to seek advice about the engineering drawings and the costs charged for excavation and concrete.
By letter dated 16 May 2007 Mr Morgan wrote to the Applicants advising that after examining the photographs of the rock encountered in the excavation of the structural shell, from a civil contract view point, the extra costs of rock excavation ie. the use of super breakers or rock cutters, was a legitimate extra. As to quantum Mr Morgan carried out an estimate of the quantities of materials to be excavated for the pool. The bulk excavation to provide a level platform was 250m³ and to excavate the pool was 150m³. Mr Morgan said: “Using a current civil engineering rate for excavation to spoil of $25 per cubic metre, this equates to the pool excavation of only $3,750.00. The figures close to the provisional cost item allowed for the pool excavation only of $4,000.00.”
The Tribunal finds the Respondent did not breach any obligation under the Contract or statute in estimating the provisional sum for excavation.
The Applicants were liable to make payment for the full cost of the excavation, equivocated in doing so, and the amount remains outstanding.
As a result of the cutting into hard rock, rock roll out occurred around the cavity as it was being excavated.
In order to construct the pool shell, the rock roll out space was required to be filled with more concrete and steel than originally estimated. While this does not appear to be the cost of a building pool wall it is a proper cost for the bulk filling of voids created by over excavation of rock.
The Respondent claimed 30m³ of concrete was allowed for in its costing and sought to claim the cost of an extra 12m³ of concrete. This was for raw bulk concrete, pumping/spraying/shaping of concrete, extra steel, extra labour for steel-work associated with cavities, extra supervision and extra gravel for the pool base.
The cost price was a raw cubic metres to determine a standard cost price formula of $390/m3 for materials and labour compared to a costs per invoice using rounded m3 amounts, costs per invoices using accurate cubic metre amounts.
When Mr Bach received the invoices for the extra concrete on 27 February 2007, he examined them in detail, questioning items such as a loading for Saturday work, extra cutting, an unknown delivery address for steel, and the amount of lineal metres of steel used.
Carefully measuring off from the photographs taken of the steel structure before being the concrete fill, Mr Bach, after consulting with Mr Brett Mills of Mills Engineering, made a detailed analysis of steel calculations which he set out in a spread sheet summary. Mr Bach could not see 735 lineal metres of steel used in the cavities.
Despite this meticulous analysis, Mr Bach stated he could only give a “ball park” figures to get a “gut feeling”[6] which was supported by assumptions and intricate calculations contending that all of the steel did not go into the pool shell structure. He said because there were no actual detailed engineering drawings, it was difficult to prove their suspicion that the Respondent’s demand for an extra payment for concrete and steel was an over estimate.
[6] Evidence given on 20 April 2011.
The Tribunal is satisfied that the Applicants have made out the cost of the extra concrete as fair and reasonable in accordance with the ADDITIONAL CHARGES as set out in the Contract.
The Tribunal finds that the extra costs for the excavation and the concrete were costs fairly incurred which were charged to the Applicants at cost. There was no add-on profit for the Respondent. The Tribunal is satisfied that the excavation and concrete costs were fair and reasonable.
A variation is an alteration, modification, revision of the design, quality or quantity of works or amendment of the original intent of the contract and/or its works. Variations are common occurrences during the design or construction phase. Ordinarily a variation is an amendment or change to the existing plans or specifications for the works to include some alteration addition or removal of some previously agreed feature in the structure.[7]
[7] D & C Builders v Rees [1967] 3 All E R 837.
The statutory scheme seeks to protect the consumer from an increased contractual price by ensuring variations are put in writing is to ensure a record of amendment in order to maintain contractual certainty in relation to many aspects of the contract, for example the addition or omission of specified work.[8]
[8]Nautilus Pools Pty Ltd v Rollo, G. & A. [2004] QCCTB 152.
The excavation of the void to make space for the pool and the concreting of the shell structure to fill rock fall out were not alterations to the design or scope of the works being a pool of defined dimensions. As such the increased costs were not variations requiring a written variation document under the contract or the DBC Act.
Moreover the Respondent also advised the Applicants that it was not possible to produce “cost only” variations prior to actually knowing what the costs actually were, and drew attention to Clause 11(18) that: “…the requirements for a signed variation document prior to the carrying out of any work does not apply if, in the contractor’s opinion,… it is not reasonably practical to produce a variation document prior to the carrying out of the work…”
Further the ADDITIONAL CHARGES provisions of the Contract did not include these items as it was not ticked whereas the box stating additional costs to be “at the contractors costs” was ticked. Hence in any event, a variation document under the terms of the Contract was not required.
On 25 April 2007 the Respondent wrote to Mr Morgan setting out their understanding of the terms of the contract in respect of excavations, “unforeseeable costs summary” and the reasons for the variation not being required in writing and that the contract was “quite strict with deeming bills as unequivocally payable where they have not been appropriately challenged in writing within five (5) days of the bill being issued”.
The Tribunal finds that the extra costs for excavation beyond the provisional sum and the extra costs for concrete were not variations and written variation documents were not required.
At no stage did the Applicants give notice in accordance with Clause 10(7) of the Contract, which provides that where the customer disputes the amount stated in any progress claim, the customer must pay to the contractor that part of the dispute on the balance, within five working days of receiving the contractor progress claim.
The Respondent requested payment for these outstanding amounts on 17 October 2006, 20 November 2006, 12 December 2006, 14 February 2007, 22 February 2007 and 8 May 2007. The Respondent asserted their right to suspend works under Clause 15(1)(b) & (c) for the time that non-payment had persisted.
On 18 February 2007 the Applicants paid part of the excavation costs and extra concrete costs, but did not pay the full amount which was disputed.
Although the Applicants made progress payments as requested they have refused to make payment for these outstanding amounts notwithstanding subsequent requests by the Respondent.
The Applicants will be ordered to pay the Respondent the balance of the excavation and extra concrete costs of $2,240.00.
After examining the invoices and rate of costs for construction in the project I am satisfied that the Respondent has made out its case for the cost of extra supervision costs of $1,623.60, the cost of the increase of their claim wall size of $1,550.73 together with interest on these amounts calculated pursuant to the contract.
Under section 77(2)(c) of the QBSA ACT, interest may be awarded as prescribed by regulation from the date an amount becomes payable until it is paid. If the parties entered into a contract, interest awarded is payable at the rate specified in the contract or at the rate of 10%: Queensland Building Services Authority Regulation 2003, section 34B. The interest is payable on and from the day after the day that the amount became payable until and including the day the amount is paid.
The Tribunal will order that the Applicants pay to Respondent the sum of $5,413.73 plus interest at 10% calculated from 17 November 2006.
The Engineering Plans, Certification and Soundness of the Structure
The Applicants exercised their lawful rights by scrutinising most aspects of the construction, taking many photographs of the works as it was underway, carefully checking costs, subjecting invoices to detailed analysis, obtaining independent engineering assessments, making complaints to regulators and ultimately instituting proceedings in the CCT and the QCAT which has attempted resolution by convening conclaves of engineers and mediation to no avail. Mrs Bach stated that “I have been motivated to proceed against the Respondent in the hope that the efforts of [Mr Bach] and myself, though at times seeming inordinately demanding, will one day make pool construction an easier task for future consumers in Queensland and ultimately reduce the suffering which we have endured.”
The excavation and extra concrete conflict escalated into a general debate about the soundness of the entire structure. The Applicants stated that: “had the Respondent not insisted on claiming the charge for extra concrete we would never have uncovered the truth of the events which occurred.”
The Applicants passed a fine tooth comb over many aspects of the construction of the work searching for error which they were entitled to do.
The Respondent considered this an attack of their professional integrity and regarded the Applicants’ zeal as an unwarranted interference in their ability to finish the job.[9]
[9]See Cube Building Services Pty Ltd v Fois (Domestic Building) [2011] VCAT 311 where it was said: “It is apparent that the Owners, as lay people, have little understanding of matters to do with building. They seem to have fundamentally misunderstood their role as owners, which is to allow the Builder to get on with the job. I think that is the likely explanation for their extraordinarily high level of interference with the work and lack of co-operation with the Builder.”
The Applicants’ case focussed on Construction Note 13 of the plans (04B013/S1) provided that “masonry walls must not be built off walkways unless so detailed”. Reliance was placed on s 70(2) of the Building Act 1975 (the BA Act) which provides that “work on any footings for the building work must not start until the drawings and details for the footings have been approved by the building certifier”. Further “a stage of the building work must not be started until the drawings and details for the stage have been approved by the building certifier”: s 70(3).
An engagement of a private certifier must be written and state the fees payable by the client for an engagement of a private certifier, the employer: s 141.1. The mere making of a building development application to a private certifier does not, of itself, constitute and engagement of the certifier by the applicant: s 141.2.
The Applicants state that the Respondent failed to provide engineering drawings to specify where “the walls to be engineered designed with footings”. Further, the Respondent failed to do all things as may be reasonably necessary to obtain all approvals required for the commencement of works in not arranging engineering drawings for the retaining walls as requested by the certifier and therefore not obtaining building approvals for the construction of the retaining walls.
The Applicants also say that the Respondent breached Clause 1 of the General Conditions in s 141 of the BA Act in that it failed to engage the certifier in writing and failed to state the fees payable by the client to the certifier. Further, the Applicants complain that the Respondent failed to notify them in writing of the appointment of the building certifier. The Applicants further contend that the Respondent, in contravention of Clause 5, failed to inform them of the conditions attached to the certifier’s approval and the obligations contained therein.
The Applicants criticised the Respondent’s engineering report of September 2007 because it:
a) does not accurately depict the cranking of the steel started bars;
b) does not detail the location of control joints in the pool.
c) nominated the pool walls at 180mm thickness.
The Applicants claim that the pool was deficient in the design code for a load of soil of 1.6m high when the actual retaining wall was 3.2m high, the pool wall thickness should have been 350mm, the control joints were constructed without dowel or key blocks and this is to ensure that each side of the joint did not move to a greater degree than the other. The Applicants said that the appropriate limit of work stress in the reinforcing steel for the pool was in the order of 130MPa. However, the working stress at the area of the pool through the bench opposite the curved entry stairways, when full design loads were applied, would be approximately 939MPa or 7.2 times the appropriate limit. The working stress in the area of the pool between the bench and the south-west corner of the pool, when full design loads were applied would be approximately 512MPa or 3.9 times the appropriate limit. Hence the Applicants argued that the pool structure is over stressed and not structurally safe.
Further in the alternative, the Applicants stated that if it considered that it was not reasonable and necessary for the pool and retaining walls to be demolished and replaced, then remedial work was required to remove the pool lining from the floor and southern walls, and epoxy grout pins into the face and respray concrete to build the wall thickness up from the existing 150mm to approximately 450mm. The Applicants say that even upon this, the pool dimensions will be smaller than those contracted for and well outside the acceptable tolerances as detailed in Clause 20 of the contract.
It is necessary to set out a chronology of some events, assessments and engineering reports about the pool structure.
The works commenced on 7 August 2006, the site was cut, the steel form work was completed and the project was ready for building approval by the third week in September 2006.
On 3 September 2006 Mr Bernie Davis, engineer and senior consultant of Qantec McWilliam advised the Respondent that the pool was of a “normal depth for domestic use” where “normal construction/reinforcing details can be followed for the shell with additional horizontal bars longitudinally in floor and both walls”. Mr Davis advised as to gravel with Ag drain, the retaining wall, footings, starter bars.
On 5 September 2006 the Respondent appointed Mr Suresh Chandra of Building Approvals and Inspections Consultants Pty Ltd as project certifier. He was provided with the textual engineering detail provided by Mr Bernard Davis and Engineer of Qantec McWilliam engaged by the Respondent. Mr Chandra accepted this as sufficient and acceptable because he was an engineer. The works which included the cross section and perspective drawings were stamped “APPROVED”.
On 11 September 2006 Mr Davis drew the POOL AND WALL LAYOUT PLAN (Detailed set-out, As per sketch plans) to the Respondent which detailed a typical section of the extended coping.
On 14 September 2006 the Respondent forwarded the plans to Mr Chandra.
On 21 September 2006, before the concrete pour commenced, Mr Chandra went to the site inspected the works and steel frames and approved the works.
Mr Chandra says he was aware that construction on the wall had commenced but he said this was common practice in the building industry as amended plans are sometimes lodged after work has been completed.
The Respondent has always maintained that having engaged the certifier, supplied him with textual engineering detail prepared by Mr Davis, they had complied with lawful requirement to obtain certification, which was obtained.
On 19 September 2006 the Applicants made their first progress instalment payment.
On 22 September 2006 as the concrete pour appeared imminent after a query by the Applicants, they were advised that the engineering inspection of steel had occurred the previous day. Mrs Bach also requested a copy of the engineer’s design drawings, but was advised that these would be delivered with all documents upon completion of the project.
On 23 September 2006 the concrete was poured and sprayed for the pool structure.
On 26 September 2006 the Applicants made progress payments.
By a letter dated 27 September 2006 the Applicants confirmed their verbal request for copies of the structural drawings.
By a letter dated 27 October 2006 the Applicants received the tax invoice for the excavation costs and extra concrete.
By a letter dated 5 November 2006 the Applicants protested the excavation costs and sought invoices for the extra concrete. They made part payment and sought further clarification about the extra concrete before considering payment of the balance.
By a letter dated 20 November 2006 the Respondent set out information seeking to answer the Applicants’ queries and requested full payment.
By a letter dated 12 December 2006 and 18 December 2006 the Respondent again made claim for the outstanding half of the second payment.
On 20 December 2006 the Applicants made a further payment to the Respondent but held back on the disputed claim.
On 22 December 2006 the Applicants approved a variation to the pool tiles.
On 29 December 2006 the Applicants again queried the amount of concrete allocated for the pool and questioned how the amount was calculated.
On 14 December 2006 after the tiling was completed leaking of water into the empty pool structure was detected by the Applicants.
In January 2007 there were on-going discussions about water line tiles.
On 6 February 2007 the Respondent made requests for the third progress payment.
By a letter dated 7 February 2007 the Applicants wrote to the Respondent asking for the name of the engineer for the project because they had questions to ask the engineer before they proposed settling the final account.
By the letter dated 14 February 2007 the Respondent:
a) set out how details on how the extra concrete was calculated;
b) made an adjustment concession on the allied earthmoving invoice;
c) sought payment for the excavation and extra concrete costs by 19 February 2007;
d) advised the Applicants that they did not normally put customers in touch with their engineers directly given that the contractual relationship exists solely between them and the engineer;
e) claimed an extension of two (2) weeks for inclement weather on an unspecified date.
By a letter dated 18 February 2007 the Applicants:
a) paid part of the excavation costs and extra concrete costs, but held back payment because of the dispute;
b) sought to inspect the engineer’s plans for the pool to ensure that the Respondent had adhered to them and to determine whether the 200mm is an acceptable width of a pool wall and that footings were engineer designed.
On 22 February 2007 at the request of the Applicants, Mr Chandra came on site with a view to discussing approval for the pool fence. Mr Chandra advised them he was an engineer, had inspected the steel, certified the structure and issued the Pool Steel Inspection Certificate (dated 22 February 2007) certifying that the reinforcement that he inspected was placed in accordance with the supplied approval structural documentation.
Also on 22 February 2007 the Respondent by a letter:
a) stated a “wish to sincerely convey our desire to resolve all relevant issues amicably and punctually. We also wish to say that such extensive “letter writing” (albeit validly requested by you) is in our opinion counterproductive, and which we trust that this will be curbed in future, by way of the extensive information contained herein”;
b) addressed the concrete usage (including surrounding issues) by setting out the method of charging;
c) sought payment of the outstanding amount for excavation and extra concrete within five days;
d) advised that it was not possible nor reasonably practicable to provide a written variation for excavation of rock prior to the commencement of incurring the costs;
e) advised of the failure to comply with clause 10(7) which sets out the time frame for withholding payment;
f) advised of the flow-on effect of extending contractual timeframe for the period of non-payment;
g) reserved the right to also suspend the works under Clause 15(1)(b) and (c) from the time the non-payment over the extra-excavation and concrete costs persisted;
h) advised that a “legalistic approach to the construction timeframe is unproductive” especially having regard to rain and the Christmas break;
i) enclosed copies of the engineering drawings applicable.
By a letter dated 25 February 2007 the Applicants said they were glad to see the project approaching completion, paid for the tiling, and set out six matters concerning defective grout, tile adhesion lumps and an expansion joint which they considered required attention before the installation of the glass fence.
By letter dated 27 February 2007 the Applicants faxed to the Respondent:
a) again disputing the extra concrete costs;
b) advising that they were seeking independent engineering reports to ensure that the original provisions were reasonable given that the estimates did not include allowance for footings and the pool thickness of 20cm may not be within the engineering specifications for retaining wall greater than 2 metres in height;
c) stating that they would not be in a position to settle the outstanding amount (if any) until these independent were obtained;
d) advising that hey would not be paying a loading for concrete being provided on Saturday;
e) disputing the amount charged by Shotcrete for an unnamed item, walkway and extra cutting;
f) asserting the payments were variations never approved by the Applicants;
g) expecting a completion date of 11 March 2007;
h) complaining that as set out on page 3 of the Contract: “Where construction approval or similar design authorisation additionally requires a detailed engineering design, or foundation data, soil tests, contour surveys etc as part of such approval, then such plans, designs or certificates must be attached to, and included upon the signing of the contract”;
i) complaining that they had not been provided with the approval conditions arising from Mr Chandra’s certification;
j) advising that a copy of the Council approval had not been forwarded to them.
At 9:00 am on 27 February 2007 Mrs Bach telephoned Mr Jakavoc about the matters raised in their letter faxed that morning to the office of the Respondent. Mr Jakavoc said he had not been in the office and had not received any faxed letters from the Applicants. She asked when work was to resume. Mr Jakavoc said he did not know when the filtration equipment or the glass fence would be installed.
Mrs Bach advised Mr Jakavoc that he ought to make sure his secretaries bring her faxes to his attention, which “brought about an explosion of abuse and shouting from Jason over the phone.”
The conversation was terminated by Mr Jakovac saying: “You are too hyper for me to talk to, I am going to terminate this call and do not call me back on this number”.
Later that day the Applicants contacted the SPASA which is a non-profit trade association dedicated to maintaining and improving standards within the industry for the betterment of consumers, pool builders and supplier and in a letter to the Respondent complained about the difficulty in making communication with Mr Jakovac requesting the Respondent appoint of another project manager.
On 12 March 2007 the Applicants sent the Respondent five photographs showing slight soil stains below the pipes from the pool wall apparently caused by water coming into the pool.
On 13 March 2007 the Applicants wrote to the Respondent advising they had sought the advice of an engineer in relation to the pool construction, enclosing photographs of leaking alongside pipes at the western wall, seeking rectification. They said: “Our engineer has raised some concerns about construction issues and we wish to discuss these with you, if possible and negotiate mutually agreeable solutions in a meeting ‘without prejudice’.”
On 21 March 2007 the Applicant engaged Mr Robert Morgan, an Engineer and Managing Director of Morgan Consulting Engineers, to seek advice about engineering drawings and excavation and concrete costs. Mr Morgan offered to attend to mediate the issues on a ‘without prejudice’ basis between the Respondent and the Applicants.
On 21 March 2007 Mr Jakovac and Mr Bach attended the office of Mr Morgan. By a letter dated 23 March 2007 Mr Morgan advised the Applicants of the water proofing material used and that he had checked the figures in relation to the additional concrete pour inviting them to look at the original invoices. Mr Jakovac offered to do the calculations together. He said: “I would appreciate if we could do this as two professionals without the emotions of the client”.
On 23 March 2007 the Respondent advised that they would treat any leaks after the pool was filled with water. The Respondent argued that the pool would not have leaked had they had the opportunity to finish it.
On 31 March 2007 the Applicants sought notification of the date of practical completion.
Around mid-March 2007 work slowed to stand still and on several occasions to May 2007 the Applicants asked when work would resume and the project completed.
The Applicants allege that the Respondent unlawfully suspended work in contravention of Clause 15 of the General Conditions on or around mid March 2007.
The Respondent denied the allegation that it was in breach in relation to the extension of time saying that those extensions were for true delays in the progress of the work outside the control of the Respondent, the alleged breach would not give rise to any loss or damage as claimed by the Applicants, the delays were notified to the Applicants verbally and then confirmed in writing, and any delays in progressing the works was a direct result of the negligence of the certifier.
The Respondent deny the allegation that it failed to complete the works by the date for practical completion because it says the Applicants had unlawfully terminated the contact thereby preventing it from bringing the contract to a stage of practical completion, the Applicant was responsible for, or had contributed to the alleged delays due to it raising the height of the retaining wall in an unauthorised manner, due to its failure to complete its payment obligations in accordance with the contract and any alleged delays in progressing the works was as a direct result of the negligence of the certifier.
On 25 April 2007 the Respondent wrote to Mr Morgan setting out their understanding of the terms of the contract in respect of excavations, “unforeseeable costs summary”, the reasons for the variation not being required in writing and that the contract was quite strict with deeming bills as unequivocally payable where they have not been appropriately challenged in writing within five (5) days of the bill being issued. The Applicants did not issue a notice in accordance with Clause 10(7) within five (5) days from the relevant invoices being issued, and absence of such compliant notice therefore unequivocally deems the relevant invoices as due and payable. The letter noted that the total amount which remained outstanding was $48,064.00 which they required to be paid by the customer within seven (7) days. The letter advised that if the amount was not received within the time frame and the Respondent reserved all rights associated with the outstanding amounts, including the right to claim interest as per Clause 5 of the Contract.
On 28 April 2007 the Applicants made a complaint to the QBSA that the Respondent had failed to complete the Contract and had not rectified defects which consist of a long list of small items concerning leaks, the fence, grout in tiles, crooked pool lights, and skimmer box flaps not fitted, etc.
By letter dated 29 April 2007 the Applicants set out in detail the matters which they required to be addressed by the Respondent. These included the ongoing dispute about the reasonableness of excavation costs, the extra concrete cost, and the leaking around the PVC penetrations into the currently unfilled pool. The Respondent observed that it was evident that the plans of the engineering consulting firm Qantec McWilliam were used in the Council application for the pool construction were of a generic nature. They advised that they had lodged a complaint with the Office of Fair Trading in relation to misleading quotation against the Respondent. They also advised that they had lodged a complaint with the QBSA for failure to rectify. In addition to the previously notified defect relating to the PVC penetrations, they formally notified the Respondent of further defects and the work which required correction concerning the paling fence post, grout in the tiles at the site of the glass gate being cracked, the leaking at the end of the backwash pipe and existing plumbing, the crooked pool lights, the unfinished PVC penetrations, the set of colour filters for the pool lights missing, and skimmer box flaps not fitted etc.
On 8 May 2007 the Respondent wrote to the Applicants again addressing the extra concrete issues.
By a letter dated 10 May 2007 the QBSA advised the Applicants that after an assessment of the file the QBSA determined that the QBSA could not assist in the matter.
On 15 May 2007 the Applicants wrote to the Respondent asking when their works would be completed, seeking further clarification as to how the disputed amount for excavation and concrete was calculated.
On 29 May 2007 the Applicants filed a Domestic Building Dispute Application with the CCT.
The Applicants, at their own expense, conducted repairs which were not effective. The Applicants contended the leakage was a result of poor workmanship (and as such a breach of contract) or a consequence of the unlawful suspension by the Respondent.
After consulting engineers and leak consultants it was decided to drain the pool and to treat each leak penetration, which could not effectively be repaired until tiles were removed from around each of the penetration areas to be drilled and resealed.
A conclave of leak consultants reported that it was necessary to drain the pool and to treat each penetration. The leaks were not repaired effectively until tiles were removed from around each of the penetration and each penetration was drilled around and resealed and this would have been done by the Respondent had they completed the pool sometime in 2007.
The leaking around the pool may have occurred because it was left standing without water for ten (10) months. During this time there may have been concrete shrinkage around the penetration.
The leaks were treated and the pool no longer leaks.
By letter dated 27 July 2007 Mr Rob Morgan of Morgan Consulting Engineers advised that the pool should be filled for two reasons because the pool was cut into a bank and if there is prolonged rain the water tide will rise and the pool may lift out of the ground if the pressure relief valve is not adequate which is a matter of serious concern and concrete cures better under water and there would be less chance of shrinkage cracking.
On 30 July 2007 the Applicants made a complaint to the QBSA against Mr Chandra alleging that he should not have approved the works because he was relying on concept drawings and that he failed to protect them from the poor engineering practices of the Respondent.
On 30 July 2007 the parties attended at the Tribunal for a mediation, but this did not resolve the matter.
On 2 August 2007 the Applicants took their complaints to their local government BCC Councillor with whom they met on 8 August 2007.
On 17 August 2007 Gregory Schonfelder, the Principle Development Officer of the Building Licensing Compliance section of the Brisbane City Council attended on site. He reviewed the submitted plans and building development permit and concluded:
a) there is no engineering details for the masonry structure arch (water curtain);
b) there are no plans and certification for the masonry retaining walls more than 1.0m in height nor plans for the walls/screens more then 2.0 metres in height, although they scaled higher on the drawings (elevations), and
c) Construction Note 13 on the Engineering Drawings which are not part of the approved plans stated that Masonry walls must not be built off walkways unless so detailed. There is no detailing of any of the walls or arch, which are attached to the pool.
In Mr Schonfelder’s opinion the “building work should not have advanced to the next stage (from the pool steel inspection stage) because it would have been obvious at that time that the building work would not comply with the approved plans and that amended plans would need to be submitted to you for approval with the relevant engineering certification.”
On 23 and 27 August 2007 Mr Schonfelder wrote to Mr Chandra advising that his review of the submitted plans and documentation for the development revealed there were no engineering drawings for the masonry arch, no plans of certification for the masonry retaining walls more than one metre in height, no plans for the wall screens more than two metres in height and referred to Construction Note 13 of the engineering drawing.
On 30 August 2007 the Applicants telephoned Mr Chandra and advised him that the QBSA had informed them that he had not yet responded to their complaint. Mr Chandra advised that he had communicated the contents of Mr Schonfelder’s letter to the Respondent and had left it with them to provide him with plans.
On 30 August 2007 the Applicants terminated the engaged of Mr Chandra.
By a letter dated 4 September 2007 the Applicants wrote to Mr Davis attacking his conclusion that he “certified that all aspects of the site are structurally sound in accordance with relevant requirements”. They advised Mr Davis that as the matter was before the Tribunal they would be applying to compel his attendance to give evidence on his involvement in the project. They warned: “In short, the process and evidence by which you have scrutinised the construction work on our property as compliance will be closely scrutinised by third parties and us”.
On 11 September 2007 Mr Davis of Qantec McWilliam lodged with the BCC a compliance certificate for building design in Form 15 for the concrete pool shell and attached reinforced concrete block walls indicating that the reference documentation was the general concept plan.
On 22 September 2007 and 15 October 2007 the Applicants advised the Council of the discontinuance of Mr Chandra and requested the appointment of another certifier.
The Applicants’ grounds for the notice of discontinuance of Mr Chandra alleged he failed in his duty of care as a private certifier by approving inadequate/incomplete engineering plans for proposed work and failed to notify them of the approval of conditions. They also alleged inadequate inspection of the steel and included failure to respond to a complaint made to the QBSA.
By a letter dated 29 October 2007 to the Applicants, the Respondent noted that the decision to disengage the private certifier had been made of their own accord. This, they said, had resulted in the requirement to obtain a full retrospective approval for the works, including evidence of a range of many aspects of the works.
On 12 November 2007 Mr Des Newport, a consulting engineer, having inspected the pool on Friday 2 November 2007, told the Applicants he was unable to provide a Form 15 because in his opinion: “All pools should have their own individual plans that cater for the individual conditions that make up a pool. Given the fact the pool has not been designed in accordance with prevailing conditions, I regret to inform you that I am unable to issue a Form 15 for a pool when I cannot be sure it has been constructed to meet its purpose. I viewed photographs of the construction, but these are not sufficient for me to determine if its construction would meet the specification design that is suitable to the conditions on your block”.
On 12 November 2007 the Applicants made a complaint to the Board of Professional Engineers against Mr Davis. They allege he failed in his duty as a professional engineer in the drawing of the plans for the work required at the property and that he did not demonstrate appropriate knowledge, skill and judgment in the utilisation of generic pool plans for the project proposed at their property. They contended that “specific plans should have been drawn by Bernard Davis taking into account the large retaining walls, located less than 2 metres from the property boundary and greater than 1 metre in height”. It was their view that the pool should have been modified in thickness and design where the retaining walls were located on the coping and footings should have been designed for all retaining walls. Notwithstanding they had a soil test from 1994, they complained that “a soil test should have been requested by Bernard Davis as nearly 100m³ was to be evacuated up to 4m in depth from the natural soil level, all less than 4 metres from the house of our adjoining property”. The complaints also included the fact that Mr Davis did not provide an engineering design certificate and did not inspect the steel in the footings at any time.
By letter dated 13 November 2007 the Respondent said that the approval process was completely satisfactory as far as the private building certifier was concerned and that all documents were completely in order, observing: “Although this may not be evident to you thus far, we suggest in your interest that you refrain from focusing on this aspect of the dispute, as we are more than confident that you would see in time that your efforts to prove otherwise will have been in vain”.
On 29 November 2007 the Applicants obtained Mr Chandra’s letter dated 13 November 2007 to the BCC including structural drawings for construction of the retaining walls and a Form 15 Compliance Certificate for Building Design or Specification.
By a letter dated 2 December 2007 Mr Chandra wrote a letter to the QBSA pointing out he did not think there was anything peculiar with the project that was different from so many others that required extra documentation when it became at the time of an inspection.
Mr Des Newport agreed that the structure had withstood a broader spectrum of climatic conditions over the past two years, but said he was not in a position to guarantee that it would be safe for the anticipated life of forty (40) years (which is normal for a structure of this type).
By report dated 7 December 2011 Mr Gary Wenck stated that his company Leisure Engineering Pty Ltd had reviewed reports of EFC Consulting, Qantec McWilliam, Des Newport Consulting Engineers, Mills Engineering Pty Ltd and Hughes Beal and Wright, plans and photographic material and performed its own assessment of the completed works and their suitability.
Mr Wenck noted: “Calculations suggest the pool’s southern wall is stable under the most adverse load conditions likely to be encountered in service. It is also noted that the pool wall is not subject to bending stresses when the pool is empty, and the quantity of reinforcement of the pool wall is not relied upon for its structural adequacy. When the pool is filled with water, the load on the pool wall is resisted by the direct contact where the rock foundation of the walls of the excavation.”
On the jointing of the walls Mr Wenck considered the dislodged render and crack revealed that rotation was minimal over the height of the wall. He concluded: “….the difference in the crack width top to bottom being no more than a coupe of millimetres, and in our opinion associated with shrinkage rather than rotation.”
Mr Wenck concluded that the change of level, and associated counterfort wall located in the north-western corner of the pool should be reconstructed and engage with the footing and a section of wall attached to the facing wall.
Mr Wenck concluded the swimming pool structure and attached retaining walls are found to be structurally sufficient and conform with relevant Australian standards. He concluded: “Passage of time and events since construction are understood to have exposed the pool and associated structures to drought conditions, a wet season (2009/2010) followed by flood rains (2010/2011) and one cycle of pool emptying and refilling, with no consequence that would be regarded as a failure or significant structural distress.”
Mr Wenck was also of the view that “detailing and construction of the counterfort wall at the north-western corner of the swimming pool is insufficient for its intended duty and the counterfort should be removed and replaced by a new panel as detailed in the drawings that accompany the Form 15 prepared by Leisure Engineering Pty Ltd.”
In answers to cross examination, Mr Wenck said he had analysed the strength of the masonry wall with reinforcement effectively 75mm from the face of the masonry and found that 15MPa concrete is a sufficient strength to resist the applied loads which is in accordance with the accepted engineering principles and specifically with the requirements of AS3600-2001 Concrete Structures. As the masonry wall is set back some 75-100mm from the top edge of the pool wall, and the pool concrete is assumed to be less than 25MPa compressive strength, then the sheer forces in supporting concrete are significantly less than those in the mating 15MPa concrete masonry section above. He did not accept any collapse scenario and Mr Wenck again asserted that the southern wall in particular is “stable under the most adverse load conditions likely encountered in service”.
Finally, Mr Wenck concluded that the change of level, and associated counterfort wall located in the north-western corner of the pool should be reconstructed and engaged with the footing and a section of wall attached to the facing wall.
Mr Wenck has produced the records of a Form 15 (Design) and Form 16 (Approval) Certificates as necessary to certify the works as structurally sound providing his reasoning and calculations for so doing (in accordance with the Brisbane City Council private certifier requirements).
By a report dated 4 September 2011 Stephane Rebibou of Booth Engineers and Associates Pty Ltd reviewed all of the engineering reports they had prepared until that time.
Mr Rebibou concluded:
“Based on the information available at the time of writing of this report, we believe there exists limited evidence to support the case that the pool shell or walls have failed or there is any potential of a catastrophic failure of these structures under expected loading conditions. More than this, the ‘as constructed’ details and photographic evidence outlined in the Eric Fox Consulting Report (EFC) generally reflect the pool walls are generally much thicker than shown in the generic pool drawings and that the reinforcing steel in the walls directly above the coping has doubled (12mm bars as 200crs in lieu of the typical spacing of 400crs) when compared to the other block walls of similar height. These observations we believe are confirmed by the subsequent performance of the structures which have now been constructed and subject to a load for approximately five (5) years with weather conditions having changed from extreme dry to extreme wet (experiencing significant rainfall) and thus giving rise to actual layers in accordance with actual real site conditions being realised. Notwithstanding any of this information, the defects described in the available reports and photos indicate that the defects are aesthetic as described by both HBW and EFC, and are commonly found in other similar structures and at this stage no actual measurement of any ongoing rotation or failure mechanism has been presented for objective comments. Defects in the form of cracks to masonry walls and gaps around construction joints are common place and whilst not desirable, those are often inevitable. To this point we include that Table C1 from AS2870-Residential Slabs and Footings Code which classifies damage with respect to walls. While this Code is not strictly applicable in a case where the structure is being considered, we believe this classification nevertheless constitutes a useful guide for reference.”
Noting that at no stage did anyone suggest the pool area should be blocked off from private or public access, Mr Rebibou said: “In other words, no building professional who has gained access to the site has felt it necessary to notify the owners of any potential for collapse and possible subsequent injury or loss or life. In fact, this office has been advised by MPL (the Respondent). The pool has indeed been used by the owner during the past five (5) years or so and it was even emptied some months ago to allow for rectifications to pool lights/waterproofing thus experiencing its worst load conditions to date.”
According to Mr Rebibou the evidence indicating any structural inadequacy was a result of limited existing engineering assessment where technical assumptions were made which were largely simplistic and did not hold up when scrutinised. These were divided into two categories, the first concerned the use of the cranked reinforcing bars which ignored the fact that there are twice as many bars as would typically be required in such a wall.
Mr Rebibou observed that: “While it is guaranteed that the use of cranked bars is not as effective and even restricted in some codes of practice (mainly where the large ….. forces could be expected of such a special purpose earthquake resistant structure) the bars used in this context clearly have some useful structural capacity and noted in the HBW report we saw no evidence where the cranked bars have failed or yield in any way”. ME does not provide any objective evidence to suggest the bars have failed and comments such as “the wall rotation has continued” cannot be evaluated by any physical means other than the authors (sic) judgment.”
The second category which Mr Rebibou addresses is the claim technical in nature concerning questionable assumptions pertaining to the actual retaining height of the combined pool wall and retaining wall above the coping and a possible soil saturation leading to hydro static pressure compounding the more traditional wall loadings. In this regard Dr Rebibou considered that the reports such as the Des Newport Consulting Engineers (DMCE) report represent very simplified calculations at best and whilst these could be used in preliminary assessment to maybe warrant further investigation and/or potential monitoring and movement defects. Mr Rebibou did not consider that these constitute sufficient evidence to claim the structure is inadequate. He considered the EFC report provided a much more useful measure of the relevant structural sections and expected loads under consideration, which concluded that based on the ‘as constructed’ physical parameters of the pool shell walls these items are structurally sound and adequate to resist the applied loads.
In conclusion Mr Rebibou believed “there is sufficient material in the form of reports, documents and photographs to support the case that the pool shell and walls are structurally adequate and can indeed be retrospectively certified”.
After considering all of the reports and photographs Mr Rebibou’s found the defects “that are aesthetic in nature and these do not appear to have changed significantly since being reported in the HBW report of 2008”. Mr Rebibou also observed that “since then, the south east has experienced extremes in weather conditions without negatively affecting the performance of the structure as may have originally been expressed in other engineering reports”.
In cross examination Mr Rebibou said that: “The only visible performance defects and supporting engineering calculations supplied to date concluded that the defect is cosmetic and directly related and to change in the stiffness in the wall footings as influenced by reactive clay movement. This common and expected defect is occurring at an expected control joint position and since after years of unrestricted use of the pool and surrounding areas, and following specific recommendations by various professionals and no allowance has yet been made for this expected movement in the structure, it should not even be considered as a defect (and is not in fact considered as a defect in accordance with the NSW guide to standard tolerance for this reason).”
Mr Rebibou had no doubt that an experienced pool contractor and builder could easily be able to combine the generic plans and others available, generic reinforced masonry retaining wall plans to proceed and construct the work to a structurally acceptable standard and fit for the purpose.
To this end Mr Rebibou said : “Based on my observation and the extensive photographic record available for such small structures, the builder has visibly significantly increased the strength of the pool shell and walls with perhaps twice as much steel required in the walls with pool walls and coping footings are almost twice as thick as required to meet the minimum strength requirements to satisfy expected loads to relevant Australian standards and perhaps to reflect outcomes of discussion with the engineer. It is my opinion the contractor has generally constructed items which have exceeded reasonable expected performance criteria from AS3600, AS3700 and AS2870 – Damage with respect to walls to base dwellings and even exceeded these requirements. Again, since after almost six (6) years of use by the owners, following years of expert reports and reviews of extensive photographic records, scans and various reports, the only real visible defect to comment on remains the possible slight rotation of a masonry wall/fence and an expected but still lacking control joint and how this one may imply imminent ‘sudden’ and ‘catastrophic’ collapse”.
Mr Rebibou was adamant that “at this stage I have not seen any evidence to suggest that any form of rectification, other than the addition of expected control joints” is required. Being regularly involved in the rectification of failed structures (including failed/rotated/cracked etc… pools, retaining walls, fences, buildings, etc…) “I would very clearly notify the client that no amount of rectification can ensure that no cracks, no rotation or effects will ever return/be exhibited”.
Mr Rebibou considered that items relating to “sudden collapse” were completely unrealistic under expected load conditions since the load requires to cause actual collapse of the wall and indeed any reinforced masonry wall of this type will always far exceed the loads required to technically “fail” the wall is strictly defined by AS3700 – indeed, a key feature of all reinforced structures is their ability to show ductile behaviour and thus give possible warning of possible failure. Typically it is unreinforced masonry and other brittle elements that would be expected to exhibit “sudden collapse” failure mechanism not reinforced ones.
Relevantly, Mr Rebibou observed of this that: “The Bernard Davis plans which were produced nearly a year after construction present a purely bureaucratic exercise to obtain retrospective approval of the structure in accordance with the prevailing local bylaws and regulations have no impact on the physical performance characteristics of the actual structures in situ. Extensive photographic records and comprehensive scans of the structure not often available on such small projects have been used to form the basis of my opinion. My comments relating to the crank bars are simply to outline how these have had and will continue to have no impact on the life of the structure and their expected loading conditions considering that the structures appear to be twice as thick with twice the reinforcing expected in such structures”.
Rectification
The Applicants described the entire works as a “hotch potch job” which they could only live with and accept without the surety of safety and longevity of the structure.
They submitted that it was reasonable and necessary to remove the risk of failure of the pool, such that the pool and retaining walls would be demolished and be required to be replaced by a new pool and retaining walls constructed in accordance with the relevant codes and good engineering practise.
The Applicants submit demolition and replacement of the entire structure, is necessary for them to sell their property and adjoining property without financial compromise.
The Applicants provide expert evidence of the assessment of the costs of demolition and replacement would be between $234,125.00 and $221,365.00.
They contend that if no action is taken the Brisbane City Council may order demolition of the works in their current state.
The Applicants contend that the dispute is not so much about monitoring a failing wall but more so about obtaining retrospective certification by the Brisbane City Council to avoid an order for demolition of the works or demolition replacement of those works.
On the other hand the Respondent submitted that the Applicants had been “actively trying to prevent the walls from being retrospectively certified (and making the structural situation much worse than it is)”.
In building their case against the Respondent to prove defects and deficiencies in the works, the Respondent says the Applicants were engaging in a self-defeating exercise against their own interest to obtain BCC approval.
The Respondent says that despite the many and varies complaints, the Applicants have had the benefit, enjoyment and active use of the pool over a long period of time, while contending that they were defective to the point of sudden catastrophic collapse.[12]
[12]See Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178, see Chesire and Fifoot, Law of Contract (9th Aus Ed, 2008) p 1081.
Essentially, the Applicants’ claim concerns assessment of damages for defective building work.[13]
[13]See generally Bryan Thomas, ‘The Assessment of Damages for Breach of Contract for Defective Building Work’ (2004) 20 Building and Construction Law 230; Chris Fenwick, ‘Necessity, Reasonableness and Intention to Rebuild: A Reconciliation of the Australian and English Approaches to Quantification of Damages in Building Cases’ (2004) 16 BDPS News: Building Dispute Practitioners’ Society Inc Newsletter 4; Douglas Bates, ‘The Assessment of Contractual Damages for Defective Building Work in Australia: Is Loss of Amenity an Available Measure?’ (1999) 15 Building and Construction Law 2; Jocelyn Winterton, ‘The Use of Damages for Rectification Works: Should the Courts Intervene?’ (1998) 14 Building and Construction Law 2; John Dorter and John Sharkey, Law Book Company, Building and Construction Contracts in Australia: Law and Practice, vol 1 (at Update 67) [1.830]; Doug Jones, Building and Construction Claims and Disputes (1996) 49–57; Philip Davenport, Construction Claims (2nd ed, 2006) 184-92; Damien J Cremean, B A (Toby) Shnookal and Michael H Whitten, Brooking on Building Contracts (4th ed, 2004) 186-95; Ian H Bailey, Construction Law in Australia (2nd ed, 1998) 92-3; Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law (3rd ed, 2009) 382-4; J W Carter, Elisabeth Peden and G J Tolhurst, ContractLawinAustralia (5th ed, 2007) 849-50; N C Seddon and M P Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th Australian ed, 2008) 1105-7; J L R Davis, ‘Damages’ in P D Finn (ed), Essays on Contract (1987) 200, 211-15.
The general rule is that the measure of damages is the difference between the contract price the work was contracted for and the cost of making the work conform to the contract with the addition of any appropriate consequential damages: See TabcorpHoldingsLtdvBowenInvestmentsPtyLtd(2009) 236 CLR 272 affirming the principles in Bellgrove v Eldridge[1954] HCA 36, (1954) 90 CLR 613, which remains the leading authority when considering rectification of building works.
In Bellgrove the builder committed “a very substantial departure from the specifications and, indeed, such a departure as to result in grave instability in the building.” at 615. The trial Judge found that the defective foundations required demolition and rebuilding of a house in order to ensure stability. The decision was upheld by the High Court. In their joint judgment Dixon CJ, Webb and Taylor JJ made the following observations at 617:
"In the present case, the respondent was entitled to have a building erected on her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract ... Subject to a qualification to which we shall refer presently the rule is, we think, correctly stated in Hudson on Building Contracts (7th ed. Sweet & Maxwell, 1946), p 343 "The measure of the damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach ...". The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt."
The Court concluded that, in the circumstances, demolition of the structure and reconstruction was reasonable and necessary to provide a building in conformity with the contract. In doing so, the Court declined to adopt a less expensive mode of rectification involving the underpinning or the replacement of the existing foundations saying at page 620:
"To give to the respondent the cost of a doubtful remedy would by no means adequately compensate her, for the employment of such a remedy could not in any sense be regarded as ensuring to her the equivalent of a substantial performance by the appellant of his contractual obligations."
In doing so, the Court laid down the principle that, in cases of defective work, the building owner is prima facie entitled to damages representing the cost of rectification of the work so that it achieves conformity with the contract, along with any “appropriate consequential damages”: at 617-18.
The Court imposed two qualifications upon the application of such a measure, first, the work must be necessary to achieve conformity and secondly, it must be a reasonable course to adopt: at 618.
As to necessity the work in question must be “apt to conform with the plans and specifications which had not been conformed with.”[14] The requirement to achieve conformity is assumed within the essence of the contractual bargain. The limb requires only that the work be ‘apt’ (which has connotations of being ‘suited to the purpose’)[15] to achieve such conformity. Thus, work which is not directed towards such conformity may not be ‘necessary’.[16]
[14]Tabcorp[2009] HCA 8; (2009) 236 CLR 272, 288 (French CJ, Gummow, Heydon, Crennan and Kiefel JJ).
[15] Susan Butler (ed), Macquarie Dictionary (5th ed, 2009) 76.
[16]Bell, Matthew "After TABCORP, for Whom Does the BELLGROVE Tolls? Cementing the Expectation Measures as the 'Ruling Principle' for Calculation of Contract Damages" [2009] Melbourne University Law Review, Volume 32, Issue 3, pp. 684-717.
Where the necessary work is not a reasonable method of dealing with the situation, the Court said that ‘the true measure of the building owner’s loss will be the diminution in value, if any, produced by the departure from the plans and specifications or by the defective workmanship or materials.”: at 619.
In accordance with these principles, the measure of damage for defective work performed in breach of contract is the cost of rectification. Both the manner of rectification and the cost of performing it must be reasonable having regard to the circumstances of this case. The test is what work is reasonably required to restore the Applicants to that which should have been provided had the contract being performed. This may involve, for example, demolition of the work, even at a cost greater than the contract price, provided that course is reasonable.
However, where rectification work has or will produce a pool which is better or lesser than that contemplated by the contract, an adjustment must be made for the difference in value. For example, if an applicant receive a pool which is less satisfactory then that which ought to have been provided under the contract, the damages awarded should include the sum for the cost of the rectification in compensation for this. On the other hand, where the rectified pool is more valuable than what is contracted for, the applicant is not entitled to have the cost of rectification reduced to allow for the betterment to the applicant.[17] The betterment is the result of the voluntary choice of the proprietor[18] or the result of a failure to mitigate the loss; or out of all proportion to the loss caused by the breach of contract.[19]
[17]British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd[1912] AC 673; [1911-13] All ER Rep 63; Harbutt’s ‘Plasticine’ Ltd v Wayne Tank and Pump Co Ltd[1970] 1 QB 447; [1970] 1 All ER 225; [1970] 2 WLR 198 (no credit required merely because destroyed factory replaced with new building of modern design); Cooke v Rowe[1950] NZLR 410; Barclays Bank Plc v Fairclough Building Ltd (No 2) (1994) 39 Con LR 144 at 154-5.
[18]Hoad v Scone Motors Pty Ltd[1977] 1 NSWLR 88 at 93 per Moffitt P; Richard Roberts Holdings Ltd v Douglas Smith Stimson Partnership (1988) 46 BLR 50 at 69; 22 Con LR 60, Official Referee.
[19]Bacon v Cooper (Metals) Ltd[1982] 1 All ER 397 at 400 pre Cantley J, QB; Hoad v Scone Motors Pty Ltd[1977] 1 NSWLR 88 at 95 per Moffitt P. Also Ruxley Electronics and Construction v Forsyth & Ors [1996] 1 AC 344.
The Tribunal has carefully read and taken into account all of the engineering reports, other evidence and submissions from both sides.
The Tribunal finds itself comfortably persuaded by the engineering reports, in particular those of Mr Davis, Mr Fox, Mr Wenck and Mr Rebibou, to conclude that it is not reasonable or necessary to demolish the pool and wall structure in whole or in part.
Notwithstanding the Applicants criticises the last two mentioned engineers for inadequate site inspection, the extensive photographs taken by the Applicants, and earlier engineering reports, and the passage of time, are more than sufficient to have formed a proper expert judgment of the structure.
Whatever the debate about Part 4 of the DBC Act and s 70 of the Building Act 1975, the role of the certifier and the state of plans, according to the preponderance of engineering opinion, the pool and wall structure is fundamentally sound. The Respondent can hardly be held to account for any misconduct by the certifier outside of their knowledge. The Tribunal is satisfied that there were engineering plans, even if generic, which were adequate and sufficient. This was standard acceptable practice of engineers, certifiers and builders. Departures from the Building Regulation 2006, the DBC Act, and Contract warranties do not necessarily lead to the conclusion that structure is unsound. The certifier, whatever misconduct can be attributed to him, was an engineer and satisfied. The other engineers called by the Respondent are satisfied. To rely on these provisions to argue for a site specific boutique plan for each and every more or less standard structure is to read these sections too narrowly. In any event even if there were deficiencies in the plans (which is not found) and errors in the certification process by the certifier, such as to make out a breach of any statutory or contractual warranty, the fact remains that the pool and walls are fit for purpose and has stood the test of time.
The Tribunal concludes that the Applicants’ claim for demolition and replacement is not open, has no proper basis, and must be refused.
Based on the engineers’ reports, the Tribunal finds the pool structure is sound and Applicants have not satisfied the Tribunal that the whole, or any part of the structure should be demolished and replaced by another pool or wall.
Having carefully considered the evidence, including all of the engineer reports and submissions, the Tribunal finds that:
a) the pool is structurally sound;
b) the walls are structurally sound;
c) there is no current failure in the walls;
d) failure in the pool and the walls is not likely in the warranty period;
e) the structure has not yielded through the full spectrum of climatic conditions over recent years;
f) no part of the project structure is likely to suffer sudden or slow failure;
The Tribunal finds the only issue open for consideration for rectification is:
a) the control joint in the west wall which should be repaired; and
b) an area of the north-western corner wall should be corrected.
The change of level, and associated counterfort wall located in the north-western corner of the pool should be reconstructed and engaged with the footing and a section of wall attached to the facing wall.
Mr Wenck was of the view that “detailing and construction of the counterfort wall at the north-western corner of the swimming pool is insufficient for its intended duty and the counterfort should be removed and replaced by a new panel as detailed in the drawings that accompany the Form 15 prepared by Leisure Engineering Pty Ltd.”
The Tribunal does not accept the Form 16 issued by Leisure Engineering is meaningless because no engineer from that company inspected the reinforced steel before the concrete was placed and drawings were produced based on the word of the Respondent. Given the engineering evidence the Form 16 is sufficient.
Accordingly, the Tribunal will order the Respondent to repair the control joint in the west wall and to make rectification as set out by Mr Wenck for the counterfort wall at the north-western corner of the swimming pool.
Upon these repairs and rectification the structure is ready for and should be certified.
The Applicants submitted that of the requirements for the issuing of a final certificate by the BBC included the revision of the cadastral survey.
To this end the Applicants commissioned a cadastral survey by Landmark Consulting at a cost of $4,750.00 which indicated the Respondent’s building works (at the end of the return buttress to the concrete retaining wall) at the western boundary of the property had encroached into the next property by 40 mm. The cost of correction by shaving of the wall is assessed at $500.00.
The Applicants own the adjoining property on the other side of the western wall. Needless to say no dispute has arisen as may otherwise have been with adjoining neighbours, suffering a trifling trespass.
The Tribunal hesitated in being persuaded to make any order for rectification or damages in the amount claimed on the principle of “de minimis non curat lex”. However on balance, the Tribunal will order the Respondent pay the corrective cost of $500 for shaving the wall.
The Applicant made claim for the costs of reimbursements for filling the pool water and acquiring pool accessories ($5,105) and the cost of correcting leaks ($4,546).
The problem for the Applicants is that these amount were incurred after the Applicants were in breach:
a) by not paying the outstanding excavation and extra-concrete costs;
b) by attempting make good the leaks themselves when the Applicants were not entitled to enter upon the construction site;
c) or alternatively after the Applicants purported to have terminated the Contract.
The Tribunal dismisses the claim for pool water, accessories and costs of correcting leaks.
Unlawful Entry
The Applicants allege that there were repeated unlawful entries by the Respondent and/or its agents on the Applicants’ property after termination of the contract being:
a) on 31 January 2008 when two directors entered upon their property;
b) on 3 March 2008 when three sub-contractors entered the property; and
c) on 6 March 2008 when two sub-contractors entered.
As a result the Applicants fitted locks at the cost of $44.00 to the security gates and erected signs naming the Respondent as a cost of approximately $20.00.
As to the repeated unlawful entries the Respondent denies that the Contract was unlawfully terminated on 21 December 2006 or that it unlawfully accessed the property.
Further, the Respondent says that the alleged breach of access on 3 March 2008 and 6 March 2008 do not concern the Respondent in the Amended Claim.
The Respondent says that the complaints of unlawfully entry are not a building dispute within the meaning of Schedule 2 of the Queensland Building Services Authority Act 1991, such that the Tribunal does not have jurisdiction under s 77(1) of the QBSA Act to decide this matter because it is not a building dispute.
The Tribunal is persuaded by the submissions of the Respondent and makes no order in terms of the Applicants’ claim for damages for unlawful entry.
Claim for stress, inconvenience, etc.
The Applicants seek damages for pain, suffering, loss of enjoyment, stress and inconvenience arising from the dispute.
By paragraph (c) of the relevant definition in the dictionary in schedule 2 to the QBSA Act, "Domestic building dispute means ….(c) a claim or dispute in negligence, nuisance or trespass related to the performance of reviewable domestic work other than a claim for personal injuries."
"Reviewable domestic work" is defined as meaning "domestic building work under the DBC Act except that for applying section 8(8) of that Act the definition excluded building work in that Act is taken not to mean anything mentioned in paragraph (b), (c) or (d) of the definition."
Generally, where there is a breach of contract, damages are not recoverable for non-pecuniary losses such as injured feelings, stress, anxiety or disappointment.[20]
[20]Addis v Gramaphone Company [1909] AC 488; reaffirmed by the Court of Appeal in Bliss v South East Thames Regional Health Authority [1985] IRLR 308; Jarvis v Swan Tours [1973] 2 QB 233; Alexander v Rolls Royce Motor Cars [1995] TLR 254; Baltic Shipping v Dillon (1993) 176 CLR 344 and Jarvis v Swan Tours Ltd [1973] 1 QB 233.
A plaintiff may be able to recover damages for injury to feelings in tort, but in contract such damages are irrecoverable.[21]
[21] Ibid.
The Respondent denies they are liable for any stress and inconvenience and loss of enjoyment, but in any event say that this is outside the terms of the QBSA Act and is not a building dispute for which the Tribunal has jurisdiction.
More over by statutory definition a claim for personal injuries is not part of a domestic building dispute.
The Applicants are unable to recover damages under this head of claim in a building dispute which is contractual in nature, the Tribunal is unable to order damages for pain and suffering under the QBSA Act. The Tribunal dismisses the Applicants’ claim for pain, suffering, loss of enjoyment, stress and inconvenience arising from the dispute.
Costs
Section 100 of the QCAT Act provides that “other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party's own costs for the proceeding.” Ordinarily the Tribunal does have the power to award costs if it considers the interests of justice require it to do so. Various factors the Tribunal may have regard to in making that decision are set out in s 102(3) of QCAT Act.[22]
[22] Kehl v Board of Professional Engineers of Queensland [2010] QCATA 77.
However s 77 of the QBSA Act confers jurisdiction on the Tribunal to determine building disputes such as the one brought by the Applicants. Section 77(1)(h) provides that, in such proceedings, the Tribunal may award costs. The section does not provide further guidance or prescription about the occasions for or conditions of exercise of that power. Accordingly an enabling Act, the QBSA Act, does, provide otherwise. As a result, the usual position as to costs in the Tribunal is displaced. That result is reinforced by other provisions dealing with the relationship between the QCAT Act and enabling Acts.[23]
[23]See Judge Kingham in Lyons v Dreamstarters Pty Ltd [2011] QCATA 142; Justice Alan Wilson Lida Build Pty Ltd v Miller and Anor [2011] QCATA 219.
There is no doubt that the parties have spent a considerable amount of money in obtaining professional advice from lawyers, engineers, certifiers and quantity surveyors examining the building works.
The Applicants make claim for expert opinions in the sum of $30,390.00. These were for the inspections, mediation and engineering reports. They also make claim for $836.00 in miscellaneous (application fee, copying, parking).
The Applicants have also spent and claimed sums incurred in legal expenses of their lawyers which they consulted weekly from December 2007 to March 2009.
The Respondent has spent the cost of $3,278.00 for a wall assessment report and no doubt met the not inconsiderable expenses of obtaining the reports of Mr Davis, Mr Wenck and Mr Rebibou.
The Respondent denies that it is liable for any cost voluntarily undertaken by the Applicants in commissioning expert inspections and advice or securing the property. No doubt the Applicants take a similar view of the Respondent’s engineering costs.
It is submitted on the Applicants’ part that the costs of the engineers engaged was necessary to find a solution to the problem pertaining to retrospective certification and on the Respondent’s part to disprove the claim for complete demolition and replacement.
This claim relates to the costs incurred to date and the costs which will be incurred by the Applicants to achieve rectification or construction of the works to adhere with the regulations of the BCC requirements and the Building Act 1975.
The Applicants have succeeded in obtaining rectification for repairs to the control joint and the north-western wall and shaving of the wall, but failed in the major claim for demolition and replacement. The Respondent has succeeded on the excavation and extra-concrete costs.
Much good money has been spent of trivial disputes and irrelevancies in an intense, needlessly adversarial, and personal disputation, which proved impervious to mediation and engineering conclave.
In the circumstances there will be no order for costs. The applications by both parties for costs are dismissed.
Orders
The Tribunal orders pursuant to s. 77 of the Queensland Building Services Authority Act 1991:
(a)The Applicants pay to the Respondent the sum of $5,413.73 plus interest at 10% calculated from 17 November 2006, such sum to be paid within 30 days;
(b)The Respondent:
(i) pay to the Applicants the sum of $500 for rectification for shaving the 40 mm wall encroachment, such sum to be paid within 30 days;
(ii) make rectification:
·by repairing the control joint in the west wall;
·as set out by Mr Wenck for the counterfort wall at the north-western corner of the swimming pool as detailed in the drawings that accompany the Form 15 prepared by Leisure Engineering Pty Ltd;
The Amended Application of the Applicants and the Amended Defence of the Respondent are otherwise dismissed.
No order is made as to costs.
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