Brown v Osterman - [2023] QCAT 98

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Brown v Osterman and Anor [2023] QCAT 98

PARTIES: MATTHEW BROWN

(applicant)

v

SOREN JOHN OSTERMAN

(respondent)

REBECCA OLSZAK OSTERMAN

(respondent)

APPLICATION NO/S:

BDL302-19

MATTER TYPE:

Building matters

DELIVERED ON:

22 March 2023

HEARING DATES:

12, 13 and 14 September 2022

HEARD AT:

Brisbane

DECISION OF:

Member Bertelsen

ORDERS:

1. The Respondents Soren John Osterman and Rebecca Olszak Osterman pay to the Applicant Matthew Brown the sum of $189,782.47 within twenty-eight days.

2. The parties shall file and give to the other party submissions on costs within twenty-eight days. Thereafter the Tribunal shall determine the issue of costs.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – GENERALLY - domestic renovation and building work-efficacy of contractual arrangements- termination-liability under do and charge contract

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 28, s 29

Queensland Building and Construction Commission Act 1991 (Qld)

Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors (No 7) [2019] QSC 241

APPEARANCES & REPRESENTATION:

Applicant:

C H Matthews of Counsel instructed by All Building Law, Solicitors

Respondents:

Soren John Osterman and Rebecca Olszak Osterman (self-represented)

REASONS FOR DECISION

By application filed 6 December 2019 the Applicant Matthew Brown (Mr Brown) claims $184,196.60 as a sum owing in respect of renovation and extension construction work carried out by him as a licensed builder at Wynnum for John and Rebecca Osterman (the Ostermans) in late 2018 and in 2019.
On 29 January 2020 the Ostermans filed a response claiming outstanding works, credit variations and defects asserting initially Mr Brown was not owed any money. Latterly to the extent discernible the Ostermans claimed $205,759.02 for the cost of incomplete work, negative variations and liquidated damages as well as $33,112.32 for defective work.

Background and evidence

Mr Brown stated that in late August early September 2018 he met the Ostermans and their architect Peter North to discuss renovation work at Wynnum. Cost saving was discussed as well as what renovation works would be undertaken. Due to uncertainty of what works were required to be carried out any quote would be on the high side. Mr Brown advised he could carry out the renovation work on a “do and charge basis” exposing himself to all of his costs for materials and subcontractors, that he would not charge a margin and that his fee would be his time (labour) charged at an hourly rate of $65.00 plus GST. The Ostermans, according to Mr Brown, accepted this proposal.
At the same meeting a costing estimate for the do and charge contract was agreed based on a square metreage of 1,400m²as there was not at that point any decision about fixtures or finishes and some cost saving work was to be undertaken by the Ostermans on a DIY basis. Following that on 17 September 2018 Mr Brown provided a written quote for $400,000.00 – no GST.
On 11 October 2018 the Ostermans gave Mr Brown drawings entitled “Building Approval Drawings, issue, a client issue” dated 11 October 2018 prepared by Peter North Architect (issue drawings). On 15 October 2018 the Ostermans gave Mr Brown structural drawings by Colin Lynskey Structural Consultants (the Lynskey Drawings).
Then on 19 October 2018 the parties entered into a QBCC Level 2 Renovation Extension and Repair Contract (QBCC contract) the real purpose of which, according to Mr Brown, was to assist the Ostermans in obtaining finance to complete renovation works. The contract price $440,000.00 inc GST was a reflection of the square metreage calculation estimated at the meeting a month or two before. Being a fixed price contract on the face of it there were eight progress payments to be made. Practical completion was to be by 15 April 2019.
Item 15 of the QBCC contract refers to both plans and specifications being provided by the Ostermans to Mr Brown on 16 October 2018. Those are more likely the Building Approval Drawings (issue drawings) and Lynskey Drawings as no other plans, specifications or drawings dated to that time, if any, appear to have formed part of the QBCC contract. Both were general in nature but for the purpose of sufficiency for finance approval were, it seems, adequate.
Mr Brown’s position was that the QBCC contract a month or more after the do and charge verbal agreement and subsequent to the written quote of 17 September 2018 was entered into to enable the Ostermans access to funding, and that the do and charge arrangement otherwise remained in place with works being carried out as requested by the Ostermans with invoices to be issued broadly in accordance with the progress payments recited in the QBCC contract. Mrs Osterman, a project manager, was to be actively involved in selecting fixtures and finishes as there was never any schedule of fixtures and finishes included in the QBCC contract at the time nor any evidence, e.g. a written amendment suggesting that any such a schedule should be included. The QBCC contract as a stand-alone fixed price contract is clearly deficient in that it does not include any such schedule. Plans that were included were not detailed enough to be sensibly incorporated on their own into a fixed price contract. That lends credibility to a do and charge arrangement whereby fixtures and fittings would be charged for as the renovation progressed read together with the QBCC contract.
It did not appear to be in any real contention between the parties that on about 2 to 4 November 2018 the Ostermans emailed the building approval to Mr Brown; that on 6 November 2018 the Ostermans provided Mr Brown with a “final for construction finishes schedule”; that works commenced on about 13 November 2018. There may have been some differences in dates between the parties but not of any consequence.
On 4 December 2018 the progress payment schedule in the QBCC contract was revised but there was otherwise no change to that contract. Invoices issued were paid except for invoice number 0055 dated 26 July 2019 for $44,000.00 and invoice number 0057 dated 22 August 2019 for $144,196.60, a total of $184,196.60. On 27 March 2019 the Ostermans issued a spreadsheet “House renovation budget” purportedly to clarify Mr Brown’s position on costs to that time seemingly to assist Mr Brown with his own financial position.
According to Mr Brown the Ostermans requested a number of variations to the works being undertaken. These were:
Painting $21,902.00
Air conditioning $18,700.00
Electrical $9,215.00
Plumbing $10,321.17
Flooring $36,993.00
Joinery $25,366.00
Tiling $2,799.94
Total $125,297.11
He said the work the subject of the variations had been completed except for some joinery; that agreement to cost of variations for flooring and air conditioning were evidenced by Form 5 variation documents produced to the Tribunal; that cost of plumbing and electrical were evidenced by the Ostermans’ email to him of 3 August 2019 produced to the Tribunal; and tiling by email of 10 June 2019 to the Ostermans giving the price of tiling to the Ostermans. With respect to painting Mr Brown said the cost of painting did not form part of any contract because the Ostermans were intending to paint themselves. However that did not transpire so Mr Brown’s painter Matthew Sutcliffe completed inside and out at a cost of $21,902.00.
Mr Brown argued with agreed variations even on the Ostermans’ own interpretation of the contract (one fixed price contract only) the contract price had increased by $125,297.11 from $440,000.00 to $565,297.11. But only $396,000.00 had been received being eight progress payment invoices he had submitted, and which had been paid. Mr Brown asserted that at a meeting he attended on 25 June 2020 with Matthew Robinson, a business associate of Mr Brown and the Ostermans and their neighbour, the Ostermans indicated they would pay the full cost of air conditioning variation $18,700.00, flooring variation $36,993.00 and half final claim $22,000.00 a total of $77,693.00. But no monies were ever forthcoming. Mr Brown said he continued to pursue payment of outstanding invoices 0055 and 0057 in August 2019.
On 27 August 2019 the Ostermans issued a Notice of Breach of Contract and Intention to Terminate Contract based on unreasonable delay, suspension, or failure to maintain reasonable progress in relation to the works. Mr Brown through his solicitor’s letter of 4 September 2019 noted, amongst other things, that failure to progress works was reasonable in the circumstances for the reason there was a refusal to make payment for a significant amount of work and in particular the Ostermans’ failure to make payment of $77,693.00 agreed at the meeting of 25 June 2019. Notwithstanding, Mr Brown said on 9 September 2019 his cabinet maker Russell Fitouts attended the property and installed a walk-in robe; that on 11 and 12 September 2019 he rectified defects at the property; that on 15 October 2019 he attended commissioning of the roof. But still there was no further payment forthcoming.
Mr Brown said he did address defects raised in a defects register sent to him by the Ostermans; that a disagreement or difference of opinion about whether an item is or is not a defect did not amount to a substantial breach and was not any basis for termination of the contract. An attempt at settlement involving the parties’ solicitors was made but it was unsuccessful.
On 4 November 2019 the Ostermans issued a further Notice of Breach of Contract and Intention to Terminate Contract (second breach notice). According to Mr Brown that notice was issued to him at 5:55pm on 4 November 2019 evidenced by the covering email produced to the Tribunal. It alleged in short form failure to replace or remedy defective work, unreasonably failing to perform work and failing to comply with the QBCC Act.
On 15 November 2019 Mr Brown’s solicitors objected to the second breach notice essentially on the grounds the vast majority of defects had been remedied and $184,196.60 was due and owing. As well on the 15 November 2019 Mr Brown’s solicitors forwarded a Notice of Breach of Contract and Intention to Terminate Contract to the Ostermans for failure to pay money due and owing.
Following that, on 19 November 2019 at 5:30am Mr Brown said he emailed the Ostermans to advise his subcontractor would attend the property that day to attend in particular to balustrade work such as to enable the Ostermans to be issued a Form 21 Final Inspection Certificate. The email was produced to the Tribunal. Having advised the Ostermans that his subcontractor would be attending he said the Ostermans issued a Notice of Termination of Contract which was sent to him by email at 2:39pm on 19 November 2019.
Mr Brown noted the second breach notice was issued by the Ostermans on 4 November 2019 at 5:55pm. Having been so sent after 5:00pm it was pursuant to clause 30.4(a) of the QBCC Contract deemed to have been given the next day, 5 November 2019. Pursuant to clause 26.1 the Ostermans were only entitled to terminate if the alleged breaches were not remedied within ten business days of the issue of the Ostermans’ second breach notice; that steps to remedy any alleged breach of the QBCC Contract were open to be taken to close of business but arguably to 11:59pm that tenth day. Mr Brown’s contractor John from All Gates and Screens attended the property at about 5:25pm on 19 November 2019 to start the works but was denied access. An email confirming attendance was produced to the Tribunal.
If the Tribunal accepts that chronology, which in the absence of any compelling evidence to the contrary it does, then the Ostermans’ Notice of Termination of 19 November 2019 is non-compliant with the QBCC Contract pursuant to which it purports to be given. As well it appears to have been given in response to Mr Brown’s email early in the morning of 19 November 2019 such as to cut short any attempt to attend to the balustrade that day. But the failed Notice of Termination of Contract thus given can be correctly construed as a repudiation of the contract.
On 22 November 2019 Mr Brown notified the Ostermans that their unlawful termination amounted to repudiation stating that he accepted such repudiation and elected to terminate the contract leading then to his claim initially for $184,196.60.
In support of the do and charge arrangement Mr Brown referred to the Ostermans’ claim under the QBCC Home Warranty scheme whereby they would be afforded a monetary entitlement if it was considered they had validly terminated a fixed price contract. The QBCC in a letter to Mr Brown of 9 June 2020 stated:
In summary I declined the claim on the basis that I did not believe the owner validly terminated the contract on the default of the licensed contractor or at common law. Further I also considered that the contract, in reality, was a cost-plus contract which means no assistance can be given under Part 2 of the terms of cover (incomplete residential construction work). It was my view that the owner had no basis for termination and that both their First and Second Breach Notices did not identify “substantial breaches” under the contract.
The QBCC decision was affirmed on internal review. The Ostermans did not seek an external Tribunal review of the QBCC’s internally reviewed decision. It was argued in view of the QBCC decision that to litigate the same issues on the same basis amounted to an abuse of process. Additionally, subsequently on 25 October 2019 the QBCC wrote to Mr Brown stating amongst other things
The QBCC cannot take any further action in this matter The QBCC will not be issuing a Direction to Rectify and/or Complete for any of the complaint items. This case has been finalised.
The Ostermans for their part considered themselves experienced renovators (Mrs Osterman a project manager) having carried out two domestic renovations prior. In March 2018 they engaged Peter North Architect to provide architectural drawings for renovation and extension at Wynnum.
On 27 August 2018 they provided Mr Brown with a hard copy of architectural drawings. The structural design completed by Colin Lynskey was discussed amongst other things on 13 September 2018 as was anticipated design and finishes. They confirmed Mr Brown provided a written quote for $400,000.00 (ex GST) on 17 September 2018. This the Ostermans said would form the basis of a QBCC fixed price contract; that there was no mention in the quote of any do and charge hourly rate.
The QBCC contract was signed on 19 October 2018 for $440,000.00 (inc GST) with no relevant provisional sums or exclusions; it was to provide certainty as to the cost and scope of works. The only contract governing their relationship with Mr Brown was the QBCC contract. On 6 November 2018 Mr Brown was provided with a finishes schedule. On 4 December 2018 the schedule to the QBCC contract was amended to reflect the sequence in which Mr Brown was performing the works.
Mr Brown completed works in accord with the QBCC contract payment schedule and invoices provided by Mr Brown. Seven invoices totalling $396,000.00 were paid. Two further invoices numbers 0055 and 0057 were disputed. They stated there were changes to the plumbing quotation and roof line which would have resulted in a negative variation to the contract price under the singular QBCC contract. As well boxing on the façade of the house was reduced in size; the GJ James window and door order was amended; and cheaper basins for the bathrooms were sourced.
Mrs Osterman said on 25 February 2019 the Architect Peter North and Mr Brown met to discuss some items because they had changed their minds on some finishes in order to save additional money. On 27 February 2019 they provided cheaper options for kitchen appliances and feature tiles for the bathrooms resulting in cost savings and consequently a decrease in the contract price. The Ostermans were concerned that Mr Brown’s initial invoices did not provide labour hours claimed. In due course particulars of hours worked were furnished.
On 27 March 2019 Mr Brown provided some costs for works to complete the build. On 7 April 2019 Mrs Osterman emailed the cabinet maker Russell Fitouts about changes in cabinetry design affecting the kitchen and butler’s pantry, walk in robe, BBQ area and entertainment units.
On 28 April 2019 the Ostermans requested a detailed day by day plan to completion due to lack of progress with the completion date 15 April 2019 having passed. The same day the Ostermans emailed Mr Brown a programme for completion of works through to 17 May 2019, the day the Ostermans would move back into the house following an earlier vacate to assist with or speed up works. On 15 May 2019 the Ostermans requested credits for tiles and timber, some twelve batches of tiles unused and timber not collected. Then on 29 May 2019 they requested final costs to completion and confirmation all trades had been paid noting there was a calculated credit of $30,000.00 from Mr Brown.
The Ostermans said on 10 June 2019 Mr Brown sent them seven quotations (as variations) without supporting documentation and after works had been completed. Only when Mr Brown claimed he had reached practical completion was it indicated that the build had gone over budget. Mr Brown issued a certificate of practical completion on 19 June 2019 but there were according to the certifier outstanding requirements. The Ostermans with the acquiescence of Mr Brown moved back into the house on about 21 June 2019. On a walkthrough of the house on 21 June 2019 Mrs Osterman said she pointed out defects to Mr Brown and following on 25 June 2019 issued a list of defects and outstanding works; numerous she said.
The Ostermans considered they had no contractual obligation to agree to positive variations some six in all sent to them by Mr Brown on 21 June 2019 because such were only sent after the variations had been completed. But Mr Brown would not acknowledge negative variations or the value of outstanding works.
With respect to the meeting of 25 June 2019 the Ostermans said they did approve two variations for ducted air conditioning and flooring supply but that such was contingent on Mr Brown approving negative variations and completing outstanding works. Minutes of the meeting referring to this arrangement were furnished to Mr Brown and Mr Robinson. There was no comment from either querying the minutes. The neighbour who attended that meeting was one Lorraine Grant who in a statement before the Tribunal stated:
Mr Brown seemed willing to accept the credit variations as indicated by the Osterman’s and a resolution and way forward seemed to be agreed.
Following in July the Ostermans requested an update on outstanding works and credit variations. On 18 July 2019 Mr Brown issued an explanation of credits asked for and outstanding works. At the same time Mr Brown attended to install towel rails and robe hooks. On 26 July 2019 the Ostermans received invoice 0055 followed by invoice 0057 on 22 August 2019.
On 27 August 2019 the Ostermans issued a Notice of Breach and Intention to Terminate for reasons already set out. On 9 September 2019 Mr Brown’s cabinet maker Russell Fitouts attended and installed a walk-in robe. On 4 November 2019 the Ostermans issued a further Notice of Breach of Contract and Intention to Terminate contract. The Notice required Mr Brown to remedy breaches stated within ten business days i.e. breaches to be remedied by 19 November 2019. They considered Mr Brown’s email to the effect that the person John would be at the Wynnum premises around 5pm that afternoon, the tenth day, to measure up the balustrade meant that making the balustrade compliant was never going to be achieved within ten days; that there had been no real effort to rectify defective works since 25 June 2019 some five months before. That being so the Ostermans accepted Mr Brown’s repudiation and terminated the contract that same day.

Witnesses at hearing

Mathew Selwyn Robinson

Mr Robinson was a friend and business associate of Mr Brown. He confirmed his statement that he attended the 25 June 2019 meeting with Mr Brown, the Ostermans and the neighbour (Lorraine Grant). He said the form 5 variations for air conditioning and flooring were signed off at the meeting; that agreement was reached for payment of some $77,000.00 to Mr Brown.

Matthew John Sutcliffe

Mr Sutcliffe, painter and decorator, confirmed his statement of 2 July 2020. He was asked by Mr Brown to look at a job at Wynnum in February 2019. He met with the Ostermans and Mr Brown. Initially he was to paint the upper exterior cladding only as the Ostermans were to paint the rest of the exterior to save money. He said the do and charge was agreed upon by the Ostermans. Once completed the Ostermans asked him about completing the whole exterior of the house at a rate of $400.00 per person per day. The rate to which the Ostermans agreed. He said he was then approached about painting the interior ceilings. That would he said take two people five days to do, the cost $4,000.00. That sum was paid in cash by the Ostermans.

Mr Sutcliffe was then asked to complete the house interior. He estimated the cost at $28,000.00. The painting was done taking about ten to twelve weeks and costing about $25,600.00 in total. He said he has only ever been paid $4,000.00. On a walk-through post completion Mrs Osterman advised she was happy with the job. In cross examination he said quotes were provided to the Ostermans and Mr Brown and that invoices were directed to Mr Brown. He confirmed he had been paid by Mr Brown. Asked whether he had received a list of defects from Mr Brown he said he had but he did not consider them defects.

Lane Stephen Bird

Mr Bird, electrician and business owner Juice Electrical Contracting, confirmed his statement of 2 July 2020. He was engaged by Mr Brown to subcontract electrical works for the extension/renovation works at Wynnum. In late October early November 2018, he met with Mr Brown and the Ostermans when ballpark figures and ideas on electrical layouts and materials were discussed. He said he was never at any stage provided with an electrical plan but rather worked with the Ostermans going over ideas for electrical plans. Discussed were choices about switches, smart lighting, USB power points, cameras, intercoms, LED strip lighting, sensors and other electrical services and ideas. The Ostermans were unsure of what they wanted and were exploring costs and options. He understood that Mr Brown was working under a do and charge arrangement. He was asked to charge for his own work the same way. All invoices were at hourly rates plus materials. There were changes on many occasions.
In cross examination he confirmed he quoted Mr Brown and invoiced him as well. Quote variations went to Mr Brown. Installations were a mixture of high and medium range finishes. While on site he was not necessarily under Mr Brown’s direction as to what went where. He had been partially paid by Mr Brown.

Jay Patrick Russell

Mr Russell, cabinetmaker of Russell Fitouts, confirmed his statement of 2 July 2020. In November 2018 he was contacted by Mr Brown about a job at Wynnum. He understood from Mr Brown that he was working for the Ostermans on a do and charge basis. On 7 December 2018 he met the Ostermans when they showed him plans and inspiration photos of what they might like. He said the Ostermans acknowledged the job was Mr Brown’s but that they were really picky and wanted to explore multiple options to get it just right. What followed were seven different quotes and multiple phone calls between the Ostermans and himself. Mr Brown did not ask for a quote rather the Ostermans dealt directly with him. Mr Russell produced to the Tribunal seven quotes given to the Ostermans and Mr Brown in the period 17 January 2019 through 9 April 2019 together with emails regarding several changes. Mr Brown was not included in the correspondence. He considered the level of finishes selected by the Ostermans was mid to high range with kitchen and butler’s pantry being a high range level of finish.
Mr Russell confirmed joinery quote issued 26 June 2019 was the final amount for adjustments made. He also confirmed that he subcontracted to Mr Brown, quoted Mr Brown, invoiced Mr Brown, and scheduled work on site with Mr Brown. Of the seven quotes provided by Mr Russell four were directed to both Mr Brown and the Ostermans.

Bruce Haines

Mr Haines, director of Building Experts Australia Pty Ltd, confirmed his statement of 23 November 2020 to which he attached his primary report and Scott schedule in relation to works at Wynnum. Subsequently he and Garry Carpenter consequent on an expert conclave produced a joint expert report dated 1 April 2021. In cross examination of his primary report Mr Haines was referred to variations being dated after practical completion and was asked why they appeared to be issued late. Mr Haines pointed to, for instance, air conditioning not being in the contract which was undertaken as a variation. Similarly, there was no electrical plan in the contract with electrical work being undertaken as a variation. There were no provisional or prime cost items. His primary report referred to Mr Brown commenting that variations were provided to the Ostermans at their request as their bank required them. All of which he said was evidence indicating Mr Brown was working on a do and charge basis and not in accordance with a fixed price contract.
Mr Haines also stated that even if it was found that the contract was a fixed price contract, he believed Mr Brown ought to be entitled to charge variations for elements that were not specified in the contract such as supply and installation of electricals.

Gary Thompson

Mr Thompson, Quantity Surveyor and licensed builder, confirmed his statement of 13 October 2020. His colleagues attended Wynnum on 4 September 2020 to undertake an inspection. He provided a formal inspection report dated 7 October 2020 produced to the Tribunal. Documents available to him to produce his report were the QBCC contract, plans used for construction, invoices paid by the Ostermans, invoices paid by Mr Brown and invoices for subcontractors and suppliers paid by Mr Brown. He estimated the total cost of work that Mr Brown claimed to have incurred was $616,263.59; that all invoices submitted to the Ostermans totalled $580,196.60 ($396,000.00 paid). He considered the costs incurred by Mr Brown in undertaking the work as reasonable at $616,263.59. Alternatively, the total invoiced sum of $580,196.60 was reasonable if work was claimed on a quantum meruit basis.
Mr Thompson confirmed his statement of 6 July 2021. On 18 June 2021 he attended Wynnum to undertake an inspection. On 6 July 2021 he produced a further inspection report in which he relied on a joint expert report prepared by Bruce Haines and Gary Carpenter (JER) in providing his opinion as to the cost to rectify alleged defects. The Ostermans claimed items from the contract documents were incomplete, producing a report from Paul Burgess Senior Quantity Surveyor of Mitchell Brandtman identifying alleged incomplete works and defective items with asserted costs to complete the works. He formed his independent assessment that the reasonable value to rectify defective works in the JER was for Mr Haines $8,222.50 and for Mr Carpenter $8,613.00. The reasonable value to complete asserted incomplete works was nil. Alternatively, if such works were deemed applicable then a value of $23,965.70 was reasonable. Mr Thompson was able to explain differences between his first report and second reports. On the first occasion he compiled an indicative estimate. On the second occasion he had before him more and better information on which to assess.
Mr Thompson also prepared with Mr Burgess a joint expert report dated 13 December 2021. In that report Mr Burgess assessed $238,871.34 for the cost of incomplete work, negative variations, and liquidated damages for late completion based on a lump sum contract and $120,519.61 based on a cost plus contract. Mr Thompson assessed $88,588.25 for both lump sum contract and cost plus contract.

Peter James North

Mr North confirmed his statement of 4 August 2020. He was the Ostermans’ architect for the renovation build at Wynnum and prepared detailed drawings and finishes schedule for the Ostermans. He spent many evenings reviewing drawings, anticipated finishes, and fixtures on Pinterest (home and style inspiration). He agreed that while drawings contained a degree of detail it was the finishes schedule that specified the, for instance, exact material, colour, style, finished appearance. Mr North said he was involved in some discussions in reduction of costs. Not having ever seen a copy of any written contract he was not involved in the way in which work was carried out. Nor did he ever approve or authorise changes to Mr Brown. He confirmed a schedule of finishes was finalised and issued through to the Ostermans on 30 October 2018.

Barry Olszak

Mr Olszak, owner director of Abcor Flooring, flooring contractor confirmed his statement of 22 September 2020. He provided a quote for $36,993.00 for flooring works at Wynnum on 12 April 2019. By 16 June 2019 flooring had been completed.

Lorraine Ivy Grant

Ms Grant confirmed her statement of 25 September 2020. She had no independent recollection of variations for air conditioning and flooring. She had an independent recollection of discussions about credit variations and processes.

Garry Clyde Carpenter

Mr Carpenter, defects and quality expert, Datum Building Consultancy Pty Ltd produced an expert report dated 22 September 2020. He considered there were defects to be rectified. When asked what the main defects were he said termite protection, driveway water issue, balustrade, and corrosion protection for the carport. He also produced a joint expert report with Mr Haines dated 1 April 2021. He confirmed his opinions and differences of opinion apropos that report.

Paul Burgess

Mr Burgess produced his expert report of 27 September 2020 regarding incomplete and defective works. The report stated he had provided assistance in the preparation of a Scott Schedule dated 26 September 2020. Lastly in the report Mr Burgess said he considered (concluded) that the total cost included in the Ostermans’ Scott Schedule was a reasonable estimate of the cost to rectify the outstanding defects and complete the works not undertaken by Mr Brown in accordance with the contract drawings.
Mr Matthews of Counsel objected to the admissibility of the report, relying on the authority Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors (No 7) [2019] QSC 241 where it was confirmed that for an expert opinion to be admissible it must be established that the facts on which the opinion is based form a proper foundation for it and the expert’s evidence must explain how the field in which the expert has expertise, that is, specialised knowledge, specified training, study or experience applies to the facts assumed or observed so as to produce the opinion propounded. Mr Burgess provided no basis or reasoning about how he arrived at his conclusion. Mr Burgess held qualifications as a quantity surveyor but not as a builder. There was no argument on the part of the Ostermans. The Tribunal considered the point properly taken. Mr Burgess’ report of 27 September 2020 was ruled inadmissible.
There was no such objection to the joint expert report of Thompson/Burgess. Their cost calculations lump sum/cost plus have already been referred to. In instances where his costings were over and above Mr Thompson’s he included individual trades callout time, travel time, set up, clean up and suchlike rather than a programmed or grouped attendance encompassing several issues to be addressed at the one time.

Mark David Porter

Mr Porter, termite consultant of Environpest (International) Pty Ltd, confirmed his report of 4 March 2021. He had some twelve concerns about the termite barrier installed by Accurate Pest Management Pty Ltd, Mr Brown’s termite barrier installer. He queried that installer in particular in relation to:
Patio and steps installed by Mr Brown compromise the external perimeter of the home
In the house rear vertical tiles installed compromise exposed edge of the patio
At the junction between the rear patio and the main home vertical tiles installed to the exposed slab edge. No termite protection.
External entry patio slab right side of home installed with no visible termite protection
A reply from Accurate Pest Management on 15 February 2021 confirmed works undertaken were to treat new construction at the property rear not any area of the existing structure. Since then, a certificate had been supplied but there was no detail. Mr Porter still had concerns.

Matteo Tirapelle

A letter from Mr Tirapelle, Principal Engineer, Hera Engineering Pty Ltd dated 17 February 2021 was included as part of the Ostermans’ hearing bundle. It was in the nature of review and comment. The letter was objected to. There was no confirmation of any undertaking to assist the Tribunal. There was an absence of compliance with rule 428 of the Uniform Civil Procedure Rules which is mandatory for admissibility of expert reports or opinions. That being so the letter of 17 February 2021 was ruled inadmissible for the purpose of consideration of issues before the Tribunal.

Conclusions

A formidable volume of statements, reports and written material was produced to the Tribunal.
The Tribunal accepts on the evidence of Mr Brown that the only basis he would have been prepared to quote in August/September 2018 was on a do and charge basis. The Ostermans were still shopping around getting ideas, making comparisons, and familiarising themselves with products that would suit their taste. The quote of September 2018 gave the Ostermans a good idea of the sort of money they were looking at to get the sort of renovation/extension they were envisaging even with some DIY cost saving on their part. It did not set out specific finishes, materials, or specifications. The Tribunal can readily accept $65.00 per hour for labour as reasonable at that time.
The Ostermans required finance to undertake the project. Any commercial financier, for security, would require a fixed price written contract setting out progress payments to be paid for works completed. A QBCC fixed price contract was entered into for $440,000.00 inclusive of GST. As a stand-alone singular contract governing the entire relationship between the parties it was entirely inadequate. It encompassed architectural building approval drawings and structural drawings. No prime cost items or provisional cost items, no schedule of fixtures and finishes. It held utility for Mr Brown for instance in providing progress payments along the way, but it was on the do and charge arrangement on which Mr Brown would be paid for works completed. To be clear the “contract” here was constituted by both an oral agreement, a do and charge contract, and the written QBCC contract.
On 6 November 2018 the Ostermans provided Mr Brown with the schedule of finishes. That schedule of finishes was never incorporated into the QBCC fixed price contract even when the progress payments schedule was amended on 4 December 2018. Budgeting, providing trades quotes, being involved in decision making for the type, style, layouts, materials, or size of fixtures runs contra to the notion of a fixed price contract where a fixed price would have been allocated to a particular obligation under the contract or where the contract would have provided for specific inclusions as part of the fixed price. For example, GJ James’ windows and doors comparison quote, the litany of quotes from Mr Russell regarding cabinetry involving changes and the emails and phone calls that accompanied them. Nor is it the case that a negative variation can apply to a do and charge arrangement. There is no reason for that to occur. The builder Mr Brown was being paid for his labour plus materials and subcontractors. Mr Brown was in fact paid for hours claimed somewhat belatedly in some instances due to his own late submission of hours claimed. In fact some seven such invoices totalling $396,000.00 were paid by the Ostermans.
The house renovation budget of 27 March 2019 is a contradiction in terms in the context of a fixed price contract which would simply, in the normal course of events, have required progress claims be paid on issue by Mr Brown at particular stages. Additionally, some invoices issued by Mr Brown were paid despite non completion at the time, for instance, kitchen /pantry, painting and fixtures and the fireplace.
It is clear on the evidence of both parties there were numerous changes and variations as the works progressed. These are addressed as follows.
(a)Flooring and air conditioning at $36,993.00 and $18,700.00 respectively. Signed form 5 variations were produced to the Tribunal. There was insufficient evidence produced to the Tribunal to conclude that acceptance of those variations was subject to acceptance by Mr Brown of negative variations. They ought properly to be allowed.
(b)Acceptance of plumbing at $10,321.17 and electrical at $9,215.00 was sufficiently evidenced by the Ostermans’ email of 3 August 2019. They ought properly to be allowed.
(c)Cabinetry/joinery at $25,366.00. The Ostermans expressed issue with the variation only to the extent of $1,000.00 for the BBQ, $2,250.00 for entertainment units and $5,000.00 for DJ storage, a total of $8,250.00. Mr Brown conceded those three items. The claim ought properly to be allowed at $17,116.00.
(d)Painting at $21,902.00. Mr Sutcliffe (painter) completed substantial painting inside and out in circumstances where the Ostermans were to undertake painting as a cost saving measure but were unable to do so. The agreement or agreements he entered into with the Ostermans was not disputed. There was no compelling evidence to suggest Mr Sutcliffe’s charge ought to be reduced. Mr Brown had paid Mr Sutcliffe in full. The variation ought to be allowed.
(e)Tiling $2,799.94. The price for tiling was presented to the Ostermans. There was no objection. Tiling variations were accepted as part of the Ostermans’ response.
(f)Variations ought to be accepted at $117,047.11 in lieu of $125,297.11.
With respect to termination the Tribunal has already concluded that it was Mr Brown who elected to terminate the contract on 22 November 2019. The Ostermans made a claim to the QBCC under its Statutory Home Warranty Scheme for incomplete works. The QBCC not only did not consider the Ostermans had validly terminated the contract but did consider the contract to be a cost-plus contract. The claim was refused. External review rights were not exercised. That the Tribunal finds is compelling evidence of a cost-plus contract. The finding of a cost-plus contract rather than a do and charge contract is inconsequential for present purposes.
Two joint expert reports were produced. Firstly, the Haines/Carpenter report and secondly the Thompson/Burgess report. The Ostermans identified some forty-eight defects. The vast majority were of a minor nature and could in the ordinary course of events have been attended to after practical completion. Mr Carpenter for the Ostermans and Mr Haines for Mr Brown were able to identify and reduce defective works and scope of works to rectify. Mr Thompson considered $11,124.50 for Mr Carpenter’s recommendations and $9,971.84 for Mr Haines’ recommendations. Mr Burgess considered $33,112.32 for Mr Carpenter’s recommendations and $23,674.37 for Mr Haines’ recommendations.
Mr Thompson’s costings are adopted in preference to Mr Burgess’s costings where Mr Burgess has gone outside the scope agreed in the Haines/Carpenter report. Nor did Mr Burgess have qualifications allowing him to cost rectification work. That being so Mr Thompson’s rectification costs are adopted, that is, $9,971.84. It was further submitted that the $9,971.84 ought be reduced in respect of two items, firstly by $818.50 due to minor defects able to be rectified after practical completion at no cost and secondly a further $3,621.00 on account of carport steel framing brackets where Messrs Haines and Carpenter disagreed, Mr Carpenter being of the view the carport was designed to have such brackets exposed thereby requiring corrosion protection as opposed to Mr Haines’ view that a ceiling was to be installed enclosing framing brackets thus not requiring corrosion protection. Because there was no requirement to leave steel framing brackets exposed there was no proof that corrosion protection was required. The claim for $3,621.00 ought be disallowed. Accepting those two reductions only $9,971.84 is reduced to $5,532.34.

With respect to negative variations (or credit against sum owed) the Ostermans asserted these came about where a product or finish of lesser quality was provided such as to reduce the overall cost. Negative variations are simply not possible on a properly conducted do and charge contract for the reason that, as here, the builder Mr Brown charges for his labour, material costs and subcontractors.
In so far as failure to complete is concerned there is no claim by the Ostermans for the reason that they are not entitled to rely on their own breach to assert completion of works partially completed at time of termination. Incomplete work cannot be applied as a credit for the reason Mr Brown was only entitled to be paid for work carried out at his labour rate.
There is no reason why the Ostermans ought not be entitled to liquidated damages. Applying the QBCC portion of the contract arrangements completion was due on 15 April 2019 with the Ostermans taking possession on 21 June 2019 which was sixty-seven days late. At $100.00 per day in accord with the QBCC contract that is $6,700.00.
Interest on overdue payments accrues at the rate of 5% per annum in accord with the QBCC contract and ought properly to be allowed from 29 August 2019, the date the latter invoice 0057 became due.
Mr Brown’s claim at his original $184,196.60 as constituted by invoices 0055 and 0057 is accepted as the sum correctly owing. That is based on the view that Mr Brown is the best arbiter of his own labour. That does not mean that Mr Thompson’s estimate of $616,263.59 is incorrect but rather confirms the $184,196.60 claim as indisputably reasonable.
In summary Mr Brown’s claim is allowed at $184,196.60 adjusted by $8,250.00 for cabinetry changes, $5.532.34 for rectification and $6,700.00 liquidated damages, a nett figure of $163,714.26 together with interest for the period 29 August 2019 to date of final submissions 4 November 2022 at 5% interest ($26,068.21), a final figure of $189,782.47.
To the extent the Ostermans’ claims are otherwise discernible they are dismissed or otherwise accounted for in the above summary. Both parties have requested to be heard on the issue of costs.

Orders

1. The Respondents Soren John Osterman and Rebecca Olszak Osterman pay to the Applicant Matthew Brown the sum of $189,782.47within twenty-eight days.
2. The parties shall file and give to the other party submissions on costs within twenty-eight days. Thereafter the Tribunal shall determine the issue of costs.