Cairns Building and Construction Pty Ltd ATF P&T Kelly Trust t/as Phil Kelly Builders v Kaminaras
[2021] QCAT 374
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Cairns Building and Construction Pty Ltd ATF P&T Kelly Trust t/as Phil Kelly Builders v Kaminaras & Anor [2021] QCAT 374
PARTIES: CAIRNS BUILDING AND CONSTRUCTION PTY LTD ATF P & T KELLY TRUST T/AS PHIL KELLY BUILDERS (applicant)
V
THEO AND TAMMY KAMINARAS (respondents)
APPLICATION NO/S:
BDL247-19
MATTER TYPE:
Building matters
DELIVERED ON:
29 October 2021
HEARING DATE:
16 August 2021
17 August 2021
18 August 2021
19 August 2021HEARD AT:
Cairns
DECISION OF:
Member C.E. Taylor
ORDERS:
1. The applicant’s claim for damages, or alternatively for an amount owing, in the sum of $116,715.00, and interest thereon, is dismissed.
2. Subject to Order 3 herein, the applicant is to pay the respondents damages in the sum of $44,206.32 plus interest at the rate of 10% per annum from 22 October 2019 until the date of payment.
3. The applicant’s liability under Order 2 herein is off-set by the unpaid balance of the adjusted contract sum, namely $104,015.13, such that the nett result is that there is no amount to be paid by the applicant to the respondents in satisfaction of Order 2.
4. The respondents’ claim for damages for loss of rental income is dismissed.
5. The respondents’ claim for damages for inconvenience and loss of enjoyment is dismissed.
6. Costs are reserved.
7. Should the parties not agree on the issue of costs within 21 days of the date of this order, the issue of costs will be determined by this Tribunal in accordance with the following directions:
(a) The respondents are to file 2 copies and serve 1 copy on the applicant any further material upon which they seek to rely, and their submissions, on costs, within 28 days of the date of this order.
(b) The applicant is to file two copies and serve one copy on the respondents its material (if any) on which it seeks to rely, and its submissions on costs, including its reply (if any) to the respondents’ submissions, within 14 days of being served with the respondents’ material and submissions.
(c) The respondents are to file two copies and serve one copy on the applicant of its submissions in reply (if any), within 7 days of being served with the applicant’s submissions.
(d) Unless either party requests a hearing on costs within their submissions filed as per (a) to (c) herein, the issue of costs will thereafter be determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
CATCHWORDS:
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE – REPUDIATION – builder asserted work was practically complete and final claim was due for payment – builder did not follow procedure for reaching practical completion and making final claim under contract – homeowner maintained work was not practically complete and payment of final claim was not due – each party asserted the other repudiated the contract – each party purported to terminate the contract
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – REMUNERATION – RECOVERY – homeowner alleged practical completion not reached because of defects or omissions – builder alleged minor defects or omissions did not prevent practical completion – whether practical completion stage achieved – whether builder entitled to payment of final claim – contract terminated – no alternative claim made for restitution – whether doctrine of substantial performance applied.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF – where homeowner alleged defects or omissions in work required substantial remedial work – whether the cost of cure or diminution in value was the proper level of remedy – where there was an absence of evidence as to the proposed remedial action being reasonable – where there was an absence of evidence as to the reasonable costs of rectification.
Queensland Building and Construction Commission Act 1991 (Qld), s 42, s 77(3)(c), Schedule 1B s 4, s 21, s 22, s 23, s 41(2)(f), Schedule 2
Queensland Building and Construction Commission Regulations 2018 (Qld), s 54
Bellgrove v Eldridge (1954) 90 CLR 369, referred to.
Cochrane v Lees [2021] QCATA 74, followed.
Freeth v Burr (1874) LR9 CP 208, cited.
Koompahtoo Council v Sanpine P/L (2007) 233 CLR 115, cited
Laurinda Pty Ltd v Capalaba Park Shopping Centre (1989) 166 CLR 623 – cited.
Mann v Patterson (2019) 267 CLR 560 – referred to.
McDonald & Anor v Dennys Lascelles Limited (1933) 48 CLR 457 – cited.Mersey Steel and Iron Co v Naylor, Benzon & Co (1884) 9 App. Cas 434 – cited.
Michelsen v Pivovarova [2017] QCAT 235 – referred to.
Mousa & Anor v Vukobratich Enterprises Pty Ltd & Anor [2019] QSC 49 – referred to.
Mulder v Queensland Building and Construction Commission [2019] QCAT 395 – referred to.
Partington v Urquhart (No 2) [2018] QCATA 120 – considered.
Pivovarova v Michelsen (2019) QCA 256 - considered.
Shepard v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 – cited.
William George Carlsen t/as W & E Carlsen Builders v Tressider [2015] QCAT 260 – referred to.Hudsons – Building and Engineering Contracts 13th Ed. – referred to.
APPEARANCES & REPRESENTATION:
Applicant:
C.J. Eylander instructed by Heatherstone Legal
Respondent:
D.Kissane instructed by Preston Law
TABLE OF CONTENTS
Background
The Contest
This Tribunal’s Jurisdiction
The Witnesses
The Applicant’s Witnesses
The Respondents’ Witnesses
Defective / Incomplete Work
Front Entrance Doorway and Door
Security Screens
Bathroom Niche
Kitchen and Butler Pantry Sinks
Salon Plasterboard
Polished Concrete Floor
Feature Timber and Slat Aluminium Wall
Painting
Boatshed Wall
Streetscape Tiles
Roofing, Box Gutter and Valley Gutters
Underground / External Drainage
Roof Awning
Garage Door Sensors
Cleaning
Electrical Solar Panels
Tender and project management tasks, engineering and drafting services
Practical Completion
Disputed Variations
The making of the ‘Final Claim’ & the respondents’ obligation to pay it
Termination of the Contract
The Competing Claims
The Applicant’s Claim for Practical Completion Stage Payment and Variations
The Applicant’s Claim for Legal Costs for the Respondents’ Breach of Contract
The Respondents’ Counterclaim for Damages
The Respondents’ Counterclaim for Loss of Rent
Conclusion
REASONS FOR DECISION
Background
Clifton Beach is one of the northern beach suburbs of Cairns. In 2014 the respondents became the registered owners of land there.[1] In July 2018 they entered into a contract with the applicant under which it, as builder, would construct a house for them, as owners, on that land.[2] Whilst not an elaborate project, it was not modest. The contract price was $828,945.00.
[1]Ex.21 – para 2.
[2]Ibid – para’s 3 & 4. Ex.1 – para 3. A copy of the contract document appears as an Annexure to both Ex.21 and Ex.1. There was a difference between the parties as to what was said to constitute the entirety of the contract documents, but as I understood that difference it was not fundamental to the relief each sought. Such is in effect as submitted by the respondents’ Counsel at para 11 of his written closing submissions. To the extent it arose in my deliberation of the issues in dispute I have addressed it in these reasons at the relevant time.
The form of the contract document adopted was an ‘HIA Queensland New Homes Construction Contract (QC 1)’. Within that form, the ‘works’ was defined as meaning “the works to be carried out, completed and handed over to the owner in accordance with this contract as shown in the contract documents including variations”. In Item 9 of Schedule 1 therein, the ‘works’ was more specifically described as being “Building and construction (sic) of 1 level masonry block (sic) with time internal walls as per plans drawn by Peddle Thorp Project No No (sic) 183422 A-08 Issue 6 Dated 19/03/18 and including items listed on the attached Phil Kelly Builders Standard Inclusions List dated 30 June 2018.” The drafting of this description is not entirely clear but, on any reading, it is for the construction of a single level house.
Within the contract document there was no expression of which party was responsible for the provision of the design and the plans drawn by Peddle Thorp, which I understand to be an architectural design firm. However, by reference to the plans that are included within the contract document and referred to in the description of the works to which I have just referred, it is noted that the ‘Client’ shown thereon is the applicant. Accordingly, from this information and in the absence of any submission to the contrary, I infer that the contract was one for design and construction of the house and I proceed on that basis.
In commencing this proceeding, the applicant asserted that the works reached practical completion on or about 29 April 2019. It also says that on 10 May 2019 it issued to the respondents a Notice of Practical Completion, a defects document listing minor defects and omissions, and a final claim. That final claim is said to have been for the sum of $105,731.40 being the aggregate of the practical completion stage claim of $82,895 and variation claims save for Variation 3B for additional tiling.[3]
[3]Annexure A to the Applicant’s Application for Domestic Building Dispute – para’s 10 to 12. Whilst I note that technically this Tribunal is a non-pleading jurisdiction in the ordinary sense of the use of the word ‘pleading’, it is convenient for simplicity to use that word in addressing the manner in which the parties have expressed their respective positions in their application and counter-application, and respective responses to each. Thus, for convenience I will refer to these documents in the more common language of the courts as the statement of claim, defence, counterclaim etc, and in terms of pleadings. Whilst paragraph 12 of the applicant’s pleading expresses the claim at $105,731.40 the remainder of that paragraph is confusing. It asserts the practical completion stage claim was $82,895 in contrast to the quantum of the same claim in the Table to paragraph 8 therein which states it to be $80,414.50. As to the Variation Claims, the total and detail of those claims is shown in the Table to paragraph 6 therein as being $29,555.67 including Variation 3B of $4,238.74 thus giving a balance after excluding 3B of $25,316.93. The final claim of $105,731.40 is the aggregate of $80,414,50 and $25,316.93.
It is common ground that the respondents did not pay that final claim and the parties fell into dispute. By early September 2019 the payment had not been made and the dispute had not been resolved. Each party then purported to have terminated the contract, the respondents on 9 September 2019, the applicant on 10 September 2019.
On 19 September 2019 the applicant commenced this proceeding. The relief it seeks is expressed as ‘payment of an amount owing plus default interest’ in the sum of $116,715.00, alternatively ‘an award for damages and interest on damages’ in the same amount. This was expressed further in the statement of claim as being:
(a)$105,731.40 for damages for breach of the contract (failure to pay final claim);
(b)$4,238.74 for damages for breach of the contract (failure to pay the variation claim 3B);
(c)$876.00 for damages for repudiation and wrongful termination of the contract (pool maintenance); and
(d)$5,869.00 for damages for repudiation for wrongful termination of the contract (legal costs).[4]
[4]I pause here to note that the cumulative effect of these four items is the $116,715.14 expressed as its claim for payment of an amount owing or alternatively as an award for damages. Whilst not expressed in the applicant’s effective statement of claim, that being their Annexure A document to the Application for a Domestic Building Dispute, I read that annexure as being relevant to the claim in either of those forms, albeit it is entirely unclear as to the premise upon which it can be said that the last two items fall within the category of ‘an amount owing’ other that by way of damages. Notwithstanding that, given the decisions I have reached in this proceeding I have not concerned myself with addressing that in detail and have simply treated them all in the alternatives given that this is the way in which the applicant chose to express its claim in the originating document.
It sought interest on the first item under the contract, and interest on the other three items pursuant to s 58 of the Civil Proceedings Act 2011 (Qld).
It also sought costs of this proceeding.
By their amended response filed 25 March 2020,[5] the respondents defended the claim in its entirety on the basis that:
(a)they have paid all of the variation claims save only for Variations 3B and 6, neither of which the applicant is entitled to payment for;
(b)the works did not reach practical completion at any time, and accordingly their liability for payment of the final claim did not arise at any time; and
(c)they lawfully terminated the contract prior to the applicant’s purported termination and accordingly there is no basis for the applicant’s claim in damages.
[5]The respondents original ‘Response and/or counter-application’ is shown as having been filed 21 October 2019, but then amended with the revised document shown as having been filed 25 March 2020.
They simultaneously raised a counterclaim against the applicant, seeking damages for breach of contract, alternatively breach of warranty, alternatively in negligence, all for the following:
(a)The reasonable cost of completing incomplete works - $114,434.89;[6]
(b)The reasonable cost of rectifying defective works - $45,870;[7]
(c)Loss of rent on a residential property they assert they had to remain in until such time as the house contracted to be built was completed – Unspecified quantum;[8]
(d)Inconvenience and loss of enjoyment of the house constructed by the applicant under the contract – Unspecified quantum.[9]; and
(e)Interest on damages under the Civil Proceedings Act 2011.[10]
[6]Amended counterclaim – para 3(a). The respondents did not express the total in their pleaded counterclaim. This is the total of the figures shown in the Table at para 4 of the amended counterclaim.
[7]Ibid – para 3(b) and 5.
[8]Ibid – para 3(c).
[9]Ibid – para 3(d).
[10]Ibid – Prayer for Relief Item 2.
The respondents also sought costs against the applicant.
By its amended response and answer filed 16 April 2020 the applicant defended the counterclaim in its entirety.
The Contest
The contest between the parties engaged four days of hearing time, although in my opinion it should have been listed for at least five days possibly even six. Given that only four days were allocated, it necessitated early starts and late finishes together with truncation of time for closing address to fit it all in plus the need for further written submissions to be filed. Following the conclusion of the hearing and the filing of those further submissions, the respective position of the parties had slightly changed.
The applicant pressed its claim in the following terms:[11]
(a)payment of the practical completion stage payment of $80,414.50;
(b)payment of the variations to the contract in the amount of $29,555.67 such including Variation 3B;
(c)payment of interest on these two amounts at 18% per annum (being the contract rate) from 17 September 2019;
(d)payment of damages for breach of contract for legal costs in the sum of $5,869.00 plus interest in the amount of $505.80; and
(e)it abandoned its claim for $876.00 for pool maintenance.
[11]Ex. 25 – See the draft order contained therein. The conceded parts of the counterclaim are as described in para 127 therein. Whilst originally the applicant’s claim was presented only in damages for breach of contract, as well as in debt for an amount owing, as I understood the closing submissions made by the applicant’s Counsel, the claim for the balance said to be owing under the contract was also pressed reliant on the doctrine of substantial performance, albeit not pleaded as part of its Application by which it commenced this proceeding.
As to the respondents’ counterclaim, the applicant conceded $8,803.20 plus interest of $425.66, as being payable by it to the respondents for certain items of the alleged defective or incomplete work but submitted that the respondents’ claim for loss of rent be dismissed.
The applicant also sought an order that costs be reserved.
The respondents submitted that the applicant should pay them:[12]
(a)premised on that which I note in the next paragraph, damages in the amount of $50,275.04 representing the costs to rectify the incomplete and defective works;
(b)damages for loss of rental income in the amount of $15,400;
(c)interest on these damages pursuant to s 77 of the Queensland Building and Construction Commission Act 1991 (Qld);
(d)costs of the proceeding.
[12]Respondents’ written closing submissions (for convenience I will hereinafter refer to these as RWCS) – para’s 3 to 6 and 230. At the close of the evidence, the respondents’ Counsel informed me that he had experienced some technological difficulties such that his written outline of his oral closing submissions was not available. Accordingly, the hearing continued with him giving oral closing submissions but with directions given for the filing of his written closing material the day immediately following the close of the hearing. Ultimately these were received on the second business day following.
The respondents’ claim for damages relating to incomplete and defective works is pressed as a nett amount after accounting for the balance said to be owing under the contract of $104,015.13, being the adjusted practical completion stage payment of $80,414.50 plus agreed variations of $23,600.93,[13] deducting this from the total of that which they say is their claim for costs of rectification of $154,290.47 such being $6,014.42 less than that originally claimed.[14]
[13]It may be immediately observed that there is a difference is what is said to be the total of the approved variations. The difference is $1,716 being Variation 6 for the extra pool fencing, a variation that was disputed on the pleadings.
[14]Ibid – para’s 224 and 225. Unfortunately, the respondents did not include a Table in their written closing submissions from which concessions made or claims abandoned could be readily identified. To the extent such occurred I will note this in my reasons on each individual item of the counterclaim.
As I noted it earlier, the respondents’ claim was premised on a number of alternative causes of action. At conclusion of the hearing, they maintained their claims pressed as not just breach of contract, but breach of the express warranty contained in clause 36 of the general conditions of contract, which is coextensive with the statutory warranties, as well as in negligence. But by the time the respondents filed their further submissions on 30 August 2021 in response to directions I gave for the provision of submissions on certain points of law, the respondents abandoned their claim against the applicant in negligence acknowledging that, at law, the applicant did not owe them a duty of care.[15]
[15]Respondents’ further submissions – para’s 39 to 42.
Also, notwithstanding that the respondents included a claim for inconvenience and loss of enjoyment in their counterclaim, it was not raised during their Counsel’s oral closing submissions nor in the written closing submissions that followed. Thus, I infer that it was abandoned, and I need not have had further regard to it. As such I have not addressed it further in these reasons save only under the heading ‘Conclusions’.
All that being said, the resulting contest between the parties gives rise to a substantial number of separate issues. Whilst the respective Counsel for each party presented his written closing submissions in a particular order, my reasons for the decisions I ultimately made in this proceeding are presented in a manner different to their presentations. This is not to say that I disagreed with their approach. Rather, as I saw the issues, I considered it more appropriate to deal with them in the order of the headings as they appear below.
However, before doing so, I will touch briefly on the topic of this Tribunal’s jurisdiction and will then make some comment on the witnesses as they were presented to me.
This Tribunal’s Jurisdiction
There is no challenge raised in this proceeding to this Tribunal’s jurisdiction to determine the matters as they arise from the ‘Application for a Domestic Building Dispute’ filed by the applicant on 19 September 2019, the ‘Amended Response and/or Counter-application’ filed by the respondents on 25 March 2020, and the ‘Amended Response and Answer to Respondents’ Amended Response and Counter-application’ filed by the applicant on 16 April 2020. Notwithstanding that, I make these few brief observations to note the jurisdictional basis upon which I proceed.
The work the subject of this proceeding falls within the definition of ‘domestic building work’ under Schedule 1B s.4 of the Queensland Building and Construction Commission Act 1991 (Qld), and in turn is ‘reviewable domestic work’ as that term is defined in Schedule 2 of that Act. The proceeding concerns a claim or dispute arising between a building owner and a building contractor relating to the performance of reviewable domestic work, and accordingly it is a ‘domestic building dispute’, which in turn is a ‘building dispute’, as those terms are defined in Schedule 2 of that Act. This Tribunal is given jurisdiction to hear and decide a domestic building dispute under s.77 of that Act.
The Witnesses
A total of twelve witnesses gave evidence during the hearing, nine for the applicant and three for the respondents. In addition, one statement of a witness for the applicant was tendered by consent, and one statement of a witness for the respondent, with those persons not being required for cross-examination.
For completeness I should also note the fact that there were five statements filed by the applicant of other persons, apparently with the intention of having them give evidence in the hearing. These were of Mr James Edward Paul, Mr Peter John Brett, Mr Michael James Daley, Mr Mark Gunn, and Mr Steven Brown. However, none of these persons were presented as witnesses nor did the applicant seek to tender any one of these statements.[16] Accordingly, notwithstanding they appear on the Tribunal’s file as material filed by the applicant, I did not have any regard to them.
[16]In his closing address, the applicant’s Counsel confirmed that his client did not seek to rely on these statements. T.2-76 - Lines 4 to 22.
As to the quality and content of the evidence overall, I found much of it to be lacking probative value. At various times statements were made that simply could not be substantiated. Thus, I was left hearing, and then having to consider, evidence which was mere bare assertion. Moreover, in some instances there was a complete absence of any evidence to support a claim.
By way of only two examples, there was the absence of satisfactory evidence from the applicant to support its claim for $5,869 in damages for that which it pleads is the legal costs it incurred arising from the respondents’ alleged wrongful termination of the contract. All that was presented is a statement by Mr Timothy Kelly as what those costs are said to be, annexing copies of WGC Lawyers tax invoices said to be for those services.[17] There was no witness presented to prove the truth of the content of those invoices. Similarly, from the respondents, there was the absence of satisfactory evidence to support their claim for loss of rent. Whilst they presented evidence of what is said to have been the range of rent that could be obtained, and a lease that they later entered into at the upper end of that range, there was no evidence at all as to the vacancy rates in the region at the relevant time nor evidence of available tenants to whom they were not able to rent the property to at the relevant time. I raised this with the respondents’ Counsel during oral closing submissions, but notwithstanding the sparsity of evidence to support it the respondents maintained their claim.[18]
[17]Ex. 1 – para 110(b). Annexure TMK 28.
[18]RWCS – para 230(c).
More critically, notwithstanding it is common in disputes such as these that the outcome will usually turn to a large degree on expert evidence, in my opinion the expert evidence left much to be desired. Neither party’s expert impressed me as having thoroughly considered the issues and applied their mind to addressing them. This is despite there being an expert’s conclave and a joint report.
The relevant success or failure of the parties reflects the inadequacy of the evidence.
The Applicant’s Witnesses
Timothy Kelly
Mr Timothy Kelly’s evidence chief was his statement dated 30 April 2020.[19] It is a large document, the text of which traverses 269 paragraphs over 33 pages, plus an additional 326 pages of annexed material. As stated therein, he was the applicant’s Director in the period 17 June 2014 until 26 November 2019. At the time of producing the statement he was employed by the applicant as a Site Supervisor.
[19]Ex. 1.
Objection was taken early to part of Mr Kelly’s statement wherein he purported to give evidence as to conversations between Mr Philip Kelly and Mr Gilboy to which he was not a party. This was allowed and paragraph 127 was struck out.
The remainder of the statement was voluminous in its detail but not in all cases helpful. I experienced many difficulties with it, for example:
(a)At paragraph 39 he refers to alleged meetings between Mrs Kaminaras and Barry at Beaumont Tiles, asserting that at those meetings she allegedly changed tile selections and layouts without the applicant’s knowledge. However, Mr Kelly was not party to those conversations and the applicant did not present Barry of Beaumont Tiles as a witness to give evidence about these alleged conversations or changes;
(b)At paragraph 67 he asserts that the works reached practical completion on 29 April 2019, an alleged fact upon which the applicant’s claim in this proceeding is apparently premised. Notwithstanding this he later refers at paragraph 69 to a purported ‘Notice of Practical Completion’ signed and dated for the applicant at 10 May 2019,[20] and a defects document also dated 10 May 2019 wherein it is stated that certain works would not be completed until 16 May 2019.[21]
(c)At paragraph 69 he then asserts that “When we sent out the practical completion noticed (sic) 10 May 2019 we advised that occupancy and handover would be ready on 17 May 2019 …”, however no such statement appears in any of the documentation to which he refers and exhibits in paragraph 67, and it would seem that such is to be inferred from the statement I have just referred to that certain works would not be completed until 16 May 2019.
(d)At paragraph 100, he asserts that whilst the applicant is said to have been ready willing and able to undertake necessary rectification works, it was “unable to do so due to the unreasonable attitude of the Respondents”, but without any explanation as to what that attitude was that allegedly prevented the applicant from carrying out such works.
(e)In the same manner as he refers to alleged meetings between Mrs Kaminaras and a Beaumont Tiles representative but at which he was not present, at paragraph 174 he refers to alleged meetings between Mrs Kaminaras and representatives of the cabinetmaker at which she allegedly made changes, but at which he was not present.
[20]Ex.1 – pg 188.
[21]Ex.1 – pg 198.
These bare assertions, which are pure hearsay, detract from the value of his statement overall.
I also had the opportunity of seeing and hearing directly from him during that which was, in comparison to some of the other witnesses, relatively extensive cross-examination over approximately three and a half hours. In doing so I observed that Mr Kelly appeared to have poor recollection of many details, was confused at various times as to when meetings occurred, and that he was at times vague in his answering of questions that may or may not have been as a consequence of that poor recollection, but it could also have been intentionally evasive. Overall, I was left with the impression that Mr Kelly could not be considered a reliable witness and his evidence lacked probative value.
Philip Kelly
In Mr Philip Kelly’s written statement, being his evidence-in-chief,[22] he is described as being the applicant’s sole director, Mr Timothy Kelly’s father, and that he works closely with his son attending on-site meetings to discuss any ongoing building matters and any concerns his sone may have. He also says he had read and agreed with his son’s statement in this proceeding.
[22]Ex. 2.
The cross-examination of Mr Philip Kelly was relatively concise. It once again afforded me the opportunity of observing the witness and I formed the view that, unlike Mr Timothy Kelly, Mr Philip Kelly had a good recollection of the facts and circumstances to the extent to which he was involved. That which became clear in the cross-examination is that it was Mr Philip Kelly who was responsible for the contract administration, namely issuing of variations, progress payment claims, notices, and the like, but in doing so he relied in many instances on Mr Timothy Kelly or others, such as suppliers or subcontractors, to provide him with information upon which he then raised variations etc. That being so, the weight to be afforded much of his evidence was reduced in that it was, in effect, second hand.
One point I did note with his evidence is that he asserted the applicant considered the work had reached practical completion as at 3 May 2019.[23] This is not the date Mr Timothy Kelly states, nor is the applicant’s pleaded case, on which it is said that practical completion occurred, but rather this is the date on which Mr Timothy Kelly states a walk-through of the house occurred with the respondents.[24] That singular fact left me with doubt as to the correctness of Mr Philip Kelly’s statement that he has read and agrees with his son’s statement.
[23]Ibid – para 35.
[24]Ex.1 – para 68.
Overall Mr Philip Kelly’s evidence was of no substantive assistance to me.
Thea Jane Kelly
A written statement by Ms Kelly was tendered by consent.[25] Therein she is described as a Chartered Accountant and the wife of Mrs Timothy Kelly. Her evidence was that she attended the walk-through on 3 May 2019 describing what she observed at that time.
[25]Ex. 3.
Her evidence was of no assistance to me.
Lachlan Ainsley
Mr Ainsley’s statement as his evidence in chief was short, it being one page only of text, accompanied with 24 pages of annexed documents.[26] Therein he is said to be a director and owner of Northern Batten Services Pty Ltd, being the company contracted to do the roofing and guttering work on the house.
[26]Ex. 4.
Whilst his primary statement was short, it was in the annexed documents that he effectively gave his statement, it said to be a ‘report’ in response to a report of Mr George Thirkell dated May 2019. Therein he also refers to a report of Mr Gilboy. Mr Ainsley’s statement also included comments as to his opinion on the costs of rectification of certain items of work.
To this extent, Mr Ainsley’s statement was effectively expert evidence and accordingly it should have been addressed within the experts’ conclave that occurred. However, whilst a general objection was raised by the respondents’ Counsel on the afternoon of Day 1 of the hearing to many of the applicant’s witness statement containing ‘opinions’ and purporting to give ‘expert evidence’,[27] ultimately no specific objection was taken to Mr Ainsley’s statement and accordingly it was admitted with that information being contained therein.
[27]T.1-99 Line 15 to T.1-102 Line 5.
For completeness I note Mr Ainsley also gave evidence about his company investigating a roof leak on 17 January 2019.
Mr Ainsley was cross-examined. Thus, I once again had the opportunity to directly observe a witness. That which became clear during the cross-examination was that, to the extent he gave evidence about investigation of a roof leak such investigation was not done by him personally but rather by other persons in his company’s employ, and to the extent he has referred to it in his ‘report’ it is based solely on computer records his company holds.[28]
[28]T. 2-23 Line 7 to T.2-24 Line 43.
As I observed and listened to Mr Ainsley, and then at the conclusion of re-examination by the applicant’s Counsel I asked Mr Ainsley some questions myself as to the content of his ‘report’, I was left with the impression that he was unclear on much of what he stated therein. His report was in part confusing as to which reports of Mr Gilboy and/or Mr Thirkell he had referred to.[29]
[29]T. 2-25 Line 44 to T.2.27 Line 22.
Overall, Mr Ainsley’s evidence was of some assistance to me but very little.
Gregory Gilboy
Mr Gilboy is the Director of Gilboy Hydraulic Solutions, which I understand to be a hydraulic services design firm. Notwithstanding that occupation, he was presented as a lay witness, although his statement and accompanying report was more akin to being evidence of an expert witness.[30] His statement was the subject of objection in that regard.[31]
[30]Ex. 7.
[31]Objection was taken to para’s 11 to 18 and Annexures D & E. See T.2-3 Line 12; T.2-6 Line 13 – 16 & 42; T.2-7 Line 10 and 38.
Ultimately part of the objections were conceded by the applicant’s Counsel with other parts abandoned.[32] The remainder of that objected to was allowed to the extent it was evidence of that which Mr Gilboy observed, and provided advice on to the applicant, whilst the contract remained on foot and thus before the commencement of this proceeding.[33]
[32]Annexures C, D & E, together with para’s 22 to 24 were removed. T.2-9 Line 27 to 33. Para 14 was abandoned – T.2-10 Line 3.
[33]See T.2-10 to 13. Paragraphs 11, 12, 13, 15, 15, 17 and 18 remained as part of the Gilboy evidence.
In essence, as I understood it, such was said to be evidence of the steps taken by the applicant to address the respondents’ complaints regarding the roof plumbing and drainage issues. He was also asked to, and did, provide some comments on a report and proposed scope of remedial works prepared by Mr George Thirkell dated August 2019 in respect of that complaint.[34]
[34]It was not entirely clear from Mr Gilboy’s statement as to that which was the Thirkell Report of August 2019 to which he was referring. During cross-examination of him it was clarified that this was the Thirkell Scope of Works and Drawings that was tendered by consent and became Ex. 8 being that attached to a Thirkell letter dated 20 August 2019 which appears as Annexure TMK-24 to Ex.1. See T.2-40 Line T.2-39 Line 19; T.2-41 Lines 37 to 42.
Overall, Mr Gilboy impressed me as a witness. He was forthright in his answers, conceding points where appropriate to have done so, but also pressing his views on issues with conviction when questioned on them. His explanations were helpful. Many of the issues I had to decide in this proceeding turned on Mr Gilboy’s evidence, even though at times adverse to the applicant.
Glen Chambers
Mr Chambers is a Building Certifier. He was the Certifier engaged by the applicant to provide it with building approval for the works under the contract, and to issue the Final Certificate for the works. Similar to Mr Gilboy, he was also engaged by the applicant to provide some advice / comment on the respondents’ complaint about the roof drainage works, more particularly in terms of the proposed solution presented by Mr Gilboy. In doing so he also addressed the report of Mr George Thirkell dated August 2019. To that extent he was presented as a lay witness with a statement tendered.[35]
[35]Ex. 10.
Again, like Mr Gilboy, such was more akin to expert opinion evidence. Again, the respondents Counsel raised objection to part of his statement, namely paragraph 10, subparagraphs (a) to (e). Notwithstanding the subparagraphs in paragraph 10 extended to also include (f) and (g), the respondents’ Counsel did not raise an objection to them but rather stated, given concessions made by the applicant on Day 1 of the hearing concerning the boatshed wall, such were no longer relevant.[36]
[36]T. 2-14. Lines 6 & 7.
The applicant’s Counsel argued against this objection on the same basis as he did against the objection to parts of Mr Gilboy’s statement, that is submitting that it is evidence of advice obtained by the applicant whilst the contract remained on foot in efforts to address the respondent’s complaints regarding roof plumbing and drainage issues. Ultimately the objection was not allowed for this reason.[37]
[37]T. 2-14 Line 32 to T.2-16 Line 42.
His evidence was relatively short. Save only to a singular reference to him having issued a Form 21 – Final Inspection Certificate, his evidence did not assist me.
Brad Stewart
Mr Stewart is the Director and owner of KC By Design Pty Ltd, the company engaged by the applicant to do the cabinetry work in the house. His statement primarily addressed the dispute regarding the sink installation in the kitchen and butler’s pantry.[38]
[38]Ex. 11.
Overall, his evidence was not helpful to me, other than the extent to which it highlighted that which appeared to me as being an underlying cause of much of the dispute between the parties. This was what became apparent as being an absence of clear and precise communications between builder and owner, the applicant leaving much of those communications to its subcontractors / suppliers. A glaring example of this is the communications regarding the sinks which Mr Stewart explains therein, most of them being second hand to him, or simply between himself and Mrs Kaminaras, and critically without the applicant being part of those communications.
There was also the critical aspect of his evidence that arose during cross examination. It was only in cross-examination that Mr Stewart gave evidence that the ‘Reece Presentation’, being the document which identified the sinks in question, was not the Reece Presentation as it appears in the contract document annexed to Mr Timothy Kelly’s statement.[39] Rather, he asserted that it was a different document said to clearly differentiate the sinks as being drop-in to the kitchen and undermount to the butler’s pantry, being the reverse of that which the respondent says was required. His evidence was, to that extent, inconsistent with Mr Timothy Kelly’s and Mr Philip Kelly’s to the extent Mr Philip Kelly stated he had read his son’s statement and agreed with its content.
[39]See TMK-6 to Ex. 1.
Despite this being said in cross-examination, there was no re-examination on the point by the applicant’s Counsel to clarify this inconsistency nor to identify the other document such that it became part of the evidence.
Ivan Gomizelji
Mr Gomizelji is a stonemason engaged by KC By Design and is said to have been the one who made the benchtops and was involved in conversations with the respondents concerning the placement of the kitchen and butler’s pantry sinks. His statement was in essence directed to that issue.[40]
[40]Ex. 12.
Like Mr Stewart he referred to a Reece Presentation document but did not annex any such document to his statement. However, unlike Mr Stewart, Mr Gomizelji asserted that the Reece Presentation in question showed that both sinks to the kitchen and butler’s pantry were to be drop-in sinks.[41] In that regard, Mr Gomizelji’s evidence was inconsistent with both Mr Timothy Kelly’s and Mr Brad Stewart’s evidence.
[41]Ex. 12 – para’s 7 & 8.
Save only for the fact that his evidence once again showed the confusion that seemed to permeate the applicant’s manner of leaving its subcontractors and suppliers to deal directly with the respondents, and also with the inconsistency in the applicant’s evidence overall, Mr Gomizelji’s evidence was not helpful to me.
Desmond Meredith
Mr Meredith is said to be a qualified electrician and the business manager at Richardson’s Electrical Service. His company was engaged by the applicant to do the electrical and solar installation in its construction of the house. His evidence was directed at the disputed issue of the solar panel installation.[42]
[42]Ex. 13.
Mr Meredith impressed me as a witness. He was direct and forthright in answering questions under cross-examination agreeing where appropriate to the need for additional work to be performed.
Christopher Boyle
Mr Boyle was presented as the applicant’s expert witness. His written evidence was contained in two documents, one being his ‘report’,[43] the second being his input to the Joint Experts’ Report which arose out of the Experts’ Conclave.[44] The former was the subject of only one objection which I allowed, such being to the extent his report referred to part of Mr Gilboy’s report which was objected to and struck out.[45]
[43]Ex. 14.
[44]Ex. 15.
[45]Ex. 13 – para 70 second sentence.
He was cross-examined at length, giving his evidence via video link from Brisbane. During that cross-examination the respondents were permitted to have their expert Mr Thirkell in the hearing room assisting their Counsel in his cross-examination on technical issues.
Whilst overall Mr Boyle’s presentation as a witness was generally acceptable, I was unimpressed by the fact that he was engaged only to undertake a desktop study, and also that he did not give any consideration to the quantum of rectification/completion of the allegedly defective/incomplete work where he formed the opinion that the item in question was not defective or incomplete. On my reading of his report, it is apparent that this was as a direct result of his brief, such being restricted to providing an opinion on the reasonable costs of rectification/completion only if he was of the view that such work was defective.[46]
[46]Ex. 14 – para 6.
This dramatically reduced the value of Mr Boyle’s evidence and left many questions unanswered. It was adverse to the applicant’s case. As the respondents’ Counsel appropriately and properly put it in his written closing submissions:
Clearly, the opinions expressed in Mr Boyles (sic) report are greatly diminished by the fact that he did not attend site, and a large number of those opinions expressed are not his own rather those of Mr Gilboy and Mr Bussell. Generally Mr Boyle’s opinions are of little assistance to the Tribunal in determining whether the works the subject of the dispute were incomplete or defective and to determine whether the costs incurred (or to be incurred) by the Owners are reasonable in the circumstances.[47]
The Respondents’ Witnesses
[47]RWCS – para 105. The reference to ‘Mr Bussell’ is, as I read it, a reference to the QBCC Building Inspector who produced the QBCC Inspection Report which appeared in the material before me. I should also note that I read the reference to opinions of ‘Mr Gilboy and Mr Bussell’ as being ‘Mr Gilboy or Mr Bussell’ given that they gave separate opinions, not joint opinions.
Tammy Kaminaras
Mrs Kaminaras gave two written statements.[48] The first of those was a direct response to various paragraphs of the statements of Mr Timothy Kelly, Mr Philip Kelly, and Mr Brad Stewart.[49] The second statement sought to make some relatively minor corrections to the content of her first statement.
[48]Ex. 19 and Ex. 20.
[49]Mrs Kaminaras also responded to a statement given by Mr Michael Daley but the applicant did not present Mr Daley as a witness or otherwise seek to tender his statement.
She was only briefly cross-examined at end of Day 3 of the hearing.[50] Therein a proposition was put to her concerning the extent of the wall tiling in the bathrooms being a change to the contract. She did not agree with that proposition. Due to the applicant’s Counsel saying he needed to organise his material somewhat to allow cross-examination to continue, given that the hearing day was drawing to a close the cross-examination was then left to continue the next morning. However, and somewhat surprisingly, on resumption the applicant’s Counsel said that he had no further questions of Mrs Kaminaras.[51]
[50]T.3-90 Line 38 to T.3-92 Line 27.
[51]T.4-2 Line 47.
Notwithstanding the shortness of the cross-examination, it was of value. Not only did it establish with some certainty Mrs Kaminaras’s understanding of the extent of wall tiling in the bathrooms, an issue in this proceeding relative to a variation claim, it afforded me the opportunity to view Mrs Kaminaras’s conduct as a witness. In doing so, what little I saw showed me that Mrs Kaminaras was quick to answer and confident in her recollection of the event in question. That being said, her written statements is in effect the entirety of her evidence, the content of which was not in any way substantially challenged so as to raise questions about it. As a general position, I had no reason to doubt the accuracy of that which she states therein.
Theo Kaminaras
Mr Theo Kaminaras gave three written statements.[52] In the same manner as Mrs Kaminaras’s first statement was presented, his first statement was responsive to the statements of Mr Timothy Kelly, Mr Philip Kelly, Mr Gomizelji, Mr Stewart, and Mr Ainsley. He also gave some evidence about the loss of rent claim and the roof gutters and underground drainage defects. His second statement was short, simply confirming that he and his wife had paid the cost of works carried out to date as referred to in Appendix Q of the Thirkell Report of June 2020. His third statement, tendered at the hearing, dealt further with the loss of rent claim.
[52]Ex.21, Ex. 22, and Ex. 23.
Mr Kaminaras also presented a video he had taken of a rain event whilst the house was under construction. This was viewed during the hearing.[53] As I understood it, this was relevant to the roof drainage issues. Just prior to and following the viewing of that video there was a short question and answer process between Mr Kaminaras and the respondents’ Counsel as well as with me. This afforded me a very small window to observe Mr Kaminaras’s conduct. Similar to that which I noted above regarding his wife, what little I saw showed me that Mr Kaminaras was confident in his recollection of the events in question.
[53]Ex. 24.
There was no cross-examination of Mr Kaminaras.[54] Accordingly, his entire evidence is his written statements, the video, and that short oral evidence he gave during the Q&A engagement. Again, I had no reason to doubt the accuracy of that evidence.
[54]T.4-12 Line 35 and T.4-14 Line 5.
George Thirkell
Mr Thirkell was presented as the respondents’ expert witness. He gave an extensive report which was annexed to his statement.[55] That is his report dated 19 June 2020. He was not taken to the Joint Expert’s Report[56] by the respondents’ Counsel to confirm his input to it. Notwithstanding that, I proceeded on the basis that given it had been affirmed by Mr Boyle it was open for me to accept it as being correctly containing Mr Thirkell’s input. The applicant’s Counsel did not suggest otherwise.
[55]Ex. 16.
[56]Ex. 15.
In all respects, Mr Thirkell’s evidence was critical to the outcome of this proceeding. As I understood the circumstances by which it came about, it was Mr Thirkell’s advice and opinions that the respondents relied on to take the steps they had taken that are reflected in their position in the dispute with the applicant. The criticality of it was particularly so in terms of the extent of success ultimately gained by the respondents. Accordingly, for the respondents’ benefit I have gone to some length to explain my views on the inadequacy of that evidence so that they may hopefully be able to understand why the outcome, in terms of a monetary measure, was much less that what I assume they thought it would be.
There was at times during the hearing confusion in terms of the reports which Mr Thirkell had produced. He also produced earlier dated reports or letters/drawings, copies of which appear in the statement of Mr Timothy Kelly. These are a report dated 15 May 2019,[57] a letter and drawings dated 20 August 2019,[58] and a draft report dated 18 February 2020.[59] It was these earlier reports or drawings that appear to have been the Thirkell documentation to which Mr Gilboy and Mr Chambers had reference as I have noted it above.
[57]Ex. 1 – Annexure TMK-21.
[58]Ex. 1 – Annexure TMK-24 & 25. The drawings were also received as Ex. 8, being the Scope of Remedial Works for roof drainage and plumbing.
[59]Ex.1 – Annexure TMK-29.
However, notwithstanding the existence of those earlier reports appearing in the applicant’s evidence, and Mr Thirkell having referred to documentation in his expert’s report that appeared from the description therein to be the same documents,[60] at no time was Mr Thirkell called upon by the respondents’ Counsel to confirm the existence or accuracy of those earlier documents as part of his expert evidence.
[60]Ex.16 – Section 3.
Notwithstanding the limited manner of reference to those earlier documents in Mr Thirkell’s evidence-in-chief, the applicant’s Counsel raised those earlier reports with him during cross examination,[61] and questioned him on the extent to which he was engaged by or for the respondents.
[61]T.3-42 – Line 2 re 15 May 2019 Report; T.3-43 – Lines 25 to 34.
It commenced with the inspection / walk through that occurred on 3 May 2019 with Mr Thirkell asserting that he was engaged at that time as an ‘expert witness’.[62] It then continued with questioning him on the content of his February 2020 Report and his June 2020 report,[63] each of which contain references to charges from ‘Thirkell Consulting Engineers and Building Design’, or similar names, for what is described as the provision of services including ‘project management’.[64]
[62]T.3-42. Lines to 17.
[63]It will be recalled that the latter report is the only ‘Expert’s Report’ from Mr Thirkell in this proceeding.
[64]T.3-44 Line 43 to T.3-45 Line 15.
From this line of questioning, and the manner in which Mr Thirkell referred to those earlier reports and his engagement at the time, it left me with some uncertainty as to the extent to which the respondents were relying on Mr Thirkell as an expert in this proceeding, vis-à-vis that which appeared to me as being more a design and project management consultant to them. This is particularly so given the description of his engagements in August 2019 and then in November 2019, the former being prior to the termination of the contract,[65] and latter being after the termination and after the commencement of this proceeding and the respondents having filed their original defence and counterclaim,[66] which he described in this way:
20th August 2019: I issued a scope of works to rectify the stormwater system and a cost estimate to render and paint the external boat garage wall including dis-assembly and re-assembly of the fence.
November 2019: I received instructions from the Respondent to assist to obtain quotes from trades to rectify defective work and complete works that were deemed incomplete.[67]
[65]On the respondents’ case such occurred on 9 September 2021.
[66]This occurred on 21 October 2019.
[67]Ex.16 – para’s 3.2 and 3.3.
The cross-examination of Mr Thirkell by the applicant’s Counsel was extensive. As I followed it, the applicant’s Counsel was endeavouring to establish the correct nature of Mr Thirkell’s role in his dealings with the respondents.[68] As I observed him during cross-examination, he appeared to either have not listened to a question being asked of him and so giving an answer that did not meet the question, or he misunderstood the question leading to a non-responsive answer, or more concerning he was simply being evasive in his answering of it.
[68]See T.3-42 to T.3-68.
I was very unimpressed with Mr Thirkell as an expert witness. Listening to the question and answer process engaged in, I was left with the impression that Mr Thirkell entirely misunderstood his role as an expert witness in this proceeding. The following are some examples of exchanges between the applicant’s Counsel and Mr Thirkell during cross-examination.
The first is in reference to Mr Thirkell’s initial engagement.[69]
[69]T.3-42. Lines 1 to 17.
Mr Eylander Mr Thirkell, you attended a practical completion inspection on the 3rd of May 2019 at the home?
Mr Thirkell I attended site. It wasn’t put to me as a practical completion inspection. No.
Mr Eylander Did you attend site on the 3rd of May 2019?
Mr Thirkell I attended site. Yes.
Mr Eylander And how long before that date were you engaged by the homeowners?
Mr Thirkell There is no time as I was engaged by Preston at that time.
Mr Eylander So before the 3rd of May 2019 you were engaged by Preston Law?
Mr Thirkell That’s right.
Mr Eylander And what were you engaged to do?
Mr Thirkell Expert witness.
Mr Eylander An expert?
Mr Thirkell I’m an expert witness. Yes.
Mr Eylander You were engaged as an expert witness by Preston Law before the 3rd of May 2019?
Mr Thirkell Yes.
On the basis of this question and answer engagement it was readily apparent that Mr Thirkell saw himself as an expert witness for the respondents. But it became abundantly clear to me that he entirely misunderstood that role, and that it may more properly be said that his evidence was not what this Tribunal should have been presented with as independent expert opinion evidence. His conduct subsequent to his asserted engagement as an ‘expert witness’ goes beyond merely being a witness because it involved him pro-actively in the respondents’ undertaking of the remedial work upon which they premise their defence and counterclaim in this proceeding.
Mr Thirkell’s first ‘report’ is the one dated 15 May 2019. A copy of it appears in the statement of Mr Timothy Kelly, but without the Appendices ‘A’ to ‘I’ referenced in the report.[70] Therein the following statement appears under the heading ‘Introduction and Instruction’.
Thirkell Consulting Engineers & Building Design[71] are engaged by Theo and Tammy Kaminaras to inspect the property at 8 Saxon Street, Clifton Beach. QLD 4879 (Lot 44 RP 748233) and provide a report addressing the following:
(a) Whether practical completion has been reached; and
(b) Whether there are defects, omissions and incomplete works; and
(c) Provide reasons to how the defects, omissions and incomplete works affect practical completion.
[70]Ex. 1 – Annexure TMK-21 pg 231.
[71]Within that report there is a statement on the Contents page that the name ‘Thirkell Consulting Engineers & Building Design’ is “A trading name of Redgate Building Solutions PL.”
Whilst Mr Thirkell stated that before 3 May 2019, when he first attended at an inspection of the house, he was engaged by Preston Law, the respondents’ solicitors, as an ‘expert witness’, there is no reference to Preston Law or that engagement in this first report. To the contrary, it expressly states he was engaged by the respondents.
The second is in reference to an inspection with a representative of the Queensland Building and Construction Commission.[72]
Mr Eylander Now there was a Queensland Building Construction Commission inspection on 5 July 2019 and you attended that inspection?
Mr Thirkell I’m just going to recall – I did attend site, as I said, but in attendance was a QBCC representative. So I did that once, so the questioning which suggests I’ve been there now twice, which wasn’t true, so I’m – I’m just trying to recall which one of those attendances was the one in question. So I did attend site with Phil Kelly and Co and the QBCC representative.
[72]T.3-42. Line 43 to T.3-43 Line 7.
Mr Thirkell’s oral evidence in this regard was not entirely clear but, as I understood it, he disputed the suggestion that he had attended at the house twice for inspections, asserting that it was only once, such being on the occasion of 3 May 2019. If this is a correct understanding on my behalf, it is in contrast with the documentary evidence that is before me.
The following statement appears in Mr Thirkell’s report of 15 May 2019.[73]
I, George Thirkell the author of this report attended site on the 3rd May 2019. … My understanding of the visit was to be briefed by the owner of their concerns with the construction. It was conveyed to me by the owner that the builder had provided permission and that a Queensland Building and Construction Commission (QBCC) representative would be there.
Upon my arrival we were advised that the QBCC representative could not make the meeting and that this site visit was a final inspection for defects or omissions before (sic) so that the builder could issue a practical completion notice. I refute the claim that this was a final inspection as adequate time was not allocated by me for this visit.
[73]Ex. 1 – pg’s 233 and 234.
There is also the QBCC’s Inspection Report, a copy of which appears in Mr Timothy Kelly’s statement in which it is records the inspection has having occurred on 5 July 2019 with Mr Thirkell being present as an ‘RPEQ engaged by the Owners.’[74]
[74]Ex. 1 – Annexure TMK-23 at pg 245.
Once again there is no suggestion in that material that Mr Thirkell has been engaged by Preston Law as an expert witness. However, I pause here to note that the second document produced by Mr Thirkell, being his letter of 20 August 2019 and accompanying drawings for rectification of the storm water system, is addressed to Preston Law.[75]
[75]Ex. 1 – Annexure TMK-24 at pg 270.
There is also Mr Thirkell’s draft report of 18 February 2020, and in particular the Appendix thereto which is entitled ‘Project Expenditure Account as of 17 February 2020’. A copy of that report is in Mr Timothy Kelly’s statement, on this occasion including the appendices referred to within it.[76] Therein there are two pages, one entitled ‘Works carried out to date’ and one entitled ‘Works to be carried out’ each which list a number of line items of work with monetary amounts ascribed to each.[77] On the second of those there is a line item described as ‘Engineering Consultancy and Inspections’ to which the amount of $19,800 is included with the accompanying comment ‘accounted for and projected’. In terms of that material the following was the discussion between the applicant’s counsel and Mr Thirkell during cross-examination.[78]
Mr Eylander With respect to the works carried out to date, as set out in this annexure, were your services that you provided, was that by way of engagement with the home owners and by that I mean by way of an agreement or contract with the home owners to perform these services?
Mr Thirkell Yeah. The owners instructed me to review quotes and invoices of contractors, sometimes provide advice to them on my thoughts about it and to record it as part of this report.
Mr Eylander Now, you said that they instructed you to give advice and do various other things. Now, we’ve heard that the engineering consulting and inspections, with an allowance of $19,800 in the works to be carried out, your engagement to do all of this was it by agreement with the home owners? Why I’m asking this, I’ll just take a step back, you’ve previously said you were engaged by Preston Law to be an expert. So what I’m trying to get from you, was your project management, as described in this document, was it with the home owners or was it with Preston Law?
Mr Thirkell The recording of these invoices is part of my brief from Preston Law to carry out this service.
Mr Eylander So you had an agreement with Preston Law to perform this work?
Mr Thirkell Yes.
[76]Ex. 1 – Annexure TMK-29 at pg 297.
[77]The relevant Appendix appears at pg’s 324 and 325.
[78]T. 3-47. Lines 22 to 38.
This exchange occurred shortly after the applicant’s Counsel had questioned Mr Thirkell as to his knowledge of contracts and invoicing for the performance of the remedial work, wherein the following was said.
Mr Eylander So these description of services and material here, there are separate contract between the various entitled and the home owners. Is that your evidence.
Mr Thirkell Yeah. Because they’re of separate prices there or separate costings, they must be on different invoices. So those invoices are – because they’re in works carried out, they’ve been completed and that would be the final charge of that building task.
Mr Eylander Well, how did you know that those amounts were forming part of or a running account. How did you know that?
Mr Thirkell Because my task as an expert was to record all expenditure to rectify the premises.
That short exchange is somewhat alarming. Not only am I unable to understand and find any meaning in Mr Thirkell’s first answer other than to conclude that he was entirely unclear on what the invoices were for, his second answer clearly demonstrates to me that he did not have a proper understanding of his role as an expert.
Moreover, it will be observed that whilst Mr Thirkell stated his brief to do certain work was from Preston Law as an “expert witness”, he also stated that he was ‘instructed’ by the respondents to review quotes and invoices and provide advice to them and to record it all. In that regard it is relevant to note the following as it appears in Mr Thirkell’s February 2020 report as the ‘Executive Summary’.[79]
Thirkell Consulting Engineers & Building Design[80] are engaged by Theo and Tammy Kaminaras to inspect the property at 8 Saxon Street, Clifton Beach. QLD 4879 (Lot 44 RP 748233).
This report outlines my findings over many visits to the premises to inspect defects and meet with the owners. The photos show the defective work and the annotation describes the actions to rectify. Appendix A Project expenditure account outlines the works that have been carried out and the works to be carried out to date.
We deem the building works to rectify to be considerable and state that the residence had not reached practical completion as stated in our first report dated 15 May 2019.
[79]This appears at Ex. 1 pg 299.
[80]Within that report there is a statement on the Contents page that the name ‘Thirkell Consulting Engineers & Building Design’ is “A trading name of Redgate Building Solutions PL.”
This description suggests to me that, not only is it simply in furtherance of the initial report of May 2019 but, it is a record of the performance to date of remedial works undertaken.
There is also the exchange between the applicant’s counsel and Mr Thirkell concerning Mr Thirkell’s report tendered in this proceeding as his ‘Expert’s Report’. It is dated 19 June 2020 and, on this occasion, unlike the earlier ‘reports’ it is entitled ‘Report to QCAT’ c/- Preston Law.[81] Mr Thirkell was taken to Appendix Q therein. It is very similar in its content to the Appendix included in his February 2020 report I mentioned a few paragraphs back in these reasons. I infer it is the same document and merely updated by the time of the June 2020 report. He was asked about two line items therein which appears as part of the ‘Works carried out to date’ spreadsheet. These each contain the description of the works as being “Tender and project management tasks, engineering and drafting services”. The first carries the amount of $7,062 including GST with the reference date of 28 March 2020. The second carries the amount of $9,680 with the reference date of 23 December 2019. In turn each of these respectively is cross referenced to a sub-appendix Q1 and Q2.
[81]Ex. 16.
Q1 is a Tax Invoice shown to have been issued by Thirkell Consulting Engineers and Building Design with the subject description “Kaminaras Residence – Expert Witness, Tender & Project management tasks, engineering & drafting services – progress invoice’ with multiple entries thereon but all shown as covering the period 13 December 2019 to 27 March 2020. Notably this covers the period in which Mr Thirkell produced his report of 18 February 2020. The description of the services on each occasion varies in terms of references to ‘Meeting’ or ‘Travel to site/meeting’ but on some occasions reference it as ‘Engineering Tasks’, or ‘Admin’, or ‘Project Management’ and also includes references to not only ‘George’ which I infer to be a reference to Mr Thirkell, but also to ‘Caio’ and ‘Jack’ whom I understand to be employees of Thirkell Consulting Engineers and Building Design.[82]
[82]See the discussion between Mr Eylander and Mr Thirkell at T.3-52 Lines 21 to 25. See also the discussion between me and Mr Thirkell at T.3-63 Lines 16 to 24.
Q2 is a Tax Invoice also issued by Thirkell Consulting Engineers and Building Design but on this occasion, it carries the subject description “Kaminaras Residence – Tender & project management tasks, engineering & drafting services – progress invoice.” again with multiple entries but covering the earlier period of 26 October 2019 to 12 December 2019. The descriptions of those works were also similar to the Q1 document describing it on various entries as being ‘Tender Management’, or ‘Engineering Tasks’, or ‘Design’, or ‘Admin’.
I also note there is another line item entry on the second page of Appendix Q being the list of ‘Works to be carried out’ described as being for “Thirkell Consulting Engineers & Building Design – Tender & Project management tasks, engineering & drafting services.” stated to be in the amount of $6,600 including GST.
The following is an extract from the exchange between the applicant’s Counsel and Mr Thirkell. [83]
[83]T.3-49 Line 31 to T.3-50 Line 30.
Mr Eylander Now, if you could describe the tender and project management task, engineering and drafting services you performed? What were they?
Mr Thirkell Well, firstly, it would be attending site, being instructed of engineering tasks, ensuring the engineering of that task, drafting and so drawing those tasks on paper so that they can be provided to various contractors to provide them instructions to understand the scope of works they are to perform and to provide a cost to those tasks.
Mr Eylander Now, the first word “tender”, was there a tender involved in all of this?
Mr Thirkell Well, it’s – no. It was just providing the information to – as instructed by the owners to various contractors to – so that tender is costings. So, really, it was information I provided to various people to cost up tasks to rectify the premises.
Mr Eylander So when you say costs that you provided, did you get other contractors – I should say, did you get licensed contractors to provide you with prices to do works?
Mr Thirkell Well, the owner and I agreed on licensed contracts to carry out or, at least, to cost the work.
Mr Eylander Well, how did you and the owner agree, and I probably should start off, there are two owners here. When you say “the owner and I agreed”, which owner are you referring to?
Mr Thirkell Theo.
Mr Eylander Theo. And how did you go about agreeing for contractors for the tender of this work?
Mr Thirkell There would just be suggestions of names. So Theo would know a whole lot of people and Tammy actually knows a lot of people as well and I would know some people. So we would just discuss who – who should we talk to and see – see how they respond. So in carrying out this task, these tasks, I may have spoken to various people and Theo and Tammy may have spoken to various people and I guess, at the end of the day, some decision was made to who would attend the site to do the task and for how much and when. I mean, that wasn’t a – that was a decision made by, generally, the owner.
Mr Eylander So you said that you would’ve spoken to various people?
Mr Thirkell Yes.
Mr Eylander And, by various people, you mean various licensed contractors?
Mr Thirkell Yes.
Mr Eylander Yes. To be engaged – well, to be invited to provide a price for doing works?
Mr Thirkell To at least – to at least express an interest or not in the project.
Mr Eylander And how did you deal with these expressions of interest and by that I mean did you present those expressions of interest to Theo?
Mr Thirkell I would’ve advised Theo of who could do it, who couldn’t do it and, yeah, that’s – that’s right. I would convey that information to Theo.
Mr Eylander And would you speak to these licensed contractors about the scope of works that needed to be done to attend to the items that you refer to in your report or did you just give them a scope of works?
Mr Thirkell I provided for the most significant tasks, drawings. Because that’s what we do. We provide drawings.
Despite that which Mr Thirkell stated in this oral evidence as to the production of drawings upon which the work was said to be costed and contracted, the only such drawings in evidence were those attached to Mr Thirkell’s letter of 20 August 2019 to Preston Law dealing with the roof drainage issues and the associated stormwater drawings which were in Appendix P to his June 2020 report.[84] It was thus entirely unclear what other drawings, if any, Mr Thirkell was referring to in terms of dealing with contractors for other works said to be required.
[84]A larger more legible copy of this appendix was tendered separately by consent. It became Ex. 8.
The line of questioning then turned to the content of the Appendix Q, in particular the entries concerning the costs of ‘Thirkell Consulting Engineers & Building Design’ to which I referred earlier. The following is relevant to the conclusion I have come to and express later in these reasons as to the probative value of Mr Thirkell’s evidence.[85]
[85]T.3-51 Line 25 to T.3-52 Line 39.
Mr Eylander Now, Mr Thirkell, appendix Q1, it’s from Thirkell Consulting Engineers and Building Design and it has underneath it “Red Gate Building Solutions Proprietary Limited”. Now, am I correct that the entity is Red Gate Building Solutions Proprietary Limited trading as Thirkell Consulting Engineers and Building Design?
Mr Thirkell Yes.
Mr Eylander And the subject of the tax invoice is “The residence, expert witness, tender and project management tasks, engineering and drafting services, progress invoice”. That’s correct?
Mr Thirkell Yes.
Mr Eylander Now the first four items under description is then followed by a line above total for expert witness services is $5850 plus GST. Does that mean that those above services in the description are for expert witness services?
Mr Thirkell Yeah. I was separating – that’s right. I was separating the costs for clarity of the invoice at the time.
Mr Eylander And I should point out, the invoice is for the respondent. Was the invoice sent to Preston Law or to the respondents?
Mr Thirkell I don’t have the information with me to ascertain that but generally I would email this invoice to Preston Law. I have Theo’s – and possibly at this time I’ve actually copied this one to Theo as well.
Mr Eylander And the payment of monies pursuant to this invoice, and I’ll get to the monies in a minute, but the payment of monies for the invoice, did that come from Preston Law or did it come from the homeowners?
Mr Thirkell I would actually have to check up on that because with regards to accounts at our office, I’m not certain. I would’ve believed Preston Law would’ve paid a lot of accounts for us and I would state that here but I believe some accounts later may have been paid by Theo later but I can’t – I can’t actually say at what point.
Mr Eylander Well, I’ll revisit that in a moment, Mr Thirkell. So the next entry is a number, 19039 PM, Preston Law and the final part of that entry is tender management, contract admin, setting a period of time, 13 December 2019 to 27 March 2020 with an amount of $2250. Do you remember what work that was for, saying tender management?
Mr Thirkell That – that would’ve – that line of item would be generally for issuing of drawings to potential contractors, liaising with Theo at the time, possibly answering phone calls from potential contractors and understanding who was interested in conveying that type of information to – back to Theo.
Mr Eylander And would it – and I know it was some time ago. Would it have included looking at the invoices and the like for the work being completed?
Mr Thirkell To March 2020. So, yes. I mean, there would’ve been invoices that was at hand. There was work that was being carried out. So I would’ve been reviewing invoices with Theo and recording – and recording it on my project expenditure sheet.
Mr Eylander Now, I’ll take you over the page, Mr Thirkell, and the third entry down, the – it ends, “Caio, project management for the period 13 December 2019 to 27 March 2020 with an amount of $1500”. Do you recall what project management was performed and – sorry. I’ll leave you answer that because there’s probably something about Caio. Is Caio an employee of Thirkell?
Mr Thirkell Caio is an ex-employee.
Mr Eylander Do you recall what that project management work was?
Mr Thirkell Yeah. And – and, look, it’s on here. In my eyes, he wasn’t project managing, he was liaising and doing and observing works on site to report back to me. That was his role.
Mr Eylander So why would you describe it as project management?
Mr Thirkell Yeah. It’s – I wouldn’t have. I would’ve been – that should’ve been really liaising or inspecting or visit the site.
Mr Eylander Mr Thirkell, there’s a subtotal there of $12,270 plus tax, GST, and then a payment. Now the payment there minus $13,497, is a different figure to that in Q1 of your project expenditure account $7062. Can you explain that?
Mr Thirkell No. I can’t explain that.
It then shortly thereafter continued with the following exchange between Counsel and Witness. The answers given by Mr Thirkell that I considered to be critical are emphasised by me in bold.[86]
[86]T.3-53 Line 7 to T.3-54 Line 26. Emphasis added.
Mr Eylander Now, during the period of time 13 December 2019 and 27 March 2020, there was works being performed at the respondent’s residence?
Mr Thirkell Yes.
Mr Eylander And your evidence is that you would – and I’m probably using the wrong word here, Mr Thirkell, collating but you are recording the payments in relation to the works being performed?
Mr Thirkell That’s right. As instructed.
Mr Eylander And you’re doing that by way of spreadsheet?
Mr Thirkell Yes. That’s a spreadsheet. Yes.
Mr Eylander And these payments, they are in accordance with contracts that have been entered into by these contractors or suppliers?
Mr Thirkell Well, the contract’s with Theo and I’m a – I receive the quotes as they arrive and ---
MemberSorry. Mr Thirkell, again, listen to the question and simply answer the question. Were the payments in accordance with contracts with these contractors?
Mr Thirkell I reviewed the payments in accordance with my drawings and the scope of works or my specifications that I provided. That’s my advice to Theo. They do the works I had on the plan and that’s – that’s really my – that is my reason for being there.
Mr Eylander And for the contractors doing the work, have you sighted the contracts with the homeowners?
Mr Thirkell I had – yes, some – some, I guess, contracts were reviewed with Theo and that – reason for that was for me to provide advice on what my thoughts about that were at the time.
Mr Eylander Did you keep copies of the contracts between – well, with the licensed contractors for the performance of the works?
Mr Thirkell I have what was provided to me. I don’t know if that’s all of them. I guess what I have recorded I have. That’s why I’ve recorded it.
Mr Eylander So what was provided to you by whom?
Mr Thirkell Theo.
Mr Eylander And Preston Law?
Mr Thirkell Sometimes Tammy would give me some information as well. So that’s true. So ---
Mr Eylander Would you agree with me that in putting together or the recording of these amounts in your spreadsheet, that you would need to look at the contracts to see if these amounts were in accordance with the contracts?
Mr Thirkell No. I – I wasn’t in detail with that. I mean, if Theo said he’s willing to pay that amount for that service or that building works, that was it. I mean, at the end of the day, my job is to see whether that work got carried out and advise Theo that, yes, I’ve inspected that work and I’m happy with it and you can close off that engagement or pay that contract but that was not in my hands.
Mr Eylander So you weren’t aware whether the contracts required a deposit or progress payments or a final payment?
Mr Thirkell No. I – that wasn’t my department of requesting deposits or – I have no financial ties with any of those contractors.
Mr Eylander Do you recall which contracts you did sight, because I haven’t seen any in your statement?
Mr Thirkell I only recall seeing emails and – so – so the process that I would go through would be probably more correspondence than seeing any contracts. I don’t recall actually seeing a contract but I’ve seen a lot of papers, so I’m going to say that maybe it’s been passed through at a meeting with Theo but I’ve never kept it. It’s just been – yeah. I’m just there for the record. I’m just there recording information.
Mr Eylander Sorry, Mr Thirkell. Just one moment. Now, Mr Thirkell, you would agree with me that in the quantification of the monies to rectify the works that you’ve proposed, you would need to see those contracts to make an assessment of a reasonable amount or an amount to be paid to attend to those works?
Mr Thirkell That – that’s – that wasn’t my role. My role is to ensure the works were carried out in accordance with my drawings.
Mr Eylander Why I ask you that, Mr Thirkell, is in the joint experts’ report you have nominated amounts for cost to complete. Thirkell – that’s the cost to complete items that are nominated as incomplete or defective work. How did you decide what amount would be as the cost to complete?
Mr Thirkell Well, as an engineer and building designer, I’m quite close to the builders and contracting industry in a sense of understanding their roles and I’d like to say that I’m fairly up to date with market rates at the time and that’s my role as a building designer and when I provide advice to my clients to how much building can I get for this price, I need to have an idea and I generally have a good idea and so I use that judgment and experience, dollars per square metre rates, to assess what these amounts are likely to be.
Mr Eylander I take it from that, that you didn’t refer to the Rawlinson’s Guide?
Mr Thirkell No. I did not. I’m familiar with that text. I – I – it’s in my opinion that I find that – that text is not very accurate for regional centres like Cairns. That’s just my opinion. So I prefer to use what I know is going on at the time in terms of the costs that are going – are generally spoken about at the time is what I meant by that.
After an adjournment for lunch, the exchange continued as follows.[87]
[87]T.3-55 Line 27 to T.3-56 Line 11.
Mr Eylander Now, Mr Thirkell, I’ll take you to the document appendix Q2 in your statement. That one there has issue date 23 December 2019, and the second entry under description, at the end it says “George tender management contract admin for that period” in the amount of $5175. Do you remember what work was done for tender management contract administration?
Mr Thirkell Precisely, no; generally, yes.
Mr Eylander Well, what’s your memory of what that was?
Mr Thirkell Well, the administra – the administration of the project, I guess, is understanding and discussing with the owner various quotes that might be coming in at the time, the various tasks, and most likely liaising with and discussing on the phone with contractors and the owner, that type of – that type of task. Now, tendering means providing drawings to contractors, subcontractors to obtain quotes, would be what I’d gather was happening at that time.
Mr Eylander And were you perusing the quotes as they were coming in?
Mr Thirkell I – Well, if they weren’t sent directly to me they would have been provided through Theo, and some were provided to me, so I would look at it and then, as I said previously, follow that on to Theo for his instruction – his further instruction of that.
Mr Eylander And did this include quotes from multiple contractors for the same type of work?
Mr Thirkell Yeah, look, yeah, for certain tasks I guess there would have been more than one quoting no doubt so, yes, I guess so. I can’t remember who and how many, but generally we – we’d expect multiple quotes or costs.
Whilst the factual circumstances in that matter are different to that which occurs in the present matter to the extent of what was not done therein to achieve practical completion, it is not enough to then say the case is distinguishable. I have already found that practical completion had not been reached by the applicant. This is enough to equate it to the circumstances in that matter and the findings of the Appeal Tribunal as to the application of the doctrine of substantial performance in circumstances where the payment being sought is that which becomes payable only on practical completion being achieved.
All that being said, for the reasons I have given in the preceding paragraphs, and in particular the emphasised passages within the authorities to which I have referred, in my opinion, in the circumstances of this contract and this proceeding, the doctrine of substantial performance has no application.
Was there otherwise an accrued right to payment?
I thus now turn to the final point for discussion under this issue.
Given the manner in which the applicant’s case unfolded in its Counsel’s oral closing submissions, it seemed to me that an argument was being made that the applicant had retained an accrued right to payment should I find that the respondents had lawfully terminated the contract. This arose from that submission on the question of practical completion I noted in paragraph [398] and discussed in paragraphs [402] to [404] herein.[403] There was then the following exchange between Counsel and me:[404]
[403]T.4-100 Line 29 onwards.
[404]T.4-100 Line 29 to T.4-101 Line 30.
Mr Eylander … The owners have taken possession of the site, which triggers clause 26. The owners have taken possession, in their evidence, on the 9th of September 2019. 26.1 comes into play and the builder must be paid the contract price.
MemberI want to ask you a question about that.
Mr Eylander Yes.
MemberThe owners took possession upon termination of the contract. They didn’t take possession before the contract was terminated, is that right? So they terminated the contract. They then took possession of the house.
Mr Eylander Well, there’s a termination letter of the 9th of September and their evidence is they took possession of the home on the 9th of September as well. Whether it’s a case of one occurred at a certain time in the morning or whether the locks were changed first thing in the morning, there’s no evidence of that before the tribunal.
MemberBut is it not open on the material as it has been presented that upon termination of the contract – where do I find the termination letter again, the Preston Law termination letter?
Mr Eylander That is at TMK26.
….
MemberSo if we read that letter, the last two paragraphs:
Our clients accept your client’s repudiation and elect to terminate the contract effective immediately.
Our clients are now entitled to immediate possession of the site to the exclusion of your client. …
and then requests delivery of keys and remote controls, et cetera, et cetera, et cetera.
It seems to me, and I’ll give this some further thought and consider any submissions you want to make about it, but it seems to me that the communication of the acceptance of the repudiation and the election to terminate has been made and then, because it says, “Our clients are now entitled”, that is something that immediately follows that, to possession of site. So you’ve got the act of taking possession following the very next second, in theory, upon the termination of the contract.
So what occurs upon termination of the contract is the clause that you’re referring me to that says upon taking possession of the site, practical completion is deemed to have been achieved, does that survive termination or is it no longer operative?
Mr Eylander I may have to consider that further.
Accordingly, I gave directions for the filing of further written submissions on this point, such to be given in conjunction with any further submissions to be made on the question of substantial performance. Each side did so, these forming part of the further submissions to which I have already referred on that question.
As I understand it, the applicant’s further submission on this issue was as a result of the further consideration to which the applicant’s Counsel averted. It was a continued reliance on sub-clause 26.1 of the general conditions, which forms part of ‘Clause 26 – Owner taking possession’, but one to be read in conjunction with subclause 26.10 therein. Whilst I extracted the first of those subclauses earlier in these reasons, for ease of reading I will do so again here, on this occasion together with subclause 26.10.
26.1The owner is not entitled to:
(a) take control of, (sic) possession of or use the works or any part of the works; or
(b) receive the keys for the works,
until the builder has been paid the contract price, adjusted by any additions or deductions made under the contract.
…
26.10The rights of the builder and obligations of the owner under clause 26 continue to be in effect after the ending of this contract.
The applicant’s Counsel then makes this submission:
The owners purported to terminate the contract on 9 September 2019 … after which the homeowners took possession of the works.
Accordingly, the homeowners were obligated to pay the contract price, adjusted by any additions or deductions made under the contract.
As I understood that submission, it is that the applicant had an accrued right at the time of the termination of the contract, such being sufficient to support its claim for payment in this proceeding advanced as either damages or debt. I touched on this briefly at paragraph [496] herein as to why I did not agree with such an argument, although I will elaborate on it in some more detail given the applicant’s express reliance on subclause 26.10.
Whilst the respondents’ Counsel’s further written submissions preceded the making of the applicant’s further submissions, they have aptly dealt with this point. To some degree they repeated the essence of the earlier submissions in regard to the operation of clause 25 of the general conditions in terms of the applicant’s entitlement to be paid the final claim, which I have already discussed at length in these reasons and need not revisit here. However, their Counsel also made these further submissions which I consider directly relevant to my determination of this issue and thus I extract them here:[405]
[405]Respondents’ further written submissions filed 30 August 2021 – para’s as noted. Footnotes and emphasis omitted.
Legal Principles
5. When a contract is terminated at common law, both parties are discharged from the further performance of the contract, except that the rights that have already been unconditionally acquired are not discharged unless the contract provides to the contrary.
6. Whether a term operates after discharge is a question of construction of the contract.
No accrued right to payment beyond the fixing stage progress claim.
…
8. Schedule 2, Part B sets out the progress payment schedule agreed between the parties.4 The parties agreed to a non-standard progress payment schedule which provided for six (6) stages. Schedule 2 Part B expressly states that:
“NOTE: All progress payments, other than the deposit, must directly relate to the progress of carrying out the subject works at the building site, and must be proportionate to the value of the subject work that relates to the claim, or less than that value.”
9. The Practical Completion stage is the sixth (6th) and final progress claim stage that was agreed in the progress payment schedule.
10. Clause 4 of the Contract provides the mechanism for payment of each of the progress claims. However, the procedure for the final claim is dealt with separately in clause 25.5.
…
12. It is clear that the Contract expressly provided for stages, specified that progress payments were payable upon completion of each stage, and that the obligation of performance under the Contract was divisible. Therefore, the right to recovery in respect of the completed stages was limited to the amount due under the Contract on completion of those stages (together with any variations that may have agreed).
…
21. The consequences of the applicant failing to satisfy these requirements is that the right to payment of the final claim did not unconditionally accrue to the Applicant prior to termination on 9 September 2019.
22. Accordingly, the Respondents were discharged from the performance of any obligation that had not unconditionally accrued, which clearly included payment of the final claim.
23. As to the question of which terms, if any, survive termination, the only provision that appears to deal with this issue in any way appears to be clause 26.10 which states:
“26.10 The rights of the builder and obligations of the owner under this clause 26 continue to be in effect after the ending of this contract.”
24. However, clause 26 relates to a circumstance where the owner has taken possession of the works at a time in which the contract remained on foot. At a time prior to the termination of the contract at common law due to the Applicant’s repudiation.
25. Once the contract has been terminated the Applicant no longer had an entitlement to possession of the land such that there was no “illegal early possession” on the part of the Respondents. That being the case, the obligations and rights contemplated within clause 26 have not accrued such that there are no continuing rights which could have survived for the purposes of clause 26.10.
26. Accordingly, there are no provisions of the Contract which preserve the Applicant’s entitlement to payment of the final claim after the Contract was terminated on 9 September 2019.
I agree with these submissions in their entirety, and respectfully adopt them as part of my reasons. Notwithstanding the words of subclause 26.1 that disentitles the respondents to take possession or receive the keys until payment has been made, and the asserted corresponding ‘right’ of the applicant to be paid if possession is taken earlier, if one does exist, upon the respondents’ act of lawful termination no such right accrued. The accrued rights of the applicant contemplated by subclause 26.10 are only those afforded it as they are expressed in clause 26, namely those in subclauses 26.3 to 26.9, when the respondents breach subclause 26.1, which they can only do whilst the contract remains on foot when this subclause remains in force. On a reading of clause 26 of the general conditions as a whole, this must be so. In no place within clause 26 is there a right to payment created that has not otherwise accrued under the contract.
For these reasons, in my opinion the applicant’s reliance on subclause 26.10 is also misplaced. I do not accept its submissions on it having an accrued right as being correct.
In all respects, on the basis of that which I have discussed in paragraphs [532] to [539] herein, I find that there is no accrued right to payment.
The Applicant’s Claim for Legal Costs for the Respondents’ Breach of Contract
The applicant claims $5,869.00 plus interest for the legal costs it asserts it incurred as a consequence of the respondents’ asserted breach of contract by wrongfully refusing to pay the final progress payment after practical completion, and/or their repudiation of the contract, and/or them taking possession.[406] This can be disposed of quickly.
[406]Ex. 25 – para 19.
I have already found that the applicant was not entitled to payment of the final claim, that practical completion had not occurred, that the respondents did not repudiate the contract but rather their termination of the contract was lawful, and that they took possession only after the act of termination. Accordingly, there is simply no basis for the applicant’s claim. Such was properly and appropriately conceded by the applicant’s Counsel in his oral closing submissions.[407]
[407]T.4-106 Line 21.
I do not allow this claim.
The Respondents’ Counterclaim for Damages
As I observed in paragraph [130], the respondents’ claim for damage is premised on a breach of statutory warranty, inter-alia a failure to have carried out the works in accordance with all relevant laws and legal requirements, and that the works will be carried out in an appropriate and skilful way, with reasonable skill and care, and in accordance with the plans and specifications.
On the premise of my discussion earlier in these reasons under the heading of Defective Work, I have found as a fact that much of that complained of by the respondents was defective. In my opinion, based on that which I have said earlier, the following words of Henry J in Mousa & Anor v Vukobratich Enterprises Pty Ltd & Anor, are apt and I respectfully adopt them.
The nature and extent of the defective works went well beyond the superficial and readily remedied flaws which might occur in progressing an otherwise competent construction process.
… It is difficult to think of a more fundamental requirement of a construction contract that that the works are to be performed in an appropriate and skilful way, with reasonable care and skill, in accordance with plans and specifications and in accordance with relevant law.[408]
[408]Mousa & Anor v Vukobratich Enterprises Pty Ltd & Anor [2019] QSC 49,[196] and [197].
Given this finding of fact, and my finding that the respondents lawfully terminated the contract, a result of which is that they became entitled to pursue a claim in damages against the applicant such being their counterclaim raised in this proceeding, I find that the respondents are entitled to relief they seek for the costs of rectification of the said works. But this is not for the entirety of that relief sought. As I have noted in my discussion on those defective work items, they have not been successful on all of them in terms of me finding the work to be defective, and in some instances whilst I have found the work to be defective the respondents’ evidence was insufficient for me to be able to reach a finding on the reasonable cost of rectification.
The items which I found not to be defective are the ‘Bathroom niche’, the ‘Feature timber and slat aluminium wall’, the ‘Painting’, and the ‘Roof awning’, and ‘Electrical solar panels’, whilst also noting that the respondents did not press their claim for the ‘Garage door sensors’.
The items which I found to be defective are the ‘Front Entrance Doorway and Door’, the ‘Security Screens’, the ‘Kitchen and butler pantry sinks’, the ‘Mouldy plasterboard to the salon’, the ‘Polished concrete floor’, the ‘Boatshed wall’, the ‘Streetscape tiles’, the ‘Roofing, box gutter and valley gutters’, the ‘Underground/external drainage’, and the ‘Cleaning’. Associated with the existence of this defective work is part of the ‘Tender and project management tasks, engineering and drafting services’ as claimed by Mr Thirkell.
It follows from those findings that the respondents have succeeded in their case for breach of contract, namely the breach of warranty, and as such their claim for damages should be quantified at the reasonable cost of rectification. The unfortunate reality however for the respondents is that for many of the items I found to be defective, there was an absence of sufficient evidence as to the issue of cost to remedy at the amounts they pressed for at the conclusion of the hearing. Accordingly, my assessment of the damage has been determined solely on the evidence that was before me. That was particularly so in regard to the ‘Kitchen and butler pantry sinks’ and the ‘Underground / external drainage’. However, notwithstanding that absence of evidence there is the finding that this work was defective and to that end, in my opinion, an award of damages should reflect that. Accordingly, I will allow the respondents nominal damages of $1.00 on each of these two items.
The cumulative effect of my findings on the issue of defective work, and the reasonable costs of rectification of same, is that the respondents are entitled to their counterclaim in the sum of $44,206.32 the calculation of which is shown in the following Table.
Item #
Description of Work
Quantum
1
Front entrance doorway and door
(See paragraphs [155] to [172] herein)
$ 8,000.00
2
Security screens
(See paragraphs [173] to [179] herein)
$12,906.00
3
Bathroom niche
(See paragraphs [180] to [189] herein)
$0.00
4
Kitchen and butler pantry sinks
(See paragraphs [190] to [227] herein)
$1.00
5
Salon plasterboard
(See paragraphs [228] to [242] herein)
$4,129.40
6
Polished concrete floor
(See paragraphs [243] to [255] herein)
$1,500.00
7
Feature timber and slat aluminium wall
(See paragraphs [256] to [262] herein)
$0.00
8
Painting
(See paragraphs [263] to [273] herein)
$0.00
9
Boatshed wall
(See paragraphs [274] to [282] herein)
$2,253.92
10
Streetscape tiles
(See paragraph [283] herein)
$550.00
11 & 12
Roofing / Box Gutter and Valley Gutters
(See paragraphs [284] to [319] herein
$8,223.00
13
Underground / external drainage
(See paragraphs [320] to [344] herein)
$1.00
14
Roof awning
(See paragraphs [345] to [358] herein.
$0.00
15
Garage door sensors
(See paragraph [359] herein.
$0.00
16
Cleaning
See paragraph [360] herein.
$1,100.00
17
Electrical solar panels
(See paragraphs [361] to [374] herein)
$0.00
18
Thirkell Engineers – Tender and project management tasks, engineering and drafting services
(See paragraphs [375] to [392]herein.
$5,542.00
Total
$44,206.32
This however is not the end result for the respondents. As the respondents’ Counsel has properly and correctly noted in his closing submissions, the balance of the adjusted contract price is to be deducted from this amount, such being $104,015.13 being the adjusted practical completion stage claim, namely $80,414.50, plus the aggregate of the agreed variations, namely $23,600.93.[409]
[409]RWCS para’s 223 to 225.
What of course will be immediately observed is that deduction has the net effect that the amount payable to the respondents is Nil.
The Respondents’ Counterclaim for Loss of Rent
The respondents press a claim for $15,400 for loss of rent on their property in which they had to continue to reside pending completion of their new house the subject of this proceeding. This is said to cover the period commencing 9 September 2019 when the contract was terminated by them, ending 25 March 2020 being the date they said they could occupy the new house.[410]
[410]RWCS para 226 to 228.
This claim can be disposed of quickly. Whilst there is evidence from Ms Katrina Gobbet as to her opinion of a reasonable weekly rental value that could have been earned on the property,[411] and evidence from Mr Theo Kaminaras of a lease he and his wife entered into with a tenant commencing 12 November 2020,[412] there is no evidence of lost opportunities to rent the property during the period in question. That is, the respondents’ evidence is entirely inadequate to prove this claim. They have failed to meet their evidential burden such that there is simply not an issue for me to consider. Accordingly, I do not allow their claim for this item.
[411]Ex. 17.
[412]Ex. 23.
Conclusion
My reasons given in the preceding paragraphs for the decisions I have ultimately reached in this proceeding are extensive. One of the reasons for this was the confused and confusing nature of much of the evidence, as well as the absence of probative value in much of that which was presented.
The very nature of building disputes means that in most instances the outcome will turn on the expert evidence. This proceeding is no exception. It is unfortunate that the expert evidence presented to this Tribunal was not of the quality that should be expected, and the outcome for the parties reflects that. It is regrettably a sad state of affairs when parties to a contract to build a house as a home end up in this Tribunal and the outcome is a hollow one. The end result has often been described as a shattered dream for the owners. I fear that this is one of those.
At the start of these reasons, in paragraphs [6] to [8], and then as it was narrowed by the conclusion of the hearing as I have described it in paragraphs [14] to [16], I set out the applicant’s claim in this proceeding. In paragraphs [10] and [11], and then as it was narrowed by the conclusion of the hearing as I have described it in paragraphs [17] to [20], I set out the respondents’ counterclaim in this proceeding. On the basis of all which I have discussed in these reasons, the following is my conclusion on those respective claims and the outcome of the contest between the parties.
The applicant’s claim for damages for breach of contract, or alternatively its claim for payment of an amount owing, expressed as the respondent’s failure to pay the final claim and variation claim 3 B, should be dismissed.
The applicant’s claim for damages for the respondents’ asserted repudiation and wrongful termination, or alternatively its claim for payment of an amount owing, being claims for pool maintenance and legal costs, should be dismissed.
The applicant’s claim for interest on damages, or alternatively on an amount owing, should be dismissed.
Subject to that which I say in the next paragraph, the applicant should pay the respondents damages in the amount of $44,206.32, representing the costs to rectify the incomplete and defective work.
The unpaid practical completion stage payment of $80,414,50 and the unpaid agreed variations of $23,600.93 should be set-off against the applicant’s liability to pay those damages, with the net result being that there is no amount to be paid by the applicant to the respondents in satisfaction of the said damages.
The respondents’ claim for damages for loss of rental income should be dismissed.
The respondents’ claim for damages for inconvenience and loss of enjoyment should be dismissed.
In terms of the interest claimed by the respondents, it was originally expressed in their counterclaim as a claim under the Civil Proceedings Act 2011 (Qld), however by the conclusion of the hearing it was expressed as being one pursuant to s.77 of the Queensland Building and Construction Commission Act 1991 (Qld). Under s.77(3)(c) of that Act, this Tribunal is afforded power to award interest on damages at the rate, and calculated in the way, prescribed under a regulation. That regulation is the Queensland Building and Construction Commission Regulations 2018 (Qld) s.54. There is no contract rate applicable to damages payable to the respondents, nor is there any evidence before me of a rate otherwise agreed between the parties. As such subparagraph 54(1)(c) of the Regulations governs the rate, such being 10% per annum, and under subparagraph 54(2) therein it is payable on and from the day after the day the amount became payable until and including the day the amount is paid. In my opinion the relevant date is the day after the respondents effectively commenced their counterclaim in this proceeding, such effectively being 22 October 2019.
In terms of costs, at the conclusion of the hearing the respondent pressed for an order that the applicant pay their costs of the proceeding, whereas the applicant sought an order that costs be reserved. Given the outcome of this proceeding in my opinion the prudent course of action is that I hear further from the parties on the issue of costs, and as such it seems to me that the proper present order is that sought by the applicant together with directions for the filing of any relevant material and submissions on the issue of costs.
Orders will be made reflecting the outcome as I have described it in these concluding paragraphs.