Canberra Acrylic Rendering Pty Ltd v Archibuild Constructions Group Pty Ltd - [2019] ACAT 48

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

CANBERRA ACRYLIC RENDERING PTY LTD v ARCHIBUILD CONSTRUCTIONS GROUP PTY LTD (Civil Dispute) [2019] ACAT 48

XD 843/2018
Catchwords: CIVIL DISPUTE failure to agree essential terms of a building contract quantum meruit

Tribunal: Senior Member A Anforth

Date of Orders:  30 May 2019
Date of Reasons for Decision:         30 May 2019
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          XD 843/2018

BETWEEN:
CANBERRA ACRYLIC RENDERING PTY LTD
Applicant

AND:
ARCHIBUILD CONSTRUCTION GROUP PTY LTD
Respondent

TRIBUNAL:Senior Member A Anforth
DATE:30 May 2019

ORDER

The Tribunal orders that:

The respondent is to pay the applicant the sum of $4,124 on or before 30 June 2019.

The respondent’s counterclaim is dismissed.

………………………………..
Senior Member A Anforth

REASONS FOR DECISION

Summary

The applicant carries on a business of cement rendering and the respondent is a builder. The respondent contracted with the applicant to perform rendering on a residential construction. The terms of the contract are in dispute.
The applicant carried out certain work for which it was partly paid. The respondent has refused to pay the balance claimed on the basis that the account is said to be excessive and includes work on the balcony fixing foam that was outside the scope of the agreement. In addition some of the work was said to be defective. The applicant ‘walked off’ the site in protest over the pay dispute.[1]
[1] Transcript of proceedings 23 January 2019 at page 102, lines 13-14
About one month after the walk off the respondent brought in new renderers to complete the work, including the rendering of the balcony and repairs to the applicant’s existing work. At no point did the respondent particularise the incomplete work or the alleged defects.
The parties had not reduced their agreement to writing. They had not orally agreed the scope of the work including whether it included the balcony or any of the later variations. They had not agreed the total area to be rendered. They had not agreed on the charging rates or when payments were to be made. The respondent understood that the applicant would charge for materials plus a charge per square metre which was inclusive of labour costs. The applicant asserted that the agreement was for materials, a charge per square metre AND a daily labour charge.
In short, this case is an example of the problems that arise where parties fail to properly record the terms of a building agreement.
The respondent has counterclaimed for rectification of defective work. In addition the respondent has counterclaimed for the cost of bringing in new renderers to complete the rendering work including the balcony while at the same time asserting that the partial work done by the applicant on the balcony was not within the scope of the contract. The Tribunal observed to the respondent that if the balcony was not within the scope of the contract then there is no basis for the respondent including the cost of rendering the balcony in its counterclaim against the applicant.
The respondent’s counterclaim is said to include late handover fees caused by the applicant’s unlawful ‘walk off’.[2] There was no evidence of the fact or basis for such charges. The Tribunal observed to the parties that if the respondent’s refusal to pay the applicant’s outstanding invoices was unlawful then the applicant was entitled to walk off.
[2] Transcript of proceedings 23 January 2019 at page 102, lines 19
In the end the parties attended the site and measured the area of rendering and of the foam and an approximate agreement was reached. There was still dispute over how much in fact had been paid.
It was not possible to determine the part of the respondent’s counterclaim that alleged incomplete work (other than the balcony) and defective work as none of this was ever particularised.

The procedural history in the Tribunal

On 28 June 2018 the applicant filed a claim in the Tribunal alleging the unpaid account of $6,625.30 plus interest and costs of $317.62. There was no further particularisation of the claim.
On 13 July 2018 the respondent filed a response and counterclaim for $10,600 plus costs of $312. In the response the respondent alleged the following:
(a)The applicant incorrectly overstated the area rendered.
(b)Some invoices did not specify the area rendered.
(c)Some of the applicant’s work was defective.
(d)The applicant was unco-operative in resolving this dispute.
(e)The applicant failed to complete all the required work and another contractor had to complete the work at a cost of $6,200.
The respondent asserted that the true area of brickwork to be rendered was 217.7 m2 and a foam area of 91 m2. The invoices from the applicant are said to amount to more than this total area of rendering and some invoices have no area shown. The respondent asserts that the work should have cost ‘around $20,000 + GST’ but that it has already paid around $24,400 (inclusive of GST) plus $6200 to another contractor to complete the work.[3]
[3] Respondent’s response to application received by ACAT 13 July 2018, 3
Annexed to the response were:
(a)An invoice from the applicant to the respondent of 21 September 2017 for $473 to patch damage to their work caused by a roofing company. This invoice contains the handwritten notation “send to roofer”.[4]
(b)An invoice from the applicant to the respondent of 24 September 2017 for $3,322.86 for materials in the sum of $1,300.78, labour in the sum of $1,720 and GST in the sum of $302.08 giving a total of $3,322.86. This invoice contains a notation “paid”.[5] It did not contain any area of rendering;
(c)An invoice from the applicant to the respondent of 12 October 2017 for $7,232.92 to “Supply/Install Foam - Acrylic Render Base Coat/Sandcote Hydroguard Top Coat” (the foam) of 69.70 m2 @ $142 m2 plus GST. This invoice contains the handwritten notation “paid”;[6]
(d)An invoice from the applicant to the respondent of 22 October 2017 for $5,913.60 for rendering of 168 m2 @ $32 m2 plus GST. This invoice contains the handwritten notation “disputed-rejected”;[7]
(e)Floor plans for the house;
(f)An email of 30 November 2017 between the parties concerning the dispute;
(g)An invoice from Master Cement Rendering Group (the new renderers) of 10 December 2017 in the sum of $2,200. This invoice contains the handwritten notation “paid”;[8]
(h)An invoice from Master Cement Rendering Group of 17 December 2017 in the sum of $275. This invoice contains the handwritten notation “paid”;[9]
(i)An invoice from Master Cement Rendering Group of 7 April 2018 in the sum of $1,250. This invoice contains the handwritten notation “paid”.[10]
[4] Tax invoice from applicant to respondent dated 21 September 2017
[5] Tax invoice from applicant to respondent dated 24 September 2017
[6] Tax invoice from applicant to respondent dated 12 October 2017
[7] Tax invoice from applicant to respondent dated 22 October 2017
[8] Tax invoice from Master Cement Rendering Group to respondent dated 10 December 2017
[9] Tax invoice from Master Cement Rendering Group to respondent dated 17 December 2017
[10] Tax invoice from Master Cement Rendering Group to respondent dated 7 April 2018
On 13 September 2018 orders were made for the parties to file and serve their evidence including any expert reports relied upon. In addition an order was made for the parties to meet on site on 4 October 2018 to measure the total area rendered in default of which the parties were to file and serve estimates of the area rendered and foam fitted, supported by drawings of the area. The matter was listed for hearing on 20 November 2018.
The owner of the property refused the applicant entrance on 4 October 2017.
On 26 October 2018 the respondent filed:
(a)A set of the orders by way of counterclaim for the sum of $13,600 plus legal costs.
(b)A statement by Adam Alaa, the site manager for the respondent who said that the applicant failed to attend to complete the job when asked to do so.
(c)A calculation of the area of rendering being brick of 217.7 m2 and foam of 91 m2.
On 18 November 2018 the applicant emailed the Tribunal advising that he had retained a certifier to assess the area rendered but the certifier was having difficulties doing this off the plans. The applicant sought an adjournment of the hearing to obtain access to the house by the certifier.
The applicant filed its evidence and annexed the following documents:
(a)A set of house plans with some notation.
(b)A further invoice of 4 May 2017 in the sum of $191.40 (inclusive of GST) for “Cladding Supply and Install/Acrylic Render/Coloured Acrylic Texture (no paint required)”; “Acrylic Render of Brickwork (Rockcote Off White Bags)”. The invoice contains the further entry “Price per m2 All materials included, Rockcote Products, 10 Year Warranty”.[11]

[11] Tax invoice from applicant to respondent dated 4 May 2017

On 20 November 2018 the matter came before the presently constituted Tribunal. Ms Beasley, commercial agent, appeared for the applicant and Mr Kwiak, director, appeared from the respondent. Mr Panunto, director of the applicant, appeared by phone.
The parties outlined their cases. The dispute involved:
(a)the parts of the house that the applicant had been asked to render and fix with foam;
(b)the basis of the applicant’s charging rate;
(c)the actual area of rendering and fixing with foam;
(d)whether the foam on the balcony had been required and if so its area;
(e)whether the respondent had given the applicant a chance to return to the site and carrying out any repair of any allegedly defective work; and
(f)who was responsible for the parties failing to meet on site on 4 October 2017.
The applicant per square metre charge for rendering was not in dispute, being $32 m2 for the brick and $142 m2 for the foam.
At the hearing it became apparent that the uncertainties at paragraph 20(a)-(e) above were fundamental to the dispute. It seems the parties genuinely had different understandings. It was this difference of understanding that caused the applicant to leave the site with the work incomplete in protest at the non-payment. There was a factual dispute concerning the issue at paragraph 13(f) above.
The applicant said that there had been oral variations directed by the respondent as the rendering work proceeded. Some of these variations arose from changes in the plans by the owner. For this reason any original estimated area was irrelevant.
The respondent said that at different time it had pressed the applicant to be specific on the area rendered and that yet to be rendered but the applicant was evasive.
The respondent had the new renderers come on site to complete the work on 10 December 2018. The extent of the work undertaken by the new renderers was never made clear.
The Tribunal explained to the parties that there were principles underpinning the law as it applied to building contracts and contracts in general. Those principles required that the parties agree to the fundamentals of the contract, which in this case included the scope of the work to be done, the charging rates, the payment regime and the time for completion. Once an agreement was reached on these matters it could only varied by agreement and that variation must also be clearly understood by both parties. In this case it seems that there was no mutual understanding between the parties on any of these matters. It was put to the parties that it was doubtful that there was sufficient certainty in their agreement for any valid contract to have come into existence. The principle of quantum meruit[12] was then explained to the parties.
[12] Quantum Meruit is Latin for ‘the amount deserved’.
The matter was adjourned to 18 January 2019 and orders were made for the parties to meet on site on 26 November 2018and carry out the measuring of the rendered area. The respondent was to contact the owners and arrange access. The parties were to video the inspection and the areas measured.
On 2 December 2018 the applicant emailed the Tribunal and advised that the meeting on 26 November 2018 went ahead, albeit with some difficulties and tensions. He measured 360.89 m2 of brick render and 116.59 m2 of foam rendering.
On 18 January 2019 the applicant filed a revised invoice for his work based on the measurements taken on 26 November. The account was in the sum of $9,846.83 (including GST). The invoice was in fact for 176.39 m2 of brick render @ $32 m2 and the balance of 23.29 m2 for supply/install of foam @$142 m2. The invoice states that the applicant had already been paid for 93.30 m2 of foam.
The hearing reconvened on 23 January 2019. Mr Panunto, director, and Ms Beasley, commercial agent, appeared for the applicant. Mr Kwiak and Mr Shawish, directors, appeared for the respondent.
Mr Bick appeared as a witness for the respondent. He was the person who took the measurements on site. Mr Bick said the area of brick rendering was 227.4 m2 and for the foam it was 97.6 m2. He said that he had spoken with the painter that had painted the house who estimated the brick rendered areas at 257 m2. The painter described the approximate method he had used.
Later Mr Bick on behalf of the respondent agreed to a figure of 360 m2 for the brick exclusive of the balcony. Mr Panunto accepted this figure and pointed out that he had only been paid for 184.5 m2. This left a balance of 116 m2 @ $32 m2 = $3,712.
Mr Panunto said he measured 116.50 m2 for the foam but had only been paid for 93.10 m2. The respondent said payment had been made for all 116.7 m2.
There was a dispute between the parties concerning how the measurements were taken.
There was a dispute over the applicant’s charging method. The respondent maintained that the contact was solely priced on materials plus a square metre basis and not on a time basis. The applicant insisted that he was also entitled to a daily rate for his labour. It was pointed out to the applicant that there was no reference to the daily rate in the invoices or emails that evidenced the agreement between the parties other than the reference to “Labour” in the invoice of 24 September which made no reference to a charge per metre. That is, at no point did the applicant notify the respondent that he was charging on both an hourly and area basis.[13]
[13] Tax invoice from applicant to respondent dated 24 September 2017
There was ventilation of the dispute over whether the contract included any work on the balcony. The applicant said that the respondent’s site manager had asked him to start work on the balcony which involved supplying and fixing the foam. No rendering was done. The respondent denied that these instructions were ever given by the site manager, although they may have been given directly by the owner. The respondent further denied that the balcony formed any part of the contract or that the applicant actually did any work on the balcony. The Tribunal noted that there was no reference to the balcony in the correspondence between the parties and so it appeared to be a later variation not authorised by the respondent. It would therefore not be included in the applicant’s claim. By the same logic, if the balcony formed no part of the contract then its non-completion by the applicant cannot form a basis for any charge by the respondent’s in its counter claim for its completion. The issue of the balcony would be excluded from the Tribunal’s consideration.
The respondent said that the new renderers were brought in at short notice to complete the job by Christmas but they charged a higher metreage than that charged by the applicant. The respondent paid them to complete the balcony, fix the applicant’s defects and complete other incomplete work, none of which was particularised. The respondent said that it had incurred a penalty of $2,000 in delay in handing over the house.
At the end of the hearing the matter was reserved for decision. Orders were made for:
(a)the respondent to file and serve the video taken on site on 26 November 2018; and
(b)a timetable for the parties to file and serve their final submissions.
On 26 February 2019 the respondent filed its final submissions and a video of the site inspection. The respondent maintained the following:
(a)The total brick render was 227.54 m2 @ $32 m2= $7,281.74.
(b)The total foam render was 97.6 m2 @ $142 m2 = $13,859.20.
(c)Total cost = $21,140.94.
(d)The total amount paid to date = $24,390.98.
The respondent annexed a report from Ausdragon Professional Pty Ltd dated 23 March 2018 for the same house which showed a render area of 257 m2. The respondent said it was prepared to accept this figure @ $32 m2= $8,224.00 in lieu of the $7,281.74 above. When added to the charge for the foam of $13,859 this gave a figure of $22,083.
The respondent maintained its counterclaim of $10,600 plus fees incurred.
The applicant did not file any final submissions notwithstanding a reminder from the Registry.

Consideration of the issues

For the reasons given at paragraphs 23 and 26 above there was no concluded contract between the parties insofar as there was no agreement on the fundamental terms of the contract.
It follows from this finding of fact that the Tribunal must apply the principle of quantum meruit which in this case means to ascertain a fair market price for the applicant’s work minus a fair market price for the rectification of any defects in the applicant’s work.
Because there was no contract between the parties, the issues of whether the respondent was justified in withholding payment under the contract and whether the applicant was justified in the “walk off”, both do not arise. Similarly, the issue of any late fees incurred by the respondent do not arise in the absence of any contractual completion date.
In applying the quantum meruit principle the Tribunal must first determine the factual matrix to which the principle is to be applied. On the evidence the discussion between the parties were to the effect that the applicant would bill for the materials and a square metre rate. If there was any discussion of a daily labour fee this fact was not reflected in any correspondence or invoices. The Tribunal does not have the evidence to determine whether the additional daily labour fee is commonly charged in addition to materials and metreage and so cannot conclude that this is case.
The Tribunal finds that the total brick rendered was 360 m2 per paragraph 28 above which leaves an unpaid account of $3,712.
The issue of the foam is less clear but the Tribunal is satisfied that either the applicant has in fact been paid for the whole 116 m2 or that the applicant only billed for 97 m2 for which it has been paid. On either scenario there is no outstanding account for the foam.
The applicant is allowed $3,712 plus its lodgement fee of $312 plus interest assessed at $100 giving a total of $4,124.
The respondent may have been entitled to a set off for the cost of necessary rectification of defective work if the alleged poor work and cost of rectification had been identified. It was not and so no set off is allowed.
The respondent is not entitled to the costs incurred in having a new renderer on site to finish the balcony because the balcony formed no part of the agreement with the applicant. The Tribunal finding that there was no unlawful “walk off” by the applicant means that the respondent is not entitled to any of the other costs incurred to the new renderers.
The respondent’s counterclaim is dismissed.

………………………………..
Senior Member A Anforth
HEARING DETAILS

FILE NUMBER:	XD 843/2018
PARTIES, APPLICANT:	Canberra Acrylic Rendering Pty Ltd
PARTIES, RESPONDENT:	Archibuild Constructions Group Pty Ltd
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	N/A
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Senior Member A Anforth
DATES OF HEARING:	20 November 2018 23 January 2019