Cavalier Homes Brisbane Pty Ltd v Findville Pty Ltd
[2011] QCAT 397
•19 August 2011
CITATION: Cavalier Homes Brisbane Pty Ltd v Findville Pty Ltd [2011] QCAT 397
PARTIES: Cavalier Homes Brisbane Pty Ltd v Findville Pty Ltd
APPLICATION NUMBER: BDL258-10
MATTER TYPE: Building matters
HEARING DATE: 28 February 2011
HEARD AT: Brisbane
DECISION OF: Mr Adrian Williams, Member
DELIVERED ON: 19 August 2011
DELIVERED AT: Brisbane
ORDERS MADE: The Respondent is required to pay the Applicant within 30 days of the decision, the sum of $10,166.11 comprised of:
Judgement Sum $9,447.78
Interest to 28.02.2011 $ 463.33
Filing fee $ 255.00
CATCHWORDS: Delays in Construction and extensions of time allowed to builder – Assessment of damages for late completion APPEARANCES and REPRESENTATION (if any):
APPLICANT: Cavalier Homes Brisbane Pty Ltd represented by Mr Peter James Gale RESPONDENT: Findville Pty Ltd represented by Mr Adrian Stagg REASONS FOR DECISION
[1]This is a decision of the Queensland Civil and Administration Tribunal arising out of a hearing held in Brisbane on 28 February 2011 in the matter of Cavalier Homes Pty Ltd (the Applicant) v Findville Pty Ltd (the Respondent). The Presiding Member hearing the matter was Mr Adrian Williams who now hands down the decision in the matter and provides an outline, in written form, as to the reasons for that decision.
[2]This QCAT decision arose out of an Application made to that Tribunal dated 1 September 2010 and filed on 2 September 2010. The Respondent filed a Response and Counter-Application on 27 September 2010.
[3]The facts of the matter are as follows.
[4]The Applicant in its Statement of Claim asserted the following.
[5]On 17 August 2006 the parties entered into a contract for the construction of a residence at Lot 3 Bremer Parade Basin Pocket (a suburb of Ipswich). The contract took the form of the then current HIA QC1 2000 New Home Construction Contract.
[6]The contract specified a total contract price of $220,238.00 which was payable as follows:
Stage Percentage Amount
i) Deposit 5% $11,015.00
ii) Base 10% $22,033.00
iii) Frame 20% $44,066.00
iv) Enclosed 35% $77,115.00
v) Fixing 20% $44,066.00
vi) Practical Completion Balance (10%) $22,033.00
[7]During the course of construction the Applicant made certain progress claims in accordance with the provisions of the contract and these were all paid by the Respondent other than the final payment upon practical completion which was partly paid and the balance of $13,107.78 which remains unpaid. The Applicant also sought orders for the payment of interest and legal costs. The Applicant subsequently reassessed the amount owing and reduced the amount of its claim to $12,927.78.
[8]It is a matter of agreement between the parties that the construction of the dwelling took significantly longer than that anticipated under the contract. The contract (in Schedule 1) specified the following time frames and potential causes of delays:
Building Period – 230 days after commencement (Schedule 1 Item 10)
Calculable Delays – [Schedule 1 Item 10 (a)]
Inclement weather – 5 days
Weekends, public holidays, rostered days off etc – 65 days
Any other matter likely to delay – 5 days
Incalculable Delays – [Schedule 1 Item 10 (b)]
1. Unavailability of suitable trades
2. Unavailability of suitable materials
3. Anything beyond the builder’s control
[9]The section of Item 10(b) which specified the “general effect that the delay is likely to have on the carrying out of the works” was not completed.
[10]Commencement under Clause 2.1 of the Contract was specified as being the date specified in Item 6 of the Contract Schedule or within 20 working days from the date in which a number of specified events have taken place.
[11]What was the correct commencement date in accordance with the contract was originally a matter in dispute between the parties however, prior to the matter being heard they agreed that the commencement date was 21 December 2006.
[12]As events transpired the property did not reach practical completion until 2 July 2009 (according to the Applicant) or 25 February 2010 (according to the Respondent). The difference between these two asserted completion dates lies in the parties failing to agree that the property was completed either without defects or with minor defects and was reasonably suitable for habitation (see section 67 of the Domestic Building Contracts Act 2000 “DBCA”).
[13]The Respondent for its part acknowledged that the final progress payment had not been paid in full but denied it was payable on the basis that it had suffered financial loss due to the Applicant:
a) Taking approximately 3 years and 2 months to complete construction of the dwelling (calculated between 18 December 2006 and 25 February 2010).
b) Attempting to hand over possession of the dwelling at a time when it had significant defects as identified in an independent report obtained by the Respondent.
c) On numerous occasions allowing the construction of the dwelling to remain at a stand-still for months at a time.
d) Omitting to complete various works required by the contract.
[14]In its Counter Application the respondent assessed its losses as being not less than $29,000.00 comprising holding costs (including bank fees, interest payment local government rates etc) and rectification works.
[15]The Respondent in accordance with Directions made by the Tribunal on 11 November 2010 subsequently quantified its alleged losses as being a total of $35,069.49 comprising the following items:
Bank Interest between September 2007
and February 2010: $21,508.59
Bank Fees (February 2009
To February 2010: $ 432.00
Council Rates (September 2007
to February 2010 $ 2,849.90
Lay carpet on stairs $ 857.00
Site Surveys $ 660.00
2nd Building inspection $ 330.00
Wrong skirting $ 400.00
Omit metal shelving $ 1,600.00
Total: $ 3,847.00
Advisory and legal fees $ 6,432.00
Total of counter-claim $35,069.49
[16]At the Directions hearing referred to above the parties agreed that the matter would proceed to hearing on the basis that the following issues remained in dispute:
a. Whether late completion damages should be calculated as provided for under the contract (namely assessed as $15.00 per day);
b. Whether schedule 1 Item 10(b) of the contract is too broad to be relied upon by the Applicant;
c. Whether the extensions of the contract claimed by the Applicant are allowable under the contract;
d. Whether interest is payable on any amounts found to be owing by the parties;
e. Whether clause 26 of the contract applies;
f. What was the date of practical completion;
g. whether monies are owed by the Applicant to the Respondent on account of :
ilosses claimed such losses to be specified by the respondent as set out above; and
iiclaimed omissions to the contract – lack of carpet on the stairs, incorrect wardrobe shelving, and incorrect skirting and architraves;
h. whether the applicant is responsible for the cost or reinstating boundary pegs disturbed during construction.
[17]At the settlement conference it was agreed between the parties that the commencement date under the contract was 21 December 2006.
[18]Much of the matters in dispute come down to issues of the correct interpretation of the building contract entered into between them and, for that reason, I will outline the essential terms of the agreement in so far as they are relevant to the current dispute
[19]Item 11 of Schedule 1 specified that the late completion damages would be the sum of $15.00 per day.
[20]For its part the Respondent contended that the Applicant had breached its obligations under both section 44 of the DBCA and Clause 36.1(c) of the Contract in that the delay in completing the dwelling within the time required under the contract evidenced a failure to carry out the works in an appropriate and skilful way and with reasonable care and skill. This contention will be assessed later in these decisions.
[21]The Applicant in response asserted that it had complied with the relevant provisions of the Contract in that once it became aware of incalculable delay it had complied with Clause 17.3 by providing written notices to the owner in the time frame specified in Clause 17.3(c) and further that the Respondent had not in accordance with Clause 17.4 disputed the notices as it was required to do if it objected to the builder’s claim for an extension.
[22]It appears to me that Clause 17 of the Contract is central to the dispute between the parties, for the reason that the delay in the completion of the dwelling, the reasons provided by the Applicant for the delay, their responses to it and the consequences for the Respondent of the delay, lay at the heart of this case. For that reason I will record the relevant clauses in full and refer to them in the course of this decision.
Clause 17 Delays and Extensions of Time
17.1The builder is entitled to a reasonable extension of time to the building period if commencement or the carrying out of the works is delayed by a claimable delay.
17.2A claimable delay means a delay caused by the builder suspending the works under Clause 19 or from a cause beyond the builder’s sole control that was not reasonably foreseeable at the time the builder entered into the contract including:
(a)
(c)a calculable delay in excess of the allowance for that cause of delay stated in item 10
(d)an incalculable delay if the cause and general effect of the delay is likely to have on the carrying out of the works as stated in item 10;
17.3To Claim an extension of time the builder must give the owner written notice detailing both:
(a)the cause of the delay; and
(b)the extension of time claimed,
by the later of the day that is:
a.20 working days on and after the builder is aware of both the cause and the extent of the delay; or
b.5 working days on or before the date of practical completion.
17.4If the owner wishes to dispute a claimed extension of time the owner must within 5 working days of receiving the builder’s claim give the builder a written notice:
(a) disputing the claim; and
(b) detailing the reasons why the claim is disputed.
17.5The builder must allow a reasonable reduction to the building period if by variation work is omitted from the works.
[23]The clause addresses both delays in the commencement of the work and the subsequent carrying out of the works.
[24]Prior to outlining the written and oral evidence given by the parties I note that there was significant time addressed in the hearing to testimony concerning the reasons for the delay in the commencement of the works. It will be not necessary for me to either record or assess this evidence as the parties are in agreement as to the date of commencement. I will address an alternative construction later in these reasons.
Evidence of the Parties
Written Evidence
[25]I will now address the written evidence submitted to the Tribunal before the hearing.
[26]The Tribunal made Directions on 11 November 2010 which addressed the question of written evidence to be filed with the Tribunal. These were as follows:
For the Applicant:
To file and serve on or before 26 November 2010;
a) An updated Extension of Time Calculation showing an amended claim amount.
b) Copies of Extension of Time Notices for each of the extension of time claims.
[27]The Applicant complied with this direction and also attached these documents to the subsequently filed statement of evidence of Mr Peter James Gale dated 17 January 2011 (“Mr Gale’s Statement”);
For the Respondent:
[28]The Respondent was required on or before 23 December 2010 to file and serve the document quantifying the basis and the quantum of its alleged losses (Respondent’s Statement of Loss”) and complied with this direction. As specified above the Respondent files this document.
[29]The Tribunal allowed the Respondent to file and serve any statements it wished to rely upon on or before 14 February 2010 (although this is clearly intended to be 2011). The Respondent elected not to file a statement in accordance with this Tribunal Direction. A Direction was made by the Member hearing the matter permitting the Respondent to file and serve any additional material upon which it sought to rely. As part of this the Respondent did make formal submissions on the evidence and I propose to refer to these submissions where they are relevant to matters I propose to address.
Mr Gale’s Statement
[30]Mr Gale is the Chief Financial Officer of the Applicant Company. In his Statement he deposed as follows:
The Respondent was not entitled to seek the amounts claimed through his Cross Claim and its Statement of Loss as it is only permitted to claim the late completion damages specified in Clause 32 of the Contract and not the amounts claimed for bank interest and fees and Council rates.
[31]He acknowledged that the house had not been completed by the date specified under the contract for practical completion which should have been 21 August 2007, but that clause 32 of the contract in accordance with Item 11 of the Schedule provided the mechanism by which liquidated damages in favour of the owner were to be assessed (taking into account the claims for extension the Applicant had issued to the Respondent).
[32]In accordance with the Contract the Applicant had provided the Respondent an updated Amendment to Contract dated 16 November 2010 and an updated File Progress date report under which the Applicant agreed to pay the Respondent a sum of money calculated in accordance with Clause 32 to compensate for the late completion of the house.
[33]Mr Gale contended that the construction of the house reached “Practical Completion” on 2 July 2009 which was the date a Form 21 Final Inspection Certificate was completed and signed.
[34]Mr Gale asserted that at that time the property was at the “Practical Completion” stage and reasonably habitable in accordance with the contract. He alleged that the Applicant had attempted on numerous occasions to hand over the house but the Respondent had claimed that the scope of work included under deck linings, carpet to the stairs and not included in the Contract, the plans or in Appendix “A” of the Contract.
[35]Mr Gale agreed that in accordance with the Amendment to the Contract and related documents referred to in item 3 above the balance of the final instalment due to be paid by the Respondent had been decreased to the sum of $12,927.78. He attached a revised Debtor Statement in that sum.
[36]At the hearing a number of Documents were submitted by the parties as Exhibits. These were submitted largely by the Respondent unless indicated otherwise. These were as follows:
Exhibit 1:The Applicant’s written quote to the Respondent dated 19 July 20106.
Exhibit 2:Bundle of Receipts for expenses incurred by the Respondent as follows:
a. Invoice from Parson’s Business Trust trading as Site Surveys
to identify boundaries of 8 Bremmer Parade ($660.00);
b. Invoice from Hoopers Carpet One Pty Ltd supply and lay carpet to staircase ($857.00);
c. Invoice Pro Check Building Services Pty Ltd ($330.00);
d. Two invoices from Praeger Ellem Solicitors addressed to the Respondent in the sum of $780.55 and $2,198.14;
e. Invoice from Building Matters Queensland $3,750.00.
Exhibit 3.List of Architraves made by Carter Holt Harvey under the ULTRAprime brand name.
Exhibit 4:Photograph’s of steel and melamine shelving.
Exhibit 5.Copy of sections 33 and 34 of the DBCA.
Exhibit 6:Copy of Section 18 of the DBCA.
Exhibit 7:Copy of Purchase Order dated 28 March 2008 (for the Applicant).
Exhibit 8:Copy of the Applicant’s updated progress dates with annotations made by Mr Adrian Stagg on behalf of the Respondent.
[37]Before turning to the evidence given by the parties at hearing it is instructive to refer to a number of time lines during the course of the dwelling’s construction, namely the dates on which various stages were certified as being completed as well as the dates progress claims were then issued and the dates the Respondent provided payment on those progress claims.
Stage Inspection & Certificate dates
Stage Inspection Date Certificate date
Foundation & Excavation 23.02.2007
Slab Stage 06.03.2007
Frame Stage 07.04.2008
Final Stage 24.06.2009 02.07.2009
Other stage (set out) 16.02.2007
Progress Claim & Payment Dates
Date & Stage Issue date Date of Payment
Deposit 16.08.2006 17.08.2006
Deposit 21.09.2006 21.09.2006
Slab 07.03.2007 19.03.2007
Frame* 01.04.2008 02.05.2008
Enclosed 20.08.2008 11.09.2008
Fixing 15.01.2009 05.02.2009
Final** 18.09.2009 25.02.2010
*A number of separate claims and subsequent reversals for this stage are recorded in the Applicant’s ledger on 24 October 2007, 19 November 2007 and 29 January 2008. I have only therefore recorded the last date.
**Again the Applicant issued an earlier claim for this stage on 5 June 2009 which was recorded as reversed on the same date. I have therefore recorded the last date.
Oral Evidence
Applicant
[38]Mr Gale provided evidence on behalf of the Applicant.
[39]He said that the Applicant had entered into a contract with the Respondent to build another dwelling on the next door lot and the history of relations between the Applicant’s supervisors and contractors and the Respondent’s Director had then had a negative effect upon the construction of the building the subject of this dispute.
[40]Over the period of time in which the property was under construction there had been significant difficulties in locating appropriate tradespersons in the Ipswich area. He partly put this down to the preference of many contractors to work in a number of large subdivisions under development at that time. He identified these as being at Mango Hill, Springfield and Ormeau. At that time there was very little building activity in the Ipswich area.
[41]When questioned about the initial delay between the agreed date of commencement and the creation of the first progress claim for laying the concrete slab but did cite that some frequent causes of delay were the need for soil and plumbing inspections performed by a private certifier. He said that given the date when the slab was inspected in early March he would have anticipated work began in late January or early February 2007. He also cited that he recalled that in January 2007 it was difficult to source appropriate trades people.
[42]With respect to the company’s procedure with respect to issuing claims for extension Mr Gale said that these would usually be issued on the advice of the supervisor appointed by the company for the site. The company’s customer relations officer would then issue the notice in accordance with Clause 17 of the Contract. He deposed that the company had not been in receipt of any notices disputing the extension claims from the Respondent over the period the building was under construction. When asked to examine the individual notices he confirmed they would all appear to have been issued on the dates specified on them. With respect to the claims for extensions for the industry shut down period these would as a matter of practice be issued in advance as these dates were generally well known.
[43]Mr Gale indicated that the amount specified under Item 11 of the Schedule for late completion damages in the sum of $15.00 was the minimum amount specified by the Housing Industry Association and was, in his experience, the amount specified in about 95% of all residential building contracts. He said that it was rarely reduced or increased and would not have been increased on a job such as this one, as it had a small profit margin and was very price sensitive.
Assessment of Applicant’s Claims for Extension
[44]The Applicant made the following claims for extensions and provided the following reasons:
Number Process date Reason for Claim Days Claimed
1 17.05.07 Public Holidays 4
2 21.05.07 Shortage of trades 14
(framing carpenter)
3 02.08.07 Shortage of Trades 7
4 21.09.07 Inclement weather &
shortage of trades 2
17.12.07 Industry Shutdown 21
5 07.02.08 Inclement weather 3
6 26.02.08 Inclement weather 2
7 25.03.08 Inclement weather 2
8 11.04.08 Shortage of trades 5
Easter holidays 2
Shortage of trades 3
Shortage of trades 5
Changes of materials 5
9 Not Known
1011 Document not provided 24
reason(s) not provided
10 03.07.08 Client to finalise variation 4
Inclement weather 2
Shortage of trades 4
Inclement weather 1
Shortage of trades 5
11 14.07.08 shortage of trades 5
Inclement weather 3
12 21.07.07 Inclement weather 1
13 29.07.08 Shortage of trades 5
14 18.08.08 Inclement weather 2
shortage of trades 3
15 29.08.08 Shortage of trades 2
Delays of materials 5
Delays of materials 2
16 04.09.08 Delays of materials 4
17 15.09.08 Inclement weather 2
18 30.10.08 Shortage of trades
(plasterer)20 total over 4 weeks
19 30.10.08 Shortage of trades 5
(plasterer)
20 Xmas Break industry shutdown 21
Total 189 days
[45]It is impossible to determine this matter without assessing the validity or otherwise of the Applicant’s numerous claims for extensions issued in accordance with Clause 17 of the contract.
[46]Firstly I note that there was no evidence before me that they were issued fraudulently, that the Respondent was unaware they had been sent to it and it is a matter of evidence that the Respondent did not issue any written notice of objecting to the claims in accordance with Clause 17(4) of the contract.
[47]The evidence provided by Mr Gale as to the systemic industry and site specific reasons for the difficulty in sourcing appropriate tradespeople were cogent and not contradicted by any other material put before the Tribunal.
[48]Against this the respondent argued that:
a. The overall delays claimed were not reasonable as required by sections 33 and 34 of the DBCA;
b. The relevant clause of the contract placed a positive obligation for the “builder to get on with contractual obligations and is not in the contract as a ‘cover all’ to both hide their ineptitude and to save them from the monetary consequences of such ineptitude”;.
c. That the matters raised in the extension claims were not matters really outside the builder’s control;
d. Unavailability of trades means a total lack of trades and material not ‘a shortage at a particular price’ or because they did not have a supervisor in place to organise it;
e. Item 10b of the Particulars did not specify the general effect of the delay and failed to comply with section 34(2) of the DBCA.
f. The Builder had failed to comply with sections 18(5) and (6) of the DBCA in that
i)Section 18(5) provides for the building period to be extended for incalculable delays (s34) ‘where the builder has complied with the variation provisions’ (sections 79-83 DBCA); and
ii)The builder had not complied with section 18(6) of the DBCA in that it failed to comply with the requirement to apply to the Tribunal for an adjustment to take into account any additional days to carry out the subject work and that therefore no extension is allowable.
[49]The primary response to the Respondent’s objections is that the contract provided it with the means to object to the claims for extension at the time they were issued and it failed to do so. Whilst it remains open for the Respondent to subsequently claim that the claims were not reasonable I have, for the reasons provided above determined in all the circumstances that they were not unreasonable.
[50]With regards to the references in item (f) above, to sections 18.5 and 18.6 of the DBCA these submissions are a misreading of the effect of those provisions of the Act. These provisions address circumstances in which the contract contains a specified completion date (which this contract does not) and which are subject to a claim for variation (which again this contract is not).
[51]I will however reduce the Applicant’s total extension period by 24 days to reflect that the Applicant did not provide documentary evidence for Extension Claim number 9.
Delay in Connecting Water
[52]The single largest factor in delaying completion of the contract and allowing the Applicant the ability to take possession of the dwelling was the discovery very late in the construction period that the dwelling was not connected to the Council’s water supply. On the basis of the evidence it would appear that in the period prior to this water was being accessed from taps on Lot 2 but close to the boundary and it therefore was not appreciated that Lot 3 was not connected. From the evidence of Mr Gale it would seem that this became apparent in May or June of 2009.
[53]The question then to be determined was whose responsibility it was to ensure the property was connected to the water mains and for the ensuing delay.
[54]The Applicant submitted that this responsibility under the contract clearly lay with the owner referring to Item 1(e) of the Contract Specification. The Applicant submitted that this took 80 days and this additional period of time was added to the total number of days in requested extensions. In their view this took between May or June and August or September.
[55]The Respondent’s Mr Stagg in his evidence said that the water connection took between 27 May and 6 July as he had made the application to the Council and was advised by Council that the connection was completed on 6 July 2009. In his submission the delay was only 41 days not 80 days as claimed by the Applicant.
[56]He submitted that the fault for the delay lay with the Applicant arising out of their removal of the survey pegs which, if they had remained in place would have alerted it to the fact that they were taking water from the neighbouring lot. In any event the Applicant was not entirely prevented from continuing other work on the dwelling.
[57]I do not accept the Respondent’s submissions with respect to the responsibility for the oversight being with the Applicant due to the removal of the survey pegs. I will address this item under my responses to the Respondent’s Cross Claim but, put simply there is insufficient evidence to lay this at the feet of the Applicant.
[58]However I do accept the Respondent’s evidence as to the date of the connection and will reduce the Applicants period of extension by 39 days being the difference between the two periods of 80 versus 41 days.
What was the Date of Practical Completion
[59]The Applicant for its part submitted that the relevant date for Practical Completion was at the time it issued its Certificate of Compliance on 2 July 2009.
[60]The Respondent submitted that the proper date for the Tribunal to determine as the date for Practical Completion was the date it took possession of the dwelling on 28 January 2010 when he was handed the keys to the dwelling by a representative of the Applicant named Gary.
[61]Both parties sought reliance upon the terms of the Contract and section 67 of the Domestic Buildings Contracts Act 2000. I set out below the section in full as this provision assists in determining whether the parties have complied with it
67 Completion payments
(1) This section only applies to a regulated contract for which the subject work consists of--
(a) the erection or construction of a detached dwelling to a stage suitable for occupation; or
(b) the renovation, alteration, extension, improvement or repair of a home to a stage suitable for occupation.
(2) The building contractor under a regulated contract must not demand all or part of the completion payment unless the practical completion stage has been reached.
Maximum penalty--100 penalty units.
(3) The building contractor under a regulated contract must not receive all or part of the completion payment unless--
(a) the practical completion stage has been reached; and
(b)if the building owner claims the stage has been reached with minor defects or minor omissions--the first and second requirements stated in subsections (4) and (5) have been complied with.
Maximum penalty--100 penalty units.
(4) The first requirement is that the building contractor must have given the building owner a document (the defects document) that--
(a) lists the minor defects and minor omissions that both the building contractor and building owner agree exist; and
(b) states by when the building contractor is to correct the listed defects and omissions; and
(c) lists the minor defects and omissions the building owner claims exist, but that are not agreed by the building contractor to exist; and
(d) is signed by the building contractor.
(5) The second requirement is that the building contractor must have made all reasonable efforts to have the building owner sign the defects document to acknowledge its contents.
(6) In this section--
completion payment, for a regulated contract, means a payment required to be made under the contract by the building owner to the building contractor for the practical completion stage. practical completion stage, for a regulated contract, means the stage when--
(a) the subject work has been completed in accordance with the contract and all relevant statutory requirements, either--
(i) without any omissions or defects; or
(ii) apart from minor omissions or minor defects; and
(b) the detached dwelling or home is reasonably suitable for habitation.
[62]The Applicant’s submission made through the evidence of Mr Gale was that the dwelling was reasonably suitable for habitation and was so from anywhere between March and June 2009. His evidence was that the Applicant would have sent a letter to the Respondent in June 2009 advising that the property was almost ready for hand-over. He subsequently confirmed this was sent on 15 June 2009. He said, in response to the Respondent’s independent building report, that whilst the report did identify some defects these did not result in the house being not reasonably suitable for habitation.
[63]What is clear is that there is no evidence that the Applicant complied with section 67(4) of the DBCA. No defects list would appear to have been prepared and offered to the Respondent to sign. It may be that the Applicant took the view that as the Respondent had engaged its own independent consultant that that report effectively operated as a de facto defects list which the Applicant over time remedied. I am satisfied though that the report revealed significant defects and omissions some of which were major in character. I would not agree with the Applicant’s contention that these were minor matters that could be addressed in the six month maintenance period.
[64]The reality was that the Applicant had not complied with its obligations under section 67 of the DBCA and sought to both pass the property to the Respondent and seek to be paid for the final stage under the contract when it was not entitled to do so. I acknowledge that by this stage the parties had reached an impasse in their professional relationship, however this does not permit the Applicant to seek to circumvent its obligations under the contract.
[65]Given all of these circumstances I take the view that practical completion was the date at which the Respondent took possession of the premises on 28 January 2010.
The Respondent’s Damages Claim
[66]This aspect of the Respondent’s Cross Claim can be addressed in fairly simple terms.
[67]The Respondent’s Director in his evidence claimed that he was under a significant amount of pressure to sign the contract as he was due to leave overseas for an extended trip. He said that if he had not been in this position he would have sought to increase the amount payable by way of liquidated damages under Clause 32 of the Contract.
[68]Also it is clear from the Respondent’s evidence that he did receive the claims for extension made by the Applicant, and that he did not object in writing as required in accordance with Clause 17.4 of the Contract. In his evidence he said that he had objected “passively” to the Applicant’s notices which would appear to have been oral in nature. He agreed that he was not aware of the terms of the contract dealing with claims for extensions and his obligations to object in writing. His position was that because the Applicant was in breach of the agreement it was therefore not entitled to seek the benefit of this Clause.
[69]None of the above entitles the Respondent to seek, through the Tribunal, some other basis to calculate the compensation payable to it. The Contract specifies the basis upon which the owner can be reimbursed if the builder fails to complete construction in accordance with the time frames laid down by the Contract. The fact that the Respondent in hindsight believes it would have, in other circumstances renegotiated the daily amount payable for late completion, that it objected “passively” to the claims for extension, its Director’s asserted ignorance of these contractual provisions, or the assertion that the Applicant’s own breach now disentitles it from seeking the benefit of these provisions, changes the unalterable fact that the contract specifies the manner in which such damages are calculated.
[70]Even if this were not the case, it is also clear that many of the amounts claimed by way of bank interest and bank fees and council rates are amounts it would have been liable to pay in any event, at least until such time as the property had been sold to a third party. It is impossible for a Tribunal to reach a view as to when the Respondent’s property would have sold if the construction had been completed in the timeframe anticipated by the contract.
[71]As far as the other items claimed I make the following observations under their separate headings:
Carpet on Internal Stairs
[72]The basis for this claim by the Respondent was largely based on the fact that this had been an explicit inclusion in the contract for the other dwelling constructed by the Applicant on the neighbouring Lot 2. The Respondent submitted that this had been specifically referred to in the scope of works for that lot but had not been included in the Contract for Lot 3. He submitted this was an “oversight” and probably stemmed from the fact that at that time the Applicant was building mostly low set homes. In the alternative the Respondent submitted that it should be implied that carpet was to be included as the stairs were referred to in Item 24 of the Building Specification as being “standard timber, carpet grade” and that other surfaces within the dwelling were required to be tiled or carpeted.
[73]The Respondent is effectively seeking the Tribunal to imply this specification in the Annexure to the contract on the basis that it was specified in the prior contract for Lot 2 or from other items specifically referred to in the Annexure.
[74]I am not prepared to accept this argument. The Respondent was in the business of property development and was not, nor should have been, unaware of the contract’s terms and the need to ensure that the scope of works as outlined in the Schedule was exhaustive and contained all of the items it had agreed with the Builder were to be included.
[75]Similar considerations apply to the contention that the linings should have been added to the under-deck areas, however, there was no specific claim for compensation made for this item in the respondent’s claim or in its other later submissions.
Metal Shelving and Skirting and Architraves
[76]The Respondent’s contention was that what was supplied and installed by the Applicant under these headings was not in compliance with the Contract’s Building Specification.
[77]Item 21 of the Specification specified as follows:
(i) Robe shelving to be Double Coated Epoxy Ventilated Wire shelving, 4 – with top shelf at 1800 height (Unless Notified Otherwise)
(j) Linen shelving to be Double Coated Epoxy Ventilated Wire shelving, 4 – with top shelf at 1800 height (Unless Notified Otherwise)
Item 25 of Appendix A to the Specifications specifies as follows:
Internal Finish
25 Provide splayed skirting and architraves as standard
[78]The evidence of the Applicant was that what was supplied still fitted the description of these items in the Specifications and in both cases were products from a different supplier but still largely met the description given in the Specifications. In the case of the shelving the replacement product was more expensive that their usual wire shelving.
[79]I accept the Applicant’s evidence on these two items. As far as the Architraves I accept that there is little difference between the item described in the Specifications and that supplied.
[80]In any event the Respondent’s estimates as to the replacement costs for the shelving are just that, estimates and it has not provided any independent basis on which to assess their costing of this item.
Site Survey Fees
[81]There was no compelling evidence submitted by the Respondent that could persuade me that the removal of the surveyor’s pegs from the lot on which the dwelling was constructed could be laid at the feet of the Applicant. The Respondent submitted that the Applicant had possession of the site and was therefore responsible for its upkeep, including maintenance of the integrity of the survey pegs during that time. The Respondent did not proffer any contractual or other basis for this alleged obligation and therefore I will not allow this aspect of the Respondent’s claim.
Independent Building Inspection Fees
[82]On this aspect of the claim and on the basis of my findings with respect to the validity of the Applicant’s final progress claim, I find that that the Respondent is entitled to recover this item and will allow the sum of $330.00.
Legal and Advisory Fees
[83]These items properly come under a separate heading of costs as they both relate to legal advice with respect to the dispute between the Respondent and the Applicant.
[84]Pursuant to the provisions of section 100 of the Queensland Civil and Administrative Tribunal Act each party must bear their own costs unless (pursuant to section 102) it considers the interest of justice require otherwise. Section 101(3) specifies those matters the Tribunal may take into consideration in reaching a view on the interests of justice. These are:
(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);
(b) the nature and complexity of the dispute the subject of the proceeding;
(c) the relative strengths of the claims made by each of the parties to the proceeding;
(e) the financial circumstances of the parties to the proceeding;
(f) anything else the tribunal considers relevant.
[85]In my view there is no material of any weight before me that persuades me to overturn the requirements of section 100 of the Act. There is no evidence that the Applicant has acted in a way that has disadvantaged the Respondent, the dispute was not in its nature anything other than a straight forward dispute between owner and builder, there was no great strength in the Respondent’s claim and the Respondent’s financial circumstances also do not warrant a costs order.
Findings of Fact and Law
[86]Earlier in these reasons I identified what matters the parties at the Directions Hearing of 11 November 2010 agreed would proceed to hearing on the basis that they remained in dispute. Based on the outline of the evidence and my findings of fact and law I find as follows (specified in bold type):
a. Whether late completion damages should be calculated as provided for under the contract (namely assessed as $15.00 per day); Yes.
b. Whether schedule 1 Item 10 (b) of the contract is too broad to be relied upon by the Applicant; No.
c. Whether the extensions of the contract claimed by the Applicant are allowable under the contract; Yes subject to qualifications set forth below.
d. Whether interest is payable on any amounts found to be owing by the parties; No.
e. Whether clause 26 of the contract applies; Yes.
f. What was the date of practical completion; For the reasons I have specified above I find that this date was 28 January 2010.
g. whether monies are owed by the Applicant to the Respondent on account of :
ilosses claimed such losses to be specified by the Respondent as set out above; and
iiclaimed omissions to the contract – lack of carpet on the stairs, incorrect wardrobe shelving, and incorrect skirting and architraves; No to items i and ii.
h. whether the applicant is responsible for the cost or reinstating boundary pegs disturbed during construction; No.
Conclusions
[87]As outlined above I have come to the view that some of the extensions claimed by the Applicant are not permissible either on the grounds of:
1. Lack of evidence (i.e. Claim Number 9 - 24 days);
2. The claimed period was excessive (claim for 80 days to connect water reduced to 41 days).
[88]I also find that the Date of Practical Completion was the date the Respondent took possession of the property on 28 January 2010. The Applicant had calculated in its document entitled Updated File Progress Dates (Annexure 1 to Mr Gale’s Affidavit) that the date of practical completion was 3 September 2009.
[89]I therefore will allow the intervening period of 147 days between these two dates to be added to the calculation of the Late Completion Damages in addition to the 24 days (claim # 9) and the 39 days difference between the Applicant’s claim for the additional delay in the connection of the water supply and the Respondent’s evidence of the date of connection.
[90]This amounts to a total of 210 additional days.
[91]When calculated against the daily late completion rate of $15.00 these three items amount to $3,150.00 to which I will add the cost of the building inspection ($330.00) which I have allowed for providing a total deductable amount of $3,480.00.
[92]Deducting the total of these items from the amount sought by the Applicant this is now reduced to the sum of $9,447.78.
[93]I will allow interest to be claimed on that amount from the date of the Applicant’s filing of his application on 2 September 2010 to the date of this hearing (28 February 2011) which I assess as being the sum of $463.33 and continuing thereafter.
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