DEMOOR & STRINE DESIGN PTY LTD (Civil Dispute)
[2011] ACAT 66
•4 October 2011
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
DEMOOR & STRINE DESIGN PTY LTD (Civil Dispute) [2011] ACAT 66
XD 1009 of 2009
Catchwords: CIVIL DISPUTE - blow out in the cost of the housing project – costing of the work done for the project – changes to home design and inclusions – lack of understanding about the type of home: if it is a project home or a custom home – Jones v Dunkel inference – negotiated terms – asking for the refund of payment nearly 12 months after termination of agreement- counterclaim for outstanding fees
Tribunal: Mr P.R .Thompson, Member
Date of Orders: 4 October 2011
Date of Reasons for Decision: 4 October 2011AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 1009 of 2009
BETWEEN:
DAVID DEMOOR
Applicant
AND:
STRINE DESIGN PTY LTD
Respondent
TRIBUNAL: Mr P.R. Thompson, Member
DATE: 4 October 2011
ORDER
- The application is dismissed.
- Judgment is entered on the counter-claim in the sum of $5,000.00.
- In view of the 11 months delay in issuing an invoice to the applicants in respect of unpaid work, interest will not run on this amount prior to the date of judgment.
- The applicants are allowed two months from the date of service of this order to pay the judgment debt.
………………………………..
Mr P.R. Thompson
Member
REASONS FOR DECISION
1.On 4 September 2009, Mr David Demoor, a resident of Yass in the State of New South Wales lodged a debt application in the ACT Civil and Administrative Tribunal (ACAT), naming Strine Design Pty Ltd, an ACT registered company carrying on business in Fyshwick in the Australian Capital Territory, as the respondent.
2.The amounts claimed by the applicant were as follows;
·Fee for commencing proceedings $115.00
·Charges and out of pocket expenses $1,500.00
·Amount of debt claimed $10,000.00
3.Whilst it is not stated in the application, presumably, the applicant was seeking a partial refund of monies paid to the respondent company pursuant to an agreement made between the parties. Subsequent pleadings confirmed that was indeed the case.
4.Attached to the application was a document headed “CHRONOLOGY OF THE DISPUTE”. That document commenced with the following statements included under the sub-heading of ‘BACKGROUND’.
The employment of Strine Design Pty Limited (Principal, Mr Ric Butt) is the result of Susan Demoor’s 5-year project to design our ‘dream house on a block of land that we have owned and lived on in Yass for the past
22 years. We are approaching retirement within the next 1 1/2 to 2 years and have a strictly limited budget for the project. We had planned to finance the property by selling our own house, which remains within the development that our new block is part of, and applying the proceeds to the new house. After retirement, we will not be in a position to carry any significant debt because we will be entirely ‘self funded.’ Therefore, we stressed to Mr Butt from our initial contact that our budget was to remain strictly within $700,000. This was on or about 13 March 2008.
5.Next, the applicant, in his originating documents, set out a chronology of the subsequent events. According to the information contained in the attachment, Mr Butt signed a Design Project Commencement Agreement on 3 April 2008 in which it was specified that the cost was to be $700,000 inclusive of a 5% contingency figure.
6.On 26 April 2008, according to the applicant, he signed an authorisation for the respondent company to begin the project. At this point in the attachment, the applicant refers to what he calls “a matter of contention”. According to the applicant, he alone signed an authorisation for Strine Design to begin the project, whilst Mr Butt had allegedly insisted that both the applicant and his wife, Susan DeMoor, had signed the document.
7.Next, according to the applicant’s chronology of events, several meetings were held between April and September 2008 as the project moved towards the construction stage.
8.Also, according to the applicant, “The construction was to have been done by Strine Constructions which according to a brochure produced by Strine, is a company related or identical to Strine Design (their premises adjoin those of Stine Design). A building diagram was presented to us and we felt that it basically reflected our wishes with respect to the project.”
9.
On 18 August 2008, the DeMoors received a letter from Strine Design indicating that the project had grown to $750,000.00, despite the 5% allowance for contingencies. According to the applicant, this was unsettling to both him and his wife, and they asked for a meeting, which was subsequently held on
15 September 2008.
10.At that meeting, which was also attended by Mr Butt and one of his architects, Ms Candida Griffiths, the following was alleged to have transpired:
1.Mr. DeMoor paid the remainder of the invoices due to that date, which added up to $22,064.00.
2.A very lengthy conference ensued which extended well after closing hours. It covered many aspects of the project, but not the final cost.
3.Mr. Butt handed the DeMoors a spreadsheet, showing that the project costings had blown out to $982,457.00.
11.According to the applicant, this was a figure they simply could not afford. They advised Mr Butt accordingly and he offered to see if he could reduce it.
12.On 16 September 2008, according to the applicant, he and his wife received a copy of a document headed “DEMOOR PROJECT ESTIMATE REVIEW” from Strine Building Pty Ltd which contained the figure of $766,881, “that was apparently for the house alone, excluding any related works.”
13.The following day, the applicant received a letter signed by Ms Griffith of Strine Design containing the figure $847,381 stated to be the “total project costs”, however this costing required deletions which the DeMoors claimed they would have needed to add at a later stage.
14.According to the applicant, these deletions would have made the house virtually unliveable and, in one aspect, illegal.
15.Ms Griffith was alleged to have mentioned in a subsequent telephone conversation that “Mr Butt would be reluctant to enter into any fixed-priced agreement.”
16.On 17 September 2008, the DeMoors cancelled the project. (The actual date of cancellation was 20 September 2008).
17.On 1 December 2008, Mr DeMoor wrote to Strine Design about the cost blowout and requested a refund of at least part of the $22,064.00 that already had been “…spent with them for which we received nothing of value to us. In my letter I offered to consider a reasonable settlement.”
18.Following that letter, there was further correspondence from both parties that contained material unhelpful to resolving this dispute, and which, therefore, I have not included in this decision. I have however included the applicant’s summation of his dispute with Strine Design. That summation was as follows:
“The basic issue of this dispute is simple: We paid Strine Design Pty Ltd $22,064 to design and supervise the construction of a home having a total project cost of no more than $700.000. They agreed in writing to do this. However, their costing amounted to $982, 457, and this was only an estimate, not a final figure. Therefore, they charged us for preparing a job that we could not possibly afford and they were not willing to produce at an acceptable price.
I feel that throughout this process the conduct of Strine design Pty Ltd and in particular its principal, Mr Ric Butt was unreasonable and possibly unethical.
I realise that the limit that I’m allowed to claim through ACAT is less than what I feel Strine Design owes us, but I favour a quick solution to this problem.”19.On 23 September 2009, following a request from the Tribunal to clarify and detail the $1,500.00 claim for out of pocket expenses, the applicant wrote to the Tribunal deleting this category of his claim, and advising that his total claim was for $10,000 for debt and $115 for costs (the fee for commencing proceedings).
20.On 16 October 2009, Strine Design Pty Limited filed its response, disputing the applicant’s claim on the following grounds:
1.The Applicant is not the correct party to the design agreement, which should be Sue and David Demoor, not Just David, as Sue had the dominant role in the design service.
2.The amounts charged by Strine Design Pty Limited to Sue & David Demoor are all in accordance with the design agreement.
3.The applicant does not acknowledge the outstanding unpaid invoice of $29,473.50. This amount is beyond the jurisdiction of the ACAT.
4.The applicant does not acknowledge their role in the design, size or cost of their house.
5.The applicant does not acknowledge the revised reduced design done by Strine Design Limited complies with their budget.
21.The following counterclaim and set–off was made by the respondent company:
·‘$29,473.50 outstanding fee invoice plus time costs & expenses incurring {sic} to recover debt’
22.A copy of Tax Invoice No. D2819-07 and dated 07/08/2009 was attached to the response. That invoice was for $29,473.50, inclusive of GST and was due and payable within 7 days.
23.The particulars of the work carried out as detailed in the invoice was as follows:
·Design Development
·Client meeting
·Development and amendments of building plans, elevations and sections
·Preparation of cost forecasts
·Internal meetings and discussions
·Correspondence including telephone calls and emails
·Construction schedule preparation and revisions
·
Detail design including kitchen, stairs, layout of office, windows,
inclusions and appliances
·Amendments to levels and room sizes
·Amendments to reduce overall size and cost.
24.On 22 October 2009, an affidavit by a corporation representative was filed in the Tribunal authorising Mr Eric Graham Butt to represent Strine Design Pty Limited in these proceedings.
25.Also on 22 October 2009, the respondent company through its authorised representative, Mr E G Butt, made an application to the Tribunal for the following orders;
1.Order to amend the applicant to Sue and David Demoor.
2.Order to dismiss the application, or in the alternative to transfer the proceedings to the ACT Magistrates Court.
26.The grounds Mr Butt relied upon in support of this application were set out as follows:
3.I am the corporate representative and director of the respondent company (Strine Design Pty Ltd ABN 31 109 594 541) in this ACAT application XD 09/1009
4.The respondent has an outstanding invoice payable by David and Sue Demoor (a copy is attached to the response to this application) for the sum of $29,473.50 plus costs and interest.
5.The applicant had previously lodged an application for a refund of $22,064.00 with the NSW CTTT which was dismissed for want of jurisdiction by Tribunal Member Chenoweth at Yass on 20 July 2009.
6.The respondent seeks an order that the applicant {sic} be amended to Sue and David Demoor in accordance with the amended Design Project Commencement Agreement dated 21 April 2008 (copy attached) and the Authorisation and Instructions for Architectural Services signed by both Sue and David Demoor on 26 April 2008 (copy attached) as both Sue and David Demoor are the correct parties to the agreement and Sue was the primary party for the design.
7.The respondent seeks an order that the application be dismissed on the grounds that the applicant was aware that the respondent intended to pursue the debt of $29,473.50 (refer attached letter to the applicant dated 6 August 2009) and is using the jurisdictional limit of ACAT to prevent the recovery of that sum and should be prevented from relying on the jurisdictional limit of the tribunal to forestall the respondent’s counter-claim.
8.Alternatively, the respondent seeks an order that the application be transferred for a decision in the ACT Magistrates Court which has jurisdiction for the amount of $29,473.50.
9.In making an application for the transfer of proceedings the respondent argues that the principles underlying the ACT Civil and Administrative tribunal allow the matter to be decided on its merits before a competent court which has jurisdiction, in this case the ACT Magistrates Court and that to refer the matter to the ACT Supreme Court under section 83 would result in considerable expense and delay to both parties which would defeat the ACAT’s stated aims of simple, quick, inexpensive and informal access to justice(s 7 (a)).
27.On 27 October 2009, a letter was received by the Tribunal from the applicant, dated 25 October 2009. That letter sets out in some detail the reasons for him alone making the original application, including the fact that the DeMoors claim to have never received a copy of an alleged “Design Project Commencement Letter”, containing the signature of both he and his wife.
28.The applicant also addressed the reasons for his choice of forum.
29.On 30 October 2011, the Tribunal received a further letter from the applicant dated 29 October 2011. Attached to that letter were a number of documents that the applicant wished to have lodged in the Tribunal. Those documents were stated to be as follows:
· A copy of the design Project Commencement Agreement dated 3 April 2011, showing that the budget for the project was $700,000. That document was signed by Mr R Butt.
· A letter from E G Butt dated 21 April 2009, which the applicant claimed contained the project budget of $700,000. (The letter itself contained no such budget total).
· A letter from Strine Design dated 18 August 2008, showing an increased project cost, to $750,000.00.
· A photocopy of part of the final project cost estimate of $982,457.
· A letter dated 17 September 2009, from Ms Candida Griffith of Strine Design showing a revised estimate of $847,381, which allegedly was achieved by deleting certain items totalling $137,335 (making a project cost of $984,716). According to the DeMoors, this was an estimate only, and not a fixed price. Agreeing to these deletions would have, in the DeMoors’ view, “. resulted in an unliveable and in at least one respect, illegal house. In all probability the local council would not have granted an Occupancy Certificate. And there is no guarantee whatsoever of yet another budget blowout.”
· A letter dated 18 July 2009 from Peter and Kate Walker.
30.On 5 November 2009, Mrs Susan DeMoor wrote to the Tribunal advising that her husband had her authority to represent her at the hearing on 10 November 2009.
31.On 10 November 2009, that application came before Senior Member Anforth who made the following orders:
(1) David Alexander DeMoor is the First Respondent.
(2) Susan Marie DeMoor is the Second respondent.
(3) The parties consent to the extended jurisdiction of the Tribunal.
(4) The applicants are to file and serve by 24/11/09:
a)A chronology of relevant events.
b)The complaint the applicants make.
c) The contract or retainer between the parties.
d) Details of payments made to date.
e) Statements from any witnesses relied upon, expert or otherwise.
f) Any other documents relied upon.
(5) The respondent is to file and serve by 8/12/09:
a)It’s response to the above including the chronology.
b)Statements of all witnesses relied upon, expert or otherwise.
c)The content of the counterclaim made with particulars of the claim.
(6) The matter is to be listed for Directions only on Thursday 10
December 2009 at 2.00 pm.
32.On 9 November 2009, in accordance with the Tribunal’s order, the following documents were submitted by the Mr David DeMoor, under cover of a letter dated 16 November 2009 and signed by him:
a)A chronology of relevant events-Document numbered 31.
b)The complaint the applicants make-Documents numbered 11 through 20 inclusive.
c)The contract or retainer between the parties-Documents 1 through 10 inclusive.
d)Details of payments made to date –Documents numbered 23 through 29 inclusive.
e)Statement from witnesses-Document 31.
f)Other documents relied upon-Documents numbered 15, 21,22,32,33.
33.Those documents remain on file (folio 2 refers).
34.On 8 December 2009, Mr DeMoor wrote to ACAT complaining that as at 10am on 8 December 2009, they had received no information from the respondent company and that the respondent’s failure to comply with Mr Anforth’s order had placed the applicants “in quite disadvantageous position with respect to responding to any allegations they might conjure up, and I request that they be dealt with accordingly at the hearing of 10 December.”
35.In any event, ACAT’s lodgement stamp bearing the date 8 December 2009, appears on the bundle of documents lodged By Mr E G Butt on behalf of Strine Design Pty Limited under cover of a letter bearing the same date.
36.In accordance with the Tribunal’s order of 10 November 2009, the respondent company submitted the following documents for filing and service:
a)Response to the DeMoor chronology.
b)Strine Design Pty Ltd chronology.
c)Response to the DeMoor complaint.
d)Response to the contract or retainer between the parties.
e)Response to details of payments
f)Response to statement from witness.
g)Response to other documents.
h)Statements of witnesses.
i)Content of the counter claim with particulars of the claim.
37.Basically, the respondent disputed the applicants’ contention that Strine Design Pty Limited (SDPL) did not provide them with a building design within their original budget and therefore were entitled to a refund.
38.Further, that it was the DeMoors’ own changes that increased the cost and complexity of the design and therefore increased the cost of the building. According to the respondent, this fact was continually brought to the DeMoors’ attention.
39.Finally, the respondent contended that the company had performed the work that it was engaged for, and therefore was entitled to be paid all amounts due.
40.On 9 December 2009, Mr Butt wrote to the Tribunal Registrar advising that:
1.The following documents were inadvertently omitted from those filed and served on 8 December 2009: Pages 1-29 attached.
2.The following correction is to be made to “d) response to the contract or a retainer between the parties”, Item 1.1: Add “fax and attached sketch concept plan of 15/3/08.”
41.Mr Butt apologised for the omissions and undertook to provide hard copies of the additional documentation at the hearing on 10 December 2009.
42.On 10 December 2009 the matter was adjourned to 9.30 am on 2 February 2010 for a further directions hearing.
43.On 2 February 2010, the matter was adjourned for hearing until 23 March 2010, at 10.00am.
44.On 18 March 2010, Ms Megan North of Elrington Boardman Allport, Lawyers wrote to the Tribunal advising that they were now acting for the first and second applicants and had obtained a statement from their client, which was enclosed therein for filling. The Tribunal was further notified that a copy of the letter and statement had been faxed to the respondent’s solicitor.
45.That statement, which was subsequently tendered at the hearing (Exhibit“A”) is reproduced in full hereunder for completeness:
1.I am David DeMoor, the first applicant in proceedings numbered XD1009 [sic] in the ACT civil and Administrative Tribunal.
2.My wife Susan DeMoor is the second applicant in the proceedings.
3.My wife and I contacted Strine Design Pty Ltd (“Strine”) with the view of offering them the work to design our home. We contacted Strine originally on 29 October 2007 by email which set out our “wants “and “needs “in respect of our new home. Attached and marked “A” is a copy of that email.
4.On 13 March 2008 Sue and I met with Ric Butt and Tony Rowley to discuss the planned project. At this meeting I said words to the following effect;
“$700,000.00 is our budget for the project.”
5.On 3 April 2009 we received a letter from Strine. Annexed and marked “B” is a copy of that letter. This letter confirmed the view I had from my conversations with Ric Butt that Strine was able to complete the project within the Budget of $700,000.00. We were satisfied that the appropriate building cost would be $2,200 x 213 Sq M (total $468,600) plus a possible 5% contingency (total of $494,160.00). I was satisfied that the project was within our budget and we could afford to proceed with the project.
6.On 18 April 2009 we met with Ric Butt and Tom Butt and they provided us with a letter dated 15 April 2008. Attached and marked “C” is a copy of that letter. At this meeting I said words to the following effect:
I said “We are willing to take out the garage, do the painting ourselves, and remove the composting toilets.”
We calculated this would reduce the project cost by $100,000.00.
Accordingly, Ric Butt agreed that they would be able to proceed with the project within the $700,000.00 budget.I left that meeting confident that the project could be done by Strine within the budget.
7.After that meeting Sue and I went to a cafe near Stine’s office. We discussed whether to proceed with Strine. We decided to proceed with Strine. I went back to the office and saw Tom Butt and said words to the following effect:
“We have decided to go ahead with Strine.”
8.Prior to this communication with Tom Butt we had not asked Strine to carry out any work on our behalf. Prior to engaging Strine we believed the cost to us would be $750.00. We paid this amount on approximately 11 December 2007.
9.At the time of engaging Strine we had also had discussions with another firm, Anna Pender. Strine was aware that we had also been discussing our plans with them because we provided Strine with a document which made mention to her (see Annexure “A”). I believe that Strine was concerned to lose work to Pender.
10.On 21 April 2009 we received a Design Project Commencement Agreement (“the Agreement”). Annexed and marked “D” is a copy of that Agreement. This confirmed my view that Strine believed that our plans were within budget and that they could design the house we wanted within our budget of $700,000.00 and that we could afford to proceed with the project. Accordingly, my wife and I signed the agreement on 26 April 2009.
11.At no point did Ric Butt or any other employee of Strine advise us that the 5% contingency only applied to the building cost.
12.Annexed and marked “E” is a copy of Tax Invoice from Strine dated 3 April 2008 for “Pre-Design” for $2,500.00. This invoice we paid immediately.
13.On 21 May 2009 Sue and I met with Ric Butt and Candida Griffith. In this meeting there was [sic] general discussions about the inclusions and attributes of the house. At no point in the meeting did Sue or I request amendments or alterations. There was no indication at this meeting that the cost of the project would exceed the budget.
14.At one of the early meetings I told Ric Butt and Candida Griffith that I would obtain the Geotechnical engineer report. I said words to the following effect: “I have dealt with ACT geotechnical Engineers in relation to the subdivision work. I will organise the report with them direct.”
15.Also, in one of these meetings I told Ric Butt and Candida Griffith that I would obtain a contour survey of the site. I said words to the following effect: “I have a surveyor I use. I will obtain the report from the surveyor.”
16.Annexed and marked “F” is a copy of Tax Invoice from Strine dated 17 June 2009 for “Pre-Design for $1,675.00. This invoice paid immediately.
17.On 1 July 2009 Sue and I attended with Candida to see some other projects by Strine. We inspected a property near Queanbeyan. We also drove around the region and Candida pointed out some other projects carried out by Strine.
18.Annexed and marked “G” is a copy of Tax Invoice from Strine dated 7 July 2009 for “Pre-Design” for $1.253.00. This invoice paid immediately.
19.On 10 July 2009 we visited a property in O’Malley which was being constructed. We met with the owner and he advised us he was happy with the house. To the best of my knowledge we did not inspect a house in Narrabundah.
20.On 14 July 2009 Sue and I met with Ric Butt and Candida Griffiths. We discussed the possibility of a pool cover. We wanted a pool cover to retain the temperature of the pool water. We were not concerned as to the ability to walk on the pool cover. We did not discuss the ‘e-house’ with them. We did discuss possible heating options. We discussed the possibility of a wood fire or gas heating. We advised Ric Butt and Candida Griffiths that we would organise and buy the heater separately. I do not recall any discussions with Ric Butt or Candida Griffith to increase the pool size. There were no costing discussions in this meeting.
21.Sue and I had a meeting with Ric Butt and Candida Griffith on 23 July 2009. The meeting was lengthy and discussion was had regarding fittings there was no discussion as to the budget or exceeding the budget.
22.Sue and I had a meeting with Ric Butt and Candida Griffiths. At this meeting we were shown three dimensional diagrams of the project. We were impressed with the design and what the building would look like. There was never any discussion as to the budget or exceeding the budget.
23.Annexed and marked “H” is a copy of tax Invoice from Strine dated 31 July 2009 for “Pre-Design” for $405.00 and “Sketch design” for $3,510.00. I paid the total amount invoiced of $3,915.00 immediately
24.Annexed and marked “J” is a copy Tax Invoice from Strine dated 18 August 2009 for “sketch design” for $10,291.00. I paid this amount immediately.
25.On 18 August 2009 we received a letter from Strine setting out a summary of costs to date. Attached and marked “K” is a copy of that letter. I was surprised that Strine’s estimated fees had been increased from $15,000.00 originally estimated to $19,834.00 which had been invoiced. Thus {sic} was an increase of 32%.
26.The letter of 18 August 2009 was the first occasion when Strine advised me that our work was costing more than quoted because senior staff members were conducting the work. I never asked for senior staff members to do the work and would have been satisfied with junior staff carry out some of the work.
27.The letter of 18 August 2009 was also the first notice I received that there had been “increased” client contact. I was not advised by Strine that we were contacting them too often or that this contact would increase our fees. I do not consider that the level of contact increased at all.
28.The letter of 18 August 2009 was also when I first became aware of increased building costs.
29.Upon receipt of the letter dated 18 August 2009 we were concerned as to the increasing costs. Accordingly, we contacted Strine to raise our concerns about the increasing costs. We organised a meeting with Strine to occur on 15 September 2009. The delay in having that meeting was because my wife was overseas at the time. We note that, even though we raised our concerns about the increasing costs, Strine continued to carry out work on our project.
30.I do not recall having a meeting with Ric Butt or Candida Griffith on 1 September 2009.
31.On 15 September 2009 we had a meeting with Ric Butt and Candida Griffiths. At the meeting Mr Butt was discussing his plans. Ric Butt spent a lot of time discussing trivial matters. Candida Griffiths interrupted Ric Butt and said words to the following effect:
“Shouldn’t we show them our latest costing figures?”
This was the only time Candida Griffiths raised costs in a meeting. This is the only time that costs were raised by Strine, or an employee of Strine.
32.On 15 September 2009 we received a spreadsheet from Strine which states that the project cost was now $982,457.00. Ric Butt provided Sue and I with the spreadsheet after Candida Griffith requested Ric Butt do this as set out above. Attached and marked “L” is a copy of that spreadsheet.
33.Some time after 15 September 2008 we received a spreadsheet from Strine which states that the project cost was now $943,435.00. Attached and marked “M” is a copy of that spreadsheet.
34.On 16 September 2008 we received a letter from Strine. Attached and
marked “N” is a copy of that letter. The letter states that “the current estimate for the works is $766,881.05”.
35.On 17 September 2008 we received a letter from Strine. Attached and
marked “O” is a copy of that letter. The letter states that “the total PROJECT COSTS estimated is thus $847,381.05”. The letter goes on to state various ways in which we could reduce the project cost.
36.I was concerned as to some of the proposed amendments to the plan. The pool was located within the house and windows separated the house from the pool. We were concerned that if the pool enclosure windows were not included in the house that it was a safety issue. Further, we were concerned about the smell of chlorine throughout the house and the effect that the chemicals may have on our chattels. In particular, we have a large collection of artwork and I was concerned that the chemicals would damage the collection. We had planned to put a cover on the pool. However, this is not a safety measure and is a heat and energy saving device.
37.When we contacted Strine we were of the view that we would have a sustainable house designed. By eliminating the photo voltaics and hydronic heating would reduce the sustainability of the home. We were concerned about this as it was our desire to have a sustainable home.
38.I was also concerned about the reduction in the floor size suggested by Strine. This would make later additions difficult and more expensive.
39.However, even after the alterations by Strine were worked in, the cost of the project was still approximately $147,000.00 over our budget. We would not be able to finance the project if the cost was this much over our budget.
40.I was willing to try and adapt the plans created by Strine to reduce the project cost. We were willing to reduce the cost of the project by eliminating the self-composting toilets, by completing the painting ourselves, completing the tiling ourselves and adding the garage later. By doing so we would reduce the project cost by over $100,000.00.
41.On 1 December 2008 I wrote to Strine and summarised my disappointment with them. Attached and marked “P” is a copy of that letter.
42.Annexed and marked “Q” is a copy of email from Strine to us dated 4 December 2008.
43.Annexed and marked “R” is a copy of letter I sent to Strine dated 14 January 2009.
44.Annexed and marked “S” is a copy of letter from Strine to us dated 16 January 2009.
45.Annexed and marked “T” is a copy of a letter from Strine to us dated 6 August 2009. The letter enclosing Tax Invoice D2819-07 for “Design Development” for the sum of $29,473.50.
46.I would not have entered into the Agreement with Strine if I had been advised by Strine or its employees, at the time of entering into the agreement, that the budget of $700,000.00 was not possible and it was possible that the budget could be increased to $982,457.00.
47.At no time was I advised by Strine that our contact with Ric Butt, Candida Griffith or Ngiao Fitzpatrick would increase the cost.
48.At no time did I request that only senior staff members conduct the work on our project.
49.The only changes requested by us in the design process were relatively minor and open for discussion. In any event, at no time were we advised by Strine that any amendments by us would increase their costs.
50.On 10 November 2009 I asked Ric Butt why Strine did not propose to build the “Millenium House” on our land as an affordable alternative. Attached and marked “V” is a copy of Strine’s brochures in relation to the Millenium House. There were no discussions with Strine prior to this date as to the possible use of the e-House, Millenium House or other “project style home” instead of Strine designing a home for us.
51.Annexed and marked “W” is a copy of letter from Strine to us refusing to build that home on our land.
52.We were not able to adopt the plans prepared by Strine. Strine has claimed copyright on the plans and accordingly, we have not been able to utilise the plans to save money on our new plans. The only documents we have been able to use is the geotechnical engineer report and the contour survey.
(signed) David DeMoor
Date: 18 March 2010.
46.It should be noted that the dates in paragraphs 5,6,10,13,16,17,18,19,20,21,23, 24,25,26,27,28,29,30,31 & 32 of Mr DeMoor’s statement are incorrect. Those events allegedly took place in 2008 and not 2009 as stated.
47.On 23 March 2010, the matter came on for hearing before me with Mr Painter appearing for the applicants and Ms Luckie appearing for the respondent company.
48.
During the course of the proceedings evidence was given for the applicants by Mr David DeMoor, whilst evidence for the respondent was given by
Ms Candida Griffiths and Mr Ric Butt.
49.The following documents were tendered:
EXHIBIT A- STATUTORY DECLARATION FROM MS SUSAN DEMOOR
Dated 20 March 2010EXHIBIT B – STATEMENT OF MR DEMOOR-Dated 18 MARCH 2010.
EXHIBIT C- EMAIL-(From Demoor to Ric Butt dated 29 October 2007)-Plus
Document headed Sue and David’s new home.EXHIBIT D- LETTER FROM STRINE DESIGN-Dated 3 April 2008 (Budget
and Estimated Fees)EXHIBIT E (1)- LETTER FROM STRINE DATED 15.4.2008
EXHIBIT E (2)- CONTRACT- (Authorisation and Instructions for Architectural
Services)-Dated 26 April 2008-Signed by David and Susan
DeMoor together with rewritten Letter of Engagement
EXHIBIT F- 5 x INVOICES DATED 3/4/08,17/6/08 & 7/7/08
(ATTACHMENTS E, F & G)-PRE DESIGNEXHIBIT G- INVOICE DATED 31/7/08 (ATTACHMENT H)
PRE DESIGN & SKETCH DESIGNEXHIBIT H- INVOICE DATED 18/8/08 (ATTACHMENT I)
SKETCH DESIGNEXHIBIT J- DOCUMENT BEING LETTER FROM STRINE DATED
DATED 18 AUGUST 2008EXHIBIT K- DOCUMENTS N & O (Letters from Strine dated 16 & 17
September 2008)EXHIBIT L- LETTER TO STRINE DATED 20 SEPTEMBER 2008
EXHIBIT M- DOCUMENT BEING LETTER FROM STRINE DATED
16 JANUARY 2009 (Reply to request for refund)EXHIBIT N- BILL SUM (cost estimate dated17 September 2008)
EXHIBIT 1- COMMENCEMENT AGREEMENT.
EXHIBIT 2- DOCUMENT DATED 15 MARCH AND ATTACHED PLAN
EXHIBIT 3- EMAIL DATED 3 APRIL WITH ATTACHED
MEASUREMENTS AND COSTINGSEXHIBIT 4- DOCUMENT BEING EMAIL DATED 14 APRIL 2008
EXHIBIT 5- LETTER FROM STRINE DATED 21 APRIL 2008
EXHIBIT 6- EMAIL FROM THE APPLICANTS TO STRINE
EXHIBIT 7- COPY OF A DOCUMENT ENTITLED
EXHIBIT 8- COPY OF EMAIL CORRESPONDECE IN RESPECT
OF GEO TECHNICAL WORK TO BE CARRIED OUT.EXHIBIT 9- COPY OF EMAIL COPRRESPONDENCE BETWEEN
STRINE DESIGN AND THE APPLICANT DATED 25 AND 26
AUGUSTEXHIBIT 10- COPY OF EMAIL DATED 26 AUGUST
EXHIBIT 11- EMAIL FROM STRINE TO THE APPLICANTS DATED
3 SEPTEMBER 2008EXHIBIT 12- REPLY FROM THE APPLICANTS TO THE RESPONDENT
3 SEPTEMBER 2008EXHIBIT 13- EMAIL FROM THE RESPONDENT TO THE APPLICANTS
DATED 14 JULY 2008.EXHIBIT 14- CONCEPT PLANS DATED 9 JULY
EXHIBIT 15 – LAND TITLE FORM 052. TRANSFER DOCUMENT
EXHIBIT 16- CURRICULUM VITAE –CANDIDA JANE GRIFFITHS.
EXHIBIT 17- CURRICULUM VITAE – ERIC GRAHAM BUTT
EXHIBIT N- BILL SUMMARY
EXHIBIT 18 –FINAL ACCOUNT DATED 7/8/09.
Note: Some exhibit numbers were duplicated during the actual Hearing.
50.Prior to the commencement of the applicants’ case, mention was made about the earlier decision or agreement to extend the Tribunal’s monetary jurisdiction in this particular case, having regard to the amount of the counter-claim, and the fact that the applicant, Mr David DeMoor, had previously abandoned the excess of his claim over $10,000.00. Mr Painter advised me that his instructions were that the applicants’ claim was still for $10,000.00.
51.Mr Painter then sought to tender a statutory declaration from Mrs DeMoor (Exhibit “A”). In her statement Mrs DeMoor wrongly refers to herself as the second respondent in these proceedings. She is of course, an applicant, along with her husband.
52.She did, however, advise the Tribunal that she was unable to attend the hearing, but that she had read the statement of her husband, David Alexander DeMoor (whom she described as the first respondent/applicant), and that she agreed with the contents of that statement. She also advised that she had no further evidence to add in this matter.
53.As previously stated, Mr DeMoor was the sole witness for the applicants. He stated that he managed strata title properties. Mr DeMoor also gave evidence that he first became acquainted with Mr Butt when he was a shire councillor for Yass and Mr Butt designed a tourist and information centre for the town. He was impressed with Mr Butt’s work.
54.Mr DeMoor went on to inform me “.... that when the time came to think about our house, we had two architectural firms that we were working with to decide which one we would pick. Both of them ultimately came out to a budget of about $700,000. One was Strine Design, the other was Anna Pender and I didn’t know of Anna’s work, but I did know of Ric Butt’s work. We saw his houses [sic] we were impressed with it”
55.According to Mr DeMoor, Sue DeMoor contacted both architects with an idea for a design of a house. She arranged for inspections and meetings on the site with both architects. This eventually led to a meeting with Strine Design where both Mr and Mrs DeMoor were present.
56.An e-mail dated 29 October 2007 was tendered and marked Exhibit “C”. That e-mail was addressed to Mr Ric Butt advising him that the DeMoors were ready to plan and build their new home on top of the hill on the original 20 acre block owned by them and asked him if he was interested in talking to them.
57.It is my understanding that a “wants and needs” document with the heading Sue and David’s new home was attached to the original e-mail. In any event those four pages were tendered along with the e-mail and form part of Exhibit “C”
58.Mr DeMoor acknowledged to me that they had the land and “....plenty of space.” He also informed me that they “....had a long list of requirements and both sides saw these requirements and both sides agreed that they could build a house on it-or a home on it –for $700,000.”
59.In any event Mr DeMoor’s evidence was that they decided to go with Strine Design after being swayed at a meeting they had with Ric Butt and his brother, Tom Butt.
60.In response to my questions as to whether or not, from the first meeting, it was made quite clear to the DeMoors that their budget was $700,000, and whether or not there was “much discussion on it”, Mr DeMoor replied “Not a whole lot, no. It went back and forth for a while as to whether they could do it for that and the night we decided to do it with Ric.....”
61.Mr Painter then asked Mr DeMoor to confirm that he had received a letter from the respondent company in which the budget and fees were set out. After an affirmative answer from Mr DeMoor, that letter was then tendered and marked Exhibit “D”, as Ms Luckie indicated that her client was not disputing any of the documents or documentation being sought to be tendered.
62.On the evidence, I was satisfied that on 3 April 2008, following a number of meetings and phone calls between 29 October 2007 and 3 April 2008, Mr Ric Butt wrote to the applicants thanking them for the opportunity of providing a fee proposal for his company’s architectural services.
63.Whilst there was a level of confusion surrounding the correct second page of the letter, the letter itself was dated 3 April 2008, gave an indicative fees estimate of $70,000, and confirmed that the target cost for the whole project for a building area of 205 square metres was to be $700.000. The allowance for the building construction itself was $480,000. The DeMoors were also advised that the intellectual property ownership of all the plans prepared on their behalf remained Strine’s property.
64.The letter went on to request that the DeMoors, “... sign and return one of the attached authorisations.”
65.Also, on the same day (3 April 2008) Mrs Demoor emailed “Tony” stating, in part, the following:
“I understand that you have talked with David about our possible contract.”
I have looked at costing using the following as references and attached a spreadsheet.
It appears to me that we should be able to do the house plan similar to my revised concept plan at 700,000. I think the problem he had was including the garage at the very high rate of 2200 per sq m.”
66.The next document tendered was a letter from Strine Design to the applicants dated 15 April 2008 (Exhibit “E (1)), and was in response to an e-mail forwarded by them the day before. In that e-mail (Exhibit “4”) Sue DeMoor queried a number of issues, but it is informative to reproduce the introduction of the e-mail here, before listing the actual issues raised by her themselves.
67.The contents of the e-mail were as follows:
“ Dear Ric and Tony,
Thank you for agreeing to see us after hours on Friday. It will be good to get all the contract details sorted out before we know if we can proceed with your services.
If we can make it work at this stage, it should be a comfortable working relationship. If not, it’s probably best for both of us if we don’t proceed.
You asked for topics for clarification, and I have attached them and copied them below.
Regards,
Sue.”
68.The issues raised by Mrs DeMoor for clarification at the meeting scheduled for 18 April 2008 included:
· Whether or not the house could be built for $700,000
· Why the costs were higher ($2,300/m²)
· Garage too costly. Wanted Strine to design only.
· Concern over paying architects on a per hour basis.
· Concerns over copyright issues. The applicants wanted to own it.
· Guarantees that Strine would be willing to make about their design and building
· Letter of Engagement omissions.
69.Mrs DeMoor then went on to outline their unhappiness with the flat square metre rate of $2,350 and the fact that ESD items had gone up from $135,000 to $150,000, even though they had removed the compost toilets at $15,000.
70.Mr. Butt replied stating that his company could not guarantee that they could provide the DeMoors’ list of requirements within their specified budget and that the allowance (not quote) of $2,300 m² included a 5% contingency to cover possible “escalation of building costs.” He also advised both applicants that they (Strine) would retain the copyright in all instances, but he also outlined his company’s policy in regard to usage, which seemed reasonable to me. Further, he advised them that whilst his company could not guarantee any performance, they stood by their track record and industry awards.
71.The final paragraph of his letter was as follows:
“You are correct in saying that there should be a comfortable working relationship between architect and client We are now unsure that we can provide the level of service and reassurance that you require. We value the relationship we have with you and have enjoyed the process to date, but now believe that it would be best for both of us if we don’t proceed with this project.”
72.It was also evident that on 21 April 2008, Mr Butt wrote two letters to the applicants, the first of which (Exhibit “5”) thanked the DeMoors “...for your time on Friday evening and your comments on our processes in arriving at this stage. We do appreciate positive suggestions that can help us to improve our business procedures.”
73.Mr Butt then went on to outline what he believed were the key points and their resolutions from that meeting. They were as follows:
Building Cost
Mr Butt advised that their latest feedback from Strine Constructions was that the estimate of $2320/m² was very realistic, and that this should allow a building of approximately 205m². He went on to state “We note the error in our adding up the costs of ESD items and pool, which frees up another $15,000, which equals approximately 7m² of building area. This figure is comparable to your required house size, without the garage.”
Copyright
Mr Butt advised the applicants that his company would like to keep the copyright, however his company accepted that the applicants may wish to make changes in the future, and that “...-we would only ask that we be notified. We have no intention of unreasonably withholding permission for such changes. We also confirm that it is not our intention to be reproducing the design of your house in its entirety.”
Sustainability/Energy efficiency guarantees
Under this heading, Mr Butt advised the applicants that his company did not have good scientific evidence of the performance of their house designs, but they did have “… extremely happy clients who have told us that their expectations of the performance of their houses have been well and truly exceeded. We can put you in touch with some past clients if you wish.”
74.Finally, Mr Butt advised that attached to the letter was a rewritten ‘Letter of Engagement’, which he hoped would be satisfactory to the DeMoors.
75.That letter, also dated 21 April 2008, contained the details of the design brief, which were stated to be:
“To design an energy efficient home along the Strine Design principles including thermal mass and precast concrete panels with features including a pool and additional sustainable design elements.”
76.After thanking the applicants for the opportunity of providing a fee proposal for Strine’s architectural services for the project, Mr Butt went on to state that “ We request your written authority and instructions for our services, which include preparation of drawings ready for application for approval and construction services. This fee proposal is for the design only.”
77.It was also clearly stated in the letter that the respondent company proposed to charge architectural services at an hourly rate. Strine’s indicative fee estimates for the various phases of the job were set out on page 2 of the letter and were as follow:
Pre Design $ 5,000
Sketch Design $10,000
Design Development $13,000
Contract Documentation $28,000
Tender Administration $ 2,000
Construction Contract Administration $12,000
TOTAL INCLUDING GST $70,000
78.Underlined and bolded in the paragraph following the fee estimates was the following statements:
“We anticipate invoicing you at fortnightly intervals and /or at phase completion. Invoices will be charged at actual hourly rates current at the time the work is completed.”
79.Mr Butt then went on to set out the then current hourly rates his company charged for the various personnel it employed, with the principal architect being charged at $350.00 per hour, a senior architect at $180.00 per hour and an architect at $150.00 per hour. Fee rates were also set out for other staff employed by the company.
80.Next, Mr Butt confirmed that the applicants had “...indicated that the target cost for the whole project is to be $700,000 including design and engineering fees. This fee estimate does not include approval fees, service connection fees, surveyor’s fees and other disbursements.”
81.Next followed a “...construction budget and target building area based on the following budget breakdown:
Project Budget $700,000
Less: Design Fees $ 70,000ESD items and extras $135,000
Allows: building construction $495.000
at $2,320/m² = 213m² building area
($2,320 = current building rate of $2,200/m² plus a 5% contingency)
Approvals: estimated at $7,500.00
-based on a construction budget of $630,000, and not allowed for in our estimates.”
82. Finally, the applicants were advised that they were required to appoint a Building Certifier, which Strine indicated they could undertake to do on their (the DeMoors) behalf, as set out in an attached authorisation.
83. That authorisation (Exhibit “E”) was dated and signed by both applicants on 26 April, 2008. As it is one of the essential contractual documents and for the sake of completeness, the authorisation is reproduced in full hereunder.
AUTHORISATION AND INSTRUCTIONS FOR ARCHITECTURAL SERVICES
PROJECT: Demoor House
WE, Sue and David Demoor, HEREBY GIVE OUR INSTRUCTIONS TO STRINE DESIGN PTY LIMITED TO ARRANGE PREPARATION OF DRAWINGS AND APPROPRIATE APPLICATIONS FOR BUILDING WORKS UPON OUR LAND AT: 5 LARSON LANE (lot 3, DP 851574) YASS
WE ACKNOWLEDGE THAT INVOICES WILL BE DUE AND PAYABLE ON RECEIPT. IF WE DO NOT MEET THESE TERMS WE AGREE TO PAY AN EXTRA ADMINISTRATION FEE OF $50.00 PER MONTH, PLUS INTEREST ON THE BALANCE (CALCULATED AT 15% PER ANNUM) AS WELL AS ANY DEBT COLLECTION AND LEGAL COSTS INCURRED TO RECOVER THE FEE.
WE AUTHORISE AND REQUEST STRINE DESIGN TO:
1. Arrange site inspections of the land.
2. Liaise with appropriate authorities as required.
3. Arrange preparation of Development Application and Building Applications.
4. Arrange for documentation for the construction of Building Works on the land
5. Arrange structural engineering design and certification for the building Works.
6. Arrange for the preparation of geotechnical engineering design for the Building Works.
7. Appoint a Private certifier.
8. Arrange a Basix Rating.
SIGNED: David DeMoor
Date: 26 /4/08SIGNED: Susan M DeMoor
Date: 26/4/08
84.I note that the signatures of both applicants appear on the document.
85.For the record, Mr DeMoor in evidence, confirmed that his wife did in fact sign the document dated 26 April 2008.What he actually said in answer to a question on that issue, was as follows:
“Yes, except that there are two copies for some unknown reason. The only one we got was the one with just my signature. I don’t know why, but when we had our first hearing in New South Wales, Ric produced the one with two. And I said,” Well, let me see it. He took it back. But then later when they were serving documents on us, he did serve the one with both signatures and it was in fact Sue’s signature.”
86.Returning to the actual evidence given by Mr DeMoor, I note that when asked what ESD stood for Mr DeMoor initially responded that he didn’t know, but on further questioning acknowledge that whilst he didn’t know what the letters themselves stood for, he conceded that it would be an architectural term which he assumed covered “.... individual things like the photovoltaics and hydroheating and other things that were extra to the-you know, that were not part of the normal house that we required with our original specifications.”
87.Told that this item was costed out at $135,000, so he must have had some idea what it meant, Mr DeMoor responded “’I’m sure, yes a reasonable idea, but I can’t list every possible thing that could have gone into it.” Mr DeMoor did however, confirm that he understood the building construction cost at that stage amounted to $495,000 for a building size of 213 square metres at a rate of $2320 per square metre, inclusive of the 5% contingencies allowance. That accords with the written advice given to the DeMoors by Mr Butt.
88.
Questioned as to his understanding that the fees to be charged out at $70,000 was an indicative total only, Mr DeMoor stated that at no time did Mr Butt tell them that he was going to exceed those costs. Asked by his counsel whether or not he had any assurances that the $70,000 fee would not be exceeded,
Mr DeMoor indicated that apart from what they had in print, they didn’t, but that they just assumed that they wouldn’t be exceeded.
89.Prior to giving that evidence Mr DeMoor had stated that “out of the 19,000 we’d paid him, so at that point we hadn’t thought that it was going to blow out but we didn’t pay him the last payment of $10,000 until virtually the last month of the dealings with him so we had no idea that they were blowing out.”
90.A perusal of the transcript reveals that the evidence given in relation to the actual invoices themselves and the amounts paid was quite convoluted and difficult to understand, even though it was conceded that all invoices up to and including 18 August 2008 had been paid. I have therefore summarised it as set out hereunder.
91.According to the written advice provided by respondent to the applicants, the indicative fee estimates for the various phases was as follows:
Pre Design $ 5,000
Sketch Design $10,000
Design Development $13,000
Contract Documentation $28,000
Tender Administration $ 2,000
Construction Contract Administration $12,000TOTAL INCLUDING GST $70,000
92.The actual amounts invoiced and subsequently paid by the DeMoors were accepted to be as follows:
Pre Design
Invoice dated 3/4/08 (E) $2,500.00
Invoice dated 17/6/08 (F) $1,675.00
Invoice dated 7/7/08 (G) $1,253.00
TOTAL $5,428.00
Pre Design and Sketch Design
Invoice dated 31/7/08 (H) Pre Design $ 405.00
Sketch Design $3,510.00
TOTAL $3,910.00
Sketch Design
Invoice dated 18/8/08 (I) $10,291.00
TOTAL $19,634.00
93.A perusal of those invoices reveals quite clearly that the DeMoors should have been aware at least from the invoices dated 7 and 30 July 2008 (Invoices G&H above), that the costs for the Pre Design had blown out by some $833.00.
94.In fact, Mr. DeMoor’s evidence on this point made it quite clear that they were aware that costs were exceeding indicative estimates. Asked by me why he paid the additional Pre Design costs without querying those costs, Mr DeMoor told me it was because of a comment in one of Mr Butt’s letters that they were using senior people for some of the jobs and that the respondent had advised that the costs would come down. Pressed as to his acceptance of that advice, Mr DeMoor replied, “Yes, there was no guarantee that it would come down. They said it should come down later on and that was all.”
95.
Therefore, I find it difficult to accept his evidence that they had no idea until the receipt of the Invoice dated 18 August 2008, (Invoice “I” above) that costs were blowing out. That is clearly not correct, and was not the only instance where
I found the evidence from Mr Demoor difficult to accept.
96.Mr Painter referred his client to paragraph 13 of his affidavit of 18 March 2010, where it was stated by Mr DeMoor that:
“On 21 May 2009 Sue and I met with Ric Butt and Candida Griffith. In this meeting there was [sic] general discussions about the inclusions and attributes of the house. At no point in the meeting did Sue or I request amendments or alterations. There was no indication at this meeting that the cost of the project would exceed the budget.”
97.Putting aside for the moment that this event took place in 2008, and not 2009 as stated, it was obvious to me that Mr DeMoor had no recollection of just what was discussed, a fact confirmed by him. His stated reason for not remembering was because, “Sue concentrated a lot on individual items in the house, I concentrated on the money just ensuring that (the) budget stayed under 700,000.
98.Pressed as to whether or not he could say for sure that neither he or Sue had requested amendments or alterations at that meeting Mr DeMoor replied, “I couldn’t say for sure, but I don’t think so because amendments mean a major change in my mind, an alteration means a major change and that’s not what we would have been talking about.”
99.That is certainly a different stance or understanding than the one previously sworn to by the witness in his affidavit.
100.Mr Demoor was, however, prepared to concede that there were meetings that went for hours where all sorts of matters or things were discussed, but he was not prepared to concede that the blow out in costs was because of increased client contact, as claimed or explained by Mr Butt, and that, “To the best of my knowledge there was no increase or decrease in client contact at any point. It was always a continuous back and forth type discussion arrangement between meetings, emails and so on.”
101.When it was pointed out to him that the respondent’s letter of 18 August 2008 advised that, “An average project requires between five to ten hours up to the end of sketch design. It’s been over 20 hours so far for this project” , Mr Demoor was not prepared to concede that 20 hours would be considered unusual for a project of the magnitude of the one in question.
102.Next, when Mr DeMoor was referred to the statement that there had been an increase in the overall area of the building of some 44%, which in turn had required addition design input, and which would result in an increase in building costs, he simply replied, “I don’t understand that at all. I had a question mark over that paragraph and I simply didn’t understand it. I wanted to discuss it with him at the next meeting which took place in September.”
103.Asked to confirm that the applicants hadn’t or didn’t put in alterations and changes that related to the overall area of the building, Mr DeMoor stated,
“Not to my knowledge, no. I will add though, that what Mr Butt didn’t discuss is our subtractions.”
104.Mr DeMoor then went on to detail those subtractions as $60,000 odd for the garage, $30,000 relating to painting, tiling for $7,000 to $15,000 and the composting toilet for another $15,000.
105.Asked by Mr Painter whether or not he had “between receiving this letter (18/8/08) and the 15 September, did you discuss the design and continue with the design with Strine”, Mr DeMoor replied, “ No, we did not. I let - Sue at this point had to go back to the States because her mother had to get relocated from one aged care facility to another and she was the only one who could do it. She didn’t get back to almost September 1st, so it was either very late August or early September, I can’t remember which. But I was in no position to do any discussing without Sue around. The two of us always worked together on this, and so she was very concerned with what was going on with her mother in Seattle.”
106.
Mr DeMoor then, in answers to questions, confirmed that they didn’t answer the letter straight away, but instead decided that they should have a meeting to discuss costs. That meeting was the one that subsequently took place on
15 September 2008.
107.Asked by me to confirm that there was no contact in the meantime and that nothing had been committed nor had any additional work been done in the period, and that he hadn’t given ‘them’ an okay to proceed with the next phase, Mr DeMoor answered “ As far as I know, no” and “No” before adding, “At some stage I think Sue spoke with somebody on the phone at Strine, and they said the costs were blowing. Now, this is after she got back from the States. The costs were apparently much higher, and that just reinforced our feeling that we should have a meeting.”
108.Unfortunately, there is very little, if any, evidentiary value in relating any supposed conversation that Mrs DeMoor may have had with anybody, as she was not present at the hearing.
109.In any event, though, the meeting did take place on 15 September 2008, at which time the DeMoors were provided with a spreadsheet that indicated an estimated cost of the project. When asked to confirm that the project cost was estimated to be some $980,000, Mr DeMoor stated, “That was the target cost, not a final cost. So in our minds that they could be exceeding this considerably.”
110.Mr DeMoor was then referred to statements made in his affidavit of 18 March 2010 and in particular to the statements made in paragraph 33 that,“ Sometime after 15 September 2008 we received a spreadsheet from Strine which states that the project cost was now $943,435.00.” Asked why that was, the witness stated, “ No, I’m not sure why it has gone down. We received a letter after that. We said we could not possibly go ahead with the project at that cost. Right then and there at the meeting.”
111.Referred back to the meeting of 15 September 2008 when they were given the spreadsheet and asked what happened as a result, Mr DeMoor’s evidence was that they informed the applicant that they couldn’t go on with the project if it was going to stay at that cost. According to Mr Demoor that’s when it was decided that Ms Griffiths “…would go back and try to make certain reductions to lower that figure, and that’s where the meeting ended.”
112.According to Mr DeMoor they didn’t know what the specific reductions were until a few days later when they received Strine’s letter dated 17 September 2008.
113.Mr Demoor’s affidavit states, “ On 17 September 2008 we received a letter from Strine. Attached and marked “O” is a copy of that letter. The letter states that “the total PROJECT COSTS estimated is thus $847,381.05”. The letter goes on to state various ways in which we could reduce the project cost.
114.Mr DeMoor next confirmed that the original budget had been increased by $38,000 to $738,000 as, “That was a suggestion not by us but by Candida Griffiths to extend the bedroom walls by another metre. And she said that it would work much better that way. So we decided to consider the extra 38,000 in light of the deductions that we had already made.
115.When it was pointed out that, “… the house in the new proposal will be 234 square metres, which is 35 square metres larger than the original proposal of 189 square metres.”, and then asked why the building was growing in size from his wife’s initial proposal, Mr Demoor replied, “That would have just been a give and take of what was going on early in the project.”
116.Asked about the pool enclosure and the solar panels which were referred to as ‘photovoltaics’ in the original application, Mr DeMoor explained that the photovoltaics produce electricity that could be sold back to the grid and that, “We wanted to build a sustainable house, and all these things we felt were necessary. The pool enclosure windows, where she proposes to eliminate the separation between the swimming pool and the rest of the house, would have meant that we had all sorts of swimming pool smells going right through the house. It would have affected artwork, which we spent a lot of time collecting, and we just couldn’t do that. And Mr Butt suggested that we could solve the problem two ways: by putting special locks on all the doors leading to the swimming pool, or covering it with a walk-on cover, or both I suppose. But if you just imagine that any time somebody comes over with little children, we’d have to run around locking all the doors or putting the cover back on that was off. It was just totally impractical.”
117.Asked what he had initially envisaged when it was decided that they were going to have a pool in the middle of the house, the witness stated, “There was a pool and a glass sliding - a sliding glass wall or door that separated the pool from the rest of the house.”
118.When asked were those costs prohibitive, Mr DeMoor added, “ Well, she claimed that that should be eliminated, and we felt that we couldn’t live with that. That the pool would then be inside the house completely in terms of contact, children, whatever. And one with hopefully grandchildren coming along, we didn’t want nothing like that to happen. And we have friends with young children that come over all the time. We couldn’t go running around the house locking doors.”
119.Mr DeMoor agreed that the pool was “… an integral part” of the reasons for the cost blowout but that his wife needed an enclosed pool, that she could use all year, because Yass was a cold climate.
120.Asked to comment on the proposal to change the heating, and delete verandas and rainwater tanks in order to bring the project back down to budget, on the basis that the last two could be added at a later time, Mr DeMoor stated that the verandas were outside, so that area wouldn’t be heated, and then later added, “Yes, but getting back to the heating again. We had a gas heater that we proposed as more or less something to make the living room more comfortable on the winter’s night, but that was our expensive anyway. We were not arguing about that. But it could hardly heat the whole house. It’s not - that wasn’t for that particular purpose. The verandas, I can’t see how you can possibly eliminate the verandas and have an Australian house on top of a hill in the middle of summer with all that glass.”
121.Mr DeMoor then added that the house would just turn into a hot box requiring a very expensive air conditioning system going 24 hours a day. That was something that he and his wife had not envisaged.
122.In answer to questions, Mr DeMoor stated that the millennium house was a house designed by Ric Butt and from what he was able to understand, it built up heat in the concrete and that heat was retained for some time.
123.
In response to a statement that the Millennium House can be any design, and that it was just a concept of how it was built with the walls and insulation,
Mr DeMoor stated, “Yes, and it also has verandas”, before adding, “So you know. The rainwater tank, if we’d eliminated that we couldn’t live in the house, because it’s a condition of council. That’s the part I said was illegal. That it’s a council requirement that all those houses have rainwater tanks, and that’s because of the drastic situation at Yass. So every house or all the houses in our subdivision had that requirement. So you can’t eliminate that, there wouldn’t have been an occupancy certificate.”
124.At this point Mr Painter tendered the two Strine letters dated 16 & 17 September 2008 (Exhibit “K”) (Documents N & O).
125.Asked whether or not he and his wife had ever discussed building a house with everything included except the pool, Mr Demoor stated that they hadn’t. Asked why not, Mr DeMoor stated, “ It just wasn’t brought up. We thought that was something – Sue’s got a problem where she has to have certain kinds of exercise … wherever we end up having a new house, we’re going to have that sort of exercise pool.”
126.Mr DeMoor did however agree with me that he could only have that sort of exercise pool if it could be put in a house that he could afford and one that was liveable, before adding, “What really puzzled me afterwards, is that I’ve got a well known friend, a real estate agent, who’s - this brochure from Strine Design which contained a set of three different kinds of houses that he could build at a very reasonable price. And the Millennium House would have suited us almost to a tee.”
127.Asked by me whether or not the millennium house had a pool in the middle of it, Mr DeMoor gave this somewhat surprising response: “ No. What we were going to do was use the Millennium house for a short period of time, and we had another house in the meantime at Gordon, Canberra, where we plan moving to now. And that would be – not now, but until this is built, and just go between the two of them we have – we bought a house at Canberra where we’re going to put a pool into it.” Mr DeMoor then added, “ A covered pool and an exercise pool. And the Millennium House, it would have been nice to have a pool if he would have suggested it, but he didn’t. If he did, then we would have had that as a feature of it.”
128.In response to a question from Mr Painter about what he did after reviewing Strine’s letter of 17 September, 2008, Mr DeMoor stated, “We got together, Sue and I, and we wrote Strine a letter on 20 September advising them that we couldn’t go on with the project.” (Exhibit “L”)
129.In answer to a further question on this issue Mr DeMoor confirmed that the applicants ended the project at that point.
130.
I then asked Mr DeMoor a series of questions in order to determine his understanding of the terms of the contract that he and his wife had agreed to, and subsequently entered into, specifically, regarding their liability under
Mr Butt’s indicative fee schedule.
131.Quite frankly, I found his answers to be unsatisfactory. Whether that was because he had difficulty in understanding my questions or was being deliberately evasive, I am unable to say.
132.For the record, I will restate that the indicative fee schedule was stated to be $15,000 for the first two phases of the project, with a total projected cost of $70,000, inclusive of GST.
133.Questioned on the meaning of indicative and asked if he took the fee schedule to be a firm quote, Mr DeMoor replied “ Probably not, no, but I suppose(d) he knew what he was doing. He’s a professional architect.”
134.
Mr DeMoor went on to add that he had relied upon a written statement from
Mr Butt that the costs would come down.
135.As previously stated, the actual amounts invoiced and subsequently paid by the DeMoors were accepted to be $5,833.00 for the “Pre Design” stage or phase of the project, with a further $13,801.00 being invoiced and subsequently paid for the “Sketch Design” phase of the project.
136.Therefore, the agreed total amount paid by the DeMoors to Strine Design Pty Ltd for the work performed or carried out by its architects and employees was $19,934.00.
137.Whilst the applicants were somewhat unhappy with the last invoice received by them, the evidence does not allow me to say that the total figure was excessive.
138.Certainly, the DeMoors paid that amount without much, if any, complaint, but it took them until 20 September 2008 before they finally terminated Strine’s services.
139.It should be noted that Strine’s letter of 18 August 2008 required the Demoors to sign off on the commencement of the next phase, and that at the subsequent arranged meeting of 15 September, 2008, it should have been obvious to the applicants that Strine was continuing to work on the project.
140.
From the evidence it can be stated that a further spreadsheet was provided to the DeMoors at that meeting and was followed up with letter on 16 and 17 September 2008 with a further spreadsheet being provided some time after
15 September 2008.
141.Obviously, Strine staff were still working on the project in an endeavour to meet the applicants’ requirements, and while Mr DeMoor was adamant that he had not given instructions to Strine to continue from the sketch design phase of the project to the design development stage, he did acknowledge that work on the project only stopped on or about 20 September 2008.
142.At this stage, it should be noted that no invoice was issued at the time for work carried out subsequent to the 18 August 2008 account. It was finally issued some 11 months later.
143.During cross-examination, Ms Luckie put it to Mr DeMoor that “…right from the start there were issues about price, weren’t there?” Mr Demoor whilst not initially conceding this point, stated, “We assumed that there will always be issues about one thing or another. That’s the normal give and take.” But he then went on to state “And where that would come up (costing issues) and if it was feasible, that we would make reductions which we did.”
144.Ms Luckie did seek to clarify one important issue with Mr Demoor and that was in relation to the architectural services being charged at an hourly rate. She referred Mr DeMoor to an email from Sue DeMoor dated 14 April 2008, in which the applicant had stated “Fees at the end of that. This was included with good estimates except we can’t be expected to pay out whatever hourly rates you choose. It needs to be at the current rate.” Mr DeMoor’s recorded answer to Ms Luckie’s question about his awareness that an hourly rate was being charged was “M’mm.”
145.
Ms Luckie also subjected Mr DeMoor to a long and thorough cross –examination of the evidence given by him, which was of course, her right.
I have only detailed a couple of the more important issues relating to the costs incurred and subsequently claimed which, in reality, is what the competing claims come down to.
146.Referring to Mr DeMoors statement of 18 March 2010, Ms Luckie asked, “ Now, your paragraph 26, your work was costing more because senior staff members were conducting the work. Do you recall that Sue asked Candida Griffith to take over the project because she felt a synergy with her because she was female?”
147.Mr DeMoor replied, “I don’t recall that but I do recall that she preferred working with Candida rather than Ric. Both of them seemed to be pretty senior to me.” It was then put to him that he was in fact aware that a senior staff member was doing most of the work, Mr DeMoor replied “Just vaguely, yes.”
148.Mr DeMoor went on to confirm that when they engaged Strine they expected Ric Butt and Tony Rally to be doing the work but that Tony had left the firm.
149.After further cross examination, Mr DeMoor acknowledged that he was aware that they were being charged at an hourly rate, and that that rate was set out in the letter of 21 April 2008.
150.Mr DeMoor would not however concede that the level of contact between the parties increased at any stage of the project stating that over the entire period, it was more or less constant.
151.Asked what he would expect the level of contact to be, Mr DeMoor stated “ Well, considering the project quite – quite high.
152.Once more I considered Mr DeMoor’s answers to the questions asked of him on these issues to be unsatisfactory. Whether or not he was being evasive or was just forgetful, I am unable to say.
153.One important issue that Ms Luckie canvassed to some extent with Mr DeMoor was the final costings of the house produced by Strine as outlined in the letter of 17 September 2008. I have reproduced that line of questioning in full hereunder.
Ms Luckie: If I take you to the letter of 17 September written by Strine Design you say the---? ---17 December?
September 2008. Its your document O. ----The one I sent?
No, the one you received from Strine Design. ---Which Year?
17 September 2008.
THE MEMBER: It’s in your statement and it’s got O on it, 13 and then O. --- Okay. 13 okay. 13 okay.
Ms Luckie: Page 2 identifies $137,000-odd of savings that could be made? --- Yes.
In actual fact, did you realise that that 137 should be taken off 847,000 not added on? ---No.
You added on the 137,000, isn’t that correct? ---(No audible reply).
Instead of looking at the cost and then taking off the savings? --- That’s right.
So 847,000 minus 137,000 bring it back to the project cost of 710,000 from my calculations. Did you ever ring Ric and ask him about that? --- No.
In fact, did you ever respond to this letter of the 17th? ---No.
Your next move was in fact to write on the 20th, was it not, to cancel the project, to terminate the arrangement? ---Yes.
At the end of the day why did you cancel? --- Because the price was too high. If you look at this we didn’t - there’s nothing here that the - that says the total project cost estimate is thus [sic] 847 or 836.
154.After questioning Mr DeMoor about a house the applicants purchased in December 2008, Ms Luckie tendered a document that showed that the actual agreed contract for sale date was 26 September 2008, which was only 6 days after the DeMoors terminated their contract with Strine.
155.On this issue, Ms Luckie contended that the reason the DeMoors withdrew from the contract with Strine was because it became unnecessary to build a new house, and was not due to any budgetary considerations, as claimed by the applicants. Simply, that the DeMoors had bought another house and were therefore in “…no position to build the design.”
156.For his part, Mr Painter after referring me to the response and counterclaim dated 20 October 2009 argued that “There’s no indication there from the respondent that there’s a breach of contract being argued. Even if there is no breach of contract(?) what the client decides to do or not do in relation to any other further purchases or business enterprises, or whatever he chooses to enter into is irrelevant. The fact in this particular matter is this particular house, as given the evidence by the applicant, is that the house was not a financially viable enterprise for him to enter into, given the inclusions or exclusions of that particular house.
157.At the time I accepted Mr Painter’s argument, but also that it was possible that there was also more than a little truth in the argument put forward by Ms Luckie. To me the two were not necessarily mutually exclusive.
158.However, on this issue Mr DeMoor was adamant that they didn’t see the house they eventually purchased until after they had cancelled the project. At the time, I stated that I believed what Mr DeMoor told me on this issue. I have not since changed my mind.
159.On the issue of any possible action for breach of contract, it is important to state that whilst the contract or the agreement was terminated by the DeMoors, Strine Design agreed to such termination. Therefore no damages flow from the actual termination.
160.When re-examining his witness, Mr Painter asked him, “In your conversations with Strine and the architects, and so forth, were you ever told that you were spending excess time with the architects or engaging them excessively?’ Mr DeMoor replied “Never.”
161.The witness was then asked “And did you give instructions at your meetings between 25 August and 15 September, apparently there might have been two or three meetings in that period, did you give any instructions for Strine to continue into the next Phase? To this question the witness answered “No.”
162.On being further cross-examined by Ms Luckie, Mr DeMoor was asked “Did you give them instructions to stop? Mr DeMoor answered “No. Stop the whole project? No. I assume that’s what you mean.”
163.Once again it should be noted that the last invoice submitted by Strine Design to the DeMoors was dated 18 August 2008. It was acknowledged by all parties that Strine continued to perform work for the DeMoors after that date and held several meetings with them, as is acknowledged by Mr Painter in his re-examination question set out above.
164.The DeMoors have never offered to pay for any of this additional work, and have in fact instituted these proceedings with a view to recovering all fees already paid.
165.The first witness called for the respondent was Ms Candida Jane Griffiths, an architect and a former an employee of Strine Design Pty Limited. Her Curriculum Vitae was tendered and marked Exhibit ‘16’.
166.I found her to be a credible witness.
167.According to Ms Griffiths, she first met the applicants when she sat in on a meeting with them, shortly after commencing employment with Strine Design. This was part of her induction and training, and she subsequently became involved in the design process, as that was her speciality.
(5)The applicants were invoiced the sum of $5,833.00 for the pre-Design Phase of the work (Exhibits “F” and “G”).
(6)The applicants were invoiced the sum of $14,001.00 for the sketch design Phase (exhibits “G” and “H”).
(7)In a letter dated 18 August 2008 (Exhibit “J”), Strine indicated that they sought a meeting with the applicants to sign off on phase # (as per submission), sketch design, and commence the next Phase.
(8)Ms Griffith in cross examination, indicated that she did not do any work in stage 4 and that she did not commence stage 4 work. Further, in cross examination Ms Griffith indicated that she would never have moved to the next phase of the design as she was of the view that the applicants did not wish to continue with the project.
(9)
In an email dated 26 August 2008, Ms Griffith invited the applicants to attend a meeting on 27 August. It seems from the content of the email that no meeting had taken place between her letter of 18 August 2008 and her email of
26 August 2008 (Exhibit “9”).
(10)In an email dated 3 September 2008, Ms Griffith wrote that the ‘preliminary costs planning spreadsheet’ had been updated and that she was obtaining a more accurate cost assessment (Exhibit “10”).
(11)Mr Butt, in cross examination, gave evidence that the amount claimed in the counter claim was for work completed in stages 2 and 3. Mr Butt indicated that the amount on the Bill was not necessarily the amount charged to the client. Amounts on the Bill included Excel training sessions by both Ms Griffiths and Mr Butt and a number of other activities charged by both.
(12)In his letter of 16 January 2009 (Exhibit “M”), Mr Butt indicated that the work performed by the office equated to over $30,000.00 and that the applicants had only been invoiced $19,834.00. The Respondent, in its application for Interim Orders, made an application for the sum of $29,473.50 pursuant to its invoice dated 7 August 2009, almost twelve months after the applicants withdrew their instructions.
(13)Ms Griffiths indicated in cross examination that, given the size of the project, she would anticipate spending considerable time with the client.
(14)Ms Griffiths, in cross examination, conceded that she did not inform the applicants that the time she was spending with them was excessive.
(15)Mr DeMoor indicated in evidence that he was not aware that the time spent with Ms Griffith was excessive.
(16)Ms Griffiths, in cross examination, conceded that the anticipated time spent with the client should have been reflected in the cost estimate set out in the contract.
(17)In summary, the applicants’ case is that they engaged the services of Strine to develop a project, which, initially, was able to have been built for $700,000.00. It was clear from the outset that Strine misquoted the project and that the project could not have been completed for that price.
(18)In defence to the Counter Claim the estimate for services provided by Strine, that being Stage 2 and Stage 3, was $15,000.00. The applicants paid approximately $19,000.00. Strine claims a further $29,000.00 for those services.
(19)In the alternative, Mr Butt, in evidence and in correspondence, advised that stage 4 was almost complete. Evidence by Mr DeMoor for the applicant and that of Ms Griffith was that stage 4 had not been commenced.
Date: 23 April 2010.
ELRINGTON BOARDMAN ALLPORT(Signed) David Major
By his employed solicitor Craig Painter
Solicitor for the Applicants.
263.On 27 April 2010, the respondent company filed its written submissions. Those submissions are also reproduced in full and were as follows:
Applicants’ Claim
The first applicant presents himself as a prudent business man who was responsible for the costs associated with the design and construction of the Applicants’ dream home. However, he exaggerates, or is wrong or confused about many of the facts, despite written evidence to which he could have referred in the interests of accuracy.
Some examples include:
·initial contract was made in October 2007 not March 2008 (Response to Chronology 8/12/09)
·that only he had signed the Letter of Engagement(Ex E);
·that he himself organised the Geotech report (Ex8);
·that their only design alterations were minor and inexpensive (ref)
·that he paid the fees “immediately”;
·that they had not requested senior people work on the design;
·that they purchased their new dream home in December 2008 when in fact it was September 2008.
Letter of Engagement 26 April 2008 (the agreement)
This agreement clearly stated that hourly rates were to be charged and this was referred to by the applicants’ themselves (Ex4). It is disingenuous for Demoor to claim that he did not realise that extra contact with Strine resulting in increased work would result in increased fees when they were charged at an hourly rate. For example, he assumed the site visits with Candida Griffiths (Griffiths) were included in the fees but there were no fees, only an “indicative fee estimate” based on an estimate of the time such a stage would usually task (Ex E).
Demoor did not query, or object to, the actual fees charged.
Although he stated in evidence that he did not understand some of the terms in the agreement he did not query them with Strine Design (Strine).Budget
Demoor states that the budget (referred to as “target” in the agreement) was fixed. In fact the applicants themselves increased the budget by $38,000.00 (Sue Demoor email 15/9/08) although this fact was never acknowledged by Demoor, nor did he accept that increased design fees must also increase the budget.
Evidence was presented that there were 7 Cost plans and 4 Cost Histories prepared and discussed (Response to Demoor chronology 8/12/09 at 2.14). Griffiths stated that at all times throughout the project the applicants were fully informed about the issues, including costs.
Despite Demoor’s clear statement of concern about the increased costs, the emails from the Demoors do not raise the issue. For example, Sue Demoor’s email dated 25/8/08. A meeting was organised by Strine on 1/9/08 to review the issues raised in the letter of 18/8/08 (design fees, increased size of house and budget), and then a further meeting on 15/9/08 to review the Strine Building costings. It was only at their last meeting that Demoor expresses their “shocked disbelief” (p 2, Chronology 27/11/09).
Demoor stating that he misunderstood and added figures in the Strine letter (Ex k) instead of subtracting, but in his statement dated 18 March 2010 (at para 35) he interprets the figures quite correctly.
House Design
Mr Demoor clearly stated that he could not remember how it was that the house design grew by 44%, but Ms Griffiths gave evidence that this was always initiated by the client. Demoor’s statements [sic] ignores the facts. For example: bedroom 1 enlarged (email 8/8/08, 15/9/08; grossing up floor area (Ex3); and pool length.
Obviously Demoor did not understand the sustainable house concept although he says he was committed to it, and Butt states that the applicants were quite wrong about the need for underfloor heating, verandas and air-conditioners. They did not heed Strine’s advice in relation to these inclusions even though they were discussed very early on (Ex 4).
Demoor stated that they were not given the option of an E-House but evidence indicates the contrary (Ex 13). He claims to have misunderstood the difference between a project home (with laminex kitchen and standard inclusions) and a custom home (with caesorstone, indoor pool and tower) despite being in the real estate industry for years.
Jones v Dunkel
The onus is on the Applicants to prove their case. Susan Demoor inexplicably declined to give any evidence in relation to her claim despite the fact that she was the driving force behind the project and the instigator in the design changes. She was also the instigator of Griffith’s involvement in the design process. Because of this, we submit that the Tribunal may draw the inference that her evidence would not support their case: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
Conclusion
In their letter of termination dated 20/9/08, the Applicants did not actually state a reason beyond affordability. Griffiths asserted that to the very end they were “delighted” with the design (see also email 3/9/08. At no time did they respond to the issues raised by Strine in their letter of 17 /8/08.
In their letter dated 1/12/2008 and then 24/8/09 (some eleven months after the project was terminated) the applicants raised many issues and request [sic] a refund because “You simply have not earned it [the fees].”
The Response to Demoor Chronology dated 8/12/09 specifically deals with each of the applicants’ allegations in detail
They have alleged, amongst other things, possible fraud in relation to Ms Demoor’s signature on the agreement (Application 25/10/2009); misleading conduct (letter 1/1/2/08 [sic] attached to application 25/10/09); professional misconduct; unreasonable and possible unethical conduct; and creating an unliveable, possible illegal house design (Applicant chronology 24/11/09).
The fact that the Applicants wrote the letter of termination on Saturday 20/9/08 but had inspected, organised finance, negotiated and exchanged contracts on a house in Amaroo 6 days later is remarkable, however it also quite simply meant that they had no further use for a dream house design. We submit that the applicants ‘desire for a refund arose out of this fact and that reasons to justify it therefore had to be found.
Respondent’s claim
Strine Design seeks the fees that are outstanding for work completed for the Applicants. Mr Butt relies on the terms of the agreement which were negotiated between the parties (Ex E).
The last tax invoice issued to Demoors included work done to 15/8/08 (Ex F). Demoor stated that he did not issue any instructions to stop. Strine did not receive any instructions to stop until the Demoor letter dated 20/9/08 which was received on 23/9/08 (Ex L). In support of the Respondent’s claim, Ms Demoor’s email of 1/9/08 even lists further “thought and sizes” and emails dated 3/9/08, 12/9/08, 15/9/08 and 18/09/08 indicate an ongoing commitment.
In their letter dated 16/1/09 (Ex M) Strine clearly indicates that there were outstanding fees yet to be billed. A great deal of work was required on the file between 15/8/08 and 17/9/08 as the design had to be finalised so that it could be sent to Strine Building for costing. Nearly 80% of Phase 4 had been completed. Butt also confirmed in his evidence that the project was in Phase 4 Design Development before it was terminated.
The applicants were clearly warned in that letter that if their demand for a refund was pursued, the final fees would be billed and costs for recovery would be sought (Ex M). This was a strictly commercial offer by the Respondent. The Applicants, we submit are the author of their own misfortune in regard to the counterclaim.
Strine has had to defend this matter first in the CTTT and now in ACAT. The costs of preparing such voluminous documentation are considerable, not to mention Ms Griffiths’ expenses as (a) witness.
If the Tribunal is not prepared to uphold the full amount of the cross-claim, we submit the alternative:
That the Applicant be ordered to pay for the actual work undertaken by Ms Griffiths and administrative staff (denoted *) between 18/8/08 and 20/9/08 as identified in the Time sheets/Reports, being:
21/8 08 74.25* 4/9/08 45.00
25/8/08 24.75* 45.00
26/8/08 225.00 90.0045.00 90.00
27/8/08 45.00 8/9/08 90.00
49.50* 24.75*
28/8/08 45.00 9/9/08 495.00
74.25* 10/9/08 405.00
1/9/08 90.00 45.00
360.00 360.00
450.00 135.00
45.00 11/9/08 180.00
49.50* 270.00
2/9/08 315.00 346.50*
123.75* 15/9/08 495.00
3/9/08 90.00 16/9/08 990.00
90.00 17/9/08 24.75* 1080.00
Total: $7,407.00
The respondent is therefore relinquishing his claim for his own fee; to interest and for recovery costs that he asserts are due and payable under the agreement and which are considerable.
In their letter dated 1 December 2008 Demoor states (page 2 para 2) that they do not doubt”....the veracity of costs associated with the work already done up to the time of cancellation, but it is also beyond doubt that our expenditure of $20,000.00 [sic] was, to us , an almost total waste of money.”
The Respondent did the work that they were engaged to do, until the date of termination of the contract between the parties. Ms Demoor, in her email dated 3/9/08 says”....I do hope a solution can be found before we are begin[sic] to seriously think about other solutions as I do love the house we have all worked on so hard and was really looking forward to having it built soon.”
The Demoors chose a different course of action when they chose not to pursue the costing reductions and brought an alternative house. They then pursued a refund. Strine should not be penalised financially for the Applicants’ decisions.
Signed for the Respondent
EG Butt
Director, for and on behalf of Strine Design Pty Ltd.
DECISION
264.In order for a party to be successful in proceedings before the tribunal, he/she must prove on the balance of probabilities that their claim has been made out.
265.In this matter, after hearing all the evidence from both parties and reading their submissions, I am not satisfied that the applicants have established, to the requisite standard, their claim for a refund of all or any part of the fees paid to Strine Design Pty Limited.
266.I am also satisfied on the evidence that the applicants do not acknowledge the part they played in the design, size or cost of the house, as claimed by the respondent.
267.I do not accept Mr DeMoor’s statement that “The only changes requested by us in the design process were relatively minor and open for discussion. In any event, at no time were we advised by Strine that any amendments by us would increase their costs.”
268.I also believe that the evidence supports Mr Painter’s contention that the DeMoors dream house simply in the end, was not a viable enterprise for them to enter into, given the inclusions or more specially the exclusions of the house that they could actually afford.
269.The final revised but reduced design produced by the respondent did however comply with the DeMoor’s budget. Again this was not acknowledged.
270.Whilst they were able to withdraw from the project, without penalty due to Strine’s’ agreement, they are not on the evidence, entitled to a refund of all or any of the fees willing paid to the respondent for work carried out on their behalf.
271.Also, on the evidence it can be stated that the respondent’s fee schedule was well known to the applicants, as was the fact that the costings were indicative only, and the DeMoors were aware that they were being charged at an hourly rate.
272.Most of, if not all of the major work, was being carried out by Ms Candida Griffiths in consultation with Mr Ric Butt. On the evidence it can also be stated that most of the meetings with the DeMoors involved those two senior architects. I also accept Mr Butt’s evidence that a more than normal amount of hours was being spent with the DeMoors on this project. I therefore find it difficult to accept Mr DeMoors statements in relation to being unaware that the original fee schedule estimations were being exceeded.
273.Ms Luckie argued that in the end, the DeMoors were considering buying another house and the entire project became pointless. I do not accept her contention that the DeMoors “… couldn’t obviously afford to build and buy as well.” My reasoning for this is that I believed Mr DeMoor when he stated in cross-examination that they were not contemplating buying this house, nor were they even aware of its existence when they cancelled the contract.
274.I do however accept the respondent’s submission that in the DeMoor letter of termination dated 20/9/08, the applicants did not actually state a reason beyond affordability. Ms Griffiths asserted in her evidence that to the very end they were “delighted” with the design. I accept that this was indeed the case, as I found Ms Griffiths to be a credible witness.
275.Also, I was concerned that at no time did the applicants respond to the issues raised by Strine in their letter of 17 /8/08.
276.I also have difficulty with the DeMoors writing to Strine nearly twelve months after terminating the contract asking for a refund of fees paid on the grounds
that, “You simply have not earned it [the fees].”
277.Certainly, Mr DeMoor was unable to demonstrate to me, when giving evidence, that that was indeed the case. Unfortunately, Mrs Sue DeMoor, who I understand from the evidence, had the main carriage of the project on behalf of the applicants, was not present during the hearing, and did not give evidence in support of their case.
278.I do note however, the respondent’s submission on this point, but whether or not my decision would have been different if Sue DeMoor had given evidence, I am unable to say. I certainly didn’t draw the inference suggested by the respondent.
279.The application for a refund of fees paid to the respondent in accordance with invoices issued at the time is dismissed. I make no order as to costs on the application.
COUNTERCLAIM
280.On the evidence I find that the counterclaim is made out, at least in part, notwithstanding the respondent’s initial reticence, for whatever reason, to invoice the DeMoors for work done after 15 August 2008, until 6 August 2009, some 11 months after the project was cancelled.
281.There can be no argument that the respondent’s staff did not continue to perform services for the applicants until at least 17 September 2008, with the full knowledge and acquiescence of the DeMoors.
282.Documents filed by the applicants prior to the hearing contain the following statement, which was in reference to a meeting that took place on 15 September 2008:
“A very lengthy conference ensued which extended well after closing hours. It covered many aspects of the project, but not the final cost.”
283.However, in the respondent’s written submissions filed in the tribunal, it was clearly stated that:
“If the tribunal is not prepared to uphold the full amount of the cross-claim, we submit the alternative:
That the applicant be ordered to pay for the actual work undertaken by Ms Griffith and administrative staff between 18/8/08 and 20/9/08 as identified in the time sheets/reports….”
“The respondent is therefore relinquishing his claim for his own fee; to interest and for recovery costs that he asserts are due and payable under the agreement and which are considerable”.
284.The respondent was still claiming $7,407.00, backed up by time sheets and reports, for these services. In the end, I was not able to award the full amount of the counter-claim as it was not argued to any extent, and no evidence was produced to justify the total amount, other than the submission setting out the work undertaken by Ms Griffiths and the administrative staff.
285.On the evidence, there is no justification for not finding in the respondent’s favour on that part of the counter-claim.
286.
However, in the interests of avoiding any claim that these fees are excessive,
I have discounted them by about one third, and I therefore enter judgment on the counterclaim in the sum of $5,000.00.
287.In view of the delay in invoicing the applicants for work done between 15 August and 20 September 2008, I also order that interest will not run on this amount prior to the date of judgment.
288.The applicants are allowed two months from the date of this decision to pay the judgment debt.
………………………………..
Mr P.R. Thompson
Member
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