Foley v Steve Bagnall Homes Pty Ltd - [2018] QCAT 458

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458

PARTIES:

IAN FOLEY and BERNADETTE FOLEY
(applicants)

v

STEVE BAGNALL HOMES PTY LTD

(respondent)

APPLICATION NO/S:

BDL090-15

MATTER TYPE:

Building matters

DELIVERED ON:

31 October 2018

HEARING DATE:

24, 25, 26, 27 October 2016; 1 December 2016; and
On the papers August 2018

HEARD AT:

Brisbane

DECISION OF:

Member Burke

ORDERS:

1.   The Respondent is to make payment to the Applicants in the sum of $167,232.89 in satisfaction of the Applicants’ claim for restitution and damages for breach of contract and/or negligence and in satisfaction of the Respondent’s counterclaim.

2.   The parties are to provide submissions to the Tribunal in writing within 21 days in relation to:

(a)   the interest, if any, to be imposed; and

(b) costs of the proceedings.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – domestic building dispute – whether premature issue of progress claim for Practical Completion stage – where owner terminates contract for builder’s failure to complete works by Date for Practical Completion – damages for breach of contract for defective and incomplete work – restitution for PC and PS items under contract - assessment of whether rectification work necessary and reasonable course to adopt

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – whether variations compliant with Domestic Building Contracts Act 2000 (Qld) – right of building contractor to recover amount for variation

Domestic Building Contracts Act 2000 (Qld), s 67, s 69,
s 79, s 80, s 82, s 84
Queensland Building and Construction Commission Act 1991 (Qld)
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 168(1)

Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Bellgrove v Eldridge (1954) 90 CLR 613
Cardona v Brown (2011) 27 BCL 194
CMF Projects P/L v Rigall & Anor [2014] QDC 90
Codelfa Construction Pty Ltd v State Railway Authority of NSW (1982) 149 CLR 337
D Galambos & Son Pty Ltd v McIntyre (1974) 5 ACTR 10
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Radford v De Froberville [1977] 1 WLR 1262
Robinson v Harman (1848) 1 Exch 850; [1848] EngR 135
Ruxley Electronics & Construction Co Ltd v Forsyth [1996] AC 344
Tabcorp Holdings Pty Ltd v Bowen Investments Pty Ltd [2009] HCA 8
Thompson Residential Pty Ltd v Tran [2014] QDC 156
Tranquility Pools & Spas Pty Limited v Huntsman Chemical Co Pty Limited [2011] NSWSC 75
Willshee v Westcourt Ltd [2009] WASCA 87

APPEARANCES & REPRESENTATION:

Applicant:

S Kelly, instructed by Paul J Hick Special Counsel at Active Law, Solicitors

Respondent:

M Panayi, Principal Solicitor of Industry Lawyers

REASONS FOR DECISION

This application is to be determined by me as directed by the President of the Queensland Civil and Administrative Tribunal pursuant to s 168(1) of the Queensland Civil and Administrative Tribunal Act 2009 (‘the QCAT Act’) having regard to the decisions and records of proceedings of the Tribunal as previously constituted.
These proceedings involve a domestic building dispute as defined in Schedule 2 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘the QBCC Act’) between the Applicants, as homeowners, and the Respondent, a building contractor.
The dispute arises out of a regulated contract as defined in the Domestic Building Contracts Act 2000 (Qld) (‘the DBC Act’) in force at the time the parties entered into the contract.[1]
[1]The DBC Act reprint current as at 18 December 2009.
The Applicants’ original application filed 11 May 2015 sought the following relief:
1. The Respondent pay the Applicants the sum of $40,061.74 in restitution for unjust enrichment.
2. Interest on the amount at paragraph 1
3. The Respondent pay the Applicants the sum of $128,644.72 for damages for breach of contract.
By Response and/or Counterclaim filed 26 June 2015, the Respondent denied the Applicants’ claim and made a counter-claim for the sum of $4,720.83 for unpaid payment claims on the following grounds:
(a)pursuant to the contract;
(b)further or in the alternative, in restitution on a ‘quantum meruit’;
(c)further or in the alternative as a debt arising from the fully executed agreement; and
(d)further or in the alternative, pursuant to section 84 of the DBC Act.
At the hearing, the Applicants’ claim had been amended to the sum of $420,106.33 on the following bases:
(a)restitution in the sum of $45,865.90 being $15,865.90 for payment in excess of the adjusted contract price for prime cost and provisional sum items and other credits and $30,000.00 refund for the Practical Completion Stage payment which was paid but not due; and
(b)damages for breach of contract and negligence in the sum of $374,240.43 for defective and incomplete work.
The Respondent’s counterclaim was revised marginally to the sum of $4,258.03.
Factual Background
The Applicants, Mr and Mrs Foley (‘the Foleys’), are the owners of a property at 44 Moreton Street, Toogoom, Queensland (‘the site’). Toogoom is a small seaside settlement located 20km from Hervey Bay. The site is on the shoreline as indicated in attachment ‘FS2’ to Mr Foley’s second statement dated 7 March 2016.[2]
[2]Mr Foley’s second statement dated 7 March 2016 – Exhibit 7.
Between May and July 2010, the Foleys engaged a building contractor, Mr Steven Bagnall, on behalf of the Respondent (‘SBH’) to provide a quotation for the construction of a two storey brick and cladded house on their property in accordance with plans and engineering drawings provided by the Foleys to SBH.
Four quotations were provided by SBH during the period May to July 2010 with the last quotation dated 30 July 2010. After the first quotation in May 2010, the final plans for construction including engineering plans were prepared.
The final plans were prepared by Payten Rodger being drawing file number 080629, pages BA 1 to 3. Structural drawings were prepared by Cardno (Qld) Pty Ltd consisting of 12 drawings for job no. 29270575. The plans and drawings were lodged with the building certifier in June 2010 and the stamped plans were received from the Fraser Coast Regional Council (‘FCR Council’) in July 2010.
There was some confusion during the evidence of Mr Foley and Mr Bagnall regarding the plans relied upon by Mr Bagnall in providing his final quotation. Exhibit 2 comprises the Payten Rodger plans and Cardno structural plans which Mr Foley states were the contract plans relied upon by Mr Bagnall in preparing his final quotation. Mr Bagnall gave evidence that the Cardno structural plans relied upon by him are the same as those in Exhibit 2 but disputes that the Payten Rodger plans relied upon by him consisted of 3 pages. Mr Bagnall asserts that he prepared his quotation on a set of plans containing only 2 pages.[3]
[3]Exhibit 21 – 2 pages of plans
Mr Bagnall provided a final quotation on 30 July 2010.[4] In evidence, Mr Bagnall accepted that it was possible that he had relied upon the Payten Rodger 3 page plans as some of the items on which he provided his quotation were not relevant to the 2 page plans. The quotation formed part of the contract as the Specifications identifying details of the works to be carried out.
[4]Exhibit 3
A standard form Queensland Master Builders’ Residential Construction Contract (RBC 07/10) was signed by the Foleys and SBH on 4 August 2010.[5] The contract sum for the works was $614,200.00.
[5]Exhibit 4
SBH commenced work on the site on 3 August 2010. Progress claims for the deposit and the base stage were issued to the Foleys on 4 August 2010 and 2 September 2010 respectively.[6]
[6]Annexures “F5” and “F6” to Exhibit 6, the first statement of Mr Foley dated 30 November 2015
Further progress claims were issued by SBH in relation to the Frame Stage on

6 October 2010, the Enclosed Stage on 1 November 2010 and the Fixing Stage on 19 November 2010.[7] The amounts of $109,385.00 for the Frame Stage, $189,498.28 for the Enclosed Stage and $157,478.05 for the Fixing Stage as claimed were duly paid by the Foleys.
[7]Annexures “F9” to “F11” to Exhibit 6
On or about 22 December 2010, by agreement between the parties, SBH allowed the Foleys access to the house for occupation although there were outstanding works to be performed.
Further, on 22 December 2010, SBH issued invoice 760 for the Practical Completion Stage of the works with the amount of $34,710.41 being due and payable.
On 23 December 2010, the Foleys paid the amount of $30,000.00 as the works were not complete and a reconciliation of prime cost items and provisional sums and variations to the original scope of works had to be undertaken by the Foleys.
The following table sets out the payment claims made by SBH and the amounts paid by the Foleys:

Date of Payment Claim

Payment Claim Stage

Amount Claimed

Amount Paid

4 August 2010

Deposit

$30,710.00

$30,710.00

3 August 2010

Base Stage

$76,775.00

$76,775.00

6 October 2010

Frame Stage

$109,382.00

$109,385.00

1 November 2010

Enclosed Stage

$189,498.28

$189,498.28

19 November 2010

Fixing Stage

$157,478.05

$157,478.05

22 December 2010

Practical Completion

$34,170.41

$30,000.00

SBH returned to the site between January 2011 and March 2011 to complete the contract works.
By letter dated 23 March 2011, the Foleys wrote to SBH regarding final adjustments and concerns in relation to a number of invoices and ancillary items.
On 30 March 2011, SBH replied to the Foleys complaints and attached a new statement with all outstanding invoices requesting payment in full within 7 days. The amount claimed was $4,270.83.
The Foleys replied on 7 April 2011. By this stage the parties were in dispute regarding monies owing and whether the works were defective and incomplete.
By letter dated 10 June 2011, the solicitors for the Foleys provided extensive details of its position regarding the amounts claimed by SBH and other concerns including items for which the Foleys claimed adjustments were to be made. The solicitors requested a response from SBH within a reasonable time in order to resolve the dispute between the parties.
On 16 June 2011, the solicitors for SBH responded addressing some of the issues and repeating the demand for full payment.
On 9 September 2011, the Foleys lodged a complaint with the Queensland Building Services Authority (‘the QBSA’) (now the Queensland Building and Construction Commission). An inspection was carried out by QBSA inspector Danny Stephenson on 25 October 2011 and a report prepared dated 28 October 2011. Mr Bagnall attended the inspection on behalf of SBH.
Of the 14 items identified in the complaint, five were considered to be contractual issues, five were considered to be either rectified or not a defect and four were considered to be category 1 defects.
By letter dated 31 October 2011, the QBSA advised the Foleys that it would not be issuing a Direction to Rectify pursuant to s 72 of the Queensland Building Services Authority Act 1991 (Qld) (‘QBSA Act’) as the items listed in the complaint were considered to be contractual issues and therefore not determined by the QBSA to be defective building work.
During the inspection on 25 October 2011, Mr Bagnall stated that he would return to rectify the works which were defective. No further rectification work was carried out.
On or about 16 April 2014, the FCR Council issued a Form 61 – Non-compliance Certificate.
On 20 May 2014, the Foleys instructed their solicitor to issue to SBH a notice of intention to terminate the contract pursuant to clause 20.1 of the general conditions of contract.
On 6 June 2014, the solicitors for SBH responded regarding the issues raised in the Form 61 – Non-compliance Certificate.
On 11 July 2014, the parties attended a mediation in an attempt to resolve the issues in dispute between them.
On 6 May 2015, the Foleys purported to terminate the contract by letter of that date.
Applicants’ Claim
The Foleys’ claim is divided into two parts:
(a)Restitution for amounts paid by the Foleys in excess of the amount owed under the contract in the sum of $45,865.90:
(i)      in relation to non-compliant variations;
(ii)      in relation to PC and PS items and credits; and
(iii)     in relation to overpayment of the Practical Completion Stage on the basis that Practical Completion has not been reached.
(b)Damages for defective and incomplete work in the sum of $374,240.43.
Non-Compliant Variations
The first part of the Foleys’ claim relates to the repayment of monies paid for variations which it is alleged do not comply with the terms of the contract or the requirements of s 80 of the DBC Act.
The Foleys’ claim is based on the following argument:
(a)none of the variations comply with either the DBC Act or the general terms of the contract and thus SBH is prohibited from recovering any sum for those variations; and
(b)as a result, SBH has been unjustly enriched at the expense of the Foleys and is obliged to repay the amounts for the non-compliant variations.
The Foleys assert that the variation claims are non-compliant for the following reasons:
(a)there was no written request by either the Foleys or Mr Bagnall in breach of clause 12.1 of the contract;
(b)the variation documents issued do not state the change to the contract price or any other details in breach of clause 12.4(d) of the contract;
(c)the variation documents were not signed by the Foleys in breach of clause 12.4(e) of the contract and s 80(2)(g) of the DBC Act; and
(d)in circumstances where the variation was requested by SBH, the reason for the variation has not been detailed as required by clause 12.4(b) of the contract and s 80(2)(c) of the DBC Act.
Before embarking on an assessment of each variation, it is essential to set out the clauses in the contract and those sections of the DBC Act relevant to the allegation of non-compliant variations.
Relevant Clauses of the Contract
The definition for ‘Practical Completion’ is provided in the definition section of the general conditions of contract as follows:
Practical Completion Stage – means that stage of the Works when the Works are completed in accordance with the Contract and all relevant statutory requirements, apart from minor omissions or defects, and the Works are reasonably suitable for habitation. Where the Owner has engaged consultants including the Building Certifier, then Practical Completion under the Contract means the stage of the Works when the Works are completed, are reasonably suitable for habitation, with minor omissions and minor defects and the Contractor only being required to provide support documents to the Owner to allow a Certificate of Completion to issue.
The Date for Practical Completion is set out in Item 10 of the contract as 2 March 2011.
The contractor’s obligations and owner’s obligations under the contract are set out in clauses 10 and 11 of the general conditions of contract.
The contractual requirements in relation to the carrying out of variations to the contract are provided in clause 12 of the general conditions of contract.
The obligations of both parties upon Practical Completion Stage are set out in clause 17 of the general conditions of contract. For present purposes, I have set out the salient sections:
17.1 Submission of Practical Completion Stage claim and a Practical Completion Stage Notice by Contractor
On reaching Practical Completion Stage, the Contractor must give to the Owner:
(a) the Practical Completion Stage claim; and
(b) Practical Completion Stage Notice:
(i) stating the date the Works reached Practical Completion Stage;
(ii) providing for a final inspection of the Works with the Owner or the Owner’s Agent at a date and time specified in the certificate; and
(iii) attaching any necessary certificates and approval required from any statutory authority in connection with the Works which the Contractor is to obtain under this Contract.
17.5 Contractor to provide signed defects document to Owner in certain circumstances.
If at the final inspection of the Works the Owner claims defects exist, or the Works are incomplete, the Contractor must give to the Owner a defects document that:
(a) lists the minor defects or omissions that the Contractor and Owner agree exist;
(b) lists the minor defects or omissions that the Owner claims exist, but that are not agreed by the Contractor; and
(c) states the time by when the Contractor is to correct the listed agreed defects and omissions.
The Contractor must make all reasonable efforts to have the Owner sign the defects document. Both the Owner and Contractor are to retain a cop of the defects document.
17.6 The Contractor must complete the agreed works on the defects document.
The Contractor must rectify or complete any agreed items listed in the defects document within the time stated in the defects document or if necessary materials are unavailable, within a reasonable period.
17.7 Practical Completion Stage claim payable by Owner upon achieving Practical Completion Stage.
On giving the defects document to the Owner, and notwithstanding that Practical Completion Stage may have been reached with minor omissions or defects, the Owner must pay the Practical Completion Stage claim to the Contractor in accordance with the Contract.
If the Owner wishes to take Possession of the Works but disputes the amount payable to the Contractor and the Contractor is a member of the Master Builders Queensland, the Owner may pay the disputed amount into the Master Builders’ Queensland Trust Account.
17.8 Owner’s entitlement to keys and possession of the Works.
The Owner must not take Possession of the Works, nor is it entitled to the keys to the Works prior to payment to the Contractor of the final progress claim unless the Owner has obtained the Contractor’s written consent.
17.9 If Owner takes possession of the Works when not entitled to do so.
If the Owner takes possession of the Works, or any part of the Works, when not entitled to do so under the Contract, the Works are deemed to have reached Practical Completion Stage on the date of Possession and the Owner is liable to the Contractor for any loss or damage arising as a result.
The Owner’s rights to terminate the contract are set out in clause 20 of the general conditions of contract:
20.1 Owner’s right to serve notice of intention to terminate contract if the Contractor:
(a) fails to proceed with the Works with due diligence or in a competent manner;
(b) unlawfully suspends the carrying out of the Works;
(c) refuses or persistently neglects to remove or remedy defective work or improper materials, so that the Works are adversely affected;
(d) is unable or unwilling to complete the Works or abandons the Contract;
(e) is in Substantial Breach of this Contract; or
(f) fails to effect or maintain any insurance policy required by this Contract;
the Owner may give a written notice to the Contractor:
(i) describing the alleged breach or breaches of the Contract by the Contractor; and
(ii) stating the Owner’s intention to terminate the Contract unless the Contractor remedies the alleged breach or breaches within a ten (10) Business Days after receiving the Owner’s notice.
Relevant sections of the Domestic Building Contracts Act 2000 (Qld)
The objectives of the DBC Act are set out in section 3 of the Act:
3 Purpose of the Act
The purpose of this Act, in regulating domestic building contracts, is –
(a) to achieve a reasonable balance between the interests of building contractors and building owners; and
(b) to maintain appropriate standards of conduct in the building industry.

Sections 42 and 45 set out the implied warranties regarding suitability of materials and adherence to plans and specifications.
For the purpose of regulating payments under the contract, the DBC Act relevantly provides:
67 Completion Payments
(1) This section only applies to a regulated contract for which the subject work consists of –
(a) the erection or construction of a detached dwelling to a stage suitable for occupation;
(b) the renovation, alteration, extension, improvement or repair of a home to a stage suitable for occupation.
(2) The building contractor under a regulated contract must not demand all or part of the completion payment unless the practical completion stage has been reached.
Maximum penalty – 100 penalty points
(3) The building contractor under a regulated contract must not receive all or part of the completion payment unless –
(a) the practical completion stage has been reached; and
(b) if the building owner claims the stage has been reached with minor defects or omissions – the first and second requirements stated in subsections (4) and (5) have been complied with.
Maximum penalty – 100 penalty points
The consequences of contravening requirements relating to payments is contained in section 69 of the DBC Act:
69 Order to refund overpaid amounts
(1) This section applies if –
(a) a court finds a charge against a building contractor for an offence against a payment section proven; and
(b) the offence involves the receipt of an amount by the building contractor.
(2) The court may order the building contractor –
(a) to refund to the building owner –
(i) the amount paid to the building contractor that the building contractor was not, under the payment sections, entitled to receive; or
(ii) a part of the amount mentioned in paragraph (a);
(b) if the building contractor contravenes the order - to pay the building owner interest on the amount to which the contravention relates, calculated at the rate, and on the basis, the court considers appropriate.
(3) The power of the court under subsection (2) is additional to any other power the court has to impose a penalty.
(4) The refund of an amount by the building contractor to the building owner under an order mentioned in subsection (2) does not stop the building contractor from later demanding and receiving payment of the amount under the contract as part of –
(a) for a fixed price contract – the contract price; or
(b) for a cost plus contract – the total amount the building contractor is entitled to receive.
Relevantly, Part 7 of the DBC Act provides:
79 Variations must be in writing
(1) The building contractor under a regulated contract must ensure any variation of the contract agreed to between the building contractor and the building owner is put in written form –
(a) within the shortest practicable time; and
(b) for a variation consisting of an addition to the subject work – before any domestic building work the subject of the variation is carried out.
Maximum penalty – 20 penalty units.
(2) Subsection (1) does not apply to a building contractor for a variation of a contract if –
(a) the variation is for domestic building work that is required to be carried out urgently; and
(b) it is not reasonably practicable, in the particular circumstances, to produce a variation document before carrying out the work.
…
(5) When the variation document is signed, the following provisions for not apply for the variation –
(a) subsections (1) and (2);
(b) section 82;
(c) section 83(1)(b);
(d) section 84(2)(a) and (3) (a)(i), to the extent the provisions concern sections 82 and 83(1)(b).
The requirements for a variation document are set out in section 80 of the DBC Act including the following:
(a)description of the variation (s 80(2)(b));
(b)if the variation was sought by the building contractor – states the reason for the variation (s 80(2)(c));
(c)for a fixed price contract – states the change of the contract price because of the variation, or how the change of the contract price is to be worked out (s 80(2)(e)); and
(d)if the contract provides for progress payments – makes appropriate provision for payments under the contract to reflect any change of the contract price caused by the variation (s 80(2)(g)).
Section 81 outlines the general contents of the variation document and the appropriate provision for payments to reflect the contract price changes.
Section 82 provides that the building contractor must sign the document and take all reasonable steps to try to ensure the document is signed by the building owner. A maximum penalty of 20 penalty unit for non-compliance applies.
Most importantly for the present case asserted by SBH in its counterclaim, section 84 provides:
84 Right of building contractor to recover amount for variation
(1) This section applies if –
(a) the building contractor under a regulated contract gives effect to a variation of the contract; and
(b) the variation consists of –
(i) an addition to the subject work; or
(ii) an omission from the subject work that results in the building contractor incurring additional costs.
(2) If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation –
(a) only if the building contractor has complied with sections 79, 80, 82 and 83; or
(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
(3) If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation –
(a) only if -
(i) the building contractor has complied with sections 79, 80, 82 and 83; and
(ii) the ground of unforeseen circumstances applies; or
(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
(4) The tribunal may approve the recovery of an amount by a building contractor for a variation only if the tribunal is satisfied that –
(a) either of the following applies –
(i) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation;
(ii) the building contractor would suffer unreasonable hardship by the operation of subsection (2)(a) or (3) (a); and
(b) it would not be unfair to the building owner for the building contractor to recover an amount.
(5) For subsection (3)(2)(ii), the ground of unforeseen circumstances applies if the variation became necessary because of circumstances that could not have been reasonably foreseen by the building contractor when the contract was entered into.
(6) If the building contractor is entitled to recover an amount for the variation of a fixed price contract, the amount is –
(a) the increase in the contract price stated, or worked out in the way stated, in the appropriate variation document for the variation; or
(b) if paragraph (a) does not apply – the cost of carrying out the variation plus a reasonable profit.
Expert Evidence
Expert evidence was provided on behalf of the Foleys by Mr Garry Carpenter, a building inspector, and Mr Gary Thompson, a quantity surveyor, both from Mitchell Brandtman.
On 27 November 2015, Mr Carpenter, in his capacity as a defects and quality expert[8], provided an expert building condition report having been instructed by Paul J Hick of Nexus Law Group, on behalf of the Foleys, to:[9]
(a)identify the original scope of works under the contract;
(b)identify those parts of the original scope of work which have not been wholly completed by the builder and estimate the cost of completing such incomplete work (excluding all statutory approvals required);
(c)identify what defects exist in those parts of the original scope of works that were complete or partially complete by the builder. Also identify the scope of work required to rectify such defects and propose a method for rectification along with an estimate of cost;
(d)identify which work outside the original scope of works, claimed by the builder in the alleged variations, has been completed or partially competed and to estimate the value of the additional work as at late 2010;
(e)identify what defects exist in additional work. To identify the scope of work required to rectify such defects and propose a method along with an estimate of the cost; and
(f)assess and itemize the ‘contract price’ as adjusted in accordance with the contract and Division 2 of Part 5 and Part 7 of the DBC Act.
[8]Datum Building Consultancy Pty Ltd
[9]Exhibit 5.
On 30 November 2015, Mr Gary Thompson of Mitchell Brandtman provided a report assessing the costs associated with following:[10]
(a)defective work as detailed in Schedule 1;
(b)incomplete work as detailed in Schedule 1;
(c)adjustment to PC and PS items as detailed in Schedule 2;
(d)alleged variations as detailed in Schedule 3; and
(e)an overall assessment of the adjusted contract value as a result of the above estimates.
[10]Exhibit 9.
On 4 March 2016, Mr Gary Thompson produced a further report updating his earlier report and providing revised figures in relation to the same issues.[11]
[11]Exhibit 10.
Mr John Browning, a building expert, gave evidence on behalf of SBH both orally and by way of a report dated 17 April 2016.[12]
[12]Exhibit 14.
Further, Mr Browning participated in the experts conclave directed by the tribunal resulting in the joint report which took the form of a Scott Schedule dated

17 October 2016 as Exhibit 1.
Variation Claims
The variations the subject of this part of the Foleys’ claim are set out in Part 2 of Schedule B attached to Mr Bagnall’s statement dated 30 March 2016.[13]
[13]Part 2 Schedule B to Exhibit 11.
Mr Foley gave evidence that the following variations have been accepted by him as compliant and valid variations on the basis that they were requested by Mr Foley:
(a)V020 – supply and fit a Dux hot water reticulating pump – $1,087.90;
(b)V027 – extra water tank and slab – $1,700.00;
(c)V026(b) – supply and install wardrobe cabinet – $1,082.40; and
(d)V024 – supply of 100mm stormwater pipe – $189.68.
In submissions dated 3 February 2017, the Foleys conceded that Variations 32 and 35 are also allowable, with the former amounting to $280.50 and the latter a credit of $490.53.
The Foleys therefore dispute that SBH is entitled to recover payment for the following variations:
(a)V001, V002, V005, V006, V007, V008, V009, V010, V021, V023, V025(b), V029, V033, V034 and V036.
Of the variations set out above, SBH asserts that:
(a)the following variations have been signed and paid in the sum of $9,958.59:
(i)      V001, V002, V005, V006, V007, V008, V009, V010 and V020;
(b)the following variations have not been signed or paid and form part of SBH’s counterclaim:
(i)      V025b, V026(b), V029, V032, V034 and V035;
(c)the following variations have been signed but not paid and form part of SBH’s counterclaim:
(i)      V021, V023, V024 and V027; and
(d)of the total of 31 variations, 21 have been signed and paid in full.
The Foleys seek restitution for all non-compliant variations.
I shall deal with each of the variations disputed by the Foleys and consider separately those the subject of SBH’s counterclaim relating to unsigned and unpaid variation claims.[14]
[14]The variations the subject of the counterclaim include V021, V023, V024, V025b, V026b, V027, V029, V032, V034, V035.
Variation V001
Variation V001 is dated 10 August 2010, signed by the Foleys on 10 September 2010 and converted to Invoice 739 dated 19 November 2010.
The work the subject of the variation is identified as ‘joinery over allowance’.[15] The variation document is signed by Mr Foley and Mr Bagnall and states that the increase in cost for the variation is $2,574.00.
[15]Annexure ‘SB33’ to Exhibit 11 – Statement of Steve Bagnall dated 30 March 2016.
In support of the variation, SBH has produced a document headed ‘Changes to Quote 3287 from Quote 3234’ and stated to be ‘on customer’s advice’ however it does not appear to be a variation document signed by the parties. This document outlines the increase and decrease in works for the kitchen, bar area, bedroom and main bathroom vanities and price difference between quotations based upon a meeting with the Foleys on 29 July 2010.
The Foleys allege that the description of the variation is not meaningful and that it does not comply with s 80(2)(b) of the DBC Act or clause 12.4(a) of the contract. On that basis, the Foleys assert that SBH is not entitled to payment for the alleged variation work unless there is an entitlement to recovery pursuant to s 84 of the DBC Act.
Further, the variation was one requested by SBH and thus was required to comply with s 80(2)(c) of the DBC Act.
There is no evidence that the works were not carried out or that there was in fact no increase in the cost.
I am satisfied that whilst the variation document did not provide the detail which was evident from the attached documents, Mr Foley signed the documents knowing full well the details having been directly involved in the changes to the joinery.
Thus I am satisfied that SBH is entitled to payment for the variation and the Foleys’ claim for reimbursement for Variation V001 fails.
Variation V002
Variation V002 is dated 10 August 2010 and is signed by both Mr Foley and Mr Bagnall. The amount of the variation is $316.15.
The variation was converted to invoice 740 dated 19 November 2010 and is described as ‘plumbing items over allowance’.
The Foleys assert that the description of the variation is sparse and there is no reason given for the variation. It is submitted that the variation does not comply with

s 80(2)(b) of the DBC Act.
The variation was sought by SBH and appears to be as a result of a change in selection by the Foleys on 6 August 2010 when they attended Tradelink.[16]
[16]Email dated 9 August 2010 from Tradelink to Robyn Bagnall as part of Annexure ‘SB-34’ to Exhibit 11.
I am satisfied that the Foleys were aware of the changes made and agreed to the increase in plumbing allowance. Mr Foley accepted the description in the variation document at the time of signing the documents as he was fully aware of the changes in selection made by him at Tradelink.
Variation V002 is confirmed.
Variation V005
Variation V005 is dated 23 August 2010 and was converted to invoice 713 dated

1 November 2010.
The variation is signed by Mr Foley and Mr Bagnall and described as ‘upgrade (2) external hinged doors to aluminium less allowance’ and is for the sum of $1,224.60.
Mr Bagnall gave evidence that the variation was requested by the Foleys. Mr Foley denies that he requested the variation.
Mr Bagnall’s diary entry for 17 August 2010 refers to ‘price for hinged doors for Foley from G. James’. This would support the notion that there was an issue regarding a change in the hinges.[17]
[17]Attachment ‘SB-35’ to Exhibit 11.
I accept the evidence of Mr Bagnall that there was a variation in the type of hinge to be installed.
Variation V005 is allowed.
Variation V006
Variation V006 is dated 26 August 2010 and was converted to invoice 714 dated

1 November 2010.
The variation is signed by Mr Foley and Mr Bagnall and described as ‘Change viewing deck louvres to 6 blade; plus upgrade screens to viewing deck to security to satisfy fall protection requirements’. The original variation is costed at $1,213.20.
Mr Bagnall gave evidence that the upgrade to the screens was not carried out and a credit for this work is the subject of V036. The credit amount is $366.20. The outstanding amount for this variation was amended to $846.00 for the change of the louvres to six blades.
Mr Foley signed the original variation which included the change of viewing deck louvres to six blades.
Mr Bagnall gave evidence that the plans detailed the installation of three louvres and thus the Foleys’ requirement for six louvres was a variation.
Elevation 2 of the plans in Exhibit 2 depicts three louvres although it does not specify that number.
Whilst the Foleys submit that the size of the window did not change, it is obvious that the number of blades was varied and this was a change in the scope of works. Any increase in cost is a variation to the contract.
Variation V006 is accepted.
Variation V007
Variation V007 is dated 1 September 2010 and is described as ‘Change to garage door from 2100 to 2400 high’. The variation was signed by Mr Foley and converted to invoice 715 dated 1 November 2010.
Mr Foley denies that he gave an instruction to increase the height of the garage door so that he could store his caravan in the garage. It is submitted on behalf of the Foleys that the plans in Exhibit 2 show the height of the garage as 2700mm and thus there was no need for Mr Foley to request a variation.
I accept the evidence of Mr Bagnall that there was a variation to the works and that Mr Foley accepted that variation upon signing the variation document.
Variation V007 is allowed in the sum of $198.00.
Variation V008
Variation V008 is dated 8 September 2010 and was converted to invoice 667 dated

6 October 2010. The variation was signed by Mr Foley and described as ‘Change BR11 steel beams to 360UB 57’. The amount of the variation is $930.00
The Foleys submit that the Cardno structural drawings depict that the viewing platform is to be constructed with two lengths of BR11 steel beams. At page eight described as ‘Floor Framing layout plan’ of the structural drawings forming part of 'Exhibit 2, under the section Member Schedule, it is stated:
BR11 – 360UB57 Steel Beam. Fix @ Columns ‘C2’, ‘C3’ and Pertal Frame with 2/M16 (8.8/s) bolts thru 10mm cap/cleat Plate.
Mr Bagnall gave evidence, supported by documentation[18] that there was an error in the beams which were ordered and those which were specified in the Member Schedule. It seems that BR – 3600UB51 members were ordered instead of 360UB57 members. Mr Bagnall gave evidence that the BR-360UB51 is a lighter grade beam.
[18]Attachments ‘SB-38’, to Exhibit 11.
Mr Bagnall conceded that the higher grade beam, being the BR – 360UB57, should have been ordered by him first and that any change was as a result of an error in the original order
I am satisfied that there was no change in the scope of works and that there was no variation to the contract. Any extra costs incurred by the building contractor resulted from an error on the part of SBH.
Variation V008 is not allowed.
Variation V009
Variation V009 is dated 8 September 2010 and was converted to invoice 668 dated

6 October 2010.
The variation was signed by Mr Foley for an amount of $970.00.
The authority for variation document describes the variation work as:
Simplify viewing platform
Make viewing platform bigger
Extra cranked beam
Steel joists
Less allowance for steel & timber joists not required.
Mr Bagnall gave evidence that he raised the issues the subject of this variation with Mr Foley in order to improve the construction of the deck area.
Whilst the description in the authority for variation to contract documents is not comprehensive, Mr Foley was aware of the work to which the document relates.
I am satisfied that the description of the variation is adequate and that the document complies with the requirements of s 80(2)(b) of the DBC Act.
The amount of $970.00 is allowed for variation V009.
Variation V010
Variation VO10 is dated 8 September 2010 and was converted to invoice 716 dated 1 November 2010.
The variation is signed by Mr Foley and relates to the following work:
Extra costs to comply with development approval
60 bags of 20kg cement
38 bags of 20kg lime
1 tin of epoxy paint
labour to paint
No evidence was provided by Mr Bagnall to support the change in scope of works for the costs relevant to this variation.
Mr Bagnall’s explanation that an agreement was reached with Mr Foley that the actual cost to comply with the development approval would be worked out at a later date is inconsistent with the fixed price term of the contract.

I do not accept Mr Bagnall’s oral evidence that an agreement was reached between the parties for the payment of extra costs relating to compliance with the development approval. Mr Foley was not given an opportunity to concede that an agreement was reached between the parties.
There is no evidence that the work claimed in this variation was an addition to the scope of works.
Variation V010 is not allowed.
Variation V013
Variation V013 is dated 15 September 2010 and was converted to invoice 719 dated 1 November 2010.
The variation was signed by Mr Foley and relates to a credit for the supply and fit of air-conditioning.
The amount of the variation is not in dispute and therefore does not form part of the Foleys’ claim.
Variation V020
Variation V020 is dated 20 October 2010 and was converted to invoice 741 dated

19 November 2010.
The authority for variation was signed by Mr Foley and relates to the supply and fit of a Dux hot water recirculating pump. The cost of the variation is $1,087.00.
The Foleys do not dispute Variation V020.
Variation V021
Variation V021 is dated 10 November 2010 and was converted to invoice 752 dated 22 December 2010.
The amended authority for variation to contract document claims the sum of $71.73 for the supply of smart tiles to the upper ensuite. The variation is signed by Mr Foley but according to Mr Bagnall has not been paid.
Smart tiles are a configuration for a floor drain consisting of a stainless steel square with a central recessed part where a matching tile is cut and placed.
Mr Foley gave evidence that he had a conversation regarding the installation of a smart tile but he was confused as to whether one or two smart tiles were provided for in the contract. He agreed that as a compromise he accepted the variation for one smart tile.
Mr Panayi, solicitor on behalf of Mr Bagnall, submits that the variation should be allowed on the following bases:
(a)the addition is recorded in V021 and signed by Mr Foley;
(b)the amount is recorded in Mr Foley’s handwriting;
(c)the plans and specifications do not specify a smart tile;
(d)proof of the additional cost incurred is in evidence; and
(e)the issues were discussed between Mr Foley and Mr Bagnall.
Mr Kelly, Counsel on behalf of the Foleys, submits that the item claimed is not a variation, particularly as it is Mr Bagnall’s evidence that a floor waste would always be required even though it is not shown on the plans or in the Specifications.
I accept the evidence of Mr Bagnall that the supply of the smart tile is a variation to the works.
Variation V021 forms part of SBH’s counterclaim as a variation which has been signed but not paid.
Accordingly, whether SBH is entitled to recover the cost of the variation will be dealt with as part of SBH’s counterclaim given that it does not form part of the Foleys’ reimbursement claim.
Variation V023
Variation V023 is dated 23 November 2010 and was converted to invoice 754 dated 22 December 2010.
The authority for variation to contract document was signed by Mr Foley and relates to the item described as:
Make glass splashback 700mm high
Plus extra power point cut out.
The variation cost is $245.00.
Mr Bagnall gave evidence that the standard height for a splashback is 600mm and that he explained this to Mr Foley on site. It is Mr Bagnall’s recollection that Mr Foley accepted this fact subject to being corrected with evidence from the Specifications. Mr Bagnall’s diary entry refers to a request that the kitchen splashback be higher.
I accept the evidence of Mr Bagnall that there was a change in the height of the kitchen cabinetry after the initial quotation provided by him and that accordingly there was a necessary change in height of the kitchen splashback.
With regard to the additional power point, there is no evidence to contradict this alleged fact. I accept therefore that this was a variation to the works as documented in the signed variation.
Mr Kelly, Counsel on behalf of the Foleys, submits that the variation description is unclear and lacking in detail regarding the position of the power point. In this regard, it is submitted that the variation document does not comply with s 80(2)(b) of the DBC Act and clause 12.4(a) of the contract.
Variation V023 forms part of SBH’s counterclaim as a variation which has been signed but not paid.
Accordingly, whether SBH is entitled to recover the cost of the variation will be dealt with as part of SBH’s counterclaim given that it does not form part of the Foleys’ reimbursement claim.
Variation V024
Variation V024 is dated 29 November 2010 and was converted to invoice 755 dated 22 December 2010.
The authority for variation to contract document has been signed by Mr Foley and relates to the variation work describes as ‘Supply 100mm stormwater pipe’.
The cost of the variation is $189.68 and is claimed by SBH as a variation which has been signed but not paid.
In submissions on behalf of the Foleys this variation and the amount claimed have been accepted.
Variation V024 forms part of SBH’s counterclaim as a variation which has been signed but not paid and will be taken into account in consideration of the counterclaim.
Variation V025b
Variation V025b is dated 20 December 2010 and was converted to invoice 788 dated 22 December 2010.
The authority for variation to contract has not been signed by Mr Foley. The document describes the variation work as:
Extra plumbing items Re: Sandy Straits Plumbing
Supply & install 1 extra hose tap to viewing deck (6 installed)
Supply & install valves for lift
The amount of the variation is $171.60.
SBH relies upon invoices from Sandy Straits Plumbing Pty Ltd and Personal Home Elevators to support the claim for the variation works.[19] The problem with this evidence is that it does not support the Foleys’ contention that six taps in total were always required by the Specifications and that any extra costs were incurred because SBH had not ordered the correct parts.
[19]Annexure ‘SB-46’ to Exhibit 11.
I accept the Foleys’ submission that the works were not a variation to the contract.
This variation forms part of SBH’s counterclaim regarding variations which have not been signed nor paid and will be dealt with separately as part of the counterclaim.
Variation V026b
Variation V026b is dated 20 December 2010 and was converted to invoice 787 dated 22 December 2010.
The authority for variation to the contract document was not signed by the Foleys and relates to the following works: ‘Supply & Install Wardrobe cabinet’.
The cost of the variation is detailed as $1082.40.
Mr Foley accepts that he requested the provision of a cabinet for security hardware in the vicinity of the laundry chute. Thus, in submissions it is conceded that there is no dispute that the works are a variation to the contract but rather that the works are defective.
This variation forms part of SBH’s counterclaim regarding variations which have not been signed nor paid and will be dealt with separately as part of the counterclaim. Issues such as whether the variation was compliant with s 80 of the DBC Act will be dealt with separately as part of SBH’s counterclaim.[20]
[20]Variation V026b has been accepted by the Foleys as payable although the variation document was not signed in paragraph 531 of the Foleys’ submissions dated 3 February 2017.
Variation V027
Variation V027 is dated 20 December 2010 and was converted to invoice 758 dated 22 December 2010.
The authority for variation to contract document is signed by Mr Foley and describes the variation work as ‘extra water tank & slab’. The cost of the variation is $1,700.00.
This variation has been accepted by Mr Foley in cross-examination as a variation to the scope of work and as an extra amount payable.
This variation forms part of SBH’s counterclaim and will be considered separately as it does not form part of the Foleys’ claim for restitution.
Variation V029
Variation V029 is dated 14 January 2011 and was converted to invoice 783 dated

23 February 2011.
The authority for variation to contract was not signed by Mr Foley and describes the variation work as ‘shelving over allowance’.
The amount of the variation is $744.00.
It is submitted on behalf of SBH that Mr Foley met with Mr Glen Harney from Good Look Garage Doors and discussed extra shelving for the shelving in bedrooms 1 and 2. This is supported by an undated letter to that effect in attachment ‘SB-49’ to Exhibit 11 from Good Look Garage Doors.
No other evidence was provided by Mr Bagnall to support the calculation of the variation and the documents reflecting an addition to the shelving provide little assistance.
Mr Kelly, Counsel on behalf of the Foleys, submits that the description in the variation document is meaningless and thus the variation does not comply with clause 12.4(a) of the contract or with s 80(2)(b) of the DBC Act. Further, it is submitted that:
(a)the tribunal should not rely upon the letter as it is hearsay;
(b)there was no evidence adduced from Mr Foley regarding the conversation about extra shelving;
(c)it is not possible to calculate the amount claimed from any documentation or from the evidence provided by Mr Bagnall; and
(d)SBH has failed to prove the variation claim.
I accept that the evidence in relation to this variation was confusing from both witnesses. I accept the evidence of Mr Kelly that SBH has failed to provide evidence supporting the claim for $744.00 in the variation document although I accept that Mr Foley requested the variation to the works.
This variation forms part of SBH’s counterclaim and will be dealt with separately as it does not form part of the Foleys’ claim for restitution.
Variation V032
Variation V032 is dated 1 February 2011 and was converted to invoice 785 dated

23 February 2011.
The authority for variation to contract document was not signed by Mr Foley and describes the work as ‘electrical installation over allowance’.
The cost of the variation is $1490.28.
The first criticism of the variation by the Foleys is that the description of the variation is not meaningful and that this contravenes clause 12.4(a) of the contract and s 80(2)(b) of the DBC Act.
Further, Mr Kelly, on behalf of the Foleys, submits that the Foleys accept that there is an amount of $280.50 owing for the following works:
(a)Lighting to jetty - $90.00 excl GST;
(b)2 x exhaust fans - $100.00 excl GST; and
(c)quartz reserve time clock to gate light - $65.00 excl GST.
Mr Bagnall supplied support for the extra work from D&S Pendrick Electrical Pty Ltd as outlined in attachment ‘SB-50’ to Exhibit 11. This document included both extras to the quotation for the electrical work and also credits for items not supplied.
I accept the documentary evidence in preference to that of Mr Foley on the basis that Mr Foley was unsure whether the works were extra or whether the works had been included.
This variation forms part of SBH’s counterclaim regarding variations which are not compliant with s 80 of the DBC Act and thus the quantum will be dealt with separately as part of a consideration of the counterclaim.
Variation V033
Variation V033 is dated 29 March 2011 and was converted to invoice 789 dated

29 March 2011.
The authority for variation to contract document describes the variation as a credit for an electric striker not installed for the sum of $213.52.
The authority for variation to contract document is not signed by the Foleys.
There is no dispute that the Foleys are entitled to a credit for the work not carried out. The only issue in dispute is the amount of the credit.
The Foleys submit that the credit amount should be $378.10 as agreed by the joint experts report (Exhibit 1) in the proceedings.
I accept the Foleys’ submission and agree that the credit amount should be $378.10.
The amount assessed by the joint expert report is accepted by SBH in its submissions dated 12 January 2017.[21]
[21]SBH admits the amount of $378.10 less GST.
This variation forms part of SBH’s counterclaim is dealt with in the category of P and other items as part of the counterclaim.
Variation V034
Variation V034 is dated 29 March 2011 and was converted to invoice 790 dated

29 March 2011.
The authority for variation to contract document describes the variation work as follows:
Extra plumbing PC items supplied above our allowance as per Tradelink and Sandy Strait invoices:
Credit 2 x shower heads (returned)
Debit 2 x shower heads
Debit 1 x grab rail
Debit 1 x set of spa taps
The authority for variation to contract document is not signed by the Foleys and relates to an amount of $253.49.
This variation forms part of SBH’s counterclaim regarding variations which are not compliant with s 80 of the DBC Act and will be dealt with separately.
Variation V035
Variation V035 is dated 29 March 2011 and was converted to invoice 791 dated

29 March 2011.
The variation work is described as ‘credit on light fittings and exhaust fan’ in the sum of $490.53.
The Foleys accept the amount of the credit.
This variation forms part of SBH’s counterclaim and thus the credit amount will be dealt with separately as part of the counterclaim.
Variation V036
Variation V036 is dated 29 March 2011 and was converted to invoice 793 dated

29 March 2011.
The authority for variation to contract document describes the variation as ‘credit security screens on viewing deck not required’.
This item has been referred to in the assessment of V006. The credit for $366.20 is accepted by the Foleys.
This variation is no longer in dispute and a credit of $366.20 is allowed.
SBH has conceded a credit in favour of the Foleys as part of its counterclaim.
Provisional Sum and Prime Cost Item Adjustments
The second part of the Foleys’ restitution claim relates to adjustments for provisional sums and prime cost items which were included in the contract.
Appendix Part A to the contract sets out the allowances for prime cost items (‘PC items’) agreed between the parties:[22]
[22]Exhibit 4.

Front Door Hume XS 2020 x 1200 with clear glass

1 item

$490.00

$490.00

Front Door Furniture

1 item

$463.00

$463.00

Light Fittings

1 House lot

$2,402.00

$2,402.00

Wall & Floor tiles (supply only) (Wet areas only)

1 m2

$35.00

$35.00

Wall tiles Ensuite Upper Floor (supply only)

1 m2

$45.00

$45.00

Appendix Part B to the contract sets out the allowances for provisional sums (‘PS items’) agreed between the parties:[23]
[23]Exhibit 4.

Site Cut & Fill

$924.00

Air-conditioning

$14,610.00

Bosch Solution Alarm System with 3 Bosch Professional Detectors

$988.90

Home network with Cat 5 points to Lounge, Study, Rumpus, Bedroom 1 & Bedroom 2

$858.00

Vacuum system

$2,932.08

CCTV Equipment

$5,478.00

Alphone JF Video Intercom without memory

$1,591.70

Surround Sound Setup

$528.00

The Foleys claim there are 16 adjustments to the contract price as a result of changes in the PC and PS items. The items are set out in Part 1 of Schedule B to Mr Bagnall’s statement.[24]
[24]Exhibit 11.
Many of the items have been agreed between the parties with the Foleys submitting that the following items remain in dispute as set out below:[25]
[25]Foleys’ submissions dated 3 February 2017 at page 79; SBH’s submissions dated 12 January 2017, paragraph 184.

Description

Agreement on Item

Amount

Credit for electronic striker plate not being installed (Item 2)

Agreed

Disagreed

Site cut and fill (Item 5)

Disagreed

Disagreed

Concreting to front and rear patios and concrete slab outside laundry (Item 14)

Disagreed

Disagreed

Credit for reduced number of electrical points and light points (Item 14b)

Disagreed

Disagreed

Change from Mowbray to Hendra clay bricks (Item 15)

Disagreed

Disagreed

A concession is made in SBH’s submissions dated 12 January 2017 in relation to the change in the installation of the door furniture. The joint expert report,[26] agreed by the parties, addresses this item and SBH accepts that the issue is no longer in dispute. The amount of $378.10 is accepted by both parties as the allowance for the change in scope of work.
[26]Exhibit 1.
In relation to item 5 regarding the cut and fill, in their submissions dated

3 February 2017, the Foleys accept that there should be an adjustment of $20.96 for this item.
There remains therefore only three outstanding items to be considered.
The items have been considered under the premise that they relate to PC or PS items. I am unsure why the parties and the experts have approached the items under this heading as none of the items are listed as PC or PS items in the contract.
The items are claimed by the Foleys as part of their restitution claim and are more appropriately dealt with as variations to the scope of works.
PC - Item 14
In relation to Item 14, the Foleys seek an adjustment to the contract price of $5,049.58 for the concrete work including a slab outside the laundry which it is alleged should have been carried out by SBH under the contract.
It is the position of SBH that no adjustment to the contract price should be allowed as the scope of works only included a concrete pad for the water tank and path to the clothesline.[27]
[27]Evidence of Mr Steve Bagnall Exhibit 11, page 42.
In cross-examination, Mr Bagnall explained that the plans and Specifications did not allow for the concrete slab works claimed. His evidence was that the dotted lines on the plans depicted the roof line and were not relevant to any slab or concrete structure. Accordingly, Mr Bagnall confirmed that neither his quotation nor the plans allowed for the item claimed by the Foleys.
The quotation provided by SBH (Exhibit 3) specifically states:
Driveway/Porches – No allowance has been made for the driveway
Paths & tank pad Allowance has been made for a plain concrete pad for the water tank and path to the clothesline.
Curiously, the Foleys accept that the plans do not indicate a concrete slab outside the laundry and yet the claim is made on the basis that there is not an express exclusion of this item from the scope of works.
In support of this contention, the Foleys rely upon the exclusion in the Specifications of the driveway from the scope of works.
Mr Foley gave evidence that no agreement was reached to exclude this item from the contract works and that he had the works carried out in January 2011 at the same time the driveway was installed as the works had not been completed by SBH.
I accept the evidence of Mr Bagnall that this item was not included in his quotation and that it was not an item included in the scope of works.
PC Item 14b
In relation to Item 14b, the Foleys seek a credit of $1,791.90 for electrical work relying upon the evidence of their quantity surveyor who made an assessment of the number of electrical points and lighting points provided under the contract compared with the number installed.
It was submitted on behalf of SBH that this issue is dealt with as part of Variation V032. An amount of $280.30 has been admitted by the Foleys and the remainder of variation V032 considered in SBH’s counterclaim.
I do not accept that this issue is the same as the items addressed in V032.
I accept the evidence of Mr Browning that the Foleys are entitled to a credit for the power points which were not installed.
The amount of $1,791.90 is allowed for an adjustment to the PC item in the contract as fewer power points were installed.
PC Item 15
In relation to item 15, the Foleys seek a credit in the sum of $2,912.09 for the change in the type of bricks used in the construction. The contract specifies Mowbray bricks and by agreement the bricks were changed to Hendra clay bricks.
SBH concedes that the credit for the change in type of brick should be $1,042.72.
The fact that the type of brick was changed is not an issue between the parties.
Mr Bagnall gave evidence that the change in scope of works resulted in the cost of the works being $49.00 per thousand bricks less that the cost of laying the Mowbray bricks.

The Foleys submit that the cost of the Hendra bricks was in fact $122.55 per thousand bricks cheaper than the Mowbray bricks. The Foleys relied upon the evidence of their quantity surveyor, Mr Thompson, in assessing the credit due to the Foleys.
Mr Bagnall provided evidence of the number of bricks delivered to site, being 21,280 bricks. No evidence was provided by either party regarding the actual cost of each type of brick.
Given the failure of the Foleys to provide any support for the rate relied upon in their calculations, I accept the evidence of SBH and allow the sum of $1,042.72.
This item is dealt with in the SBH counterclaim and a credit is accepted in favour of the Foleys in the sum of $1,042.72.
Summary of Compliant and Non-compliant variations
The Foleys claim that they are entitled to restitution for variation claims which it alleges are not compliant with the general conditions of contract or sections 80 and 82 of the DBC Act.
The Foleys submit that Variations V001, V002, V005, V006, V007, V008, V009, V010, V013, V021, V021, V023, V024 and V027 are not compliant with s 82 of the DBC because they were not signed by both Mr Foley and Mrs Foley but rather only by Mr Foley. I do not accept this to be a factor on which non-compliance can be relied given the likelihood that Mr Foley had authority to sign on behalf of both parties to the contract.
In relation to all the variations for which restitution is claimed, the Foleys allege the following non-compliance:
(a)there is no written request by either the applicant or the respondent in breach of clause 12.1 of the contract;
(b)the variation document did not state any change in the Contract Price as a result of the variation, or how that change was worked out in breach of clause 12.4(d) of the contract and s 80(2)(d) of the DBC Act;
(c)the variation document did not state when any adjustment to the Contract Price is to be claimed or allowed by the Contractor in breach of clause 12.4(e) of the contract and s 81(1), (2), (4) and (5) of the DBC Act;
(d)with respect to variations requested by the Contractor no reason for the variation was stated in the variation document as required by s 80(2)(c) of the DBC Act; and
(e)a number of the variations do not describe the variation in any meaningful way in breach of clause 12.4(a) of the contract and s 80(2) of the DBC Act.
The Foleys submit that SBH is statutorily prohibited from recovering any amount for any variations, by reason of the prohibitions contained in sections 84(2) and (3) of the DBC Act.
Sections 84(2) and (3) of the DBC Act provide:
(2) If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation –
(a) only is the building contractor has complied with sections 79, 80, 82 and 83; or
(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
(3) If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation –
(a) only if -
(i) the building contractor has complied with sections 79, 80, 82 and 83; and
(ii) the ground of unforeseen circumstances applies; or
(b) only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
The statute is clear that the builder is only able to recover an amount for a variation in circumstances where there has been compliance with the requirements for a proper variation or on a successful application to the tribunal by the building contractor, taking into account the matters to be determined by the tribunal on an application as set out in s 84(4) of the DBC Act. The application then triggers an assessment to be made by the tribunal pursuant to section 84(6)-(7) of the DBC Act.
The Foleys submit that all rights a builder may have in relation to the payment for variations are abrogated by s 84(2)(a) in the event of non-compliance with sections 79 to 83 and then a statutory right to payment only arises upon an application pursuant to s 82(2)(b).
The legislative intention is clear:
(a)a building contractor must comply with the requirements of sections 79–83 of the DBC Act;
(b)if the building contractor does comply with sections 79–83, there is an automatic entitlement to recovery of an amount for the variation;[28]
(c)if the building contractor fails to comply with sections 79–83, the building contractor may only recover an amount for the variation through an application to the tribunal and upon approval of the tribunal;
(d)once an application is made, the tribunal must be satisfied with the matters in s 84(4)(a)-(b) before approval for recovery of an amount for the variation; and
(e)if the building contractor is entitled to recover an amount for the variation (either by compliance or upon approval by the tribunal), the amount is valued (for a fixed price contract) in accordance with the valuation process set out in s 84(6)(a) or (b) of the DBC Act.
[28]The valuation of that entitlement is to be determined in accordance with s 84(6).
McGill DCJ in Thompson Residential Pty Ltd v Tran[29] formed the view that the Court of Appeal in Allaro Homes Cairns Pty Ltd v O’Reilly[30] rejected the idea that an applicant could have a restitutionary remedy outside s 84(4), a remedy which, had it existed, the applicant ought to have been able to pursue before the tribunal. His Honour further noted that it is surprising that the Court of Appeal did not confirm that a restitutionary remedy was available. His Honour concluded that s 84(2):
excludes any restitutionary remedy as well as any contractual remedy, and, in circumstances where it is accepted that the section applied and ss79-81 have not been complied with, the plaintiff may not recover in this court any amount in restitution for any of these variations.
[29][2014] QDC 156.
[30][2012] QCA 286, [2] (Holmes JA).
His Honour approved the decision of Andrews DCJ in CMF Projects P/L v Riggall & Anor[31] referring to the following passage from Andrews DCJ:
[23] In my opinion, s84(2) excludes a builder’s capacity to recover an amount on account of a variation on any basis other than by satisfying one of the subparagraphs in s84(2)(a) or s84(2)(b). This is for two reasons. The first is that that is the natural meaning of the words used in s84(2). The second is that there would be little point in the legislature creating a specific, and quite restricted right at s84(4) to, in effect, a restitutionary remedy in certain circumstances if the legislature did not intend otherwise to exclude any right to recover, including in restitution… Section 84(4) is an instance of the legislature creating a specific and restricted right to a restitutionary remedy for builders who failed to obtain properly documented variation agreements, a remedy available only from the tribunal and to the exclusion of other rights of recovery.
[31][2014] QDC 90. On appeal, this point was not argued.
I have formed the view that on a proper interpretation of s 84:
(a)section 84(2)(a) abrogates any entitlement to payment for non-compliant variations. The use of the word ‘only’ in s 84(2)(a) limits the circumstances initially when recovery for payment may be enlivened. Therefore, entitlement only arises upon compliance with sections 79 to 83;
(b)section 84(2)(b) ameliorates the restriction in s 84(2)(a) by allowing the building contractor to seek the approval of the tribunal for payment for a non-compliant variation. Such an application then triggers a consideration of the matters set out in s 84(4); and
(c)
a valuation of a variation is to be carried out under s84(6) once an entitlement is established. That entitlement only arises under s 84(2)(a) or

s 84(2)(b) in conjunction with s 84(4).
The prohibition through the word ‘only’ in s 84(2)(a) limits entitlement to payment for non-compliant variations until there is an approval by the tribunal. Section 84(2)(a) ‘sterilises’ a claim for payment for variation work which does not comply with Part 7 of the DBC Act whilst s 84(2)(b) provides a conduit for a claim for payment subject to the considerations in s 84(4). Without s 84(2)(b) in conjunction with s 84(4), a claim for payment for variation work which was non-compliant with the Act would be defeated by s 84(2)(a).
Those variations alleged to be non-compliant variations on the basis of non-compliance with the general conditions of contract or the DBC Act are Variations V001, V002, V0O5, V006, V007, V008, V009, V010, V020 and V036.[32] Of those variations, I have formed the view above that Variations V08 and V010 do not relate to variation work and thus need not be considered in this category. In addition, Variation V020 has been conceded by the Foleys as valid as the variation was requested by Mr Foley and Variation V036 is the subject of a credit which has been agreed.
[32]In the Applicants’ submissions, reference is also made to Variations V021, V023, V025b, V029, V032 and V034. These form part of the counterclaim by SBH and thus will be dealt with as part of that application.
Thus, for the purpose of assessing whether the Foleys are entitled to restitution for the alleged non-compliant variations this assessment relates to Variations V001, V002, V005, V006, V007 and V009.
All of these variation documents were signed by Mr Foley. I have dealt with these issues in relation to each individually above and formed the view that all the items should be allowed.
(a)V001 – signed and description sufficient;
(b)V002 – Foleys were aware of change per Tradelink and description sufficient;
(c)V005 – requested by Foleys and describes details of work;
(d)V006 – signed by Foleys and describes details of work;
(e)V007 – signed by Foleys and describes details of work; and
(f)V009 – signed by Foleys and describes details of work.
Accordingly, I have formed the view that each of the variation claims above should be allowed. It is not necessary to consider the matter further, nor is it necessary to consider the relevant matters which would have to be considered in the event of an application being made by SBH pursuant to s 84(4) of the DBC Act.
As part of the Foleys’ claim in restitution, I have not considered the variations which are the subject of the application brought by SBH as part of its counterclaim pursuant to s 84 of the DBC Act. Those variations will be dealt with in the SBH counterclaim.[33]
[33]Variations V021, V023, V025b, V029, V032 and V034.
Defective and Incomplete Work
Exhibit 1 is a Scott Schedule issued on 17 October 2016 compiled by the expert witnesses as a result of a conclave as directed by the Tribunal.
Mr Garry Carpenter, a building consultant, and Mr Gary Thompson, a quantity surveyor, were engaged by the Foleys and gave both documentary and oral evidence. Mr John Browning, a builder, was engaged by SBH.
The Scott Schedule is designed to outline all the defects and incomplete work the subject of the Foleys’ damages claim and sets out all items on which the experts agree and disagree in relation to both liability and quantum. It is noted that the agreed amounts for each item are exclusive of both GST and any builder’s margin.
For the most part, the Foleys agree with the items in the Scott Schedule on which the experts agree. SBH, on the other hand, has taken issue with a number of items although they have been agreed by the experts. Those items will be addressed below.
The Foleys claim in relation to the defects is based on SBH’s breach of its obligations under clause 10 of the contract and/or the implied terms referred to above. The Foleys also submit that the defective work is evidence of a breach of sections 44 and 45 of the DBC Act.
I shall deal with each item of defective and incomplete work, using the item numbers contained in the Scott Schedule Exhibit 1.
Item 1 – Failure to fix electronic striker plate
SBH has conceded that the experts have agreed to this item and concedes that the Foleys’ claim should be allowed, subject to an adjustment on account of the applicable builder’s margin and GST.
SBH submits that any amount derived by Mr Thompson would be reduced by 10% given that a builder’s margin has been allowed in Mr Thompson’s assessments. Further, SBH submits that if a builder is required the amounts derived by Mr Browning should be increased by 10% to allow for the builder’s margin and further increased 10% for GST.
I accept the evidence of the experts in relation to this item and allow the sum of $378.10 as agreed between the experts.
Item 2 – Breach of termite barrier through the floor waste
SBH has conceded that the experts agree that the defect does not exist.
The experts agree that in order to determine whether there was a defect extensive destructive investigation would be required.
The Foleys do not pursue this claim and thus no adjustment to the contract price is claimed.
Item 3 – Insufficient Fall to bedroom 2 ensuite shower recess
The experts agree that there was an issue with the flow of water from the shower recess and a problem with the fall to the ensuite floor. This was supported by photographs 101,102, 103, 104, and 106 attached to Mr Carpenter’s report dated

27 November 2015.[34]
[34]Exhibit 5.
Mr Browning recommended the installation of a 10mm x 10mm aluminium bund to the shower entry in line with the fixed panel shower screen. The cost of rectification would be in the vicinity of $24.00. SBH submits that this solution is the most cost-effective and less likely to cause further problems.
Mr Carpenter recommended the removal of approximately 3m² of the floor tiles outside the shower and bedroom and replacing them in order to achieve a fall to the waste in the shower.[35]
[35]See sketch by Mr Carpenter, Exhibit 23.
Mr Browning conceded in his comments in the joint report that if it is the case that a floor waste is needed then he accepted the evidence of Mr Carpenter that the amount of $976.52 excl GST would be the cost of the installation of a floor waste.
I accept the evidence of Mr Carpenter as set out in Exhibit 1 that the floor tiling has insufficient fall to the shower floor waste as installed. In this regard, the Building Code of Australia requires that the floor be constructed so that water flows to the waste point without ponding.[36]
[36]See section 3.8.1.10 Wet Area Floors – Exhibit 36.
The amount of $976.52 is allowed for this claim.
Item 4.1 – Stainless steel wires not fitted with grommets at posts
The experts agree on the method of rectification of this defect.
The rectification work results from missing grommets to the stainless steel balustrade wires at the galvanised corner posts.
SBH accepted that grommets were required but says that it was denied access to install the grommets.
Mr Browning estimates that the cost of removal of the wires, refit of the grommets and reinstatement of the wires, including re-tensioning of the wires, is about $335.00.
Mr Thompson estimates that the cost of the rectification would be $855.10.
I accept the evidence of Mr Thompson based on his experience as a quantity surveyor in assessing this type of work.
The amount of $855.10 is allowed for this defect.
Item 4.2 –Fixing screws corroded
This defect is alleged to have arisen as a result of stainless steel handrail brackets being fixed to steel posts with an assortment of screws.
Both Mr Carpenter and Mr Browning agree that the rusting screws need to be replaced.
Mr Carpenter estimates the cost of this rectification work is $230.20. Mr Browning estimates the cost to be $55.75.
For the sake of expediency, SBH has agreed to the amount of $230.20 to rectify this defect.
Item 4.3 – Corrosion on handrail support posts
The Foleys allege through Mr Carpenter that the handrail support posts are rusting and need to be replaced.
Mr Browning formed the view that the handrail support posts are not in fact rusting but there is evidence of tea staining. Accordingly, Mr Browning is of the view that no rectification work is required.
In the joint report, Mr Carpenter asserts that the handrails should be replaced and at the same time the waterproofing membrane should be rectified. Mr Carpenter states that the membrane should be replaced rather than patched.
Mr Carpenter’s evidence that the handrails are rusting is supported by the photograph at page 6 of Exhibit 1 in relation to this item. It was Mr Carpenter’s evidence that all the posts exhibit this rusting.
Mr Thompson has estimated the cost of rectifying the posts and replacing the waterproof membrane at $20,500.00. No breakdown of this amount was provided.
No evidence was provided by Mr Browning regarding the estimate provided as Mr Browning had formed the view that there was no rust at all. He relied upon his involvement with other buildings exhibiting the same condition and gave evidence that all that was required is some cleaning.
Mr Carpenter conceded that he had not tested the posts for corrosion nor had he tried to remove the surface stain with a brush. He used a fingernail to try and remove the rust stain. Mr Carpenter conceded that the staining may be surface rust. Further, in cross-examination, Mr Foley conceded that the method of installation of the membrane may have caused or contributed to any rust evident on the steel posts.
The experts agree that the posts as installed do not exhibit any structural defect and there is no evidence that the posts are failing.
I do not accept that there is sufficient evidence to support the Foleys contention that all the steel posts need to be removed. Nor do I accept that the rust as shown on the photograph equates to corrosion of the steel posts.
The amount claimed is not allowed.
Item 4.4 - Chain Anchor points show corrosion and have failed
The experts agree that there is a defect in the chain anchor points and that rectification is required. The experts agree on the method of rectification.
The experts do not agree on the cost of rectification. Mr Thompson estimates the cost of rectification is $2,091.80. Mr Browing estimates the rectification cost to be $131.90.
Given Mr Thompson’s evidence that his estimate was too high, the Foleys conceded that the claim should be $131.90.
The amount of $131.90 is allowed for this defect.
Item 4.5 – Fixing of stainless steel posts and membrane installation
This item relates to the fixing of the stainless posts to the balcony area. The defect is alleged to have resulted from the fixing of screws without an appropriate sealant during installation.
Mr Carpenter comments in Exhibit 1:
Carefully remove the fixing screws to the bottom post caps to all posts to the membrane areas.
Lift the bottom post caps up and seal the existing screw holes and around the base of the post caps.
Slide the post caps back down and refit new fixing screws.
Mr Carpenter advised that membrane rectification should not consist of patching and commented as follows:
I am advised that the membrane on the decks was initially installed prior to the stainless steel posts and that the screw fixings through the post baseplates penetrate through the membrane. I am advised that membrane was subsequently added over the post brackets as a temporary measure to exclude water from penetrating the deck construction. This has caused conditions where the bottom of the post cannot drain water and the possibility that water trapped in the post can deteriorate the base of the post and leak into the deck construction through the unsealed fixing screw holes.
Mr Carpenter carried out extensive investigation in relation to this defect as shown in photograph 114.
Mr Browning gave evidence that the contract and the quotation excludes external balcony membrane works and that the Foleys engaged a membrane contractor for installation of the membrane. The membrane was installed prior to the installation of the balustrade posts. The base plates of the posts and the fixing screws were sealed with a sealant during installation. The bottom post caps were then installed over the base plates to the posts. The membrane contractor applied a further sealing coat of membrane over the bottoms caps stopping drainage from the area and inside the bottom post caps which includes drainage from the balustrade posts. Mr Browning formed the view that the membrane was starting to break up in areas to both first floor balconies and he did not observe any evidence of leaks coming from the balustrade post fixing points.

There is no dispute that the Foleys have adhered to the procedure in the general conditions of contract in relation to the termination of the contract. The clause 20.1 notice was served almost 3.5 years after SBH submits it reached Practical Completion and the termination notice 4.5 years since the alleged Date of Practical Completion.
Despite the submissions of SBH to the contrary, I am satisfied on the evidence that the Foleys did not deny reasonable access to SBH to carry out any rectification work at any time. The only issue with access was when the Foleys were absent from the premises. I accept that, on reasonable notice, the Foleys were prepared to provide access to SBH.
I do not consider that the Foleys repudiated the contract by refusing to pay the whole amount claimed for the Practical Completion Stage in December 2010 and nor do I accept that the Foleys were in default in limiting the builder’s access for particular works.
Accordingly, SBH issued the Practical Completion Stage payment claim before it was due. SBH continued to act upon its erroneous interpretation of the contract that the Practical Completion stage had been reached and payment was due.
SBH submits that the termination by the Foleys was a repudiation of the contract in that the grounds on which the termination was based were not valid.
SBH relies upon a number of grounds:
(a)the items in the Form 16 - Non-compliance Notice had been rectified;
(b)the reliance upon the failure of SBH to rectify the membrane works was not valid given the works had been carried out by others; and
(c)the Foleys had denied SBH access to complete the works and to remedy the defects.
I accept the submission of SBH that neither the defects nor complaints regarding the lift or the waterproofing were the responsibility of SBH and the Foleys could not rely upon these two grounds. Putting those two matters to one side, the Foleys still had legitimate grounds on which to terminate the contract.
I am satisfied that the facts sets out above support the conclusion that the contract was validly terminated by the Foleys and the reasons provided by them were substantiated.[69]
[69]Cardona v Brown (2011) 27 BCL 194.
Claim for Restitution and/or Damages
The Foleys have divided their claim into two parts:
(a)a claim in restitution; and
(b)a claim for damages for breach of contract or negligence in respect of defective and incomplete work.
From the outset, it is obvious that the Foleys cannot claim both restitution for the payment of the Practical Completion Stage and the cost of completing the incomplete works. To do so, is what can only be termed as ‘doubling up’.
The Foleys are either entitled to repayment of the payment for the Practical Completion Stage on the basis that SBH was not entitled to make the claim for Practical Completion and/or SBH had not carried out the works the subject of the progress claim or claim damages for breach of contract which would take into account the costs incurred by the Foleys in completing the contract works.
I have determined that the contract was properly terminated by the Foleys and thus the Foleys are entitled to damages on the usual basis. That is, the Foleys are entitled to claim the difference between the cost incurred to carry out the works the subject of the contract (including variations) less what it would have cost the Foleys had the works been carried out under the contract.
Pursuant to clause 20.5 of the general conditions of contract, the contractor is entitled to a reasonable price if the contract is ended under clause 20. The contractor is entitled to a reasonable amount for the value of the works carried out under the contract to the date the contract is ended.
In carrying out this exercise, I have taken into account an assessment of the variations for which SBH is entitled to payment (except for those the subject of the SBH counterclaim) and an assessment of an adjustment to the contract works in relation to PC and PS items.
The amounts allowed are set out in the summary below.
Respondent’s Counterclaim
The counterclaim by SBH is pleaded as monies owing under the contract or alternatively in quantum meruit.
To the extent that the counterclaim relates to unpaid variations, the claim is made pursuant to s 84 of the DBC Act.
The revised counterclaim by SBH in the sum of $4,258.03 relates to the following claims:
(a)Payment for variations not signed by the Foleys and not paid by the Foleys. This claim relates to Variations V025b, V026b, V029, V032, V0034 and V035. This category amounts to $3,079.64. This claim is made pursuant to an application under s 84 of the DBC Act.
(b)Payment for variations which have been signed by the Foleys but not paid in the sum of $2,206.41. This category applies to variations V021, V023, V024 and V027.
(c)Payment for errors in the stage payments processed by SBH under the original contract. The amounts claimed relate to an unpaid amount under the Practical Completion Stage in the sum of $710.00 and an amount of $50 unpaid for the Fixing Stage.
(d)Credits to the Foleys in the sum of $1,788.02 for three miscellaneous items (two items have been abandoned):
(i)      Electric door striker (dealt with in Item 1 of the Defects list) in the sum of ($378.10);
(ii)      PC Item front door – abandoned;
(iii)     Extra site cut and sill – abandoned;
(iv)     Security screens on viewing deck not required (V036) in the sum of ($367.20); and
(v)      Change bricks from ‘Mowbray’ to ‘Hendra’ in the sum of ($1,042.72).
The starting point for a consideration of SBH’s entitlement to payment of the first two categories is whether there is an entitlement under the DBC Act.
Statutory Framework of s 84 of the DBC Act
I have already set out in full the relevant provisions of the DBC Act regulating a building contractor’s entitlement to payment for variations.
Variations are regulated by Part 7 of the DBC Act.
The following steps are to be determined in addressing whether the building contractor is able to recover payment for variation work:
(a)Is the work a variation to the agreed scope of works?
(b)Whether the variation work was ordered by the building owner or the building contractor, is there compliance with the requirements of sections 79 to 83 of the DBC Act, by reference to the following:
(i)      Is the variation in writing? – s79;
(ii) Is there compliance with the formal requirements for a variation document? – s 80(2) and 81;
(iii) Is the variation document signed by the building contractor and have steps been taken to ensure the variation document is signed by the building owner? – s 82
(iv) Has a signed copy of the variation document been provided to the building owner? – s 83
(c)If the building contractor has not complied with sections 79, 80, 82 and 83 with respect to variations sought by the building owner, has the building contractor made an application pursuant to s 84(2)(b) for recovery of the variation amount?
(d)In circumstances where the building contractor has sought the variation, in addition to compliance with sections 79, 80, 82 and 83 were there unforeseen circumstances relevant to the variation work?
(e)If the building contractor has not complied with sections 79, 80, 82 and 83 with respect to variations sought by the building contractor, has the building contractor made an application pursuant to s 84(3)(b) for recovery of the variation amount?
(f)In the event of non-compliance with sections 79, 80, 82 and 83:
(i)      Are there exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation?; or
(ii)      Would the building contractor suffer unreasonable hardship if recovery was only possible if sections 79, 80, 82 and 83 were complied with?
These factors will be considered in relation to each variation claimed by SBH.
Variations not signed nor paid
In this category of variations, SBH says that the following variation claims are owing even though they have not been signed.
There has been obvious non-compliance with sections 79 to 83 of the DBC Act. Accordingly, whether SBH is entitled to recover for the amount of the variation will require an assessment of:
(a)whether the work is variation work;
(b)whether SBH is entitled to recovery pursuant to s 84(2) or s 82(3) in conjunction with s 84(4).
For the purpose of addressing the requirements of s 84(4), I will deal with that matter in relation to all in this category of variations as opposed to each variation individually.
VO25b
I have formed the view under an assessment of this variation previously that the work the subject of V025b is not variation work.
Accordingly, the claim for V025b in the sum of $171.60 is not allowed.
VO26b
Mr Foley concedes that the works are a variation to the scope of works and that he did request a cabinet to house his security hardware directly with the cabinet maker.
The main dispute regarding the works has been dealt with in Item 18 of the Foleys claim for defective works.
Accordingly, the Foleys must concede that payment is due for the variation, although not signed, and that SBH is entitled to the sum of $1,082.40.
V029
Variation V029 has been dealt with previously and a determination made that there was little substantiation for the valuation of the work although no alternative valuation is in evidence.
There was conflicting evidence as to whether Mr Foley sought the variation to the shelving. Mr Foley was unhelpful in his recollection as to whether he had ordered extra items including shelving for the bedrooms.
SBH provided a notation from the Good Look Garage Doors which points to a conversation between the shelving supplier and Mr Foley regarding extra shelving.
I accept that the works are a variation to the contract requested by Mr Foley.
The Foleys dispute that payment is owing because of non-compliance with sections 79 to 82 of the DBC Act.
It is obvious there has been no compliance with the requirements of s 80, 82 and 83 of the DBC Act.
The issue to be determined is whether SBH has an entitlement to recover pursuant to s 84(2)(b) of the DBC Act.
Subject to a consideration in relation to s 84(4) of the DBC Act, the amount of $744.00 will be accepted as the amount allowed for the variation work sought by Mr Foley.
V032
The claim for $1,490.28 for extra electrical installation work has been set out above.
The evidence indicates that Mr Foley had discussions with the electrician on site regarding extra electrical work. Mr Foley’s main concern was whether he would receive a credit for the power points and lights which were not installed.
Mr Bagnall’s evidence is that the credits have been taken into account in his assessment of the variation.
There is no dispute that the variation was not signed by Mr Foley. The main criticism is that the variation document does not fully describe the variation work and identify the change to the contract sum in contravention of s 80(2)(b) of the DBC Act.
Mr Bagnall accepted in cross-examination that it was not possible to identify the work to which the variation document relates.
Reliance was placed by SBH on the tax invoice from the electrical contractor D & S Pendrick Electrical Pty Ltd dated 15 January 2011
Mr Foley addressed each of the items in the attachments to Invoice 1007 from which it is alleged by SBH there is substantiation of the extra work. It included the following works:
(a)Wall oven and hotplates wiring to downstairs - $200.00;
(b)Hayman’s invoices for extra lights - $734.22;
(c)Light to jetty - $90.00;
(d)Provision for lights in eleven fans - $220.00;
(e)Future light wiring to the garage - $40.00;
(f)2 x exhaust fans - $100.00;
(g)3 x 2-way switches - $150.00;
(h)3 x ceiling fans - $210.00;
(i)circulating pump to the kitchen - $80.00;
(j)door switch to pantry - $90.00;
(k)quartz reserve time clock to gate light - $65.00; and
(l)credits for one exhaust fan/light, ten light points, five power points and two weatherproof power points in the sum of $850.00.
The Foleys concede payment for items (c), (f) and (k) in the sum of $285.00.
On the evidence before the tribunal, I do not accept that the works contained in items (a) and (d) were not included in the original scope of works.
I have formed the view that Mr Foley was unsure whether the remaining works formed part of the contract and at times was unsure whether the works had been installed as alleged.
Given Mr Foley’s confusion regarding many of the items, I accept the documentary evidence provided by SBH and its subcontractor.
Accordingly, I accept that the works claimed in items (b), (c), (d), (f), (g), (h), (i), (j) and (k) amount to a variation to the scope of works.
Subject to an assessment whether SBH is entitled to recovery pursuant to sections 84(3) and (4) below, I accept the evidence of SBH that the electrical works itemized were variation works and that the sum of $889.22 is the cost of that variation work.
V034
Variation V034 relates to extra plumbing work which included a credit for two shower heads and payment for other items including two showerheads, a grab rail and a set of spa taps in accordance with invoices from Tradelink and Sandy Straits relied upon by SBH.
The Specifications allow for the supply of two showerheads. There is no evidence that there has been a change in the scope of works.
Further the specifications provide for ‘hand shower rail’ and ‘sundeck to have hot and cold taps for spa’.
I have formed the view that the items claimed are not variations to the scope of works and therefore no payment is allowed.
V035
An amount of $490.53 as a credit to the Foleys for light fittings and an exhaust fan has been agreed by the Foleys.
Variations signed but not paid
In this category of variations, SBH claims that the variations have been signed by the Foleys but have not been paid.
V021
I have accepted that the work the subject of variation V021 is variation work which has been accepted and signed by the Foleys.
Accordingly, SBH is entitled to an amount of $71.73 for the supply of a smart tile to the upper ensuite.
V023
I have accepted that the work the subject of Variation V023 in relation to a change in scope of the glass splash back and an extra power point are items which were a change to the scope of work. The valuation of the variation work is accepted to be $245.00.
The objection from the Foleys relates to non-compliance with s 80(2)(b) of the DBC Act in that the variation document is lacking in detail in the description of the variation work.
I accept the Foleys’ submission that the variation document is not clear.
Accordingly, this variation will be considered by reference to s 84(4) below as to whether recovery should be allowed by the tribunal.
V024
Variation V024 in the sum of $189.68 has been accepted by the Foleys in relation to both issues as to whether the works are a variation and whether a proper valuation of the variation has been claimed.
V027
Variation V027 was accepted by Mr Foley as a variation to the scope of works. Mr Foley also conceded that the amount of $1,700.00 claimed should be allowed.
Recovery for non-compliant variations under s 84(4) of the DBC Act
A consideration of entitlement to recovery pursuant to s 84(4) is required for the variations above which I have determined to be variation work or which have not been conceded by the Foleys albeit not compliant with the requirements of Part 7 of the DBC Act.
The Foleys concede that SBH is entitled to payment for variations V026(b) and V035 which involves a credit to the Foleys.
The Foleys submit that SBH has no entitlement to recover any amount for non-compliant variations pursuant to an application under s 84(4) on the basis that there are no exceptional circumstances warranting the recovery and no evidence was lead in this respect. The Foleys further submit that SBH would not suffer any unreasonable hardship if the sum for the non-compliant variations claimed was not recovered.
Accordingly, in considering the non-compliant variations which I have accepted as variation work, it is only necessary to consider an entitlement under s 84(4) in relation to variations V021, V023, V029 and V032.
The four variations fall into two categories:
(a)Variations V021 and VO23 have been signed but not paid; and
(b)Variations V029 and V032 have not been signed or paid.
The matters to consider are:
(a)are there exceptional circumstances to warrant recovery of the amount of the variation?; or
(b)will the building contractor suffer unreasonable hardship by the operation of strict compliance with sections 84(2)(a) or 84(3)(a), whichever is relevant?;
(c)would it be unfair to the building owner for the building contractor to recover an amount?
As I have determined that the variations were sought by Mr Foley, sections 84(2)(b) and 84(4)(a) and (b) apply and it is therefore necessary to first consider whether there are exceptional circumstances to warrant recovery or whether SBH would suffer unreasonable hardship by the operation of s 84(2)(a).
The term ‘exceptional circumstances’ is not defined in the DBC Act.
In Allaro Homes Cairns Pty Ltd v O’Reilly,[70] the Queensland Court of Appeal considered the expression ‘exceptional circumstances’:
The phrase ‘exceptional circumstances’ is not defined. It is found in an Act whose purpose or object is to achieve a reasonable balance between the interests of building contractors and building owners and to maintain appropriate standards of conduct in the industry. It may be vague but that matters that might be considered relevant to such an inquiry will be indicated by the particular way in which the Act was not complied with and the circumstances particular to the dispute. In this Act, it directs attention to those circumstances which are exceptional warrant a conferring upon the building contractor an entitlement to recovery for the variation which its conduct, by failing to meet the obligations imposed by the statute, deprived it. It would therefore suggest, in the context of this dispute, attention might be directed to the circumstances that applied that prevented compliance or explained non-compliance with s80(2)(e), which required the building contractor to state the change of the contract price because of the variation or how the change in price might be worked out. Circumstances such as an unanticipated event requiring work to be done urgently might, for example, afford an explanation and constitute an ‘exceptional circumstance’. But this comment should not be regarded as exhaustive, the term is broad and it is not desirable to attempt an exhaustive statement of what might be in any given dispute an exceptional circumstance.
[70][2012] QCA 286, [15] (North J).
SBH submits that there are exceptional circumstances in this case which justify recovery under the DBC Act and justify why the requirements for variations to be signed and contain full details were not met. SBH says that the fact that the Foleys were living in a caravan on site during construction meant that the Foleys often gave instructions directly to the subcontractors without advising Mr Bagnall. SBH submits that this meant that it did not enjoy full autonomy and use of the site and variation works were carried out without SBH’s initial input.
The term ‘unreasonable hardship’ is also not defined in the DBC Act.
In Allaro Homes,[71] the Court of appeal considered further the term ‘unreasonable hardship’. Her Honour Holmes JA (as she then was) stated:
[3] Thirdly, it was suggested that the appeal tribunal had wrongly taken the view that the magnitude of the unpaid variation in a particular case could never support a finding of unreasonable hardship. To the contrary: the Deputy President, having observed that the mere fact of inability to recover cost of variation could not, without more, constitute unreasonable hardship, went on to say, correctly, in my respectful view:
“The test of unreasonable hardship requires an assessment of the impact of that sanction on the builder in the circumstances in which the non-compliance occurred. That is both a subjective and an objective enquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs.”
The magnitude of the sum that cannot be recovered is a relevant consideration in both respects. Subjectively, the inability to recover an amount may or may not cause hardship to a builder, depending on its financial circumstances. A small sum for a sole operator whose margins are slim might have a greater financial impact on that builder than a much larger sum would have on an enterprise with a large turnover and a good profit margin.
[71][2012] QCA 286, [3].

As to whether SBH will suffer unreasonable hardship, it is not a question of assessing whether the hardship will arise just from the non-payment but whether the hardship will arise in all the circumstances.
Counsel for the Foleys submits that the financial situation, as evidenced in Exhibit 12 (being the second statement provided by Mr Bagnall), does not depict a sole operator whose margins are slim.
SBH submits that the submission on behalf of the Foleys, which relies entirely on the income from properties owned by SBH, ignores the expenses from the properties including the mortgage encumbrances shown in the account liabilities for the company. Further, the submission on behalf of the Foleys has not taken into account the deficits for the company for both 2015 and 2016, the overdraft on three properties owned by the company, other bank overdrafts and secured and unsecured loans.
In addition to the position of SBH, it is also necessary to consider the position of the Foleys.
Section 84(4)(b) stipulates that the tribunal must be satisfied that it would not be unfair to the building owner for the building contractor to recover an amount.
In determining whether it is unfair to the Foleys for SBH to recover payment, consideration is given to the Foleys’ ability to pay and also whether they have retained a benefit from the varied work.
In relation to those variations which have been signed by the Foleys, I do not accept the evidence that Mr Foley was confused about the document he was signing and thus I do not think that it is unfair to the Foleys that they pay for those variations.
In relation to the variations which have not been signed, I am satisfied that Mr Foley directly dealt with the subcontractors in relation to variations V029 and V032 and thus it would not be unfair for the Foleys to make payment for the variation works even though they are not compliant with the DBC Act.
I have weighed up the considerations necessary to be satisfied by the tribunal under

s 84(4)(a)(i) and (ii) and also s 84(4)(b) and have formed the view that SBH would suffer unreasonable hardship by the operation of subsection (2)(a) and that it would not be unfair for the Foleys to pay for the non-compliant variations.
Accordingly, I have formed the view that the tribunal should approve the recovery of the amount claimed by SBH for the variations which the tribunal has allowed even though there has been non-compliance with the requirements of Part 7 of the DBC Act.
Adjustment to Payment Claims
SBH claims that the Foleys have failed to pay the amount of $710.00 owing in relation to the Practical Completion Stage of the works and $50.00 in relation to the Fixing Stage.
Pursuant to Part D of the Appendix to the contract the Practical Completion Stage of the works was nominated to be 5% of the Contract Price and valued as $30,710.00 inclusive of GST.
There is no dispute that the amount of $710.00 remains unpaid for works the subject of the Practical Completion Stage of the contract.
The Foleys submit that SBH is not entitled to any sum the subject of the Practical Completion Stage because Practical Completion was never reached.
The Foleys rely upon s 67(2) of the DBC Act which provides that the building contractor under a regulated contract must not demand all or part of the completion payment unless the practical completion stage has been reached. For this contravention there is a maximum penalty of 100 penalty points.
Section 67(3) further states that the building contractor under a regulated contract must not receive all or part of the completion payment unless:
(a)the practical completion stage has been reached; and
(b)if the building owner claims the stage has been reached with minor defects or omissions – the first and second requirements stated in subsections (4) and (5) have been complied with.
The consequence of a breach of s 67(2) of the DBC Act is that the building contractor may be required to repay any monies paid in contravention of the Act. Therefore, SBH may be required to refund the monies paid in relation to the Practical Completion Stage which had not been reached.
This relates specifically to the sum of $30,000.00 paid by the Foleys as part payment of the sum of $30,710.00.
The DBC Act however does provide some relief for SBH.
Pursuant to s 69(4) of the DBC Act, the builder has a right to make a demand for payment of the amounts refunded to the building owner as part of the contract price.
Section 69 of the DBC relevantly provides:
69 Order to refund overpaid amounts
(1) This section applies if –
(a) a court finds a charge against a building contractor for an offence against a payment section proven; and
(b) the offence involves the receipt of an amount by the building contractor.
(2) The court may order the building contractor –
(a) to refund to the building owner –
(i) the amount paid to the building contractor that the building contractor was not, under the payment section, entitled to receive; or
(ii) a part of the amount mentioned in paragraph (a);
…
(4) The refund of an amount by the building contractor to the building owner under an order mentioned in subsection (2) does not stop the building contractor from later demanding and receiving payment of the amount under the contract as part of –
(a) for a fixed price contract – the contract price.
It follows therefore, that it would not be unreasonable that, in ascertaining the contract price, this tribunal may take into account the sum of $710.00 which has not been paid for the contract works and also re-adjustment of the contract price to include the amount of $30,000.00 in the event that the Foleys are successful in claiming that amount pursuant to s 67(2) of the DBC Act.
Further, as the Foleys damages claim relates to both defective and incomplete works it is necessary to take into account the amount claimed as owing pursuant to the contract, otherwise there is the possibility that the Foleys will have the advantage of not only having not paid for a part of the contract price but claiming the cost of the incomplete work.
No evidence was provided that the works the subject of the claim had not been carried out.
For this reason, I have allowed the balance of the Practical Completion Stage, so that this amount may be included in a proper assessment of the Foleys’ entitlement to damages as claimed.
Further Adjustments
The Foleys accept that an amount of $105.66 is owing in relation to PC item 1 and an amount of $20.96 is owing in relation to PC item 5.
In relation to the amount of $50.00 outstanding for the Fixing Stage of the works, the Foleys deny that SBH is entitled to the underpayment on the basis that there is no explanation of the claim nor has it been proved.
Appendix D of the contract provides that the Fixing Stage payment is $153,500.00. SBH only claimed $153,450.00. The amount claimed was paid by the Foleys.
The error in the amount paid was not as a result of an underpayment by the Foleys but rather as a result of an error by SBH in claiming the correct amount.
I am not satisfied that SBH has substantiated its entitlement to an extra $50.00
Credits to Applicants
SBH concedes that the following items should be a credit to the Foleys in determining the amount owed to SBH:
(a)Electric door striker - $378.10;
(b)Security screens on viewing deck - $367.20; and
(c)Change of brick from ‘Mowbray’ to ‘Hendra’ - $1.042.72.
The Foleys accept the credit amounts proposed and have dealt with these items in their claim for damages and variations in the following items, namely Defect item 1, variation V036 and PC item 15.

Summary of Amounts Owing By the Respondent to the Applicants

In order to assess the amount owing by SBH to the Foleys, if any, as a result of my assessment of the alleged defective and incomplete work forming part of the Foleys’ claim in damages for breach of contract and/or negligence and the Foley’s claim in restitution, it is necessary first to assess the contract price: that is, the price which the Foleys would have paid had the contract been performed.
The next step is to assess the costs which the Foleys have incurred, or will incur, in bringing the works to completion and in conformity with the contract. This exercise necessarily includes the following:
(a)an assessment of amounts paid to SBH; and
(b)an assessment of additional amounts paid or to be paid to rectify the works or to complete the incomplete works.
The original Contract Price is $614,200 (including GST). To be deducted from this amount is the sum of $33,170.01(including GST) for PC and PS Item adjustments and credits, as determined above and set out below:[72]
[72]Contrary to the submission by SBH that the adjustment for PC and PS items should exclude GST, I have included GST as the amounts set out in the contract for PC and PS items were inclusive of GST.

Item No.

Description

Amount allowed by the tribunal

1 Front door $105.66

2 Credit for electronic striker plate not being installed (Variation V033) ($378.10)

3 Light fittings (Variation V035) ($490.53)

4 Wall and floor tiles to wet areas and upper ensuite floor ($1,290.58)

5 Site cut and fill ($20.96)

6 Air-conditioning (Variation V013) ($14,610.00)

7 Bosch alarm system ($988.90)

8 Home network ($858.00)

9 Vacuum system ($2,932.00)

10 CCTV ($5,478.00)

11 Intercom ($1,591.70)

12 Surround sound ($528.00)

13 Water system, Aqua Nova to Fuji ($1,275.00)

14 Concreting to front and rear patios and concrete slab outside laundry Nil

14b Credit for reduced number of electrical points and light points ($1,791.90)

15 Change from Mowbray to Hendra clay bricks ($1,042.00)

Total (include GST) $33,170.01

To be added to the Contract Price is the sum of $3,849.05 (including GST) for the allowable variation claims admitted by the Foleys.

Variation No.

Description

Amount submitted by the Applicants

V020

Supply and fit Dux hot water reticulating pump

$1,087.90

V024

Supply 100 mm stormwater pipe

$189.68

V026b

Supply and install wardrobe cabinet (security equipment)

$1,082.40

V027

Extra water tank and slab

$1,700.00

V032

Electrical installation over allowance

$280.50

V035

Credit on light fittings and exhaust fan

($490.53)

Total (incl GST)

$3,849.95

To be added to this sum is the Variations which have been disputed by the Foleys but which the tribunal has allowed in the analysis above.[73]
[73]V01, V02, V05, V07, V08, V09, V010 and V020 were signed and paid by the Foleys.

Variation No.

Description

Amount allowed by the tribunal

V01

Joinery over allowance

$2,574.00

V02

Supply 100 mm stormwater pipe

$316.15

V05

Upgrade external hinged doors to aluminium

$1,224.60

V06

Change viewing deck louvres and upgrade screens to viewing deck to security to satisfy all protection requirements

$846.00

V07

Change garage door

$198.00

V08

Change BR11 steel beams to 360VB 57

Nil

V09

Simplify viewing platform; enlarge viewing platform; extra cranked beam, steel joists less allowance for steel and timber joists not required

$970.00

V010

Extra cost to comply with Development Approval

Nil

V036

Security screens on viewing deck not required

($366.20)

Total (incl GST)

$5,762.55

The remaining variations, namely V021, V023, V024, V025b, V029, part of V032 ($1490.28 minus $280.50) and V034 will be considered as the subject of SBH’s counterclaim as to date none of the variations have been paid.
Accordingly, the adjusted Contract Price is calculated as follows:

Original Contract Price

$614,200.00

Less PC, PS and credit adjustments

$33,170.01

Plus allowable variations

$9,612.50

Adjusted Contract Price

$590,642.49

The Foleys have paid SBH the sum of $593,846.33.
For the reasons set out above, and given the re-adjustment of the contract price, there is no substance to the Foley’s restitution claim for either an amount overpaid in relation to the Practical Completion stage, particularly if the refund for the Practical Completion stage is claimed in addition to the claim for damages for breach of contract.
My assessment of the Foleys’ entitlement to damages for breach of contract being the cost of rectification works and the cost to complete incomplete works is set out below:

Item No. (as per joint report)

Description

Amount as allowed by the tribunal

1

Electric striker to front door

Dealt with as a PC item - $0.00

2

Breach to termite barrier through the floor waste

$0.00

3

Insufficient fall to bedroom 2 ensuite shower recess

$972.52

4.1

Stainless steel wires not fitted with grommets at posts

$855.10

4.2

Fixing screws corroded

$230.20

4.3

Corrosion on handrail support posts

$0.00

4.4

Chain anchor pints show corrosion and have failed

$131.90

4.5

Fixing of stainless steel posts and membrane installation

$0.00

4.6

Fascia and beam deterioration to north elevation

$4,648.60

5.1

Membrane patching around penetrations

$0.00

5.2

Fixing screws to the chain brackets

$87.85

5.3

Wire termination screw not sealed to roof

$132.60

6

Exterior cladding substandard and unfinished

$694.32

7

All locks to be keyed alike

$269.00

8

Garage door remote controls and instruction manuals not provided

$250.00

9

Substandard paint finishes to eaves, patio ceilings, downpipes and the like

$869.58

10.1

Street stormwater outlet position

Included in item 10.2

10.2

River stormwater outlet position

$14,720

10.3

East side downpipes not in correct position

Included in item 10.2

10.4

East upper roof discharge flooding lower roof gutter at front door area

Included in item 10.2

11

Defective pump- for water tank rectified by applicants

$0.00

12

Defective and incomplete fence and gate to spa deck

$11,200.00

13 (incl items 13.1 to 13.3)

Various issues with upstairs timber floors

$4,758.00

14

Building failed to clean concrete floors downstairs

$0.00

15

Replacement of membrane to the north and south patios as a result of handrail installation penetrating membrane

$0.00

16

Horizontal balustrade wires have damaged brickwork at the northeast corner of bedroom 3

$2,307.00

17

Plaster defects to various locations

$860.00

18

Defective internet cupboard

$993.00

19

Clay brick letterbox to be installed

$212.30

20

Water supply to the pool not installed

$0.00

21

Overhead cupboard and bulkhead to downstairs bar not installed

$0.00

22

Access door to lift shaft not installed

$450.00

23

Sliding door to garage not installed

$327.63

24

Cleaning to remove mortar splashing to various locations

$215.20

25

Builder’s rubbish removed by owner on completion

$0.00

26

Ducting to the range hood not undertaken

$450.15

27

Power supply to pool and winch for boat ramp paid for by owner

$327.27

28

Supply and install insect screen to spa deck access door

$0.00

29

Additional certification costs

$350.00

30

Supply and install security screen to garage not undertaken

$0.00

31

Supply and install security screen to front entrance door

$1,052.73

32

Severe structural crack to brick wall on north east corner of building

Included in item 16

33

Dux water pump not correctly installed

$305.00

34

Clear windows to have grey tint

$14,522.20

35

Power to front boundary gate

$0.00

36

Drain for lift not installed as designed

$1,452.80

37

Gaps above windows to be filled

$434.16

38

Replace timber treads to the stair case to the viewing platform

$730.40

39

Adjust trim to suit A/C plant condensation drain pipes

$364.44

40

Replace existing external light fittings to soffit

$0.00

41

Internal doors require painting and replace cavity sliding doors

$445.00

42

Water saving device

Included in item 33

43

Roofing material

$60,660.60

Subtotal

$126,279.55

Plus GST

$12,627.95

Subtotal

$138,907.50

Plus margin @ 20%

$27,781.50

Total (including GST)

$166,689.00

Therefore, in assessing the Foley’s entitlement to damages the following calculations must be carried out:
(a)cost incurred by the Foleys being the sum of $593,846.33 as the amount paid to SBH under the contract;
(b)plus the sum of $166,689.00 for the defective and incomplete work;
(c)resulting in the total cost incurred by the Foleys being $760,535.33
To be deducted from this sum is the amount which the Foleys would have paid had the contract been performed. That sum has been calculated above as $590,642.49.
The cost incurred by the Foleys over and above the contract price is $169,892.84.
With respect to SBH’s counterclaim, the table below sets out the amounts which have been allowed by the tribunal:

Item Claimed in Counterclaim

Description

Amount allowed by tribunal

V026b

Supply and install wardrobe cabinet

Included in calculations for variations in contract price as agreed by Foleys

V029

Shelving over-allowance

$744.00

V032

Electrical installation over allowance

$889.22

V034

Extra plumbing PC items

$0.00

V035

Credit for light fittings

Included in calculations for contract price

V021

Supply smart tiles to upper ensuite

$71.73

V023

Make glass splash back higher

$245.00

V024

Supply 10mm stormwater pipe

Included in calculations for contract price

V027

Extra tank and slab

Included in calculations for contract price

Practical Completion Stage

Underpayment of Practical Completion stage

$710.00

Fixing stage

Underpayment of Fixing stage

$0.00

As I have set out above, a number of items which would have been allowed in the counterclaim, namely payment for variations V024, V026b, 27 and 35 have been conceded by the Foleys and included in the assessment of the contract price. The credits claimed by SBH have also been included in an assessment of the Foleys’ claim for damages and restitution.[74]
[74]Credits for the front door, electric door striker, security screens and the change in type of bricks.
Given that many of the items the subject of the counterclaim have been taken into account in the assessment of the Foleys claim, the amount to be deducted from the damages allowed for the Foleys’ claim above is the sum of $2,659.95.
Orders
As set out above, in the assessment of the Foley’s claim for restitution and/or damages for breach of contract (and/or negligence) the tribunal has considered some of the items claimed in the counterclaim by SBH and reached a determination of a sum of $169,892.84 as the amount owed by SBH to the Foleys.
In considering the amount assessed as owing under the counterclaim for amounts not already considered in the Foleys’ claim, the tribunal has allowed the sum of $2,659.95.
Accordingly, the order of the tribunal will be that the amount of $167,232.89 is payable by SBH to the Foleys in satisfaction of both the Foleys’ claim and SBH’s counterclaim.
Written submissions will be considered in relation to interest and costs

CITATION:	Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458
PARTIES:	IAN FOLEY and BERNADETTE FOLEY (applicants)
v
STEVE BAGNALL HOMES PTY LTD (respondent)
APPLICATION NO/S:	BDL090-15
MATTER TYPE:	Building matters
DELIVERED ON:	31 October 2018
HEARING DATE:	24, 25, 26, 27 October 2016; 1 December 2016; and On the papers August 2018
HEARD AT:	Brisbane
DECISION OF:	Member Burke
ORDERS:	1. The Respondent is to make payment to the Applicants in the sum of $167,232.89 in satisfaction of the Applicants’ claim for restitution and damages for breach of contract and/or negligence and in satisfaction of the Respondent’s counterclaim. 2. The parties are to provide submissions to the Tribunal in writing within 21 days in relation to: (a) the interest, if any, to be imposed; and (b) costs of the proceedings.
CATCHWORDS:	CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – domestic building dispute – whether premature issue of progress claim for Practical Completion stage – where owner terminates contract for builder’s failure to complete works by Date for Practical Completion – damages for breach of contract for defective and incomplete work – restitution for PC and PS items under contract - assessment of whether rectification work necessary and reasonable course to adopt CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – whether variations compliant with Domestic Building Contracts Act 2000 (Qld) – right of building contractor to recover amount for variation Domestic Building Contracts Act 2000 (Qld), s 67, s 69, s 79, s 80, s 82, s 84 Queensland Building and Construction Commission Act 1991 (Qld) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 168(1) Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Bellgrove v Eldridge (1954) 90 CLR 613 Cardona v Brown (2011) 27 BCL 194 CMF Projects P/L v Rigall & Anor [2014] QDC 90 Codelfa Construction Pty Ltd v State Railway Authority of NSW (1982) 149 CLR 337 D Galambos & Son Pty Ltd v McIntyre (1974) 5 ACTR 10 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 Radford v De Froberville [1977] 1 WLR 1262 Robinson v Harman (1848) 1 Exch 850; [1848] EngR 135 Ruxley Electronics & Construction Co Ltd v Forsyth [1996] AC 344 Tabcorp Holdings Pty Ltd v Bowen Investments Pty Ltd [2009] HCA 8 Thompson Residential Pty Ltd v Tran [2014] QDC 156 Tranquility Pools & Spas Pty Limited v Huntsman Chemical Co Pty Limited [2011] NSWSC 75 Willshee v Westcourt Ltd [2009] WASCA 87
APPEARANCES & REPRESENTATION:
Applicant:	S Kelly, instructed by Paul J Hick Special Counsel at Active Law, Solicitors
Respondent:	M Panayi, Principal Solicitor of Industry Lawyers

Date of Payment Claim	Payment Claim Stage	Amount Claimed	Amount Paid
4 August 2010	Deposit	$30,710.00	$30,710.00
3 August 2010	Base Stage	$76,775.00	$76,775.00
6 October 2010	Frame Stage	$109,382.00	$109,385.00
1 November 2010	Enclosed Stage	$189,498.28	$189,498.28
19 November 2010	Fixing Stage	$157,478.05	$157,478.05
22 December 2010	Practical Completion	$34,170.41	$30,000.00

Front Door Hume XS 2020 x 1200 with clear glass	1 item	$490.00	$490.00
Front Door Furniture	1 item	$463.00	$463.00
Light Fittings	1 House lot	$2,402.00	$2,402.00
Wall & Floor tiles (supply only) (Wet areas only)	1 m2	$35.00	$35.00
Wall tiles Ensuite Upper Floor (supply only)	1 m2	$45.00	$45.00

Site Cut & Fill	$924.00
Air-conditioning	$14,610.00
Bosch Solution Alarm System with 3 Bosch Professional Detectors	$988.90
Home network with Cat 5 points to Lounge, Study, Rumpus, Bedroom 1 & Bedroom 2	$858.00
Vacuum system	$2,932.08
CCTV Equipment	$5,478.00
Alphone JF Video Intercom without memory	$1,591.70
Surround Sound Setup	$528.00

Description	Agreement on Item	Amount
Credit for electronic striker plate not being installed (Item 2)	Agreed	Disagreed
Site cut and fill (Item 5)	Disagreed	Disagreed
Concreting to front and rear patios and concrete slab outside laundry (Item 14)	Disagreed	Disagreed
Credit for reduced number of electrical points and light points (Item 14b)	Disagreed	Disagreed
Change from Mowbray to Hendra clay bricks (Item 15)	Disagreed	Disagreed

Item No.	Description	Amount allowed by the tribunal
1	Front door	$105.66
2	Credit for electronic striker plate not being installed (Variation V033)	($378.10)
3	Light fittings (Variation V035)	($490.53)
4	Wall and floor tiles to wet areas and upper ensuite floor	($1,290.58)
5	Site cut and fill	($20.96)
6	Air-conditioning (Variation V013)	($14,610.00)
7	Bosch alarm system	($988.90)
8	Home network	($858.00)
9	Vacuum system	($2,932.00)
10	CCTV	($5,478.00)
11	Intercom	($1,591.70)
12	Surround sound	($528.00)
13	Water system, Aqua Nova to Fuji	($1,275.00)
14	Concreting to front and rear patios and concrete slab outside laundry	Nil
14b	Credit for reduced number of electrical points and light points	($1,791.90)
15	Change from Mowbray to Hendra clay bricks	($1,042.00)
Total (include GST)	$33,170.01

Variation No.	Description	Amount submitted by the Applicants
V020	Supply and fit Dux hot water reticulating pump	$1,087.90
V024	Supply 100 mm stormwater pipe	$189.68
V026b	Supply and install wardrobe cabinet (security equipment)	$1,082.40
V027	Extra water tank and slab	$1,700.00
V032	Electrical installation over allowance	$280.50
V035	Credit on light fittings and exhaust fan	($490.53)
Total (incl GST)	$3,849.95

Original Contract Price	$614,200.00
Less PC, PS and credit adjustments	$33,170.01
Plus allowable variations	$9,612.50
Adjusted Contract Price	$590,642.49

Item No. (as per joint report)	Description	Amount as allowed by the tribunal
1	Electric striker to front door	Dealt with as a PC item - $0.00
2	Breach to termite barrier through the floor waste	$0.00
3	Insufficient fall to bedroom 2 ensuite shower recess	$972.52
4.1	Stainless steel wires not fitted with grommets at posts	$855.10
4.2	Fixing screws corroded	$230.20
4.3	Corrosion on handrail support posts	$0.00
4.4	Chain anchor pints show corrosion and have failed	$131.90
4.5	Fixing of stainless steel posts and membrane installation	$0.00
4.6	Fascia and beam deterioration to north elevation	$4,648.60
5.1	Membrane patching around penetrations	$0.00
5.2	Fixing screws to the chain brackets	$87.85
5.3	Wire termination screw not sealed to roof	$132.60
6	Exterior cladding substandard and unfinished	$694.32
7	All locks to be keyed alike	$269.00
8	Garage door remote controls and instruction manuals not provided	$250.00
9	Substandard paint finishes to eaves, patio ceilings, downpipes and the like	$869.58
10.1	Street stormwater outlet position	Included in item 10.2
10.2	River stormwater outlet position	$14,720
10.3	East side downpipes not in correct position	Included in item 10.2
10.4	East upper roof discharge flooding lower roof gutter at front door area	Included in item 10.2
11	Defective pump- for water tank rectified by applicants	$0.00
12	Defective and incomplete fence and gate to spa deck	$11,200.00
13 (incl items 13.1 to 13.3)	Various issues with upstairs timber floors	$4,758.00
14	Building failed to clean concrete floors downstairs	$0.00
15	Replacement of membrane to the north and south patios as a result of handrail installation penetrating membrane	$0.00
16	Horizontal balustrade wires have damaged brickwork at the northeast corner of bedroom 3	$2,307.00
17	Plaster defects to various locations	$860.00
18	Defective internet cupboard	$993.00
19	Clay brick letterbox to be installed	$212.30
20	Water supply to the pool not installed	$0.00
21	Overhead cupboard and bulkhead to downstairs bar not installed	$0.00
22	Access door to lift shaft not installed	$450.00
23	Sliding door to garage not installed	$327.63
24	Cleaning to remove mortar splashing to various locations	$215.20
25	Builder’s rubbish removed by owner on completion	$0.00
26	Ducting to the range hood not undertaken	$450.15
27	Power supply to pool and winch for boat ramp paid for by owner	$327.27
28	Supply and install insect screen to spa deck access door	$0.00
29	Additional certification costs	$350.00
30	Supply and install security screen to garage not undertaken	$0.00
31	Supply and install security screen to front entrance door	$1,052.73
32	Severe structural crack to brick wall on north east corner of building	Included in item 16
33	Dux water pump not correctly installed	$305.00
34	Clear windows to have grey tint	$14,522.20
35	Power to front boundary gate	$0.00
36	Drain for lift not installed as designed	$1,452.80
37	Gaps above windows to be filled	$434.16
38	Replace timber treads to the stair case to the viewing platform	$730.40
39	Adjust trim to suit A/C plant condensation drain pipes	$364.44
40	Replace existing external light fittings to soffit	$0.00
41	Internal doors require painting and replace cavity sliding doors	$445.00
42	Water saving device	Included in item 33
43	Roofing material	$60,660.60
Subtotal	$126,279.55
Plus GST	$12,627.95
Subtotal	$138,907.50
Plus margin @ 20%	$27,781.50
Total (including GST)	$166,689.00

Item Claimed in Counterclaim	Description	Amount allowed by tribunal
V026b	Supply and install wardrobe cabinet	Included in calculations for variations in contract price as agreed by Foleys
V029	Shelving over-allowance	$744.00
V032	Electrical installation over allowance	$889.22
V034	Extra plumbing PC items	$0.00
V035	Credit for light fittings	Included in calculations for contract price
V021	Supply smart tiles to upper ensuite	$71.73
V023	Make glass splash back higher	$245.00
V024	Supply 10mm stormwater pipe	Included in calculations for contract price
V027	Extra tank and slab	Included in calculations for contract price
Practical Completion Stage	Underpayment of Practical Completion stage	$710.00
Fixing stage	Underpayment of Fixing stage	$0.00