Godbold v Queensland Building and Construction Commission
[2014] QCAT 537
•12 August 2014
| CITATION: | Godbold v Queensland Building and Construction Commission [2014] QCAT 537 |
| PARTIES: | Grant Allan Keith Godbold Julianne Jennifer Godbold (Applicants) |
| v | |
| Queensland Building and Construction Commission (Respondent) |
| APPLICATION NUMBER: | GAR080-13 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 17 March 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howe |
| DELIVERED ON: | 12 August 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Commission made 25 January 2013 assessing the applicants’ entitlement under the statutory home warranty scheme as nil is set aside. 2. The Applicants are entitled to be paid the sum of $44,157.23 for their claim under the statutory home warranty scheme. |
| CATCHWORDS: | Statutory Home Warranty scheme – completion of work under the construction contract – dispute as to variations – variations not in writing – prepayment by the owner before payment due under the contract – indemnity insurance – payment for loss – delay in Commission recognition of termination – completion of the work by the owners – actual costs of completion – expert evidence – reduced value of expert evidence – assumptions of fact by expert – owners resiling from some of the contract work after termination – Commission to act reasonably in estimating owners remaining liability under the contract |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Gregory Richards, Solicitor, represented Mr and Mrs Godbold |
| RESPONDENT: | Ms Cheriden Farthing, Solicitor, represented the Queensland Building and Construction Commission |
REASONS FOR DECISION
Mr and Mrs Godbold own a home at Shailer Park. They wanted to renovate and expand. They signed a fixed-price building contract with Mr Camilleri, a builder, on 27 July 2009. The agreed cost was $363,446.
There were eight staged progress payments under the contract not including the deposit. The final two were for fixing and practical completion, each for $36,344.60. There were a number of variations to the contract which increased the price. They were not in writing.
Mr Camilleri found himself in financial difficulties. He asked for more money to keep him going with the rest of the job. The Godbolds acknowledged they owed him for variations. On 25 February 2010 they wrote him out two cheques, each for $36,344.60, the progress payment amounts for the remaining two stages of work[1].
[1]Exhibit 2 at [70].
Mr Camilleri did not finish the job. He met Mr Godbold on 20 March 2010 and said to do that it would take another $163,523.03. The Godbolds refused to pay that additional sum and on 27 March 2010 terminated the contract. They made complaint to the Queensland Building and Construction Commission (the Commission) and thereby claimed under the statutory home warranty scheme. The Commission initially disallowed the claim on the basis the contract had not been properly terminated. The Godbolds applied to the Tribunal for review of that decision and they were successful[2]. The issue of the amount of their claim was remitted to the Commission. The Commission determined their entitlement was nil. The Godbolds have brought this present application seeking review of that assessment.
[2]Godbold & Anor v QBSA & Anor [2012] QCAT 313.
Home Warranty Insurance Terms
The owners supervised completion of the work themselves, directly engaging the necessary contractors, many of them previously engaged by Mr Camilleri. The work on the house was reasonably complete by September/October 2010[3].
[3]Exhibit 2 at [144].
The home warranty insurance policy (the Policy) covers loss suffered by an insured owner in the event the contractor fails to complete the contract[4]. The relevant Policy was Edition 8 effective 1 July 2009. The payout is limited to the Commission’s assessment of the reasonable cost of completion less the insured’s remaining liability under the contract at date of termination[5]. If an insured pays money to the defaulting contractor before they are due, the Commission is entitled to reduce the payout under the policy by the amount of the prepayment[6].
[4]Exhibit 7 page 16 clause 1.1.
[5]Ibid clause 1.5(a).
[6]Ibid clause 1.6(b).
There is a marked difference in the parties’ assessment of the moneys due. The Commission’s assessment of the owners’ entitlement under the policy was as follows:
Initial contract amount $363,446.00
Plus variations 73,919.82
Adjusted contract amount 437,365.82
Less payments made 356,768.00
Remaining liability under the contract 80,597.82Cost of completion 118,613.52
Less remaining liability under the contract 80,597.82
38,015.70
Less prepayment to builder 72,689.20
Entitlement -$32,668.96According to the Commission, the owners are due nothing under the Policy. The owners disagree and submit two alternatives where they are entitled to either $133,701.64 or $132,471.02.
Deposit
The contract called for a deposit of $18,172.30. According to Mr Godbold he paid $6,678 on 22 May 2009 and the balance of $11,494.30 on 29 July 2009. The contract was signed on 27 July 2009. The Commission says the first payment has not been substantiated. It is not quite clear whether that means the Commission has not been provided with supporting documentation or that the payment was made but it was not for the deposit, perhaps because it was made before execution of the contract. Mr Godbold tenders copies of a cheque and internet transfer of funds[7]. I accept the payment was made. On the material before me there was never a challenge from the builder that the full deposit was not paid. There is nothing to suggest the builder did not accept the monies paid on 22 May 2009 as part of the deposit under the contract. Accordingly, I so find.
[7]Exhibit 2 pages 20 and 51.
Variations
The parties do not agree on the value or extent of variations to the contract. The Commission relied on a breakdown of variations prepared by the builder which totalled $73,919.82. The Godbolds dispute those variations. None of the variations are in writing. They say the variations are to be calculated as the difference between the maximum amount of their budget, $400,000, advised on more than one occasion to the builder, and the contract price. That difference is $36,554.
Mr Godbold said the agreed variations were excavation under the deck at a cost of $20,000 to $25,000[8]; a water tank[9] for $2,000; building a shed[10] at a cost of $2,500; increasing the height of a retaining wall[11] $6,000; the addition of rails[12] for $2,000 and air-conditioning[13] at a cost of $2,500. That is a range of $35,000 to $40,000. The Godbolds’ claim is $36,554, the difference between the contract price and their budget limit for the project of $400,000.
[8]Ibid at [35].
[9]Ibid at [35].
[10]Ibid at [58].
[11]Ibid at [47].
[12]Ibid at [48] – [49].
[13]Ibid at [55].
The Commission relies on the builder’s assessment of variations apparently supported by 31 individual variation notes prepared by the builder.[14] But the builder did not give evidence in these proceedings. He gave evidence in the earlier proceeding, where presumably his breakdown of variations was tendered.[15] The learned Member conducting the earlier hearing was of the view that, if relevant, the better indication of the value of the variations was that provided by the builder[16]. However the learned Member also made it clear that issues about quantum of claim were not the subject of detailed evidence before him.[17] It is clear from the material filed that the builder’s breakdown is very much disputed. Given that, the Godbolds were entitled to expect they would be given an opportunity to test it in this hearing. In other words that the builder would be called. He wasn’t; nor was there any affidavit material from him; nor was reference made or reliance placed on any evidence from the builder led in the earlier proceeding. Though the Tribunal may inform itself in any way it considers appropriate and act with little formality and technicality that is tempered by the rider that it is subject to a proper consideration of the matter before the Tribunal. Here in the circumstances outlined, whilst the builder’s breakdown is available for consideration, I accord it little weight as opposed to the sworn evidence of Mr Godbold.
[14]Exhibit 6 at [11(b)] and pages 13 – 16.
[15]Godbold & Anor v QBSA & Anor [2012] QCAT 313 at [10].
[16]Ibid at [12].
[17]Ibid at [62].
The latter’s evidence about the method of calculation and the resultant gross agreed value of the variations is unusual and very much broad brush, but I see no reason why his evidence should not be accepted on that basis alone. I accept Mr Godbold’s evidence that the builder never communicated his list of alleged variations to owners. I accept Mr Godbold’s evidence as to the agreed variations and his evidence about the agreed cost of the variations limited to $36,554.
Prepayment
The Policy provides in clause 1.6(b):
Where in the opinion of the BSA, the Insured pays to or on behalf of the contractor any moneys for the contracted works before they become due (“prepayment”), the BSA will reduce the amount payable under this policy by the value of that prepayment. (The value of the prepayment is the BSA’s assessment of the value of the incomplete work in the stage of the contract for which the prepayment was made).
Mr Godbold accepted the builder had completed all or nearly all the work entailed in the sixth stage of the work which entitled him to a payment of $72,689.20 which was made on 5 January 2010. There remained two stages of work. Each entitled the builder to 10% of the contract amount or $36,344.60. Mr Godbold’s evidence was
… (w)e had not paid for the variations and he had incurred extra cost because of that. As I did not have anything in writing about the variations, I wrote out a cheque for each of the remaining stages in accordance with the Contract. These two cheques were dated 25 February 2010, in the amount of $36,344.60 each…. I believed that I was in effect paying Mr Camilleri to cover the costs he had already incurred in completing the excavation, water tank, shed, retaining wall, rails and air-conditioner (approximately $36,554) as well as giving him some money to pay for the next stages of the project.[18]
[18]Exhibit 2 at [70].
The owners submit it was Mr Godbold’s intention to pay for the variations by those two payments. I do not accept that. His evidence is clear. He wrote out cheques for each of the remaining stages of the contract. He did that rather than pay for variations because at that time it was unclear exactly how much was owing for variations. He said in cross-examination that he said to the builder at the time ‘…How about I pay you for one of the stages that will cover the variation work and then when you get me the paperwork on the variations, then I can make the payment for that’.[19] I conclude the payment of the two amounts of $36,344.60 were payments for just what Mr Godbold said they were for, for the stages of the contract, not to pay for the variations. The owners were worried the builder would down tools. The progress payments were made to keep him there and the job going.[20]
[19]Transcript page 64 lines 38 – 40.
[20]Transcript page 76 lines 21 – 27.
But the owners say, regardless of that, these payments cannot be prepayments qualifying under clause 1.6(b) of the Policy. The amount of the variations was at that time owed, so regardless of why or on what basis it was paid, there was no prepayment to the extent of the value of the variations.
The owners acknowledge in their submissions that the builder had no entitlement to be paid for variations by reason of breach of the Domestic Building Contracts Act 2000 (DBCA).[21] Further however, regardless of that the builder had not complied with the contract requirements to make the variation claims payable. They never became due and owing under the contract. Leaving aside the statutory requirements which preclude recovery by a builder, clause 12.3 to 12.5 of the general conditions of the contract were never satisfied to make the variations a debt payable by the owners. There was no amount due for variations under the contract at the time the two payments for the final two stages of the work were paid.
[21]DBCA ss 79 – 84 (variations to be in writing and with prescribed content).
The payments for the final two stages were prepayments and pursuant to the Policy the payout to the owners is to be reduced by their value accordingly.
Completion of the Work under the Contract
Mr and Mrs Godbold terminated the contract on 27 March 2010. They found themselves in a very difficult position after that with their claim under the home warranty insurance being rejected by the Commission. They found themselves with an unfinished house. It took a long time for the termination of the contract to be accepted. It wasn’t until December 2012 that Mr Vosper for the Commission attended to calculate the costs of completion. Accordingly it is understandable that Mr and Mrs Godbold felt it was up to them to complete the work under the contract.
They engaged contractors themselves, including many of the builder’s subcontractors, and had the work finished. It took some 6 to 7 months to do that. The house was in a reasonable state to live in by September or October 2010. According to Mr Godbold as at 20 September 2011, the date of his affidavit, the actual cost of completion to that date was $153,476.10.[22] The only work not done apart from some defective work done by the builder and to be rectified was the carport and a retaining wall. Adding the costs of building the carport and retaining wall and costs of rectification his total estimate to complete the work was in the range $195,476.10 to $203,476.10.[23] There was no claim for a builder’s margin or supervision costs.
[22]Exhibit 2 at [145].
[23]Ibid at [153].
By 14 February 2012 Mr Godbold’s “actual” costs to complete increased to $160,615.52, but now included work for a retaining wall and excavation in lieu of a carport.[24] Again, there was no claim for builder’s margin.
[24]Exhibit 3 at [35] – [36].
Mr Gall, a quantity surveyor, was engaged by the Godbolds to assist with their claim. He gave an estimate of costs to complete on 20 February 2012 of $218,635.93. In reaching that figure Mr Gall added a builder’s margin of $18,066 and preliminaries and onsite overheads of $12,750 and then GST on the total of a further $19,873. He added the margin and other additional amounts because he prepared his estimate on the basis that the works would have been tendered to a main contractor who would charge for onsite supervision, overheads and profit.[25] He didn’t add anything for rectification of defective work.
[25]Exhibit 1 annexure NG2 at page numbered 1.
Following an inspection in December 2012 the Commission’s estimate of costs of completion was $118,613.52. The Commission based its assessment on the inspection and the Godbolds’ documented expenditure.
Mr Gall gave another report on 26 June 2013 which reduced his estimate to $213,068.84. In this he included a main contractor’s profit of $14,760, a management of works cost of $8,800 and now rectification of defective work of $12,034. GST on the whole cost of completion was now not included.
Builder’s Margin
By clause 1.5(a) of the Policy:
Subject to the provisions of Parts 6, 7 and 8 of this policy, where the contractor has commenced the contracted works in accordance with clause 1.3, the amount of the payment is limited to the total of:
(a) the (Commission’s) assessment of the reasonable cost of completing the contract less the Insured’s remaining liability under the contract … at the date of termination of the contract….
Most commonly the Commission assesses the reasonable cost of completion of a contract pursuant to a claim shortly after the claim is submitted.[26] The assessment is made before the remaining work is done. Tenders are called from other builders to complete the work. Here, there was no assessment because termination of the contract had to be established. That is a requirement of the Policy.[27] In the meantime, the Godbolds wanted their home finished so they arranged for that work to be done themselves. In these circumstances, the actual cost of completion to the Godbolds is or should be known. Subject to those costs being reasonable, that cost will be the payout under the Policy, subject to appropriate deductions. The way costs of completion are adjudged reasonable is usually through use of the tender process.[28] But that did not occur here. There was no tender and no other builder engaged.
[26]Fenwick v Queensland Building Services Authority [2011] QCAT 39 at [21].
[27]Clause 1.2.
[28]Queensland Building Services Authority v Fenwick [2012] QCATA 20 at [24].
Before considering the reasonableness of the actual costs of completion it is appropriate to address the issue of the builder’s margin and costs of supervision claim. The owners say the “reasonable cost of completing the contract” as at the date of termination as stated in clause 1.5 of the Policy should include the overheads and profit of a main contractor completing the works. It was reasonable to expect that the balance of the work would be completed by a contractor following a tender process. A main contractor would have charged an amount for overheads and profit. That amount should be awarded the Godbolds.
Clause 1.1 of the Policy provides:
Subject to the terms of this policy, the (Commission) agrees to pay for loss suffered by the insured in the event of the contractor failing to complete the contract for the residential construction work.
The Policy is a contract of indemnity insurance. The insured is indemnified against loss suffered. The use of the word “loss” is indicative of indemnity insurance.[29] With indemnity insurance an insured cannot recover more than his or her actual loss.[30] The liability of the Commission to pay out money is not contingent only on the failure of the contractor to complete the contract. If the insureds suffer no loss though the contractor failed to complete the contract, the Commission is not liable to pay anything under the Policy. Mr and Mrs Godbold did not engage a main contractor. They did not incur costs associated with use of a main contractor. They did not pay a main contractor his profit margin or an overheads charge. They did not make those payments and they have not incurred any loss by having to make such payments. Accordingly they are not entitled to claim those things here under this policy of indemnity.
[29]Meacock and Anor v Bryant and Co [1942] 2 All ER 661 at 663 per Atkinson J.
[30]Castellain v Preston (1883) 11 QBD 380 at 386 per Brett LJ and 387 per Cotton LJ; British Traders’ Insurance Co Ltd v Monson [1964] HCA 24 at [3] – [5]; (1964) 111 CLR 86.
The Expert Evidence on Loss
The Commission’s estimate of loss is given by Mr Vosper, a building inspector employed by the Commission, whose evidence is criticised as non-expert, lacking impartiality, and conducted rather as an audit limited to a consideration of receipts and invoices rather than valuing the work itself. What was required, say the owners, was a determination of the reasonable cost of completing the contract as at date of termination. The work had been finished by the time Mr Vosper, and also Mr Gall, attended to inspect.
Whereas Mr Vosper relied on receipts and invoices, Mr Gall based his opinion on the invoices, receipts and statements provided to him by Mr Godbold. I cannot see that either addressed the correct issue. What was required was confirmation that the work done by the Godbolds was work required to complete the contract as at date of termination and that the costs they incurred doing that were reasonable.
Mr Gall relied on a number of assumptions of fact in giving his expert opinion. Those assumptions have not necessarily come up to proof in the proceedings. The biggest assumption was that the scope of work he commented on was correct. He did not consider the contract and therefore did not directly consider the contract scope of work.[31] He said he wasn’t asked to look at the contract but instead he relied on what he was told was the scope of work by Mr Godbold to calculate a fair and reasonable cost to complete that identified work.[32] If the scope of works to complete the contract advised to him by Mr Godbold was not the same as the scope of works under the contract to be completed as at date of termination his conclusions are flawed to that extent. I must say I have not been satisfied of that congruity on the evidence led by Mr Godbold.
[31]Transcript page 7 line 36.
[32]Transcript page 10 lines 25 – 27.
Further, Mr Gall said Mr Vosper’s reliance on the Cordell Housing and Building Cost Guide, a reference tool not uncommonly relied on by experts in building cases before the Tribunal, was a mistake. I note he did not say Cordell was an inaccurate tool generally. He gave reasons for his position. He said
(t)he Godbolds have spent money to complete the works and generally speaking, subject to the observations I have made in the Second Aquenta Report, they have proof of what they have spent. What the Godbolds paid to complete the works is the best guide of what those works would cost in the market… There is no basis to believe that the Godbolds have paid more than a reasonable price to complete the works given that they have generally contracted the same trade contractors as the previous builder had contracted to complete the works…. I understand from reviewing Mr Godbold’s affidavits and from discussions with Mr Godbold that the specification for the works was a maximum price specification. It would not be appropriate to use Cordell for this kind of specification.[33]
[33]Exhibit 1 at [12].
If, by what he said Mr Gall is asserting that the prices paid by the Godbolds were market prices simply because that is the price they paid, as he appears to say, I cannot agree. He assumes surely the prices they paid were market prices. He relies on the use of the former builder’s contractors in completing the work to conclude the prices charged were market value. He doesn’t explain the correlation however and to me the correlation required explanation. What was made very clear at hearing was that there was no tendering in the market place for the work organised by the Godbolds. That was one of the principle complaints about the Godbolds’ costs raised by the Commission.
Mr Godbold said in one affidavit that he and one of the builder’s carpenters tried to obtain the best possible prices for completion of the work and they obtained quotes to finish the work from other contractors but they were more expensive than having the original tradesmen finish the work.[34] Perhaps this is what Mr Gall relied on. But in another affidavit Mr Godbold said he and his wife were forced to have the work completed by the builder’s contractors.[35] He expanded on that in cross-examination to say otherwise there could have been a problem getting certificates.[36] He made it clear in cross-examination that he did not obtain competitive quotes from any trades.[37] He considered he and his wife had no option but to use the existing contractors and therefore they “elected” to use them.[38] Where Mr Godbold talked about obtaining quotes in his complaint to the Commission[39] what he was referring to was the estimates the builder’s contractors gave him as to their costs for them to complete the job[40].
[34]Exhibit 3 at [33].
[35]Exhibit 4 at [12].
[36]Transcript page 44 lines 21 – 22.
[37]Transcript page 56 lines 28 – 47 and page 57 lines 1 – 9.
[38]Transcript page 44 lines 17 – 18 and 25 – 26.
[39]Exhibit 7 at page 74.
[40]Transcript
According to Mr Godbold he had the contactors do no more than complete the contract to the same specification as under the builder’s contract. But there was no evidence from any of the contractors to show what they did and how they charged for it. Some of the contractors were owed money at the time by the builder. Did this influence their charges to the Godbolds? One cannot know because there was no evidence about that. And yet Mr Gall says what the Godbolds paid to complete the works is the best guide of what those works would cost in the market. I challenge the logic of that statement in the absence of any evidence that any competitive quotations for the work was obtained. Mr Gall does not say that in his expert opinion the costs charged were reasonable and competitive in the market place.
I note Mr Gall also based his opinion about the lack of usefulness of the Cordell guide in part because he had been advised by Mr Godbold that the work under the contract was pursuant to a maximum price specification. That concept, if I can call it such, formed no part of the contract executed between the parties. Mr Godbold said he had a certain “expectation”[41] about the maximum contract price, but no such expectation was reflected by provision in the contract. Therefore it cannot affect the costs of completion of work under the contract as at date of termination. That misleading concept may well have affected Mr Gall’s conclusions.
[41]Exhibit 4 at [6].
Given this, Mr Gall’s evidence is of limited use. That is not because his expertise is limited but because an expert’s opinion resting on certain assumptions of fact not established by the evidence is of little value. As stated by Heydon J in Dasreef Pty Ltd v Hawchar[42]:
Opinion evidence is a bridge between data in the form of primary evidence and a conclusion which cannot be reached without the application of expertise. The bridge cannot stand if the primary evidence end of it does not exist. The expert opinion is then only a misleading jumble, uselessly cluttering up the evidentiary scene.[43]
[42][2011] HCA 21.
[43]Ibid [90]; R v Ping [2205] QCA 472 at 43 per Chesterman J; and see Heydon J in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305.
Is Mr Vosper’s evidence also of limited use? The principle criticism of Mr Vosper’s evidence is that he did not determine the reasonable cost of completing the contract as at date of termination. But as pointed out, here the owners had had the work completed. As such the question becomes were the actual costs of completion reasonable. An insurer is entitled to refuse to pay costs outside competitive parameters on the basis such costs are excessive and prejudice their interests.[44] Costs are generally adjudged within competitive parameters and therefore reasonable through testing via a tender or quotation process. That was not done here though the owners were in a position to do that during the course of completing the work. In so far as Mr Vosper’s evidence, and also that of Mr Gall’s, addresses the issue whether the costs incurred by the Godbolds were costs required to complete the work under the contract, and whether those costs were reasonable, the evidence is of assistance.
[44]Insurance Contracts Act 1984 (Cth) s 54(2).
Agreed Items
Some items are agreed. Those are painting $10,010; Internal doors $932.80; cabinet work $18,445.50; port-a-loo $343.86; decking $7,500; timber floor and shutters $17,156 and a bar roller shutter $2,800. The agreed items total $57,188.16.
Prime Cost and Provisional Cost Items
Tiling. Supply of tiles was an agreed prime cost of $27 per square metre for both wall and floor tiles under the contract. Mr Gall did not explain why he paid that no heed. Mr Vosper relies on the Cordell price guide to calculate a cost for both supply and fixing. He estimated there were 30 square metres of floor tiles and 40 square metres of wall to be supplied and fixed. Cordell suggests $78.78 per square metre for supply and fixing of floor tiles and $82.00 per square metre for supply and fixing of wall tiles. Mr Vosper doesn’t say what Cordell provides for fixing only but the cost per square metre for supply of average builder’s range tiles was $30 per square metre. Mr Gall says fair wastage should be considered and the area of tiles needed was in the order of 85 square metres rather than Mr Vosper’s 70. Mr Gall allows $10 per square metre for bedding 70 metres of tile area plus labour to fix at 1.25 hours per square metre at $70 per hour which totals $6825. That calculates out to a rate of $97.50 per square metre for fixing only, approximately $20 per square metre more expensive than the Cordell price for both supply and fixing.
The owners argue the “maximum specification quote” meant it was not intended the owners should pay more than the provisional or prime costs nominated in the contract. I have already explained that concept is no part of the contract. Besides that, it appears it was the Godbolds who chose the tiles. They presumably knew the prime cost under the contract. They ignored it.
I accept Cordell should apply. Mr Gall’s suggestion as to cost to fix is so far above the Cordell estimate it called for an explanation and that was not given other than to say Cordell was not appropriate. Mr Gall does not challenge the Cordell figures as not reflecting market values. I conclude the cost of supply of tile must be limited to $27 per square metre. I shall accept Mr Gall’s inclusion of 15 square metres of wastage is appropriate given Mr Gall says some of the tiling was difficult[45] and accordingly the owners are entitled to claim for the supply of 85 square metres of tiles at $27 per square metre which is $2,295. Applying a generous fixing fee taking into account the difficult tiling work of $60 per square metre on 70 square metres, that amounts to $4,200. The total cost appropriately allowed for tiling is therefore $6,495.
[45]Transcript page 19 lines 30 – 34.
I apply similar reasoning in respect of the other prime cost or provisional items under the contract to allow the owners the following claims: the fireplace $3,300[46]; railings $5,383[47]; shower screens $1,100[48] and flyscreens $2,000[49]. The latter claim can only relate to flyscreens given security screens are excluded from the contract.[50]
[46]Exhibit 5 annexure DV2 pages 32 and 57.
[47]Ibid annexure DV2 pages 32 “verandah post and rails” and 57 “handrails and balustrades”.
[48]Ibid annexure DV2 pages 32 and 58.
[49]Ibid annexure 2 at pages 32 and 57.
[50]Ibid annexure DV2 pages 77.
The prime cost and provisional sum items total $18,278.
Evidenced Claims
Carpentry and building. Mr Vosper allows $30,132 for labour and materials associated with carpentry and building costs. That is based on sighted invoices. Mr Gall says the amount of $43,885.96 is fair and reasonable. That includes amounts claimed without documentary evidence. In an affidavit sworn 6 December 2013 Mr Godbold says he has misplaced some relevant invoices with respect to various items, but ‘the relevant works for which I claim (sic) carried out and I have paid for those works’. He allows he is not a quantity surveyor or construction professional. He has simply done the best he can.[51] I think it reasonable that the Godbolds generally be required to evidence their loss, particularly given their admitted inexperience with respect to construction matters. What amounts to evidence of loss is capable of some flexibility. I consider it is appropriate to accept payments evidenced by invoices or bank payments. My calculation of such based on the documents supplied by Mr Godbold to the Commission[52] total at $37,479.57. That amount is allowed the owners.
[51]Exhibit 4 at [23] – [24].
[52]Exhibit 7 at 764 – 808.
Plumbing. Similarly I find acceptably substantiated costs here of $9,098. I accept Mr Godbold’s evidence that the excluded Bathroom Warehouse item of claim for $1,772 was a cost incurred by him through an agent.
Air-conditioning. As previously explained, I have placed little weight on the builder’s variations. The builder’s variation for this item costs at $1,404.74 which includes a builder’s margin. Mr Vosper says the work covered by that variation was only the rough-in of the pipe work, not the supply and installation of air-conditioners. Mr Godbold agrees that air-conditioning was a variation though he initially attributed a broad brush figure of $2,500 to that item. The cost claimed by Mr Godbold[53] in his affidavit sworn 14 February 2012 was $2,218.50. Mr Gall had reference to the contract for this particular item. He said the contract made provision for one air-conditioning unit. Mr Vosper challenged that assertion. Indeed air-conditioning does not appear to have formed any part of the original work under the contract. All very confusing. In the circumstances, given I have accepted Mr Godbold’s evidence that air-conditioning was an agreed variation, I propose to allow Mr Godbold the amount claimed to be due by his expert less the addition of any builder’s margin. The owners are allowed $1,921.70 under this head of claim. It should be noted this finding does not reduce the total accepted costs of variations under the contract of $36,554. As explained that finding is based on a very broad brush approach and derived as the difference between the sum of the total budget figure of the owners of $400,000 and the contract price.
[53]Exhibit 3 at [35].
Electrical. The Commission relies on the Cordell Guide for supply and installation of 34 down lights, 17 wall mounted lights and 16 power points. Mr Vosper says he counted those fixtures during his inspection. Mr Gall based his estimate on invoices for electrical work done for the Godbolds. There has not been to my satisfaction any marriage of the expenditure by the Godbolds on electrical items and the reasonable cost of completing the electrical work under the contract as at date of termination. I conclude the use of Cordell is therefore more appropriate in the circumstances. They should be awarded the cost calculated by Mr Vosper on that basis of $6,035.
Waterproofing Certificate
The owners claim $1,000 paid to Blakes Waterproofing for waterproofing work done prior to termination. The builder had been billed $1,230.90 and he had not paid. Mr Godbold says the contractor refused to provide a certificate for the waterproofing work unless at least $1,000 was paid off the outstanding invoice. Mr Godbold argues his claim to that amount is reasonable in the circumstances because they required a waterproofing certificate. If that money had not been paid there would have been no certificate. The Commission says the owners have not suffered loss associated with any failure to complete waterproofing work.
I accept a certificate was necessary. Mr Vosper said in cross-examination the certificate was necessary for final certification. There was no evidence adduced however whether another waterproofing contractor would have certified the completed work if asked, nor how much that other contractor would have charged to do that if he would have done it. Evidence was necessary on the point. I feel any new waterproofing contractor would have taken some time to inspect the existing work. In the circumstances I feel the full amount paid should not be allowed without that further evidence. I do however allow an amount of $400 in respect of the waterproofing certification in acknowledgement that a certificate was necessary.
Retaining Wall and Excavation
There is no dispute that the contract originally provided for a two bay carport. Mr and Mrs Godbold decided not to build the carport after terminating the contract. They have however excavated a sloping driveway and retaining wall at a cost of $22,400.[54] They claim the cost of the latter in lieu of the cost of completing the carport.
[54]Exhibit 3 at [36].
The Commission says they cannot make that alternate claim. By resiling from completion of the carport there is no failure to complete that part of the contract. From the perspective of the owners they say this would have been a variation to the contract if it had proceeded and they should not be penalised by choosing to vary the works.
There was no variation however. That would at least have required the builder’s agreement.[55] No such point was reached. If there was no variation to change the carport to the excavation of a sloping driveway and retaining wall, then that was no part of the contract. The Policy only covers loss under the contract. There can be no claim for the cost of excavating the driveway and adding a retaining wall against the Commission under the policy of insurance.
[55]Clause 12.2 contract general conditions.
The issue for consideration however is whether the price for the carport is to be factored into the equation in some manner. By clause 1.5(a) of the Policy the Commission must assess the reasonable cost of completing the contract less the insured’s remaining liability under the contract at the date of termination. The Commission excludes from their assessment of costs to complete the contract the costs claimed for the excavation of a sloping driveway and retaining wall in lieu of the carport. But the Commission has included the work to build the carport in the second part of its exercise in determining the amount payable under the policy, that is, in calculating the owners’ remaining liability under the contract. The Commission must act reasonably. Either it includes the cost of completing all parts of the contract at the date of termination, and then pays a reasonable amount to have all those parts completed, or acknowledges the decision by the insured not to claim for a part of the contract, and reduces its calculation of the owners’ remaining liability under the contract accordingly. The statutory insurance scheme is established under the Queensland Building and Construction Commission Act 1991 and the objects of that legislation include regulation of the building industry to achieve a reasonable balance between the interests of building contractors and consumers and to provide support for consumers.[56] Factoring in the cost of the carport in either fashion described achieves that.
[56]Queensland Building and Construction Commission Act 1991 ss 3(a)(ii), (c).
Given the owners do not intend to build the carport, a reasonable allowance for that work must be made in calculating the owners’ liability under the contract. Unfortunately neither party turned their mind to this cost. Mr Gall said that the costs of the driveway and retaining wall are equal to the costs of construction of the carport, and allows $23,000. I accept his evidence on that point. The owners’ liability under the contract is reduced by that amount.
Rectification Including Slab, Shed and Retaining Wall
The owners claim $12,034 costs to rectify defective work performed by the builder. They rely on an invoice from Can-Crete Pty Ltd dated 10 July 2012. That invoice doesn’t refer to defective work however. It simply details certain additional concreting work at the property. The owners complain about water and drainage issues with the slab with water accumulating and puddling, water flooding a garden shed beneath the deck and water coming through the retaining wall.
Mr Gall gives no opinion on this. He simply refers to and accepts the Can-Crete invoice as an appropriate claim. The owners’ claim is not about any breach of the Building Code of Australia, but that the complaints about water evidence breaches of some Australian Consumer Law (ACL) guarantees[57].
[57]Competition and Consumer Act 2010.
There is no evidence that any of the complaints show defective building work. There has been no evidence adduced as to the manner in which the builder failed to exercise due care and attention nor how it is not fit for purpose. Mr Vosper’s evidence is that the BCA does not require slabs to be constructed with falls, the shed is able to be described as a garden shed and there was no requirement under the contract to have the retaining wall waterproofed given it is not required as part of the weatherproofing of the habitable areas. Mr Vosper’s evidence is not challenged in any meaningful way and I accept it and conclude the claim for defective building work must fail. I might also note, given the ACL only came into operation from 1 January 2011, and the defective work alleged was done before that, the guarantees under the ACL have no application here.
Accordingly, I find the owners can claim the following amount under the Policy:
Original contract price $363,446.00
Plus variations 36,554.00
400,000.00
Less payments made (including balance deposit) 363,446.00
36,554.00Less carport cost 23,000.00
Remaining liability under the contract 13,554.00
Cost of completion
Painting $10,010.00
Internal doors 932.80
Cabinet work 18,445.50
Port-a-Loo 343.86
Decking 7,500.00
Timber floor and shutters 17,156.00
Bar roller shutter 2,800.00
Tiling 6,495.00
Fireplace 3,300.00
Railings 5,383.00
Shower screens 1,100.00
Flyscreens 2,000.00
Carpentry 37,479.57
Plumbing 9,098.00
Air-conditioning 1,921.70
Electrical 6,035.00
Waterproofing certificate 400.00
130,400.43 130,400.43
Less remaining liability under the contract 13,554.00
116,846.43
Less prepayment to builder 72,689.20
Entitlement under the Policy $44,157.23
1
6
0