Hajrudin Turcinovic t/as HNT Civil Building Construction Maintenance v Kavvadas
[2013] QCAT 265
| CITATION: | Hajrudin Turcinovic t/as HNT Civil Building Construction Maintenance v. Kavvadas [2013] QCAT 265 |
| PARTIES: | Hajrudin Turcinovic t/as HNT Civil Building Construction Maintenance (Applicant) |
| V | |
| (Respondent) |
| APPLICATION NUMBER: | BD401-08 |
| MATTER TYPE: | Building matters |
| HEARING DATES: | 12 September 2012 21 March 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Sandra G Deane, Member |
| DELIVERED ON: | 20 June 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. 2. 3. Each of the parties are to file in the Tribunal a copy and provide a copy to the other party of any submissions: a) on costs generally (including reserved costs if any) setting out the legal basis and details of any amounts claimed on or before 4pm on 22 July 2013; and b) in reply to such written submissions on or before 4pm on 5 August 2013. 4. Unless any party requests an oral hearing in relation to any application for costs such application shall be determined on the papers not before 5 August, 2013. |
| CATCHWORDS: | Domestic Building Dispute – variations not reduced to writing prior to work being performed – suspension of works – whether repudiation - whether entitlement to terminate – what damages flow as a consequence of termination – reasonable costs to complete Queensland Civil and Administrative Tribunal Act 2009 s93 Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37 Shevill v Builders Licensing Board (1982) 149 CLR 620 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Hajrudin Turcinovic t/as HNT Civil Building Construction Maintenance, in person; assisted on 21 March 2013 by Mr Paul Baggaley, employee |
| RESPONDENT: | |
REASONS FOR DECISION
Mr Turcinovic was a builder. He entered into a contract to demolish an existing house and build a new house for Mr Kavvadas at Princess Street, Bulimba. The contract was terminated prior to the works reaching completion. Each party contends they terminated for the others breach and are entitled to damages.
Mr Turcinovic seeks payment for variations, adjustments to prime cost items, delay costs, damages[1] and interest.
[1] Lost profit and overhead on the works to complete.
Mr Kavvadas seeks damages[2], liquidated damages and interest.
[2] Costs to complete.
Mr Kavvadas did not attend the Tribunal on 21 March 2013 nor did he apply for an adjournment. I was satisfied from the Tribunal records that Mr Kavvadas had notice of the adjourned hearing date and proceeded to hear the matter[3]. At the conclusion of the hearing on 21 March 2013 I made directions affording both parties a final opportunity to make written submissions. Both parties filed final written submissions, which I have considered.
[3] Queensland Civil and Administrative Tribunal Act 2009 s 93.
Is Mr Turcinovic entitled to payment for variations and adjustments to PC items?
Mr Turcinovic claimed 14 variations and claimed a builder’s margin on each of them. Mr Turcinovic also claimed adjustments to 3 PC items.
Mr Kavvadas denies the entitlement to claim builder’s margin with respect to variations and PC items on the basis that the contract does not entitle such a claim.
Item 6 of the Contract provides that “if the Contract Price is subject to an increase in accordance with clause 12, 13, 14 (Variations) or Clause 9 (Prime Cost Items & Provisional Sums) then the following builder’s margin is to apply to that increase.” No amount has been inserted. It stipulates that if nothing is stated then 20% is to be applied.
Mr Kavvadas denies each of the variation claims except one. He accepts the item relating to ‘providing drainage for shower in garage’ but disputes the amount claimed.
It is not disputed that all of the variations claimed were not reduced to writing, agreed and signed as required by the Domestic Building Contracts Act 2000 (DBC Act)[4]. It is not contended that the work was required to be carried out urgently to justify that it was not reasonably practicable to produce a variation document before carrying out the work.[5] It is also not disputed that the provisions of the contract in relation to variations were not followed for each of the variations claimed.[6]
[4] Domestic Building Contracts Act 2000 ss 79, 80, 81, 82.
[5] Ibid s 79(2).
[6] Clause 12.
Mr Turcinovic’s claim for variations is therefore dependent upon establishing an entitlement under section 84(4) of the DBC Act. The contract was a fixed price contract. Where there is no variation document if a builder is entitled to recover an amount for a variation under the DBC Act the amount is the cost of carrying out the variation plus a reasonable profit.[7]
[7] Domestic Building Contracts Act 2000 s 84(6).
It is necessary to establish:
(a) either:
(i) there are exceptional circumstances that warrant recovery of an amount; or
(ii) the builder would suffer unreasonable hardship by the section being applied; and
(b) it would not be unfair to the owner to allow the builder to recover an amount.
The Appeal Tribunal has previously found that it would be inconsistent with the purpose of the DBC Act to find unreasonable hardship just because a builder incurred and cannot recover the costs of a non-compliant variation[8]. The Appeal Tribunal in that case also considered that the test requires an assessment of the impact of the inability to recover both subjectively i.e. the hardship caused to the particular builder and objectively i.e. the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs.
[8] Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37.
Mr Turcinovic and Mr Baggaley gave oral evidence that:
a)Mr Kavvadas and Mr Turcinovic had a history of contracts where Mr Kavvadas requested variations, the work was carried out, the variations were then put in writing only to the extent they were documented in the next progress claim and the variations were paid.
b)Mr Turcinovic had adopted the same methodology in this contract, recording the variations fortnightly in the progress claims.
c)The failure of Mr Kavvadas to pay for the variations as they were performed and claimed put financial pressure on Mr Turcinovic which lead to Mr Turcinovic suspending the works.
Mr Turcinovic’s final written submissions were that due to Mr Kavvadas’ failure to pay for the variations requested by him, Mr Turcinovic has suffered extreme hardship, has lost his builder’s licence and livelihood.
There is no documentary evidence before the Tribunal as to the cause of Mr Turcinovic losing his builder’s licence. At the hearing on 21 March 2013 Mr Turcinovic informed the Tribunal that he had lost his licence because he had not been able to meet the prudential requirements.
I accept that it is more likely than not that Mr Turcinovic’s failure to receive payment from Mr Kavvadas to offset the costs of performing variation works at Princess Street contributed to his failure to meet the prudential requirements.
Both parties have referred in their evidence and submissions to another building contract between them (referred to as Palm Square, Morningside), which was undertaken at least in part concurrently with the performance of the contract the subject of this dispute. The parties are also in dispute in relation to the Morningside contract and that dispute is the subject of separate Tribunal proceedings. It appears that at one time the parties enjoyed a good relationship but that this has broken down during the course of these 2 contracts.
It is evident from a review of published decisions of this Tribunal that this is not an isolated incidence where Mr Turcinovic has failed to comply with the provisions of the DBC Act in relation to variations.[9]
[9] Habchi and Anor v Harjudin Turcinovic [2011] QCAT 309; HNT Civil Construction v Mahamoud [2013] QCAT 36.
A matter that is relevant to quantifying the amount payable[10] and to a finding as to whether the inability to recover for a non compliant variation might constitute unreasonable hardship is the actual costs incurred by the builder in carrying out the variation[11]. Some evidence of the cost of the work performed has been tendered, which is set out in relation to each variation claim. In some cases there has been no evidence of actual costs in the form of invoices from third parties for services or materials or timesheets for labour.
[10] Domestic Building Contracts Act 2000 s 84(6)(b).
[11] Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37.
There is some evidence that Mr Turcinovic brought to Mr Kavvadas’ attention the financial difficulty the work on this dwelling was causing both due to the method of valuation of the work by Mr Kavvadas’ financier’s valuers and by non payment of amounts relating to claimed variations.[12]
[12] HT17 – 29 July 2008.
In addition to relying upon the DBC Act Mr Kavvadas contends that there was an agreement reached on or about 9 October 2008 such that any variations and adjustments to PC items would be capped at $25,000 and would only be payable upon completion. He contends that as the contract was terminated prior to completion no amount is payable for the variations and adjustment to PC items. Mr Turcinovic denies this was the agreement reached at a meeting between Mr Kavvadas and Mr Baggaley on 9 October 2008.
Mr Baggaley gave evidence that the letter (incorrectly dated 14 October 2007) set out the agreement and that the handwritten annotations dated 15 October 2008 was not agreed between them.[13] Mr Baggaley gave evidence the $25,000 was agreed to be an interim payment and that he did not agree that it would not be paid until completion and include PC adjustments which had not yet been finalised.
[13] HT21.
Mr Kavvadas was not available at the hearing to be cross examined by Mr Turcinovic on his written evidence or questioned by the Tribunal. I prefer the evidence of Mr Baggaley. Mr Turcinovic had been expressing concerns about carrying the costs of the work. It is more likely than not that he would not have agreed to defer receipt of payment. It may have been that there was not a true meeting of the minds and therefore no agreement. Mr Turcinovic did not seek to enforce the agreement. I am not satisfied that the agreement contended for by Mr Kavvadas was reached.
Mr Kavvadas sought to rely upon a deed (signed by both parties) which warranted to his financier that there had been no variations in order to seek to deny the existence of variations claimed by Mr Turcinovic.[14] There is conflicting evidence as to when the deed was signed. Mr Turcinovic in his statement[15] gave evidence that it was signed in August 2007. The copy of the deed attached to Mr Kavvadas’ statement[16] is dated 20 December 2007. On the evidence before the Tribunal this would potentially affect Mr Turcinovic’s variation 1 and Mr Kavvadas’ claim that the Contract was amended to include liquidated damages.
[14] HT2 – cl2.2; KV3
[15] 23 November 2009
[16] KV3
The parties accepted that the financier would not be funding any variations. This is not a claim against or by the financier. On the evidence before the Tribunal both parties continued to discuss and proceed with variations without notifying the financier.
I am not satisfied that the terms of the deed provide Mr Kavvadas with a defence.
Variation 1 - Removal of Tree and Stump grinding - $6,329.40 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
Mr Turcinovic has given evidence that he incurred expenses[17] in relation to the carrying out of this work:
(a)Allied Earthmoving $1,386.00
(b)River City Tree Services $1,133.00
(c)Danny’s Bobcat Hire $3,810.40
[17] HT3
Mr Baggaley gave evidence that:
(a)he met with the tree removalist to discuss and arrange a quote;
(b)the next day he spoke to Mr Kavvadas, advised him of the quote received for the removal of the tree and got oral approval to proceed prior to removing the tree.
Mr Kavvadas denies this conversation took place prior to the tree being removed and alleges that Mr Baggaley provided a rough cost of $2,000 after it had been removed. Mr Baggaley denies this occurred. Mr Kavvadas gave evidence that he would not have approved a quote for $6,329.40 or thereabouts as he considers it excessive.
It is not clear from Mr Baggaley’s evidence whether the quote he received was only from the tree removalist, River City Tree Services or included quotes from the other service providers.
Mr Kavvadas admits that the tree was removed but contends that it was reasonably foreseeable that the tree would need removal and therefore ought to have been included in the original scope of works. The Contract[18] provides that the builder is not entitled to additional payment in these circumstances. The DBC Act is in similar terms.[19]
[18] Clause 12.6
[19] Section 84(3)(a)(ii) and 84(5) DBC Act
Mr Turcinovic bears the onus of proof in relation to establishing an entitlement. There is no evidence before the Tribunal upon which I could be satisfied that it was not reasonably foreseeable that the tree would need to be removed.
The different recollections surrounding this item demonstrate why the parliament imposes obligations on the builder to reduce proposed variations to writing.
Variation 2 – Shift garage to give 6m frontage - $2,000 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
Mr Turcinovic has given evidence that he incurred expenses[20] in relation to the carrying out of this work to Peter Woods in the sum of $1,005.00.
[20] HT7
The balance of the claim, $995, is for “sundry materials concrete”[21]. There is no evidence in relation to incurring of actual costs for this amount.
[21] HT20
It is not disputed that the contract drawings show a set back less than 6m. Mr Kavvadas gave evidence that a 6m set back is standard and therefore Mr Turcinovic as an experienced builder should have been aware of this and not commenced the footings until he received clarification.
Whilst the plans and obtaining of building approval was the responsibility of Mr Kavvadas there is no evidence before the Tribunal upon which I could be satisfied that:
(a)it was not reasonably foreseeable by an experienced builder that building approval would require a 6m set back.
(b)it was reasonable for an experienced builder to commence pouring the footings as designed prior to ensuring building approval had been received.
Variation 3 – Change of floor plans ground floor to first floor - $5,665 plus builder’s margin
I find that Mr Kavvadas is to pay $5,939.74 for this item.
Mr Rowland Lampard’s report confirmed that Bay Island Septic invoiced Mr Turcinovic $5,000 (incl GST)[22] and $165 (incl GST)[23] for this work.
[22] Attachment E invoice 461801
[23] Attachment E invoice 461810
Mr Kavvadas admits he requested this change to the dwelling and that additional work would be required. Mr Turcinovic and Mr Farquahar[24] gave evidence that by the time of this request a considerable amount of work had been performed and was required to be amended and new work was required.
[24] Statement Don Farquhar dated 23 November 2009
Mr Kavvadas contends that Mr Farquahar said he would need to speak to Mr Turcinovic but said that it should only cost about $2,000-$3,000 and that he agreed to pay these costs. Mr Farquahar denies discussing any amount other than a $5,000 plus amount.
Given the significant layout change required as a result of this request by Mr Kavvadas and the stage of the works when the request was made I find that it is more likely than not that Mr Farquahar provided an estimate of $5,000 plus. Mr Turcinovic has incurred costs to a third party of $5,165 (incl GST) in carrying out this work at Mr Kavvadas’ request.
In the circumstances I find that Mr Turcinovic would suffer unreasonable hardship if he were prevented from recovering an amount in respect of this work given that he has incurred this liability to a third party.
I find it would not be unfair to Mr Kavvadas for Mr Turcinovic to recover an amount given that Mr Kavvadas requested this work and acknowledges that additional work was required as a consequence and has received the benefit of that work.
I find that Mr Turcinovic is entitled to the proven cost of carrying out the work, $5,165 (incl GST) plus a reasonable profit.
Through his progress claims and in this proceeding Mr Turcinovic claimed a builder’s margin of 15% for variations. Given that Item 6 of the Contract provides for 20% I accept that 15% is reasonable.
I find that Mr Kavvadas is to pay $5,939.74 for this item calculated as follows:
Bay Island Septic $4,695.45 (excl GST)
Margin 15% $ 704.32
Sub- total $5,399.77
GST 10% $ 539.97
Total $5,939.74
Variation 4 - Provide drainage for shower in garage- $600 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item other than the amount conceded by Mr Kavvadas.
Mr Kavvadas concedes an amount of $127.69.[25]
[25] Mr Kavvadas’ response to Mr Turcinovic’s variations cost schedule filed 12 September 2012.
There is no evidence in relation to incurring of actual costs for this item.
I find that Mr Kavvadas is to pay $127.69 in respect of this item.
Variation 5 – Extra shower in bathroom - $752 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
There is no evidence in relation to incurring of actual costs for this item.
Variation 6 – Glass inserts in garage door - $483 plus builder’s margin
I find that Mr Kavvadas is to pay $610.99 for this item.
Mr Turcinovic has given evidence that he incurred expenses[26] in relation to the carrying out of this work to B&D Doors. There is evidence before the Tribunal that such a door was requested and installed.
[26] HT20.
Mr Kavvadas admits he requested this change to the dwelling and that he received a written quote and that he acknowledged it was acceptable.[27]
[27] HT16.
In the circumstances I find that Mr Turcinovic would suffer unreasonable hardship if he were prevented from recovering an amount in respect of this work given that he has incurred this liability to a third party. I find it would not be unfair to Mr Kavvadas for Mr Turcinovic to recover an amount given that Mr Kavvadas requested this work, was provided with a written quote, approved that quote and has received the benefit of that work.
I find that Mr Turcinovic is entitled to the proven cost of carrying out the work, $483 plus a reasonable profit plus GST.
I find that Mr Kavvadas is to pay $610.99 for this item calculated as follows:
B&D Doors $483.00
Margin 15% $ 72.45
Sub- total $555.45
GST 10% $ 55.54
Total $610.99
Variation 7 – Additional costs for facetted glass - $1,075.80 plus builder’s margin
I find that Mr Kavvadas is to pay $1,237.17 for this item.
Mr Lampard’s report confirmed that the contract drawings show facetted panels as 2,400mm and 2,100mm whereas the dwelling as constructed has panels 2,830mm and 2,585mm.
Mr Lampard’s report confirmed that Bretts Glass & Aluminium quotation[28] was increased by $1,075.80 (incl GST) to allow for increased height of the facetted panels[29].
[28] Attachment G.
[29] Attachment H; Statement Paul Baggaley dated 23 November 2009 - PB3.
Mr Kavvadas does not give any evidence in relation to this claim. There is no evidence before the Tribunal as to why Mr Turcinovic would have changed this item and incurred additional costs if Mr Kavvadas did not request it. I find that it is more likely than not that Mr Kavvadas requested this change.
In the circumstances I find that Mr Turcinovic would suffer unreasonable hardship if he were prevented from recovering an amount in respect of this work given that he has incurred this liability to a third party. I find it would not be unfair to Mr Kavvadas for Mr Turcinovic to recover an amount given that Mr Kavvadas requested this work and has received the benefit of that work.
I find that Mr Turcinovic is entitled to the proven cost of carrying out the work, $1,075.80 plus a reasonable profit plus GST.
I find that Mr Kavvadas is to pay $1,237.17 for this item calculated as follows:
Bretts $ 978.00 (excl GST)
Margin 15% $ 146.70
Sub- total $1,124.70
GST 10% $ 112.47
Total $1,237.17
Variation 8 – Infill concrete - $600 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
There is no evidence in relation to incurring of actual costs for this item.
Variation 9 – Additional room above garage - $3,040 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
There is no evidence in relation to incurring of actual costs for this item.
Variation 10 – Amend kitchen window - $600 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
There is no evidence in relation to incurring of actual costs for this item.
Variation 11 – Reconfigure rear stairs - $1,600 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
There is no evidence in relation to incurring of actual costs for this item.
Variation 12 – Change profile of cornice - $2,200 plus builder’s margin
I find that Mr Kavvadas is to pay $2,530 for this item.
Mr Turcinovic contends that Mr Kavvadas requested this change. Mr Kavvadas denies requesting this work. Mr Turcinovic gave evidence that he had no reason to request the plasterer to perform this change unless Mr Kavvadas had asked for it. I find that it is more likely than not that Mr Kavvadas requested this change.
Mr Lampard gave evidence that the as constructed cornice and square set joints was a variation to that set out in the contract drawings.
Mr Lampard’s report confirmed that Springfield Plaster’s quotation[30] was increased by $2,200 (incl GST) to allow for this work.[31]
[30] Attachment I.
[31] Attachment J – invoice 1035.
In the circumstances I find that Mr Turcinovic would suffer unreasonable hardship if he were prevented from recovering an amount in respect of this work given that he has incurred this liability to a third party. I find it would not be unfair to Mr Kavvadas for Mr Turcinovic to recover an amount given that Mr Kavvadas requested this work and has received the benefit of that work.
I find that Mr Turcinovic is entitled to the proven cost of carrying out the work, $2,200 (incl GST) plus a reasonable profit.
I find that Mr Kavvadas is to pay $2,530 for this item calculated as follows:
Springfield Plaster $2,000 (excl GST)
Margin 15% $ 300
Sub- total $2,300
GST 10% $ 230
Total $ 2,530
Variation 13 – AC framing changes - $2,200 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
There is no evidence in relation to incurring of actual costs for this item.
Variation 14 – Extent of tiling changed - $1,600 plus builder’s margin
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
Tiling was a prime cost item subject to adjustment. This claim relates to additional labour (including mortar and grout).
There is no evidence in relation to incurring of actual costs for this item.
Prime Cost Adjustments
The Contract[32] permits an adjustment to the Contract Price where the actual cost of a Prime Cost Item exceeds the amount allowed. The excess amount and builder’s margin may be claimed.
[32] Clause 9.5.
Mr Turcinovic claims for additional tiles caused by the layout change. A remeasure[33] was provided to Mr Kavvadas showing the additional cost of tiles as $4,091.03.
[33] HT18.
Mr Lampard confirmed that the tiling as constructed is more extensive than that set out in the contract drawings.
I find that Mr Kavvadas is to pay the PC adjustment for tiling in the sum of $5,175.15 calculated as follows:
Extra Tiling $4,091.03
Margin 15% $ 613.65
Sub- total $4,704.68
GST 10% $ 470.47
Total $ 5,175.15
Mr Turcinovic claims $2,916.75 (plus builder’s margin plus GST) for additional fees above the $5000 allowed.[34]
[34] Claimed HT20
Mr Lampard’s report attaches copies of invoices for the fees claimed evidencing costs incurred.[35]
[35] Attachment L
I find that Mr Kavvadas is to pay the PC adjustment for fees in the sum of $ 3,689.69 calculated as follows:
Fees $2,916.75
Margin 15% $ 437.51
Sub- total $3,354.26
GST 10% $ 335.43
Total $ 3,689.69
Mr Turcinovic claims $1,520 (plus builder’s margin plus GST) in respect of an adjustment for the costs of air-conditioning.
Mr Lampard’s report attaches a copy of the air-conditioning quotation in the sum of $21,520 (incl GST).[36] The PC sum was $20,000.
[36] Attachment M
I find that Mr Kavvadas is to pay the PC adjustment for air-conditioning in the sum of $1,922.80 calculated as follows:
Air-conditioning $1,520.00
Margin 15% $ 228.00
Sub- total $1,748.00
GST 10% $ 174.80
Total $ 1,922.80
Mr Turcinovic claims interest under the Contract on amounts owing. This claim can only apply to the PC adjustments totalling $10,787.64 as the amounts for the variations are not owing pursuant to the Contract.
The Contract provides[37] that if the owner fails to make any payment within the time under the Contract the Builder is entitled to interest on the amount outstanding at the rate specified in item 19 from the time for payment until the date of payment. Item 19 provides 15% per annum calculated on a daily basis. Item 20 provides that the time for payment after the Builder submits a claim is 14 days.
[37] Clause 11.9
Mr Turcinovic made a claim for PC sum adjustments dated 17 November 2008. [38] Interest commenced to accrue on the PC adjustments totalling $10,787.64 on and from 2 December 2008 at a rate of 15% per annum or on my calculation at a rate of $4.43 per day. The period on and from 2 December 2008 to 20 June 2013 is 1662 days.
[38] HT25
I find that Mr Kavvadas is to pay Mr Turcinovic interest in the sum of $7,362.66 and that interest continues to accrue at the rate of $4.43 per day until the amount of $10,787.64 for PC adjustments is paid.
Other variations
Mr Kavvadas in his statement dated 14 May 2010 suggests that Mr Turcinovic ought to have decreased the contract price in relation to a requested variation to replace a balcony with an awning. Mr Kavvadas did not provide any evidence as to the appropriate adjustment. Mr Turcinovic gave evidence that the awning was more complicated than the proposed balcony and therefore there was no adjustment.
I find that Mr Kavvadas has failed to prove on the balance of probabilities that an adjustment in his favour ought to be made.
Mr Kavvadas also suggests that Mr Turcinovic ought to have decreased the contract price as although tiling increased this had the consequence that tongue and groove flooring decreased. Mr Kavvadas asserts that tongue and groove flooring is more expensive than tiling. Mr Turcinovic gave evidence that it is not when you take into account water proofing that is required for tiling.
Mr Kavvadas did not provide any evidence as to the cost of tongue and grooving nor the appropriate adjustment.
I find that Mr Kavvadas has failed to prove on the balance of probabilities that an adjustment in his favour ought to be made.
Delay Costs - $4,400
Mr Turcinovic claims delay costs on the basis that he was delayed for 11 days for various reasons including for the variations claimed said to be outlined in a claim dated 28 April 2009.[39]
[39] Amended Application filed 1 May 2009.
I am not satisfied that Mr Turcinovic has established an entitlement to any amount for this item.
He claims preliminaries were $2000 per week or $400 per day. There is evidence that preliminaries were $2000 per week.[40] The claim dated 28 April 2009 does not appear to be before the Tribunal. There is no evidence before the Tribunal as to the affect on the critical path of Mr Kavvadas’ conduct. Extensions of time were not requested during the course of the Contract. The Contract provides that an extension of time is to be made within a reasonable time.[41]
[40] HT4.
[41] Clause 15.1.
I am not satisfied that there is sufficient evidence to find that Mr Kavvadas caused 11 days delay for which delay costs ought to be payable particularly where variations were not claimed in accordance with the terms of the Contract nor the DBC Act. If variations had been claimed in accordance with the Contract delay and any consequential delay costs would have been addressed.[42]
[42] Clause 12.4(c).
Termination
Both parties purported to terminate the contract relying upon a claimed breach by the other and both seek damages from the other flowing from the breach giving rise to termination.
There is conflicting evidence in relation to when the works were suspended for non-payment. Mr Turcinovic’s then lawyers in their letter dated 16 December 2008[43] referred to a suspension by notice dated 29 July 2008[44] and stated that the works had been suspended since July. Mr Turcinovic gave evidence that on or about 16 October 2008 he suspended the works due to Mr Kavvadas’ non-payment of the amounts claimed for variations[45] and because Mr Turcinovic was told by Mr Kavvadas that ‘he had no money’. Mr Kavvadas does not recall that such a conversation occurred.
[43] HT28.
[44] HT17.
[45] Clause16.1(b).
Mr Turcinovic did not give a formal notice of suspension as required by the contract.[46] The letter to which the lawyers referred was in terms of “we will have to invoke clause 16.1(b), “to formally suspend the works, should our reasonable claim not be met”.” Such a letter is foreshadowing a suspension but is not in itself a notice of suspension as contemplated by the Contract.
[46] Clause 16.2.
As discussed earlier in these reasons Mr Turcinovic had not complied with the provisions of the Contract nor with the DBC Act for claiming amounts for variations and therefore the amount claimed for variations and unpaid was not in fact owing under the terms of the Contract and therefore the right to suspend under the Contract had not properly arisen.
If Mr Turcinovic had concerns about Mr Kavvadas’ capacity to pay he could have sought evidence of capacity to pay under the terms of the Contract.[47] There is no evidence that he sought to do so.
[47] Clause 11.2.
Mr Kavvadas did not give notice of intention to terminate in accordance with clause 20.1 of the Contract. The DBC Act provides a right to the owner to terminate in certain circumstances of increased cost or delayed completion.[48] The Contract also expressly refers to such a right.[49] The Contract and the DBC Act do not state that these are the exclusive rights for bringing the Contract to an end such that repudiation would not found a right to termination.
[48] Section 90.
[49] Clause 21.
I am satisfied that Mr Turcinovic’s actions in failing to progress the work in accordance with the Contract since July 2008 or from at least on or about 16 October 2008 until early December 2008 amounted to a repudiation[50] entitling Mr Kavvadas to terminate and claim damages.
[50] Acts evidencing an intention not to be bound by the contract - Shevill – v – Builders Licensing Board (1982) 149 CLR 620.
I find that Mr Kavvadas validly terminated the Contract for Mr Turcinovic’s repudiation by letter dated 4 December 2008[51].
[51] HT27.
Accordingly Mr Turcinovic is not entitled to loss of profit and overhead on the works to complete.
I find that Mr Kavvadas has not established any loss arising out of Mr Turcinovic’s repudiation.
Mr Kavvadas’ asserts that it cost more to complete the dwelling than the Contract Price having regard to the amount he alleges was remaining as unpaid under the Contract and the amount he paid to other contractors and that therefore he has suffered loss.
It is necessary to assess the reasonable costs of the incomplete or defective work under the Contract and to deduct that amount from the total amount payable by Mr Kavvadas under the Contract to determine if any loss has been suffered.
Mr Kavvadas has a duty to mitigate his loss suffered as a consequence of Mr Turcinovic’s breach of contract.
There is no evidence before the Tribunal that:
a)Mr Kavvadas obtained quotes from contractors other than the contractors engaged.
b)the amount paid was reasonable.
c)the only work performed by subsequent contractors which is claimed by Mr Kavvadas was work to complete the original scope of work. Mr Buckley gave evidence that the works performed by Shailer Constructions ‘were no more than necessary than to complete the house on the Site to a reasonable standard”.[52] This does not address the issue of whether all the works were part of the original scope of works.
[52] Statement 15 June 2010, paragraph 19.
I find that Mr Kavvadas has not demonstrated that the work performed by the subsequent contractors for which he claims was only work required to be performed under the original contract. I also find that Mr Kavvadas has not demonstrated that he has mitigated his loss as he was obliged to do.
This matter was first scheduled for hearing on 6 and 7 June 2012. Mr Kavvadas was legally represented until shortly before the original hearing date. All Mr Kavvadas’ witness statements had been filed long before that original hearing date. If there was better evidence of Mr Kavvadas’ claim for damages I would expect that his legal representatives would have ensured that it was provided.
In contrast Mr Turcinovic and Mr Baggaley gave evidence that:
a)the amounts paid under the original contract were in accordance with the valuations of the works performed by Mr Kavvadas’ financier’s valuer. Mr Turcinovic complained to Mr Kavvadas that the valuations of work performed were conservative.
b)there were only minor items of works requiring completion, which would easily have been performed for the remaining moneys under the original contract.
c)they disputed that certain of the items of work claimed by Mr Kavvadas were incomplete at the time Mr Turcinovic was last on site.
d)they disputed that certain of the other items of work claimed were part of the scope of work under the Contract.
e)a subcontractor had returned to complete some items of work alleged to be incomplete and performed that work prior to Mr Kavvadas terminating the Contract.
f)some items claimed were PC items for which an adjustment would have been made and would have been additional to the Contract Price.
The substance of these matters were set out in Mr Turcinovic’s response to Mr Kavvadas’ incomplete work schedule[53] but no supplementary evidence was filed by Mr Kavvadas in response to seek to address these matters.
[53] Served 1 September 2011.
Mr Kavvadas and Mr Buckley were not available at the hearing to be cross examined by Mr Turcinovic on their written evidence or questioned by the Tribunal.
In the circumstances I accept Mr Turcinovic and Mr Baggaley’s evidence, in particular that Mr Kavvadas’ financier’s valuer was ensuring that progress payments reflected no more than the value of the work performed having regard to the Contract Price and the work yet to be performed. In those circumstances the reasonable cost to complete the original contract scope of works was adequately provided for in the balance of moneys owing and no amount has been demonstrated to be payable to Mr Kavvadas as damages.
Liquidated Damages
Mr Kavvadas claims liquidated damages for delayed completion at a rate of $75/day. Mr Turcinovic denies liquidated damages are applicable.
The contract stipulates that liquidated damages are not applicable.[54] Mr Kavvadas gave evidence that the contract was amended on or about 23 August 2007 to include such a term.[55]
[54] Statement Hajrudin Turcinovic – HT1 - Item 18.
[55] Statement Vasilios Kavvadas – KV4.
Mr Kavvadas is the claimant in respect of this aspect and bears the onus of proof to establish his entitlement on the balance of probabilities. I am not satisfied that the contract was amended to provide liquidated damages at a rate of $75/day.
Mr Kavvadas sought to rely upon a deed (signed by both parties) which warranted to his financier that there had been no variations in order to seek to deny the existence of variations claimed by Mr Turcinovic.[56] This is evidence against Mr Kavvadas as to a variation in relation to liquidated damages.
[56] HT2 – cl2.2; KV3.
In any event the document relied upon is ambiguous. It is in terms of bank default interest and not liquidated damages.
Mr Turcinovic and Mr Baggaley gave evidence that:
a)Mr Kavvadas requested Mr Turcinovic to agree to the amendment regarding bank default interest in order to satisfy his financier;
b)at no time was there any discussion that this was a reference to liquidated damages;
c)it was their clear understanding that this did not relate to liquidated damages.
Mr Kavvadas was not available to be cross examined or questioned on this point. I prefer the evidence of Mr Turcinovic and Mr Baggaley in relation to this matter.
Certificates
Mr Kavvadas claimed delivery up of certificates. The evidence before the Tribunal is slim. Mr Turcinovic gave evidence that to the extent that Mr Turcinovic held certificates he has already provided them to Mr Kavvdas.
I find that Mr Kavvadas has not established on the balance of probabilities that Mr Turcinovic has or is responsible for procuring additional certificates.
Summary
Mr Kavvadas is to pay Mr Turcinovic the following amounts:
a) Variation 3 - $5,939.74
b) Variation 4 - $127.69
c) Variation 6 - $610.99
d) Variation 7 - $1,237.17
e) Variation 12 - $2,530
f) PC Adjustments - $10,787.64
g) Interest on PC Adjustments until 20 June 2013 - $7,362.66
h) Interest on PC Adjustments on and from 21 June 2013 - $4.43 per day until payment of PC Adjustments in the sum of $10,787.64
Mr Turcinovic claimed costs in his application. Both parties were legally represented for some time during this dispute. It is appropriate to seek submissions as to costs prior to making a decision about an appropriate costs order.
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