Harris v Cronk
[2012] QCAT 195
•16 May 2012, amended by order on 31 July 2012
| CITATION: | Harris v Cronk and Anor [2012] QCAT 195 |
| PARTIES: | Brian Glen Harris (Applicant/Appellant) |
| v | |
| Malcolm Cronk Sarah Jane Cronk (Respondents) |
| APPLICATION NUMBER: | BD422-08 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 5 December 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Richard Oliver, Senior Member |
| DELIVERED ON: | 16 May 2012, amended by order on 31 July 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The respondents must pay the applicant $1,941.00 by 30 June 2012. |
| CATCHWORDS: | Building Dispute – whether the respondents repudiated the contract by issuing a notice of termination which was declared null and void – where respondents always willing to perform the contract – where the applicant was in breach in not complying with milestones – where house demolished – whether reasonable to demolish the partially built house – whether foundation structurally inadequate – assessment of money owed under the contract and respondents’ counterclaim Harris v Cronk [2009] QCCTB 124 Cheshire and Fifoot’s Law of Contract 9th edition |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Harris was represented by Mr O’Regan of counsel instructed by Gadens, solicitors |
| RESPONDENT: | Mr and Mrs Cronk were represented by Mr Barlow of counsel instructed by the respondents |
REASONS FOR DECISION
On 18 April 2007 Mr Harris and the Cronks entered into a written Master Builders Contract for the construction of a house at 15 Thirteenth Avenue, Brighton. The original contract price for the house was $250,000. Work commenced in October 2007 but by September 2008 the project came to a standstill and the parties fell into dispute.
In October 2008 Mr Harris was in breach of the contract and after giving him a notice of intention to terminate the contract, the Cronks gave him a notice of termination on 8 October 2008.
After receiving the notice Mr Harris did not return to the site. He then commenced proceedings in the former Commercial and Consumer Tribunal (“CCT”) on 11 November 2009 claiming money due under the contract and damages.
In May 2009 the CCT declared that the Cronks’ notice of termination was null and void. Despite this Mr Harris did not return to the site, presumably because he genuinely believed he had terminated the contract lawfully by treating the Cronks’ termination as a repudiation.
After this decision the proceeding then progressed in this Tribunal.
A compulsory conference was conducted in the QCAT on 27 October 2011. At the conclusion of the conference the parties agreed that the following issues be determined at the hearing to be conducted on 5 December 2011. In respect of the applicant’s claim the issues are:
1.Was the contract validly terminated on acceptance of the respondent’s wrongful repudiation by the applicant’s solicitor’s letter of 14 October 2008?
2.If so, what was the quantum of his damages?
3.Alternatively, does the applicant have a valid quantum meruit claim?
4.Does the applicant’s claim for variations comply with the requirements of the contract and/or the Domestic Building Contracts Act 2000?
5.If not, can the applicant recover the costs of the variations as a quantum meruit claim?
In respect of the respondents’ counter claim, the agreed issues for determination were:
1.Was the work carried out by the applicant so defective as to warrant the demolition of the house?
2.If not, what is the quantum of rectification costs, if any, that should be set off against the claimant’s claim?
3.Do the respondents have a valid claim for costs of delay, and if so, what is the quantum of those costs?
Background
After the contract was signed work commenced at the end of October 2007. The contract was varied significantly in February 2008 with a change in how progress payments should be made and new milestones for the various stages were agreed.[1] Those milestones required Mr Harris to reach frame stage by 31 March 2008; enclosed stage by 30 April 2008; fixing stage by 31 May 2008; and practical completion by 31 August 2008. By 29 September 2008 Mr Harris had not reached any of the agreed milestones and was in breach. Because of this, the Cronks’ solicitors, Harrisons, gave Mr Harris a Notice of Intention to Terminate the Contract. This was followed by a Notice of Termination which was delivered on 8 October 2008. The Cronks then treated the contract as being at an end.
[1] Refer to the full factual background in Harris v Cronk [2009] QCCTB 124.
In response to the notice of termination Mr Harris’ solicitors, Maunsell Pennington, wrote to Harrisons on 14 October 2008 advising the Cronks that Mr Harris regarded the Cronks’ termination as an unlawful repudiation and elected to terminate the contract.
After pleadings had been filed in the CCT proceeding, the Cronks filed an interlocutory application in the proceeding for a declaration that the contract between the parties had been validly terminated by them on 8 October 2008. Had the decision gone in their favour it may have expedited access to the Building Services Authority insurance fund.
That question was ultimately determined by me on 27 May 2009. I found that the Notice of Termination dated 8 October 2008 was null and void and of no force and effect on the basis that although Mr Harris was in breach of the contract, the time specified in the Notice of Intention to Terminate the Contract to remedy the breach was not reasonable. The effect of this decision was to put the parties in the position they were in at the time the Notice of Intention to Terminate the Contract was given to Mr Harris. In other words, as though the notice had not been given.
After that decision Harrisons wrote to Maunsell Pennington on 3 June 2009 inviting Mr Harris to return to the site to complete the work with the offer of financial assistance from the Cronks. Although Mr Harrison did not directly assert that the contract remained on foot and the parties reverted to the former positions, the tenor of the letter certainly permits this inference.
In response, Maunsell Pennington relayed their instructions that Mr Harris considered that a return to the site to complete the works would not be a viable option given the breakdown in the relationship between Mr Harris and the Cronks. However Mr Harris was prepared to consider any proposal about payment for the work done and assist the Cronks to arrange an alternate builder to complete the project.
In a letter of 22 June 2009, Harrisons reiterated the Cronks’ position that they wanted Mr Harris to return to the site to complete the works. They also invited a proposal as to the terms upon which Mr Harris might return to the site. Clearly, the Cronks were holding their ground requiring Mr Harris to return to the site, but, given the circumstances were prepared to enter into negotiations on terms for his return. In other words, they were prepared to negotiate a variation to the contract. Of note Mr Harrison, in each letter, reserved his clients’ rights under the contract.
The final letter in the exchange came from Maunsell Pennington on 26 July 2009 in which they made Mr Harris’ position quite clear stating that he was no longer in a position to return to the site to complete the house himself. The reason for this related to his adverse financial position and that he had ceased to operate his business.
The only conclusion open, after this exchange of correspondence, is that the Cronks were insisting Mr Harris perform the contract and Mr Harris refused to return to site.
The Cronks were not confident to complete the house because of defective building work and lack of certification for various stages. They tried to sell the property, but again, its condition rendered it unsaleable and ultimately on 5 May 2010 the house was demolished and the land sold.
Because I found that the Cronks’ Notice of Termination was null and void the Cronks contend the applicant cannot now assert that they are in breach by their conduct in terminating the contract as being a repudiation of their obligations under it. To do so, it is submitted would be inconsistent with the applicant’s earlier stance that the contract remained on foot and inconsistent with my prior decision.
Was the contract lawfully terminated by the Applicant?
Mr Harris contends that the Cronks had no right to issue the notice of intention to terminate. In his solicitor’s letter of 29 September 2008 it is contended that any failure by Mr Harris to reach the nominated stages is not a basis for issuing the notice because liquidated damages is an adequate remedy. In addition they alleged that the Cronks were in substantial breach by not making progress payments. The last contention is inconsistent with February variations. Despite these contentions I found, in the earlier decision, that Mr Harris was in breach and therefore these reasons will proceed on that basis. In response to the notice of termination, Mr Harris relied on the matters set out in the 29 September letter to contend that the attempted (but wrongful) termination amounted to repudiation.[2]
[2] Applicant’s submissions para 32.
The applicant relies on Qline Interiors Pty Ltd v Jezer Construction Group Pty Ltd[3] in support of the submission. In Qline, Jezer purported to give a notice to remedy breaches in a letter to Qline and then terminated. The Court found that the purported termination was unlawful and a repudiation because there was no compliance with clause 24 of the contract which specified what should be specified in the notice to remedy any breach. Thereafter, Jezer treated the contract at an end and excluded Qline from the building site. In my view, the facts here are distinguishable from Qline. The Cronks exercised their contractual right in giving the notice of intention to terminate because of the applicant’s breach. They did so in strict compliance with clause 20 of the contract save that the time given to remedy the breach was found not to be reasonable.
[3] [2002] QSC 088.
Breach of contract by repudiation occurs when a party manifests an unwillingness or inability to perform the contract, in substance or at all, before or at the time when performance is due.[4] Termination of a contract without justification amounts to repudiation which entitles the other party to elect to accept the termination and sue for damages.[5]
[4] Cheshire & Fifoot’s Law of Contract, 9th ed. Paragraph 21.11.
[5] Cheshire & Fifoot’s Law of Contract, 9th ed. Paragraph 21.12.
So the question for determination here is did the Cronks manifest an unwillingness or inability to perform the contract. Put another way as the applicant submits, did they reject a continuation of the contract.[6] Mr Harris had been given ample time to complete the milestones he agreed to as a variation of the contract. Because of his non-compliance the Cronks, as they entitled to do, gave him a notice of intention to terminate under clause 20 of the contract. In the circumstances it was reasonable for them to adopt this course. In other words there was nothing unlawful in this conduct under the contract nor did it exhibit any unwillingness on the part of the Cronks to perform the contract. In fact it shows the contrary, that the Cronks were willing to proceed if Mr Harris got on with the works. If Mr Harris considered the time unreasonable he should have said so.
[6] Applicant’s submissions paragraph 35.
The finding that the time given to remedy the breach was unreasonable, does not, of itself, establish an unwillingness to perform the contract thereby establishing breach. This is one of the types of cases referred to in DTR Nominees Pty Ltd V Mona Homes Pty Ltd[7] where, although asserting a wrong view of the contract because they believed it to be correct, the Cronks were willing to perform the contract according to its tenor.
[7] (1978) 138 CLR 423 at 432.
On the other hand, Mr Harris was in no position to terminate because of the Cronks’ purported repudiation because he himself was in breach and not ready and willing to proceed with the works.[8]
[8] DTR Nominees Pty Ltd v Mona Homes Pty Ltd (supra) at 433.
Finally, the Cronks’ position subsequent to the decision of 19 May 2009 is also consistent with their willingness to proceed with the contract. Had they then given a further notice of intention to complete, providing for a reasonable time for Mr Harris to do so, they would have been within their contractual rights to terminate. However this was not necessary as Mr Harris had himself repudiated by his correspondence of 26 July 2009.
I have therefore come to the conclusion that Mr Harris did not lawfully terminate the contract.
Estoppel
The applicant relies on the alternate submission that the respondents are estopped from contending that the applicant abandoned the contract in October 2008.
It is contended that this same argument could have been advanced by the Cronks at the preliminary hearing and by not doing so an Anshun estoppel applies and it would be unreasonable to allow that argument to be considered now.
The test to be applied is whether the argument relied upon was so relevant to the preliminary application that it would be unfair and unreasonable to allow the point to be considered in any subsequent hearing.[9]
[9] Port of Melbourne Authority v Anshun (1981) 147 CLR 589.
I have specifically found that the Cronks, in delivering the notice of intention to terminate, relied on specific grounds for doing so. They did not rely on abandonment. The above findings render the estoppel argument redundant.
Was demolition necessary?
Before dealing with the parties’ respective claims for money owed under the contract or damages, it is first necessary to decide whether demolition was necessary. This will, of course, impact on the assessment of damages having now found that Mr Harris was in breach.
The only estimate of the cost to complete is from Mr Dyer which is about $40,000.00. Therefore in a $190,000.00 project the bulk of the work had been done although the building had reached the enclosed stage. So much is conceded by the applicant. If the only issue was about rectification then demolition would be unreasonable.
However, if it is found that the piling/footing system is defective and structurally deficient then demolition may be reasonable.
To determine if demolition is reasonable in the circumstances regard is had to what the High Court said in Bellgrove v Eldridge.[10] What remedial work is both necessary and reasonable will be a question of fact in the circumstances of the particular case. If the foundation is so defective that the stability of the house is threatened and the only reasonable course to remedy this defect is demolition, then the builder must bear this cost.
[10] (1954) 90 CLR 613 at 618-619.
It is therefore necessary to consider the evidence about the piling system to determine its adequacy as a foundation to ensure the stability of the house is not threatened. If it is then demolition is reasonable.
Lindsay Baguley Builder Pty Ltd installed the piling system in October 2007 under the supervision of Mr Lindsay Baguley. Mr Baguley is a registered professional engineer. He also holds a Builder – Open Class license with the Queensland Building Services Authority. He has been involved in doing piling work for at least 17 years. He has both the professional expertise for the work as well as practical expertise gained from many years of experience. He has provided a comprehensive report[11] in which he sets out in detail how the work was carried out and its compliance with AS2159-1995 and AS2870-1996 insofar as they relate to piling installation.
[11] Exhibit 19 Statement of Lindsay Baguley dated 16 November 2011.
In carrying out the work, Mr Baguley relied on the design pile layout prepared by Ocean Breeze Enterprises Consulting Engineers, who were engaged by Mr Cronk. The plan specified that 150mm piles were to be driven to a depth of between 3m and 3.5m and have a compression capacity of 20 tonnes. Despite observations by Mr Karrasch in his report about “uplift” resistance, Mr Baguley confirmed the system was not designed for anything other than compression capacity.
Because of the depth of the pile and the type of pile specified, two piles were needed which were joined with a “splice”. The splice is a steel tube the same diameter as the post and 300mm long into which the end of each pile is inserted. Detail of the splice system is annexed to Mr Baguley’s report. Importantly, Mr Baguley said, and I accept, that the splice is for the purposes of installation only. Once the pile is installed and the weight of the house is transferred to the piles the splice becomes redundant.[12]
[12] Exhibit 19 Report paragraph 10.
The floor bearers are then fixed to the piles using a steel tie down bracket as can be seen in the photographs. Mr Karrasch’s concerns about uplift loads were put to Mr Baguley by counsel for the respondents. In response he candidly said uplift and sheer was not considered by him because the only specification by the engineers related to compression. Therefore, he assumed, reasonably, that if this was an issue then there would have been a specification from Ocean Breeze concerning uplift and sheer. One can reasonably assume the plans were certified and Mr Baguley built to the certified plans and as he says he installed the piles in accordance with Ocean Breeze’s specification.
Mr Karrasch is not a registered engineer. He is an architect and a registered builder. In the joint expert report[13] he comments that the piling installation was placed on uncontrolled fill and was required to resist bending under N2 wind loads against the superstructure. The deficient construction, he says, in the spliced piles compromises the structural integrity of the building and as a consequence the foundation system requires replacement. He sought to rely on AS2159 to support his conclusions but then conceded in cross-examination that this Standard did not apply.
[13] Exhibit 17.
On the basis that the foundation required replacement, he estimated the cost to drive 61 piles “on a cleared site” would be $91,000.00 plus GST. Despite having said that in the joint report, in his oral evidence he seemed to justify this cost by including the cost to remove the existing building. Even if this were the case the demolition costs contended for by the respondents is only $22,000.00 which would still put Mr Karrasch’s cost of piling at about $70,00.00. By contrast Mr Baguley says that it would cost $22,000.00 to redo the piling if the house was removed. By virtue of his special knowledge and experience he is in a far better position to provide a cost for this work, and I accept his evidence without reservation. Mr Karrasch’s evidence on this point does seem somewhat unreliable and impacts on his credit particularly as the basis for justifying the cost is inconsistent with his written report.
A number of other things can be said about Mr Karrasch’s evidence. In so far as any of his expert evidence relates to loadings, uplift and wind sheer in the foundation as designed by Ocean Breeze, he is, in my view, going beyond his expertise. I accept, as an architect, he has the expertise to design the structure to ensure compliance with the Australian Standards and wind ratings but design to ensure structural integrity of the foundation is a matter for engineers. There was no serious challenge to the objection to his expert evidence by counsel for the applicant. Perhaps it is for this reason that he does not deal with these matters in his initial report.[14] He did not give any evidence as to his experience with piling systems or otherwise establish any basis upon which his evidence on these points should find favour as opposed to that of Mr Baguley. In addition, on 9 December 2009, Mr Baguley signed an Inspection Certificate[15] certifying the work performed by East Coast Geotechnical Pty Ltd complied with the relevant Australian Standards. The certificate was not given to Mr Harris because Mr Baguley was waiting for payment. No evidence has been produced by the respondents to directly challenge this certification, or any engineering evidence to support Mr Karrasch’s opinions.
[14] Exhibit 21.
[15] Exhibit 27.
The certification, Mr Baguley’s evidence about his expertise with respect to piling, and the lack of any evidence to establish Mr Karrasch’s expertise in this specific area leads me to conclude that I have little option but to accept Mr Baguley’s evidence in respect of this important issue. This is not to say that consideration should not be given to the concerns about the piles in Mr Karrasch’s initial report because these concerns do not go to engineering matters per se. This evidence relates to the fact that some of the splices are above ground, are rusted and there is packing between the top of the pile and the bearer. This defective work is capable of rectification without demolition.
I have therefore come to the conclusion that the piling foundation was not so defective that the stability of the house would have been threatened and it was not reasonable to demolish the house.
Variations
Section 79 of the Domestic Building Contracts Act 2000 provides that all variations of the contract must be put into written form. Failure to do so prevents the builder from recovering the cost of the variation unless the Tribunal approves the recovery under section 84(4) in circumstances where the builder can demonstrate there are exceptional circumstances warranting recovery, or, the builder would suffer unreasonable hardship.
The applicant concedes that he did not comply with section 79 but asks the Tribunal to make an order under section 84. Counsel for the applicant has referred me to decisions of the former Tribunal dealing with the application of section 84.[16]
[16]Ross v Rangel [2004] QCCTB 98; Black v Toowoomba Resort Pty Ltd [2007] QCCTB 122.
The works the subject of the variations are:
(a)Footings redesign $4,925.00
(b)Surveyor (pilings) $2,685.00
(c)Modification to stairwell due to new kitchen design $1,040.00
(d)Modification of window opening and new storage
Cupboard added $ 600.00
(e)Extra GPO points (wired only) $3,500.00
(f)Preparation of water tank base $2,200.00
The respondents paid $10,000.00 towards the cost of the variations leaving an outstanding balance of $4,950.00.
The applicant, as a licensed builder, is assumed to know the requirements of the DBC Act in so far as it relates to ensuring variations are in writing. He has provided no explanation why he did not comply with the Act and reduced the agreed variations to a written form. He makes two good points. Firstly, that the respondents have (notionally) obtained the benefit of the work and, secondly; have made no complaint about the work or that it was unauthorised.
However this, in my view, is not sufficient to fall within exceptional circumstances. In the majority of cases the homeowner will receive the benefit of the work and the work, generally, would have been carried out with the knowledge of the homeowner.
The issue about the location of the water tank, if Mr Harris is correct, should have been reduced to writing if Mr Cronk agreed.
The relationship of the parties in the performance of this contract does not give rise to exceptional circumstances to invoke section 84. I have found that the way the payments were structured was to Mr Harris’ disadvantage, but he agreed to this and must accept some responsibility for the way matters transpired.
As for hardship, the submission made is unsupported by particulars other than the obvious contention that Mr Harris will not be paid. Again, this is Mr Harris’ doing and he should have paid more attention to detail in his dealings with the Cronks.
I am not satisfied that he has established exceptional circumstances or hardship and therefore the claim for variations is disallowed.
Defective Building Work
Mr Harris accepts that some of the building work undertaken by him was defective. He accepts he is liable for at least $25,719.00 in rectification costs. These costs are set out in the most recent joint experts report where both Mr Dyer and Mr Karrasch reached agreement about the majority of defects and the cost of rectification.
The items agreed are as follows:
(a)Verandahs to Dwelling: $14,717.00
(b)Steel Column & Pile at N/W corner: $ 2,900.00
(c)Packing of Timber Piles and Bearers: $ 100.00
(d)Verandah Plate and Hyne Beam Connection $ 1,010.00
(e)Tie-Down Connection N/W Corner $ 600.00
(f)Timber Stops to Weatherboards $ 1,012.00
(g)Termite Caps to Piles $ 990.00
(h)Sarking to Western Wall $ 700.00
(i)Bearer to End of N/E Verandah $ 200.00
(j)Broken Electrical Conduit $ 90.00
(k)Installation of Doors $ 500.00
(l)Temporary Securing of Doors $ 160.00
(m)Cladding to Western Elevation $ 970.00
(n)Garage Cladding $ 830.00
Total $24,779.00
Items of disagreement as to whether rectification is necessary or the cost of rectification are as follows:
(a)Flashing to Ends of Southern Verandah: Mr Karrasch is concerned about water penetration behind the installed weatherboards. Mr Dyer disagrees because he is of the view that the area would be sealed in the completion stage and the roof overhang is sufficient to provide protection from the weather. Water is an insidious invader of buildings and great care must be taken to prevent any water penetration. To be on the safe side I prefer Mr Karrasch’s evidence on this point and will allow $800 for rectification.
(b)Truss Connection to the False Wall: there is no dispute that rectification is necessary. Mr Dyer says the cost is $100.00 whereas Mr Karrasch says the cost is $230.00. I propose to allow $200.00.
(c)Perimeter Flashing to Wet Area: Again disagreement between the experts. Mr Karrasch says there is non-compliance with AS3740 as the perimeter flashing to the wet area does not have “a horizontal leg of 50mm as required under AS3740”. Mr Dyer says a 25mm leg is sufficient and ultimately the flashing will result in compliance with the Standard. If the Standard calls for a 50mm leg it should be rectified. I will allow the cost to rectify of $350.00.
(d)Incomplete Framing: Here there is disagreement as to the extent of the work to properly complete the framing. Mr Dyer says all that is necessary is to secure the existing tie downs and refixing. Mr Karrasch says much more work is involved. No framing certificate has been produced. The building has been left incomplete for some time. The frame needs to be brought to Frame Stage. I favour the more comprehensive approach, which would include the thorough assessment suggested by Mr Karrasch. I will allow $1,640.00.
(e)Garage: There is some dispute that the garage is incomplete and therefore as the slab is not retained, the base stage is incomplete. He also says the framing for the garage is incomplete for the Frame Stage. Mr Dyer says that as the house is on an elevated timber floor and the garage is on a slab, the non-completion of framing around the garage does not affect taking the house to the enclosed stage. Despite this divergence, as there are no costings to bring the garage to Frame Stage there is little I can do in terms of cost to complete or rectification cost.
The cost of rectification is therefore increased by $2,990.00 taking the total cost to $27,769.00. This is the responsibility of Mr Harris and is to be offset against any monies found to be owing to him.
However, they contend that the work was so defective that it was not economically viable to carry out the rectification work and that demolition of the existing structure was reasonable. The respondents demolished the house on 5 May 2010.
Mr Harris concedes that there was defective work and the reasonable cost to rectify that work was $25,719.00. He also concedes that liquidated damages are payable in the sum of $1,760.00. Therefore the total amount claimed by him, including an amount for unsigned variations of $4,950.00, is $89,971.00. Mr Harris also claims interest and costs.
The respondents contend that their only option, given the defects in the house together with the defects in the piling foundation system was to demolish the house. They say that as Mr Harris did not give them the various certifications for work done, in particular, the piling certification, they were unable to sell the house and did not have confidence in the existing structure to engage builders to complete it.
Leaving aside the piling system, both Mr Dyer and Mr Karrasch in their joint expert report assessed the cost of rectification of the defective building work carried out by Mr Harris in a range of $25,719.00 to $28,500.00.
What is the quantum of the applicant’s claim?
The applicant’s only claim is for the work done and materials supplied in the project less any offsetting claims. At the time of termination the contract price for the build had been adjusted to $190,000.00. Mr Harris has been paid $47,500.00. It seems Mr Harris had spent about $90,000.00 on the job up to February 2008. There is no evidence as to what was actually spent after that time until work stopped[17] but further work was done. The only evidence about the cost of completion comes from Mr Dyer who says that the reasonable cost to complete was $40,000.00[18] however, that is not particularly helpful to determine the value of the work done by Mr Harris.
[17] Exhibit 6 – affidavit of Mr Harris filed 5 May 2009.
[18] Exhibit 16 report of BAC Group (QLD) 14 July 2011.
Doing the best I can on the evidence it seems reasonable to adopt a figure of about $100,000.00 representing the amount actually expended by the applicant on the project up to September 2008. Mr Harris is entitled to $52,500.00 less the cost of rectification of $27,769.00. The result is $24,731.00 payable to Mr Harris less any damages assessed under the Cronks’ counterclaim.
Counterclaim
The respondents particularised their loss in paragraph 23 of the amended response and/or counterclaim at $211,496.11 as follows:
(a)Funds paid under the contract $ 47,500.00
(b)Items purchased pursuant to the contract $ 34,254.01
(c)Cost of Council relaxation $ 1,200.00
(d)Height certification $ 1,160.00
(e)Draftsman’s costs $ 2,240.00
(f)Certifier costs $ 1,387.10
(g)Air conditioners $ 3,400.00
(h)Water storage $ 2,400.00
(i)Forfeited swimming pool deposit $ 1,500.00
(j)Inspections costs $ 4,865.00
(k)Interest paid on holding the land on $439,000.00 $ 48,290.00
from 31 August 2008 to date estimated at 6% per
annum for 22 months(l)Interest paid on storage of carpet, tiles and $ 5,040.00
garage doors to date estimated at $210.00 per
month for 24 months(m)Loss of rental income from 31 August 2008 to $ 36,260.00
date estimated at $370.00 per week for 98 weeks(n)Demolition costs $ 22,000.00
$211,496.00
The Cronks’ counterclaim is premised on a finding that it was reasonable to demolish the house. The usual damages for home owners in the Cronks’ situation are to be awarded the costs, not only for the defective building work but also any extra cost for a third party builder to complete the works. The only evidence of cost to complete comes from Mr Dyer who puts it at $40,000.00. That is within the contract price, remembering that the Cronks had already purchased all the fixtures for the house.
Except for the claims of interest, loss of rental and demolition cost the balance of the items claimed as damages are costs incurred under the contract for which the Cronks have the benefit.
The Cronks purchased items for the house. This cost was picked up as a variation to the contract and credited as a stage payment. Given my view about demolition, these goods could still have been utilised in the house if they had decided to finish it. Therefore any loss in respect of the purchase of these items do not flow from the applicant’s breach.
The demolition costs are not recoverable for the reasons referred to above.
Rental costs would be recoverable for a reasonable time over and above the contracted completion date. In accordance with the varied milestone for practical completion, it would be reasonable for Mr Harris to be responsible for rental costs until the Cronks made a decision not to complete the building. This date on the evidence is when they decided to sell the house by listing it with Mr Lewis in late 2009. The Cronks submit that the property was for sale for “12 months in 2009”.
However, it would not be reasonable to allow the Cronks rental damages from the time they purported to terminate the contract until the CCT’s decision in May 2009. Therefore rental damages are payable between 19 May 2009 to the end of 2009 which is a reasonable time in which the house could have been rectified and completed. I accept the rate of $370.00/wk which results in a loss of $9,620.00.
As for the claim for interest, the same considerations apply and I will allow interest for a 6 month period at the rate claimed resulting in a loss of $13,170.00.
The total of the counterclaim is therefore $22,790.00.
Conclusion
I have assessed the applicant’s claim at $24,731.00 and the respondents’ counterclaim at $22,790.00. The result is that the respondents must pay the applicant $1,941.00. I do not propose to allow interest on this sum because of the applicant’s conduct in not returning to the site to assist in the completion of the house.
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