Hayes v Aramac Developments Pty Ltd
[2014] QCAT 119
•2 April 2014
| CITATION: | Hayes v Aramac Developments Pty Ltd [2014] QCAT 119 |
| PARTIES: | Mr Kip Hayes Mrs Louise Hayes (Applicants) |
| v | |
| Aramac Developments Pty Ltd ABN 99 127 419 738 (Respondent) |
| APPLICATION NUMBER: | BDL006-13 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 31 May 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member FitzPatrick |
| DELIVERED ON: | 2 April 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The owners pay the builder the sum of $8,524.01 within 14 days of the date of this decision. 2. The builder deliver to the owners all outstanding building certificates and contract documents within 7 days of the date of this decision. 3. The owners grant the builder access to attend to rectification work, and that the builder complete that work, within 28 days of the date of this decision. |
| CATCHWORDS: | BUILDING MATTERS - Where Standard BSA Renovation - Extension and Repair Contract is still on foot - where owners resumed occupation 7 months before they were entitled to handover - where works are physically complete despite minor defects and omissions - whether the builder met its contractual obligations for reaching practical completion - where the parties are in dispute about the date for practical completion - the date of practical completion - non compliant variations - defects and omissions - the amount payable for the final completion stage and whether interest is payable by the owners - and whether the owners are entitled to offset liquidated damages - whether the builder can make a quantum meruit claim for the non compliant variations Domestic Building Contracts Act 2000 (Qld) ss 18(6), 25, 67, 79, 80, 81, 82, 83, 84, 92, 93 Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286, |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Kip Hayes and Mrs Louise Hayes were self represented |
| RESPONDENT: | Aramac Developments Pty Ltd was represented by Mr Allan Cummings |
REASONS FOR DECISION
The Brisbane River flooded in January 2011. Mr and Mrs Hayes’ home in Chelmer was affected. On 14 January 2012 Mr and Mrs Hayes, (the owners), entered into a standard BSA Renovation, Extension and Repair Contract with Aramac (the builder) for renovation and repair works.
The scope of work included raising the house, building in a level underneath the existing ground floor and refurbishing the existing ground floor. The contract price was $227,932.50 (including GST, and two prime cost items totalling $8,000).
Work commenced on 16 February 2012, with practical completion due by 29 June 2012[1]. The owners were out of the house for about a month. With the consent of the builder they moved back into the top level of their home at least 7 months before they were entitled to handover under the terms of the contract. They occupied the top floor level from March 2012 and received handover of the final level on 21 September 2012. By October 6, 2012, the builder had laid the turf to the front yard and removed its sign and materials and the owner had installed and activated a security system.
[1] Condition 10.1 and Schedule Item 4 of the Contract.
The contract is silent about occupation prior to practical completion. The builder did not impose any conditions on the early handover.
The SMS and email traffic between the parties indicates that the build went fairly smoothly, and that Mr Hayes had a positive working relationship with the builder’s representative, Mr Cummings. It also shows that that Mr Hayes, who has 23 years’ experience in the in the construction industry, and who was living on site for most of the build, assessed the progress and the quality of the work daily, with an expert eye. Finally, it reveals that Mr Cummings was responsive to Mr Hayes’ queries about the quality or pace of the work. The owners paid all progress claims up to the completion stage as they fell due.
This dispute arose because Mr Cummings did not pay adequate attention to the builder’s obligations under the Domestic Building Contracts Act 2000 and the contract to produce and serve documents. It was only after the work was practically complete that he attempted to properly document the variations and extensions of time. This was a cause of frustration to the owners, who resorted to producing their own schedules of variations and lists of defects in an effort to obtain agreement on variations, rectification of minor defects and omissions and on the amount of the final payment for the practical completion stage.
The dispute
The parties are in dispute about the date for practical completion; the date of practical completion; variations; defects and omissions; the amount payable for the completion stage and whether interest is payable by the owners; and whether the owners are entitled to offset liquidated damages. However, neither party has alleged any “substantial breach” of the contract giving rise to a right to terminate under condition 20.
On 13 January 2014 the owners lodged an application for miscellaneous matters, asking the Tribunal to rule on an additional defect, namely a ghosting effect in the shape of approximately 18 boot marks on the polished timber kitchen floor, which had emerged since the hearing. This is not an application for a re-opening, as although the matter had been heard when the application was received it had not been decided.
I have decided not to deal with this application as part of this decision. As this decision clarifies the rights and obligations of the parties on other fronts, they may be able to negotiate a mutually acceptable outcome. If not, although the defects liability period has expired, there are other avenues open to the owners to pursue this claim.
The evidence
The builder did not file any affidavits, despite QCAT’s direction that evidence should be by affidavit. The owners each filed an affidavit. Mr Cummings elected not to cross examine the owners. The builder called its licensee, Mr Miller, who is a licensed building contractor with over 55 years’ experience, specialising in the restoration of historic buildings. It also called a representative of its earthmoving contractor.
Orders sought
The owners are seeking orders that:
a) the builder deliver outstanding warranties and certificates;
b) the contractor agree a list of outstanding defects with the owners;
c) the date of practical completion be the date that the builder complies with a) and b);
d) the builder rectify the outstanding defects within 28 days of a list being agreed;
e) the builder is liable for liquidated damages from the due date for completion to the date of practical completion;
f) the Tribunal calculate the adjusted total price payable under the contract taking into account any variations.
In its counterclaim the builder is seeking:
a) payment of “all invoices;” together with interest payable under the contract,
b) If all invoices and damages are not paid immediately that the building site be handed back to the builder;
c) that it be granted access to attend to agreed defects; and
d) Legal costs
The builder is seeking $47,827.02. The owner says that if payment is due, the builder owes them $5,853.27, after deducting $14,205 for rectification costs.
What was the date for practical completion under the contract?
The owners say that as the contractor did not submit any extension of time claims under condition 10 of the contract, the date for practical completion was always 29 June 2012. I agree. Condition 10 of the contract makes the builder responsible for documenting extensions.
Although most of the variations are non-compliant, the time for practical completion must be adjusted to take account of any consequential decrease in the days required to carry out the work. However, neither party adduced evidence to enable the Tribunal to make this adjustment[2].
[2] DBCA s 18(6).
The Tribunal may also adjust the completion date to take account of the additional days required to carry out the subject work.[3]In its email of 2 October, 2012 the builder claimed that “there have been various extras and changes, some have caused delays, others have been time neutral.” [4] However, the builder did not specify the number of extra days sought, so the Tribunal is not able to consider an appropriate adjustment.
[3] Ibid.
[4]It claims to have taken “additional days” to excavate under and beside the house and behind the car port and that it was delayed by another contractor engaged to install the kitchen.
I find that the due date for practical completion remained the date calculated in accordance with the original contract, namely 29 June 2012.
Did the work reach “practical completion stage”, and, if so, when?
On 9 November 2012 Mr Cummings, the builder’s representative, emailed the owners that “practical completion … has nothing to do with the need for handover of certificates, as the latter is a contractual matter and (they have) nothing to do with each other”.
Mr Cummings believed that the practical completion stage had been reached when the builder complied with its obligations under the DBCA, and that the builder’s contractual obligations were just “mopping up”. In reality, the builder had assumed more onerous obligations under the standard BSA Renovation, Extension and Repair Contract than those in the DBCA, and the practical completion stage could not be reached until those contractual requirements were satisfied.
The owners are relying on the contractual definition in support of their claim that the completion payment is not due, while the builder is relying on the legislative definition to say that it is due.
The owners say that the builder cannot certify the practical completion stage under condition 11 of the contract until:
a) it has given the owners notice of the proposed date for practical completion and of their right to inspect the premises; and
b) the owners are satisfied that the Works have reached Practical Completion, (sic) and
c) the builder produces to the owners “satisfactory written evidence” that all relevant inspections …have been satisfactorily completed; and
d) the builder has completed and signed the BSA Form 5 or similar appropriate document; and
e) the builder has given the owners a Certificate of Practical Completion stating that date as the Date of Practical Completion; and
f) handed over the works to the owners.
The owners say that due to the Builder’s failure to comply with Condition 11 they are not obliged to make the completion payment;[5] or, if the payment is due, they can offset liquidated damages.[6]
[5] Condition 11.5 of the Contract.
[6] Condition 14 and Schedule Item 11 of the Contract.
In its response, the builder says that
a) “all warranties, with the exception of the termite barrier and the insulation/ energy certificate, have been forwarded to the certifier
b) the owners had agreed that it would be paid for “all works and extras” at practical completion;
c) the works were practically complete on 6 October 2012,
d) it has suffered financial loss because it has not been paid;
e) it is entitled to its final payment.
The DBCA says that building work reaches the “practical completion stage” when the “subject work”[7] has been completed in accordance with the contract and all relevant statutory requirements, either without, or apart from, minor omissions or minor defects; and where the home is also reasonably suitable for habitation.[8]
[7]Section 25 DBCA says that a reference to “subject work” in a domestic building contract is a reference to the subject work for the contract. As I understand it, the definition only requires the “subject work” to be completed in accordance with the contract and all relevant statutory requirements before the works can reach the practical completion stage under the DBCA. It does not require the builder to have satisfied all of its outstanding contractual obligations.
[8] DBCA s 67(6).
The DBCA allows the builder to claim its completion payment when this stage has been reached, provided it has also given the owners a signed defects document and has made all reasonable efforts to have the owners sign it to acknowledge its contents.
I find that by 6 October, 2012, the statutory preconditions to achieving the practical completion stage in s 67(6) of the DBCA had been satisfied:
a) Emails between the parties demonstrate a shared understanding that the work was physically complete by 6 October, 2012;
b) The owners have not complained of any major defects or omissions;
c) The owners had progressively occupied the various levels of the home as they were completed. By 6 October 2012 the owners were in possession of all areas of the house.
Although the works were practically complete under the DBCA as at 6 October 2012, the builder was not entitled to claim for the completion payment under s 67 of the DBCA until it delivered a compliant defects notice. Additional contractual preconditions to claiming the final payment also remained outstanding.
The contractual definition of “practical completion stage” in condition 11 refers in turn to the definition of ‘practical completion’, which is defined as “the date on which the works are completed in accordance with the requirements of this contract, including Condition 2 (warranties) and Condition 11.2, (which obliges the builder to serve various documents).[9]
[9]A domestic building contract is void to the extent to which it is contrary to the DBCA, or if it purports to annul, exclude or change a provision of the Act. However, the parties can include provisions that impose more onerous obligations on a building contractor than are imposed by the DBCA. Subsection 93(1) and (2) apply subject to any contrary intention in the Act.
The builder argued, in effect, that the owners are estopped from asserting that the practical completion stage has not been reached under the contract.[10] It pointed to the owners’ failure to respond to Mr Cummings’ email of 9 November 2012, which informed the owners that if practical completion had not taken place, they should vacate the premises and return the keys, and asking them to “advise urgently in this regard”.
[10]“…equitable estoppel will permit a court to do what is required in order to avoid detriment to the party who has relied on the assumption induced by the party estopped - The Commonwealth v Verwayen (1990) 170 CLR 39.
This argument would have been more persuasive had the builder negotiated for the relaxation of its contractual obligations in exchange for early possession. No conditions were imposed. There is no evidence of a representation by the owners that they would not exercise their rights under the contract in exchange for early possession.
Although the owners did not respond directly to the builder’s email, they wrote on 27 November 2012, formally disputing that that the practical completion stage had been reached. They put the builder on notice that they were still insisting on strict compliance with the contractual preconditions to reaching the practical completion stage in condition 11.2.
The estoppel argument is strongest in relation to the owners’ insistence on strict compliance with the original contractual steps leading up to handover, including the right to an inspection. They were out of the house for less than a month and had unfettered access to the site for 7 months before the work was practically complete under the DBCA.
Mr Hayes was well acquainted with the state and progress of the works. He had taken responsibility for scheduling the works and sent the builder detailed lists of outstanding work in August, September and October, 2012. He had been advised by email of the proposed completion date. The builder had good grounds for believing that the owners were not seeking a formal inspection or handover. However this was just one of many instances of non-compliance by the builder.
In any event, the owners were not at liberty to forego the consumer protections afforded by their statutory right to a defects notice, which is a precondition to claiming the completion payment.[11] Mr Cummings did not give the builder’s defects list to the owners until 11 January 2013. Some defects were agreed and others were disputed. It objected to rectifying work where variations were disputed.
[11] DBCA s 93.
Section 67(4) of the DBCA sets out the requirements for the defects document that the building contractor must give the building owner before it can “receive” all or part of the completion payment. I find that Mr Cumming’s email satisfied these requirements as it:
(a) lists the minor defects and minor omissions that both the building contractor and building owner agree exist; and
(b) states by when the building contractor is to correct the listed defects and omissions; (the builder proposed attending to the agreed items on 14 January, 2013.)
(c) lists the minor defects and omissions the building owner claims exist, but that are not agreed by the building contractor to exist; and
d) the email has been electronically “signed” by Mr Cummings on behalf of the building contractor.
The second requirement in s 67 is that the builder must have made all reasonable efforts to have the owners sign the defects document. I do not consider that the builder had further obligations in this regard after the owners told Mr Cummings access would only be granted if he agreed to their list.
In its email of 11 January 2013 attaching its list of minor defects and omissions, the builder proposed attending to the agreed items on 14 January, 2013. The owners responded that internal access would not be available on 14 January as they would both be at work.
On 15 January the owners advised the builder that they had commenced proceedings in the Tribunal and had lodged a complaint with the BSA. The builder responded by saying that it would be on site on 17 January to attend to the outstanding interior rectification works. In other words, it continued to comply with its obligation under condition 22.2 to proceed diligently with the work notwithstanding the dispute.
On 15 January the owners rejected the builder’s offer to rectify internal defects on 17 January, “unless you agree that all defects we have raised are legitimate, and … attend to the defects under our supervision”.
The owners were not entitled to place these conditions on access, which could amount to a “substantial breach” of the contract as defined in condition 24(u), namely “substantially or persistently obstructing the contractor in the performance of the work under the contract”.
On 17 January the builder wrote to the owners complaining about their refusal of access, and their refusal to negotiate defects. However the letter was couched in terms of breaching the “BSA rules” and I find that it did not amount to a notice to remedy a “substantial breach” under condition 20 of the contract.[12]
[12] This was a precondition to the builder terminating the contract and claiming damages.
On 11 January 2013 the builder gave the owners a final draw invoice of $13,396.64, less $1000 for liquidated damages, less prime cost item adjustments, leaving a balance of $9,305.44 payable by 18 January 2013, and flagging a further invoice for $13,400.98. However the builder was not entitled under the contract to deliver more than one completion claim. After comparing the two, I find that this “final draw invoice” is a “similar appropriate document” to a form 2 progress claim under clause 13.1.(c)
Under the DBCA, the builder was entitled to demand the completion payment on 11 January, 2013, as the practical completion stage had been reached under the Act. It was also entitled to receive the completion payment as it had complied with ss 67(4) and (5). However under conditions 13 and 11.5 of the contract the owners were not obliged to pay for the work until the requirements of condition 11.2 were satisfied.
In any event, the owners did not dispute the claim within 5 business days of 11 January, 2013, as they were required to do under condition 13(g) of the contract, using a BSA form 3 or “similar appropriate written notice stating the reasons for so disputing the claim or part of it”.[13] Although the builder did not attach a form 3 to the completion claim as he was required to do, this does not excuse the owners from complying with condition 13(g).
[13]The completion payment is classed as a progress payment in Schedule item 10 of the contract.
Working from the owners’ calculations in exhibit 13 to Mr Hayes’ affidavit, as at 11 January 2013, when the claim was made, they agreed that $6,951.73 was payable to the builder. They agree on the $11,396.64 practical completion milestone payment, to which they add agreed variations, less prime cost items and back charges. On 11 January 2013 $1,960 was outstanding for liquidated damages. In other words, only $2,353.71 of the $9,305.44 completion claim was in dispute when they received the completion claim.
The owners did not have any grounds for deducting the cost of rectifying minor defects and omissions from the completion claim, as the defects liability period was still open. Although the disputed variations were not included in the claim, the owners knew the variations were non-compliant, probably unenforceable, and that they could only result in the completion payment increasing, not decreasing. The owners had an obligation under condition 13(g) to identify the extent of any dispute.
Rather than filing a form 3, rejecting all or part of the completion claim, the owners filed this application to resolve a domestic building dispute. I find that even if the application was served within the 5 day time limit, which is not discernable from the incomplete affidavit of service, it did not amount to a “similar appropriate written notice”.
The owners bypassed the mandated dispute notice and commenced Tribunal proceedings, which have a different function and different implications for the parties and the future course of the dispute. For example, a dispute notice may have led to settlement negotiations and averted the additional expense and delay of a Tribunal hearing.
Because of the owner’s failure to comply with clause 13(g), the issue of whether practical completion had been reached under the contract on 11 January becomes a moot point, as the owners cannot contest the completion claim.
I find that the completion claim of $9,305.44 was due and payable by the owners on 18 January 2013, 5 business days after it was received.
If I am wrong about the operation of condition 13(g), it is still arguable that the completion payment was payable under condition 11.5 on 18 January 2013.
a) the builder served the owners with a retrospective certificate of practical completion on 17 January, 2013, nominating 6 October 2012 as the date of practical completion;
b) the builder’s email of 11 January 2013 may qualify as a “similar appropriate document” to replace the BSA Form 5 defects document;
c) it is arguable that the builder’s obligation under condition 11 is only to provide the owners with “satisfactory written evidence” that inspections have been completed in order to reach practical completion under the contract and does not necessarily require handover of the certificates themselves[14]. Mr Hayes knew that the inspections had been satisfactorily completed and had been advised in writing by Mr Cummings that they were in the builder’s possession.
[14]That is not to say that the builder was entitled to withhold the inspection certificates in in exchange for payment. This is clearly incorrect in light of the builder’s separate obligations under condition 11.2; and under s 39 of the DBCA, to provide them to the owners “as soon as practicable”.
Interest
In accordance with Condition 15 and schedule item 12 of the contract interest is payable on $8,459.50 ($9,305.44, less GST of $845.94, which is not an “overdue payment” under the contract). The applicable rate is 8%, payable from 18 January 2013 to the date of this order, amounting to $793.57.
Variations
The builder did not comply with s 79 of the DBCA; or condition 17 of the contract; which, read together, require that additions, deletions or substitutions to the subject work be documented before the work commences, including the consequential change to the Total Price payable under the contract.
Mr Miller, the licensee, gave evidence that the excavation work under the house was urgent, as it affected the structural integrity of the works. The builder argued that, accordingly, it was not reasonably practicable to produce a variation document before carrying out the work.[15]
[15] DBCA s 79(2).
However, under cross examination by Mr Hayes, Mr Miller did not dispute that the excavations took 5 weeks and that most of the excavation work was done while the owners were occupying the top floor, and that had there been any danger, the owners would have been asked to leave.
I find that none of the variation work was urgent, and that it would have been reasonably practicable for the builder to document this and the remaining variations.
As the builder has not followed the procedure in the DBCA it cannot recover the disputed variations unless the Tribunal finds either:
a) exceptional circumstances to warrant the conferring of an entitlement on the builder to recover the cost of the variation, or
b) that the builder would suffer unreasonable hardship and it would not be unfair to the owners for the builder to recover the amount.[16]
[16] DBC Act s 84(2) and (4).
In other words, the Tribunal must enquire into both the circumstances surrounding the builder’s failure to follow the legislative scheme and the impact of a proposed order on the parties.
In Allaro Homes Cairns Pty Ltd v O'Reilly [2012] QCA 286, the Queensland Court of Appeal noted that while “exceptional circumstances” is not defined in the DBCA:
“….the matters that might be considered relevant …will be indicated by the particular way in which the Act was not complied with; and the circumstances particular to the dispute….it directs attention to those circumstances which are exceptional and warrant conferring upon the building contractor an entitlement to recovery for the variation which its conduct, by failing to meet the obligations imposed by the statute, deprived it.”[17]
[17] Allaro para 15 op cit.
The Court considered the Tribunal should have regard to the “..circumstances...that prevented compliance or explained non-compliance…. the term is broad and it is not desirable to attempt an exhaustive statement of what might be in any given dispute an exceptional circumstance.[18]
[18] Ibid, para 15.
I adopt my earlier finding that none of the variation work was so “urgent", as to satisfy the “exceptional circumstances" test and excuse the builder’s failure to comply. Mr Cummings also said that as he had the owners’ informal agreement, he didn’t think it necessary to document the variations. Again, this does not amount to exceptional circumstances.
I find that there were no exceptional circumstances to warrant the Tribunal exercising its discretion to make an order in favour of the builder.
The Tribunal may also make an order for recovery if it is satisfied that the builder would suffer "unreasonable hardship" if it cannot recover the cost of the non-compliant variations, provided it would not be unfair to the building owners for the builder to recover an amount.[19]
[19] DBCA s 84(4)(a)(ii).
Again, “unreasonable hardship” is not defined in the DBCA. In Allaro Homes the Court endorsed the tests laid out in the decision under appeal:
“The circumstance that a builder might be unpaid for work done does not necessarily lead to an inference that hardship is suffered. Something more than non-payment should be demonstrated to establish “unreasonable hardship” [20] ;
“The test …requires an assessment of the impact of that sanction on the builder in the circumstances in which the non-compliance occurred. That is both a subjective and an objective enquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs.
The magnitude of the sum that cannot be recovered is a relevant consideration in both respects. Subjectively, the inability to recover an amount may or may not cause hardship to the builder, depending on its financial circumstances.”[21]
[20]Allaro, Para 21, op cit. In effect, the Court of Appeal adopted approach taken by Judge McGill DCJ in Poiner v Quirk, where his Honour said “There cannot be said to be unreasonable hardship just because he incurred some additional cost which he cannot recover, one would expect that this is precisely what the legislature intended in such circumstances”.
[21] Para 3, op cit.
As in the present case, the evidence before the Tribunal at first instance had included the contract price, the cost of the variation and that the work had been performed but not paid for. In Allaro there was also evidence about the builder’s turnover, which was not presented in this case. The Court of Appeal regarded the evidence at first instance as “scant”, and did not upset the Appeal Tribunal’s finding that the builder had not demonstrated “unreasonable hardship’. It noted that, as here, there was no evidence about the financial consequences for the builder.
It is significant that Allaro Homes had an annual turnover of between $11,000,000 and $17,000,000. The only information before this Tribunal about the builder’s turnover is a BSA licence search provided by the owners, which indicates that the builder’s Allowable Annual Turnover is a more modest $600,000-$3,000,0000. Nevertheless, on its own this information does not establish that the builder will suffer financial hardship if it cannot recover what is fair and reasonable for the variations.
Finally, Holmes J noted in Allaro Homes that circumstances giving rise to quantum meruit claim were irrelevant to the application of the statutory tests of exceptional circumstances and unreasonable hardship.
I find that the builder has not established the requisite degree of financial hardship to warrant the Tribunal exercising its discretion to make an order for the recovery of the non-compliant variations.
Rectification
I rely on my earlier comments about the owners refusing the builder access to rectify defects in January 2013. Mr Hayes emailed Mr Cummings on 22 May 2013, inviting the builder to rectify agreed defects. Mr Cummings declined, as the hearing was a little over a week away, and the scope of the rectification work was to be determined at the hearing.
The owners say that this exchange is evidence that the builder is not prepared to return and rectify defects, so the Tribunal should award the cost of rectification instead. It suggests to me only that the owners were cognisant of their prospects at the hearing, and that Mr Cummings was prepared to return after receiving the Tribunal’s decision about the extent of the rectification work required. I do not agree that it is a basis for ordering the builder to pay the cost of the rectification work, rather than attending to the rectification itself.
Some of the defects relate to non-compliant variations. Section 92 of the DBCA provides that the failure by a building contractor to comply with a requirement under the Act does not make the contract illegal, void or unenforceable, unless the contrary intent appears in the Act. I have found that the Act expresses this contrary intention when it provides that a builder cannot recover the value of non-compliant variations.
Although it seems unfair, I can see nothing in the DBCA which would prevent the owners enforcing an oral agreement for non-compliant variations, including the statutory warranties as to exercise of reasonable care and skill and appropriate construction, even where they have not paid for those variations[22]. However the challenge for the Tribunal is to determine what was agreed, given the variations were not documented.
[22]See also HG Windsor Pty Ltd v Waterman [2013] QCAT 618, although in that case it appears the variations were paid for.
The numbering of the alleged defects is not sequential as some have either been rectified by the builder or abandoned by the owners.
Defect 1.b) “Front lawn levels incorrect near entry - water ponding adjacent to new ramp”. The builder says that there was no specification in the contract to fill the front yard, and all that is required is half a cubic metre of top dressing at the corner of the driveway where it joins the grated drain. Builder to top dress as agreed in email of 07 October 2012.
Defect 3 – The Contractor removed a pergola, cut a steel column off and applied a patch, which has spalled off. The concrete needs to be cut out, the steel post cut off lower and a concrete patch reinstated. Similarly, the concrete around one of the carport posts has been left raised and has started to spall and needs to be patched. Builder agrees to rectify
Defect 4.a)- as the end cap is no longer commercially available, the builder agrees to fashion a purpose built end cap for the drain.
Defect 8 Voids have emerged between the sleepers and the fence to the sides of the house. Earth is migrating between the fence line and the sleepers. The owner is concerned that the treated sleepers will rot and precast should be used at the base. The sides of the house don’t drain properly to the rear of the property and pond adjacent to the slab.
The owners rely on a quote from Sheldon White Building and Carpentry, which priced the work at $4,750.00, for excavating under the sleepers, supplying and installing 11 meters of concrete sleepers under the timber sleepers and supplying and laying blue stone gravel.
The builder says that this work was an addition to the original scope of work. The builder relied on an email dated 17 June 2012 from Mr Hayes enquiring about the cost of the work, where he said he would cover the path with other product in the future, and that in the interim crusher dust sufficed. The builder acknowledged its intention to provide gravel at back of sleepers, however, when Mr Hayes advised he wouldn’t pay for the sleeper retaining wall, no further work was carried out. It asserts that the sleepers are sold Australia wide for use in, on or above ground, and that most timber retaining walls do not have concrete sleepers at base.
In the absence of better evidence that concrete sleepers were specified or were industry standard, I conclude that the builder is only responsible for what it agreed to do, namely supplying and laying blue stone gravel to fill the voids.
Defect 9 Machine screw missing from threshold plate at front door. Value $10. Cost accepted by builder.
Defect 11 Caulking between floor boards to front deck unsightly, shrunken and cracked and likely to be the source of water ingress in defect number 30. Defect 30 The lower front deck is leaking into the soffit, which should have been ventilated by code, replace soffit lights.
The parties disputed whether this adjustment was initiated by the builder or the owners. In cross examination Mr Hayes put to Mr Miller:
“Well, I put it to you that, in fact, the idea of creating the soffit and sealing the gaps above was Aramac’s idea as a means of deleting the false roof and deleting its difficult drainage”. Mr Miller responded: “I reject what you say. Because I recall … Mr Cummings, came to me and said that Kip wants the gap between the boards caulked because he wants to keep the texture of the timber decking. And I said well, if that’s what he wants that’s what you’ve got to do. But I do recall having stated that the only logical thing you can do to an exposed timber deck is to be able to make it waterproof totally by sheeting and tiling it.”
Mr Hayes also asked Mr Miller: “If, as you contend in your letter of the 17th of May 2013, the sealing of the gaps in the front deck would not be successful… because of the exposed nature of the decking, why .. recommend the same detail in writing for our other deck? Mr Miller replied: “Simply because what you wanted at the front appeared acceptable to you and you were insistent on it. And so we’ve done the same at the back.”
There is considerable uncertainty about the appropriate rectification work. The owners say “a proper remedy is not yet known for waterproofing deck surface..”. They were unable to obtain a quote “as (tradespeople) cannot warrant and will not undertake the work.”
The builder should have asked for the owners’ instructions in writing if they were refusing the builder’s advice. More evidence about the decision to “delete the false roof and its difficult drainage” over one of the decks may have allowed a determination of what was agreed and why.
The owners did not explore Mr Miller’s remedy of sheeting and tiling. This tends to confirm Mr Miller’s evidence that the owners wanted caulked decking for aesthetic reasons. Mr Miller’s evidence was that caulking in an exposed deck has a limited life; however there is no information before the Tribunal about the acceptable life of caulking in exposed timber decks.
In the circumstances I order that the builder reseal the joints and replace the lights. As the builder did not contest the ventilation issue, I order the builder to install ventilation to the soffit.
Defect 14 “The Contractor has hack-sawn the exiting grille and butted it back together rather than replacing it as agreed.” Builder to rectify by installing a new vent.
Defect 17 The bottom of the posts to the external stair landing need to be cut off to provide the minimum 25mm clearance. As the posts have been passed by Certifier no further action is required by the builder.
Defect 19 The steel posts were not primed prior to painting and are now peeling. I accept that the builder was not working with a new surface, however it must rectify the work.
Defect 20 The Contractor has reused metal skirting. Builder agrees to replace with new material fitted appropriately.
Defect 21 “The hardwood treads in the external rear stairs were not sealed before installation and they deposit tannin stains on the concrete below when wet. The treads need to be removed, sealed and reinstalled and the concrete acid washed to remove the tannin stain.
Mr Miller says that the stairs are stained in accordance with the specifications. They can only be sealed by painting and even then they will require extensive maintenance. He rejects the owners’ proposal for rectification as moisture will still be absorbed at the ends causing leaching. In his letter of 17 May, he says that the leaching will diminish over time and in the interim it can be remedied by sealing round the housing of the treads with silicon, at an estimated cost of $80.
In the absence of expert evidence to resolve this conflict about the leaching properties of timber, I order the builder to pay half of the owner’s estimate of rectification, namely $790.
Defect 22 The concrete cap installed at the end of the carport needs to be rendered. Builder agrees to rectify.
Defect 23 The footings have been over poured, left exposed and need to be trimmed back. Builder agrees to rectify where excessive.
Defect 25 Chip in the concrete in middle of Tilt-a-door opening to the garage. Builder agrees to rectify.
Defect 26 A gap between the left hand architrave to the front door and western wall has not been sealed: Builder accepts quote of $25.00.
Defect 27 plasterboard wall has cracked and needs to be replastered and painted. Builder accepts quote of $250.00.
Defect 28 The plasterboard wall has cracked and needs to be replastered and painted. Builder accepts quote of $250.00
Defect 29 The plasterboard wall has cracked. Builder says this wall was built by the original builder but will repair and brace with internal timber.
Defect 31 Windows to eastern side of ground floor as they have not been correctly flashed. The builder agrees to rectify.
Defect 32 Chip in the concrete at the base of the rear stairs. The builder agrees to rectify.
Defect 33 The villaboard wall under the sink in the garage is cracked and needs to be plastered and painted: Builder accepts $250 quote
Defect 34 Concrete over the block work retaining wall beside the entry ramp is spalling off and needs to be ground back and an appropriate product applied. The builder agrees to rectify.
Defect 35 A red string line marking and paint have been left exposed on the external concrete under rear deck. The builder agrees to rectify.
Total payable by builder on account of defects: $1,575.
In summary, I find that the he owners are indebted to the builder in the sum of sum of $8,524.01, calculated as follows.
a) $10,099.01, comprising $9305.44 for the completion payment and interest of 793.57;
b) less $1575 for rectification costs payable by builder.
The parties were not legally represented at the hearing and each was partially successful, so I do not make any order in relation to costs.
I order that:
1. The owners pay the builder the sum of $8,524.01 within 14 days of the date of this decision.
2. The builder deliver to the owners all outstanding building certificates and contract documents within 7 days of the date of this decision.
3. The owners grant the builder access to attend to rectification work, and that the builder complete that work, within 28 days of the date of this decision.
2
1