Hayes v Sheenmar
[2012] QCAT 149
•12 April 2012
| CITATION: | Hayes v Sheenmar and Anor [2012] QCAT 149 |
| PARTIES: | Paul Gerald Hayes (Applicant) |
| v | |
| Jang Sheenmar Amarjeet Sheenmar (Respondents) |
| APPLICATION NUMBER: | BDL008-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 22 February 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Michelle Howard, Member |
| DELIVERED ON: | 12 April 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the respondents pay to the applicant the sum of $27,939.80 within 21 days of these orders. 2. That the applicant give to the respondents copies of all of the Form 16 certificates obtained during the certification process which he has in his possession power or control within 14 days, together with the plumbing sustainability certificate within 42 days of these orders. |
| CATCHWORDS: | BUILDING – CONTRACT – where final payment outstanding under building contract –whether contract validly terminated by home owners – whether builder by conduct elected to terminate contract – whether builder entitled to final claim – whether home owners entitled to recover for damages – whether costs of rectification and costs of certification were accrued rights under the contract at the time their wrongful repudiation was accepted by the builder – whether evidence of costs of obtaining certification Domestic Building Contracts Act 2000, ss 18, 33, 90, 91 Ogle v Comboyoro Investments Pty Ltd (1976) 136 CLR 444 Rapid Roofing Pty Ltd v Natalise Pty Ltd [2007] QCA 94 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Hayes appeared on his own behalf |
| RESPONDENT: | Mr Sheenmar appeared for himself and Amarjeet Sheenmar |
REASONS FOR DECISION
Paul Hayes, a builder, entered into a domestic building contract with Jang Sheenmar and Amarjeet Sheenmar on 8 September 2008. The contract was for the construction of a two story brick veneer house on vacant land at 4 Apulia Place, Bridgeman Downs. The contract price was $485,000. The contract is regulated by the Domestic Building Contracts Act 2000.
Mr Hayes applied to the tribunal seeking orders for the payment to him of $48,358.80 for works done under the contract payable either as damages arising from the breach of the contract by the Sheenmars; under section 91 of the Domestic Building Contracts Act 2000; or on a quantum meruit claim, together with interest and costs.
The Sheenmars’ response filed in the tribunal seeks a declaration that that the contract was validly terminated by them and seeks damages arising from the termination, in particular, the costs of obtaining final certification for the house, and for rectification of defective work. At the hearing, Mr Sheenmar stated that the outcome they seek is for Mr Hayes to provide the final certificate for the house, and that Mr Hayes then be paid the sum of $30,000 which has been paid into a solicitor’s trust account.
The evidence before the tribunal and issues of credit
Both Mr Hayes and Mr Sheenmar provided written statements to the tribunal setting out their respective versions of events. Amarjeet Sheenmar did not attend the hearing and provided no evidence.
Both parties relied upon expert evidence in the proceeding. Mr Hayes filed a report of Wayne Dyer. The Sheenmars filed reports of Russell Davidson and Neil Dixon. However, only Russell Davidson attended an expert conclave convened by the tribunal, with Mr Dyer. Following the conclave a joint report was produced and signed by them, in which they agreed most matters relating to rectification of defects required and the cost of rectifying those defects.
Mr Dixon did not participate in the conclave process and nor was he made available at the hearing. I have accorded no weight to Mr Dixon’s report in relation to the matters about which Mr Dyer and Mr Davidson agree. I accept the joint report of Mr Dyer and Mr Davidson about the matters the report covers, as indeed did Mr Hayes and Mr Sheenmar at hearing. The cost of obtaining final certification was the one issue which was not agreed by Mr Dyer and Mr Davidson.
Mr Hayes and Mr Sheenmar both gave oral evidence to the tribunal at the hearing and both tendered additional documents during the hearing. Mr Hayes answered questions in an apparently forthright manner, making concessions consistent with his version of events as he did so. His evidence, both written and oral, was consistent apart from what appears to be a typographical error in his written statement (given that he provided a copy of the schedule showing the correct date with the statement) about the month in which the contract was signed.
Mr Sheenmar’s evidence was contradictory. For example, he spoke several times, as does his statement, of Mr Hayes and his team rarely being present at the site and attributed delays in construction to this absence. However, when Mr Sheenmar gave evidence about delays in gyprocking of walls which Mr Hayes attributed to Mr Sheenmar’s engagement of contractors to undertake a fit out for multi-media on the site for whom he had to wait, Mr Sheenmar variously said that Mr Hayes people were ‘never there’ and that no delay was caused by him because Mr Hayes’ workers were able to work along side the persons employed by him and that they were ‘all working most of the time.’
In his written statement, Mr Sheenmar denied that installation of the air-conditioning caused delay for Mr Hayes in construction. He asserts that it was an agreed variation and that Mr Hayes had full control over its scheduling. At the hearing, it became apparent that he had declined to instruct Mr Hayes in relation to the air-conditioning of the home, choosing to engage his own contractors to do this work. He did not concede that his decision to install air-conditioning, through his own contractor in a particular manner resulting in the need to redesign the trusses which had already been installed, caused more than nominal one day delay in construction. Mr Sheenmar suggested that Mr Hayes failed to make appropriate arrangements to accommodate air-conditioning, it seems wherever, whenever and however Mr Sheenmar chose to have it installed in the house. Mr Hayes’ evidence was that it delayed construction by 10 days, including time to have engineers redesign and manufacture the trusses.
It makes logical sense that engineering redesign and manufacture took some time, and caused some delay in construction. Ten days delay seems reasonable and likely, whereas one day’s delay for this to occur seems most improbable. Further, Mr Sheenmar’s oral evidence about this issue contradicted his written statement.
Mr Sheenmar’s written evidence was that the building works commenced in the second or third week of November, 2008 whereas in oral evidence he asserted that they started in late November or early December, 2008.
As a result of the inconsistencies in his evidence, I formed the view that Mr Sheenmar’s evidence was unreliable. Wherever Mr Hayes evidence and Mr Sheenmar’s evidence conflict, I accept the evidence of Mr Hayes and reject the evidence of Mr Sheenmar.
The contract, the building period and commencement date
The parties executed a HIA New Home Construction contract on 8 September 2008, which refers to the inclusion in the contract of the tender documents and plans. The contract price was $485,000.
Although the standard wording in Schedule 1 of the contract provides in item 10 that the building period is in calendar days, the parties provided specifically for a building period of ‘160 working days’ for the works to reach practical completion. The contract provides for allowances within the building period of calculable days for inclement weather and its effects of two days; weekends and public holidays of one day; and any other matter reasonably likely to delay the carrying out of the works of seven days.
Under the terms of the contract, commencement was to take place on or before the later of specified occurrences, including relevantly, the owner giving the builder evidence of the owner’s capacity to pay the contract price or the builder receiving all permissions, consents and approvals from relevant authority.
I accept Mr Hayes’ evidence that he received the approved plans from Council on 12 December 2008. He did not receive a letter from the owner’s financier at any stage, but with the Sheenmars’ consent spoke with a person at their bank on 22 December 2008, who gave verbal confirmation. His evidence was that before the commencement all he did in preparation for commencement was a ‘vegetation scrape’. He did this in December shortly prior to receiving the approved plans. He says that although under the contract, he was entitled to commence later, that the parties had agreed it would commence as of 12 December 2008. He says that actual work on the site commenced on the site on 20 December 2008. The parties agree that the Mr Hayes had the slab poured on 22 December 2008.
For the reasons discussed earlier, I reject Mr Sheenmar’s evidence that the works commenced either in the second or third week of November 2008 or late November 2008.
Despite the agreement of the parties that the works would commence on 12 December, 2008, I accept Mr Hayes evidence that they actually began as of 20 December, 2008 and the slab was then poured on 22 December.
Under clause 2.3 of the contract, the building period starts on the actual day of commencement, that is 20 December 2008. Clause 3 provides that the builder must complete the works on or before the end of the building period stated in item 10 as extended under clause 17. Clause 17 provides for extensions for claimable delays, including delays for causes beyond the builder’s sole control that were not reasonably foreseeable at the time the builder entered into the contract; including for variations requested by the owner; and industry shutdown for three weeks from 22 December each year; calculable delays in excess of the allowance for that cause stated in item 10; and anything done or not done by the owner.
Under clause 17.3, the builder must give an owner written notice of the extension of time, detailing both the cause of the delay and the extension of time, by the later of 20 working days after becoming aware of both the cause and extent of the delay; or five working days before the date of practical completion.
The building works were therefore to be completed ‘160 working days’ from 20 December 2008, ignoring any claimable delays for which the builder was entitled to an extension under the contract. The contract contemplates in standard wording that the building period in item 10 is expressed in calendar days not working days. Because the parties have chosen to define the building period in working days, there is some internal inconsistency in the contract regarding references to public holidays and weekends, and calendar days in item 10. However, I am satisfied that on the face of the contract, the intent of the parties was clearly to express the building period in working days.
I am satisfied that the most sensible construction of the use of the words ‘working days’, is that week days as opposed to weekend days are to be counted and that public holidays are excluded. I adopt this construction. I sever the references to public holidays and weekends and the sentence stating that the building period is in calendar days from item 10. On this basis, 160 week days, from 20 December provides for a completion date, without regard to public holidays (which, for convenience, I will deal with when I consider extensions) and properly claimed extensions under clause 17, of 31 July 2009.
Variations to the contract
Mr Hayes said that there had been variations to the contract. Copies of the variations were not filed with his statement. During the hearing, he obtained and tendered unsigned copies of the variation documents he had prepared and the corresponding tax invoices, but was unable to tender the originals which he said were packed away.
He said that he delivered the variation documents to the Sheenmars on about the dates they were dated. His evidence was to the effect that he did not proceed with any item of variation before receiving authorisation, because as a builder with 40 years experience, he knew the difficulties that could be encountered by the builder if signed variations were not obtained.
Mr Sheenmar’s evidence was to the effect that he remembered the variations and tax invoices and did agree to the variations, but said he thought that they had not signed them.
Amongst the copies of variations were variations for air-conditioning and a theatre set up which both parties gave evidence did not proceed, as the Sheenmars decided to employ separate contractors to do this work. It is apparent from the tax invoices that the amounts claimed for variations do not include the amounts proposed in the variation documents for the air-conditioning and home theatre.
The tax invoices indicate that the total price claimed by Mr Hayes includes the following variations:
(a) variation 1: increase ceiling height $30,000.00;
(b) variation 2: raise floor level $ 9,739.80;
(c) variation 3: delete bifold doors -$ 9,150.00
add brick veneer, extend kitchen $ 4,550.00
- $ 4,600.00
(d) Variation 4 amended $12,532.00;
(e) Variation 7: caesar stone upgrade $10,765.00;
(f) Variation 8: additional shelving $ 2,230.00.
TOTAL $60,666.80
For the reasons earlier expressed, I accept the evidence of Mr Hayes and I reject the evidence of Mr Sheenmar to the extent that he suggests that the variation documents may not have been signed. Therefore, I accept that variations were agreed and documented for variations 1, 2, 3, 4 amended, 7 and 8. These variations total $60,666.80.
Adding the amounts allowed as variations to the original contract price, the total contract price is $545,666.80.
A final invoice was issued by Mr Hayes claiming $48,358.80 and he claims that this amount remains outstanding to him. Mr Sheenmar’s statement acknowledges the claim and does not dispute the calculation of the amount said to be outstanding, although he says the Sheenmars should not have to pay it by reason of the counter-claim made by them.
The tax invoices are somewhat confusingly presented. However, the tax invoice of 15 April 2010 which records all of the variations claimed for and payments made, records payments which total $497,308.00.[1] Although receipts were not produced, consistently Mr Sheenmar gave oral evidence to the effect that that he had paid some $500,000.00 to Mr Hayes.
[1]Progress payment No 5 for $48,358.80 also appears in the column which records payment and variation amounts, but both parties acknowledge that it is in fact unpaid.
I accept that the difference between the contract price including variations and the payments made is therefore $48,358.80.
Further, I accept that an amount of $48,358.80 remains unpaid.
I make the observation that Mr Hayes does not claim any extensions of time under the contract to complete the variations agreed, although it appears that he was probably entitled to do so.
Claimed delays and extensions to the building period
Mr Hayes claims that the building period was extended for delays in accordance with the contract as follows:
Christmas shutdown period 2008-2009 under clause 17(2)(l) 15 days
Public Holidays
Australia Day 1 day
Good Friday 1 day
Easter Monday 1 day
Labour Day 1 day
Queen’s Birthday 1 day
Royal Queensland Show 2 days
Period when works could not be completed due to rain delays 112 days
January 09 24 days
February 09 28 days
March 20 days
April 20 days
May 20 days
Delays caused by the Sheenmars 35 days
Late payment of progress claim 15 days
Delay due to changes for air-conditioning 10 days
Delay due to respondents’ subcontractors 7 days
Delays due to respondents’ tiler 3 days
Delays caused by vandalism of property 72 days
Delays caused by purported termination 16 Dec 2009 16 days
Christmas shutdown period 2009-2010 15 days
At hearing, the claim for 15 days for late payment of a progress claim was abandoned.
Clause 17 of the contract provides that the builder must give an owner written notice of the extension of time, detailing both the cause of the delay and the extension of time, by the later of 20 working days after becoming aware of both the cause and extent of the delay; or five working days before the date of practical completion.
In correspondence to the Sheenmars’ lawyers dated 6 October 2009 and 20 January 2010, Mr Hayes sought the extensions which he claimed had accrued at that time in accordance with these claims.
Extensions claimed for industry shutdown 2008-2009 & public holidays
At hearing, the Sheenmars did not dispute the claimed extensions for the Christmas shutdown and six days of public holidays, but disputed two days rather than one for the Royal Queensland Show. Mr Hayes claimed two days for the Show was common building practice in recognition of the north and south-side holidays on different days. However, I consider one day of the holidays applied at the site only and so allow only one day for the Show.
I allow the claim for 15 days for industry shut-down. In respect of the six public holidays, I consider that these are allowable, because they are non working days which were not included in the ‘160 working day’ building period which the parties had agreed, rather than as an extension. The overall effect is that is, an additional 21 week days are allowed.
Extensions claimed for rain days
Mr Hayes calculated the rain days he has claimed on the number of wet days, based, as he described it, on a two day allowance under item 10 of the contract, for each wet day recorded in the rainfall records produced to the tribunal for Boondall and the Brisbane Airport, there being no discrete rainfall records for Bridgeman Downs. He says these records would allow rain days of 126 days. However, he reduced it to 112 days because on some days, he says he was able to work in the house.
The Sheenmars dispute the rain days claimed as inaccurate. However, they did not produce any record of rainfall, nor suggest how many days they considered should be allowed, if any.
According to Google Maps, Bridgeman Downs is some 8.3 kilometres from Boondall, whereas it is over 16 kilometres from Bridgeman Downs to the Airport. Therefore, the rainfall at Boondall is more likely than not to be similar to the rainfall at Bridgeman Downs, and it is more likely to be similar than the rainfall at the Brisbane Airport. Accordingly, I am satisfied that the Boondall records reflect the rainfall at Bridgeman Downs.
Mr Hayes’ construction of the contract regarding the allowance made for rain days is incorrect. Under the contract, two days in total were allowed for rain days within the ‘160 working day’ building period provided for in item 10. However, under clause 17, Mr Hayes was entitled to claim for further calculable delays including rain days provided that they were not reasonably foreseeable at the time of entering into the contract.
Having regard to the rainfall records, rain days cannot be claimed when the rain occurred during the period of 15 days industry shut-down from 22 December 2008. Work was due to resume following shutdown on 12 January 2009. Rain days cannot therefore be claimed for 3, 4, 8 and 9 January 2009.
Nor can a rain day legitimately be claimed for rain on the Australia Day holiday, for which the day is already allowed as a non-working day. Similarly, although it rained over Easter 10-13 April 2009, no proper claim can be made for rain days over this period. Nor can rain days be allowed when the rain fell on the weekend, given that the building period excludes weekends.
Rain days occurred in January 2009 on four other week days which were not public holidays, weekend days or during industry shutdown; in February 2009 on eight non-weekend days; in March 2009 on seven non-weekend days; in April 2009 on non-weekend or public holidays, six days; and May 2009, on five non-weekend days. This is a total of 30 days. Although it rained subsequently, no days are claimed and from the evidence it appears that by then work was able to be done indoors during rain.
The days in excess of the two delays included in the allowance under item 10, that is, 28 days, can be claimed by Mr Hayes, if the delay was from a cause not reasonably foreseeable at the time the builder entered into the contract. Thirty days of rain on working days during a five month period is a considerable amount of rain. I accept, on the balance of probabilities that the extent of the rain days was not reasonably foreseeable when the contract was entered into and that an extension to the building period should be allowed for the 28 additional rain days on working days.
Extensions claimed by Mr Hayes to have been caused by the Sheenmars
For the reasons explained earlier, I accept Mr Hayes’ evidence about the delays caused by the Sheenmars’ changes for the air-conditioning of 10 days and subcontractors to do the home theatre work of seven days.
Mr Hayes claims a further three days for delays installing the wardrobe doors while Mr Sheenmar’s contract tiler completed some works. The Sheenmars deny this on the basis that the house should have been completed by the time the tiler was able to do his work in September 2009. This assertion by Mr Sheenmar takes no account of any entitlement of Mr Hayes to extensions, and implicitly acknowledges that there was a delay while the tiling was done. Therefore, I accept that this caused delays of three days.
This is a total of 20 days delay caused by the Sheenmars actions. I consider that an extension for this 20 working day period is allowable under clause 17 for these delays attributable to the Sheenmars’ actions.
Extension claimed for vandalism
On 28 September 2009, an act of vandalism occurred at the site. There is general agreement between the parties that on that day a tap on the second floor was left running by a person and the house was flooded causing significant damage to the works. Also, paint was thrown onto the stairs and some walls. It seems the incident followed a dispute between Mr Hayes and a subcontractor, but it is not alleged that Mr Hayes is responsible for the damage.
Mr Hayes says that building works could not proceed for 72 days following the vandalism until the insurance company gave its approval for the works to proceed. Mr Sheenmar said he could not say how many days delay were caused.
In the absence of any contrary evidence, I accept that the delay, which was caused by this unfortunate incident other than by an act of Mr Hayes, and which was not reasonably foreseeable at the time the contract was entered into resulted in 72 days delay. I am further satisfied that this is a claimable delay. However, as discussed earlier, item 10 in Schedule 1 included an allowance of seven days for any other matter reasonably likely to delay the carrying out of the works. I consider this seven day allowance for other delays must be subtracted in calculating the extension to which Mr Hayes is entitled as a result of the incident. Therefore, the extension allowed is 65 working days.
Following this event, the total of the properly claimable extensions results in an extension of 134 working days, taking the date for practical completion into 2010. Accordingly when Mr Hayes sent his letter claiming extensions on 6 October 2009, his notice was given within the time provided for by the contract.
Extension claimed for purported termination of contract and Christmas shutdown 2009-10
Mr Hayes claims an extension of 16 days for a period from three days before Christmas shutdown began in 2009. The Sheenmars purported to terminate the contract under clause 28 of the contract by correspondence dated 16 December 2009 and then changed the locks. Mr Hayes says that he was then unable to gain entry to the site.
He says he had no entry until 27 January 2010. He claims for this period, an extension for Christmas shutdown of 15 days, and in total 16 days (three before Christmas shutdown and 13 after it) because he was locked out of the site as a result of the Sheenmars’ actions.
Mr Sheenmar agrees with the dates and the period for which Mr Hayes did not have access to the site, although he claimed that because Mr Hayes should have finished the house in June 2009, that he should not be entitled to an extension for the Christmas shutdown 2009-2010.
If the Christmas shutdown was not claimed, Mr Hayes would no doubt have claimed an extension for the entire period between 16 December 2009 and 27 January 2010, as a result of the purported termination in any event.
There was further correspondence between the parties about the alleged breach leading to the purported termination and it seems an application by Mr Hayes to the Commercial and Consumer Tribunal which was subsequently withdrawn. By agreement signed by the Sheenmars and Mr Hayes, Mr Hayes was allowed back on site on 27 January 2010 to complete the job ‘as per the original contract’.
Clause 17 of the contract entitles Mr Hayes to an extension because of anything done or not done by the owner. The purported termination by the owner which was subsequently withdrawn resulted in a total further delay of 21 days week days. An extension should be allowed for this further period of 21 working days.
Building Period taking into account the extensions
The total number of days allowed for delays are 155 days. The building period was therefore due to complete on 5 March 2010.
Practical Completion
Mr Hayes says that on 15 April 2010, he advised the Sheenmars that practical completion had been reached on 14 April. Consistently, correspondence to the Sheenmar dated 9 April 2010 advises that it was expected that practical completion would be reached on 14 April 2010. However, Mr Hayes says that a walk-through was not able to be arranged with the Sheenmars and their building consultant, Russell Davidson until 21 April, 2010.
It is common ground that the house was inspected on 21 April 2010 by the Sheenmars’ advisor, Russell Davidson, in the presence of the Sheenmars and Mr Hayes. Mr Hayes says it was agreed that minor defects would be rectified by him by 28 April 2010. He says a defects list was provided on 23 April 2010, and most of the defects rectified by that date. Further, Mr Hayes says that on 23 April, the works reached practical completion and he issued a notice of practical completion under clause 25.2 of the contract and his final invoice for $48,358.80.
On the same date, 23 April, 2010, the Sheenmars again purported to terminate the contract. Mr Sheenmar says that the house was incomplete and had not been completed within the time allowed under section 90 of the Domestic Building Contracts Act 2000. Mr Sheenmar’s written statement says that Mr Hayes has never delivered a notice of practical completion. However, at hearing, he acknowledged receiving a notice of practical completion on the same day that the notice of termination was issued.
A report of Russell Davidson documents the inspection on 21 April 2010, and refers to Mr Hayes agreeing to be totally completed by 28 April. This is consistent with Mr Hayes evidence.
All parties acted consistently with a notice of practical completion having been issued. However, the date on which that occurred is not entirely clear. However, on the balance of probabilities, I accept that it was issued at latest on 23 April 2010.
Mr Hayes has not had access to the premises since the second purported termination by the Sheenmars. The final payment claim has not paid by the Sheenmars who told Mr Hayes that they would be deducting the cost of completion and rectification work from the unpaid amount and that they had a counter-claim of $59,293.75 for damages for late completion and credits claimed, as well as costs.
Was the contract validly terminated?
On 23 April 2010, notice was given by the Sheenmars purporting to terminate the contract under section 90 of the Domestic Building Contracts Act 2000 for failure to complete construction ‘within a period 1.5 times the effective completion period under the Building Contract of 160 working days namely by 22 July 2009.’ The notice nominates the commencement date as 12 December 2008.
Section 90(2) provides that the building owner may only end the contract if the reasons for the increase in time could reasonably have been foreseen by the building contractor when the contract was entered into. The ‘effective completion period’ is defined by section 18 of the Domestic Building Contracts Act 2000 to mean the stated completion period as adjusted under the section. The section provides for the period to be adjusted to include any additional days required to be applied for allowable calculable delays[2] and for other allowable delays, an adjustment to take into account the actual number of days involved in the delay.[3]
[2]Domestic Building Contracts Act 2000, ss18(3) and 18(7) and for ‘calculable delays’ see section 33.
[3] Domestic Building Contracts Act 2000, ss 18(4) and 18(8).
If a building owner ends a contract under the section, the building contractor is entitled to receive a reasonable amount for the contracted services provided to the time the contract is ended, but not more than he was entitled to receive under the contract.[4]
[4] Domestic Building Contracts Act 2000, section 91.
The purported termination under section 90 fails to include any allowance for any of the delays resulting in extensions sought by the builder in his correspondence of 6 October 2009, or as a result of the period he was locked out following the first purported termination on 16 December 2009, and allowable under the contract and the Domestic Building Contracts Act 2000. Further it relies upon the ‘agreed’ date of commencement, namely 12 December 2008, although the works did not commence until later.
When the properly claimed extensions are taken into account, and the correct commencement date is used in the calculation, Mr Hayes had not failed to complete the construction within 1.5 times the effective completion period. The effective completion period commenced on 20 December 2008 and had ended only on 5 March 2010. This being so, the purported termination under section 90 on 23 April 2010 was invalid.
Mr Hayes gave a notice of practical completion. It was given on the day on which the Sheenmars gave their second notice purporting to terminate. After receiving the Sheenmars’ notice, Mr Hayes wrote to the Sheenmars’ representative requesting the final payment and requesting that the Sheenmars and their agents not occupy or enter the premises pending release of the monies claimed.
Although the purported termination was invalid, purported termination may demonstrate an intention not to be further bound by and to repudiate a contract.[5] Generally, wrongful termination will constitute repudiation.[6] However, wrongful repudiation does not terminate the contract. The innocent party must elect to terminate the contract because of the repudiation.[7] Until the repudiation is accepted the contract remains binding on both parties.[8]
[5]Qline Interiors Pty Ltd v Jezer Construction Group Pty Ltd [2002] QSC 088 and Décor Blinds Gold Coast Pty Ltd v Décor Blinds Australia Pty Ltd [2004] QSC 055.
[6] Ogle v Comboyoro Investments Pty Ltd (1976) 136 CLR 444, 453.
[7] White and Carter (Councils) Ltd v McGregor [1962] AC 413.
[8] Foran v Wight (1989) 168 CLR 385.
Following wrongful repudiation, an innocent party can elect to terminate a contract through unequivocal words or conduct, demonstrating their election to terminate the contract and sue for damages,[9] or for a debt owing.[10] An innocent party cannot obtain damages where they have not accepted the repudiation. However, failure to perform a contractual obligation can constitute acceptance.[11]
[9] Hill v Canberra Holdings Ltd (1995) 122 FLR 434.
[10] Rapid Roofing Pty Ltd v Natalise Pty Ltd [2007] QCA 94.
[11] Vitol SA v Norelf Ltd (The Santa Clara) [1996] AC 800.
The Sheenmars actions indicated their clear intention to repudiate the contract by issuing the notice on 23 April 2010. Mr Hayes initially wrote to them refuting the termination and requesting that they not occupy the premises pending payment under the contract. However, the Sheenmars did take possession of the property by 28 April. Mr Hayes did not rectify the balance of the defects which were to be rectified by 28 April or otherwise act as though the contract remained on foot from that time. He filed these proceedings on 28 May 2010 seeking damages for breach of contract, or remedies in the alternative.
I am satisfied that Mr Hayes did, by his conduct, accept the Sheenmars’ wrongful repudiation of the contract, on or before 28 May 2010 when he filed his application in these proceeding. However, he was bound to fulfil his contractual obligations as accrued up until that date.[12]
[12] McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457.
The Claims
Mr Hayes claims the full amount outstanding on his final invoice of $48,358.80. He will be entitled to recover this amount as a debt or damages if the obligations under the contract were performed or substantially performed.[13]
[13] Sunbird Plaza v Maloney (1988) 166 CLR 245.
I have accepted that practical completion had been reached. Some minor defects identified had been rectified. The balance of the defects were to be rectified by 28 April 2010. The contract had been substantially completed.
Mr Hayes is entitled to recover the amount of his final invoice.
The Sheenmars counter-claim for defects and final certification. Although they wrongfully purported to terminate the contract, a party in breach is entitled to damages for a prior breach by the non-defaulting party if the right has been unconditionally acquired or has unconditionally accrued.[14]
[14] McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457.
Defects
A joint report was produced by Mr Dyer and Mr Davidson following an experts conclave convened by the tribunal. Both of the parties accepted at hearing that an amount for defects should be allowed to the Sheenmars in accordance with the joint report. I accept the various defects identified by them jointly and the cost of repairing those defects as agreed by them.
The joint report identifies one item of electrical work for which they jointly offer a cost of rectification if a circuit is installed, or if it is not. If there is no circuit, they say it needs to be installed at a cost of $752. If there is a circuit, they agree that the cost to rectify is the cost of a new light of $320.
They agree, as does Mr Hayes, that the electrical plan does not include a circuit to the particular light. Mr Hayes was unable to say whether a circuit was installed in the position. It is reasonable to infer, and I do draw the inference, that the electrician installed the circuits in accordance with the electrical plan. Therefore, I am satisfied on the balance of probabilities that a circuit has not been installed. I allow rectification for this item at $752.
The total allowed for the costs of rectification apart from costs relating to certification issues is $9,567.
The joint report identifies that both experts agree that further discussions are required regarding certification pertaining to the framing certificate which contains alterations, ‘with the final inspection detailing no outstanding issues from previous inspections. Both experts agree this matter will require further resolution from parties regarding inspections and could not be resolved at conclave.’
Certification issues
Mr Sheenmar says that evidence of final certification has not been delivered by Mr Hayes. He says that the property does not have a certificate to frame stage, which it failed on 12 March 2009. His statement attaches a copy of a certificate from the Brisbane Certification Group (BCG) which contains comments about items to be attended to and indicates ‘reinspection required’. The certificate appears to have been altered as a tick next to, ‘inspection satisfactory’ has been crossed through, and the box indicating ‘reinspection required’ and next to it, ‘additional fee’ have been crossed through but ticks placed above those boxes.
Mr Hayes says he obtained a final inspection certificate and a copy was provided to the tribunal. It is dated 23 April 2010. However, he lost his copy of the frame certificate and when he requested another copy from BCG, he was given the copy to which Mr Sheenmar refers. There are also two versions of the final certificate, one showing satisfactory inspection on 23 April 2010 and no reinspection required, but with a handwritten note ‘cert as above’, which appears to refer to some certificates indicated under the heading of ‘certification’ are still required.
The second final inspection certificate contains a typed notation as follows:
note added on 10 August 2011 by Jason Bird
note modified on 15 December 2011 by Jason Bird
Certificates still to be supplied are;
-Form 16 footing inspection
-Form 16 slab inspection
-Form 16 frame inspection
-Form 15 prefab frame
-Form 15 prefab truss
-Form 15 glazing certificate
-Form 16 plumbing sustainability
Mr Hayes gave evidence that he had been told by BCG that the file relating to the premises had been destroyed, although he now understood from Mr Sheenmar that the Brisbane City Council has it. He said that he provided various certificates to BCG when he asked for the final inspection. He understood the only outstanding certificates were the energy efficiency form; mechanical ventilation; and the slab inspection. His evidence was that the slab certificate was missing, although it had been inspected, but a copy had not been provided to him personally. He tried to obtain a copy from the engineer who did the inspection, but the engineer has not retained his file.
Mr Sheenmar said that Jason Bird of BCG told him that after the requisitions on the framing inspection, BCG was not contacted again with a request to reinspect. He understands from Jason Bird that all of the certificates referred to in his note of 15 December 2011 remain outstanding.
Mr Hayes says that as the house is a slab on ground construction, there was no footing inspection, although he had a pier inspection below ground and that had been provided to BCG; regarding the slab inspection, as stated he cannot obtain a copy of the certificate from the engineer; Jason Bird has emphatically told him that he will not issue a frame certificate because there has been no reinspection; the prefab frame and prefab truss and glazing certificates were provided to BCA on 23 April 2010, but copies should be available if required; the plumbing sustainability certificate he cannot obtain from the plumber because he owes the plumber money on this job and the plumber refuses to issue it until the money is paid. He said that the actual inspections at the site were done by a person who no longer works for BCG named Martin, but that Jason Bird had since taken over the file.
Mr Sheenmar gave evidence that he has recently reopened the building approval which had expired and the Brisbane City Council has inspected the house, but had also said that they could not assist with final certification without the missing certificates.
The only evidence about the costs of taking steps to obtain certification was provided in the report of Mr Dixon. He estimated the costs of taking the steps required to obtain a framing certificate at $9,187. The joint report did not resolve the issue. Mr Dyer opined that no rectification works were required for certification. Mr Davidson does not address the cost in his report.
Mr Sheenmar gave oral evidence that he had approached a number of builders, but that he had been unable to obtain any quotes because the matter was in the tribunal. However, he produced receipts for $1,555 paid to the Brisbane City Council to reopen the building approval which had expired and $110 paid to BCG in December 2011.
The state of the evidence about this issue is particularly unsatisfactory. Mr Sheenmar asks the tribunal to determine what the costs of certification will be and award that to him, or require Mr Hayes to obtain certification for him. However, the contractual obligations between the parties are at an end. Therefore, orders cannot be made requiring Mr Hayes to obtain certification, although as final certification was due under the contract at the time the contract was brought to an end, damages may be an available remedy if I am satisfied that it was not obtained and that the Sheenmars had an accrued right under to the contract to final certification at the time the contract was terminated.
Clause 11 of the contract provides for the builder to comply with all requirements of authorities on the owners behalf.
Mr Hayes evidence is that he had obtained final certification on 23 April 2010. Difficulties appear to have resulted following a change in staff at the certifier’s office. Mr Bird, who did not conduct the inspections as the works progressed, apparently has different requirements than the person who did the inspections. The available evidence does not indicate who altered the frame certificate and when. Further, Mr Hayes says he provided certificates to BCG for final certification which it seems have been misplaced, presumably by the certifier.
Mr Hayes has presented evidence of final certification being obtained, although he did understand that several certificates remained outstanding. The outstanding certificates, as he understood it, were limited, not as Mr Bird has since suggested. Nevertheless, it was not entirely finalised. Mr Sheenmar’s evidence, which is not contradicted by Mr Hayes, is to the effect that the Sheenmars were not provided with a final certificate at any stage. I am satisfied that under the contract, Mr Hayes had a responsibility at the time the contract was ended to provide final certification. I am therefore satisfied that Mr Hayes is liable to the Sheenmars in damages for the costs of final certification.
However, the Sheenmars must satisfy the tribunal about the costs of certification. Unfortunately, the evidence provided by them is limited. The proceedings have been on foot for several years and the issue is not a new one. It was raised in Mr Sheenmar’s witness statement dated November 2010. Mr Dixon’s report filed in the tribunal in 25 October 2010 refers to it. There has been ample opportunity for the Sheenmars to obtain evidence about the likely costs.
The known costs of obtaining certification are $1,665, plus the costs of obtaining the remaining outstanding certificates. Mr Dixon estimated the work required to obtain a frame certificate at $9,187. The total is $10,852. As these are the only known and quantified costs, I make orders that Mr Hayes is liable in damages to this extent for the costs of certification. Mr Hayes should also be ordered to provide copies to the Sheenmars of the Form 16 certificates that he does have, and the Form 16 which he is yet to obtain from the plumber when he satisfies the plumber’s account.
Orders
Mr Hayes has successfully claimed damages for the amount of $48,358.80.
However, the Sheenmars have been successful in their counter-claim to the extent of the amounts allowed to rectify defects totalling $9,567 and for the costs of obtaining final certification of $10,852.
Therefore, the Sheenmars must pay Mr Hayes the sum of $27,939.80.
Mr Hayes must also provide the Sheenmars with copies of all of the Form 16 certificates obtained during the certification process which he has in his possession, power or control within 14 days, together with the plumbing sustainability certificate within 42 days of these orders.
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