Henley Properties (Qld) Pty Ltd v Salam
[2014] QCAT 436
•3 September 2014
| CITATION: | Henley Properties (Qld) Pty Ltd v Salam & Anor [2014] QCAT 436 |
| PARTIES: | Henley Properties (Qld) Pty Ltd (Applicant) |
| v | |
| Muhammad Salam Seowmee Salam (Respondents) |
| APPLICATION NUMBER: | BDL122-13 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 20, 21 March 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member McLean Williams |
| DELIVERED ON: | 3 September 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Respondents are to pay the Applicant the sum of $17,779.53 within 21 days of the date of these orders. 2. The parties are to file written submissions on the question of costs within 14 days of the date of these orders in response to those matters identified in paragraph [47] of the reasons for decision. 3. The question of any entitlement to costs will then be determined on the papers. |
| CATCHWORDS: | Building matters - domestic building contract to construct a new home for $632,179 - circumstances wherein additional variations requested by the home owners and undertaken by the builder to the value of $21,417, yet unpaid by the home owners - circumstances wherein written variation documents sent by builder to home owners prior to commencement of any variation works, and these being signed and returned to builder duly authorising the variations prior to the variations commencing – circumstances wherein builder did not itself sign the variations documents, contrary to Domestic Building Contracts Act 2000, s 82(a) – and home owners did not specifically initial the provision in the variation documents stating when the increase is to be paid, per Domestic Building Contracts Act 2000, s 81(5) – question as to whether in circumstances of the overall signing by the home owners of the variation documents there had been a waiver of the benefit to the home owners of s 82(a) and/or s 81(5) – question of entitlement of builder to payment for variations under s 84(4) of the Domestic Building Contracts Act 2000 - circumstances as to whether either exceptional circumstances or unreasonable hardship arising, per s 84(4)(a)(i) and (ii) - builder’s entitlement to default interest and indemnity costs under the contract in circumstances where relief obtained under the statute, not the contract. Domestic Building Contracts Act 2000 (Qld), s 79(5), s 80(2)(g), s 81(5), s 82(a), s 84(2), s 84(4), s 93(1)(a) Aon Risk Services Aust Pty Ltd v Australian National University [2009] HCA 27 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Steven Hogg of counsel, instructed by Mills Oakley Lawyers |
| RESPONDENT: | Mr Russell Ensby, solicitor, of CBP Lawyers |
REASONS FOR DECISION
The Scope of these proceedings:
The Applicant in this matter is a residential construction company, Henley Properties (Qld) Pty Ltd (“the Applicant”). The Respondents are Dr Muhammad Salam and his wife, Mrs Seowmee Salam (“the Respondents”).
On 24 January 2011 the Applicant, as builder, and the Respondents, as home-owners, entered into a Queensland Plain Language Peace of Mind New Home Construction contract (“the Contract”) for the construction of a two level residential property at Lot 48, Macon Street, at Birtinya, Queensland. The contract amount was $632,179.
Works were commenced by the Applicant on 8 March 2011. Practical completion was obtained by the builder on 29 December 2011.
The Respondents have already paid to the Applicant the full contract amount, yet the builder seeks $21,417 as the result of a number of variations requested by the Respondents during the project, which were undertaken by the builder, and for which it has not been paid.
The Applicant’s standard operating procedures require employees to maintain comprehensive written notes of every communication had between the Applicant and clientele of Henley Properties. The notes made in regards to the communications between the Applicant’s employees and the Respondents include records of variations requested by the Respondents.[1] Written variations documents[2] were raised by the Applicant in response to these requests, and these were sent to the Respondents, who then signed them, and returned them to the builder.
[1]See annexure “ARA-4” to the Statement of Mr Alex Raleigh, the Queensland Building Manager of Henley Properties (Qld) Pty Ltd.
[2]Ibid, “ARA-5”.
In summary, the variation documents raised by the builder and sent to the Respondents were as follows:
Variation No.
Date
Amount
Post Contract Variation No 1
30.3.11
$20,942.00
Post Contract Variation No 2
15.4.11
$245.00 (credit note)
Building Variation No 1
21.4.11
$4,289.00 (credit note)
Building Variation No 2
9.5.11
$172.00
Building Variation No 3
4.8.11
$3,332.00
Building Variation No 4
24.8.11
$2,905.00
Building Variation No 5
1.12.11
$1,400.00 (credit note)
Total: $21,417.00
Although each of the variations were signed by the Respondents, it is important to record that the builder did not sign the variation documents, prior to any of these being sent to the Respondents in the manner contemplated by s 82(a) of the Domestic Building Contracts Act 2000 (Qld) (‘the DBC Act’). Equally, although the Respondents have signed all the variation documents, they have not on any of them initialled next to that part which specifies when the home owners were expected to pay for the variations, as is expected by s 81(5) of the DBC Act.
Clause 19.8 of the contract provides that the price of a variation becomes payable immediately upon the commencement of the variation works. However, in this case it would seem that the Applicant has not been minded to enforce its contractual right to have immediate payment. Instead, the builder has been content to await the completion of the project, before invoicing the homeowners for all of the variations, in one invoice. In this regard, shortly prior to the completion of the project, the Applicant sent the Respondents invoice No. 29670,[3] in the amount of $21,417.
[3]Ibid, “ARA-6” to the statement of Mr Alex Raleigh dated 8 July 2013.
To date, the Respondents have not paid invoice 29670, despite formal demand for payment by the builder on 22 March 2012, sent in the form of a Notice to Remedy Breach.
In consequence, the Applicant now seeks the outstanding sum by means of an order from QCAT, together with further orders for the payment of interest, and costs. The Applicant maintains that it should be paid for the variations because each of the variation documents complies with the requirements of clause 19.1 of the contract. The Applicant further says that it has an entitlement to interest because of clause 30 of the contract; as well as an entitlement to the costs of being required to commence these proceedings (including legal fees on a solicitor and own client basis), because of clause 31.1 in the contract.
The Respondents’ Case
Factually, very little is in dispute between the parties. The Respondents admit to having requested the variations, and also admit to their having received and signed the variation documents. The Respondents also admit to having received invoice 29670. Yet, they say that invoice 29670 is not due and payable, because the variation documents do not comply with either s 81(5) or s 82(a) of the DBC Act. Because of that, the Respondents contend that the Applicant must establish an entitlement under s 84 of the DBC Act, before they can be ordered by QCAT to pay for the variations that they have requested.
The Respondents also contend that it is irrelevant whether the variation documents comply with clause 19.1, because the variation documents do not conform with the requirements of s 79, s 80, s 81 and s 82 of the DBC Act. The Respondents also allude to s 93(1)(a) in the DBC Act, which provides that a domestic building contract is void to the extent that it is contrary to the DBC Act. In all the circumstances, the Respondents say that the Notice to Remedy Breach issued by the builder on 22 March 2012 is of no effect; such that the builder should not be entitled to claim either interest, or costs, under the contract.
On 4 March 2014 the Respondents were given leave by QCAT to commence a counterclaim. By that counterclaim the Respondents contend that aspects of the construction were undertaken negligently and/or in breach of the contractual warranties that require that the work be carried out by the builder in an appropriate and skilful manner. In consequence, the Respondents now claim the sum of $60,979.84, which they say is the cost of rectifying the defective works.
Ultimately, the issues for determination in these proceedings are:
a) Whether the variation documents raised by the Applicant comply with Part 7 of the DBC Act;
b) Whether, the builder has an entitlement for payment pursuant to s 84(4) of the DBC Act;
c) The extent of any defective work and the costs of rectification; and
d) Whether the applicant has an entitlement to interest and costs pursuant to the contract.
Whether the variation documents raised by the Applicant comply with Part 7 of the DBC Act?
By its final submissions[4] the Applicant contends that the variation notices issued by it to the Respondents comply with clause 19.1 of the contract, by reason that each variation notice:
a) is in writing, in English, and readily legible;
b) has been reduced to writing before the commencement of any of the variations;
c) adequately describes the variations that are to be undertaken;
d) specifies the amount payable in relation to the variation;
e) states when the payment for the variation is payable; and
f) has been executed by the Respondents by means of their signature.
[4]Applicant’s final submission, filed 15 April 2014, at [17].
Although that much is undoubtedly true, it cannot rightfully be claimed by the Applicant that it has complied with clause 19, given that clause 19.2 of the contract provides:
19.2If the owner requests a variation the builder must, before commencing the work and as soon as is reasonable, either:
(a) agree to carry out the variation by giving the owner a variation document signed by the builder, or
(b) refuse to carry out the variation. If the builder refuses, the builder does not have to give any reasons for such refusal. [the emphasis has been included]
It is not contentious that the Applicant has not signed any of the written variation documents.[5] In light of same, the only conclusion open to me is to find that the builder has not complied with the totality of clause 19, because it has not given the Respondents a variation document “signed by the builder”. It follows then that the Applicant is also non-conforming with the requirements of s 82(a) of the DBC Act, that provides that as soon as practicable after an appropriate variation document is made the building contractor must ‘sign the document’.
[5]“ARA-5”.
In its final submissions[6] the Applicant seeks to deal with the fact of it having not signed the variation documents by submitting that the requirement that the builder sign a variation is a term inserted for the protection of the home owner, and home owners are entitled to waive the benefit of it.[7] Because the Respondents have signed the variations, it is contended by the Applicant that the Respondents have thereby authorised them, as well as their having waived the requirements set out in clauses 19.2 contract, and in s 82(a) of the DBC Act.[8]
[6]At [17] – [18].
[7]Gange v Sullivan (1966) 116 CLR 418.
[8]Flexible Systems Ltd v Molkerei Alois MüllerGmbH & Co KG (UK Production) [2010] 1 WLR 753.
Although it be the case that the Respondents have authorised the variations (indeed, they admit as much), I am not satisfied that I may also find an instance of waiver in circumstances where there is just no evidence before QCAT as to the Respondents’ state of knowledge regarding the fact of their foregoing the benefit of each of clause 19.2, and s 82(a) of the DBC Act, by their having signed the documents.[9]
[9]Craine v Colonial Mutual Fire Insurance Co Limited (1920) 28 CLR 305.
Ultimately, I take the view that the provisions contained within ss 79 - 83 are consumer protection provisions. The provisions necessitate strict conformity on the part of the builder. So much is clear from the requirements contained in s 80(1) of the DBC Act which provides that a building contractor under a regulated contract “must” ensure a variation document for the contract complies with the formal requirements for a variation document. Equally, s 82 requires that a building contractor “must” sign the document, and s 81(5) provides that a variation document will comply with the requirements of s 80(2)(g) of the DBC Act “if” the provision of the document stating when the increase is to be paid - or when the decrease is to be accounted for - is initialled, by the building owner. In the context of the consumer protection scheme established by Part 7, use of the conjunction “if” in s 80(2)(g) is a conditional term, one that qualifies the circumstances in which compliance with the regulatory regime is obtained. In circumstances where (as here) that part of the variation document specifying when the variation payment is to be made has not been initialled by the building owner, it cannot be said that there is conformity with s 80(2)(g).
Ultimately, not a great deal probably turns on the particular oversight by the builder of it having failed to sign the variation documents as required by s 82(a), because s 79(5)(b) provides that s 82 does not apply for the variation once it has been signed, (presumably) by the Respondents. However, the escape afforded for the Applicant for its oversight of the requirement in s 82(a) by s 79(5) does not similarly protect the builder, in respect of its further oversight, as regards s 81(5). Section 81 provides:
81General contents—appropriate provision for payments to reflect contract price changes
(1)This section sets out how a variation document complies with the requirement mentioned in section 80(2)(g) (the payment requirement).
(2) If the variation results in an increase in the contract price, the variation document complies with the payment requirement if it states when the increase is to be paid.
(3) However, the increase can not be required to be paid before work the subject of the variation is started.
(4) If the variation results in a decrease in the contract price, the variation document complies with the payment requirement if it states when the decrease is to be accounted for.
Example for subsection (4)—
The variation document might identify a particular progress payment in which the decrease is to be accounted for.
(5) The variation document complies with the payment requirement if the provision of the document stating when the increase is to be paid, or when the decrease is to be accounted for, is initialled by the building owner.
It is uncontentious that the variation documents have each been signed, by both of the Respondents. The form of the variation documents utilised by the Applicant is such that in a section entitled “Notes” - immediately above the signature block - where the Respondents have in each instance affixed their signatures, the following information is presented:
NOTES:
All additional Building Variations if approved by the Builder will incur an Administration Fee
Credits (if applicable) will be deducted from the Final Progress Claim.
Please sign and return as soon as possible. If this has not been received within five (5) days, we will assume the variation is no longer required and it will be cancelled.
Payment is due and payable immediately upon commencement of the works, as per clause 19.8 of your contract.
Any alterations to this document are to be submitted separately.
If you should have any queries please contact [name] of our office”.
[Emphasis in the original document, however the underlining has been included here]
In the case of the variation documents[10] utilised by the Applicant, the ‘provision of the document’ (per s 81(5)) stating when the increase is to be paid, or when the decrease is to be accounted for can only be found within the aforementioned Notes section, of the variation documents.
[10]“ARA-5”.
The question arises as to whether - by the fact of their having signed the variation documents in the space immediately below the “Notes” section - the Respondents might be taken to have now sufficiently initialled the time for payment of the variation requirement, in conformity with s 81(5)?
Although each of Doctor and Mrs Salam have signed the variations as accepted, I take the view that they have not thereby initialled the note on the document indicating when the increase is to be paid, or when the decrease is to be accounted for, even notwithstanding the obvious physical proximity between their signatures on the variation document, and the “Notes” section. In my view, the initialling requirement referred to in s 81(5) of the DBC Act must be taken as a specific requirement, one that is in addition to the requirement for the home owners’ signatures on variation documents as a whole, as contemplated by each of s 79(5) and s 82(b) of the DBC Act. In this regard, it is to be noted that, by s 79(5) of the DBC Act, the signing of a variation document excludes the application of various provisions within Part 7 of the DBC Act to the variation, yet s 81(5) is not one of the provisions thereby excluded. This adds comfort to my view that the initialling requirement raised by s 81(5) is intended as an additional requirement to the more general requirement for signatures by the home owners, contemplated by s 79(5), and s 82(b).
I conclude therefore that the Applicant has not complied with 81(5), which, in turn, results in non-conformity with the requirements of s 80(2)(g). This means that the building contractor has not complied with s 79, s 80, and s 82[11] of the DBC Act. It is trite law that the Applicant may only recover an amount for variations requested by the Respondents by means of either s 84(2)(a) or (b) of the DBC Act that provides:
(2) If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation –
(a)only if the building contractor has complied with section 79, 80, 82 & 83; or
(b)only with the Tribunal’s approval[12] given on an application made, as provided under the QCAT Act, to the Tribunal by the building contractor.
[11]However here recognising that non-compliance with s 82(a) may be overlooked, because of s 79(5).
[12]See DBC Act, s 84(4).
Whether, the builder has an entitlement for payment pursuant to s 84(4) of the DBC Act?
As the Applicant cannot satisfy s 84(2)(a), it must seek to prevail upon s 84(4) if it is to recover an amount for the variations.
In the Respondents’ submissions given in reply,[13] the Respondents submit that the Applicant’s s 84 application is, in reality, an application for leave to amend the Applicant’s claim to make an alternate claim, pursuant to s 84 of the DBC Act. The Respondents oppose leave being granted by QCAT to the Applicant to amend their claim at this late juncture. The Respondents argue that the Applicant only made it clear in an oral application after the conclusion of the hearing an intention to bring a claim pursuant to s 84 of the DBC Act. The Respondents cite Aon Risk Services Aust Pty Ltd v Australian National University[14] (“Aon”) as authority for why the Applicant ought be precluded from obtaining relief from QCAT pursuant to s 84. The Respondents cite paragraph 112 in Aon, in particular, where it states:
112. A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits would be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.
[13]Those filed by the Respondents in the QCAT Registry on 24 April 2014.
[14][2009] HCA 27.
The Respondents argue that the Applicant had sufficient opportunity to bring an application to amend its claim to include an application pursuant to s 84 prior to the commencement of the hearing of this matter, particularly in circumstances where the Respondents had previously raised the s 84 issue in correspondence, prior to the commencement of proceedings. Equally, the Respondents contend that the Applicant has afforded no explanation for its delay in making an application pursuant to s 84, when sufficient explanation for that delay becomes a necessary prerequisite upon any such application, in accordance with principles recognised by the High Court in Aon.
Ultimately, I do not accept the Respondents’ submissions on this point. These take insufficient account for the fact that QCAT is not a court and is a non-pleadings jurisdiction; and nor is their sufficient regard for the objects in s 3(b) in the QCAT Act. Moreover, s 84(4) of the DBC Act confers a discretion upon QCAT to approve the recovery of an amount by a building contractor for a variation upon being satisfied of those matters set out in the provision. There is nothing in the words of s 84(4) that provides that the power is only enlivened on the making of an application, by a building contractor. Fundamentally, it has been the practice by QCAT, and of its predecessor Tribunal, to allow the bringing of a claim for relief pursuant to s 84(4) of the DBC Act even without the making of a formal application. In all events, this hearing has been conducted on the basis that relief pursuant to s 84(4) was always in contemplation, and the Respondents have not been caught by surprise.
Section 84(4) of the DBC Act provides:
(4)The Tribunal may approve the recovery of an amount by a building contractor for a variation only if the Tribunal is satisfied that-
…
(c)either of the following applies –
(i)there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation;
(ii)the building contractor would suffer unreasonable hardship by the operation of sub-section (2)(a) or (3)(a); and
(d)it would not be unfair to the building owner for the building contractor to recover an amount.
The Applicant submits that “exceptional circumstances” arise in this case by reason that the Respondents requested several variations and went through four iterations of the Henley ‘New Home Proposal’ before finally settling upon all of the desired inclusions for their home, in the fifth version of the New Home Proposal. According to the evidence given by Mr Raleigh during the proceedings, it is more usual for Henley clients to generate either one or two New Home Proposals, rather than the five that were worked up on behalf the Respondents in this case. The Applicant submits[15] that this volume of pre-contract activity ought give rise to a finding of special circumstances. However, I do not consider that the pre-contract negotiations in this case are enough to give rise to matters that might qualify as exceptional, particularly when considered in light of those matters identified by North J in Allaro Homes Cairns Pty Ltd v O’Reilly & Anor.[16] To this end, I do not think it especially remarkable that there were protracted discussions regarding the design of the Respondents’ new home before the final inclusions package was agreed. This type of phenomenon, although perhaps less common in the experience of the Applicant, is nonetheless still far short of what would be required in order to fall within the concept of an exceptional circumstance.
[15]Applicant’s final Submissions filed 15 April 2014 at paragraph 28.
[16][2012] QCA 286 at [15].
Consideration moves then to whether there are circumstances of “unreasonable hardship”, per s 84(4)(a)(ii) of the DBC Act.
The Respondents contend that, as a matter of evidence, the Applicant has failed to demonstrate any unreasonable hardship that it will suffer if it is not paid for the variations. The Respondents cite Poiner v Quirk[17] and Allaro Homes (ibid) as authority for that contention. In Poiner v Quirk, at paragraphs [73] and [74], the following was said in relation to s 84(4)(a)(ii):
Subsection (4) provides that approval may be given only if there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation or the building contractor would suffer unreasonable hardship by the operation of the requirement that section 79, 80, 82 & 83 be complied with, and that it would not be unfair to the building owner for the building contractor to recover an amount.”
The Tribunal found that there were no exceptional circumstances surrounding the claim, and it does not appear from the written submissions on behalf of the Appellant that any exceptional circumstances were even alleged: p13. Indeed those submissions do not address the requirements of s 84 at all; they proceed on the basis that it is sufficient that the work was carried out on instructions from and with the knowledge of the Respondents, which is not enough to satisfy s 84. There is nothing to indicate that there would be any unreasonable hardship to the building contractor in enforcing the requirements of ss.79, 80, 82, & 83 in the present case.
On the face of it, if this work was required by the Respondents, the Appellant simply did not comply with the requirements of the statute. He ought to have required them to sign a variation before he did the work. 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. There was nothing to indicate that he would have suffered unreasonable hardship from enforcing the requirement that he comply with ss.79, 80, 82 & 83. In my opinion, there was no proper basis on which the Tribunal could have held in the circumstances of this matter that the Appellant had satisfied the requirements of s 84 to recover payment of this amount, even assuming that the work was carried out on instructions from and with the full knowledge of the Respondents. If the Tribunal had found that the Respondents had not requested that this work be done, it seems to me that this would simply be a further impediment to satisfaction of the requirements of s 84, since I cannot see how in those circumstances the Tribunal could have concluded that it would not be unfair to the Respondents for the Appellant to recover the amount for this work.
[17][2007] QDC 299 per McGill SC DCJ.
Equally, in Allaro Homes Cairns Pty Ltd v O’Reilly & Anor at [20] and [21] North J said:
Turning to the question of ‘unreasonable hardship’. The evidence before the Appeal Tribunal was scant but included the contract price, the cost of and findings with respect to the cost of the variation and the circumstances that the work had been performed but not paid for. In addition there was evidence from the director of the applicant of the turnover of the applicant’s business. Plainly, it was a substantial building company with a turnover varying over three years of between $11m and $17m. There was no evidence going to the consequences for the applicant of non-payment.
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’ suffered from the operation of the act. Both the Tribunal and the Appeal Tribunal concluded that the applicant had demonstrated neither hardship nor that it was unreasonable. That conclusion is dictated by the evidence in this case and I can see no error of fact or law in that conclusion.
I accept, of course, that the circumstances that a builder might be unpaid for work done does not necessarily lead to an inference that hardship is suffered, and that something more should ordinarily be established, before unreasonable hardship can be made out. The concept of ‘unreasonable hardship’ was considered by the Commercial and Consumer Tribunal in Ross v Rangel.[18] The use of the term “unreasonable” before hardship was said by Member Lohrisch to qualify the notion of hardship, and encompasses a need for consideration of concepts such as equity, justice, and fairness when assessing whether there has been any unreasonable hardship.[19] I agree that this embodies the correct approach to s 84(4)(a)(ii).
[18][2004] CCTB 432-02 at [71] – [77].
[19]At [76].
In this case the variations (and the price for same) had been advised to the Respondents, in writing, before the works were effectuated, and after these had been requested of the builder by the home owners. Similarly, the Respondents have signed the variation documents authorising those changes, and have returned the document to the builder before those works were undertaken. Now that the variation works have been performed, the Respondents have also received the benefit of them. The evidence before QCAT is also that the builder has waived a number of administrative fees in regards to the Respondents requesting these variations to which it was contractually entitled, and that it has then conferred the further benefit to the Respondents of not demanding payment for any variations until the very end of the construction, when it was entitled to be paid for them immediately. The variation documents also very substantially comply with the requirements of Part 7 of the DBC Act and, in the end, are only non-compliant to the extent that the builder did not require the Respondents to initial next to the note as regards time for payment of the variation (per s 81(5) in the DBC Act); in circumstances wherein the Applicant did not, in all events, enforce the contractual timeframe specified in the variation document for payment. In my view, these are all factors that give rise to considerations of equity and fairness, and are matters that would make it unreasonable were an order not made by QCAT pursuant to s 84(4), because the result of not making such an order would be to visit an unreasonable hardship upon the Applicant. I am also satisfied that it would not be unfair to the Respondents to entitle the Applicant to recover an amount in respect of invoice 29670 in these circumstances, as required by s 84(4)(b). To find otherwise in the circumstances of this case would amount to a triumph of form over substance. In my view the amount that should be approved by QCAT is the full amount indicated by invoice 29670, namely $21,417.00.
The extent of any defective work and the costs of rectification
QCAT heard expert evidence in relation to these matters from Mr Don Dixon on behalf the Respondents and Mr John Reeve and Mr Bryan Vadas, on behalf the Applicant.
As became clear during the hearing, particularly from the oral testimony of Dr Muhammad Salam, the Respondents’ primary complaint relates to tiling issues. For the most part, it became clear that the Respondents are disappointed by their own decision to select ceramic tiles, rather than porcelain tiles, and now seek to attribute responsibility for that choice onto their builder. The Respondents had inspected the Applicant’s display home at Upper Coomera and were greatly impressed by the porcelain tiles that they had seen therein. Despite that, the Respondents did not select porcelain tiles for their own home, and chose ceramic tiles. The evidence received before QCAT makes it absolutely clear that the tiles that were selected (and signed off as the approved product), by the Respondents were also those that were laid in their new home, by the Applicant. Ultimately Dr Salam, in particular, was disappointed that these did not look as good as the porcelain tiles that he had recalled seeing in the display home at Upper Coomera. I was not impressed by Dr Salam’s evidence wherein he sought to blame the Applicant for that decision.
The other key complaint by the Respondents relates to the height of the step down from the laundry door to the slab outside the laundry, (which they had requested be just 86mm rather than the 160mm as constructed), and the fact that this slab does not extend all the way to the boundary line for the property. Again, these are not defects as the evidence confirms that both are features built in conformity with the requirements of the Building Code of Australia, and the contract, and are matters that had been discussed with the Respondents at the time of construction.
As is usually the case in any large construction project, there were, at the end of it, still a number of minor defects requiring rectification. Having considered the evidence, and in particular the opinions of Mr Vadas, Mr Reeve, and Mr Dixon, my conclusions in relation to all those items from the list of alleged defects that should now be recognised as defects is as follows:
Dixon Report Reference
Defect Details
Rectification Amount Allowed
A1(i) & (ii)
Floor tiles – movement joints and joint widths
$297.43
A1(a)
Floor tiles – shower floor (ensuite 4)
$101.30
A2(i)
Wall tiles – inconsistent width of grout joints
$428.41
A2(ii)
Custom cut wall tile (ensuite 4)
$50.00
A4
Outdoor wall tiles – leaching
$400.00
A5
Outdoor floor tiles – grand alfresco
$500.00
B1
Carpet laying
$500.00
B2
Metal material exposed to weather
$132.00
B3
Entry door
$50.00
B3
Internal doors – painting of top and bottom edges
$479.66
D2
Wavy ceiling line
$287.50
D3
Concrete driveway
$271.64
E2
Silicone to kitchen splash-back
$97.00
F6
Bathroom shower niches – sharp edges
$42.53
TOTAL
$3,637.47
It follows therefore that I conclude that the amount which should be awarded to the Respondents by way of rectification costs is the sum of $3,637.47, and this sum should now be deducted from the sum of $21,417 owing to the Applicant.
In relation to all the other alleged defect items in the expert report obtained from Mr Don Dixon (those that are not now listed in paragraph [41] above), I do not assess any of these to be defects or matters for which the Applicant bears any responsibility.
The Applicants claim for interest and costs
Further submissions on costs are required in order to determine the question, yet the claim for interest can be determined, at this juncture. The Applicant makes a claim for interest on the sum outstanding on invoice 29670 from the date it is claimed payment was due (5 January 2012), pursuant to clause 30.1 of the contract, at the default rate, which is 15.43%.
Ultimately, I have upheld the Respondents’ contention that the only basis for an entitlement by the builder to be paid for the variations arises because of s 84(4) in the DBC Act. In those circumstances there has been no default under the contract and thus, in my view, no entitlement to interest arises for the Applicant under clause 30.1.
The Applicant seeks its costs of these proceedings pursuant to clause 31.1 of the contract, which provides:
31.1The owner must pay to the builder any debt collection costs, including any legal fees on a solicitor and own client basis, associated with recovering or the attempted recovery of an amount under this contract.
The Applicant has attempted to recover the sum outstanding pursuant to invoice 29670 under this contract, yet has ultimately only succeeded in obtaining an amount because of s 84(4) of the DBC Act. Prima facie clause 31.1 enables recovery on an indemnity basis for an attempted, (albeit obviously unsuccessful), recovery of an amount ‘under the contract’. Yet, I apprehend that there may be broader public policy considerations that warrant my deliberation before ultimately determining that point. Accordingly I will invite further submissions from the parties in relation to clause 31.1 of the contract and in relation to an alternative award of costs pursuant to s 102(1) of the QCAT Act, particularly in light of those considerations identified by Keane JA in Tamawood Ltd & Anor v Paans.[20]
[20][2005] QCA 111, at [32].
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