Hilliard v Simonds Homes Qld Pty Ltd - [2011] QCAT 375

CITATION:

Hilliard v Simonds Homes Qld Pty Ltd [2011] QCAT 375

PARTIES:	Ms Jane Hilliard
v
Simonds Homes Qld Pty Ltd

APPLICATION NUMBER:

BD453-09

MATTER TYPE:

Building matters

HEARING DATE:

22 and 23 February 2011

HEARD AT:

Brisbane

DECISION OF:

Ms Julie Cowdroy, Member

DELIVERED ON:

26 July 2011

DELIVERED AT:

Brisbane

ORDERS MADE:

The application and the counter claim are dismissed.

CATCHWORDS:

Building dispute – allegations of defective and negligent work and work performed in breach of contract – applicant seeks compensation for rectification, loss of rental income, interest and loss incurred by sale of house – respondent counterclaims for costs of items previously not claimed

APPEARANCES and REPRESENTATION (if any):

APPLICANT:	Ms Jane Hilliard self represented
RESPONDENT:	Simonds Homes Qld Pty Ltd represented by Mr Jim Welsh

REASONS FOR DECISION

Background to the Application

The applicant contracted with Simonds Homes Queensland Pty Ltd (“Simonds Homes”), to erect a residence at 1 Uluru Place, Forest Lake. Handover of the house occurred in October 2008. On 15 October 2009 the applicant lodged an application with the Commercial and Consumer Tribunal (“the CCT”). Her claim related to the cost of rectifying defects, compensation in respect to breach of contract and other matters in relation to the construction of the house. In December of 2008, upon the creation of the Queensland Civil and Administrative Tribunal the CCT was abolished. This tribunal has the functions and powers that were previously conferred on the CCT.
In about July of 2010 Ms Hilliard sold the house and consequently, an order for rectification was no longer relevant. Accordingly, she was granted leave to amend her claim and the amended claim seeks reimbursement for the cost of rectification works carried out, loss of rental income, costs associated with the claim, interest and the diminished value of the residence due to what she describes as a forced sale.
The respondent denied the totality of the applicant’s claim; claiming it is not liable to rectify defects and omissions outside the six months defects liability period; it denied it was in breach of its contractual obligations or that some of the work was carried out in a negligent manner and counter claims $825 for the installation of a solar hot water system and $9,835 for rendering work.
The parties had been involved in litigation as a result of the applicant’s employment with the respondent from 4 July 2007. The applicant was employed as a sales representative and she took action to recover commission owing to her.

Hearing

The matter was heard on 22 and 23 February 2011 following which the parties were invited to provide further written submissions. Submissions from the respondent and the applicant were received respectively on 2 March 2011 and 10 March 2011. The decision is based on the written material and the oral evidence of the parties.

APPLICANT’S CASE

Jane Hilliard

Handover occurred on 17 October 2008. Prior to handover, the respondent had been notified of defects that required rectification. The applicant advised the respondent verbally and in writing. Not all of the matters that were alleged to be defects were included on the inspection certificate of practical completion signed by her on 2 October 2008 and “signed off” on 10 October 2008. She drew attention to the fact that on that document she had written, in addition to the 12 items listed, “*defects & maintenance TBA”.
It was contended that the respondent did not attempt to carry out any of the rectifications which are the subject of the claim. The respondent made some rectifications, but these were confined to those which were the subject of adverse comment in the report of the Building Services Authority.
Essentially the defective or incomplete items related to drainage problems in the bathroom, ensuite and laundry, external drainage, kitchen drawer installation, fridge tap not installed and other matters.
The applicant also claimed that work was not carried out in accordance with the contract and plan. The major items in this category were the installation of a shower hob when one was not required, incorrect window and door frame colours, floor wastes not installed as per plan, incorrect location of external tap, skirting not laid in accordance with plan, tiling plan not adhered to, incorrect bath tap ware installed, frosted glass fitted in lieu of clear glass; tiling to bathroom and ensuite showers and concreting in front porch not in accordance with plan.
The applicant provided copies of e-mails in which she had reported defects and modifications required and she had been led to believe that these would be rectified. After 2 ½ years the problems still had not been remedied and she decided to sell the house. This was attributable to a number of factors, but primarily water and drainage issues and the unwanted hob.
The water ponding and lack of drainage caused flooding to the property on 1 December 2008 that necessitated the replacement of flooring at a cost of $1,040.
There were rectifications made to the premises prior to its sale. Some of the problems, such as drainage, were not rectified and reference was made to an e-mail (document 14) in which the new owners referred to “drainage issues identified in the inspection report” but absolved the vendors of any responsibility.
As a result of the forced sale of the house, a loss had been incurred. The loss was calculated on the basis of the purchase price of the land and the amount paid to Simonds Homes, with regard to the additional amounts spent by her and also taking into account what would have been anticipated in the increase in value over two years. This was calculated at 5 per cent capital gain per year.
The house was placed on the market in about March of 2010, at which time notice to leave was given to the tenants occupying the applicant’s investment property. Ms Hilliard and her family needed the house to be vacant so that they had somewhere to live when the Forest Lake house was sold. Settlement occurred in August of 2010, so there was a loss of a number of months rental income. The applicant seeks an order for reimbursement of that rental income.
The respondent had never sought from her the costs of rendering or the installation of the hot water system. Those issues had only been raised in the form of a counter-claim once she had lodged her application. She had never agreed to consider contributing towards the cost of rendering. The cost of render had been included in the contract for loan purposes, but it was agreed between the parties that items could be taken out if wanted. She had purchased a quantity of stacked stone and it was intended that her partner, Francisco Lepore, would build feature walls, consequently rendering was not required. Accordingly, she was given a credit for the rendering.
Ms Hilliard took issue with most of the evidence of Mr Hetherington. She did not ask him to install the hot water system as he claimed. When she noticed that the hot water system had been installed, she assumed it formed part of the solar system package that had been purchased. She denied that she had asked Mr Hetherington to install the system. She had never received an account for the installation and it was first mentioned in the counter claim. She agreed that she had refused Mr Hetherington entry to the house on one occasion when he called to inspect plumbing and draining concerns, but she was feeding her daughter at the time and she had specifically asked that contact be made by phone prior to attending her home. Mr Hetherington had not done this.
There were other issues in relation to a range of concerns including but not limited to the installation of bath tap ware, lack of a deflection plate to the oven causing damage to kitchen cupboards, the concreting on the front porch was not in accordance with the contract plans and other matters which were set out in the original claim. The house had now been sold and it was difficult to quantify the loss in value which those problems caused. Some of the problems were rectified at her cost and invoices were produced.

Hob

Of paramount concern to the applicant was the installation of a hob in the ensuite shower that was not in accordance with the plan. The applicant wanted wheelchair access for her mother. When the shower recess was completed there was an unfinished metal piece protruding out of the recess, which prevented wheelchair access. Karl Kollar, a tiler, had carried out tiling and concreting work to the ensuite shower at a cost of $550, however the cost of altering it to a “hobless” shower would have required considerably more expense.

Drainage

The applicant contended that the drainage in the wet areas were defective and not in accordance with the contract. It was contended that the bathroom, ensuite and laundry floors do not drain to the floor waste as per the contract. Reference was made to the report of Brian Smith dated 2 August 2010. Mr Smith is a Housing Industry Association of Australia (HIA) building inspector, who the applicant engaged to inspect the premises.
During a visual inspection, Mr Smith noted a number of what he describes as “discrepancies”, including the presence of a hob in the ensuite shower, a 5mm to 10 mm backfall from the floor waste in the ensuite shower recess causing ponding of water to the outer edges, the laundry floor is incorrectly graded away from the floor waste in a number of areas, slowing water flow into the linen cupboard and under the wall into the adjacent hallway and to the entrance of the shower recess. He referred to photos which were taken by the applicant following water incursion into the hallway on 1 December 2008.
The applicant’s evidence was that there was flooding of water from the shower in the main bathroom into the laundry wall. Receipts from Chris Rata for the removal of damaged flooring and underlay and installing quick step flooring and underlay ($500) and, in respect to the supply of the flooring, from Fortitude Valley Carpet Choice for $490.91 were produced.

Skirting

The applicant wanted ‘tacked on” skirting in certain areas so that timber flooring could be installed at a later date. This was not done. A document quoted/invoice for spac fill prime and paint skirting for $700 was produced.

Finish – Colours

The applicant provided to the applicant notice that she wanted a variation in the colours that were originally selected. Amongst the variation was an indication that she required changes to the doors and window colours. This was not acted upon by the respondent.

Rendering

The variation document (marked No 25), states that item No 7 of contract is to be deleted (rendering) and replaced with smooth rendered and painted finish in lieu.
Notwithstanding that advice, the respondent rendered the external areas. Ms Hilliard had purchased a quantity of stone work and it was intended that her partner would create feature walls. She was asked by the respondent to sign a variation in regard to the rendering and other matters on around 14 May 2008, which she signed but refused to date. She had already submitted signed variation documents about the same matters. She acknowledged that a credit of $9,835 had been allowed for that variation. It was not appropriate that the respondent seek payment of that amount now, due to its error.
Ms Hilliard contended that other variations included on that document were carried out so the respondent could not now claim that the document with the variation regarding the rendering had not been received until after the rendering was complete. She questioned the ethics of the respondent in its dealings with her.
Generally, Ms Hilliard was very dissatisfied with the respondent’s response to her concerns. Over two years, the respondent carried out no rectification. Mr Smith was shocked at the workmanship in the house; he measured the level of the floors, which the inspector sent by Simonds did not do.
The house was sold for $560,000. The land had been purchased for $189,000; the contract for the construction was for $232,000 but less was paid because she and her partner did a fair bit of work themselves. The applicant spent between $75,000 and $100,000 in improvements to the residence, including $18,000 for air-conditioning, $7,000 for bench tops and other work.
There had been modification of her claims over time – this was due to the fact that she had been hoping for items to be rectified and some compensation for the fact that she did not receive the home she contracted with Simonds Homes to build. The respondent had endeavoured to confuse the issues – it argued about the hob when the evidence clearly demonstrates it is a hob which is unfinished and unusable. The respondent’s attitude towards the hob demonstrates its attitude towards most of the items in dispute.
The respondent had continually made excuses for its inaction to rectify the defects and had protracted the resolution of the matter to the point where she felt compelled to sell the house which she had expected to reside in with her family for many years.
A meeting occurred in the presence of Mr Fusco and Mr Welsh in an effort to resolve the matter. Whilst she provided a list of landscaping items to then, it was not prepared for the purpose of seeking compensation from the respondent, but was merely a list prepared by her and her partner as to what remained to be done to bring the house to finished stage. Mr Welsh had misrepresented the list as a list of demands, which was not the case.

RESPONDENT’S CASE

Jim Welsh

Mr Welsh holds the position of regional manager, a position he has held since 2009. The respondent’s position is encompassed in the statement of Mr Graeme Mathers, who was the regional manager until December 2008.
Simonds Homes is a licensed builder, and had been building homes since 1982. Mr Welsh referred to the report of Mr Fred Broekman, licensed building inspector for All Suburbs Building Inspections and Reports. Mr Broekman attended the Forest Lake residence on 24 June 2010, carried out an inspection and provided a report at the request of Mr Welsh.
The respondent relied on Mr Broekman’s report. It also relied on the report of the BSA dated 13 August 2009. The respondent claimed that many of the items in issue were of a minor nature and no complaints were made about those items until well after the six-month warranty period. Some of the issues now raised by the applicant did not come to light until her amended claim was lodged. Her claim had grown from $77,000 to $144,000.
Despite the fact that many of the issues were raised after the six month period, the respondent attempted to satisfy the applicant’s concerns wherever possible. It sent a plumber to inspect the water problems in the wet areas. Both the BSA inspector and Mr Broekman were of the view that the wet areas have been installed in a competent manner and in accordance with relevant standards. All wet areas were observed to be sealed correctly when inspected.
The respondent contended that it did not construct a hob in the ensuite shower, by reference to the Australian standard for hobs. There were no specific drawings provided by the applicant as to her specific requirements for wheelchair access. Significantly, Ms Hilliard had not raised her concerns about what she perceived was the presence of a hob at the time of practical completion.
The applicant’s claim for compensation for loss as a result of sale of the property had not been properly quantified. There was no evidence of loss, no evidence from a valuer and in particular no evidence that any loss, if sustained, was attributable to defects to the house and in particular due to water issues. It was pointed out that the water issues were first the subject of dispute on 13 August 2009.
Even though the water problem was notified outside of time, the respondent sent a plumber to attend, investigate and repair. Mr Welsh agreed upon being shown the photo of the hall area, that there had been water ingress into the house.
Items such as incorrect window colour, glass and the position of the tap are normally covered by the six-month warranty. Mr Welsh disputed that certain colour variations were received by the company and suggested that the applicant created the variation to the colour document (2) in her capacity as sales consultant. He also initially contended that the deletion of the render was not conveyed to the company but ultimately conceded that the house was rendered in error and that the colour variation had been received and not acted upon.
Ms Hilliard produced a list of landscaping items during a meeting which he attended with Mr Fusco in July of 2009. In his view, the applicant was not genuine in wanting to resolve the dispute; instead, she presented them with a list of landscaping items to be attended to, in lieu of alteration to the hob in the shower and compensation for the colour of the windows.
In a statement from Robert Bishop, an estimator who is employed by Simonds Homes, the cost of the works set out in that list had been calculated at $71,100. Simonds Homes considered that this was not a fair and reasonable compromise and had not attended to any of the matters on the list.
The respondent had constructed a beautiful house for the applicant. Any defects noted by the BSA had been rectified. The company had taken the view that any contractual issues were adequately compensated for by the fact that it bore the cost of the installation of the hot water system and the rendering.
The respondent considered that Ms Hilliard was attempting to take advantage of some minor contractual issues and she was engaging in conduct with a view to “unjust enrichment”. It was after the receipt of Ms Hilliard’s claim that the respondent sought to be compensated for the hot water installation and the rendering.
The respondent had gone to considerable effort and expense to allay the applicant’s concerns despite the fact it had no legal requirement to do so.

Guy Hetherington

Mr Hetherington operates a plumbing business, trading as Guy Hetherington Plumbing. He was contracted by Simonds Homes to carry out plumbing works at the applicant’s home. He provided a written statement of his contact with Ms Hilliard. He attended the applicant’s home in response to an email from Mr Welsh to investigate a problem with a blocked shower. After receiving no response to his requests to make contact, he attended the applicant’s residence on 14 August 2009 unannounced and she refused him entry to the premises
His understanding was that the solar hot water system was to be provided and installed by the applicant, however the applicant contacted him and asked him to install it and advised that she would pay him directly. He completed the work and sent an account but no payment was made. Simonds subsequently paid him for the work in the amount of $825.
He positioned the external tap on the basis of the site supervisor’s instructions. In cross examination he conceded that the placing of the external tap was 3 or 4 metres different to that shown on the plan however he contended that he was told that the variation was in accordance with the owner’s wishes.
The wastes and palazzi gully work were carried out in accordance with the plans and he tested that the water drained adequately, which it did. All of the plumbing work was inspected and approved by the Brisbane City Council and a compliance certificate was provided.
He had been shown a copy of the inspection report of Brian Smith which states that the drainage pipe was not connected to the drainage system, which would suggest that this was defective or incomplete work. He connected the pipe to the system when he completed the plumbing work and it would not have been approved if it had been left unconnected.

He suggested that the pipe had been disconnected or broken after his work was completed, possibly during landscaping works.

Findings and Consideration

During the hearing, it was obvious that there was considerable animosity between the parties. Mr Welsh conceded nothing until it was patently obvious the evidence was against him and he argued about matters which were not relevant to the matter to be decided.
I formed the view that he was not always truthful and was inclined to overstate his case in a number of instances. He stated that the list produced by the applicant of landscaping items was an example of her attempts to extract compensation far beyond what was reasonable. Ms Hilliard’s evidence on this aspect was not persuasive, however ultimately, Mr Welsh’s credibility, and to some extent, Ms Hilliard’s credibility, were not central to the issues to be decided.
For similar reasons, the evidence of Mr Hetherington, which was challenged soundly by the applicant in many respects, did not form the central basis of my decision. I find that the hot water system was fitted by Mr Hetherington and that the applicant did not pay him for the installation. His evidence as to the plumbing compliance certificate is relevant in that it is unlikely that this would have been issued if connection of the downpipe to the water tank pipe had not occurred.
His understanding of the positioning of the external tap and the bath tap ware issue is somewhat academic, given that the house has been sold. I note his evidence that the wastes and palazzi gullies were installed in accordance with the plans and were tested to ensure that water drained adequately.
For the respondent’s part, it relies extensively on the report of the Building Services Authority and Mr Broekman. It submits, in essence, that all matters of defective or poor workmanship had been attended to, that other matters raised by the applicant (mostly contractual), where admitted, were of a minor nature. In relation to the rendering this was carried out in error, however the cost of this had never been sought until the claim was lodged by the applicant, and nor was any reimbursement sought for the cost of the installation of the solar hot water system.
Ms Hilliard suggested that the company had not been honest in its dealings with her. She had a number of site supervisors and dealings with a range of Simonds Homes’ employees during the time the house was under construction. I accept her evidence that communication with the builder was difficult and that not all the variations which she requested were acted upon, despite the fact that the variations were received well in advance of the work occurring.
I find that the shower is not hobless, as that term is commonly described. Ms Hilliard states that the shower was to cater for her mother who was in a wheelchair. There was insufficient evidence for me to determine whether the building company had knowledge of that circumstance, in any event, the shower was not built in accordance with the contract.
I accept that the rendering was carried out despite the applicant notifying that she did not require it. I accept that there were other matters that were not in accordance with the contract but it does not automatically flow that such variations resulted in diminution in the value of the property.
In respect to the applicant's complaint about water issues, the photographs produced by the applicant demonstrate ingress of water under the hall carpet. In relation to that topic, I had regard to the reports of Mr Smith, Mr Barrett, Building Inspector of the Building Services Authority and Mr Broekman.
Taking these in turn, Mr Smith reported following an inspection of the property on 30 August 2010. Apart from contractual issues, he noted a number of what he described as “discrepancies”. In relation to the water issues (4, 5, 6) he referred to the photographs taken by the applicant. Those photographs were taken some time previously and there was no evidence that the water issues were constant or regular. Mr Smith did not describe the discrepancies in terms which would qualify as a defect or against accepted building standards.
The BSA reported following an inspection on 13 August 2009. Again, apart from contractual matters, in relation to a complaint relating to main shower not draining (but not all the time), the BSA did not identify a problem and categorised the complaint as “no defect”.
In relation to a complaint in relation to the ensuite shower not draining and ensuite floor not draining to floor waste, the BSA considered that the ensuite shower drained adequately in accordance with building regulations. The absence of the floor to fall to a floor waste was considered to be a contractual matter and its absence did not constitute defective work.
Mr Broekman’s inspection carried out on 24 June 2010, resulted in a report which concluded that it was not possible to ascertain who installed the hob (relying almost exclusively on the information provided to him by the respondent). He considered that the floor wastes in the ensuite bathroom and laundry floors and the tiling in the wet areas had been installed in a trade like manner and within acceptance industry standards and tolerances.
In relation to the contractual issues, Mr Broekman relied extensively on what was conveyed to him by the respondent in relation to most of the contractual matters and I place little weight on this evidence. He further made the comment, which I accept, that the positioning of the external tap and some of the contractual matters were of a cosmetic nature only and did not effect its functioning. Such matters included the concrete area on the front porch, the paint colours of the internal doors and the window and doorframes.
Based on all the above, I find that there is no evidence of a major water issue in the house. The reference to “water issues” in an email from the purchaser is vague and is not quantified in any respect. Mr Smith’s report relies on photographs of water problems taken at least a year prior to his inspection, and the BSA inspector did not find the presence of a defect. Consequently, the evidence does not corroborate Ms Hilliard’s assertion that one of the significant reasons that caused her to sell the house was due to major water issues.
Whilst I accept that the hob was installed, and this was a concern, the cost of rectifying that situation was not so exorbitant as to require the sale of the house. Essentially, whilst the applicant was not satisfied with the house in all respects, it was, to all intents and purposes a marketable home that attracted a buyer.
Her decision to place the house on the market and move into the rental home was a choice she made. The house was neither uninhabitable or in such poor condition that the cost of rectification to modify the house to that which Ms Hilliard was so prohibitive that the sale of the property was the only solution.
I find that it was not a forced sale, as Ms Hilliard implied. It was a choice that she made. There was no persuasive evidence before me that the house had to be sold. I disallow any claim for loss of rental income.
In respect to the claim for loss upon sale, the evidence is that the house and land cost a maximum of $421,000. Ms Hilliard maintained that she spent between $75,000 and $100,000 but no evidence was provided to substantiate this claim. The applicant provided receipts for the replacement of carpet and other costs, as well as quotations for various renovations to the bathrooms, however these do not constitute improvements and in any event they were quotations rather than invoices for work carried out.
There was no evidence from a valuer that if the house had been completed in accordance with the contract that a higher sale price would have been realised. In fact, given the slump in the price of real estate in Queensland over the past two years, it could be argued that Ms Hilliard was lucky to have sold the house for $560,000. In any event, she has not demonstrated any loss.
Whilst I accept that the house was not entirely in conformity with the contracts, most of the variations were of a minor nature or of an aesthetic nature. They did not necessarily detract from the value of the home. The matter of Bellgrove v Eldridge (1954) 90 CLR 613 is authority for the principle that the usual remedy for incomplete and defective building work will be the cost of completing the building works in accordance with the contract. However, that principle was qualified by the statement that such reinstatement must be a necessary and reasonable course to adopt. This principle also applies to matters of a contractual nature.
In the present circumstances, Ms Hilliard has received rendering and the installation of the hot water system at no cost. The builder has borne that cost – in the case of the rendering it was due to its error and it would be unfair and unreasonable to require Ms Hilliard to pay for this. There was no evidence that the presence of the rendering caused any decrease in the value of the home.
To grant the compensation which the applicant seeks would constitute unjust enrichment. She has not demonstrated a loss, and therefore her claim is dismissed.
For all of the foregoing reasons, I decline to make an order for compensation. It follows that an order for costs and or interest are not relevant, and each party is to bear its own costs. I dismiss the counterclaim of the respondent.