Hin v Douglas
[2015] QCAT 40
•9 February 2015
| CITATION: | Hin v Douglas [2015] QCAT 40 |
| PARTIES: | Manfred Hin (Applicant) |
| v | |
| Margot Douglas (Respondent) |
| APPLICATION NUMBER: | BDL055–14 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 19 September 2014 |
| HEARD AT: | Townsville |
| DECISION OF: | Member Johnston |
| DELIVERED ON: | 9 February 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Manfred Hin is ordered to pay Margot Douglas the sum of Four Thousand and Thirty One Dollars and Twenty-Eight Cents ($4,031.28). 2. Margot Douglas’ Response and Counterclaim is dismissed. |
| CATCHWORDS: | Dispute over terms of contract and the standard of the work undertaken |
APPEARANCES:
| APPLICANT: | Mr Manfred Hin – self represented |
| RESPONDENT: | Mrs Margot Douglas – self represented |
REASONS FOR DECISION
Background
The Applicant issued a Minor Civil Debt in the Townsville Magistrates Court on 14 January 2014. The Respondent lodged a Response and Counterclaim on 11 July 2014. The Magistrates Court subsequently transferred the matter to the building list of the Queensland Civil and Administrative Tribunal.
On 3 March 2014, the Principal Registrar of QCAT ordered that: Pursuant to Practice Direction 3 of 2010, it is ordered the matter be removed from the Townsville Minor Civil Dispute list and be dealt with in accordance with the Practice Direction as a building dispute.
The Tribunal is therefore hearing the matter under its jurisdiction as a building matter.
The Applicant is a builder and a business owner with significant experience in the building sector.
The Applicant carries on a building, renovation, repair, and maintenance business.
The Respondent engaged the Applicant to undertake building work at her house at 18 Cannon Street, South Townsville (the premises).
The contract consisted of a quote on two separate contracts.
The Respondent contends that the Applicant did not complete the works. The Respondent contends that the Applicant ceased work at the premises on 10 December 2013, not having completed the works.
On 10 December 2013, the Applicant handed to the Respondent his Invoice 1037 dated 22 November 2013, which purported to be for work up to the lock up stage.
On 6 January 2013, the Applicant put the Respondent on notice that she was in breach of contract.
The Respondent purported to terminate the contract on or about 7 March 2014.
On 14 January 2014, the Applicant issued an Application for a Minor Civil Dispute.
On 9 July 2014, the Respondent filed her Response and Counter Claim seeking $107,919.00 by way of damages for breach of contract made up of $28,121 for the cost of rectification of defective work and $79,798 for the cost of completing the work.
The Applicant claims $24,090 for unpaid invoice number 1037 dated 22 November 2013 due and owing to the Applicant.
There is a dispute between the parties as to whether the Respondent is required to pay the Applicant’s account in respect of those works.
The Respondent alleges that there are significant defects in the works performed by the Applicant and the Respondent is entitled to recover an amount by way of rectification caused by defective works.
The cost of completing the works has been calculated as follows:
The sum of $144,995.00 (being the assessed value of the works set out in the contract) less $65,197.00 (being the assessed value of the works completed by the Applicant) – $79,798.
What are the relevant contract documents?
The relevant contract consisted of a quote and two separate contracts.
Mr Hin did provide a quotation to Mrs Douglas for renovation and external works at 10 Cannon Street, South Townsville. This is contained in his letter of 11 March 2013 and shows a total of $79,700 payable in the following stages: 10% on acceptance; 30% on starting framing; 40% at lock-up stage 20% on completion. I accept the Respondent’s evidence that the splitting of the contracts was a device by the Applicant to gain some savings in the cost of the works.
The Tribunal notes that the quotation and contract contain different percentages for progress payments. Mr Hin's invoices are for progress payments for the stages. The Tribunal proposes treating the two contracts as one contract for the purposes of the work undertaken. The Act sets out guidelines for progress payments.
The Tribunal accepts the Respondent’s contentions that Mr Hin has breached the provisions of the Act by requiring progress payments that he was not entitled to claim. Mr Hin has claimed and received a deposit or payment exceeding 5% of the contract price on both contracts, in breach of Clause 3.1 of the Contracts and section 64 of the Domestic Building Contracts Act 2000 (the Act). A claim for progress payments for stages of the contracts is not in accordance with clauses 3.2, 3.3, 3.1, 3.5, of the Contracts and is in breach of section 66 of the Act.
What is clear to the Tribunal is that the documentation does not represent a meeting of minds between the Applicant and the Respondent. The Tribunal struggles to rectify situations where the parties have not adequately documented their agreement and there are disputes over the nature of what has to be undertaken. What this does is create a completely unacceptable degree of uncertainty, which was not resolved by the evidence called by the parties.
What are the issues?
The Respondent contends that the Applicant has breached the contract between the parties in the following ways:
the Applicant did not take out the required building insurances
the Applicant did not take out public liability insurance
the Applicant issued invoices prior to work being undertaken prior to work being completed
the Applicant did not certify the work undertaken
the Applicant failed to carry out the works to the required standard; and
the Applicant failed to have a licence to carry out specific works
Did the Applicant take out the required building insurance?
Mr Hin gave oral evidence was that he had drawn up two contracts because the demolition work could not be insured by the Queensland Building Services Authority. There needed to be two contracts. One contract was for the demolition work and the other for the renovations.
Mr Hin denied that he had not taken out the required builders’ insurance. Mr Hin referred the Tribunal to Exhibit 2 the Master Builder Queensland Policy Invoice, which shows the insurance details.
The Tribunal accepts this evidence and is satisfied that Mr Hin had taken out building insurance.
What is clear however from the evidence of Mr David Hopmeier is that Mr Hin appears to have seriously under estimated the costs of completing the job.
Did the Applicant take out public liability insurance?
Mr Hin disputed the allegation and provided evidence of his public liability insurance. Exhibit 2 is a Tax Invoice from Master Builders Queensland Insurance Services, which includes “Public Liability Insurance”.
The Tribunal is satisfied that Mr Hin had affected appropriate public liability insurance for the works, which he was undertaking.
Did the Applicant issue invoices prior to work being undertaken, prior the work being completed?
Mrs Douglas has claimed that Mr Hin has falsely asserted that the works are to an enclosed stage and that he is entitled to payment for this stage.
Mrs Douglas contends that the works are not to an enclosed stage and makes reference to Schedule 2 of the Domestic Building Contracts Act 2000 definitions.
Mr Hin referred the Tribunal to page 4 of the Renovation Contract and the definition of “enclosed stages”.
Enclosed Stage - means that stage of the Works when the external wall cladding is fixed; the roof is fixed but without soffit linings necessarily having being fixed or for a tile roof, pointing necessarily having being done or for a metal roof, scribing and final screwing off necessarily have been done; and the structural flooring is laid; and the external doors are fixed (even if only temporarily), but, if a lockable door separating the garage from the rest of the building has been fixed, without the garage doors necessarily having been fixed, and the external windows are fixed (even if only temporarily)
Mr Hin stated that the external wall cladding had been fixed; the roof support had been fixed; structural floors laid; door temporarily fixed; no garage; the external door had been fixed even if temporarily. He stated that all this had been achieved so that he had reached the “enclosed stage” and was entitled to issue an invoice for the work undertaken.
He referred the Tribunal to page 74 on the Act schedule 2, which describes the term “enclose stage”. The term “enclosed stage”, for a building, things stage when-
the external wall cladding is fixed; and
the roof covering is fixed, but without –
soffit linings necessarily having been fixed; or
for a tile roof – pointing necessarily having been done; or
for a metal roof – scribing and final screwing off necessarily having been done; and
the structural flooring is laid; and
the external doors are fixed (even if only temporarily), if a lockable door separating the garage from the rest of the building has been fixed, without the garage doors necessarily having been fixed;
the external windows are fixed (even if only temporarily).
The terms of the Renovations Contract follow the definition in the Act.
Mr Hin pointed out that section 66 of the Act provides for progress payments. He had reached the enclosed stage and was entitled to render an invoice for that stage of the contract. He stated that Mrs Douglas refused to pay his invoice.
Mr Hin stated the defects period under the Renovations Contract had not started because the defect period which had not started. He referred to the Tribunal to clause 15.2 of the Renovations Contract provides the defects liability period to run from the date of practical completion. He submitted that all the work that had been defective was unfinished particularly the plumbing work.
He referred the Tribunal to page 2 of Mr Hopmeier’s report where he comments on the valuation of the work completed mainly the sum of $65,197. This compares with the amount invoiced (including the unpaid) of $63,690. Mr Hin submitted that this proves that the value of the work he has undertaken has been substantiated.
Mr Hopmeier whilst acknowledging that some of the work was incomplete was critical of the standard of the workmanship of some of the work.
Mr Hopmeier when questioned whether the building was to the lock-up or enclosed stage gave the answer “yes, basically”. He stated that the ply sheeting for the sub walls had not been sheeted.
The Tribunal based on Mr Hopmeier’s evidence accepts Mr Hin's claim that the work was to the enclosed stage.
The Tribunal does not accept the Respondent’s contentions that the work was not to the enclosed stage.
Did the Applicant certify the work undertaken?
The Tribunal was not referred to any provision in the Contracts that requires certification of stage claims.
Did the Applicant fail to carry out the works to the required standard?
Mr Ian Savage the Council Plumbing Inspector told the Tribunal that he had 27 years’ experience in the plumbing trade. His view of the work was that it was “non-compliant”. When asked whether the work was up to the standard required of a plumber his answer was “no”. He told the Tribunal that a permit was required for the work. The appropriate form was a Form 1 with plans for drainage. Under cross-examination, he did not accept Mr Hin’s contentions that this was “incomplete work”. Mr Savage stated that work should not have started until the Form 1 permit had been granted. His view given the nature of the work that he would have expected a permit before it was started. He confirmed that the standard of the work was poor. He sets out in Exhibit 9 problems with the work that had been undertaken together with pictures that show poor standards of workmanship.
Mr Savage would not comment on what was temporary and what was not temporary. He went back to the point that a permit is needed before any of the work was undertaken.
Mr Hopmeier told the Tribunal that Mr Hin’s work was not up to the required standard of workmanship.
Mr Hopmeier provided a report, which is Exhibit 10. In his report on page 12 he talks about the drainage installation stating that: ‘this does not appear to comply with current regulations has not been installed in accordance’ with the client’s requirements. He recommends the replacement of the drainage. In relation to the plumbing installation, he points out that the Applicant has not carried out the work in accordance with the instructions of the Respondent. He concludes on page 13 that: ‘In my opinion there has been lots of defective work carried out by the builder and the work to be rectified would be quite expensive’.
Mr Hopmeier on page 11 stated that all of work was incomplete. He was of the view that the quality of some of the work was not up to the required standard. The external cladding; the installation of Doors and Windows; the Framing; the plumbing; drainage; and electrical work were not up to standard.
Mr Hin agreed that the work was not up to the required standard of workmanship because the work was not practically complete. He contended that the work did not have to be up to the required standard of workmanship until the stage of practical completion. His argument being that he had only undertaken work up to lock-up stage.
Mr David Hopmeier said to the Tribunal that there was clear evidence of poor workmanship. He talked about problems with the drainage. The gutters were poorly installed. Mr Hin had exposed silicon. He stated that no sealer should be exposed. He talked about the poor state of the electrical wiring. He stated that the cyclone rods have been welded but some of the work was not up to a good standard.
Mr David Hopmeier told the Tribunal that if the work had been done to a good standard of workmanship he would have accepted Mr Hin’s contentions however he did not accept that the work was simply not complete.
The Tribunal accepts the evidence of Mr Savage and Mr Hopmeier.
The Tribunal is satisfied that the proper process was for a Form 1 to be lodged with plans with the plumbing Inspector providing approval. The plumbing work has clearly proceeded without such approval. The standard of work that was undertaken was poor and not up to the required standard. Mr Hin had the opportunity to provide a statement from a plumber and call the plumber if a plumber had undertaken the work. Mr Hin failed to do so. The Tribunal does not accept his explanation regarding the state of the plumbing.
The Tribunal is satisfied based on the evidence of Mr Savage and Mr Hopmeier that Mrs Douglas will need to have the plumbing and drainage rectified.
Mr Hopmeier has detailed his concerns regarding the defective work and estimated that the cost of the total rectification was the sum of $28,121.28. The Tribunal accepts his evidence of the cost of rectification of defective work.
The Respondent contends that the Applicant did not have the appropriate contractor's licence to undertake electrical and plumbing work.
Mrs Douglas contends that Mr Hin did not have a contractor's licence of the appropriate class to undertake the electrical and plumbing work.
Mrs Douglas made a complaint to the Queensland Building and Construction Commission about Mr Hin undertaking unlicensed work.
The Queensland Building and Construction Commission wrote to Mr Hin advising that the Commission had investigated the allegations but: has been unable to obtain sufficient evidence to prove any breaches of legislation.
The fact that plumbing work was undertaken without a permit being obtained does suggest that the Applicant was undertaking work that was beyond his appropriate class of contractor's licence.
The Tribunal is of the view that Mr Hin must take responsibility for the standard of the work that he has undertaken. The evidence is that there is extensive defective work across all the areas of the work undertaken by Mr Hin.
What is the status of the contract between the parties?
Mr Hin wrote to Mrs Douglas on 6 January 2014 stating that: ‘Since you expressed on Friday, 3 January 2014 that you do not wish for myself to continue with the remaining work. I have withdrawn the current building permit held in my name’.
Mr Hin made it clear in his oral evidence that Mrs Douglas no longer wanted him to undertake the work.
Mrs Douglas told the tribunal that Mr Hin had abandoned the site. She instructed her solicitors Wilson Ryan and Grose to write to Mr Hin giving him notice that because of his substantial breaches he had repudiated the contract or in the alternative put Mr Hin on notice that the contract would be terminated in 10 business days Mr Hin did not address the alleged substantial breaches.
The Tribunal heard from Mr Hin that Mrs Douglas had organised for her nephew to draw up the plans for the kitchen. Mr Hin prides himself on his ability to do excellent kitchen designs. When Mrs Douglas told Mr Hin of her plans this was the final straw for Mr Hin.
The Tribunal notes that Mr Hin handed to Mrs Douglas his invoice on 10 December 2013. There was clearly significant conflict between the parties over the contract at that point in time.
On 3 January 2014, Mr Hin sent an e-mail to Mrs Douglas confirming that she was not willing to pay his invoice and that she was expressing the wish that he not continue the works. He wrote again on 6 January 2014 advising Mrs Douglas that she was in breach of the contract by not paying his invoice. Mr Hin advised Ms Douglas that she did not wish for him to continue the remaining work that he had withdrawn his current builder’s permit. Mrs Douglas in her letter of 7 January 2014 confirms that she told Mr Hin that that she did not want him on-site under the current conditions.
Mrs Douglas disputed Mr Hin's entitlement to claim for work up to the lock-up stage.
The Tribunal has found that Mr Hin has done the work up to lock-up stage but that he has not done all the work to the required standard. While the Tribunal accepts Mr Hopmeier’s evidence that the work was not up to the required standard. The Tribunal has also accepted his evidence that the work was at the lock-up stage.
Mrs Douglas was therefore not entitled under the contract to refuse to pay the Invoice. The Tribunal notes also that Mr Hin in the normal course would have had the opportunity to rectify the defective work.
Mr Hin has acted upon Mrs Douglas’ failure to pay him by putting her on notice that she has breached the contract. Mrs Douglas did not remedy the breach. Mr Hin has used that as the basis to end the contract and bring his proceedings to be paid for the work that he has done to lock-up stage.
The Contract at clause 13 provides that the Contractor may terminate the contract if the Owner breaches any of the obligations in clause 2. Clause 2 provides for the Owner to pay the Contractor’s stage payments.
The Contract provides that the Owner may not terminate the contract where the owner is in substantial breach. The Tribunal is satisfied that refusing payment of the invoice and refusing access to the premises were substantial breaches.
The Respondent made it quite clear that she did not intend to pay Mr Hin or allow him back on site.
Discussion of the evidence
Mr Hopmeier comments:
From reading documents, it would appear that the builder’s quotation was fairly vague, though it does include some items such as bathroom, laundry, cupboards and storage cupboards as indicated on sketch plans. However, these are not shown on the plans he submitted to the certifier for Approval.
He refers to a range of items he expected to be contained in the price and plans.
What is clear to the Tribunal is that the contract documentation does not reflect the intentions of the parties. This clearly creates some tension between the parties because Mr Hin and Mrs Douglas had different ideas about the work being undertaken.
The Tribunal accepts the evidence of Mr Hin that he had reached the stage described as “enclosed stage”. The evidence of Mr Hopmeier supports this.
Mr Hin had a right to lodge a claim for work up to the enclose stage.
Mr Hin is however required by clause 1 of the contract to undertake the works:
a) in an appropriate and skilful way;
b) use reasonable care and skill;
c) in accordance with the plans and specifications, and
d) in accordance with the relevant laws and legal requirement.
Mr Hin seeks to rely on the fact that the work was incomplete and the defects liability period has not come into operation so he is not responsible for incomplete work.
The Tribunal is satisfied that Mr Hin has to undertake the work in accordance with the requirements of clause 1 of the contract and that where a builder terminates the contract his work has to evaluated based on the requirements in clause 1 with appropriate allowances to be made because the work is or may be incomplete.
Mr Hopmeier is a highly experienced builder and architect and has turned his mind to this issue and found that there was extensive defects in relation to the standard of the work undertaken. He strongly rebutted Mr Hin’s evidence that the works were simply incomplete. Mr Hopmeier’s evidence was that some of the work was to the required standard of skill and care and some was not.
The Tribunal accepts the evidence of Mr Hopmeier and Mr Savage over the evidence of Mr Hin in relation to the issue of defective work.
This places the rights of the parties under the contract in a very difficult position. The Tribunal has awarded damages for work that was not completed with due care and skill attention in circumstances where the builder in the ordinary course may have taken steps to remedy the defects. The builder has terminated the contract. His work has been found to be not of a workman like standard.
The principal breach is the failure to pay the account as rendered.
Mr Hopmeier sets out in his report that cost of undertaking rectification. The Tribunal accepts is evidence as to the extent of the defects.
The Tribunal allows the Respondent the sum of $28,121 being the costs to repair defects.
The Tribunal accepts that Mr Hin was also in breach of the Act, as his instalments did not comply with the Act. There were differences between the quotes and the contracts. The Tribunal is not satisfied that this was a ground to end the contract.
The Tribunal in the circumstances is satisfied that the contract ended when Mrs Douglas refused to make the stage payment and refused him access to the site.
Mrs Douglas has been awarded damages for defective work however the Tribunal is of the view that the contract was at an end after she refused to pay for the stage.
The consequences of this are that it ends the Contract. Mr Hin has taken the position that the contract is over.
The Tribunal is satisfied that the Contract is over.
The Tribunal is not satisfied that the Respondent has proved the basis for her claim for $79,798 for the cost of completing the work. The Respondent’s actions lead to the termination of the contract. This ended the builder’s obligation to complete the works.
What is clear is that there was not a meeting of minds over the terms of the agreement. By the time, that Mr Hin reached the enclosed stage there were clearly significant tensions between the parties over the contract. The parties had reached an impasse when it came to renovating the kitchen.
The Tribunal accordingly orders that Mr Hin pay Mrs Douglas the sum of $4,031.28. This sum has been calculated by taking the costs of rectification accepted by the tribunal of $28,121.28 from the sum of $24,090 claimed by Mr Hin in his application.
The Tribunal otherwise dismisses the Respondent’s Response and counterclaim.
0
0
0