Ingles Homes (Qld) Pty Ltd v M & R Hudson Plumbing Pty Ltd
[2010] QCAT 556
•8 November 2010
| CITATION: | Ingles Homes (Qld) Pty Ltd v M & R Hudson Plumbing Pty Ltd [2010] QCAT 556 |
| PARTIES: | Ingles Homes (Qld) Pty Ltd ABN: 2147483647 |
| v | |
| M & R Hudson Plumbing Pty Ltd ABN: 89487971614 |
| APPLICATION NUMBER: | BDL152-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 12 October 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick – Member |
| DELIVERED ON: | 8 November 2010 |
| DELIVERED AT: | Brisbane. |
ORDERS MADE: | 1. I order that the application and counter application be dismissed. 2. I make no order as to costs. |
| CATCHWORDS : | Repudiation of contract, termination for breach, affirmation of contract. |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Ingles Homes (Qld) Pty Ltd represented by Mr Greg Ingles. |
| RESPONDENT: | M&R Hudson represented by Mr. Michael Hudson. |
REASONS FOR DECISION
Application and Counter- application
The applicant filed an application for domestic building disputes on 14 May 2010. The applicant claims from the respondent the sum of $1,506.85 comprised as follows:
a)Payment to Your Plumbing Solutions to:
§ Find and locate cold water pipe for rainbank then run out of wall $352.00
§ Find and locate hot and cold water for kitchen then run pipes through kick panels to underside of sink $495.00
§ Cut into down pipe overflow of hot water heater $165.00
b)Payment to J&L Plastering
§ Supply labour and materials to replace villaboard in bathroom $134.20
c)Interest $110.65
d)Costs $250.00
The respondent filed a response and counter-application on 11 June 2010. That response was significantly amended at hearing by oral evidence and withdrawal of allegations made in the response. The respondent maintains a counter- application in the sum of $867.40, being outstanding profit on the balance of the contract sum not paid to it. The respondent also claims interest at 10% per annum and costs.
Background
The matters set out below by way of background, emerged at the hearing and were uncontested.
The applicant is a home builder. The respondent conducts a plumbing business.
For the past eight (8) years the respondent has performed a significant amount of plumbing work for the applicant.
Exhibit 6 tendered at the hearing is a letter from Suncorp to the Queensland Builders Services Authority dated 23 February 2009 referring to approval for working capital for the purpose of payment to outstanding creditors. It appears the applicant experienced some financial difficulties resulting in slow payment of invoices rendered by the respondent.
Exhibit 7 tendered at the hearing is a copy of a letter from the Managing Director of the applicant to suppliers and subcontractors, dated 11 March 2009 confirming funding has been secured to enable payment in full of outstanding monies.
Exhibit 8 tendered at the hearing is a copy of a letter from the applicant to the respondent dated 16 March 2009 referring to slow payment and confirming funds have been transferred into its bank account for payment of outstanding invoices. The applicant expresses a desire to continue its working relationship with the respondent and says that it will contact the respondent to discuss moving forward.
The respondent has undertaken two adjudication processes with the applicant pursuant to the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA). The first round of adjudications related to claims lodged on 2 March 2009. Adjudication findings were made in favour of the respondent on 15 April 2009.
10. A second round of payment claims pursuant to the BCIPA resulted in payment following adjudication, on 12 June 2009.
11. Notices suspending work were given in accordance with the BCIPA on a number of homes being constructed by the applicant, which were subject to a payment claim and the adjudication process.
12. The respondent’s response asserted that a payment claim was made to the applicant with respect to the property in question, Lot 321 Whitehill Road, Raceview (Lot 321). It was also asserted that a suspension of work notice was given with respect to Lot 321. These assertions were withdrawn at the hearing on the basis that the respondent was mistaken. Evidence was given by Mr and Mrs Hudson that no payment claim or suspension of work notice was given to the applicant with respect to Lot 321.
13. The applicant asserts that the respondent was engaged to perform all the plumbing work associated with the construction of a dwelling at Lot 321 in the following 3 stages:
a)drainage (in ground work under the slab);
b)rough in (pipe work around the building before external and internal cladding is applied) and
c)fit off (fitting taps and sinks, installing water tank and pumps)
14. At each stage a compliance certificate from the Ipswich City Council should be obtained. The plumber arranges for the Ipswich City Council to conduct the inspection.
15. Because of the extent of work performed by the respondent for the applicant over the years, the applicant holds a current price list from the respondent. Based on that price list it issues a purchase order. It was asserted that the respondent was aware of the payment schedule the applicant normally adhered to. That is, the respondent would render an invoice for completed work on the 14th day of each month and would subsequently be paid.
16. The purchase order with respect to Lot 321 is attachment B to the applicant’s application. The respondent rendered tax invoices for the work performed by it, dated 3 November 2008, 15 December 2008 and 17 November 2008., being attachment C to the applicant’s application. The respondent performed plumbing work up to the fit off stage.
17. The applicant asserts that the work performed by the respondent was incomplete and defective. The respondent denies this allegation and says that some work was incomplete, however, it did not have the opportunity to return to site to complete the work.
Evidence
18. The applicant called evidence from Mr John Lind, Construction Manager, who said that he had two relevant telephone discussions with Mr Michael Hudson of the respondent. He said that in early March he telephoned Mr Hudson and said that the building was ready for fit off. He arranged to meet Mr Hudson on site to discuss the fit off.
19. Mr Lind said that on a date which he could not recall, but which was in late March, he attended the site but Mr Hudson did not meet him at site. He gave evidence that he telephoned Mr Hudson. He said that Mr Hudson told him that he was not working for Ingles anymore and that he had sent an email to the office in relation to that.
20. Thereafter Mr Lind spoke to his site supervisor to have him contract another plumber to finish the work.
21. Attachment D to the application of the applicant is an invoice from Your Plumbing Solutions dated 22 May 2009 and a purchase order from the applicant to Your Plumbing Solutions dated 25 May 2009.
22. No plumber from Your Plumbing Solutions was called to give evidence in relation to the work performed by it.
23. No person with any direct knowledge of the state of the plumbing works at the site gave evidence. Mr Lind relied on information relayed to him by the site supervisor, following a discussion by that person with the plumber who performed the work to the effect that:
a)no hot and cold water was connected to the kitchen sink;
b)there was no connection for the water tank, and
c)there was no tongue dish for the hot water.
24. Mr Lind said that this was evidence of the work being defective or incomplete and not in accordance with the practise of the plumbing trade. However, Mr Lind did say that in his experience Mr Hudson was a good plumber.
25. Mr Hudson gave evidence that he was on site and supervised an employed plumber performing the work. He said that he had a good and clear recollection of the work on the site. He denied that the work was defective and said that the work would not have passed the Ipswich City Council inspection if it was defective. He referred to a compliance certificate from the Ipswich City Council dated 25 May 2009, being exhibit 3 tendered at the hearing. That Compliance Certificate reveals an inspection of combined sub drain and drainage on 30 October, 2008 and inspection of rough in on 21 November, 2008. He also relied upon a letter from the Ipswich City Council to the Master Plumbers Association of Queensland, dated 8 October 2010 referring to the inspections conducted at the site and noting that the work passed the inspections.
26. Mr Hudson said with respect to the items claimed on the invoice from Your Plumbing Solutions that a compliance certificate from the Ipswich City Council would not have been given if there had been no cold water pipe for the rainbank in the correct position and if the hot and cold water pipes for the kitchen had not been in position.
27. His evidence was that the provision by Your Plumbing Solutions of a kickpanel to the underside of the sink was not necessary as the poly pipes were in position at the back of the kitchen sink cupboard. He gave evidence that he positions hot and cold water pipes in a different position to some plumbers but that he had always positioned the pipes in the same place in the very many houses in which he had performed plumbing work for the applicant.
28. In relation to cutting a tee into the downpipe for overflow of hot water, he said that was done at the fit off stage and was incomplete work. He said that he was not given an opportunity to complete that work.
29. Mr Hudson said that he laid hot and cold water pipes to the back of the kitchen sink cupboard and that the access points for the pipes were in place. He acknowledged that as part of the fit out it would be necessary to continue the pipes. He said that no compliance certificate would have been provided if the access points were not in place.
30. No evidence was given by the Ipswich City Council Inspectors as to the extent of work necessary to achieve compliance. The only evidence in that regard was the evidence of Mr Hudson. On the basis that Mr Hudson is an experienced plumber I accept his evidence as to the meaning of the compliance certificate tendered in evidence.
31. Mr Hudson said that it was possible a competent plumber could miss the piping he had laid and relay new pipe.
32. He could not explain why the plumber from Your Plumbing Solutions performed the work that he allegedly performed, however, he suggested that a considerable period of time had passed from the last work performed by the respondent at the site and in his experience workmen sometimes covered the pipe work with cladding. Mr Lind denied this was the case at Lot 321.
33. In relation to the other part of the applicant’s claim with respect to the supply of labour and material to replace villaboard to the bathroom, the applicant said this was necessary because the plumber had to cut holes in the wall to find the pipes laid by the respondent.
34. Mr Hudson said that it was not necessary to cut holes in the bathroom wall to find pipes in the kitchen and denied that the work related to pipes from the water tank as the water tank was situated at the front of the house, not near the bathroom. He also said it was possible to find pipes by entering the manhole and looking down from the roof cavity.
35. Mr Hudson made the point that the reference to Lot 321 on the plasterer’s invoice had been inserted in handwriting over the reference to a different lot. He suggested that the invoice related to different work at a different property. In fact attachment D to the applicant’s application is an invoice from Spenmac Pty Ltd dated 29 May 2009. It is not clear if this company conducts the business of J&L Plastering. The applicant’s claim relates to a payment made to J & L Plastering. The purchase order is made out to J&L Plastering. No one from J&L Plastering was called to give evidence about the work performed by it.
36. Mr Hudson denied that he had a telephone conversation with Mr Lind on 18 March 2009 to the effect that the Respondent would not continue to perform work for the applicant.
37. Mr Hudson gave evidence that he had a conversation with Mr Lind on that day in relation to organising a subcontractor to use a drain camera.
38. Mr Hudson said that he thought Mr Lind may be confused with discussions he held face to face with Mr Lind on 23 April 2009. Mr Hudson gave evidence that during those discussions Mr Lind asked him to call off the adjudication process. Mr Hudson said that he would discuss it with his wife and brother.
39. Mr Hudson said that he walked away from Mr Lind to ring the Master Plumbers Association as well as his wife and brother. He returned to his conversation with Mr Lind and told him that he would continue to fulfil all contracts but that he would continue with the adjudication process to recover all money owing to the respondent.
40. Mr Hudson said that it was subsequent to that conversation that the applicant engaged another contractor on 20 May 2009 to complete the works at Lot 321.
41. Mr Hudson gave evidence that he was nevertheless booked by the applicant to do the fit off at Lot 321 and on 1 May 2009 he telephoned the site supervisor to confirm that the materials necessary for the fit off would be onsite. On 5 May 2009 he went to site but no materials were on site to enable a fit off to be undertaken. On 7 May 2009 he telephoned the site supervisor to ask if the materials would be brought to site. The site supervisor told him that he was not sure.
42. That was the last contact between Mr Hudson and the applicant with respect to Lot 321.
43. Mr Hudson said that if he had been asked to attend the site to complete the work he would have done so. He said that he was not given an opportunity to continue the work.
44. Mr Hudson suggested that he did do other work on properties despite the suspension notices relating to them. Mr Lind gave evidence that Mr Hudson did some maintenance work on some leaking spas and did some final work on other properties which had been constructed for a number of years but which were awaiting final certificates.
45. Mr. Ingles, the Managing Director of the applicant gave evidence in response to a question from me that after learning from Mr Lind that Mr Hudson was allegedly refusing to perform further work, he made no contact with Mr Hudson to discuss the matter or to ask him to complete the work because at that time Mr Hudson had been agitating about late payments.
46. Both Mr Hudson and Mr Ingles asserted that the applicant and the respondent were each ready willing and able to continue their contract for the completion of plumbing works at Lot 321but each said the other was responsible for not proceeding.
47. In support of his contention Mr Ingles relied on exhibit 8, being a letter from the applicant to the respondent dated 16 March 2009, stating relevantly “we are eager to continue our working relationship with your company and we will contact your early this week to discuss how you would like to move forward.”
48. In support of his contention, Mr Hudson tendered a facsimile transmission from Hudson Plumbers to the applicant dated 22 June 2005, being exhibit 5. That facsimile transmission provided that “now that we have been paid for the contracts which we had to suspend work under section 33 of the Act. We are now willing and able to complete these contracts.” I note this letter post dates the alleged refusal by the respondent to perform work for the applicant and that there was no suspension of work notice given in relation to Lot 321.
49. However, Mr Hudson also gave evidence in support of his contention, that he was booked by the applicant to continue work on Lot 321 and in accordance with that site instruction attended the site on 5 May 2009. He said that he also did work for the applicant on the same subdivision on other properties on that day.
50. Mr Hudson said that he should have been given the opportunity to continue the job. He said the usual practise with the applicant was for it to contact him in order to rectify works or to continue works before any step was taken to engage another contractor.
51. Mr Hudson’s evidence was that as a result of not completing the job he was unable to render final invoices which would have totalled $3,021.70. He gave evidence that the outstanding profit on the balance of the contract sum was $867.40. He proffered no means of calculating that profit.
Issue for determination
52. The question is - did Mr Hudson on behalf of the respondent repudiate the respondent’s contract with the applicant by refusing to continue work on Lot 321, in a conversation alleged by Mr Lind to have occurred in late March 2010? Alternatively - did the applicant breach the contract with the respondent by engaging another contractor to complete the plumbing works at Lot 321 on 20 May 2009?
53. The legal principles relevant to this case involve a consideration of repudiation of contract, acceptance of repudiation; termination of contract and affirmation of contract.
54. Repudiation of a contract occurs when a party evinces an intention no longer to be bound by it[1].
[1] Shevill – v – Builders Licensing Board [1982] 149 CLR 620
55. If Mr Lind’s evidence is accepted, the conduct of Mr Hudson in not attending the site meeting to discuss fit off and advising Mr Lind by telephone that Hudsons’ were “not working for Ingles anymore”, would be a clear statement of intention not to be bound by their contract.
56. A repudiation entitles the other party to a contract to accept the repudiation and to terminate the contract.
57. Communication of an election to terminate is essential, however, communication of an election to terminate for breach need not be expressed as such. Any words or conduct are sufficient if they make the election manifest to the relevant party[2] (See Ryder – v – Frohlich[3] )
[2] Cheshire and Fifoot’s law of contract, 9th Australian edition paragraph 21.2.3
[3] (2004) NSWCA 472 at (117) – (118).
58. On the applicant’s version, it accepted the respondent’s repudiation by engaging another plumber to complete the work.
59. That is not, however, an end of it. It appears from the evidence of Mr Hudson that he received a direction to attend at site on 5 May 2008 to complete the fit off, but found when he attended site that there were no materials to complete the job. On 7 May 2009 he asked the site supervisor if the material would be delivered to site and he was informed words to the effect, “I am not sure.”
60. That conduct may constitute an election to affirm the contract. No contrary version was put to Mr Hudson by the applicant. Nor was this assertion dealt with in any way by the applicant at the hearing.
61. It is possible to categorise the direction that the respondent attend site to complete the fit out on 5 May 2009 as an explicit demand that the contract be performed. Such conduct is usually treated as an affirmation of the contract.[4]
[4] Turner – v – Labafox International Pty Ltd (1974) 131 CLR 660
62. It has been held that an insistence on performance amounts to “positive affirmation of the contract”, and that the right to rescind is lost.[5]
[5] Ibid at 670
63. The effect of an affirmation of a contract is that any breach of obligation by the affirming party may in turn enable the party originally in breach to terminate the contract.
64. Thus, the conduct of the applicant in subsequently engaging another plumber to complete the work could be construed as a breach of contract on the applicant’s part, giving rise to rights on the part of the respondent to terminate and seek damages for breach of contract.
Findings
65. It is very difficult to make a finding as to whether the conversation alleged by the applicant to have occurred on 18 March 2009, in fact occurred. In any event I do not consider it necessary to make a finding as to whether the respondent did say that it no longer intended to be bound by the contract. I have reached this conclusion because of the conduct of the applicant in directing the respondent to site on 5 May 2009 and the respondent in fact attending site on that day. I find that these events occurred.
66. I find that such conduct amounted to either an affirmation of the contract or conduct consistent with an ongoing contract. I find that as a consequence the applicant’s subsequent conduct in engaging a different plumber amounted to a breach of contract on the part of the applicant.
67. Further, I find that the applicant has not established the damages it seeks.
68. In particular, the applicant failed to call the plumber who performed the work described in the invoice from Your Plumbing Solutions, dated 22 May 2009. The sum of $450 claimed for finding and locating the hot and cold water for the kitchen then running pipes through the kick panel to the underside of the sink was work which at least in part would need to have been performed at cost to the applicant as part of the fit off. Both Mr Lind and Mr Hudson agreed that the pipes to the kitchen were 1500-1800 short and would have to be extended as part of the fit off.
69. The evidence of Mr Lind and Mr Hudson was that cutting a tee into the downpipe for overflow of the hot water heater was work which would have to be performed as part of the fit off. That work would have been at cost to the applicant.
70. The evidence was not clear as to whether the work involved in finding and locating the cold water pipe for the rainbank, then running it out of the wall was work which would at least in part have been done as part of the fit off.
71. In relation to the claim for the sum of $134.20 with respect to replacement of villaboard to the bathroom, I find that there was insufficient evidence linking that work to the work performed at Lot 321 by Your Plumbing Solutions.
72. The applicant’s purchase order was for a sum of $9,991.00 exclusive of GST. The remaining balance of the contract, after payment of the respondent’s invoices, with the fit off work remaining to be done, was $2,747.00. The purchase order allowed a sum of $1,092.00 for final fit off.
73. On the basis that:
(a) some of the work performed by the new plumber, would have been incurred by the applicant as part of fit off in any event; and
(b) the compliance certificate issued by the Ipswich City Council with respect to the drainage and rough in stages of the work suggests those stages of work were successfully completed by the respondent, so that some further work performed by the new plumber was unnecessary,
I find that the applicant has not established loss or damage to the extent claimed. On the state of the evidence it is not possible to say what loss might have been suffered. It is unnecessary for me to make such a finding, given that I have found that the applicant was itself in breach of its contract with the respondent.
74. In relation to the respondent’s counter application, the lack of specificity works against the respondent.
75. On my reference to the purchase order, the total value of the works excluding GST is $9,991.00. By reference to the invoices from the respondent, the total amount claimed and paid, excluding GST is $7,244.00. That leaves the sum of $2,747.00 for the balance of the work. The respondent’s counterclaim refers to a higher balance remaining under the contract of $3,021.70. Loss of profit claimed in the sum of $867.40 is said to be the sum remaining after deduction of the cost of materials. Without some evidence of the formula used by the respondent to calculate profit on individual invoices or at various stages of work, it is not possible to find that the sum claimed of $867.40 has been proved to be a loss of profit.
Order
76. I order that the application and counter application be dismissed.
77. I make no order as to costs.
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