Judith Maree Chesterton as administratrix of the Estate of Damonde Laurence Southion deceased v Smith
[2011] QCAT 307
•7 July 2011
| CITATION: | Judith Maree Chesterton as administratrix of the Estate of Damonde Laurence Southion deceased v Smith and Anor [2011] QCAT 307 |
| PARTIES: | Judith Maree Chesterton as administratrix of the Estate of Damonde Laurence Southion deceased |
| v | |
| Baydon Smith Desiree Smith |
| APPLICATION NUMBER: | BD448-08 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 9-13 May 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Sandra G Deane, Member |
| DELIVERED ON: | 7 July 2011 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | [1] Mr and Mrs Smith are to pay Ms Chesterton the sum of $117,632.58. [2] Mr and Mrs Smith are to pay Ms Chesterton interest at the rate of 15% per annum calculated on a daily basis on the sum of $117,632.58 as from 20 December 2007 until the amount due is paid. [3] Each party is to file in the Tribunal and serve upon the other party any submissions on costs generally (including reserved costs in particular those referred to in the decision of the former tribunal dated 12 May 2009 and this Tribunal of 9 November 2010) and any further submissions in relation to the Application for compensation in writing: a) on or before 4pm on 21 July 2011; and a) submissions in reply to such written submissions on or before 4pm on 28 July 2011. [4] Unless any party requests an oral hearing in relation to the Application for compensation and/or any application for costs these applications shall be determined on the papers not before 28 July 2011. |
| CATCHWORDS: | Domestic Building Contract – death of builder prior to practical completion – whether doctrine of substantial performance gave rise to an entitlement to a progress payment – owner purported to terminate – whether termination lawful – whether owner entitled to damages for breach by builder – whether costs to complete and rectify defects reasonable – whether contract frustrated by death or abandoned – amounts owing to the estate of the builder under contract or quantum meruit – acts done prior to issue of grant of letters of administration Application for compensation Succession Act 1981, s 45 Hoenig v Isaacs [1952] 2 All ER 176 Naidu v Queensland Building Services Authority [2005] QCCTB 167 Sopov & Anor v Kane Constructions Pty Ltd (No 2) VSCA 141 (15 June 2009) Urban Homes Pty Ltd v Wright CCT B280-05 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Ms Judith Chesterton represented by Mr A Wallace of Counsel instructed by Sawford Lawyers |
| RESPONDENT: | Mr Baydon Smith (in person) Mrs Desiree Smith (no appearance) |
REASONS FOR DECISION
Background
Mr Southion, a licensed builder, and Mr and Mrs Smith entered into a building contract dated 19 December 2006 for the construction of a reproduction Queenslander on land at Southport (the Original Contract)[1].
[1] Exhibit 1, JMC2, JMC3 and JMC4.
Mr Southion commenced work in accordance with the Original Contract on or about 8 May 2007.
Ms Chesterton was Mr Southion’s life partner and assisted him with various tasks in relation to the Original Contract, mainly of an administrative nature.
A number of disputes arose during the course of the Original Contract and the parties each appointed legal representatives. Ms Chesterton represented Mr Southion at ‘mediation’ meetings where various disputes were agreed to be resolved.
Mr Southion died on 4 December 2007 prior to the works reaching Practical Completion.
Mr and Mrs Smith:
a) served 17 Notices to Remedy Breach on 6 December 2007;
b) purported to terminate the Original Contract on 17 December 2007 because the alleged breaches were not remedied;
c) entered into a building contract with East Coast Building Pty Ltd dated 29 January 2008 which had a Contract Price of $126,000 (the Second Contract)[2].
[2] Exhibit 21, BRS50.
The description of works in the Second Contract was not very detailed.
Ms Chesterton was, by Grant of Letters of Administration issued out of the Supreme Court of Queensland on 26 March 2008, appointed Administratrix of the estate of Mr Southion.
Mr and Mrs Smith separated after these proceedings had commenced.
After their separation, from in or about July 2010, Mrs Smith was not legally represented. Mr Smith continued to be legally represented until approximately a week before the hearing.
Mrs Smith informed the Tribunal by email dated 5 May 2011 that she would not be attending the hearing. The hearing proceeded in her absence.
Evidence and Discussion
At the time of Mr Southion’s death and the subsequent purported termination of the Original Contract by Mr and Mrs Smith the works were nearing completion.
FIXING STAGE
An issue in these proceedings was whether the Fixing Stage, being the last stage prior to the Practical Completion stage, had been reached on or about 28 November 2007 or prior to the purported termination by Mr and Mrs Smith on 17 December 2007.
Mr Southion issued a progress claim for the Fixing Stage on 28 November 2007[3] claiming a total of $116,342.62. In doing so Mr Southion purported to certify that the Works had been completed to the relevant stage.
[3] Exhibit 1, JMC5.
The Original Contract[4] provided in clause 1:
“Fixing Stage means that stage of the Works when all the internal linings, architraves, cornices, skirtings, doors to rooms, baths, shower trays, wet area tiling, built in shelves, built in cabinets and built in cupboards are fitted and fixed in position.”
[4] Exhibit 1, JMC2.
Ms Chesterton gave evidence that the Fixing Stage had not been reached prior to 28 November 2007 as 2 square metres of tile splashback to the kitchen had not been completed due to delays brought about by Mr and Mrs Smith.
It was submitted that as a matter of construction of the Original Contract that ‘wet area tiling’ may not include kitchen splashbacks.
The original carpenter, Mr Daniel Maguire gave evidence that the only carpentry work which was required to be performed to reach Fixing Stage was that 5 l/m of skirting needed to be put in place and that work would take approximately 20 minutes to complete. Mr Haskard’s estimate was 30 minutes. Mr Haskard gave evidence that the Fixing Stage had not been reached prior to 17 December 2007.
Mr Blair Ripley, an employee of Jeffrey Hills & Associates prepared a report dated 17 January 2008[5]. It listed incomplete works and allegedly defective works as at 20 December 2007 and stated that the interior fix out was approximately 98% complete. The report stated that he had not considered “any electrical, plumbing, fire services, security or other electronic systems”. He noted that works to be completed included:
“joinery fit off works to some skirtings and internal doors and all supply and installation of door locks/furniture”.
[5] Exhibit 8, JH1.
It was submitted that as a matter of construction of the Original Contract that ‘doors to rooms’ may not include installation of locks/furniture as distinct from the doors.
Ms Chesterton submitted that under the doctrine of substantial performance[6] that the Tribunal could find that Mr and Mrs Smith are liable to pay the Fixing Stage progress claim. This doctrine has been recognised by Australian courts.[7]
[6] Hoenig v Isaacs [1952] 2 All ER 176.
[7] Fraser v The Irish Restaurant & Bar Company P/L [2008] QCA 270.
The Fixing Stage Progress Claim included claims for variations in the total value of $2,296.80, being:
a) Variation 004 in the sum of $105.60[8]
b) Variation 005 in the sum of $712.80[9]
c) Variation 006 in the sum of $1478.40[10]
[8] Exhibit 1, JMC6.
[9] Exhibit 1, JMC7.
[10] Exhibit 1, JMC8.
The fact that the variations had been performed was not in issue (in the Defence, where it was denied that the variations were agreed or lawful) until Mr Smith was cross-examined. He stated that he could not be sure that the works were performed.
In any event Mr Smith conceded that he was liable to pay the second payment for Variation 005 in the sum of $712.80 and for the Spa Power point in RFI 004 in the sum of $105.60 but maintained that he ought not to be responsible for the Water Tank variation 006.
Variation 006 was a variation raised on 30 October 2007 arising from changes to the Queensland Development Code (Part 25) requiring new houses to meet water savings targets. Ms Chesterton submitted that it was a variation required by law. By letter dated 9 November 2007[11] Mr and Mrs Smith consented to the works to the extent that the works were required by law.
[11] Exhibit 1, JMC9.
However Mr and Mrs Smith contended that it ought to have been included as part of the Original Contract and provided to Mr Southion a copy of Building Newsflash 254 dated 18 December 2006 which advised of the amendments effective 1 January 2007[12].
[12] Exhibit 2, JMC34.
The Original Contract was signed the day after the date of the Building Newsflash. There is no evidence as to when Mr Southion specifically received notice of the amendment. In view of the date of the announcement, the date the change in the legislative requirement took effect and the date of the Original Contract it is more likely than not that the Original Contract did not contemplate such amendment and could not reasonably have been expected to contemplate it and therefore the amount of $1,478.40 was payable in respect of Variation 006 as a variation required by law.
Other adjustments included in the Fixing Claim dated 28 November 2007 was an adjustment for Prime Cost items relating to the spa bath in the sum of $140 and an adjustment for Provisional Sum items relating to fencing in the sum of $442.10. These items were not contested and therefore I accept them as payable as part of this Fixing Claim.
Based upon the evidence of Ms Chesterton, Mr Daniel Maguire, Mr Haskard and the report of Mr Blair Ripley and without making a finding as to the construction of the Original Contract regarding ‘wet tiling areas’ and ‘doors to rooms’ I am satisfied that there had been substantial performance of the Fixing Stage as at 28 November 2007 and that an entitlement to be paid $116,705.40 on 6 December 2007 arose.
After 28 November 2007 further works were performed until about 6 December 2007 by Mr Southion or his trades people. The kitchen splashback tiling works had been completed by 5 December 2007 and various certificates had been provided[13]. No further work was performed under the Original Contract after about 6 December 2007.
[13] Exhibit 1, JMC12.
The lawyers who had been appointed by Mr Southion in respect of issues relating to the Original Contract prior to his death and retained after his death by Ms Chesterton, Sawford Voll, signed, as agents, a further progress claim for the Fixing Stage on 13 December 2007[14], claiming a total of $117,632.58.
[14] Exhibit 1, JMC13.
An issue in these proceedings was whether the progress claim was not valid as the builder did not certify that the works had reached fixing stage. This contention appears to arise from the fact that Mr Southion was not alive or in any event did not sign the relevant progress claim form. The relevant certification box on the form was ticked. I am not satisfied that there is any reason why an agent could not sign the form on the builder’s behalf.
A further issue was whether Ms Chesterton and therefore Sawford Voll had authority to sign a progress claim on 13 December 2007.
Section 45 of the Succession Act 1981 provides that upon Ms Chesterton’s appointment as Administratrix of Mr Southion’s estate the rights to and any debts owing under the Original Contract to Mr Southion vested in her upon Mr Southion’s death i.e. on 4 December 2007.
Having regard to the relation back provision in section 45(4) and also to section 45(4A) of the Succession Act 1981 I am satisfied that Ms Chesterton had relevant authority to act in relation to those rights before she was appointed as Administratrix and therefore Sawford Voll had authority to sign the progress claim.
By issuing the second Fixing Stage claim on 13 December 2007 I find that the first Fixing Stage claim was impliedly withdrawn.
The Fixing Stage claim dated 13 December 2007 also included claims for variations in the total value of $2,296.80 and an adjustment for Prime Cost items relating to the spa in the sum of $140. For the reasons outlined above I accept that those amounts are payable. It also included an amount in respect of cost escalation in the sum of $1,369.28.
Clause 26.2 of the General Conditions provided that if the Works was delayed for a reason for which the Builder was not responsible the Builder was entitled to give notice of increase of the Contract Price. Such a notice was given on 13 December 2007[15].
[15] Exhibit 1, JMC 13.
A 6 day delay in completing the tiling as a result of the changes made by Mr and Mrs Smith from laminex bench tops to granite bench tops is consistent with the estimate provided by the kitchen supplier in a facsimile transmission from Rod’s Kitchen dated 31 October 2007[16].
[16] Exhibit 1, JMC 17.
I find that under clause 26.2(b) of the General Conditions a claim for 6 days x 0.05% x $456,426.00 or a total of $1,369.28 arose.
For the reasons outlined above in respect of the first Fixing Stage claim and because further work had been performed after that claim was issued I find that there had been substantial performance of the Fixing Stage and that an entitlement to be paid $117,632.58 on 20 December 2007 arose.
Clause 11.9 of the General Conditions and Item 19 of the Schedule provides that interest is payable on moneys due but not paid from the time for payment until the date of payment at the rate of 15% per annum calculated on a daily basis.
I find that interest at the rate of 15% per annum calculated on a daily basis is payable on the sum of $117,632.58 as from 20 December 2007 until the amount due is paid.
If I am wrong and substantial performance of the Fixing Stage had either not been achieved or no entitlement to be paid arose prior to the Fixing Stage actually being reached then it is necessary to consider Ms Chesterton’s claim for the value of the work performed on a quantum meruit basis. I consider that claim later in these reasons starting at [229].
Given that no further work was performed under the Original Contract after about 6 December 2007 it follows that if the Fixing Stage had not been reached by 13 December 2007 the Fixing Stage had not been reached by 17 December 2007 when Mr and Mrs Smith purported to terminate.
FRUSTRATION
An issue in these proceedings was whether the Original Contract was frustrated upon Mr Southion’s death.
Cheshire and Fifoot[17]:
a) states that “the law recognises that events not provided for in the contract may affect its performance so adversely as to bring it to an end…. Frustration occurs only when the course of events brings about a situation which is radically different from that contemplated by the parties at the time when the contract was made”.
b) identifies the death of a contracting party as a frustrating event which by operation of law may terminate a contract.
[17] “Law of Contract” (9th Aust Ed, 2002) p42-43.
In Naidu v Queensland Building Services Authority [2005] QCCTB 167 the death of the builder did not operate to frustrate the contract and bring it to an end. The contract provided for an assignment by consent and “builder” was defined to include the builder’s successor’s and permitted assigns.
The Original Contract provided by clause 29.4 of the General Conditions a right to assign by consent and “builder” was defined in clause 1 of the General Conditions to include “permitted assignees and transferees”.
I therefore find that the Original Contract was not frustrated and brought to an end by Mr Southion’s death.
The Original Contract did not specifically deal with a party’s death or impose a time limit within which an assignment would be required to be completed. Where no time is specified the law will imply a reasonable time.
Ms Chesterton submits, in the alternative, that the Original Contract was frustrated by operation of law when it became apparent to her that she was no longer able to assign the Original Contract to a third party pursuant to clause 29.4 due to the purported termination on 17 December 2007 and the ultimate awarding of the Second Contract to complete the works to East Coast.
I am not satisfied that such a circumstance is a frustrating event which by operation of law brought the Original Contract to an end.
If Mr and Mrs Smith validly terminated the Original Contract it was properly at an end and a right arose to offset the reasonable costs to complete against any amount owing to Mr Southion’s estate (in contract or quantum meruit).
If they did not validly terminate and the purported termination was in effect a repudiation then Ms Chesterton had an election, to affirm the contract and seek to assign or to accept the repudiation and terminate. Ms Chesterton appeared overtly to do neither.
However it is clear from the actions of the parties that neither party took steps to have the Original Contract continue. Mr and Mrs Smith appointed East Coast. Ms Chesterton was therefore no longer in a position to seek their consent to assign the Original Contract to another party and did not press for this. The parties could be said to have abandoned the Original Contract and brought it to an end by consent.[18]
[18] Queensland Building Services Authority v Fox [2005] QDC 129.
If I am wrong and the parties did not abandon the Original Contract then I find that Ms Chesterton by not pressing for an assignment of the Original Contract by conduct accepted Mr and Mrs Smith’s repudiation.
In either of these events it would be necessary to consider Ms Chesterton’s claim for the value of the work performed on a quantum meruit basis, if I am wrong in finding that Ms Chesterton is entitled to the Fixing Stage claim under the contract. I consider that claim later in these reasons starting at [229].
TERMINATION
An issue in these proceedings was whether Mr and Mrs Smith validly terminated the Original Contract and the consequences flowing from any such valid termination.
Mr and Mrs Smith served 17 Notices to Remedy Breach on 6 December 2007, 2 days after Mr Southion’s death. This was the day after Mr and Mrs Smith had been notified of Mr Southion’s death and that assignment of the Original Contract was being investigated.
Clause 20.1 of the General Conditions provided a right to the Owners to serve a notice of intention to terminate if the Builder was in breach in certain respects such as:
a) failed to proceed with the Works with due diligence and in a competent manner;
b) unlawfully suspends the works;
c) the builder was in substantial breach of the contract;
d) failed to effect or maintain any insurance policy required by the contract;
e) is unable or unwilling to complete the works or abandons the contract.
Ms Chesterton submits that the last category requires some form of physical or mental act by the builder which prevents him from completing the work but specifically does not mention his death.
In circumstances where an assignment is being investigated following the death of the builder I am not satisfied that this category was applicable as at 6 December 2007. A reasonable time had not at that time elapsed for Ms Chesterton to seek to obtain an assignee and seek Mr and Mrs Smith’s consent.
There was no evidence before this Tribunal to the effect that:
a) as at 6 December 2007 the works under the Original Contract were suspended; or
b) Mr Southion had not proceeded with the works with due diligence or competence or had failed to effect or maintain insurance.
Accordingly, I am not satisfied that Mr and Mrs Smith have demonstrated that Mr Southion was in breach as at 6 December 2007 under any of the categories.
If I am wrong and Mr Southion was in breach, clause 20.2 of the General Conditions provides that the Owners may terminate if the breach notified was not remedied and the notice of termination is not given unreasonably or vexatiously.
Ms Chesterton submits that the 17 Notices of Intention to Terminate[19] having been issued by Mr and Mrs Smith 2 days after the death of Mr Southion were given “unreasonably or vexatiously” and were issued in a manner whereby it was not reasonable for the alleged breaches to be remedied. Therefore the purported notice of termination was tainted and also given “unreasonably or vexatiously” and was null and void.
[19] Exhibit 24, KES23.
The 17 Notices effectively sought to re-open the validity of all progress claims, notices of escalation and suspensions and the agreements reached through “mediation” and effectively sought to impose a unilateral time limit on locating a suitable assignee and obtaining consent. I accept Ms Chesterton’s submission that in giving these Notices there was no reasonable expectation that they could be remedied because it would require the repayment of all of the moneys paid under the Original Contract with the exception of the deposit and would leave Mr and Mrs Smith with a substantially completed house having paid nothing other than the deposit.
I therefore find that the notice of termination was of no force or effect under clause 20.2.
If I am wrong and Mr Southion was in breach and the notice of termination was not given unreasonably or vexatiously then clause 20.3 of the General Conditions provides that if the Owner is in substantial breach the Owner may not terminate.
Clause 22.1(d) of the General Conditions provided that the Builder had a right to terminate the Original Contract if the Owners unreasonably failed to consent to a variation required by law or fails to sign a variation document provided by the Builder.
The right to terminate indicates that the breach is regarded as a substantial breach.
Mr and Mrs Smith, at the time of their purported termination of the Original Contract, had refused or failed to consent to signing Variations 006 and 007.
Mr and Mrs Smith refused to consent to variation 006 on the grounds that it ought to have been included in the scope of works of the Original Contract.
Earlier in these reasons I found that variation 006 was properly a variation required by law. Pursuant to clause 13.3 of the Original Contract, Mr and Mrs Smith were obliged to not unreasonably withhold their consent to the variation. In the circumstances I find that they had unreasonably withheld their consent as the variation was required by law.
Variation 007 was a variation raised on 30 October 2007 for an Extension of Time to complete the works arising from Mr and Mrs Smith’s changes to the kitchen benchtops from laminex to stone.
Mr and Mrs Smith signed variation 007 on or about 31 October 2007 but deleted any reference to the Extension of Time or the estimate for the additional time required to complete the contract arising from the variation.
Mr and Mrs Smith’s refusal to consent to the Extension of Time or permit the Builder to provide a written estimate of the likely delay (as required under the Original Contract and under the Domestic Building Contracts Act 2000) was an unreasonable failure to consent to variation 007, particularly given that the variation was requested by Mr and Mrs Smith.
As a result of their refusal to consent to either variation 006 or 007 or both, I find that Mr and Mrs Smith were in substantial breach of the Original Contract and were not entitled to terminate it.
In this event and if I am wrong in finding that Ms Chesterton is entitled to the Fixing Stage claim under the contract it is necessary to consider Ms Chesterton’s claim for the value of the work performed on a quantum meruit basis. I consider that claim later in these reasons starting at [229].
If I am wrong and Mr and Mrs Smith validly terminated the Original Contract then it is necessary to consider what damages for breach Mr and Mrs Smith are entitled to recover. In doing so, it is necessary to consider if they mitigated their loss (as was their duty) and what was the reasonable costs of completing the scope of work under the Original Contract and rectifying any defects in the work performed prior to Mr and Mrs Smith’s termination.
Clause 20.4 of the General Conditions provides that the reasonable cost to complete is to be set off against the unpaid balance of the Contract Price.
DAMAGES CLAIM
Mr and Mrs Smith claimed $134,532 being:
a) Amounts paid to complete the works in the sum of $127,452, comprising:
i.Contract Price under the Second Contract in the sum of $126,000
ii.Amount paid to Lock’s Direct in the sum of $297
iii.Amount paid to Ready Fencing in the sum of $385
iv.Amount paid to King Hazell Enterprises for rubbish removal in the sum of $220
v.Amount paid to Jeffrey Hills & Associates in the sum of $550.
b) alternate accommodation expenses in the sum of $7,080
Reasonable Costs to Complete/Costs to Rectify
Ms Chesterton gave evidence that the completed house contained aspects which were not within the scope of the Original Contract. Some of the witnesses including Mr Haskard (see below) gave evidence that they had attended the property after the house’s completion or they viewed photographs of the completed house and identified work which had been performed which was outside the scope of the Original Contract. Ms Chesterton contends that the additional cost of such work is not properly recoverable by Mr and Mrs Smith in these proceedings. I accept that contention.
Mr Smith cross examined Ms Chesterton and her witnesses as to whether they knew if the works they identified had been paid for by Mr and Mrs Smith separately, by which I understood him to mean outside of the Second Contract. This was a matter understandably outside of those witnesses’ knowledge.
Mr Smith sought leave to call evidence from Rick Wild and David Wild of East Coast. No statements by either of these persons had been filed within the time required by the Tribunal’s directions or prior to the commencement of the hearing. Ms Chesterton objected to Mr Smith being allowed leave to call evidence from these persons in the circumstances. Mr Smith had been legally represented until shortly before the hearing. The Tribunal must conclude that it was not considered desirable or necessary to lead evidence from these persons in a manner which would have allowed Ms Chesterton to properly prepare for such witnesses.
In refusing leave I indicated to Mr Smith that he ought to lead evidence of the scope of the work performed under the Second Contract or outside of the Second Contract and the amounts paid for additional work identified either through Mr Hills or himself if either of them had relevant knowledge.
Mr Smith under cross examination rejected the suggestion that there were additional works performed under the Second Contract although he accepted that there may have been some minor additional inclusions such as 4 garage remote controls as against 2 garage remote controls.
Mr Smith did not give any evidence as to when the additional work was performed such as was commented upon by Ms Chesterton and her witnesses and how it was paid for.
Mr Smith’s recollection of the events in his oral evidence was somewhat uncertain. Mr Smith did not appear to have a good grasp on the documents. In respect of a number of issues his oral evidence was that he could not recall and he stated what he believed he would have done, without being certain that he actually did it. Such evidence is not very persuasive.
In contrast Ms Chesterton appeared to have quite a clear recollection of events, with the exception of the few days after Mr Southion’s death, which is understandable in the circumstances.
Ms Chesterton and Mr Southion appear to have kept good contemporaneous records during the course of work under the Original Contract and those documents no doubt assisted Ms Chesterton to refresh her recollection.
I find that at least some work outside of the original scope and defect rectification was performed under the Second Contract and comprised part of the work for which Mr and Mrs Smith was charged $126,000. I address particular aspects of this below in more detail. In the circumstances I am not satisfied that Mr and Mrs Smith are entitled to damages for that amount.
An issue in these proceedings was whether significant extra work would be required to be performed by a contractor or tradesperson taking over incomplete work when compared to the same contractor completing the whole of the works. This and the reasonable costs to complete and rectify were the subject of expert evidence.
Expert evidence
Mr Haskard, who first attended at the property after the house had been completed, gave evidence that his approach was to independently assess the value of the work by:
a.reviewing the original trades people’s statements which set out the state of the works at the time they left the site and work remaining to complete their work to practical completion and the photographs referred to;
b.reviewing Mr Hills’ statement[20] and the photographs referred to;
c.reviewing the costings on 2 domestic building contracts Mr Haskard had performed as a builder in about 2007/2008;
d.making enquiries of relevant tradespeople used by Mr Haskard as to costings;
e.considering the items in the Applicant’s Scott Schedule in preparing the Joint Expert Report[21];
f.performing his own calculations in relation to some items;
g.having regard to his own experience as a builder.
[20] Exhibit 8.
[21] Exhibit 13.
Mr Haskard attended the Tribunal with copies of his reports and many of his working papers and seemed well prepared and gave evidence of what appeared to be his considered opinions.
Mr Hills approach was to consider, in light of his inspection of the property shortly after Mr Southions’ death and his experience, whether the overall price payable under the Second Contract was reasonable and to consider whether the price payable under actual invoices from East Coast’s tradespeople were reasonable.
Mr Hills stated in his oral evidence that he had spoken to representatives of East Coast as to work performed. Mr Hills did not seek to corroborate these discussions for example by way of any contemporaneous notes and I therefore place little weight on this part of his evidence.
Mr Hills gave evidence that he had not specifically considered the items in the Applicant’s Scott Schedule but rather had considered the work holistically. I will return to this issue later when considering the Miscellaneous Matters Application.
Mr Hills did not perform an independent costing of the remaining works and rectification of defects nor did he make specific enquiries to ascertain whether all of the work performed by East Coast or its subcontractors and for which the Contract Price was charged was within the scope of the Original Contract or any required rectification of that scope of works.
Mr Hills and Mr Haskard gave some of their oral evidence concurrently which enabled the Tribunal to receive evidence from each of them on each of the issues in quick succession and obtain ‘real time’ comment by each of the witnesses.
Ms Chesterton challenged the expertise of Mr Hills in domestic building construction. Queensland Building Services Authority (QBSA) searches[22] do not tend to support Mr Hills’ evidence that he has significant domestic building experience.
[22] Exhibits 25, 26 and 27.
Mr Hills’ experience in domestic building construction does not appear to be as extensive as Mr Haskard’s.
Mr Hills did not attend upon the Tribunal to complete his expert evidence. On the morning of 12 May 2011 Mr Smith informed the Tribunal that he and Mr Hills had had a discussion on the afternoon of 11 May 2011 and that Mr Hills had informed him that he would not be returning to complete his evidence.
The Registry received a call from a female on Mr Hills’ behalf on the morning of 12 May 2011 advising that Mr Hills would not be attending because he was ill. In light of Mr Smith’s disclosure, it is more likely than not that this call was made at Mr Hills’ request and this explanation for his non-attendance was simply untrue.
Mr Hills did not attend subsequently upon the Tribunal in this matter or write to it to seek to excuse himself from further attendance. Such an occurrence is extraordinary.
In my view Mr Hills’ conduct is unprofessional particularly in light of the special duty expert witnesses have to the Tribunal and which Mr Hills acknowledged on a number of occasions but most recently in the Experts Joint Report dated 14 December 2010[23].
[23] Exhibit 13.
If Mr Hills had attended to complete his evidence he would have had an opportunity to explain to the Tribunal the inconsistencies between his evidence of significant experience in domestic construction and the QBSA searches which suggest very limited experience.
Ms Chesterton sought a direction that extensive parts of Mr Hills’ report of 30 August 2010[24] be struck out on the grounds that he sought to provide evidence in fields in which he was not qualified (including the law), gave evidence without establishing a sufficient basis, made speculative or hypothetical or irrelevant statements and sought to introduce hearsay evidence from East Coast personnel.
[24] Exhibit 9.
The parts challenged were:
a) Page 2, Assignment of a Contract – 1st and 2nd paragraph; 4th paragraph (2nd and 3rd sentences); 5th paragraph
b) Page 3, What Stage Was the Building At, At The Time of Termination – last paragraph
c) Page 3, Fixed Price vs Costs Plus Contract – all
d) Page 4, Using the Original Builders Contractors – 1st and 2nd paragraph; 3rd paragraph (1st sentence); 4th paragraph
e) Page 4, Warrantee of Tradespersons Work - all
f) Page 5, Comment – 1st paragraph; 2nd paragraph (1st sentence); 3rd paragraph (last sentence commencing from “it is not uncommon” until the end); 4th paragraph (last sentence)
g) Page 6, 3rd paragraph
h) Page 7, Assumption of Completion – 2nd paragraph (1st and 2nd sentences)
i) Page 8, Summary Conclusion – 1st, 2nd and 3rd paragraphs
While there is some attraction to this submission this Tribunal is not bound by the usual rules of evidence. I am not satisfied that I should strike out those parts of Mr Hills’ report.
Mr Hills’ style is very informal. In his report and in his oral evidence he was prone to making sweeping generalisations. He did not seek to justify many of his statements by reference to specific experience and evidence. He did tend to stray into areas in which he acknowledged he has no qualifications such as the law. In the circumstances I place little weight on those parts of Mr Hills’ report.
In my view, Mr Hills’ approach was quite superficial. He did not seek out pertinent information such as the details of what work was performed by East Coast and its subcontractors and how that corresponded with the scope of works under the Original Contract. It is difficult to understand how he could satisfy himself of the reasonableness of the costs in the absence of such information.
When Mr Hills attended the Tribunal he did not attend with copies of all the expert reports in this matter nor his working papers. He was not well prepared and gave evidence in what appeared an ‘off the cuff way’ rather than in a way which appeared to convey considered opinions.
His approach was not as thorough, logical or in my view reasonable as that adopted by Mr Haskard and therefore I generally prefer Mr Haskard’s approach and his evidence.
For the reason set out in [104]-[105] and other reasons Ms Chesterton invited me to find that Mr Hills was an unreliable witness.
Given my preference for Mr Haskard’s approach and his evidence it is unnecessary for me to make such a finding and I leave that question open.
Plumbing
Mr Darren Maguire, the original plumber, gave evidence that:
a)in order to achieve plumbing fit off under the Original Contract there was no more than 2 days work for 2 plumbers.
b)the cost to complete those works were in the order of $2,826.09.
c)he had identified a number of plumbing related works in the invoices of Fluid Plumbing (the second plumber) and in photographs which were outside the scope of the Original Contract[25]. This extra plumbing work included:
i.The removal and replacement of the rainwater tanks;
ii.The installation of an external shower;
iii.Gas;
iv.The moving of the water meter;
v.Downpipe to Bay window;
vi.Extended clearouts;
vii.The repair of storm water pipes.
[25] Exhibit 7, paragraphs 9-10.
Mr Haskard gave evidence that the reasonable costs of completing the plumbing works were $2,826.09.
Mr Hills referred to the 3 Fluid Plumbing invoices attached to his report dated 30 August 2010[26] totalling $6,523 (incl GST). His evidence was that this amount was reasonable to complete the plumbing work.
[26] Exhibit 9.
These invoices contained very little detail as to the work performed. Mr Hills gave evidence that he did not make enquiries as to the scope of the plumbing work required in the Original Contract nor in relation to the details of the work performed by the second plumber. I am troubled by such an approach.
I prefer Mr Haskard’s approach and evidence on this item.
The reasonable costs of completing the plumbing works were $2,826.09.
Supply Water Pump
Mr Haskard gave evidence that the reasonable cost of supplying the water pump was $366.00. Mr Hills’ evidence was that he had included it in his plumbing figure but that on a stand alone basis he agreed that $366.00 was reasonable.
The reasonable cost of supplying the water pump was $366.00.
Electrician
Mr Glen Owen, the original electrician, gave evidence that:
a.at the time of Mr Southion’s death, subject to painting works being completed the works were at stage where electrical fit off could occur.
b.electrical fit off is one of the last trades to be completed prior to Practical Completion.
c.in order to achieve fit off for this trade under the Original Contract 2 days work for 2 electricians would have been sufficient.
d.he had identified from photographs that a number of additional fans and lights had been installed which were outside the scope of the Original Contract.
e.he had identified from the invoices of Cheap Chills Air Conditioning & Electrical (the second electrician) that there were several items of work which were outside the scope of the Original Contract.
f.the costs of completing the electrician’s works to reach Practical Completion were in the order of $2,489.20.
g.he had marked the cabling to assist fit off as it could be months between conducting the ‘rough in’ works and the final fit off.
h.based on his experience of taking over incomplete works, if he took over an incomplete job then it may take an extra hour or two to perform the fit off compared to completing a job where he had performed the initial work.
i.in late 2007 and early 2008 his usual rate for work for a builder was $35/hour and for a one off job was not more than $50/hour.
Mr Haskard gave evidence that the reasonable costs of completing the electrician’s works were $2,489.20.
Mr Hills referred to the invoice of Cheap Chills Air Conditioning & Electrical (the second electrician) in the sum of $7,050.04 (incl GST). His evidence was that this amount was reasonable to complete the electrician’s work.
Mr Hills gave evidence that there would have been significant extra work performed by the second electrician to check the works performed by the original electrician.
Mr Owen and Mr Haskard rejected this contention.
In oral evidence Mr Hills agreed that the following materials listed in the invoice did not form part of the scope of the Original Contract:
a.1 Telstra box
b.1 16x20mm duct
c.1 413 Plug base
d.1 sensor
e.8 junction boxes
f.4 mounting blocks
g.1 13w fluoro
h.1 Limit switch
i.1 4 gang switch
j.4 3 gang switch
These additional materials had a value in the invoice. It is more likely than not that some of the labour charges set out in the invoice related to the installation of these additional materials however the invoice contained no break down or description of the work performed for the various days’ labour. Mr Hills gave evidence that he did not make enquiries as to the work performed.
Mr Hills gave evidence that even though some work performed was outside the original scope that the total charged (for all the work) was reasonable for that part of the work which was within the scope of the Original Contract. The logic of that evidence is difficult to accept.
The additional work must have had a value. It was not contended that the additional work was so insignificant so as to have no substantial value.
I prefer Mr Haskard’s approach and evidence on this item and find that the reasonable costs of completing the electrician’s works were $2,489.20.
Carpenter
Mr Daniel Maguire, the original carpenter, gave evidence that:
a.the works the subject of the Original Contract were likely to reach Practical Completion on or about 21 December 2007 if Mr Southion had not died;
b.the only carpentry work which was required to be performed to reach Fixing Stage was that 5 l/m of skirting needed to be put in place and that work would take approximately 20 minutes to complete;
c.there was approximately 2 days work to complete his works as head carpenter to achieve Practical Completion.
Mr Haskard gave evidence that:
a.fixing the skirting would take approximately 30 minutes to complete;
b.the reasonable costs of completing the carpenter’s works were $3,177.83.
Mr Hills gave evidence that East Coast engaged 2 carpenters and referred to their short statements attached to his report dated 30 August 2010[27] which set out that Highcorp Homes charged the amount of $7,920 (incl GST) and Foreshore Carpentry charged the amount of $8,305 (incl GST). His evidence was that this combined amount $16,225 was reasonable to complete the carpenter’s work.
[27] Exhibit 9.
The second carpenters’ statements did not set out in any detail the work performed other than to state a date range (18 February 2008 to 21 April 2008) and a very general description. Mr Hills gave evidence that he did not make enquiries as to the scope of the works performed and whether all of the work charged was within the scope of the Original Contract or rectification of defects under the Original Contract. As stated earlier I am troubled by such an approach.
Mr Hills gave evidence that the bulkhead in the media room/office was re-done even though it “wasn’t needed” except for cosmetic reasons and a bigger bulkhead was built in the garage and another bulkhead under the deck was installed by East Coast or its sub-trades.
Based on Mr Haskard’s and Mr Hills’ evidence this bulkhead work was work outside the scope of the Original Contract and must have had a value for which Mr and Mrs Smith are not entitled to recover from Ms Chesterton.
I prefer Mr Haskard’s approach and evidence on this item.
The reasonable costs of completing the carpenter’s works were $3,177.83.
Foreman/Builder
Mr Hills gave evidence that in addition to 2 carpenters it would be reasonable for a builder to have a foreman spend some 240 hours on site at a cost of $15,840 (incl GST).
Mr Haskard gave evidence that he has never used a foreman on a domestic building project nor known of one to be used. Mr Hills gave evidence that in his experience builders on a domestic building project sometimes use a foreman.
Based on Mr Haskard’s and Mr Hills’ evidence I find that it is not usual for a foreman to be used on domestic building projects.
The reasonable costs of completing the works would not include an amount for a foreman.
Mr Hills gave evidence that it would be reasonable for a further 160 hours to be spent on contract administration and work by the builder at a cost of $10,560 (incl GST).
Mr Haskard gave evidence that in his experience the contract administration and builder’s own work would be absorbed into the builder’s margin and not factored into the contract price as a separate item.
Mr Hills gave evidence that it would not be absorbed into the builder’s margin. Mr Hills’ experience in domestic building construction does not appear to be as extensive as Mr Haskard’s. I therefore prefer Mr Haskard’s evidence on this item.
The reasonable costs of completing the works would not include a separate amount for contract administration and work by the builder as described by Mr Hills.
Range hood Installation
Mr Haskard gave evidence that the reasonable costs of range hood installation were $385.00. Mr Hills’ evidence was that he had included it in the overall Contract Price for the Second Contract but that on a stand alone basis he agreed that $385.00 was reasonable.
The reasonable cost of range hood installation was $385.00.
Window Hoods
Mr Haskard gave evidence that the reasonable costs of window hoods were $3,883.00. He referred to a quote from All Australian Awnings dated 4 December 2007 attached to his report dated 6 October 2009[28].
[28] Exhibit 10.
Mr Hills gave evidence that based on his discussions with representatives of East Coast this work formed part of the carpenters’ work and he had included this work as part of the $16,225 for carpentry. Mr Hills did not seek to corroborate these discussions for example by way of any contemporaneous notes and I therefore place little weight on this part of his evidence.
Mr Hills also referred to the invoice of Robina Roofing attached to his report dated 30 August 2010[29] which set out material costs of $676.90.
[29] Exhibit 9.
The Robina Roofing invoice did not set out any details of what the materials were used for specifically. There was insufficient evidence before the Tribunal to make a determination as to whether this invoice related to work to complete the scope of works under the Original Contract.
Mr Hills gave evidence that this window hoods item would require scaffolding which would add to the reasonable costs.
Mr Haskard gave evidence that:
a.he had not allowed for any scaffolding charges for this item as the All Australian Awnings quote included installation, therefore any scaffolding would be to its cost;
b.the Provisional Sum amount for scaffolding in the Original Contract had been exceeded at the time of Mr Southion’s death and therefore any additional scaffolding costs would be to Mr and Mrs Smith’s account in any event.
I prefer Mr Haskard’s approach and evidence on this item.
The reasonable costs of completing the window hoods were $3,883.00.
Painting
Mr Christopher Gray, the original painter, gave evidence that:
a.he has been a painter for approximately 25 years.
b.a substantial amount of the internal painting had been completed.
c.external painting had been commenced.
d.all of the painting work required under the Original Contract could have been completed by 2 painters in 9 days or less including touch ups.
e.his hourly rate at the time was $35.
f.the paint had been purchased.
g.the colours chosen by Mr and Mrs Smith were fairly neutral and easily matched.
h.based on his experience, if he took over an incomplete job then there would be no additional time or cost compared to completing a job where he had performed the initial work.
i.it is not usual to repaint the whole house if part of the painting work is incomplete and would be a waste of money.
Mr Haskard gave evidence that the reasonable costs of completing the painting works including the cost of paint were $6,800.00. He agreed that it was reasonable to estimate that the work could have been completed by 2 painters in 9 days.
Mr Hills referred to the Tony Budworth invoice attached to his report dated 30 August 2010[30] totalling $18,480 (incl GST). His evidence was that this amount was reasonable to complete the painting work. The invoice sets out no significant details of the work performed.
[30] Exhibit 9.
Mr Hills gave evidence that he did not make enquiries as to the scope of the works performed by the second painter or make enquiries as to the quote referred to by the second painter in his invoice and therefore did not satisfy himself that the scope was consistent with the work remaining to be completed under the Original Contract or any rectification works required.
Mr Hills gave evidence that this item would require scaffolding which would add to the reasonable costs.
Mr Hills was referred to the interior decorating specification which detailed the paint to be used.[31] He gave evidence that it is difficult to match paint colours and that in his experience that if the painter doesn’t have the paint used by the original painter then it is necessary to repaint the whole house.
[31] Exhibit 21, BRS 18.
Mr Gray is an experienced painter. He strongly disagreed with Mr Hills’ evidence. For that reason I do not accept Mr Hills’ evidence that it would be reasonable to repaint the whole house.
Mr Haskard gave evidence that:
a.he had not allowed for any scaffolding charges for this item as painters often have their own trestles;
b.the Provisional Sum amount for scaffolding in the Original Contract had been exceeded at the time of Mr Southion’s death and therefore any additional scaffolding costs would be to Mr and Mrs Smith’s account in any event.
I prefer Mr Haskard’s approach and evidence on this item.
The reasonable costs of completing the painting were $6,800.00.
Flooring
Mr Haskard gave evidence that the reasonable costs of completing the sanding and polishing of the upstairs floors were $3,877.50 and that a reasonable rate was $27.50/m2.
Mr Hills gave evidence that the reasonable costs of completing the sanding and polishing of the upstairs and downstairs floors were $6,501.00. He accepted that a rate of $27.50/m2 was reasonable.
Ms Chesterton gave evidence that:
a.the downstairs flooring work (supply and lay) had been performed by Mr Southion and his carpenters prior to his death, however, sanding and polishing of the downstairs flooring had not been completed.
b.she had obtained a December 2007 priced quote from Marques Flooring[32] for the supply, laying, sanding and polishing of flooring at $185/m2.
c.Mr Southion had received a quote from Allwood Timber Floors dated 4 April 2007[33] for similar work equivalent to $183.67/m2.
[32] Exhibit 5, JMC2.
[33] Exhibit 5, JMC3.
Mr Haskard gave evidence that:
a.the Original Contract provided a Prime Cost allowance for the supply, laying, sanding and polishing of the downstairs flooring in the amount of $15,040.00.
b.the reasonable costs to supply, lay, sand and polish flooring as of December 2007 was $185/m2.
c.the reasonable value of the work performed by Mr Southion prior to his death was $185/m2 less $27.50/m2.
d.the area of the downstairs flooring was 103 m2.
e.the reasonable value of the work performed by Mr Southion prior to his death was $16,222.50, being an amount of $1,182.50 in excess of the Prime Cost allowance.
f.a credit of $1,182.50 plus 20% builder’s margin ought to be allowed to Ms Chesterton for the work performed under the Original Contract.
g.the Prime Cost allowance for downstairs flooring in the Original Contract had been exceeded at the time of Mr Southion’s death and therefore any additional sanding and polishing costs would be to Mr and Mrs Smith’s account in any event and therefore no amount should be allowed in determining the reasonable costs of completing the work under the Original Contract.
Mr Hills evidence was that it was not appropriate to value Mr Southion’s work in such a way and that Prime Cost allowance work ought to have an identifiable invoice. His evidence was that in the circumstances the reasonable costs of sanding and polishing the downstairs floors needed to be included in determining the reasonable costs of completing the work.
It is not clear if Mr Hills contends that Mr Southion having decided to perform this part of the works himself he ought to be taken to have agreed to perform the whole of the subject works of the Prime Cost allowance for the amount allowed and therefore the reasonable costs of sanding and polishing the downstairs floors needed to be included.
The downstairs flooring was provided for by a Prime Cost allowance. It is not for this Tribunal to re-write the Original Contract. The approach taken by Mr Haskard to value the work performed is logical and consistent with evidence provided by Ms Chesterton.
The reasonable costs of completing the sanding and polishing of the upstairs floors were $3,877.50.
A credit of $1,419.00 ought to be allowed to Ms Chesterton for the work performed under the Original Contract for the exceeding of the Prime Cost allowance.
No amount is allowed in the reasonable costs of completing the scope of the Original Contract for sanding and polishing of the downstairs floors because the Prime Cost allowance had been exceeded.
Door Remotes
Mr Haskard gave evidence that the reasonable costs of supplying 2 garage remote controls was $88.00. Mr Smith conceded this item during the course of the hearing.
The reasonable costs of supplying 2 garage remote controls was $88.00.
Fly Screens and Screened Verandah
Mr Hills gave evidence that the reasonable cost of completing the fly screens and the screened verandah was $8,706.00. He referred to an invoice from Goldco Security Supa Screens dated 15 April 2008. This document was not in evidence. In any event, Ms Chesterton conceded this item during the course of the hearing.
The reasonable cost of completing the fly screens and the screened verandah was $8,706.00.
Site Clean
Mr Haskard gave evidence that the reasonable cost of performing the site clean was $500.
Mr Hills did not specify an amount for this item in the Joint Expert Report[34] but gave oral evidence that the reasonable cost of performing the site clean was more like $900 on the basis that a site clean would take approximately 4 hours for a bobcat and truck.
[34] Exhibit 13.
Mr Haskard gave evidence that 4 hours was excessive given the small size of the block.
Mr Haskard’s evidence of the reasonable costs was a considered view (expressed in the Joint Expert’s Report[35]) whereas it appears Mr Hills’ view was more in the nature of an ‘off the cuff’ assessment.
[35] Exhibit 13.
I therefore prefer Mr Haskard’s approach and evidence on this item.
The reasonable cost of performing the site clean was $500.
Builders clean
Mr Hills gave evidence that the reasonable cost of performing the builder’s clean was $600.00. He referred to the invoice from All About Cleaning dated 9 April 2008 attached to his report dated 30 August 2010[36]. Ms Chesterton conceded this item during the course of the hearing.
[36] Exhibit 9.
The reasonable cost of performing the builder’s clean was $600.00.
Builder’s Margin
Mr Hills contended that a builder would require an extra risk premium to finish incomplete works and that this would be reflected in the builder’s margin. Mr Hills considered that a reasonable builder’s margin would be 25% in these circumstances. Mr Haskard accepted that a reasonable builder’s margin would be between 20% and 25%.
Based on Mr Haskard’s and Mr Hills’ evidence I find the reasonable costs of completing the works would include an amount for builder’s margin calculated at 25%.
Extra Work
Based on the evidence of Mr Haskard and the original tradespeople I find that significant extra work would not have been required to be performed by East Coast or their tradespersons in taking over this particular incomplete work (particularly given the advanced state of the works) when compared to the same contractor or tradespersons completing the whole of the works.
PC Items
Mr Haskard gave evidence that the reasonable costs to complete the works would include the following Prime Cost items totalling $13,358:
a.Supply of kitchen appliances $6,500
b.Supply and fit shower screens and mirrors $2,930
c.Hardware Specification Wall Basin $220
d.Solar hot water tank $743
e.Tap ware $1,565
f.Bathroom accessories $1,400
In the Joint Expert Report[37] Mr Hills gave evidence that the Prime Cost items totalled $6,720 which equates to the prime cost items in the Second Contract being $6,500 for kitchen appliances and $220 for basin (wall) in lower WC. This is one of the items for which Mr Hills did not make himself available for cross examination.
[37] Exhibit 13.
I therefore prefer Mr Haskard’s evidence on this item.
The reasonable cost to complete the works includes Prime Cost items totalling $13,358.
Defective Works
Mr Haskard gave evidence that the reasonable cost to rectify defective work was $1,229.34.
Mr Hills gave evidence that he did not agree with the amount stated by Mr Haskard in the Joint Expert Report[38] but unhelpfully did not state a separate amount for such work. He noted that it was part of the $126,000 contract price for the Second Contract. This is one of the items for which Mr Hills did not make himself available for cross examination.
[38] Exhibit 13.
I therefore prefer Mr Haskard’s evidence on this item.
The reasonable cost to rectify defective work was $1,229.34.
Credit on Sewage connection and approval fee
Mr Haskard gave evidence that the Prime Cost allowance for this item was $610 and that the actual cost was $816. Mr Hills accepted these facts.
Mr Haskard gave evidence that a credit of $206 plus builder’s margin of 20% ought to be allowed to Ms Chesterton. Mr Hills did not comment on the application of the builder’s margin. This is one of the items for which Mr Hills did not make himself available for cross examination.
I therefore accept Mr Haskard’s evidence on this item.
A credit of $247.20 ($206 plus 20%) ought to be allowed to Ms Chesterton.
Credit on Temporary Fencing
Mr Haskard gave evidence that a credit of $503.31 ought to be allowed to Ms Chesterton for this item. Mr Hills agreed.
A credit of $503.31 ought to be allowed to Ms Chesterton.
Total Cost
For the reasons set out above I find that the reasonable costs of completing the scope of work under the Original Contract and rectifying any defects in the work performed prior to Mr and Mrs Smith’s purported termination less appropriate credits is $54,481.99, calculated as follows:
Plumbing $2,826.09 Supply Water Pump $366 Electrician $2,489.20 Carpenter $3,177.83 Rangehood Installation $385.00 Window Hoods $3,883.00 Painting $6,800.00 Upstairs floors $3,877.50 Door remotes $88.00 Flyscreens and screened verandah $8,706.00 Site clean $500.00 Builder's clean $600.00 Sub-total $33,698.62 Builder's margin 25% $8,424.66 Total $42,123.28 PC Items $13,358.00 defective work $1,229.34 Total for all costings $56,710.61 less credit flooring -$1,478.12 credit on sewage connection -$247.20 credit on temp fencing -$503.31 Total Cost to Complete and Rectify $54,481.99
East Coast took out QBSA insurance as a necessary part of completing the works. QBSA insurance is calculated with reference to the Contract Price. In circumstances where the reasonable costs to complete and rectify are less than half of the contract price under the Second Contract I am not satisfied that I should allow the amount paid in the sum of $995.40[39] to be recovered as part of the reasonable costs of completing the scope of work under the Original Contract.
[39] QBSA letter dated 12 February 2008 part of Appendix B, Exhibit 9.
There was no evidence as to what amount for insurance would have been payable had a contract been entered into for the reasonable cost. There is insufficient evidence of the amount of Mr and Mrs Smith’s loss and therefore I do not allow any amount for this item.
Other Damages Claimed
Mr and Mrs Smith claimed the amount paid to:
a) Lock’s Direct in the sum of $297. This item was not contested and I therefore allow it.
b) Ready Fencing in the sum of $385. This item was not contested and I therefore allow it.
c) Jeffrey Hills & Associates in the sum of $550. This item was not contested and I therefore allow it.
d) King Hazell Enterprises for rubbish removal in the sum of $220. Amounts were allowed in the reasonable costs to complete in relation to builders and site clean. I therefore do not allow this as a separate item.
Mr and Mrs Smith also claimed alternate accommodation expenses in the sum of $7,080 on the grounds that they had been delayed in moving into the home for at least 3 months. In the Defence Mr and Mrs Smith made reference to programming evidence that would be submitted. No programming evidence was before the Tribunal. However, Ms Chesterton in the Reply and Answer conceded a 3 month delay in achieving practical completion.
Mr Smith gave evidence that he had paid rent in the amount of $590 per week. Under cross examination he gave evidence that he had claimed a proportion of this rent as a business expense but could not recall the amount and had not been able to obtain relevant information from his accountant.
There is insufficient evidence of the amount of Mr and Mrs Smith’s loss and therefore I do not allow any amount for this item.
MITIGATION
Mr and Mrs Smith made limited attempts to source an alternative builder and only obtained the one quote prior to entering into the Second Contract in the sum of $126,000.
The Second Contract, allowed for payment in two stages, the first at the completion of the Fixing Stage in the sum of $100,000.00 and the second at Practical Completion in the sum of $26,000.00.
The payment due under the Original Contract upon reaching Practical Completion was stated to be $22,821.30, which is not significantly different to the payment provided for under the Second Contract.
It is, however, difficult to reconcile the payment allowed for under the Second Contract upon reaching Fixing Stage when they entered into this contract knowing that their own expert advised that the Fixing Stage was 98% complete.
Mr Smith gave evidence that he:
a.made enquiries of a couple of contractors who as matters transpired did not perform the particular type of residential construction, namely the construction of reproduction Queenslanders and therefore they did not provide a quote.
b.did not contact the Master Builders Association (MBA) to obtain a list of suitably qualified contractors, despite having attended two ‘mediation’ meetings at the offices of MBA during the course of the Original Contract;
c.did not contact the QBSA for advice as to how the matter should best be resolved or explore whether they may have had an entitlement under the QBSA insurance;
d.made no inquiries about what was involved in becoming an ‘Owner-Builder’ despite the fact that they were advised that they may be able to engage the original tradespeople and could have purchased the Prime Cost Items from Ms Chesterton[40].
[40] Exhibit 24, KES 29.
By letter dated 17 January 2008[41] Mr and Mrs Smith were warned that they had a duty to mitigate their loss and damage. In any event they were legally represented and ought to have been aware of this duty.
[41] Exhibit 24, KES 29.
Ms Chesterton submitted that either the Respondents were taken advantage of by East Coast, and/or they had East Coast perform works that were not within the scope of the Original Contract.
It is evident from my findings on the reasonable cost of completing the works that the costs charged by East Coast were excessive and/or there were extra works performed by East Coast.
Mr and Mrs Smith failed to minimise their costs in completing the works and therefore they are not entitled to simply deduct the amount paid to East Coast from amounts owing to Ms Chesterton.
If Mr and Mrs Smith validly terminated then I find the following amount is payable by Mr and Mrs Smith as provided by Clause 20.4(b) of the General Conditions:
Amount owing to Ms Chesterton for Fixing Stage $117,632.58
Plus Practical completion payment $ 22,821.30
Sub- total $140,453.88
Less reasonable costs to complete & rectify $ 54,481.99
Amount payable by Mr and Mrs Smith as a debt
due and payable to Ms Chesterton $ 85,971.89
Mr and Mrs Smith would be entitled to offset other amounts for damages referred to in [214] above in the sum of $1,232 against this amount.
QUANTUM MERUIT
An issue in these proceedings was whether Ms Chesterton was entitled to claim based on a quantum meruit in relation to work undertaken by Mr Southion and, if so, what is the amount of the quantum meruit?
If the contract was not validly terminated by Mr and Mrs Smith but was abandoned or Ms Chesterton accepted Mr and Mrs Smith’s repudiation and if I am wrong in relation to Ms Chesterton’s claim under the contract for the Fixing Stage Claim then Ms Chesterton is entitled to claim the reasonable amount incurred in performing the works, including amounts in respect of Mr Southion’s work as a carpenter and profit.[42]
[42]Sopov & Anor v Kane Constructions Pty Ltd (No 2) VSCA 141 (15 June 2009) at [33-35]; Larson v Schimke [2007] CCT BD042-07 at [13].
Ms Chesterton gave evidence[43] that the reasonable amount incurred in performing the works less the payments made by Mr and Mrs Smith was $133,852.50 including GST.
[43] Exhibit 3.
Mr and Mrs Smith in their Defence denied that the reasonable value of the works was $140,490.44, being the original amount set out in the Application and referred to expert evidence being exchanged. However they did not lead any evidence in relation to the value of the work performed. Mr Smith did not seek to challenge Ms Chesterton’s evidence in cross examination.
I have reviewed the copies of invoices and other documentation[44]. The claim for E18 in the sum of $57.47 is not supported by documentary evidence in that exhibit but a copy of a Mitre 10 invoice in that amount is otherwise in evidence.[45]
[44] Exhibit 3, JMC2.
[45] Exhibit 1, part of JMC19.
I accept that the total value of the invoices before profit is $379,570.64.
The total including a 20% margin is $455,484.77.
The balance after deducting payments of $321,632.27 is $133,852.50.
It is appropriate to deduct the reasonable costs of rectification in the sum of $1,229.34 as found in [204] above from the reasonable amount incurred.
Accordingly, if I am wrong in relation to Ms Chesterton’s claim under the contract for the Fixing Stage claim on the basis of substantial performance, Ms Chesterton would be entitled to the sum of $132,623.16 plus interest[46] calculated from the date the Application was made (27/11/2008) to the date of this decision calculated at the rate of 10% per annum on a simple basis.
[46]Kane Constructions Pty Ltd v Sopov (No 2) [2005] VSC 492 (16 December 2005) at [60-62]. Although overturned on appeal, whether or not Interest could be claimed and how it could be claimed was not disturbed.
An issue in these proceedings was whether or not Mr and Mrs Smith are entitled to claim payment from Ms Chesterton, on the basis of monies had and received in the sum of $15,974.91 relating to a claim for cost escalation for claimed delays in moving the sewer main for the period from 1 February 2007 to 8 May 2007 and also on the basis of suspension of works for the period 27 June 2007 to 8 July 2007 in the reduced sum of $15,974.91.
Mr Smith conceded under cross-examination that Mr and Mrs Smith were responsible for moving the sewer main and that the monies were paid by Mr and Mrs Smith voluntarily consequent upon on a commercial decision taken at the ‘mediation’ meeting on 4 June 2007 and evidenced in the Notice to Increase Contract Price dated 4 July 2007[47].
[47] Exhibit 2, JMC6.
I therefore find that Mr and Mrs Smith are not entitled to claim payment of this sum on a restitutionary or any other basis[48].
[48] Urban Homes Pty Ltd v Wright CCT B280-05, per Mr Scheaffe, at [101] – [104].
An issue in these proceedings was whether or not Mr and Mrs Smith are entitled to claim payment from Ms Chesterton, on the basis of monies had and received in the sum of $4,263.66 relating to a claim for delay costs during the period from 7 September 2007 to 25 September 2007 as a result of a suspension of the works by Mr Southion claimed on the basis that Mr and Mrs Smith failed to pay the Progress Claim dated 29 August 2007 (frame stage claim) within the 7 day period required by the Original Contract[49].
[49] Exhibit1, JMC2 item 20.
Mr Smith conceded that the payment was late.
As a result of Mr and Mrs Smith’s failure to pay the frame stage claim within 7 days, Mr Southion was entitled to suspend the works pursuant to clause 16.1(b) of the General Conditions and was therefore entitled to recommence 14 days after Mr and Mrs Smith remedied the breach pursuant to clause 16.4 of the Original Contract.
Mr Southion was therefore entitled pursuant to Clause 26.2(b) of the General Conditions to claim from Mr and Mrs Smith an amount equal to 0.05% of the Contract Price for each day of the delay.
I therefore find that Mr and Mrs Smith are not entitled to claim payment of this sum on a restitutionary basis.
An issue in these proceedings was whether or not Mr and Mrs Smith are entitled to claim payment from Ms Chesterton, on the basis of monies had and received in the sum of $8,461.20 being monies paid by Mr and Mrs Smith to Mr Southion for a claim for additional costs of scaffolding hire during the suspension by Mr Southion during the period from 7 September 2007 to 25 September 2007.
Ms Chesterton gave evidence that Mr Southion secured a special “off-hire” pricing for the scaffold during the suspension period and that Mr and Mrs Smith were only charged the sum of $699.99 for the scaffold during this time[50].
[50] Exhibit 2, paragraph 58 and JMC15.
In view of my finding that Mr Southion was entitled to suspend the works I find that Mr and Mrs Smith are not entitled to claim payment of $8,461.20 or $699.99 on a restitutionary basis.
SUMMARY OF FINDINGS
Ms Chesterton’s primary claim was for the Fixing Stage progress claim under the Original Contract. By making the second claim on 13 December 2007, the first claim made on 28 November 2007 was impliedly withdrawn. On the basis of the doctrine of substantial performance I have found that an entitlement to payment of the amount of $117,632.58 arose on 20 December 2007 in respect of the claim issued on 13 December 2007.
I have also found in relation to the primary claim that interest is payable on $117,632.58 at the rate of 15% per annum calculated on a daily basis as from 20 December 2007 until the amount due is paid.
Ms Chesterton has, therefore, been successful in her primary claim and these findings are reflected in the orders.
Ms Chesterton’s alternative claim was in quantum meruit.
If I am found to be wrong that Ms Chesterton is entitled to the Fixing Stage progress claim under the Original Contract, I have found that Ms Chesterton would be entitled to claim the sum of $132,623.16 on a quantum meruit basis plus interest on that amount calculated from 27 November 2008 to the date of this decision calculated at the rate of 10% per annum calculated on a simple basis.
I have found that Mr and Mrs Smith did not validly terminate the Original Contract and are not entitled to damages for completing the works under the Original Contract or other damages. No amount is therefore ordered to be deducted from amounts owing to Ms Chesterton in respect of any alleged damages.
If I am wrong and Mr and Mrs Smith validly terminated then I have found that the reasonable costs to complete and rectify would be $54,481.99. Accordingly, the amount payable by Mr and Mrs Smith to Ms Chesterton as a debt due under Clause 20.4(b) of the Original Contract would be $85,971.89. Mr and Mrs Smith would be entitled to offset other damages in the sum of $1,232 against this amount.
Miscellaneous Matters Application
Ms Chesterton made an Application dated 27 October 2010 for various orders including an order pursuant to section 48 of the QCAT Act for compensation to be paid by Mr and Mrs Smith for reasonable costs incurred in relation to the Respondents’ failure to comply with the Tribunal’s directions.
The Tribunal received written submissions and affidavit material from the parties and directed that the Application would be decided at the hearing. Ms Chesterton did not pursue the other orders originally sought in the Application nor did she pursue an order against Mrs Smith. The latter on the grounds she was no longer taking an active role in these proceedings.
Leave was sought to amend the Application to make it clear that an order for compensation pursuant to section 48(2)(c) was being sought. Mr Smith opposed leave.
It was clear from the Application that compensation was sought. Section 48(2)(c) is the compensation provision. There is no evidence before the Tribunal that Mr Smith will be prejudiced by my granting leave. I therefore grant leave to amend.
Section 48(2)(c) provides that the Tribunal may make an order against a party causing disadvantage by not complying with a Tribunal order without reasonable excuse to compensate another for any reasonable costs incurred unnecessarily.
The Tribunal must consider the extent to which the party causing disadvantage is familiar with its practices; the capacity of the party causing disadvantage to act on the tribunal’s orders and directions; and whether the party is acting deliberately.[51]
[51] Section 48(3) QCAT Act 2009.
This Application arises out of the alleged failure of Mr and Mrs Smith to provide:
a) a response to the Scott Schedule filed by Ms Chesterton by 4pm 31 August 2010 in accordance with the Tribunal’s direction of 16 June 2010;
b) a detailed response to the Scott Schedule in the format of a schedule by 4pm on 20 October 2010 in accordance with the Tribunal’s direction of 23 September 2010.
Ms Chesterton claims that Mr and Mrs Smith’s contravention of the 2 Tribunal directions has caused her disadvantage in that:
a) The proceeding was delayed as a result of the failure to comply;
b) In the absence of a detailed response to the Scott Schedule the Experts Conclave could not meaningfully proceed.
Despite the Tribunal’s best endeavours, parties commonly fail to comply with directions for the filing of material. In a jurisdiction where the starting point is that parties bear their own costs these defaults should not give rise to a costs order except in extreme circumstances.
The use of Scott Schedules in building disputes to clearly identify the nature of the dispute and the quantum disputed is of long standing. Scott Schedules are used to identify areas of agreement e.g. although it might be disputed that certain work was defective or a variation, the parties may be able to agree on the relevant quantum if the Tribunal found that the work was in fact defective or was a variation. In this way it serves to limit the issues in dispute and therefore the evidence required and to truncate the hearing and minimise the costs to all parties.
It is not necessary for a party to have relevant industry expertise or knowledge and where they do not they will necessarily rely upon others to assist with the completion of the Scott Schedule.
Ms Chesterton’s Scott Schedule was filed and served in late July 2010[52]. The Jeffrey Hills & Associates report dated 30 August 2010[53] which purported to be a response to Ms Chesterton’s Scott Schedule did not address the Scott Schedule other than in a very general way.
[52] Exhibit 14.
[53] Exhibit 9.
It was not, in my view, an appropriate response.
Mr Smith was represented at the time by legal practitioners who ought to have known it was not an appropriate response and advised Mr Smith against such an approach to complying with the Tribunal’s directions.
On 23 September 2010 the Tribunal made a further direction that a response be filed and served.
The subsequent response filed and served on 20 October 2010 by Mr Smith was more likely than not a disingenuous, and was at the least an unhelpful, attempt to comply with the Tribunal’s directions. It was not, in my view, an appropriate response.
Mr Smith was still represented at that time by legal practitioners who ought to have known it was not an appropriate response and advised Mr Smith against such an approach to complying with the Tribunal’s directions.
On 9 November 2010 this Tribunal again directed that the experts were to file a joint expert report with a completed Scott Schedule.
A Joint Expert Report was filed. Mr Haskard prepared a summary schedule as part of the report. As referred to earlier Mr Hills did not consider the items of the Scott Schedule and did not provide the types of responses in the summary schedule which were useful in limiting the time required at the hearing.
The Tribunal is not in a position to know whether Mr Smith accepted or rejected his then lawyer’s advice on any of these occasions. In any event Mr Smith is responsible for the responses and the consequences.
On Day 2 of the hearing Mr Hills informed the Tribunal that he had not considered the items in the Scott Schedule in detail and invited the Tribunal to allow him and Mr Haskard to confer in private to seek to reach agreement. I declined Mr Hills’ suggestion on the grounds that there had been at least one Experts’ Conclave and the preparation of a Joint Expert’s Report, the purpose of which was effectively to do just that but indicated that they should feel free to use any time during hearing recesses e.g. lunch breaks to seek to reach agreement.
Ms Chesterton sought to lead evidence from Mr Ensby and Mr Haskard as to certain matters that occurred at the Experts’ Conclave to demonstrate the alleged disadvantage. Mr Smith objected to that evidence on the grounds that this Tribunal’s Practice Direction No 4 of 2009 provides that evidence of anything done or said at a conclave is inadmissible at any stage of the proceeding.
I accept Mr Smith’s submission.
There has been no evidence provided to the Tribunal that would give rise to a reasonable inference that:
a) Mr Smith or his lawyers did not understand the directions made by the Tribunal;
b) he was in any way incapable of acting in accordance with the directions; or
c) his non compliance was inadvertent.
The objects of the Queensland Civil and Administrative Tribunal Act 2009 include the requirement that the Tribunal deals with matters in a way that is accessible, fair, just, economical, informal and quick. Section 28(3)(e) requires the Tribunal to ensure that all relevant material is disclosed to the Tribunal to enable it to decide the proceeding with all the relevant facts. This is the reason that the Tribunal makes directions such as the delivery of and responses to a Scott Schedule.
It is more likely than not that the Experts’ Conclave was of a longer duration than it would have been if the Scott Schedule had been considered prior to it and proper response provided.
Mr Smith submitted that in bringing this Application (filed 21 October 2010) Ms Chesterton is acting in a way which unnecessarily disadvantages him. He also submits that Ms Chesterton in bringing these proceedings as a whole is acting in a way which unnecessarily disadvantages him.
I do not find such submissions very persuasive. Parties are entitled to bring miscellaneous matter applications and such original claims as they wish and the Tribunal will deal with them according to the applicable law. If they are vexatious or frivolous then appropriate orders may be made.
A matter which must be established is whether any disadvantage was ‘unnecessary’ as distinct from a disadvantage experienced in the usual course of a dispute proceeding.
Non-compliance with the Tribunal’s order of 16 June 2010 may have been able to be explained but it is difficult to accept that the response filed in purported compliance with the specific direction of 23 September 2010 that a detailed response in a format of a schedule was justifiable.
A further direction was given by the Tribunal on 9 November 2010 that a joint expert report with a completed Scott Schedule be filed by 31 December 2010.
In the Joint Expert Report[54] filed Mr Hills’ responses in the main do not directly respond or address Mr Haskard’s costings.
[54] Exhibit 13.
Mr Smith’s non compliance has not only affected Ms Chesterton but has also taken up the time and resources of the Tribunal and has prevented the Tribunal from taking effective steps to provide an expeditious resolution of this matter.
It is more likely than not that had a proper consideration and response to the Scott Schedule been given then time would have been saved in this proceeding.
Mr Hills’ approach to his evidence and reports including the Joint Expert Report has also contributed to extending the time taken by this proceeding.
Ms Chesterton seeks an order that the compensation should be determined on an indemnity basis.
The difficulty with Ms Chesterton’s claim is satisfactorily defining what costs are able to be claimed in the event this application succeeded.
Mr Ensby gave evidence[55] that:
a) Ms Chesterton has incurred time and legal costs in dealing with the persistent non-compliance with the Tribunal’s directions in relation to the filing and serving of a proper response to the Scott Schedule;
b) The progress of the proceeding will be unnecessarily delayed because it would not be sensible or productive to hold the Experts Conclave until a proper response had been filed and served and Mr Haskard has had a reasonable opportunity to consider the response.
[55] Affidavit dated 28 October 2010.
On the last day of the hearing I sought clarification of the claim and it was submitted that the appropriate order was ‘reasonable costs to be agreed or failing agreement to be assessed’. This order presupposes some definition or boundaries of what is to be assessed.
Mr Smith’s written submissions were to the effect that a decision in this Application ought not be made until the Tribunal has made findings in relation to the substantive claim and is in a position to consider the consequences of a settlement offer made, which if it had been accepted would have resolved the proceedings prior to the time of the relevant conduct.
At the end of the hearing the parties asked to be heard generally on the issue of costs after this decision was given.
I therefore direct that the parties are to file in the Tribunal and serve upon the other parties any submissions on costs generally (including reserved costs in particular those referred to in the decision of the former tribunal dated 12 May 2009 and this Tribunal of 9 November 2010) and any further submissions in relation to the Application for compensation in writing:
a) on or before 4pm on 21 July 2011; and
b) submissions in reply to such written submissions on or before 4pm on 28 July 2011.
Order
Mr and Mrs Smith are to pay Ms Chesterton the sum of $117,632.58.
Mr and Mrs Smith are to pay Ms Chesterton interest at the rate of 15% per annum calculated on a daily basis on the sum of $117,632.58 as from 20 December 2007 until the amount due is paid.
Each party is to file in the Tribunal and serve upon the other party any submissions on costs generally (including reserved costs in particular those referred to in the decision of the former tribunal dated 12 May 2009 and this Tribunal of 9 November 2010) and any further submissions in relation to the Application for compensation in writing:
a) on or before 4pm on 21 July 2011; and
b) submissions in reply to such written submissions on or before 4pm on 28 July 2011.
Unless any party requests an oral hearing in relation to the Application for compensation and any application for costs these applications shall be determined on the papers not before 28 July 2011.
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