K C Painting and Decorating v Jagger Pty Ltd - [2013] QCAT 11

CITATION:

K C Painting and Decorating v Jagger Pty Ltd & Anor [2013] QCAT 11

PARTIES:	K C Painting and Decorating ABN 59 529 043 080 (Applicant)
v
Jagger Pty Ltd (First Respondent) Earth Spirit Home Pty Ltd (Second Respondent)

APPLICATION NUMBER:

BDL201-11

MATTER TYPE:

Building matters

HEARING DATE:

18 December 2012

HEARD AT:

Brisbane

DECISION OF:

David Paratz, Member

DELIVERED ON:

9 January 2013

DELIVERED AT:

Brisbane

ORDERS MADE:

Earth Spirit Home Pty Ltd pay to K C Painting and Decorating the amount of $8,555.65.

CATCHWORDS:

Construction – liable parties

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Self represented (Christel Doherty)

RESPONDENT:

Jagger Pty Ltd represented by Dale Cliff (MS & Cliff Lawyers)

Earth Spirit Home Pty Ltd self represented by Brett Blacklow

REASONS FOR DECISION

This is an application for monies owing for painting work done.
The Applicant is a business, KC Painting & Decorating (KC), run by Kevin Doherty and his wife Christel Doherty.
Statements of evidence have been filed on behalf of each party. It was agreed on the hearing of this matter that those statements would form the evidence in the matter, that each party would make oral submissions, and that I would then deliver my decision in writing.
The evidence consist of the following documents:
Statement of Kevin Doherty (on behalf of KC) – Filed 28 June 2012
Statement of George Nichols (on behalf of Jagger Pty Ltd) – Filed 31 July 2012
Statement of Brett Backlow (on behalf of Earth Spirit Home Pty Ltd) – Filed 14 November 2012
I heard oral submissions from each party.
In late 2010 and early 2011, KC did painting work on a group of houses being built at Wakerley.
This application is one of 5 separate actions that have resulted from the property development and events surrounding it. There are 2 actions in the Federal Magistrates Court, 2 actions in this Tribunal, and one action in the Supreme Court. It is a complicated and unfortunate litany of events.
KC has been caught up in greater events. Their basic position is simple – they performed painting work to the value of $8,555.65 and have not been paid for it. There is no challenge to the fact that KC performed the work, or that they are due the amount invoiced. Whilst there is a contention by Jagger Pty Ltd (Jagger) as to the work being of poor quality and requiring remediation, there is no material as to that, and no issue as to that in contention.
The unpaid invoices which constitute this claim were made out by KC to Jagger, and are as follows:
a)    7 February 2011 – $4,400.00
b)    7 February 2011 – $1,955.65
c)    25 March 2011 – $2,200.00
The question in this application is, who is responsible to pay KC for their work?
The matter concerns 10 houses which were to be built on land at Nile Close, Wakerley. The project was being undertaken by members of the Nichols family. The overall plan was for 5 of the homes to be built for members of the family, and the balance to be a commercial development.
The relevant members of the family are George Nichols and his wife Jennifer (now deceased); his son Philip Nichols who was married to Melinda Nichols (who are now involved in a family law dispute in the Federal Magistrates Court); his son Nick Nichols; and his brother Peter Nichols who is married to Debra Nichols.
The initial plan was that Philip Nichols and his wife Melinda Nichols, who operated an earthmoving business, would develop the land through a company called Asden Developments Pty Ltd.
Philip Nichols had discussions with Mr Blacklow in relation to design of the houses. Mr Blacklow was initially involved as an architect, then subsequently became involved as a project manager and builder. Mr Blacklow is the principal of Earth Spirit Home Pty Ltd (ESH).
Asden Developments Pty Ltd went into liquidation on November 2010.
A “Period Subcontract” dated 1 November 2010 was entered into between ESH and KC. It is agreed that the document was actually signed on 6 or 7 February 2011 after intervention by the QBSA to require written contracts between the various contractors and subcontractors.
The Period Subcontract was signed on behalf of ESH by its construction manager, Grant Baudino. Mr Blacklow acknowledges that he was authorised to do so.
An email, dated 16 December 2010, (Attachment “Q” to the statement of Mr Blacklow) was sent to:
All parties concerned: Asden Developments PL and all parties associated with this company, Earth Spirit Homes and all parties associated with this company, George and Jenny Nichols, Peter and Debra Nichols
by Debra Nichols on behalf of George and Jenny Nichols, and Peter and Debra Nichols. It read as follows:
Due to a serious breakdown in the administration of Asden Developments and a failure to take our instruction in matters relating to the construction of the five homes on Nile Close, Wakerley, we withdraw any rights previously granted to Asden Developments to be involved in the construction of the buildings, or to incur debts on our behalf.
Brett Blacklaw and his authorised delegates of Earth Spirit Homes have been appointed as the responsible entity for the construction of the premises and the development and the security of the site.
This arrangement is effective immediately.
Please address any concerns you may have in relation to this matter to either Brett or myself.
Mr Blacklow, in his submissions, said that he was aware of the email being sent, and that he did not take issue with it at the time.
A statement of Lexanne Schumann, is Attachment “S” to the Statement of Mr Blacklow. She says that she was employed by Asden Developments and worked for them as a site purchasing officer for the Wakerley project from early November 2010 until, on or around, 14 December 2010.
Ms Schumann says that she was engaged by Debra Nichols, on or around 14 December 2010, to perform similar duties on the project, but under the direction of the Nichols group and Jagger Pty Ltd.
She says that she was advised by Mr Blacklow that George Nichols had agreed to deposit $250,000 into a trust account with the Queensland Master Builders as security for payment of works performed on the project; and that once the deposit had been paid, that she was advised by Debbie Nichols and had it confirmed by Mr Blacklow, that Jagger was allowed to make purchases on ESH trade accounts.
Mr Doherty says [13] that he was told to send invoices as follows:
Shortly after ESH took over the site, on or about 16 December 2010, I remember having a conversation with Brent from ESH and the office lady (appointed by one of the Nichols family company, although I am not sure which one) at the site office at the development about the change. Although I cannot remember the specific words used, I remember being told:
(a)   ESH had taken over the site;
(b)   The invoices were to be addressed to Jagger Pty Ltd; but
(c)   The invoices would be faxed to the site office and submitted to ESH for checking. Once checked by ESH they would approve the Invoice for payment and hand back to the office lady for payment.
Mr Blacklow says that ESH were construction managers from 1 November 2010 until 8 February 2011 [C, D].
George Nichols in his statement of evidence, says that he is a Director of Jagger Pty Ltd, that it has not traded since 1999 and does not have any bank accounts [9]. He says that Jagger has not entered into any contract with KC or ESH [10].
Mr Doherty in his statement [16] says that just before Christmas 2010
Brent from ESH told me that the Nichols family was putting some pressure on him to get the development finished
and refers to the invoices in question and says that [22]
a large component of these invoices relate to hard costs we incurred (sub-contractor fees, paints) because of ESH’s request to us to speed up the work on the development.
In her submissions, Ms Doherty said that she did not consider ESH was liable for payment of the KC Invoices, which was a curious submission, as KC had joined ESH as a respondent. She submitted that Jagger was responsible.
Mr Blacklow submitted that the KC invoices were the liability of the Nichols family.
Mr Cliff, the solicitor for Jagger, submitted that ESH was liable for the KC invoices on the basis of contract law.
KC was directed to issue invoices to Jagger. It does not seem that Jagger actually paid any of the invoices. The evidence of Mr Doherty is that three invoices were paid by personal cheques from members of the Nichols family – Jennifer, George, Debra and Peter [20].
The issuing of an invoice to an entity, or even the payment of an invoice by an entity, does not in itself create any legal relationship between it and the issuer of the invoice, or any liability by the entity in respect of those invoices.
In Walton Construction (Qld) Pty Ltd v Salce & Ors [2008] QSC 235 McMurdo J noted at [13] that:
But Walton still argues that there was no construction contract, largely upon the basis of a proposition, said to be derived from the judgment of Jones, J in Vis Constructions Ltd v Cockburn (2006) QSC 416, that an arrangement for the payment of a subcontractor’s accounts by a person not a party to the subcontract “does not of itself amount to a construction contract”. That proposition may be accepted.
In order for there to be a liability to pay, there must firstly be a legal relationship. In this matter, there is no evidence of any legal relationship between KC and Jagger. There is no contract between them, or any novation of rights of another party under another contract.
KC was receiving directions and conducting work. The work for which the invoices in question were issued, was all conducted after the date shown on the Period Subcontract, and after the date that ESH assumed control over the site.
ESH may not have appreciated that it was entering into a legal relationship with KC from at least 16 December 2010 (if not 1 November 2010), but the material establishes that it did so. By entering into the Period Subcontract (even at the date in February 2011), it was confirming or assuming a liability as head contractor. The actions of ESH in directing KC as to the work to be performed, and supervising it, is an active role consistent with that of a head contractor.
The email of 16 December 2010, to all parties, nominating ESH as the “responsible entity for the construction of the premises”, which ESH did not dispute and acted in accordance with, is also consistent with, and evidence of, ESH becoming the head contractor in fact and law.
ESH in turn will have rights to recover any amounts due to it from its principal, whoever that may be. The identity of the person or persons who are liable to ESH, and the extent of that liability, is likely to be the subject of the other proceedings in this tribunal in which ESH is a party.
In the first instance however, I find that there is a contractual relationship between KC and ESH, and that ESH is liable for the uncontested invoices of KC.
Ms Doherty had not pressed for this result in her submissions, but I gained the impression that this was related to her view as to overall liability in the greater scenario. She indicated at the outset of her submissions that she was not skilled in contract law. I consider her intention to be well-meaning, but the matter has to be determined in accordance with law. KC has brought this action against ESH, and I find that action is well founded.
Mr Blacklow indicated the great stress that these matters have placed upon him, and said that an adverse finding on this application would add to that stress. He acknowledged that he could incorporate this claim in his claim in the other action, and that the first two invoices were already included, and that he could add the third invoice.
Mr Cliff, who also acts for parties in the other matter, indicated that he would have no objection to ESH amending their claim to also include the third invoice. ESH therefore has the potential to recover these amounts.
Mr Cliff submitted that I could include in my orders in this matter, an ancillary order under s 114 of the Queensland Civil and Administrative Tribunal Act 2009 referring matters of fact to the other proceedings in this Tribunal, and link this decision to the other application. As the parties may not be entirely the same in the other proceedings, this may raise more complications than it achieves, and I will decline to do so.
I therefore find that Earth Spirit Home Pty Ltd is liable for payment of the invoices of KC Painting and Decorating in this matter, and order that Earth Spirit Home Pty Ltd pay to KC Painting and Decorating the amount of $8,555.65.