Kuma Tech Homes Pty Ltd v Rigg
[2013] QCAT 74
•22 February 2013
| CITATION: | Kuma Tech Homes Pty Ltd v Rigg and Anor [2013] QCAT 74 |
| PARTIES: | Kuma Tech Homes Pty Ltd (Applicant/Appellant) |
| v | |
| Tony Rigg Andrea Rigg (Respondents) |
| APPLICATION NUMBER: | BDL006-12 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 9, 10 October 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Peter Walker, Member |
| DELIVERED ON: | 22 February 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the Applicant pay the Respondents the sum of $17,530.63. |
| CATCHWORDS: | Where hand written amendments to contract – where scope of Works in dispute – where Notice of Practical Completion issued – whether Works practically complete – whether Notice to terminate effective – repudiation – uncertainty; liquidated damages G Scammell and Nephew Ltd v HG and JG Ouston [1941] AC 25 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr F W Redmond of Counsel instructed by Mr Michael Ohlson |
| RESPONDENT: | Smith, Solicitor of Gall, Standfield & Smith |
REASONS FOR DECISION
Background
The Applicant, Kumatech Homes Pty ltd and the Respondents, Mr and Mrs Riggs first appear to have entered into contractual relations when they signed a preliminary agreement relating to investigative works obviously intended to lead to construction of a dwelling at Lot 20 Bark Court, Oxenford.
Subsequent to this the parties did in fact enter into a Residential Building Contract for the construction of a dwelling on the land. The contract is in standard Master Builder format and is dated 29 November 2010. The contract price was fixed at $278,000.
The process that led to the contract actually being signed was the subject of some dispute but it appears in the first instance that an agreement relating to preliminary works was signed whereby the Respondents agreed to pay the Applicants a preliminary sum. The signing of the actual contract by the owners occurred when they attended at the Applicant’s place of business.
The works proceeded, albeit slowly, until about November 2011. Lawyers first became engaged in that month. The first of a series of legal letters was sent on 11 November 2011 by Gall Standfield Smith for the Respondents. Thereafter it appears Kumatech appointed Ohlson & Associates to act and a series of letters, incorporating Notices in respect of alleged breaches pursuant to the contract were sent. Ultimately each party purported to terminate for breach.
The parties are not in agreement about many issues and matters that require determination include the following:
A.What were the “works” comprised by the contract?
B.Did the works reach a stage of practical completion?
C.Did Mr and Mrs Rigg enter into early possession of the works and thereby trigger the contract provisions that deemed the works to have reached practical completion?[1]
D.Was the contract ever terminated?
E.If so what was the effective date of termination?
F.What is an appropriate assessment of the amount of liquidated damages?
[1] See clauses 17.8 and 17.9 of the contract.
What were the Works Comprised by the contract?
The starting point for the consideration of this issue must be the written contract. Clause 1 of the General Conditions defines works as follows:
Works – means the whole of the work to be carried out by the Contractor under the Contract, a description of which is contained in item 3 of the Schedule, and includes variations to the Works.
The works are described in item 3 of the Schedule as follows:
Construction of residential dwelling as per approved plans and specifications.
The Applicant appears to submit, in reliance on clause 3.3 of the contract[2] that the correct interpretation of this is that anything in the specification that does not fall strictly within the definition of “residential dwelling” must be excluded as the inclusion of such an item creates a discrepancy which must be resolved by reference firstly to the General Conditions.[3]
[2] Order of precedence of documents.
[3] See Applicants submissions at paragraphs 10 onwards.
While paragraph 16 of the Applicant’s submissions refers specifically only to the two hand written items, if it is found that these were part of the contract it does not, in my view, matter whether they were hand written or typed as part of the original document.
I can only say, if that is the intent of the submission I do not agree with it.
“Residential Dwelling” is not defined anywhere in the contract documents. Furthermore the term, “dwelling”, appears to be capable of varying definitions, both where it is used in legislation and where it is used in a more general sense. In my view it provides nothing more than the most general of descriptions and could easily be capable of being understood as incorporating all sorts of things that may not be essential parts of a house, but which may well be considered to be part of a home.
The Applicant’s argument is expanded by reference to the plans. On Sheet 1 thereof it is stated:
Building approval for structures listed on associated decision notice only.
Ancillary structures and existing work such as retaining walls, pools, driveways, sheds etc is not included unless listed on the decision notice.
From there it appears that I am asked to conclude that unless the specific item has an “approval” in accordance with the plans it cannot form part of the Works because they are not “approved works”.[4]
[4] Applicant’s submissions at paragraph 17.
In my view this submission seeks to draw a distinction that is not open. There is no reference in the definition of works to “approved works”, only to “approved plans”. Quite clearly those plans, which were drawn by Kumatech, include numerous items that were not part of that initial approval process. This includes items such as a retaining wall, an HSTP system, and a pool. While these were clearly not part of the “approved works” they are incorporated within “approved plans” and, in my view, are capable of forming part of the Works to be performed.
In this respect the evidence of Mr Sim, an architect engaged by the Applicant to provide reports, was instructive. Among other things he conceded that it is not uncommon, where a pool is included in contract works, for a separate contract between the builder and a subcontractor to be entered into and a separate approval to be subsequently obtained by the pool builder.
To better consider the issue of what the Works comprised, then, one has to consider the addition of two items to the Specification, namely “A/C to Masterbedroom & Upper Living” and “Pool as per plans”.[5]
[5] See exhibit.
In this respect Mr Kumara Lockwood, for the Applicant, says that these items were not included in his version of the contract and were added without his consent or knowledge.
By way of contrast evidence on behalf of the Respondents is that these items were intentionally added and initialled.
To determine this issue I must consider the evidence of the various parties.
In this respect I have to say that I found Mr Lockwood’s evidence to be less than satisfactory in a number of respects. He gave what I could only interpret as conflicting evidence in respect of this issue, and particularly about the issue of his various signatures.
It appears to be uncontentious that the Respondent’s copy of the contract contains a square bracket against the addition of the two items handwritten and also contains Mr Lockwood’s signature in blue ink. By way of contrast it appears to be uncontroversial that the other signatures on the contract itself were signed in black ink.
I understood Mr Lockwood’s evidence in this respect to be that he always signs the “Specification” page of contracts but that he doesn’t necessarily sign all parts of the documents at the same time, hence the two different ink colours. Quite frankly I found this explanation to be unlikely. He was unable to give any satisfactory reason why he signed the Specification page but none of the other myriad of documents that formed part of the contract. A suggestion that a person would sign different parts of one contract at different times simply pushes the bounds of common sense. It is also, of course, contrary to the evidence of Ms Knight.[6]
[6] See her statement dated 17 April 2012.
Quite frankly I found the explanation proffered on behalf of Mr and Mrs Riggs to be far more likely, namely that the signature and brackets were added to signify acceptance of the addition of the hand written notations.
In this respect it is worth noting the evidence of Natalie Knight.[7] She specifically gave evidence that the additions were written on by her and signed by Mr Lockwood denoting his acceptance of them. Ms Knight impressed me as a forthright witness who made appropriate concessions. By way of example she freely admitted not recalling whether the HSTP system was included.[8] I was unimpressed with Mr Lockwood’s attempts to paint her a person who left just before he could terminate her.
[7] See above.
[8] See statement at paragraph 21(c) ii.
Another issue in contention, so far as the Works was concerned, was the HSTP system. It is contended for the Kumatech that this was not part of the Works. They appear to rely on a number of points to support this including:
a)The HSTP system was described as “proposed” on the site plan;
b)That what the Respondents originally asserted was that it was agreed that a “septic system” would be provided and that this is different from a HSTP;
c)In addition there appeared to be initial reliance on the Part 1 of the Appendix to the Contract as apparently being a contractual agreement that this system was not to be provided;
d)Finally it is submitted that if it is found that this was to be provided that the provision is void for uncertainty.
It is certainly conceded that the system, although described as “proposed”, is included on the first page of the approved plan. To the extent that it is necessary or relevant though, I would have thought that the best evidence of what the parties thought in respect of this issue is the fact that the Applicant obtained a site and soil evaluation from STA Consulting Engineers,[9] and that Queensland Building Approvals, on behalf of the Applicant, lodged an application for approval of the HSTP with the Gold Coast City Council.[10]
[9] See item 1 of the Respondents Further Supplementary Bundle of Documents.
[10] See statement of DM Wright dated 3 May 21012 at paragraph 9.
It simply does not make sense that the Applicant would go to the expense of undertaking these steps unless it was contractually required to do so, either by virtue of the original contract, or by way of variation.
To me it is not surprising that there may have been some discrepancies in respect of terminology. It appears to me that references to “Septics” as opposed to HSTP’s probably arose as a result of ignorance and no particular significance should be attached to this.
Any issues of alleged uncertainty in respect of this issue can be resolved by looking at the system that was designed and for which approval was sought by the Applicant.
I therefore find that the HSTP is part of the contract works.
Additional issues raised by the parties related to a sleeper retaining wall and a rock retaining wall. The sleeper retaining wall is clearly shown and described on the plans both as to height and length, which can, if necessary to be ascertained by scaling.
There is additionally a claim by the Respondents in respect of a “Boulder wall. A quotation provided is for a wall some 40 metres in length. While I can see some marks on the plan that are described as “Wall to be formed by pool” that structure is plainly nowhere near 40 metres in length. I note that there is a separate, significantly higher quote in respect of that wall as part of the pool quote provided by Luxury Pools.[11] The type of construction of this wall is not clear to me. Further I can only assume its only relevance is to the claim for the pool and I will therefore consider it in that context.
[11] See exhibit 14.
It is conceded by Mr Sim that as the retaining walls do not exceed one metre in height they do not require Council approval and that appears to be correct.
For the reasons already stated I do not accept that these fall outside the description of the contract Works. In my view they can clearly be regarded as part of a “residential dwelling”.
While there are obviously some minor variations with regard to the way the sleeper wall can be constructed, having regard to the fact that the material, dimensions and height are ascertainable from the contract documents themselves I consider that these issues are sufficiently dealt with that they are not subject to issues of uncertainty.
I therefore find that the sleeper retaining wall is also included within the Works.
Whether the Works were Practically Complete as at the Date of the Issue of the Notice
Kumatech issued a Practical Completion Notice on 5 December 2011.[12]
[12] See bundle of agreed contractual documents at page 104.
“Practical Completion Stage” is defined in the General Conditions of the contract as follows:
... means that stage of the of the Works when the Works are completed in accordance with the contract and all relevant statutory requirements, apart from minor omissions or minor defects, and the Works are reasonably suitable for occupation.
In my view I need go no further than the issue of the HSTP system to determine that issue. Quite clearly, in view of my finding that the supply of this system was a contractual obligation of the Applicant, the Works were not practically complete and could not have been practically complete while they remained unconnected to a working and approved sewerage disposal system.
Quite apart from that, however, it is clear that there were steps relating to bush fire rating that had not been complied with[13] and numerous approvals had not been obtained[14] before the Works could be said to be practically complete.
[13] See Agreed bundle of documents.
[14] See Agreed bundle of documents.
Whether Contract had ever been Properly Terminated and if so When
There were a number of attempts by the parties to terminate the contract for various reasons.
The first such notice appears to have been contained in a letter from Gall Standfield Smith, on behalf of Mr and Mrs Rigg contained within correspondence dated 15 December 2011.[15]
[15] See Agreed Contractual Documents bundle at pages 21 to 22.
The validity of this Notice was questioned by and on behalf of the Applicant, on 16 December 2011, at that time, because it was asserted that the Respondents were in substantial breach of the contract for alleged non compliance with clauses 11.7(a), (b) and (c) of the General Conditions.[16]
[16] See Agreed Contractual Documents bundle at pages 123 and 124.
In the same correspondence from the Applicant to the Respondent the Applicant gave Notice of Intention to Terminate unless alleged breaches were remedied.
That Notice was withdrawn and another was issued in its place by the Applicant on 19 December 2011.[17]
[17] See Agreed Contractual Documents bundle at pages 126 and 127.
By letter dated 30 December 2011 from the Applicant to the Respondent the Applicant purported to formally terminate the contract for no rectification of the alleged breaches.[18]
[18] See Agreed Contractual Documents bundle at pages 130 to 131.
On 6 January 2012 Gall Standfield Smith, on behalf of the Respondents, purported to give formal notice of termination.[19]
[19] See Agreed Contractual Documents bundle at page 132.
Turning first to the purported termination by the Applicant it is now submitted on its behalf that the attempts to terminate were void and of no effect and did not terminate the contract.[20] In this respect it is conceded on behalf of the Applicant that the notice was issued prior to the elapse of the necessary 10 business days. Further, I would add to that, as I am not satisfied the Works were contractually complete I am not satisfied that the Respondents were in breach or that the issue of the Notice to Remedy was appropriate.
[20] See Applicants submissions at pages 4 to 5.
Accordingly I find that the Notice of Termination issued on 30 December 2011 by the Applicant did not, of itself, effectively terminate the contract.
The next issue that I must determine is whether the Respondents’ notice was sufficient to effect a termination of the Contract.
I am satisfied that there were works due under the contract that had not been performed including, but not limited to the supply and fitting of an HSTP and the obtaining of the necessary approvals, including the plumbing approval. I am further satisfied that the notices were received by the Applicant but that it did not, and no intention of, taking any steps to remedy the breaches.
Technically however, the only ground on which an Owner can give notice of Termination are when the circumstances referred to in Clause 21 have arisen. In this case the relevant period for this clause appear to have expired by 6 December 2011
I therefore find that the Notice to Remedy breach given on behalf of the Respondent on 15 December 2011 was appropriately given and was not remedied.
Nevertheless it is submitted on behalf of the Applicant that this Notice was ineffective to terminate the contract because, it is alleged, as and from 30 December 2011 Mr and Mrs Rigg entered into wrongful occupation of and/or used the works. This argument is prefaced on a consideration of clauses 17.8 and 17.9 of the General Conditions, which state as follows:
17.8 The Owner must not take Possession of the Works, nor is it entitled to the keys to the Works, prior to payment to the Contractor of the final progress claim unless the Owner has obtained the Contractor’s written consent.
17.9If the Owner takes possession of the Works, or any part of the Works, when not entitled to do so under this Contract, the Works are deemed to have reached Practical Completion Stage on the date of possession and the Owner is liable to the Contractor for any loss or damage arising as a result.
Mr and Mrs Rigg, of course, deny that they had entered into possession of the works on that date and they deny taking possession until after the Applicant had wrongfully terminated the contract. The evidence for the Applicant on this point is the statements of Michael Painter[21] and Stuart McCristal.[22] While there was obviously a degree of bad blood between the parties by this point the evidence of neither Mr Painter nor My Cristal was impacted by cross-examination and I felt it was unlikely they would be part of what would have amounted to a very elaborate hoax to effectively defraud Mr and Mrs Rigg.
[21] See exhibit 6.
[22] See exhibit 7.
Of course evidence was given on behalf of the Respondents by Mr Keith Bain of Achieve Locksmiths[23] who said that he attended the residence on 12 January 21012 and changed all locks. He effectively stated that he did not observe any furniture in the home or any signs of occupation. I had no reason whatsoever to question the evidence of Mr Bain, but on the other hand his evidence and that of Mr Painter and Mr Cristal are not necessarily inconsistent, particularly when considered in the context that in between those two dates it is likely Mr and Mrs Rigg would have sought legal advice on issues relating to termination.
[23] See exhibit 24.
It therefore appears more likely to me, and I find, that by 30 December 2011 the Respondents had entered into possession of the Works within the meaning of that term as contained in the General Conditions.[24]
[24] See definition of “Possession” at page 5 of the General Conditions.
The question becomes whether entering into possession in the circumstances of this particular contract, constitutes a “Substantial breach” within the meaning of clause 20.3 of the General Conditions.
In the definitions section “Substantial Breach means a contracting party’s failure to perform a substantial obligation under the contract (e.g. Owners failure to make payment on time).” There is only this inclusive definition given and it must be weighed up within the context of these particular factual circumstances. We know that by this time the Applicant had made it plain that it did not intend to do any further work in respect of the contract and indeed on that day it served its own Notice of Termination, albeit an ineffective one. Further the evidence clearly is to the effect that by 12 January 2012 the Respondents were able to move everything out. Accordingly the breach was one that was easily remedied.
While one would think that entering into possession would ordinarily constitute a “Substantial Breach” I find in the circumstances of this particular case it did not do so. Accordingly the Notice of termination issued by the Respondent on 6 January 2012 was effective to terminate the contract.
That is not to say that breach of clause 17.8 is necessarily waived by virtue of the termination, just that the termination remains effective.
In the event that I am wrong in respect of this one needs to consider the alternate argument raised on behalf of the Respondents that the Applicant, by its behaviour, in purporting to terminate the contract, repudiated its obligations.[25]
[25] See counterclaim at paragraph.
In my view it is clear that the issuing of a Notice to Terminate by the Applicant on 30 December 2011, despite the fact that it was wrongly given, clearly constituted a repudiation of its obligations as it evidenced, in the clearest terms, notice of intention not to be bound by the contract. In my view it was equally clear that this wrongful repudiation was accepted by the letter from Gall Standfield Smith to the Applicant dated 6 January 2012.
This appears to fall squarely within the decision of Muir J in Qline Interiors Pty Ltd v Jezer Construction Group Pty Ltd and Ors.[26] There it was stated:
As the requisite notice was not given in respect of the acts or events of default relied on by the first defendant, the purported termination of 16 July 2001 was ineffective. On and after 16 July, the first defendant was plainly treating the subcontract as at an end. The plaintiff was required by the first defendant to leave the site and did so.
In these circumstances, the plaintiff was entitled to accept the first defendant’s unlawful repudiation of the subcontract and terminate it. It did that by letter from its then solicitors to the first defendant dated 18 July 2001.[27]
[26] (2002) QSC 088.
[27] See above at paragraphs 29 and 30.
This is exactly the situation we have here. There was a purported but invalid Notice of termination. The Respondents elected to treat that as a repudiation which they accepted by their solicitor’s letter of 6 January 2012. Further neither party displayed any behaviour that may have led to a conclusion that they were treating the contract as being on foot.
Accordingly I am satisfied on this alternate ground that the contract was terminated on 6 January 2012.
One must consider, however, what the meaning of the words in clause 17.9 “...the Works are deemed to have reached Practical Completion Stage on the date of Possession and the Owner is liable to the Contractor for any loss or damage arising as a result”. For all intents and purposes the only effect of this is that the Final Completion Stage payment becomes due. It does not relieve the Contractor from liability to remedy faults and certainly does not appear to allow the Contractor to escape liability for breaches of contract, as those are not losses arising from the breach, namely the entering into early possession.
Accordingly in my view the Applicant remains liable to the Respondents for failure to construct any part of the Works that they were contractually bound to do.
Pool and Wall to be Formed from Pool
I note that there is a pool drawn on the plans as is the wall described. I have found that the addition of the reference to a pool on the Specification was consensual. Certainly there was enough peripheral evidence give for me to conclude that the parties certainly contemplated a pool as being part of the Works. Evidence in this respect was not only given by the Respondents but also by the evidence of Erica Frisoli.[28] However I am only given the most basic of information in this respect. There appears to be evidence that a pool of approximately 6 metres by 4 metres was considered. One possible position for this at least was noted on the plans but other positions were obviously considered.[29] My real concern then is whether there is sufficient information within the contract documents for me to give any real meaning to the agreement in this respect.
[28] See statement dated 12 April 2012 from paragraph 6.
[29] See statement of evidence of the Respondents and Statement of E Frisoli above.
A starting point for a consideration of rule regarding certainty of contractual obligations is the decision of Viscount Maughan in G Scammell and Nephew Ltd v HG and JG Ouston where it was stated:
In order to constitute a valid contract the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty. It is plain that unless this can be done it would be impossible to hold that the contracting parties had the same intentions; in other words the consensus ad idem would be a matter of mere conjecture.[30]
[30] [1941] AC251 at 268.
It is equally clear that the uncertainty can relate to one or more terms or to the whole contract itself. If a term is severable it can be cut out without the whole of the contract being found to be uncertain.
It is clear that recent decisions have tended to attempt to find certainty where it is clear that there was an intention to be bound. The fine line that can exist between an attempt and whether the attempt succeeds was well expressed by Gleeson CJ in Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd where he said:[31]
In a case such as the present, there are two, sometimes related, questions which require to be considered. The first is whether the parties to the putative contract intended to make a concluded agreement.
The second is whether they have succeeded in doing so. The answer to the second question may depend upon a number of factors, including, whether the parties have reached agreement upon all the terms necessary, in the circumstances, to constitute a contract. In that connection, an implication of terms, or resort to considerations of reasonableness, may assist a conclusion that a contract has been made.
[31] (1995) 7 BPR 14,551 at 14,552.
The very difficulty with regard to enforceability is perhaps best summed up by the submissions of the Respondents where they concede that there was no agreement about dimensions, depth and location.[32] I would add to that there was additionally discussion about the addition of a water feature and it may, or may not, have involved a rock, or some other type of retaining wall.
[32] See Respondents submissions at paragraph 31 (c).
It appears common ground that the Respondents gave evidence that the agreement was for the inclusion of “a regular standard pool of approximately 6 metres x 4 metres with a water feature”.[33] Despite this the evidence that I was provided as to alleged loss was for a pool 8 metres x 4 metres without a water feature. This again, in my view, supports my impression that the pool concept was nothing more than a work in progress with no essential terms ever agreed upon.
[33] See Exhibit 11 at paragraphs 41 to 45.
While I note that it is not conclusive a contract for a swimming pool is subject to the provisions of the Domestic Building Contracts Act 2000. In a swimming pool contract one would expect to see not only details of dimensions, depth and location, one would also expect to see details of the proposed finish, coping, tiles, pumps and filtration systems and so on. If all these matters had not been agreed one would have, at the least, expected it to be treated as a Prime Cost item with a specific allowance under the contract. This, of course, has not been done.
Accordingly I am forced to conclude that this falls squarely with that class of cases where the parties may well have intended to create a binding contract but failed to do so. For the record it would seem to me to be a relatively straight forward conclusion to draw that this clause is severable, and I do so.
Air-Conditioning
I have already found that it was the intention of the parties that these be included in the contract. The question for determination then is whether this provision should also fail for uncertainty on the same basis as the provision relating to the pool.
What we can say with certainty and by reference to the contract documents is that the area to be air-conditioned is precisely known and from that a competent installer would be able to calculate the size of the units needed.
It is submitted on behalf of the Applicant that this is also vague for uncertainty because there are a number of different types of air-conditioner as well as different brands.
I can say that I do not see the issue of brand as leading to uncertainty. While there are certainly a number of different brands they seem to be in a similar price bracket and all would be capable of doing the job. I don’t think that this would be an essential term so far as either party is concerned. Equally, one would look at the particular application in deciding the type of unit that is appropriately used. For example, it would seem that a window unit would not generally be an appropriate choice in a new construction, because of its noise and general unsightliness. Certainly one would not use a ducted system for only 2 distinct parts of a house. Clearly those are used when one intends to air-condition the whole of a house. If one looks at the application in the present case, namely 2 rooms, it would seem that a split system would be the most appropriate and would be the one that would be adopted in a new house. Finally, one would expect that an inverter system would be chosen over a reverse cycle system in a new installation, as even though the initial up-front cost would be higher the additional cost of the inverter would be more than recovered over the life of the system.[34]
[34] See by way of example the discussion at >
This is not to say that there was no scope for disagreement or interpretation, in the same way that the meaning of “Outgoings” was considered to have “...left considerable room for reasonable argument” in Lend Lease Financial Planning Ltd v Southcap Pty Ltd.[35] But in my view this was a considerably different issue to the pool where the variables were so many and so great.
[35] [1998] QCA117 per Pincus JA.
Accordingly I find that the Air-Conditioners to the main bedroom and upstairs living area formed part of the Works.
Security Screen to Front Door
In would seem that the Respondents have been invoiced for and paid, as part of Variation number 1[36] a fee to “Upgrade” the security screen to a stainless steel one. Despite the fact that this variation has been paid the stainless steel security door has never been supplied or fitted. Further, quite clearly this should not have been a variation because the terms of the approval require it.[37]
[36] See agreed bundle of documents number 7.
[37] See final paragraph of page 86 of agreed bundle of documents.
Accordingly the Respondents should be allowed a credit in respect of the amount wrongly charged as a variation and they should be allowed the cost of a compliant security door.
Fencing
Mr and Mrs Rigg claim the cost of “fencing”. This claim appears to be based entirely on verbal discussions between the parties and a document referred to as “standard inclusions”.[38] It does not appear to be asserted on behalf of Mr and Mrs Rigg that this agreement found its way into the contract documents in any form whatsoever. Certainly is not contained in the contract documents as far as I can see. In particular it does not appear to be included in either the specifications or the plans.
[38] See paragraph 46 to 51 of the Respondents joint statement and attachment AR10 thereto.
The contract documents appear to be entire and normally I would only normally consider oral evidence to determine any issues of ambiguity. Here there are no such issues raised by the contract documents, bearing in mind that it does not appear to be asserted that the “standard inclusions” document was part of the contract. Further I would have expected, had this been an issue that the Respondents would have asked for this to be included in the Specification in the same way that they did for the Pool and Air-Conditioning. It therefore seems to me that fencing of any kind, was not part of the Works.
Even if I am wrong on this and there was an agreement to include fencing such an agreement would be far too imprecise to be capable of being enforced. Fencing can be anything from star pickets with plain or barbed wire to elaborate brick and concrete constructions. In this case there does not seem to even be a suggestion that the actual length of the fence was agreed. In those circumstances I would have no hesitation in finding that a term to do an uncertain amount of fencing using an uncertain construction technique would be void for uncertainty.
Quantum Meruit Claim for Earthmoving Services by the Respondents
There appears to be no doubt that there was an agreement entered into between the parties whereby the Respondents were to perform some earthmoving type activities. There appears further, to be no doubt that such work was performed. This was specifically accepted by Mr Lockwood, apart from anything else, in cross-examination.
The evidence of the Respondents, in respect of this work is brief. The work itself “included excavation and backfilling”.[39] They simply say its value is $4,000 and that an allowance in that sum should be made. I understood there to be a concession that Mr Lockwood would provide cabling and conduit to enable a shed to be connected to the household electricity supply. From this it appears I am asked to assume that this was agreed as some type of setoff, though I could find no such agreement based on the information provided.
[39] See statement of Mr and Mrs Rigg (exhibit 11) at paragraphs 20 and 94 to 96.
By way of contrast Mr Lockwood at least specifically states that the agreement was that he would provide the cabling and conduit by way of payment for the earthmoving carried out.[40]
[40] See exhibit 1 at paragraph 18.
Mr Lockwood did appear to agree, in cross examination, that the value of the work performed by Mr Rigg may well have been in the vicinity of $4,000.
A quantum meruit claim is one generally where there is no agreement as to payment. It is generally based on the concept of “unjust enrichment”. In short, if there is a contract that fixes the basis for payment there cannot be a quantum meruit claim. On the other hand where someone does work at one party’s request and thereby acts to their detriment and the requesting party benefits there can be such a claim.
Within the factual context of this case we have evidence of work being undertaken at Mr Lockwood’s request. Further I can infer that Mr Rigg thereby suffered a detriment and Kumatech obtained a benefit. So in the absence of evidence of a contract the basic requirements for a quantum meruit claim have been made out.
I can only say that I find the evidence of the Respondents in this respect, to be extremely vague. The actual work done is not explained, the hourly rate used to calculate the charge is not given, and it is not even clearly expressed that it was agreed that the value of the conduit and cabling would be offset against the claim. In my view the evidence falls short of what one would ordinarily expect to be given in support of such a claim. At least the Applicant’s evidence on the point is clear, and in the circumstances I accept it
In the circumstances I find that the work performed by Mr Rigg was performed under a contract whereby the services he provided were performed in exchange for cabling and conduit provided by Kumatech and that the cabling and conduit that constituted the consideration have been supplied. In view of the fact that the work was performed pursuant to a contract an examination of the respective values of the work and the material provided is not appropriate.
I therefore find that the quantum meruit claim must fail.
Liquidated Damages Claim
Liquidated Damages are provided for by clause 18 of the General Conditions. Clause 18.1 states as follows:
If the Contractor fails to bring the Works to Practical Completion Stage by the Date for Practical Completion Stage, the Contractor must pay or allow to the Owner liquidated damages at the rate stated in Item 18 of the Schedule for the period commencing on the Date for Practical Completion Stage and ending on the day the Works reach Practical Completion Stage, or the date the Owner takes Possession, whichever is earlier.
The Respondent has claimed an entitlement to liquidated damages from the Date of Practical Completion Stage to the time of the hearing, apparently based on the fact that they have not had the full use of the property for that period. Such a claim is clearly not justified by the terms of Clause 18.1. I have found that the Applicants entered into possession by 30 December 2012 and accordingly that must be the cut off point for the assessment of liquidated damages. Even if I am wrong on that they clearly took possession when they terminated the contract of 6 January 2012.
There is insufficient evidence that any additional claim for delay was made by the Applicant. The construction period was therefore 237 days from the date of commencement. The Date for Practical Completion Stage therefore was 24 July 2011. From then until the date of deemed practical completion, by reason the Respondents entering into possession is, on my calculations, 159 days. Having regard to the agreed daily rate of $28.57 the Respondents entitlement to liquidated damages is $4,542.63.
Final Position
I therefore find, in respect of the Applicant’s claim, it is entitled to the following allowances:
Practical Completion Stage payment 13,900
Less Preliminary plans credit 2,200
Less liquidated damages 4,542.63
Less credit for window screens and
security door as claimed[41] 2,132
8,874.63
Entitlement on Claim $ 5,025.37
[41] See Applicant’s written submissions at page 28.
I find that the Respondents are entitled to the following in respect of their Counterclaim:
HSTP system 9,018
Air-conditioning 5,221
Sleeper Retaining Wall 8,317
Entitlement on Counter Claim $ 22,556
I have not made allowances for liquidated damages or the security screen issues as part of the counterclaim as they seem more appropriately set offs against the claim as was conceded in submissions.
I therefore find that the final position arising out of the claim and counter claim is that the Applicant should pay to the Respondents the sum of $17,530.63.
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