La Pompa (Aus) Pty Limited v Scheiffers and Anor (Civil Dispute)
[2019] ACAT 59
•26 June 2019
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
LA POMPA (AUS) PTY LIMITED v SCHEIFFERS & ANOR (Civil Dispute) [2019] ACAT 59
XD 748/2018
Catchwords: CIVIL DISPUTE – consumer guarantee to render services with due care and skill – probative value of statements made by parties who are not called as witnesses – damages for stress and inconvenience for breach of building contract and statutory guarantees – negotiations correspondence as evidence of settlement agreement – clear intention required to exclude right to damages – circumstances justifying exemplary damages
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 7, 8, 18
Australian Consumer Law ss 18, 60, 62, 237, 267, 268, 269, 270
Building Act 2004
Evidence Act 2011 s 131
Civil Law (Wrongs) Act 2002 s 35
Cases cited: Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188
Baltic Shipping Company v Dillon [1993] HCA 4
Boncristiano v Lohmann [1998] VSC 228
Briginshaw v Briginshaw [1938] HCA 34
Hawes v Dean [2014] NSWCA 380
Jones v Dunkel [1959] HCA 8
Re Giuseppe Musca and Veronica Musca; Heather Collardeau and Astle Corporation Pty Ltd v Astle Corporation Pty Ltd; Charles Morrone; Giuseppe Musca and Veronica Musca and Heather Collardeau [1988] FCA 4
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66
Transfield Pty Ltd v Arlo International Ltd [1980] HCA 15
Williams Love & Nicol Lawyers Pty Ltd v Wearne [2016] ACAT 18
XL Petroleum (N.S.W.) Pty. Ltd. v. Caltex Oil (Australia) Pty. Ltd [1985] HCA 12
Zieme v Gregory [1963] VR 214
Tribunal: Senior Member E Ferguson
Date of Orders: 26 June 2019
Date of Reasons for Decision: 26 June 2019AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 748/2018
BETWEEN:
LA POMPA (AUS) PTY LIMITED
Applicant
AND:
ANDREW SCHEIFFERS
First Respondent
ALANA SCHEIFFERS
First Respondent
TRIBUNAL: Senior Member E Ferguson
DATE: 26 June 2019
ORDER
The Tribunal orders that:
1. The respondents shall pay the applicant $23,447.26 comprised of $19,272 for monies due under the contract, plus the filing fee on the claim of $300 and interest in accordance with Court Procedure Rules 2006 of $3,875.26 calculated as follows:
(a) In relation to Invoice 967 from 25 November 2015 to 26 June 2019 on the sum of $16,060.
(b) In relation to Invoice 1050 from 16 December 2015 to 26 June 2019 on the sum of $3,212.
2. The applicant shall to pay the respondents a total of $5,278.16 comprised of $4,146.71 compensatory damages for:
(a) $327.50 — Rubbish removal.
(b) $244.21 — Cost of approval.
(c) $1,275 — Repair to irrigation system.
(d) $300 — Replace hedge.
(e) $2,000 — Inconvenience and distress.
(f) plus $300 for the filing fee on the counter claim and interest in accordance with the CPR of $831.45 on $4,146.71 from 2 December 2015, being the date for completion of the contract, to 26 June 2019.
3. The amount payable by the applicants on the counter claim is offset against the amount payable by the respondents on the claim, the balance being payable by the respondents to the applicant by 24 July 2019.
………………………………..
Senior Member E Ferguson
REASONS FOR DECISION
Introduction
1. The hearing took place on 25 February 2019. The applicant company, which traded as Mediterranean Pools, was represented by its lawyers, Eastwoods Legal. The respondents, Mr and Mrs Scheiffers, represented themselves. No officer of the applicant company attended the hearing. After hearing the parties’ submissions I reserved my decision. This is my decision.
2. In this decision a reference to the ‘tribunal’ or ‘ACAT’ refers to the ACT Civil and Administrative Tribunal generally and a reference to the ‘Tribunal’ or the first person refers to the member who heard the matter. All prices include GST unless otherwise indicated.
What is this case about?
3. In 2015 Mr and Mrs Scheiffers engaged Mediterranean Pools to build a swimming pool in their front yard. Mediterranean Pools made a debt application to recover $24,333.58 from the Scheiffers for monies due under the pool contract plus its filing fee and interest under the Court Procedures Rules 2006.
4. The Scheiffers disputed the amount outstanding under the pool contract and denied liability in any event due to, amongst other things, Mediterranean Pools’ delay and defective work. Further they counterclaimed for damages in the sum of $23,265.08 (plus the filing fee, interest and unspecified costs). They claimed compensatory damages for a range of defective and incomplete work. They also claimed exemplary damages for Mediterranean Pools’ conduct throughout which they described as “reckless, negligent, bullying, dishonest and fraudulent.”
5. The Scheiffers and Mediterranean Pools’ agent, John-Paul (JP) Williams, signed two contracts for the project — one for the pool construction (the pool contract) and one for additional works by Miras Constructions Pty Ltd (the additional works contract).
6. The Scheiffers held Mediterranean Pools responsible for works under the additional works contract; Mediterranean Pools asserted it was only responsible for the pool contract, and that Miras Constructions, was responsible for the additional works contract. The scope of Mediterranean Pools’ legal responsibility was central to much of the Scheiffers’ response and counter claim.
7. After considering the parties’ evidence and arguments I found the Scheiffers liable to pay Mediterranean Pools the sum of $19,272 under the contract and Mediterranean Pools liable to pay the Scheiffers $4,146.71 compensatory damages on the counter claim — such sum to be offset against the amount payable by them to Mediterranean Pools. I awarded both parties interest and the filing fees on their respective claims.
Evidence
8. Mr and Mrs Scheiffers both provided witness statements and gave evidence at the hearing under oath and were cross-examined. No other witnesses were called. The Scheiffers adduced no expert evidence of the alleged defects.
9. Both parties relied on SMS and email correspondence, which was not in dispute, between the Scheiffers and Mediterranean Pools’ employee JP Williams and its director Dan Dicks. The other evidence consisted of:
(a) the pool contract;
(b) the additional works contract;
(c) the following invoices issued by Mediterranean Pools to the Scheiffers:
(i) Invoice #854 for $5,061.58 dated 2 October 2015;
(ii) Invoice #967 dated 25 November 2015;
(iii) Invoice #1050 dated 16 December 2015;
(d) Mediterranean Pools document titled “Sales Register [Closed Invoices] 1/1/2010 through 16/3/17”;
(e) SMS between Benito Miras, director of Miras Constructions, and Andrew Scheiffers — undated;
(f) witness statement of Alana Scheiffers dated 23 January 2019;
(g) witness statement of Andrew Scheiffers dated 18 January 2019;
(h) photographs of the project in progress taken by the Scheiffers.
The claim
10. To decide the claim I needed to answer the following questions:
(a) How much was outstanding under the contract?
(b) Were the Scheiffers entitled to relief from liability for the outstanding amount?
(c) If not, were they entitled to other relief?
How much was outstanding under the contract?
11. The contract price of $64,240 was payable by instalments on completion of each stage of construction as follows:
(a) Initial deposit - $6,424.
(b) Payment 2 - for site preparation; completion of excavation & removal of soil $12,848.
(c) Payment 3 - completion of formwork. Supply and installation of standard structural steel work; installation of internal pool plumbing and light housing. Installation of concrete structural shell “Spray Day” - $25,696.
(d) Payment 4 - Supply and delivery of pool equipment to site; installation of coping; pool ready for interior lining $16,060.
(e) Payment 5 - Installation of interior lining; fill; handover - $3,212.
12. Mediterranean Pools’ relied on its invoices for Payments 4 and 5 plus an additional invoice, No. 854 (Invoice 854) for $5,061.58 dated 2 October 2015 “for disposal of excavation waste from pool.”
13. The Scheiffers said they paid the first three payments under the contract, a total of $44,968, and Mediterranean Pools’ sales register confirms this. The Scheiffers admitted they withheld payment of the outstanding balance of $19,272 for Payments 4 and 5; they denied liability for Invoice 854, which they said, was issued in error.
14. Invoice 854 did not correspond to any prescribed payments under the contract and was for an amount additional to the contract price. The Scheiffers had already paid for excavation in Payment 2. JP Williams in an SMS exchange with Andrew Scheiffers admitted the invoice was issued in error on the same day it was sent. Mediterranean Pools did not explain why the Scheiffers were liable for this payment.
15. I concluded that Invoice 854 was clearly issued in error, and that Mediterranean Pools failed to establish any basis for its claim to this invoice.
16. For the reasons set out above I found the sum outstanding under the pool contract was $19,272.
Were the Scheiffers entitled to relief from payments 4 and 5?
17. The Scheiffers denied liability for the amount of $19,272 outstanding under the pool contract on the grounds that:
(a) the pool depth was not in accordance with the contract;
(b) the works performed by Mediterranean Pools was sub-standard in a number of specified ways;
(c) some work under the contract was delayed and other work was not completed at all;
(d) the Scheiffers at their own cost (which they particularised) had to complete or rectify the following works which were the responsibility of Mediterranean Pools:
(i) removal of rubbish from site;
(ii) refilling the pool after rectification works;
(iii) installing temporary fencing;
(iv) repairing the irrigation system damaged by JP Williams;
(v) connecting electrical supply for pool lights; and
(vi) completing management of the project, in particular arranging certification.
18. The first place to look for a right to withhold payment is the contract.
Defective work
19. Clause 11.6 of the pool contract provided in relation to defects:
(a) Subject to clause 11.6(b), the Builder is not obliged to carry out any work under the contract. The warranty period is not suspended in these circumstances.
(b) If the work performed by the Builder is defective, the Customer may set aside money that would otherwise be payable to the Builder in an account not accessible to either party other than:-
(i) upon presentation of a written agreement of both parties for the release of the funds; or
(ii) upon presentation of an award by arbitration, mediation, expert determination or otherwise or the judgment of court authorising release of such funds to the party entitled under the award or judgment.
20. There was nothing to suggest that the Scheiffers followed the process set out in 11.6(b). Accordingly, they were not entitled to withhold payment for defective work. Were they entitled to withhold payment for the last two stages because they were not completed?
Incomplete work
21. The Scheiffers argued that Mediterranean Pools was not entitled to payment of the last two invoices because the work for each stage was not complete. They asserted the invoices were therefore issued fraudulently.
22. Mediterranean Pools’ entitlement to staged payments and the Scheiffers right to withhold payment are dealt with at clause 12 of the contract which provides relevantly at 12.1 under the heading “Claims for payment and payments”:
(a) The Builder will request staged payments in accordance with the appropriate payment schedule set out in Part A Schedule 3 itemS3.2, together with any variation payable at such time. Staged payments can be claimed in any order upon completion of 95% of the work described in that stage.
A stage referred to in Part A Schedule 3 item S3.2 is complete when work comprised in that staged (sic) is 95% complete, except for incomplete work or defects remaining in that stage that are of a minor nature and number, and do not affect the works from progressing.
(b) The Customer must upon request for a staged progress claim, in accordance with (a) above pay the mount of the progress claim detailed by the builder.
(c) …
(d) If the Customer identifies in writing, within 2 days of request for the staged progress claim work which is omitted, incomplete or defective and for which no deduction has been made then an amount equal to no more than 2.5% of the claim may be withheld. An alternative amount may be agreed between the parties. Any amount withheld becomes payable once the work omitted, incomplete or defective has been completed.
23. The Scheiffers did not argue that they complied with clause 12(d) and on the balance of evidence I am satisfied that they did not. Therefore, unless they established an alternative right to withhold payment they were required to pay for stages 4 and 5 upon receipt of Mediterranean Pools’ invoices.
24. Neither the common law of contract, the Australian Consumer Law (ACL) nor the Building Act2004 gave the Scheiffers a right to withhold payment on the facts alleged.
25. The Scheiffers failed to establish an entitlement to withhold payment of the last two progress payments and are therefore liable to pay Mediterranean Pools the amount outstanding under the contract.
Were the Scheiffers entitled to other relief?
26. I did not accept Mediterranean Pools’ argument that the Scheiffers were not entitled to damages because they did not terminate the contract. The Scheiffers were free to elect to keep the contract on foot and pursue damages for breach. Failure to terminate is also irrelevant to damages for both negligence and for contravention of an ACL consumer guarantee.
27. In exercising its functions under the ACT Civil and Administrative Tribunal Act 2008, the tribunal must ensure its procedures are as simple, quick, inexpensive and informal as is consistent with achieving justice; and observe natural justice and procedural fairness. It is not necessary for a party to submit formal pleadings.
28. The grounds relied upon by the Scheiffers in defence of Mediterranean Pools’ claim are more properly dealt with as part of their counter claim, and this is how I have treated them. Because the Scheiffers intended these grounds to operate as a defence rather than a counter claim they made no submissions on the appropriate type or quantum of compensatory damages.
29. Where I found the Scheiffers entitled to damages I assessed the type and quantum of such damages based on the evidence and submissions of loss in the materials the Scheiffers filed and served on the applicant. The damages available on the counter claim were limited to $25,000, being the jurisdictional limit that can be claimed in relation to a civil dispute application in the ACAT.
The counter claim
30. To decide the counter claim I needed to answer the following questions:
(a) What works were Mediterranean Pools contractually responsible for?
(b) Were the Scheiffers entitled to compensatory damages for the following alleged defects, failures to take reasonable care, breaches of contract and incomplete works:
(i) the temporary fence was not installed;
(ii) the permanent fence cost more than the contract price;
(iii) the pool depth was not in accordance with the plans;
(iv) the work performed was generally substandard, in particular:
(A) the retaining wall was bowed;
(B) rubbish was not removed from the site;
(C) the hydrostatic valve was installed in the wrong location;
(D) the pool lights had “faded” after installation;
(v) the pool lights were not connected to the electricity supply;
(vi) the hedge, removed for access, was not replaced;
(vii) Mediterranean Pools’ agent damaged the irrigation system;
(viii) approval/certification was not completed;
(ix) Mediterranean Pools’ agent damaged paths and driveways; and
(x) the works were not competed in the agreed time (delay)?
(c) Were the Scheiffers entitled to compensatory damages for distress and inconvenience?
(d) Were the Scheiffers entitled to exemplary damages?
What works was Mediterranean Pools contractually responsible for?
The two contracts
31. On 30 July 2015 JP Williams asked the Scheiffers to sign not only the Mediterranean Pools’ contract to construct the swimming pool but also a contract on the letterhead of “Miras Constructions Pty Ltd”. The second contract was described as being for “supply and management of additional works, further to the swimming pool construction” for a total of $25,170.00 + GST ($27,687), “All works to be coordinated with Mediterranean Pools”. The recitals in the additional works contract referred to: “Swimming Pool Construction: by Mediterranean Pools; contract provided.”
32. Mr Williams signed the pool contract on behalf of Mediterranean Pools. He also signed the additional works contract. The applicant’s solicitor submitted that Mr Williams had signed the second contract on behalf of Miras Constructions. The Scheiffers said he signed it without the authority of Miras Constructions and that Mediterranean Pools was a party to both contracts.
33. The additional works covered by the second contract comprised:
(a) concrete and Stencil Works;
(b) supply of materials for, and installation of, the permanent pool fence;
(c) extension of the brick retaining wall; and
(d) management of electrical works.
34. The pool contract expressly excluded 23 items, including two of the items covered by the additional works contract i.e. the electrical connection works and the permanent pool fencing.
Was Mediterranean Pools responsible for work in the additional works contract?
35. The Scheiffers submitted that Mediterranean Pools was legally responsible for performing, or at least managing, the additional works contract as well as the pool contract. Mediterranean Pools denied any legal responsibility for performing or managing the additional works contract, which, it argued, was between the Scheiffers and Miras Constructions. Mediterranean Pools further submitted that the items of work specified in the additional works contract were either expressly excluded from, or not included in, its pool contract with the Scheiffers.
36. The Scheiffers argued that:
(a) Mediterranean Pools was responsible for performance of the additional works contract because:
(i) the parties’ mutual intention was that both contracts were between the applicant and the respondent and that Mediterranean Pools was responsible for completion of the entire project, through their own employees or sub-contractors, Miras Constructions being merely one of Mediterranean Pools’ sub-contractors;
(ii) JP Williams was not authorised to enter a contract on behalf of Miras Constructions and he purported to do so fraudulently without the knowledge and consent of Miras Constructions;
or in the alternative:
(b) Mediterranean Pools was responsible for managing the project as a whole, including the additional works.
37. I was not persuaded that the issue of Mr Williams’ authority to bind Miras Constructions was relevant to the scope of the contractual relationship between the Scheiffers and Mediterranean Pools because the absence of such authority would not make Mediterranean Pools a party to the additional works contract. However, the issue of Mr Williams’ authority is relevant to other aspects of the counter claim and I will return to it later in my reasons.
Intention of parties
38. Both parties adduced email and SMS correspondence between the Scheiffers and Mr Williams relevant to intention of the parties at the time the contract was formed. The Scheiffers relied on SMS and email correspondence between themselves and Mr Williams dating back to April 2015. As evidence of correspondence between the parties was not in dispute I took it into account in determining their intentions.
39. The Scheiffers also gave evidence that Mr Williams made oral representations to them before the contracts were signed to the effect that Mediterranean pools was responsible for the entire project.
40. Mediterranean Pools did not admit that Mr Williams made the oral representations alleged. Neither party called Mr Williams as a witness. Whilst I am not obliged to apply the rule against hearsay, or draw any adverse inferences from Mr Williams absence, I find the Scheiffers evidence of the oral representations made by Mr Williams of no probative value as he was not available to give his version of what was discussed and be tested on it.
41. At first there was no mention in the correspondence of anyone, other than Mediterranean Pools, being responsible for the entire project. The Scheiffers asked Mr Williams to compile a list of costs to support their application to their bank for finance. On 17 April 2015 Mr Williams sent Andrew Scheiffers a list of costs that included works, without distinction, which would later be divided between the two contracts.
42. Sometime in early July 2015 a dispute arose between the Scheiffers and Mr Williams about whether Mediterranean Pools would be responsible for the entire project. The contract with Miras Constructions was mentioned for the first time in an email from JP Williams to Andrew Scheiffers on 9 July 2015:
Mate this has turned into a mountain from a mole hill….So in order for your project to be commenced and within the boundaries of insurances, we need to enter a pool contract with pool work only… Then I have a builder that contracts to us that can do a contract for all the other work you need done He was the one that would have done all the work like the fencing ect etc. then you can present you ‘project total’ to your bank. [errors in original]
43. On same day Andrew Scheiffers expressed concern to Mr Williams about co-ordinating works on the project, saying: “You remain lead agent and control everything I assume… I need one person in control and one agreed price…”
44. On 17 July 2015 Mr Williams sent an SMS to Andrew Scheiffers:
Mate…yes! Finally got everything sorted. Benny [Benito Miras, Director of Miras Constructions] is doing contract for everything outside the pool build; we’ll obviously then have our respective pool contract
Monday, I’ll deliver rewritten pool contract and Tuesday I’ll draft additionals with benny. Have a great weekend.
45. Throughout the rest of July 2015 Mr Williams and Andrew Scheiffers discussed arrangements for drafting and signing the two contracts.
46. Although I accepted that the Scheiffers would have strongly preferred a legal relationship with only Mediterranean Pools I found they agreed, at Mr Williams’ insistence, to enter a second contract with Miras Constructions for part of the project. I was satisfied by the correspondence that Mr Williams made clear before the Scheiffers signed both contracts that the performance of work in the additional works contract was not included in the contract with Mediterranean Pools. For the above reasons I found that Mediterranean Pools was only contractually obliged to perform the work in the pool contract.
Project Management
47. The Scheiffers maintained that Mediterranean Pools assumed responsibility for project management, by which I understood the Scheiffers to mean both the supervision and coordination of all works in both contracts. Mediterranean Pools submitted that it had no contractual obligation to manage the additional works contract, and was not liable at all in relation to the fencing.
48. It was obvious that works in both contracts needed to be coordinated to ensure the efficient scheduling of trades on site. The following statement in the additional works contract reflected this, “All works to be coordinated with Mediterranean Pools”. If Mediterranean Pools failed to coordinate its work with other the contractors involved in the project it risked delays to performance of its obligations under the pool contract.
49. There is evidence from the SMS correspondence during December that Mr Williams was coordinating works with Benito (Benny) Miras, director of Miras Constructions. In early 2016 as the relationship between the Scheiffers and Mediterranean Pools deteriorated Mrs Scheiffers seemed to take over the coordination role, especially with regard to scheduling installation of the permanent fence.
50. For the reasons previously given I did not take into consideration the Scheiffers evidence of oral conversations between them and Mr Williams, which were not admitted by Mediterranean Pools.
51. On the balance of evidence I was satisfied that Mr Williams did, at least initially, coordinate the project and it was sensible for him to do so. However, the Scheiffers have not established that the parties intended Mediterranean Pools to be legally bound to perform that role, except to the extent expressly provided in the pool contract.
Temporary fence
52. Mediterranean Pools did not install a temporary safety fence during the preparation of the site, excavation or construction of the pool.
53. I accepted as self evident the Scheiffers assertion, that they had no choice but to install at their own expense a temporary fence to protect their two small children and others from the hazards presented by a construction site including the deep hole excavated by Mediterranean Pools. Emails from Alana Scheiffers to JP Williams and attached photographs indicated that around 6 December 2015, after the pool was dug and concrete poured, the Scheiffers erected a makeshift barrier to the construction site made from a pallet.
54. Later the Scheiffers paid $370 to hire a temporary safety fence from Canberra Hire. The photograph dated 18 December 2015 submitted by the Scheiffers shows a demountable metal mesh fence around the coping of the partially filled pool.
55. Mediterranean Pools did not respond to this counter claim but their solicitors submitted at the hearing that their clients were not responsible under the contract for the temporary safety fence.
56. Who was responsible for the temporary fence? The pool contract relevantly provided:
Clause 8.8 Pool fencing – temporary and permanent
(a) The Builder is to ensure that temporary safety fencing of a type acceptable to WorkCover and suitable to the site conditions is in place during the construction of the pool.
(b) The parties must not or must not cause the pool to be filled with water prior to the erection of any approved fencing required by the relevant approval authority;
(c) If the customer is the party who is to supply and or install the permanent pool fencing then any delay in doing the same which lasts more than 10 days after the builder requests the fencing to be installed, will result in the Builder being entitled to claim compensation for delay at a rate set out in Part A Schedule 3 item S3.5.
(d) If the Customer is the party who is to supply and or install the temporary safety fence as set out in Part A Schedule 3 Item S3.9 point 16 then this must be done prior to the Builder’s work commencing on the site. In the event the customer fails to supply and install the temporary fence, then the Builder will do so and the costs associated with this work will be deemed as an automatic variation payable by the customer.
57. It was not clear on the evidence whether an “approved” fence was in place before the pool was filled; either when it was first filled in December 2015, or when it was refilled after the rectification of the steps in around April 2016.
58. In Part A Schedule 3 Item S3.9 of the pool contract headed “Items which may not be included in contract work and price” provides:
The list and answers in this part are to be referred to in determining whether particular work or expenses is included within the work to be carried out for a lump sum under the contract or is to be carried out as work for a rate, or as a variation, where a variation arises.
59. In S3.9 items 15 (the permanent pool fencing) and 16 (the temporary fencing to prevent unauthorised access) were bracketed together with the annotation: “included in other contract”. It was not disputed that the other contract referred to was the additional works contract. The corresponding box for each item was ticked to indicate the item was excluded from the contract work and price.
60. The special conditions annexed to the pool contract included:
Special conditions 4. Permanent or temporary pool fencing to be completed prior to finishing the pool interior must by law, be erected by the client to suit A.S. 1926 fencing codes. Fence install organised by Medpools.
61. I found Mediterranean Pools in breach of contract as follows:
(a) By permitting construction work to commence before a temporary fence was installed in breach of Clause 8.8(a) and (d).
(b) By failing to organise installation of any fencing in breach of special condition 4.
62. However, that does not mean Mediterranean Pools was responsible for the cost of installing the temporary fence. Item 16 is somewhat ambiguous because it refers to the temporary fence being part of the additional works contract – it was not, only the permanent fence was. At least one aspect of the temporary fence, that is organising it, was expressly included in the pool contract by special condition 4. The express provisions of special condition 4 prevail over the general provisions of S3.9 item 16 to the extent of the inconsistency and accordingly organising the installation of either a permanent or a temporary fence before the pool interior was finished was included in the pool contract.
63. Special condition 4 was not inconsistent with item 16 to the extent that item operated to exclude the cost of installation from the contract price. The combined effect of clause 8.8(d), and item 16, was that, even if Mediterranean Pools had installed the temporary fencing, they could have recovered the cost of doing so as a variation from the Scheiffers. The Scheiffers were therefore responsible for the cost of installing the temporary fencing. The Scheiffers suffered no financial loss as a result of Mediterranean Pools breach of clause 8.8 and special condition 4. I considered whether the suffered non-financial loss under the heading ‘Damages for inconvenience and distress’.
Permanent Fence
64. In the additional works contract the price for the supply of materials and installation of the permanent pool fence was $12,037.20, assuming a GST rate of 10% comprised of:
3. Pool fence supply. Supplier, Sentrel $7,222 +GST
4. Pool fence, gates and latches. Supplier, Sentrel. $980 +GST
5. Pool fence delivery from supplier, Sentrel: $650+GST
6. Pool fence installation $3,000 + GST
65. The Scheiffers said they ended up organising Miras Constructions to install the fence for a total cost of $22,237.28 (including materials). They said that when they contacted Sentel, the nominated supplier of the fence components, they were told that Mediterranean Pools had not placed an order. They claimed that Benito Miras refused to be bound by the fence installation price in the additional contract because it was signed without his knowledge and approval.
66. I note that the invoices for materials and installation for the permanent fence that the Scheiffers relied on only add up to $13,708.20. In any event the Scheiffers have claimed the difference between the price in the additional works contract and the amount they paid for the permanent fence.
67. The Scheiffers claim for the additional cost of the fence relied on establishing that that Mr Williams signed the additional works contract without authority. This allegation, if established, would have the following legal consequences:
(a) The additional works contract would have been of no effect from the beginning;
(b) Mediterranean Pools could be vicariously liable to compensate the Scheiffers for any loss they suffered as a result, either on the grounds of fraudulent misrepresentation at common law or misleading and deceptive conduct under section 18 of the ACL.
68. The Scheiffers relied on an undated SMS from Mr Miras to Andrew Scheiffers in which Mr Miras said he was in the process of rendering the wall at their house but denied all knowledge of the contract purportedly signed by Mr Williams on his behalf, and said any such contract was fraudulent.
69. Mediterranean Pools relied on the same SMS to support their opposing argument that the additional works contract Mr Williams signed for Miras Constructions was valid. Presumably because it showed that the Scheiffers negotiated payment for the works with Mr Miras directly.
70. The logical flaw in Mediterranean Pools’ argument was that the Scheiffers did not dispute that they negotiated payment directly with Mr Miras – they said they were forced to do so because the additional works contract signed by Mr Williams was unenforceable.
71. Neither party called Mr Miras as a witness. When I asked why the Scheiffers had not called Mr Miras, Mrs Scheiffers said, “I just didn't want to waste his time. I think his text message is reasonably clear.”
72. No officer of the applicant attended the hearing or gave evidence in any form. Solicitors for Mediterranean Pools told the Tribunal that Mr Williams had since left the company. Mediterranean Pools did not address the allegation of fraud in its response to the counter claim.
73. Mr Miras was not present when the Schieffers signed the additional works contract given to them by Mr Williams and the Scheiffers had not previously communicated with anyone from Miras Constructions. The applicant provided no explanation as to why Mr Williams signed both contracts nor did it produce evidence of his authority to sign the additional works contract. Nevertheless the Scheiffers bear the onus of proving on the balance of probabilities that the additional works contract was not entered into with the authority of Miras Constructions.
74. The High Court in Neat applying the test established in Briginshaw v Briginshaw stated that:
the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove.
In short, the more serious the allegation, the more probative or stronger the evidence needs to be.
75. The Scheiffers’ allegation that Mr Williams signed the additional works contract without the authority of Miras Constructions is extremely serious and if proved could amount to fraud. Whilst I am not obliged to follow the rules against hearsay or draw an adverse inference from the Scheiffers’ failure to call Benito Miras I found the SMS message of no probative value because Mr Miras was not called to elaborate and be tested on his assertions.
76. In the absence of any other persuasive evidence I found that the Scheiffers failed to discharge onus of proving that Mr Williams signed the additional contract without the authority of Miras Constructions, thereby rendering that contract unenforceable. As the permanent fence was included in the additional works contract, Mediterranean Pools were not liable for the extra cost claimed by the Scheiffers.
Pool depth
77. The Scheiffers claimed that:
The Applicant never delivered the pool in accordance with the contract. It was too deep and although the rectification went some way to fixing this, the Respondents now have a pool that is not the design they wanted.
Was the pool too deep?
78. The contract specifies that the water depth, “measured at the waterline”, shall vary between 1200mm and 2000mm. The plans included in the Development Application provided views from both above and the side and showed the specified depth at various points on the pool floor and internal steps.
79. The Scheiffers claimed that Mediterranean Pools dug the pool too deep resulting the finished depth being 300mm more than the depth of 1900mm specified in the contract. Mrs Scheiffers told the Tribunal that she determined the depth by measuring from the bottom of the pool to the “coping”. She said the pool was 20% deeper than it should have been. On my calculations, based on her figures, the difference is approximately16%. Nothing turns on whether the difference was 20% or 16% as both are outside the permitted tolerance of +10% to -5% provided at clause 8.7 (a)(1) of the pool contract.
80. Mrs Scheiffers explained that the top step was designed to also function as a sitting platform. She said that, as a result of the pool being too deep, the step was too low for its intended purpose. According to the plans the depth of the top step at the shallow end should have been 300mm.
81. I am not satisfied that the Scheiffers established on the evidence that the pool depth exceeded the permitted tolerances under the contract at any particular point. I found the methodology described by Mrs Scheiffers to determine the depth of the pool unreliable for the following reasons:
(a) The contract provides for variety of depths ranging between 1200 and 2000mm depending on location.
(b) Mrs Scheiffers described measuring at only one location, which she did not identify.
(c) Mrs Scheiffers failed to explain why 1900mm was prescribed depth at the location she measured.
(d) She reported measuring from the bottom of the pool to the coping- not the waterline, the reference point prescribed by the contract.
82. In early 2016 Mrs Scheiffers and Mediterranean Pools director, Dan Dicks negotiated rectification of what she described as the “depth issue”. It is clear that this issue related to, at least, the depth of the internal steps, and was associated with an issue about the location of the steps. However it is not clear that the parties were talking about the depth of the pool in general,or in any other particular location.
83. Mrs Scheiffers and Mr Dicks agreed to leave the steps where they were, but reconfigure them, including by raising the height of the sitting platform. The pool, originally filled in December 2015, had to be emptied for the rectification to be performed.
84. Under both common law and statute, evidence of admissions by words or conduct made by parties in the course of negotiations to settle an existing dispute is privileged, unless all parties to the negotiations agree to the contrary or the evidence is disclosed with the express or implied consent of the person in dispute.
85. Mediterranean Pools effectively waived privilege to the negotiations correspondence by adducing in evidence an email from Mrs Scheiffers to Mr Dicks on 2 March 2016 in which she confirmed the terms of their agreement to resolve outstanding issues, including rectification of the steps.
86. In my view the correspondence reflected the parties’ genuine efforts to resolve the matters in dispute and cannot be properly interpreted as either an admission of liability on the part of Mediterranean Pools, or a release from liability on the part of the Scheiffers. However, the correspondence can be used to establish that a settlement agreement was reached and the terms of such agreement.
87. On 25 February 2016 Mr Dicks wrote to Mrs Scheiffers as follows:
…Monday, Tuesday and Wednesday will be step area rectification …………..Once the steps have been rectified the coping will be cleaned and sealed before the pool is refilled (late next week).
88. The correspondence contained no mention of who would organise or bear the cost of refilling the pool, but Clause 11.5(c) of the pool contract does:
If the Builder has to empty the pool to carry out warranty rectification work, then the Builder must, upon refilling the pool with water supplied at the Customer’s expense, provide chemicals to re-treat the water to a standard suitable for swimming.
89. The Scheiffers claimed that as a result of Mediterranean Pools failing to “finalise the project” they incurred expenses including “Excess water to refill the pool a second time – $539”.
90. Mediterranean Pools was liable under clause 11(c) to refill the pool following the step rectification but the Scheiffers were responsible for the cost of the water. Neither party mentioned the pool chemicals.
91. When Mrs Scheiffer wrote to Mr Dicks on 21 April 2016 she asked that he attend to a number of outstanding issues, including refilling the pool. It is not disputed that Mediterranean Pools never returned to the site.
92. I was satisfied that Mediterranean Pools did not return to refill the pool and were therefore in breach of its obligations under clause 11(c) of the contract. The Scheiffers failed to establish any financial loss as a result of this breach but I have considered whether to award damages for non-financial loss under the heading ‘Damages for inconvenience and distress’.
Sub-standard work
93. The Scheiffers claimed that the quality of Mediterranean Pools’ work was substandard in the following respects:
(a) The retaining wall was bowed.
(b) The hydrostatic valve was in the wrong spot – not at the deepest point of pool.
(c) Lights installed had faded.
(d) The yard was left covered in rubbish.
94. The retaining wall was included in the additional works contract. Having previously found that work in that contract was not within the scope of works Mediterranean Pools was contracted to perform, I am satisfied that Mediterranean Pools was not liable for any defect in the wall.
95. The Scheiffers claims regarding the hydrostatic valve and the fading lights were not supported by objective evidence and I was not satisfied that they established that either alleged defect existed and, if it did, what if any loss they suffered as a result.
96. Special condition 9.8 of the contract provided: “we will clean up our own rubbish”. The Scheiffers said they cleaned up the site and had to hire a skip at a cost of $327.50. They relied on an email order for hire of skip on 9 July 2016.
97. I find Mediterranean Pools breached its contractual obligation to remove rubbish from the site and that the Scheiffers suffered financial loss in the sum of $327.50 as a result. Accordingly I awarded the Scheiffers $327.50 for financial loss caused by Mediterranean Pools breach. I also considered whether also to award damages for non-financial loss under the heading ‘Damages for inconvenience and distress’.
Connecting pool lights
98. Mrs Scheiffers explained to the Tribunal that the standard number of lights under the pool contract was two but the parties agreed that Mediterranean Pools would install two extra lights. The extra lights were installed but none of the lights were connected to the electricity supply by Mediterranean Pools. The Scheiffers said the cost they incurred of engaging an electrician to connect electrical services, including pool lights was included in the pool contract. They relied on Part A Schedule 3 S3.7 which allowed a provisional sum of $1,100 for “Extra lights”.
99. I have disallowed the claim because:
(a) the Scheiffers did not establish any relationship between the provisional sum for extra lights and the costs of electrical connection; and
(b) part A Schedule 3 S3.9 item 12 specifically excluded from pool contract:
Electrical supply for connection to pumps, lighting, heating or other equipment. This also includes the installation and supply of suitable conduits from the pool shell to domestic power supply/connection point.
Hedge
100. The Scheiffers claimed damages of $500 for the cost of replacing part of the hedge removed by Mediterranean Pools to allow access to the site.
101. The contract provided at Part A Schedule S2.8 Item 6: “Means of access (description): front corner of block via hedge dug out by us – Access Width: >3m – Access Height: >3m”.
102. Special condition 9.7 provided:
Access to site- Provision of access to the site via the corner of block. Medpools will clear access to the site by taking out hedges as required. We will take best endeavours to preserve hedge and replant.
103. The Scheiffers alleged that Mediterranean Pools breached its obligations under special condition 9.7 to use its best endeavours to preserve the hedge, and that due to delays in the works the plant(s) removed died so could not be replanted. In their response the Scheiffers asserted that Mediterranean Pools:
Delayed so substantially that the hedge died (if the project was completed on time, the part of the hedge removed for access would have been able to replanted).
104. They claimed the cost of replacing the dead plants with mature photinias, which they estimated at $500. It is not clear how many plants died but Mrs Scheiffers told the Tribunal that a two metre photinia was removed. I am satisfied that at least one mature photinia was lost.
Best endeavours
105. The Australian position on the meaning of “best endeavours” was considered by the High Court in Transfield Pty Ltd v Arlo International Ltd [1980] HCA 15. In that case, Stephen J held that a “best endeavours clause”:
…prescribed a standard of endeavour which is measured by what is reasonable in the circumstances, having regard to the nature, capacity, qualifications and responsibilities of the [party] viewed in the light of the particular contract.
Evidence of Breach
106. The hedge, including the root ball, was dug out with an excavator by Mr Williams on 1 September 2015. Mrs Scheiffers gave evidence in her witness statement that Mr Williams told her that he would be able to be replant it within eight weeks and it “would be fine”. On 29 October 2015, that is eight and a half weeks after it was removed, Mrs Scheiffers informed Mr Williams by email that the plant had died.
107. The fact that the hedge died after being removed by Mediterranean Pools is not sufficient to establish that Mediterranean Pools failed to use its best endeavours to preserve it. The onus of proving such breach rested on the Scheiffers. There is no evidence of precisely when it died and whether it would have survived if replanted within eight weeks. The Scheiffers failed to produce objective evidence of either the cause of death of the hedge or how it was related to Mediterranean Pools delay. Accordingly, I cannot be satisfied on the evidence that Mediterranean Pools breached special condition 9.7.
108. However, Mediterranean Pools was liable to replace the hedge pursuant to a settlement agreement reached between Mrs Scheiffers and Mr Dicks. On 25 February 2016 Dan Dicks wrote to Alana Scheiffers: “The following week will see the excess soil is removed and topsoil spread. I will replace the hedge once the soil is removed and spread”.
109. I accepted the Scheiffers’ evidence, which was not contradicted, that Mediterranean Pools failed to replant the hedge. The Scheiffers provided no evidence to support their estimate of the cost of replanting the hedge. I found that $300 is a fair estimate of the cost of sourcing, purchasing and planting a mature Photinia plant.
Damage to irrigation system
110. The Scheiffers claimed that Mr Williams negligently damaged their irrigation system when clearing the site. They gave evidence that he commenced work against their express instructions not to do unless one of them was present to show him where the irrigation system was. Mediterranean Pools neither admitted nor denied the allegation and did not adduce evidence. Unlike the hedge the contract was silent on the irrigation system.
111. Mrs Sheiffers in her witness statement recalled a conversation with Mr Williams on 30 July 2015 in which she said he promised Mediterranean Pools would: “watch out for the watering system when digging and will reconnect it when we respread the soil”.
112. For reasons previously explained I find evidence of conversation of no probative value because Mr Williams was not called to give his version. Based on the SMS correspondence between Mediterranean Pools agents and the Scheiffers I was satisfied that:
(a) on Sunday 30 August 2015 JP Williams dropped the excavator at the site to start excavation at 8.30am on Monday 31 August;
(b) Andrew Scheiffers told JP Williams that he (Andrew) would be there until 9.30am and would not be available again until Wednesday 2 August. Andrew asked for the excavation to be rescheduled for Thursday 3 August and asked, “can you email me a schedule around that II [sic] can plan around being here for critical events”;
(c) JP Williams reassured Andrew Scheiffers that he would arrive soon. JP Williams does not get there in time and Andrew Scheiffers has to leave to catch a plane;
(d) JP Williams goes on to complete the preparatory excavation works with neither of the respondents present;
(e) JP Williams agreed to put the watering system “back together again” but said on 22 December 2015 he ran out of time to do so; and
(f) when Mrs Scheiffers asked Mr Dicks to rectify the watering system in February 2016 he refused to do so.
113. The Scheiffers relied on invoice from “All Good Gardens” dated 7 May 2016 for repairs to watering system for $1,275 to support the quantum of their claim.
114. On balance of evidence I was satisfied that damage was caused to the watering system as a result of Mr Williams’ failure to exercise due care and skill in initial site preparation.
115. I found that Mediterranean Pools failed to comply with the guarantee under section 60 of the ACL to render its services with due care and skill and that when Mrs Scheiffers gave Mr Dicks an opportunity to rectify the failure he refused to do so.
116. Solicitors for Mediterranean Pools submitted that the ACL guarantees only applied to defects in the structure Mediterranean Pools was contracted to construct, that is the pool itself. I do not accept this argument. Under section 267(4) of the ACL a consumer who has suffered “reasonably foreseeable” loss or damage is entitled to recover damages against the supplier of the services. This entitlement is separate from and additional to the right under section 267(3) of the ACL to recover compensation from a supplier of services for any reduction in the value of the services: see section 267(5) of the ACL.
117. The services Mediterranean Pools were contracted to perform included, “site preparation; completion of excavation & removal of soil”. Mediterranean Pools’ agent damaged the watering system in the course of rendering those services. It was reasonably foreseeable that if he failed to render those services with due care and skill the Scheiffers would suffer damage of the type sustained to their irrigation system.
118. The Scheiffers are entitled to damages in the amount of the cost for repairs to restore them to the position they would be in but for the breach. The Scheiffers submitted an invoice to repair “All Goods Gardens” dated 7 May 2016 for $1,275 as evidence of the loss incurred. Therefore, I have upheld their claim for $1,275.
Approval/certification
119. The Scheiffers claimed that one of the consequences of Mediterranean Pools’ breach of its obligation to manage the project was that they had to undertake “significant project management to finalise the project including arranging final certification (see Attachment U) at a cost of $244.21”.
120. Having previously found Mediterranean Pools not contractually liable to manage the project as a whole I considered whether Mediterranean Pools was obliged under the pool contract to arrange certification of the works.
Certification
121. The pool contract relevantly provided at clause 10: “Completion and hand-over:”
(d) The Builder is under no obligation to provide any certificates required to obtain an occupation certificate unless the Builder is the party who is to obtain an occupation certificate.
(e) In this contract unless stated otherwise as a special condition it is not the Builder’s obligation to obtain an occupation certificate.
122. There was no special condition imposing an obligation to obtain an occupation certificate on Mediterranean Pools.
123. The contract expressly provided that Mediterranean Pools was not responsible for obtaining an occupation certificate upon completion of the works. Accordingly, Mediterranean Pools was not in breach of the contract for failing to obtain certification.
Approval
124. Attachment U to the response and counter claim relied on by the Scheiffers was an invoice addressed to Andrew Scheiffers dated the “18 June 2015” from the Environment and Planning Directorate for “Building Applications Fees and Levies Tax Invoice”. The invoice was not related to certification but rather for fees and levies payable to the ACT government in order to obtain building “approval”.
125. I assumed the Scheiffers conflated approval and certification and meant to argue that Mediterranean Pools was responsible for payment of costs associated with obtaining the building approval.
126. Part A Schedule 3, S3.8 item 4 of the contract provides:
Are the costs associated with obtaining building approval included in the contract price? (see clause 4 for details regarding approval of the work) – Yes
127. The cost of the building application fees and levies paid by the Scheiffers was expressly included in the contract price. As Mediterranean Pools did not pay this cost it is not entitled to recover payment for it. Accordingly, I awarded the Scheiffers $244.21.
Damage to paths and driveway
128. The Scheiffers claimed that Mediterranean Pools negligently damaged their:
driveway and created a significant depression in what had previously been an immaculate path and driveway by parking their concrete truck on it. There was an entire garden/curb with bark chips on which they could easily have parked to ensure no damage was done.
129. They claimed damages of $7,850 for the cost repairing the driveway and path. They supported their claim with a quotation from Bruce Works dated 5 September 2018 for $7,850 to repair both the driveway and “car parking area”.
130. Mediterranean Pools neither admitted nor denied the Scheiffers’ claim and presented no evidence in relation to it. At the hearing Mediterranean Pools solicitors submitted that the contract expressly excluded its client’s liability for damage to the driveways and paths and relied upon Clause 6(b) which provided:
The Builder is not liable to the Customer for any damage to driveways, footpaths, underground services and drains, or any private or public property, caused by the reasonable acts of the Builder or any third party, arising from access to perform work under the contract.
131. Clause 6(b) only protected Mediterranean Pools from liability under the contract if it acted reasonably. The Scheiffers asserted the action of Mediterranean Pools agents were not reasonable. Mediterranean Pools could also be liable for damages under section 267(4) of the ACL for any reasonably foreseeable loss the Scheiffers suffered as a result of failure by Mediterranean Pools to render services with due care and skill in breach of section 60 of the ACL.
132. Mrs Scheiffers gave evidence that the concrete truck parked on the driveway caused damage to both the driveway and adjacent path. They submitted photographs of the damage, which showed a depression and uneven surface in paved area; and a hairline crack in the surface at the entrance to the driveway. I accepted Mrs Scheiffers’ evidence, which was not contradicted, and found that the driver of the concrete truck engaged by Mediterranean Pools caused the damage described when he parked on the driveway.
133. Proof of damage that Mediterranean Pools’ agent caused the damage is not sufficient to establish liability. The Scheiffers must also prove that either; the driver did not act reasonably (in breach of contract), or did not exercise due care and skill (in breach of section 60 of the ACL) or was negligent at common law.
134. The driver of the truck needed to bring it close enough to the excavated hole to pour the concrete. The Scheiffers said he could have parked on the curb or the garden bed. Mrs Scheiffers told the Tribunal:
…the whole corner block of our yard goes in like a right angle and we would have at least 2 metres width of bark chips that could easily have been parked on rather than the driveway.
135. The Scheiffers adduced no objective evidence of the following matters necessary to establish their claim that:
(a) damage to the concrete driveway was a reasonably foreseeable result of driving on it;
(b) damage to the paving was a reasonably foreseeable result of parking on it; and
(c) parking on the garden was a feasible and preferable alternative to using the concrete driveway to access the pool area and parking on the paving.
136. I was not satisfied on the balance of evidence that the Scheiffers established this aspect of their counter claim and so I disallowed it.
Delay
137. The contract provides under the heading “Construction Period” in Part A page 2 that:
Construction period: Number of weeks to complete the pool from start of work on the work site: 12 Weeks subject to extension of time, if any, under Clause 7.2 or other additional period as agreed by the parties.
138. It was not disputed that work started on the site on 1 September 2015 therefore the construction period expired on 24 November 2015, unless extended pursuant to the contract.
139. The ACL consumer guarantee that services will be supplied within a reasonable time does not apply because it only arises where no time is stipulated for completion.
140. The last work that Mediterranean Pools did on site was in about April 2016. The respondents said that, despite giving the applicant an opportunity to complete the works and rectify defects, the contract was never completed and they had to engage third parties to complete the works. The evidence suggests that the project was not completed until approximately May 2016.
141. Mediterranean Pools responded that at least some of the works not completed were outside the scope of their contract and that, in any event, the Scheiffers had extended time under the contract for completion.
Did the parties extend time pursuant to the contract?
142. Mediterranean Pools argued that the Scheiffers agreed to extend the construction period pursuant to the contract. The Scheiffers denied this and said that at all times they had reserved their rights in relation to delay. Both relied on email and SMS correspondence between the parties to establish their respective cases.
143. Mediterranean Pools did not suggest that it sought an extension of time by following the strict procedural notice requirements set out in clause 7.2, instead it submitted that the “parties agreed to an additional period” and relied on the following extracts from email exchanges between Alana Scheiffers and Mediterranean Pool’s agents:
I will therefore allow you one more week
All work needs to be completed by 28 March [2016]
You will come and finish site clearance and clean up tomorrow
144. In my view the correspondence between Mrs Scheiffers and Mediterranean Pools’ agents, viewed as a whole, painted a different picture. The following exchanges were of particular relevance:
(a) On 29 September 2015 Mr Scheiffers in an SMS asked Mr Williams for a construction schedule.
(b) On 29 October 2015 Mrs Scheiffers sent an email to Mr Williams raising concerns about the progress of works and requesting a written schedule:
The contract states that work will be completed within 12 weeks. Work has now been underway for almost 9 weeks. As such, the pool is due to be completed in 25 days and I have grave concerns about your ability to deliver by this due date.
(c) On 17 November 2015 Mrs Scheiffers again asked for a schedule of works and reiterated her concerns that completion by the due date will be not be achieved.
(d) Mr Williams’ replies the same day explained the delay, identified what still needed to be done and gave a timeframe for some tasks, but not a commitment to a time for completion. He told Mrs Scheiffers: “Once this godforsaken concrete goes down, you’ll see fantastic progress!”.
(e) On 18 November 2015 Mrs Scheiffers wrote to Mr Williams:
If this job is to be completed in a satisfactory timeframe (which is to me is within the next two weeks – I realise you cannot stick to your word and complete call [sic] in five days from now) you need to ensure concurrent activity.
Two weeks from 18 November was 2 December 2015.
(f) On 25 November 2015 Mrs Scheiffers wrote to Mr Williams:
It is now 25 November [2015] and you are now officially in breach of your contractual obligations to deliver our project. I am writing to notify you that we do not waive any of our rights in relation to this delay. (emphasis added)
(g) On 6 December 2015 Mrs Scheiffers wrote to Mr Williams to complain about bricks falling into the excavated but still un-concreted hole:
I continue to reserve all rights available to us such that we can prosecute your incompetence and negligence to the fullest extent possible should rectification not occur and work not be completed immediately.
(h) On 8 December 2015 the concrete was poured and the pool was filled around 19 December 2015.
(i) On 28 January 2016 Mrs Scheiffers discussed a number of outstanding issues with Mr Dicks. Throughout February 2016 Mrs Scheiffers and Mr Dicks continued to correspond about outstanding issues.
(j) On 15 April 2016 an exasperated Mrs Scheiffers followed up outstanding issues with Mr Dicks and reminded him, “I… never agreed to the substantial delays in this matter”. Negotiations broke down in April 2016 after the steps were rectified and Mediterranean Pools did no further work.
145. Viewed in context, the correspondence showed that the Scheiffers at no stage agreed to an extension of time beyond 2 December 2015 and were simply trying to get the job finished and mitigate the inconvenience caused by Mediterranean Pools delay. Mrs Scheiffers made it abundantly clear that she and her husband reserved their rights in relation to the applicant’s delay and other breaches.
Were the works completed within time under contract?
146. Construction was not substantially completed until on or about 19 December 2015 when the pool was filled for the first time.
147. I have already found that when Mediterranean Pools stopped work on the site sometime in April 2016 after rectifying the steps. At which point the following works under the contract, or agreed rectification, were not completed:
(a) Rubbish removal.
(b) Refilling the pool.
(c) Replanting the hedge.
148. Mediterranean Pools breached its obligation to complete construction by 2 December 2015 being the extended date agreed pursuant to the contract. It also breached its obligation to rectify defects pursuant to the settlement agreement reached between Mrs Scheiffers and Mr Dicks and failed to complete works under the contract.
Remedies
149. Mediterranean Pools submitted that its liability to compensate the Scheiffers for delay was excluded by the terms of the pool contract.
150. Clause 7.3 dealt with compensation for late completion by the builder or delay by the customer and relevantly provided:
(a) At Part A Schedule 3 item S3.5 the parties have pre set the compensation, if any, which will be payable by the Builder to the Customer if the works are not completed within the construction period as adjusted by the contract terms.
(b) The sum, if any, determined with reference to Part A Schedule 3 item S3.5 is the maximum liability of the builder with regard to liquidated and general damages in any way associated with the completion of the works outside the contract construction period, as adjusted under the contract. (emphasis added)
151. Item S3.5 had spaces for the parties to nominate the amount of compensation payable by the builder pursuant to clause 7.3 (a). Ticks were inserted in each of the spaces instead of sums of money. Mediterranean Pools argued that this meant that the Scheiffers were not entitled to any damages whether liquidated or general if it failed to complete the works within the construction period.
152. If I had accepted Mediterranean Pools argument then the stipulation of a construction period in the contract would be nothing more than an unenforceable expression of intent.
153. A number of cases have considered whether inserting expressions such as nil or N/A in a liquidated damages clause is sufficient to establish that the parties have actually agreed to exclude a customer’s right to damages for a builder’s delay. Burns J after reviewing the authorities on this point concluded as follows Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188 at [79]:
The principles which I distil from these cases are:
(a) the requirement in each case is to ascertain the intention of the parties to the agreement concerning damages for delay;
(b) in ascertaining that intention, consideration may be given not only to the language of the agreement, but also to the surrounding circumstances known to the parties and the apparent purpose and object of the transaction. Temloc was a case where evidence was received of surrounding circumstances, being evidence of a course of dealings between the parties to the agreement which confirmed that the intention of the parties was that damages for late completion would not be available;
(c) the vesting of a discretion in the proprietor to exercise a contractual right to claim liquidated damages may indicate that the parties did not intend the contractual right to liquidated damages to be the exclusive remedy for delay; conversely, a mandatory clause, in the sense of compelling the builder to pay regardless of any demand for payment by the principal, may indicate that the clause is intended to provide an exclusive remedy; and
(d) in construing a contract which, on its face, provides for no liquidated damages for breach, an intention to exclude a right to common law damages must be expressed in clear and unambiguous terms.
154. Clear words are necessary to establish an intention to give up a right to damages. In this case — there are no words or even acronyms — but rather a symbol. It is not clear what meaning, if any, the ticks were intended to convey. I am not satisfied they establish that the parties intended to deny the Scheiffers a remedy for Mediterranean Pools’ delay.
155. The Scheiffers could not claim liquidated damages because no sum was stipulated under the contract but, in the absence of a clear intention to exclude their right to damages for delay, they remained entitled to general damages. The Scheiffers did not establish any financial loss as a result of Mediterranean Pools’ delay but I considered whether to award compensatory damages for distress and inconvenience under the following heading.
Compensatory damages for Inconvenience and distress
156. In the ACT the Civil Law (Wrongs) Act 2002 section 35 provides that “Damages must not be awarded for pure mental harm to a person resulting from negligence unless the harm consists of a recognised psychiatric illness”.
157. The effect of section 35 is to exclude a claim for damages for inconvenience or distress based on negligence. It does not exclude a claim for damages under section 247(4) of the ACL for foreseeable loss caused by a breach of a consumer guarantee, as the cause of action is one created by statute and not based on the tort of negligence. Similarly it does not preclude damages for breach of contract.
158. Damages are not awarded for disappointment, frustration or distress flowing from a breach of contract unless the breach caused physical inconvenience resulting in such an injury, or the object of the contract is to provide enjoyment or relaxation or to prevent “molestation”. It is well established that damages are available for physical inconvenience, anxiety and distress caused to a customer by a builder’s breach of a building contract.
159. Mrs Sheiffers told the tribunal that: “We suffered the loss of amenity of our property for quite some time…” The correspondence between the Scheiffers and Mediterranean Pools’ agents showed the effect of the breaches upon the Scheiffers. On 6 December 2015 Mrs Scheiffers sent two emails to Mr Williams with photos of the makeshift fence they installed to prevent access to the construction site, the same day she sent him a photo of the paving collapsing into the hole excavated by Mediterranean Pools and wrote:
JP,
More bricks are falling into the hole. I have tried to block the path off. See attached photo showing my temporary attempts. Please ensure you take all steps necessary to as soon as possible to prevent access to the path.
This is now a significant hazard and I am terrified someone is going to suffer a severe injury. You need to have this issue rectified immediately. In my view this is now an emergency as I am concerned the whole house risks subsiding.
160. On the balance of evidence I was satisfied that Mediterranean Pools commenced construction without a safety fence being in place creating an unsafe situation, which was only ameliorated when the Scheiffers erected a temporary barrier in early December 2015. For the duration of the project, which was protracted by Mediterranean Pools’ delays, the site was unsightly, access was difficult, and the front yard could not be enjoyed. As a result of the breaches the Scheiffers were left to rectify the damage caused to their irrigation system, clear the site of rubbish, arrange for the pool to be re-filled after the steps were rectified, and replant the hedge.
161. I have awarded $1,000 each to Mr and Mrs Scheiffers which I regard as fair and reasonable compensation for the distress and inconvenience they suffered as a result of Mediterranean Pools breaches of the contract and rectification agreement; and contravention of section 60 of the ACL.
Exemplary damages
162. The Scheiffers claimed exemplary and punitive damages of $5,000 for Mediterranean Pools “reckless, negligent, bullying, dishonest and fraudulent conduct throughout the building of the pool and subsequent.”
163. Mediterranean Pools responded that:
The Applicant denies that the facts provide any legal basis for the Respondent to make a claim for exemplary or punitive damages. Exemplary damages are only awarded where defendant is being sued under a tort in order to punish them for conduct showing a conscious disregard for the plaintiff’s rights and to deter them from committing such conduct in future. This matter is a civil dispute not a tort, and the facts do not support any submission for damages on these grounds.
164. The Scheiffers countered Mediterranean Pools argument by asserting:
The Respondents counter claim is in both breach of contract and negligence (a tort). The contemptuous disregard the respondents were treated with and the deceit throughout the project justify, in the respondents’ submission, the amount of $5,000 claimed.
165. Both parties relied on the decision of the High Court in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12. In that case his Honour Chief Justice Gibbs summarised the law as follows:
As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v. Harvey (1814) 5 Taunt 442 (128 ER 761) substantial exemplary damages were awarded for a trespass of a high-handed kind which occasioned minimal damage, Gibbs C.J. saying:
“I wish to know, in a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?” (emphasis added)
166. I agreed with the applicant that exemplary damages are not available at common law for breaches of contract but are available for certain torts, including deceit. Logically, exemplary damages are not available for breach of a consumer guarantee under the ACL because the purpose of damages under section 237(4) of the ACL is to compensate for “loss or damage” not to punish.
167. In this case the allegations of fraud made by the Scheiffers have not been established on the evidence. I found Mediterranean Pools failed to render its services with due care and skill in contravention of section 60 of the ACL resulting in damage to the Scheiffers’ irrigation system. Even if I had instead found the tort of negligence proved on the same facts the breach of duty of care would not have been sufficiently serious to warrant exemplary damages.
168. For the reasons set out above I did not allow the Scheiffers claim for exemplary damages.
Conclusion
169. The respondents shall pay the applicant $23,447.26 comprised of $19,272 for monies due under the contract, plus the filing fee on the claim of $300 and interest in accordance with Court Procedure Rules 2006 of $3,875.26 calculated as follows:
(a) In relation to Invoice 967 from 25 November 2015 to 26 June 2019 on the sum of $16,060.
(b) In relation to Invoice 1050 from 16 December 2015 to 26 June 2019 on the sum of $3,212.
170. The applicant shall to pay the respondents a total of $5,278.16 comprised of $4,146.71 compensatory damages for:
(a) $327.50 — Rubbish removal.
(b) $244.21 — Cost of approval.
(c) $1,275 — Repair to irrigation system.
(d) $300 — Replace hedge.
(e) $2,000 — Inconvenience and distress.
(f) plus $300 for the filing fee on the counter claim and interest in accordance with the CPR of $831.45 on $4,146.71 from 2 December 2015, being the date for completion of the contract, to 26 June 2019.
171. The amount payable by the applicants on the counter claim is offset against the amount payable by the respondents on the claim, the balance being payable by the respondents to the applicant by 24 July 2019.
172. The claim and counter claims arose out of performance of the same contract and are so closely connected that, in my view, it would be unconscionable not to allow Mediterranean Pools liability to be offset against the Scheiffers’ liability. Accordingly, I ordered that the amount payable by the applicants on the counter claim be offset against the amount payable by the respondents on the claim.
………………………………..
Senior Member E Ferguson
HEARING DETAILS
FILE NUMBER:
XD 7482018
PARTIES, APPLICANT:
La Pompa (Aus) Pty Limited
PARTIES, RESPONDENT:
Andrew Scheiffers
Alana Scheiffers
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
Eastwoods Legal
SOLICITORS FOR RESPONDENT
N/A
TRIBUNAL MEMBERS:
Senior Member E Ferguson
DATES OF HEARING:
25 February 2019
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