Lewis v Netcon Pty Ltd
[2011] QCAT 295
•29 June 2011
| CITATION: | Lewis v Netcon Pty Ltd [2011] QCAT 295 |
| PARTIES: | Mrs Virginia Lewis |
| v | |
| Netcon Pty Ltd |
| APPLICATION NUMBER: | BDL214-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 31 March and 1 April 2011 |
| HEARD AT: | Cairns |
| DECISION OF: | Ms Joanne R Browne, Member |
| DELIVERED ON: | 29 June 2011 |
| DELIVERED AT: | Cairns |
| ORDERS MADE: | The Respondent pay to the Applicant the amount of $15,268.00 by 4.00pm on 25 July 2011. |
| CATCHWORDS: | Whether contract lawfully terminated – failure to pay final progress claims – due diligence – defective and incomplete work Section 77 Queensland Building Services Authority Act 1991 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mrs Virginia Lewis (self-represented) |
| RESPONDENT: | Mr Jack Welten appeared for Netcon Pty Ltd (self-represented) |
REASONS FOR DECISION
Introduction
Mrs Virginia Lewis engaged the services of Netcon Pty Ltd (“the Builder”) to conduct renovation work to her house at 90 MacIlwraith Street, Manoora (“the house”). The renovation work was performed by Mr Jack Welten and his son Mr Michael Welten (Michael) who are both directors of Netcon Pty Ltd. Mrs Lewis lived in her house throughout the renovations. The Builder was in the course of completing the renovation works at the house when this dispute arose. The essence of the dispute was whether the work performed by the Builder was satisfactory and whether Mrs Lewis owed the Builder money for work performed.
The work performed by the Builder was to be completed in three (3) stages and for the purposes of section 17A of the Domestic Building Contracts Act 2000 (“the DBCA”), the domestic building work carried out by the Builder is taken to be a single contract. Mrs Lewis informed the Tribunal at the commencement of the hearing that she had not been provided with a copy of the standard terms and general conditions of the contract despite a direction being made that Netcon Pty Ltd provide a complete copy of the contract. Mr Welten provided a copy of the standard terms and general conditions to Mrs Lewis and the Tribunal at the hearing however the copy of the standard terms provided was incomplete.
The parties signed three (3) Master Builders Minor Works contracts in respect of the following renovation works at the house:
i) Balcony – the contract was signed on 4 June 2009 and the works to commence on 22 June 2009. The works to be performed were described “as per drawings V2009 – OT04 dated 17-04-09 proposed balcony only” to be completed by 1 September 2009 in the amount of $47,288.00. The work was to be performed in “stages” including laying the deck, laying the roof, hand rails and soffit.
ii) Downstairs – the contract was signed on 10 August 2009 and the works to commence on 12 August 2009. The works to be performed were described as “renovations to downstairs area including stairs” with work to be completed in stages (including frame, lockup) by 7 October 2009 in the amount of $30,900.00.
iii) Upstairs – the contract was signed on 15 October 2009 and the works to commence on 15 October 2009. The works to be performed were described as “upstairs only” to be completed by 20 October 2009 in the amount of $17,100.00.
Mrs Lewis submits that the renovation works included:
i) The deck.
ii) Enclose downstairs – add a bedroom, bathroom, lounge and internal staircase with storage underneath and a storage cupboard built into the bathroom.
iii) Upstairs – remove existing wall, build an internal wall and remove and replace ceilings, internal walls, put in a bifold door and change windows to accommodate casements.
Included in the contract documentation tendered at the hearing by Mr Welten were quotations specifying the included and excluded works in respect of the upstairs renovation[1] and the downstairs.[2]
[1] Exhibit 20, letter to Mrs Lewis dated 15 October 2009.
[2] Exhibit 20, letter to Mrs Lewis dated 6 August 2009.
The Application filed on 14 July 2010 seeks an order for relief from payment for money owing under the contract and an order for costs of rectification of the building work. Mrs Lewis also seeks an order for payment of her legal fees and other costs in relation to the Application. Mrs Lewis has also filed a list of alleged defective/incomplete work dated 9 July 2010 which identifies 57 items.
The Builder filed a Response and Counter-Application on 9 September 2010 seeking payment of the amount of $14,397.00 plus interest at a rate of 15% per annum for money allegedly owing by Mrs Lewis under the contract as follows:
i) Balance of progress claim No. 3 dated 18/11/09 – $2,000.00 outstanding since 24 November 2009 (Downstairs);
ii) Balance of progress claim No. 4 dated 23/11/09 – $4,000.00 outstanding since 30 November 2009 (Upstairs);
iii) The final claim for contract 2 (downstairs) – $1,674.00 outstanding since 10 February 2010;
iv) The final claim for contract 3 (upstairs) – $6,723.00 outstanding since 10 February 2010 – comprising $1,390.00 (final claim) and $5,933.00 (additional works) less $600.00 (tiling)[3].
[3] Exhibit 24, invoice dated 10 February 2010.
The renovation work performed by the Builder at the house falls within the definition of domestic building work under section 8 of the DBCA and the Tribunal has jurisdiction to determine the dispute pursuant to sections 75 and 77 of the Queensland Building Services Authority Act 1991.[4]
[4]The Tribunal also has jurisdiction by virtue of section 9 of the Queensland Civil and Administrative Tribunal Act 2009.
Both parties were self-represented at the hearing – Mrs Lewis appeared in person and Mr Welten appeared on behalf of the Builder. Several documents were tendered comprising various typed and handwritten statements and photographs of the house. Both Mrs Lewis and Mr Welten gave sworn evidence and were cross-examined at the hearing. Mr Bryan Peach (Building Consultant) also gave evidence at the hearing on behalf of Mrs Lewis and a report prepared by Mr Peach was tendered by Mrs Lewis on the basis that Mr Welten had raised issues about a possible conflict of interest between herself and Mr Steven Ford (Cairns Building Approvals) who also prepared a report dated 25 March 2010 to be relied upon by Mrs Lewis. Mrs Lewis was given leave by the Tribunal at the hearing to tender the report of Mr Peach.
[10] Mrs Lewis conceded at the hearing that the amount of $14,397.00 is owing under the contract. Mrs Lewis argues that progress claims and final payment was not made to the Builder because:
i) The Builder failed to complete the works to be performed under the contract to a satisfactory standard.
ii) The Builder failed to rectify items set out in a list completed by Mrs Lewis and given to the Builder (the defects list).
iii) The costs of rectification of the completed work carried out by the Builder exceed the value of the contract work. Mrs Lewis relies on the reports of Mr Bryan Peach and Mr George Hoffmann (Habitat Building Inspections) in relation to the costs of the rectification works.
iv) The Builder breached the terms of the contract by not being on site for “many consecutive days [over 3 weeks]” and the works should have been finished before the end of 2009.[5]
[5] Exhibit 11 (Document/statement prepared by Mrs Lewis).
[11] The issues to be determined by the Tribunal are:
i) Was Mrs Lewis in breach of the contract for failing to pay progress and final claims to the Builder?
ii) Has the Builder by its conduct repudiated the contract which repudiation Mrs Lewis accepted verbally on 1 February 2010 and later in writing on 5 February 2010? Where the grounds for repudiation were the failure of the Builder to complete the works with due diligence and or a failure to complete or rectify works as directed by Mrs Lewis?
iii) In the event that there has been lawful termination of the contract is Mrs Lewis entitled to claim for the costs of any alleged defective and incomplete works?
Evidence of Mrs Lewis
[12] Mrs Lewis filed statements tendered at the hearing and gave sworn evidence in relation to the works performed by the Builder. Mrs Lewis states that it was her intention to engage the Builder to complete her “dream renovation” but now she “hates” her house and states “it is revolting”. Mrs Lewis states that Mr Welten was aware that his son Michael was missing for approximately three (3) weeks in August 2009. Mrs Lewis also states that she had brought up problems and concerns with the renovation works with Mr Welten on several occasions and the issues were not attended to. Mrs Lewis states that she engaged the services of the Builder because they were licensed builders and Mr Welten was a draftsman and could therefore assist with the preparation of plans. Mrs Lewis states that the works were not performed properly and are still not complete. Mrs Lewis states that following events on 2 February 2010 she was not comfortable with allowing the Builder access to her house to finish the works and it was therefore necessary for her to obtain other quotes to prove that the work was not just “cosmetic” and had to go to trouble and expense.
[13] Mrs Lewis gave evidence at the hearing that she was initially very happy with the work performed by the Builder and after signing a contract for the renovation works in respect of the balcony she then engaged the Builder to perform additional renovation works. Mrs Lewis states that she did have some concerns about the roof line, in particular that it looked “crooked” and that the deck was “too short”, however the Builder agreed to rectify the length of the deck and add an additional post. Mrs Lewis states that throughout completion of the renovation work there were still things left unfinished to the downstairs however Mr Welten told her he would put the items on a list to be finished.
[14] Mrs Lewis gave evidence at the hearing that she was living in the house during the renovation works and that there was “furniture piled up everywhere” – there was dust, holes in the floors and ceilings were “ripped out”. Mrs Lewis states that when the renovation works to the downstairs were completed she had some issues in relation to the tiles which she states “looked uneven, crooked and raised in some places”: she states that she had “a vision of how things should look and it looked like a mess”. Mrs Lewis states that she did not have “huge issues” with the renovation works apart from the “cosmetic issues” of the deck and tiles, so she signed a contract with the Builder for further renovation works to the upstairs.
[15] Mrs Lewis states that when she initially engaged the Builder it was her understanding that Mr Welten would prepare the plans as a draftsman and oversee the work performed by his son Michael who was also a builder. Mrs Lewis states that when the renovation works were commenced to the upstairs of the house Michael was absent from the house “a lot”. Mrs Lewis states that she had a problem with the removal of rubbish and that it was “a constant issue” and Mr Welten filled up rubbish bins every week however failed to remove the rubbish – she used a trailer to remove rubbish in or about December 2009 and completed approximately four (4) to five (5) trips to the rubbish “tip”.
[16] Mrs Lewis states that she was leaving for a holiday on 22 December 2009 and was absent for a period of four (4) weeks. Prior to going on holidays Mrs Lewis states that there were no locks upstairs and that four (4) casement windows had been put on hinges to be used as bifolds however there were no locks that worked properly – there were also no locks downstairs. Mrs Lewis states that she spoke to Mr Welten before she went on holiday on or about 18 December 2009 and said that she would “catch up with them” when she came back to go through the things that needed to be rectified. Mrs Lewis states that when she returned from holiday in late January 2010 she had missed calls from Michael on her mobile phone. Mrs Lewis states that she was “giving him a bit of his own back” and thought that Michael could wait a couple of days before she returned his call. Mrs Lewis states that she telephoned Michael a week or so after returning from her holiday and organised a time to catch up. Mrs Lewis states that Michael had a copy of the list of things to be rectified and that they were going to get started on the renovations and finish off the list. Mrs Lewis states that she arranged to meet Michael on Australia Day. Mrs Lewis states that at the meeting with Michael she told him that she was disappointed and Michael apologised and said that he would “do the right thing”. Mrs Lewis states that two (2) days later she found the locks had been placed back to front downstairs and she immediately telephoned Michael on or about 1 February 2010 and left a message on Michael’s phone saying “come and pick up your tools” and stated that she did not want him to finish the job and would get Mr Steven Ford (Building Certifier) to “look at it”. Mrs Lewis states that she knew Mr Steven Ford was a Building Certifier and she made arrangements for him to come to the house to inspect the building work. Mrs Lewis states that she also telephoned Michael the day before the inspection at the house with Mr Ford – an inspection took place on 6 February 2010 and a report was prepared by Mr Ford and was available on 25 March 2010.
[17] Mrs Lewis states that on 2 February 2010 Mr Welten and Michael came to the house at about 7.30am. Mrs Lewis states that Mr Welten had invoices and told her that it wasn’t fair what she was doing and “how dare I do this to them”. Mrs Lewis states that Mr Welten was “yelling and throwing tools around” and she told Michael to “tell your father to get off my property”. Mrs Lewis gave evidence at the hearing that as a result of Mr Welten’s conduct on 2 February 2010 she was concerned that he may also display a temper should she allow him back at the house. Mrs Lewis states that it is not appropriate for her to allow the Builder to come back to the house to complete the renovation works due to Mr Welten’s behaviour on 2 February 2010. Mrs Lewis sent a letter to Netcon Pty Ltd dated 5 February 2010 referring to the “disagreement” on 2 February 2010 and that the Builder had breached its terms of the contract by failing to be on site and failing to complete the works by the end of 2009. Mrs Lewis states that approximately one (1) month later she received a caveat in the mail and incurred legal costs in relation to dealing with the matter. Mrs Lewis states that these costs are relevant to the present proceedings because the costs were incurred by her in relation to the dispute over money claimed to be owing by the Builder under the contract.
[18] Mrs Lewis states that after the inspection with Mr Ford at the house she contacted the Queensland Building Services Authority (“QBSA”) on the recommendation that the work performed could not be approved through Council as there were too many things “wrong with it”. Mrs Lewis states that the QBSA also arranged for an inspection of the works and prepared a report. Mrs Lewis states that Mr Welten was present at the inspection with the QBSA and there was no offer by the Builder to rectify the works. Mrs Lewis states that following the inspection with the QBSA she wrote a letter to the QBSA (Mr William Courtney) dated 30 June 2010.
[19] During cross-examination Mrs Lewis denied that Michael was away from the house for only four (4) days from 28 September 2009 to 1 October 2009 and from 4 November 2009 to 9 November 2009. Mrs Lewis gave evidence at the hearing that Mr Welten had informed her that he was also worried about Michael as he had been absent from the house. Mrs Lewis denied that she was quite often away from the house during the time that Michael was completing the renovation works. Mrs Lewis gave evidence that she would see Michael arrive early in the morning before she left for work. Mrs Lewis did agree however that Michael was absent for a period of six (6) days in August however she gave evidence that she had also recorded other dates that Michael was absent from the house.
[20] Mrs Lewis gave evidence at the hearing that after the contract ended on 20 November 2009 there was additional work that she required the Builder to do such as removal of rubbish and a “list of things”. Mrs Lewis states that she went to Michael’s house on 4 December 2009 to request that she required him “back on site” to do other things such as a list that she had completed including completion of the cladding downstairs. Mrs Lewis gave evidence that she completed a list of outstanding works to be completed in or about November 2009 and gave the list to Michael. Mrs Lewis states that she cannot recall when she gave the list to Michael – it was possibly late November 2009 and the list contained items to be “rectified or finished as they hadn’t been done”. Mrs Lewis states that when she came back from holidays in December 2009 she expected that Michael would complete or rectify the “things on the list”. Mrs Lewis states that she would have asked Michael on 26 January 2010 to come back to work as he had been away “most of November and December” and that it was her opinion that the renovation works were not completed. Mrs Lewis states that there was a “hand written” list[6] which was “fairly similar” to another list previously given to Michael and states that nothing on the list had been rectified by the Builder. Mrs Lewis states that she pointed out items to Michael near completion of the works and prior to Mr Welten going on holidays on 23 November 2009 – she raised issues about the stairs being crooked, the walls downstairs and the balustrade. Mrs Lewis states that all the items on the “defect list” were raised with the Builder.
[6] Exhibit 8.
[21] In relation to Mrs Lewis not paying the $6,000.00 as claimed by the Builder on 2 February 2010 Mrs Lewis states that there were “problems to be rectified” and nothing had been done correctly and it was therefore fair to withhold payment. Mrs Lewis referred to items which she claims were not completed including nails sticking out, uneven skirting boards, skirtings missing, locks not installed, and cladding does not extend to the roof. Mrs Lewis states that as a result of the QBSA inspection some 17 items were identified as being not done correctly or not done at all.[7] Mrs Lewis agreed during cross-examination that some items had been duplicated. However she did not agree that the QBSA were of the view that the items were “cosmetic”.
[7] Exhibit 9.
[22] During cross-examination Mrs Lewis gave evidence that she did not understand the Builder’s invoices – she did however acknowledge on 5 February 2010 during the QBSA inspection that she owed the Builder approximately $6,000.00 however she does not agree that there is money owing now given that there are rectification works and further works required to complete the renovations to the house. In particular Mrs Lewis states that she is unable to insure her house because the Certifier will not sign off on the renovations. During cross-examination Mrs Lewis denied that she had informed Michael she would pay the outstanding $6,000.00 to the Builder after she had sold her caravan.
[23] In relation to the French doors Mrs Lewis states that the Builder had agreed to remove the French doors to have them sanded and although this was not stipulated in the scope of works the Builder had agreed to remove them. Furthermore Mrs Lewis states that other additional works performed by the Builder including the bathroom mirror and doors although not stated in the scope of works were completed by the Builder on the basis that they had agreed to do it. This also included the shower curtain. Other items identified by Mrs Lewis as being incomplete or requiring rectification include the balustrade which left a “big hole” in the wall, the weatherboard to the front being uneven and broken. Mrs Lewis states that she requested the Builder put in bifold windows however the windows cannot be certified. Mrs Lewis states that it was always her intention to use the casement windows as bifolds.
[24] In relation to the tiling upstairs and downstairs Mrs Lewis does not accept that an appropriate deduction had been made by the Builder for the tiling work. Mrs Lewis states that the Builder did not fulfil its contractual obligations by failing to be on site at the house. Mrs Lewis also states that it wasn’t until the QBSA inspection that the Builder agreed to rectify certain items.
Evidence of Mr Bryan Peach
[25] Mr Peach gave evidence on behalf of Mrs Lewis at the hearing. Mr Peach informed the Tribunal that he was “more qualified” than a Building Certifier in that he held a Diploma of Building and had 45 years experience as a builder. Mr Peach gave evidence at the hearing that he was qualified to comment on the work performed at the house. In relation to the stairs Mr Peach states that there was no hand rail. Mr Peach also gave evidence that the supporting wall needs to be certified. In relation to the incomplete works Mr Peach states that there is a possibility of vermin entry. In respect of the downstairs bathroom Mr Peach states that there was inadequate waste-water shower drainage. During cross-examination Mr Peach denied that the leaking roof could be as a result of previous problems before the Builder performed renovation works. Mr Peach states that the leak “looked recent”. Mr Peach also gave evidence that there needed to be another ceiling baton installed in between the existing batons. In relation to the cladding on the roof Mr Peach states that this needs to be removed as it was not proper cladding and the work was not performed to a satisfactory standard. Mr Peach refers to “other items” mentioned in Mr Ford’s report and states that the “standard of workmanship is far below what you would expect to get from a Licensed Building contractor, in fact it is more in keeping with what you would expect from a first year apprentice, without supervision. This substandard work has been well documented by both [Mr Ford] and the [QBSA]”.
Evidence of Mr Jack Welten
[26] Mr Welten Managing Director of Netcon Pty Ltd gave evidence on behalf of the Builder. Mr Welten states that Netcon Pty Ltd was a competitive company and that he gave a good price to Mrs Lewis for the renovation works in relation to the balcony. Mr Welten states that there were additional works performed for Mrs Lewis such as helping with painting, assisting with the electrical works, removal of furniture and extra painting work was performed on the fascia – such as painting before putting the gutter on. Mr Welten prepared a list of items which he states was “extra work done that has not been charged for” by the Builder.[8] Mr Welten states that there are 28 items on the list and an extra item for “painting” should also be included – Mr Welten agreed to paint the downstairs ceiling and walls (3 rooms) and upstairs ceiling in exchange for one (1) carton of beer per hour of painting, to be provided by Mrs Lewis. In relation to the painting Mr Welten states that he has not been given any beer by Mrs Lewis in payment. Mr Welten denied during cross-examination that he had been given three (3) cases of beer for the painting downstairs and two (2) cases of beer for the painting upstairs.
[8] Exhibit 15.
[27] During cross-examination Mr Welten gave evidence that Mrs Lewis had made the final payment in relation to the renovation works to the deck. Mr Welten states that the alleged defects were not serious however he does agree there were some items that required further work such as the tiling to the bathroom downstairs. Mr Welten gave evidence that the deck was completed on 12 August 2009 and in relation to the findings made by Mr Peach about the fixings to the deck Mr Welten states that he was only recently been made aware of this.
[28] Mr Welten states that the renovation work was completed on 20 November 2009 and that the downstairs bathroom required rectification by the Builder – some lifting of the tiles is required as identified in the QBSA report (waterproofing); deck and wall cladding – the fibro has not been fitted to ensure vermin proofing in particular the cladding requires sealing. However Mr Welten states that the Builder was not given access to fix these items. Mr Welten states that there is a six (6) month warranty period after completion of the works in relation to omissions and defects.
[29] In relation to the hand railings Mr Welten states that the “riser is different in height because the tiles are not laid”. Mr Welten states that this may or may not be an error. In relation to the intermediate landing being crooked Mr Welten states that he has not had an opportunity to inspect the work. Mr Welten during cross-examination gave evidence that the beams may require engineering approval.
[30] In relation to the downstairs bathroom Mr Welten states that Mrs Lewis raised the issue of tiling on 20 October 2010 – she was not happy with the alignment. Mr Welten suggested that Mrs Lewis make arrangements for her own tiler. Mr Welten states that the issue of the tiling was not raised again until some four (4) months later.
[31] Mr Welten gave evidence at the hearing that on 18 December 2009 Mrs Lewis went to his house and requested that the kitchen window casements be re-hung and that the French doors be hung. Mr Welten denies that Mrs Lewis mentioned a defects list. On 19 December 2009 Mr Welten states that Mrs Lewis spoke to him at the front gate of the house and confirmed that she would arrange for the glass missing on the panels to be installed. It was at this time that Mrs Lewis provided Mr Welten with a list. Mr Welten states that Mrs Lewis told him that she would like to go through the list with Michael when she gets back from holidays. Mr Welten gave evidence at the hearing that prior to 19 December 2009 he recalls that issues were raised by Mrs Lewis in relation to some of the renovation works, for example the length of the balcony – Mrs Lewis queried the fascia and that it “didn’t look flat”. Mrs Lewis was also not happy with the tiling downstairs and Mrs Lewis had agreed to arrange for her own tiler to complete the work. Mr Welten gave evidence that on 19 December 2009 he was not surprised that a list of defects was raised and was concerned about the list and made sure that Michael contacted Mrs Lewis. Mr Welten gave evidence that on 12 January 2010 he made sure Michael telephoned Mrs Lewis and it was his understanding that Michael went to the house on 13 and 14 January 2010 and again on 16 and 18 January 2010 to complete works. Mr Welten states that Michael was to start working on the various items on the “defects list” on 18 January 2010; one of these items was the vermin proofing and completion of the cladding. Mr Welten states that Michael was advised by Mrs Lewis’ daughter Tasmin who was living at the house to stop work until Mrs Lewis returned from holiday. Mr Welten denies that the locks were installed back to front as stated by Mrs Lewis – he states some rectification works were completed by Michael between 27 January 2010 and 1 February 2010 such as cladding and vermin proofing.
[32] Mr Welten denies that Mrs Lewis left a message on Michael’s phone on 1 February 2010 stating that the contract is terminated – she only stated that he (Michael) should “pick up his tools”. Mr Welten states that it was his intention on 2 February 2010 to review progress with Michael and took the file to do final claims for downstairs and upstairs which needed input from Mrs Lewis – Mrs Lewis had made several promises to pay the outstanding money. Mr Welten denies he was verbally abusive towards Mrs Lewis – he walked up to the open window of the house where Mrs Lewis was standing and she told him that she had to pick up the French doors and windows and said she wanted to “wake up with no one here”. He states that he raised his voice and was “angry with [himself]… just wanted to leave and calm down” – he packed up his tools on the basis that Mrs Lewis said she wouldn’t pay the outstanding money so he picked up the tools and dropped them in a crate.
The alleged defective and incomplete works
[33] Mr Steven Ford of Cairns Building Approvals (CBA) inspected the house on 4 February 2010 and prepared a report dated 25 March 2010. The report states that “the following is a list of works considered necessary before a final building inspection can be undertaken and consideration given to issuing a Final Certificate/Form 21 as required by the Building Code of Australia, the Building Act and Regulations…”.The report refers to 37 items which require “attention”.
[34] The QBSA inspected the house on 12 April 2010 and completed a report dated 13 May 2010. By letter dated 2 June 2010 the QBSA notified Mrs Lewis that the Builder had been given 28 days to rectify or complete the work listed in the enclosed “items”. There are 11 items identified in the QBSA report.
[35] Mrs Lewis also refers to a quote obtained from Mr Paul Maujean of Chappell Development Group dated 9 November 2010. Mr Maujean did not inspect the works at the house and states that “we would only be prepared to take on the project on a ‘Do and Charge’ basis. We suggest a budget of $15,000 to $20,000 would be reasonable estimate for the work required based on the reports you provided”.
[36] Mr George Hoffmann (Habitat Building Inspections) inspected the works at the house on 20 and 28 September 2010 and prepared an estimate dated 19 October 2010. Mr Hoffmann states “It is apparent that the overall quality of finish is poor with many items requiring complete removal and reinstallation to bring them up to an acceptable level of finish and or compliance to Australian Standards (A.S.).”The estimate refers to the items identified in Mr Ford’s (CBA) report and photos are attached. The total cost of rectification and completion quoted is $59,109.00 (inclusive GST).
[37] Mr Welten in the Response and Counter-Application states that an estimate of the costs of rectification for the items (11 in total) referred to in the QBSA inspection report total $1,170.00. Mr Welten argues that the Tribunal should not accept the evidence given by Mr Peach on the basis that the Builder has not had an opportunity investigate Mr Peach’s report. Mr Welten also disputes the legal costs claimed by Mrs Lewis and states that the costs should not be awarded by the Tribunal. Mr Welten claims an amount of $2,420.00 plus $90.00 (for painting)[9] as extra work performed by the Builder for which Mrs Lewis was not charged.
[9]Based on the evidence of Mr Welten – Mrs Lewis was to give Mr Welten a carton of beer per hour of painting and the $90.00 claimed is based on the cost of five (5) cartons of beer for five (5) hours painting by Mr Welten.
[38] Mr Welten argues that the works were completed on 20 November 2009 which was the date the contract came to an end and the Builder had six (6) months to complete any defects under the defects liability period so there was no requirement that the Builder should be at the house “full time”. Mr Welten relies on the findings made by the QBSA and does not dispute that there are some items which require attention by the Builder – he argues he was not given an opportunity to attend to those items. Mr Welten identified the items to be rectified at the hearing as items numbered 2, 4, 7, 8 and 9 referred to in the QBSA report. In relation to item 6 (landing of internal stair) in the QBSA report Mr Welten argues that this issue was never raised by Mrs Lewis with the Builder.
[39] There are several lists of defective and incomplete works – Mrs Lewis attached a list to the Application and refers to a list in her letter dated 1 March 2010 to the Builder.[10] Mr Welten identified at the hearing the items which he states are included in the QBSA report. There is another handwritten list[11] undated which Mr Welten states Michael was working on after Mrs Lewis provided the list to him at the Australia day meeting (on 26 January 2010).
[10]Exhibit 8.
[11]Exhibit 9.
[40] Mr Welten has also identified the items in Mr Ford’s report which he states are included in the QBSA list dated 2 June 2010[12] – Mr Welten gave evidence at the hearing that he has assessed the value of the works, based on his own experience, in the QBSA list (items 1 to 11) in the amount of $1,170.00 and the remaining items referred to in Mr Ford’s report in the amount of $530.00.[13] Mr Welten argues that there are items included in Mr Ford’s report which are extra work outside the scope of agreed works – items numbered 1, 4, 16, 17, 18, 21, 27, 29, 33, 34, 35 and 36. Mr Welten also argues that the estimate provided by Mr Hoffmann (Habitat Building Inspections) does not relate to the QBSA inspection and that the estimate provided by Chappell Development Group is not a quotation and that they do not “appear to be builders”.
[12]Items numbered 2, 3, 5, 6, 7, 8, 9, 10, 21, 22, 24, 25, 26, 27, 32 Mr Welten states are items included in the BSA report dated 2 June 2010.
[13]Items numbered 11, 13, 14, 15, 18, 19, 20, 23, 28, 29, 30, 36 and 37 referred to in Mr Ford’s report.
Tribunal Findings
[41] The Tribunal has carefully considered all of the material filed by the parties and has spent a considerable amount of time isolating the factual issues which are agreed and disputed by the parties from the purported statements and other documents filed, which were both repetitive and lengthy.
[42] The first issue to be determined was whether Mrs Lewis was in default under the contract for failing to pay money to Netcon Pty Ltd being the progress payments and final payments and whether these payments were due and owing under the contract. Furthermore, in respect of the final payments due, whether the works to be performed under the contract had been completed or had reached practical completion. Practical completion for a regulated contract is defined under the DBCA as the stage when the works are completed in accordance with the contract and relevant statutory authority without any “omissions or defects” or apart from “minor omissions or minor defects” and the home is “reasonably suitable for habitation”.
[43] The works in respect of the balcony (contract 1) were completed and final payment was made by Mrs Lewis – Mr Welten states that a final inspection for the balcony works took place with Cairns Building Approvals on 15 October 2009.[14] The final payment for contract 2 (downstairs) and 3 (upstairs) was issued on 10 February 2010. The Builder claims that the works were completed on 20 November 2009[15] and that the progress claims numbered 3 (downstairs) and 4 (upstairs) were issued on 18 and 23 November 2009 respectively. The reports tendered by Mrs Lewis, in particular the reports of Mr Peach, Mr Ford and the QBSA, refer to a number of items which require further work by the Builder. The Tribunal accepts the evidence of Mr Peach and finds that the works were substandard and that there were significant defects and incomplete works. The report of Mr Ford refers to a number of items which require attention before a final building inspection to obtain certification can be undertaken. The QBSA also refers to a list of items which require rectification and completion. The Tribunal finds that as at 20 November 2009 the works to be performed under the contract were not completed and Mrs Lewis is therefore not in default under the contract for a failure to pay the final progress claims and payments to the Builder.
[14] Exhibit 17, statement of Mr Welten.
[15] Exhibit 15.
[44] It is the usual practice as argued by the Builder that at the completion stage of the works the Builder will attend to minor defects. The Builder has an obligation under section 67(6) of the DBCA in regards to practical completion to take steps to certify the works as completed and prepare a defects list – the usual practice adopted by builders. The defects liability period runs for 6 months after the date of practical completion during which time the Builder must rectify defects and omissions in the works which become obvious and are notified to the Builder. The builder has a “primary obligation” to deliver or complete “work free of defective work upon final completion”.[16] Unless stipulated elsewhere in the contract the Builder is not obliged to rectify defective work (if any) until the work has reached practical completion or final completion.[17]
[16]Thunder Corp [83] see Qantas Airways Ltd v Joseland & Gilling (1986) 6 NSWLR 327.
[17] As above [83].
[45] Mr Welten argues that the Builder was not given an opportunity to attend to the rectification of the works which would have been attended to during the 6 month warranty period. The Tribunal accepts the evidence of Mrs Lewis that she prepared a list of defects and incomplete works which she gave to the Builder (Michael) in late November 2009 for attention and that she intended to make final payment once those items had been attended to and Mrs Lewis communicated her concerns about the incomplete and defective works to the Builder in November 2009 and at the meeting on 26 January 2010. The Builder has elected to continue with the terms of the contract notwithstanding the alleged failure to pay the final progress claims and payments by agreeing to complete the outstanding works at the house as identified by Mrs Lewis at the meeting (with Michael) on 26 January 2010.
[46] The Tribunal must determine whether there was lawful termination of the contract by Mrs Lewis in accordance with the common law before considering whether there is an entitlement to damages for defective and incomplete works. Furthermore, did Mrs Lewis give the Builder a reasonable opportunity to rectify and complete the works? Although the Builder argues that it is not in breach and that it intends to be bound by the contract by agreeing to attend to the rectification of items identified by the QBSA, the Tribunal finds that the contract has either been repudiated by the Builder by failing to complete the works with due diligence or to a satisfactory standard by the date of completion of the works (20 November 2009).
[47] The Tribunal accepts the evidence of Mrs Lewis that the Builder, in particular Michael who was completing the building renovation work to the house, was absent for a period of time – 3 weeks in August 2009 and several days in November and December 2009 including only working in the morning and being absent from lunch time and that these concerns were raised by Mrs Lewis with the Builder at a meeting on 26 January 2010.[18] The Tribunal also accepts the evidence of Mrs Lewis that she raised her concerns with the Builder (Michael) in November 2009, on 18 December 2009 (with Mr Welten) and again on 26 January 2010 (with Michael) in relation to the quality of the work performed by the Builder, in particular that there were several items identified by her as being defective and incomplete.
[18] See Exhibit 3.
[48] There is an implied warranty under sections 43 and 44 of the DBCA that the renovation work carried out by the Builder will be in accordance with “all relevant laws and legal requirements, including, for example, the Building Act 1975” and that the work will be “carried out” in an “appropriate and skilful way” and with “reasonable care and skill”. The Tribunal has determined that the works were incomplete and had major defects and that Mrs Lewis informed the Builder about her concerns regarding the unsatisfactory work. The Tribunal is satisfied based on the evidence of Mrs Lewis that she gave the Builder a sufficient or reasonable opportunity to complete or rectify the works.[19]
[19]See Scott Building Pty Ltd v Minogue & Coal Basin Equipment Pty Ltd [2010] QCAT 420.
[49] The Tribunal finds that the Builder failed to attend at the site to complete the works by 20 November 2009 and the works were either incomplete or had major defects to be attended to by the Builder. The failure by the Builder to complete the works was conduct for the purposes of repudiatory breach of contract, inconsistent with the Builder’s statutory obligations where the Builder has refused to perform the contract except on its own terms.[20] The Tribunal finds that it was therefore reasonable for Mrs Lewis to think that the Builder was not prepared to be bound by the contract and has communicated an acceptance of the Builder’s repudiatory conduct on 3 February 2010 by engaging the services of Cairns Building Approvals (Certifiers) – this is conduct consistent with an acceptance of the repudiation and an election to terminate the contract.[21]
[20]Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626 and see Thunder Corp Pty Ltd [117].
[21]Thunder Corp Pty Ltd at [125].
[50] The Builder has also demonstrated conduct consistent with an intention to no longer be bound by the contract by failing to attend the inspection with the CBA at the house on 4 February 2010, the Tribunal having accepted the evidence of Mrs Lewis that she notified the Builder of the date of inspection by leaving a message on Michael’s mobile phone. Furthermore the Builder (Mr Welten and Michael) attended Mrs Lewis’ house on 2 February 2010 with outstanding invoices for payment and the Tribunal accepts the evidence of Mrs Lewis that Mr Welten packed up his tools and this was a clear intention by the Builder to no longer be bound by the contract. Mrs Lewis has by letter dated 5 February 2010 to Builder confirmed that the contract had been terminated.
[51] The Tribunal must determine the quantum to be awarded for the defective and incomplete works. The relevant authority in determining the quantum payable by the Builder for completing and rectifying the building works in accordance with the contract is the decision in Bellgrove v Eldridge[22] where the rectification work to be performed must be both necessary and reasonable.[23] The Tribunal is satisfied based on the reports of the QBSA and Mr Peach that the outstanding works as at the alleged date of completion (20 November 2009) were incomplete and that there were substantial defects. The Tribunal must determine the quantum to be attributed to the items found to be defective and incomplete based on the material filed and the evidence given at the hearing by Mr Peach and Mr Welten and the findings made by Mr Ford in the CBA report.
[22](1954) 90 CLR 613 referred to in Pulitano v Mikescapes Pty Ltd [2010] QCAT 248 and Franklin v A&S Bricklaying Service [2010] QCAT 69.
[23]See Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8.
[52] Mrs Lewis prepared a document tendered at the hearing[24] which referred to the item numbers referenced in the schedule of alleged defective /incomplete work dated 9 July 2010 and referred to those items referenced in the QBSA list and Mr Ford’s (CBA) report. The Tribunal to assist with the cross-referencing process has prepared the following schedule based on Mrs Lewis’ document:[25]
[24]Exhibit 3.
[25]Based on the information provided in Exhibit 3. Mrs Lewis states in the document prepared that the remaining items are also covered by the QBSA and Mr Ford (CBA) reports however there is no further reference made to these remaining items in the Mrs Lewis’ document.
Applicant’s Alleged Defective and Incomplete Work Schedule (Item Number and Description). QBSA Item No. Mr Ford’s (CBA) Report Item No. 1. Rough tiling in downstairs bathroom/no water stop at bathroom door 1 2, 3 2. Wall cladding downstairs not secure/not complete
3. Gaps at top of wall cladding
4. Sharp edges and rough finish to wall cladding
19. No vermin proofing ceiling and floor on deck
3, 4 5, 6, 8 5. Window and door furnishings not installed correctly
6. Weather proofing to bi-fold doors incomplete
12. Bi-fold kitchen windows unlockable5, 10 7, 22, 25 7. Split boards on deck
8. Nails sticking out on balustrade
15. Front doorstep not level16. Weather boards above front door split and different profiles and very rough
17. Split timber right side of front door
18. Split wood where original balustrade removed20. Front of house, centre pole on balustrade used wood chip to correct lean to pole
21. Balustrade top rail uneven and not level (front of house)
22. Centre pole too high and should be under rail (front of house)
23. Balustrade spacing generally uneven
7, 8 9, 31, 32, 33, 34, 36
9. Water leaking entire length of veranda roof
14. Window flashing downstairs fixed window
24. Daylight through deck eaves veranda
25. Front south of deck ceiling goes up on the left26. Ceiling wall between new deck and original back deck gets very wet when it rains
5, 9 8, 11, 13, 14, 15, 16 10. Internal stairs uneven
11. Internal stairs dwarf wall crooked and uneven6 18, 24, 26 13. Internal wall cladding downstairs bedroom rough 11 30, 36, 37 15. Front door step not level
16. Weather boards above front door split and different profiles, very rough
17. Split timber right side of front door
18. Split wood where original balustrade removed
27. Wood profiles different above bi-fold doors27, 28, 37
[53] Mr Welten does not dispute that the items numbered 2, 4, 7, 8 and 9 referred to in the QBSA list dated 2 June 2010 are defects. Mr Welten also states that the items numbered 1, 4, 16, 17, 18 (part), 21, 33, 34, and 35 in Mr Ford’s (CBA) report are excluded from the scope of works and are the responsibility of Mrs Lewis. Mr Welten identifies 15 items in Mr Ford’s report that he states are included in the QBSA items and 14 items which he states “require an inspection and clarification”. Mr Welten did not file any evidence to contradict the findings made by Mr Ford. Mr Welten did not file any material in support of his submission in relation to the estimated costs of rectification for the items which he concedes require further attention by the Builder. Mr Welten submits that he has assessed the items to be rectified being items numbered 2, 4, 7, 8 and 9 referred to in the QBSA list based on his expertise as a builder and costed the items in the amount of $1,170.00 – this includes the 15 items identified by him in Mr Ford’s report (items numbered 2, 3, 5, 6, 7, 8, 9, 10, 12, 22, 24, 25, 26, 27 and 32). Mr Welten also states that the 14 items identified by him in Mr Ford’s report which require further inspection or clarification have been costed in the amount of $530.00.[26]
[26] Items numbered 11, 13, 14, 15, 18, 19, 20, 23, 28, 29, 30, 31, 36 and 37.
[54] The items disputed by Mr Welten as being outside the scope of works are items numbered 1, 4, 16, 17, 18, 21, 33, 34, and 35 referred to in Mr Ford’s report:[27]
[27] Exhibit 17, written submissions.
Item No Reference to item in Mr Ford’s (CBA) report
1 Provide an amended Building Application… (e.g. spiral stairs and lower bathroom layout). 4 Satisfy the requirements of Condition 10 of the Development Application Decision Notice dated 25 June 2009 (BA 1471). 16 Effectively dispose of roof water as per the requirement of Condition 6 of the Development Application Decision Notice dated 25 June 2009 (BA 1471). 17 Provide a Final Inspection Certificate for all plumbing works as supplied by the Cairns Regional Council’s Plumbing Department. 18 Finalise timber trims in the internal stairway (NB amendments to approved building plans are needed in this area). 21 Seal the waste pipe on the western wall and/or complete as required – refer to photograph 21. 27 Seal all open joints, gaps or holes in external lining boards. Replace mis-matched lining boards where there is noted variation in finishes – refer to photographs 40, 41, 42 & 43. 29 “Make good” damage to base supports to window assemblies – refer to photographs 59 & 62. 33 Punch “home” exposed deck nails – refer to photograph 76. 34 Remove exposed nails in lining boards, for example – refer to photograph 78. 35 Explain why electrical wiring works were not planned to be concealed in wall frames where these walls were re-lined – refer to photograph 78. 36 Replace mis-matched skirting boards and trims throughout – refer to photograph 79. Complete skirtings neatly around services – refer to photograph 80.
[55] Mr Hoffmann’s report has costed the items as follows: Item 4 – $9,000.00; item 16 – $3,300.00; item 17 – $185.00. There is a costing for items numbered 18-37 (inclusive) – $12,000.00. The Tribunal must determine whether the disputed items identified in the above schedule are items outside the scope of works as alleged. Item 1 (amended Building application) has not been included in the costs of rectification by Mr Hoffmann and Mrs Lewis did not make any submissions in relation to this item. The Tribunal does not make any findings in relation to Item 1. The “quote” for renovations included with the contract excludes:[28] “Local authority approvals, plumbing and drainage (by owners), structural design, air conditioning, termite treatment, supply and install spiral staircase, insulation in walls, restoring casement windows, painting… Authority inspections”. The Tribunal finds items numbered 4, 16, 17, 18 and 21 did not form part of the scope of works. In relation to items numbered 33, 34 and 35 the Tribunal notes the items included in the “quote”. Based on the evidence of Mrs Lewis, the Tribunal finds that items numbered 33, 34 and 35 were items included in the scope of works.
[28] Exhibit 20.
[56] The estimate provided by Mr Hoffmann (Habitat) refers to the items referenced in Mr Ford’s (CBA) report and does not refer to the QBSA report. Mr Hoffmann and Mr Ford were not called to give evidence at the hearing, however Mrs Lewis relies on the estimate provided by Mr Hoffmann in relation to the costs of rectification and to complete the works at the house. The Tribunal must approach the evidence of Mr Ford and Mr Hoffmann with some caution given that Mr Welten did not have an opportunity to test the evidence – the rules of evidence do not apply in this Tribunal however the findings made must be considered in the context of whether there has been a disadvantage to the Builder given that the particular witness was not available for cross-examination. The Tribunal accepts that Mrs Lewis, as indicated in the material tendered at the hearing, had made attempts to obtain other quotes in relation to the works however her attempts were not successful. Mrs Lewis also indicated at the hearing that she obtained a report from Mr Peach on the basis that Mr Welten had raised concerns about Mr Ford having known Mrs Lewis in her capacity as a real estate agent. Mr Welten on behalf of the Builder did not tender any material to be relied upon, other than his own evidence, to contradict the findings made by Mr Peach, Mr Ford and Mr Hoffmann.
[57] The Tribunal accepts Mr Welten’s submission that the Chappell Developments quotation is an estimate and is unclear as to the costing of the various items to be rectified. The Tribunal prefers the quotation provided by Mr Hoffmann (Habitat) – Mr Hoffmann inspected the works at the house whereas Chappell Developments did not undertake an inspection. The Tribunal accepts the evidence of Mr Ford and Mr Hoffmann that the items identified in their reports require further work before certification may be obtained. The Tribunal also accepts the findings made by the QBSA in relation to the items identified to be rectified or completed by the Builder.
[58] The Tribunal must attempt to cross reference the items referred to in Mr Ford’s (CBA) report with the QBSA list so that the relevant quotation for those items identified in Mr Hoffmann’s report can be determined. Some of the quoted items in Mr Hoffmann’s report are “inclusive” of more than one item referred to in Mr Ford’s report, for example items numbered “2 & 3 Bathroom” are quoted as an inclusive amount of $11,000.00 in Mr Hoffmann’s report.
[59] Mr Welten made concessions at the hearing in relation to some of the items referred to in the QBSA list and the Builder has agreed to attend to the QBSA items except for item numbered 1.[29] The Tribunal accepts the evidence of Mrs Lewis that the Builder was required to complete work to the downstairs bathroom and also notes the findings made by Mr Peach in his report that the “waterproofing and waste-water shower drainage of the downstairs bathroom as [being] the most significant”. The Tribunal is satisfied that the quotation provided by Mr Hoffmann is reasonable and finds that the rectification and completion costs should be paid by the Builder. The Builder is however entitled to recover the money owing for the renovation works completed on the basis that Mrs Lewis has had the benefit of the works, less any claim for defective and incomplete work.[30] The Tribunal accepts the evidence of Mr Welten that the additional items claimed by the Builder for extra work were not included in the outstanding progress and final payments claimed under the contract of $14,397.00 and the amount of $2,420.00 (as claimed) plus $90.00 for painting should be allowed. The amount of $32,175.00 must therefore be offset against the amount claimed by the Builder for the works performed ($16,907.00):
[29] Exhibit 12, letter dated 9 June 2010.
[30] See Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178.
Quote by Mr Hoffmann: $53,735.00 (plus GST)
LESS
Items outside the scope of works:
Item 4 $ 9,000.00
Item 16 $ 3,300.00
Item 17 $ 185.00
Items 18 & 21[31] $12,000.00
[31]The Tribunal is unable to apportion a reasonable amount towards the costs of items numbered 18 and 21 as there is an inclusive amount of $12,000.00 for items 18 to 37. The amount of $12,000.00 must therefore be deducted from the total quote.
$24,485.00 (plus GST) LESS
Money owing:
Contract $14,397.00
Extra work $ 2,420.00
Painting $ 90.00
$16,907.00
TOTAL $15,268.00
Costs
[60] The starting point concerning costs in QCAT is that each party must bear its own.[32] This presumption may, however, be displaced if the Tribunal considers it in the interests of justice to order a party to pay all or part of the costs of another party.[33] The phrase “in the interests of justice” is not defined in the Act but is to be construed according to its ordinary and plain meaning, which obviously confers a broad discretionary power on the decision-maker. In determining whether it is in the interests of justice to award costs against another party the Tribunal may have regard to the nature and complexity of the dispute; the relative strengths of the claims made by each of the parties; and, whether a party has acted in a way that unnecessarily disadvantages another party.[34]
[32]Queensland Civil and Administrative Tribunal Act 2009 (“the Act”), s 100.
[33]As above, s 102(1).
[34]As above, s 102(3).
[61] The issues to be determined by the Tribunal in this matter were contested by both the parties. There were several documents both handwritten and typed to be considered and calculations to be reconciled with the evidence adduced and tested by way of cross-examination at the hearing. The legal costs claimed by Mrs Lewis in relation to the Caveat issue are not costs incurred in relation to these proceedings and are therefore not costs which the Tribunal can consider as being payable under section 102 of the Act. The Tribunal is not satisfied having regard to the discretionary power to award costs under section 100 of the Act and the issues to be determined in this matter that it is appropriate to make an order for costs.[35]
[35]Interest was claimed by Netcon Pty Ltd however the Tribunal has determined that Mrs Lewis was not in breach of the contract for failing to pay the final progress claims. The Tribunal has made no order in respect of interest.
[62] The Tribunal orders that Netcon Pty Ltd pay Mrs Lewis the amount of $15,268.00 by 4.00pm on 25 July 2011.
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