Lida Build Pty Ltd v Miller
[2012] QCAT 137
•26 March 2012
| CITATION: | Lida Build Pty Ltd v Miller and Anor [2012] QCAT 137 |
| PARTIES: | Lida Build Pty Ltd |
| v | |
| Peter Miller Susan Miller |
| APPLICATION NUMBER: | BD314-09 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 16 March 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | B Cotterell, Member |
| DELIVERED ON: | 26 March 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That Peter & Susan Miller pay Lida Build Pty Ltd the sum of $11,820.34 by 4pm on 23 April 2012. |
| CATCHWORDS: | Contract – Domestic Building Contract – Remuneration – Whether a home owner may lose the right to liquidated damages when they have contributed to or caused the contractor’s delay Peak Constructions (Liverpool) v McKenney Foundations Limited (1970) 69 LGR 1 followed Contract – Domestic Building Contract – damages – whether assessed according to rectification measure rather that diminution in value TabcorpHoldingsLtdv Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 followed |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Lida Build Pty Ltd represented by Mr Jover |
| RESPONDENT: | Peter Miller & Susan Miller represented by Mr Miller |
REASONS FOR DECISION
This application has been referred back to this Tribunal by the QCAT Appeal Tribunal (the Appeal Tribunal). Both Lida Build Pty Ltd (Lida Build) and Peter and Susan Miller (the Millers) appealed a decision of this Tribunal dated 6 September 2010 to the Appeal Tribunal and both were successful in part.
The Appeal Tribunal was constituted by the President, Justice Alan Wilson, and Member Michelle Howard. It ordered as follows:
On the appeal of Lida Build, the appeal is allowed but only to the following extent:
(a) That the amount allowed for electrical variations of $11,302.91 be set aside and the amount of $12,433.21 be substituted;
(b) That the decision of the Tribunal about the date for practical completion, delay costs, and late completion damages be set aside and those issues returned to the Tribunal for reconsideration according to law;
(c) That the claim by Lida Build for interest under the contract is returned to the Tribunal for reconsideration and the Tribunal is directed to hear further evidence to allow it to calculate interest owing on monies owing under the contract;
(d) That the claim by Lida Build for costs under the contract is referred back to the Tribunal for reconsideration and the Tribunal is directed to hear further evidence to allow it to calculate costs referrable to recovery of monies owing under the contract;
(e) That the claim by Lida Build for costs by way of the filing fee of the application is referred back to the Tribunal for reconsideration and the Tribunal is directed to determine the claim.
2. On the appeal of Susan Miller and Peter Miller, the appeal is allowed but only to the following extent:
(a) (i) That the Tribunal’s orders dismissing the claims for diminution of value and rectification relating to the roof pitch be set aside and that the Tribunal reconsider those claims;
(ii) The Tribunal is directed to determine, in accordance with the evidence, that the roof pitch of the existing house is 25 degrees and the roof pitch of the pool house is 30 degrees, whether the contract required the roof pitch to match the roof pitch of the existing house; and, whether an amount should be awarded on the Millers counter-claim for rectification of the pool house roof or diminution in value;
(b) That the claims for shuttering of $3,500, fitting door furniture of $225.50 and paint of $139.71 are allowed;
c) That the amount allowed for rectification of minor defects of $792 is set aside and the amount of 1267.50 ($792 plus $475.50) is substituted for it;
(d) That the amount allowed for the rectification of the fascia of $880 is set aside and returned to the Tribunal for reconsideration of this issue when determining the claims specified in 2(a) of these orders;
(e) That the decision of the Tribunal about the date for practical completion, delay costs, and late completion damages be set aside and those issues returned to the Tribunal for reconsideration according to law.
This Tribunal reheard the matter on 16 March 2012.
Lida Build’s claim relates to $18,528 for its fixing stage, $15,675 for its practical completion stage, $5,329.50 for delay costs, $11,816.65 for electrical variations, $6,807.90 for tiling variations and $1,326.60 for roof variations amounting to a total claim of $59,483.65. The $1,326.60 for roof variations claim was abandoned at the hearing reducing the claim to $58,157.05. Lida Build have also claimed interest and costs.
As a result of the decision of the Appeal Tribunal it was agreed by the parties on 16 March 2012 that Lida Build’s claim must be adjusted as follows:
Claim (12 June 09) for its fixing stage of $18,528[1]
Claim for its practical completion stage of $15,675[2]
Delay Costs of To be calculated
Claim for electrical variations $12,433.21[3]
Claim for ceramic tiling variations $1,346.40
Claim for external tiling variations nil
Claim for roof rectification withdrawn
Claim for Interest To be assessed
Claim for costs To be assessed
Claim for Filing Fee To be assessed
Total To be calculated[1]Lida Build’s invoice was for $20,900 from which the Millers deducted $2,372 which they had paid directly to the painter (Channon) leaving an agreed balance of $18,528.
[2]This was the amount of Lida Build’s invoice which related to the contract stage plus GST before the variations were claimed.
[3]This amount arises from the decision of the Appeal Tribunal paragraph 1(a).
As a result of the decision of the Appeal Tribunal, it was agreed by the parties on 16 March 2012 that the Millers’ claims must be adjusted as follows:
Roof Pitch[4]
• Claim for rectification $37,638.98 To be assessed
• Claim for diminution in value of $52,500 To be assessed[4]The amount of $880 allowed by the decision of the Tribunal of 16 September 2010 for rectification of the fascia was set aside and referred back to this Tribunal by the Appeal Tribunal.
Damages to the Millers' Property
• Damages to Swimming Pool Dismissed
• Damages to Lawn DismissedItems lost or thrown away by Lida Build
• Swimming pool filter Timer Dismissed
• CD Player for Sauna DismissedLate Completion Damages To be assessed
Claims for shuttering, fitting door furniture and paint 3,865.21[5]
Rectification of Minor Defects identified in BSA Report 1,267.50[6]
Total To be calculated
[5]Approved by the Appeal Tribunal at paragraph 2(b).
[6]Approved by the Appeal Tribunal at paragraph 2(c).
At the hearing on 16 March 2012, Mr Miller also sought costs on the basis that Lida Build were claiming costs. Lida Build’s claim was under the contract and the Millers’ claim was under the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act).
Witnesses
Lida Build filed a statement from Mr Darryl Jover, dated 19 October 2010, to which was attached evidence in relation to its Claim for Interest, Claim for costs and Claim for the Filing Fee. Lida Build also filed submissions dated 13 February 2012.
The Millers filed submissions from their solicitors dated 18 October 2010 and 15 February 2012 but these did not provide the Tribunal with any new evidence. The submission did not directly refer to any evidence previously filed to justify the submissions.
Matters to be Determined
At the start of the hearing on 16 March 2012, the parties agreed that, in view of the decision by the Appeal Tribunal, the issues to be determined by this Tribunal were as follows:
1. The date for practical completion;
2. The delay costs;
3. The late completion damages;
4. The claim by Lida Build for interest under the contract;
5. The claim by Lida Build for costs referrable to recovery of monies owing under the contract;
6. The claim by Lida Build for costs by way of the filing fee;
7. The Millers’ claims for diminution of value and rectification relating to the roof pitch;
8. The Millers’ claim for costs (added at the hearing).
Date for Practical Completion
According to the Contract dated 7 October 2008, the work was to be completed in 45 working days from the date work commenced. It is not in dispute that work commenced on 20 October 2008.
The Tribunal decision of 16 September 2010 extended the date for Practical Completion to 4 February 2009 on the basis that it accepted Lida Build’s claims for delay as follows:
Wet Weather delays in November = 8
Electrical variations Nov + Dec = 4
Interference by Millers Oct/Nov/Dec = 5
Roof rectification 22-24 Dec = 3
Christmas shut-down 24 Dec-19 Jan 09 = 17
Extension for Practical Completion = 4 February 2009
The Appeal Tribunal referred back to this Tribunal the decision about the date for practical completion.
The Tribunal decision of 16 September 2010 allowed the eight working days for weather and the four days for electrical variations as Mr Miller had conceded this at the hearing.[7] Mr Miller disputed the claim for four days for the electrical variations on 16 March 2012 but these days must be and are allowed because of Mr Miller’s concession. This justifies an extension to 22 December 2008.
[7] Transcript of 15 July 2010 Mr Miller at page 53 the 8 weather days plus 4 for the electrical variations.
On 16 March 2012, Mr Miller again disputed the claim for five days for the alleged interference by the Respondents and when pressed to justify how this claim specifically related to the period between 20 October 2008 and 4 February 2009, Lida Build was unable to provide convincing evidence to justify that many days in that period. Therefore, the Tribunal dismisses the claim for these days.
The Roof Pitch Problem
The next relevant claim is for the roof rectification of three working days. There is no doubt that three working days were spent attempting to rectify the problem from 22 to 24 December 2008 once it was discovered on or about 22 December 2008 that the fascias were too low. This problem arose from the fact that the roof pitch of the pool house was built at 29-30 degrees.
It is not in dispute, that the plans supplied by the Respondents, somewhat unusually according to Mr Sweeney, the architect from Mondo Architects, did not show a pitch for the roof[8]. Mr Sweeney, at the hearing on 15 July 2010, stated:
“Normally on those drawings you would have a roof pitch, especially with a new construction and I’m not going to step back from the idea that a 25 degree pitch should have been nominated on these drawings”[9]
[8] Transcript of 15 July 2010 Pages 43 and 44 Mr Sweeney.
[9] Transcript of 15 July 2010 Page 44 Mr Sweeney.
The plans do state “roof to match existing” and Mr Miller submitted that this referred to the pitch of the existing house which, now is not in dispute, is 25 degrees. However, contrary to Mr Miller’s submission, Mr Sweeney stated at the hearing on 15 July 2010 that this was a reference to the “roof cladding to match the same profile and colour”[10]. It is not in dispute that Lida Build matched the roof cladding to the house.
[10] Transcript of 15 July 2010 Pages 36 and 45 Mr Sweeney.
The dispute arises from the fact that the pool house does not match the roof pitch of the house and this claim for roof rectification arises from attempting to fix the problem once it was identified on or about 22 December 2008.
Mr Sweeney, however, having admitted that his firm had not inserted a roof pitch on the plans stated:
“Any carpenter can work out a 790 eaves overhang from 24 (2400mm) pitching height is going to give you a 2150 clearance under the eaves but any other pitching height is going to give a difference. That’s carpentry 101”[11]
[11] Transcript of 15 July 2010 Page 45 Mr Sweeney.
However, just to complicate this issue further, at the hearing on 15 July 2010, Mr Jover asserted that he “matched the existing pitch of the house”[12]. This was not the first time that he had made this assertion because at the hearing on 14 July 2010 he had stated:
”…we got the roof pitch from the existing house by placing a bevel into the existing soffit and then transcribed that on to the hand pitched section of the centre pavilion area of the pool house and ordered the trusses.”[13]
[12] Transcript of 15 July 2010 Page 45 Mr Jover.
[13] Transcript of 14 July 2010 Pages 24-25 Mr Jover.
The obvious question arises as to why Lida Build “got the roof pitch from the existing house” unless they wanted to match the roof pitch of the pool house to that of the existing house.
In summary, the Tribunal finds that both parties are to blame for the issue of the roof pitch. The Millers were responsible for supplying the plans which clearly were defective and Lida Build, while not required by the plans’ notation “roof to match existing” to match the pitch of the house attempted to do so and failed. The Tribunal will return to this issue later.
Returning to the claim for the roof rectification of three working days, the Tribunal determines that this claim should be allowed under the circumstances referred to above where both parties are to blame and the roof rectification involved an attempt to resolve the problem quickly, due to Christmas, and, no doubt, as cheaply as possible.
This results in an extension for practical completion to 24 December 2008 plus one day. Lida Build then has claimed 17 working days for the Christmas shutdown from Wednesday 24 December-Monday 19 January 2009 and this is approved by the Tribunal. This results in an extension for practical completion to Monday 19 January 2009 plus the one day resulting in the extension for practical completion to 20 January 2009.
Lida Build’s claims for one working day on 23 January 2009 for weather and subsequent days must be dismissed as they occur after the extension for practical completion to 20 January 2009.
The Tribunal will address Lida Build’s claims for 81 days delay in relation to the additional water meter and four working days delay for the late supply of sanitary pan when addressing the Millers’ claims for late completion damages.
Lida Build’s Claims for Delay Costs
The Tribunal decision of 20 September 2010 accepted Lida Build’s submission that under Clause 16.2 of the Contract 0.05% of the contract price of $104,500 results in an amount of $52.25 per day being the appropriate amount to use for calculating delay costs. This was not disputed by the Millers.
Under the contract, delay costs are claimable after commencement where the carrying out of the work is delayed by a cause for which the owner is responsible.
This results in the following amounts:
(a)Delays associated with electrical variations 4 days x $52.25 per day = $209.00
(b)Delays associated with roof rectification 3 days x $52.25 per day = $156.75.
The Tribunal finds that the Millers were not responsible for wet weather delays or the Christmas shut-down and awards no delay damages for these periods.
That results in a total for Delay Costs of $367.75.
The Millers’ claims for late completion damages
The Millers have claimed late completion costs of $50 per day in accordance with Clause 11 of the contract. The question to be determined is the number of days. At the hearing on 16 March 2012, Mr Miller stated that from 16 December 2008 to 16 March 2012 was 949 days and that 949 days should be used by the Tribunal.
The Tribunal having determined that the extension for practical completion should be to 20 January 2009, that clearly is the date from which to begin counting. It is then necessary to determine when the period should end and for reasons I will now address, what days, if any, should not be counted for late completion damages.
Lida Build claimed 81 days delay in relation to the additional water meter and four working days delay for the late supply of sanitary pan was as a result of actions by the Millers. Mr Miller claimed that the plumber, Mr Flynn, was responsible in relation to the additional water meter and the late supply of sanitary pan and that he was the sub-contractor of Lida Build, therefore, Lida Build was responsible for both delays.
Dealing firstly with the late supply of sanitary pan. The Millers purchased a sanitary pan at the Home Show in 2006, which it transpired was not suitable and Mr Flynn offered to exchange it for them. When Mr Flynn eventually got around to exchanging it in June 2009, he found that this type of pan was no longer produced and another one had to be purchased. Mr Flynn conceded at the hearing on 14 July 2010, that it took four days to get the pan and two days for him to install it.[14] The Tribunal, therefore, finds that the late supply of sanitary pan resulted in six days delay to Lida Build and because the purchase and exchange arrangements were all strictly between Mr Flynn and the Millers that the Millers were responsible for this delay.
[14] Transcript of 14 July 2010 Page 83 Mr Flynn.
Dealing now with the additional water meter. The Millers requested that Lida Build use Mr Flynn as the plumber on the project as they had had previous dealings with him and also he was familiar with the Lomax system, which they wanted installed.
Lida Build included a sum of $4,500 in its quote to the Millers for plumbing and anything in addition was to be paid for by the Millers.
Mr Flynn, in March 2009, had a discussion with Mr Miller where he suggested that the Millers should apply to the Brisbane City Council for an additional water meter. Mr Miller, who was responsible under the contract for all applications, applied and it was eventually approved and installed on 9 June 2009. This resulted in a delay of 81 days. Mr Miller submitted that because Lida Build had engaged Mr Flynn as the plumber on the site, at the Millers’ request, that Lida Build were responsible for this delay caused by the application for the additional water meter.
Mr Flynn gave evidence that the water could have been connected to the pool house from the existing house. He also gave evidence which suggested that approval of a third meter was not the norm. He also gave evidence that connecting it from the third meter once approved was quicker and cheaper than from the existing house. Under cross-examination Mr Flynn was asked:
“In your opinion would it have been reasonable for Lida Build, or particularly myself (Mr Jover), to anticipate that Mr and Mrs Miller would request this third water meter to be installed?”
Mr Flynn replied:
“Probably not. If there’s water on the premises, there’s no reason why you would as a builder think we can’t hook into that. It would probably have been something that Mr and Mrs Miller, I would have thought, would have gone through with you if they wanted a separate meter.”
The Tribunal rejects the submission by the Millers that Lida Build were responsible for this delay caused by the application for the additional water meter. The Tribunal finds that Lida Build had no reason to anticipate that the Millers would want an additional meter and no reason to suggest this to the Millers as the pool house could be connected without it.
While Mr Flynn was the plumber used by Lida Build on the site, he had an on-going relationship with the Millers as evidenced by their relationship in 2006, his undertaking landscaping for them during the period of the Lida Build contract and his billing the Millers rather than Lida Build for all of his work. On the basis of all of the evidence, the Tribunal is of the opinion that Mr Flynn was working directly for the Millers and not as a sub-contractor for Lida Build. This adds to the reasons why the Tribunal finds that the Millers were responsible for this delay caused by the application for the additional water meter.
By virtue of clause 17.3 of the contract, the contractor is required to give written notice of the claim for an extension to the homeowner detailing the cause of the delay and the extension of time occurring by the later of 20 days after becoming aware of both the cause of the delay and the extent of the delay, or five days on or before the date of practical completion. Practical completion is defined in the contract. Lida Build submitted an extension of time claim on 12 June 2009, and asserts that it therefore complied with the notice requirements.
The Appeal Tribunal stated:
Clause 17 contemplates, in 17.3, that notice will be given at latest 5 days before the date for practical completion. The date for practical completion is the date provided for in the contract before any extension of time, or any extended date for completion allowed in accordance with the clause.
Properly construed, in its terms, the clause does not contemplate extensions claimed arising from events which occurred after the date for practical completion as originally agreed by the parties, or as extended under the clause before the date for practical completion has passed. Lida Build had contractual rights which it could have exercised to extend time as a result of the delays which occurred. It appears it did not do so.
The date for practical completion has been assessed by this Tribunal as 20 January 2009 and these delays occurred well after that date. On this basis this Tribunal finds that Lida Build cannot rely upon Clause 17 of the contract to extend time for the delays which occurred after 20 January 2009.
Before the Appeal Tribunal Lida Build relied upon the prevention principle discussed in Peak Constructions (Liverpool) v McKenney Foundations Limited.[15] Essentially, it argues that the prevention principle establishes that a principal may lose the right to liquidated damages when it has contributed to or caused the contractor’s delay. It argued that the principle has found support in Australia.[16]
[15](1970) 69 LGR 1.
[16]SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391; Turner Corporation Pty Ltd) Receiver & Manager Appointed) v Austotel Pty Ltd (1992) 27 NSWLR 592; Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) 16 BCL 449.
The Appeal Tribunal stated:
The prevention principle is grounded in ‘considerations of fairness and reasonableness’.[17] It operates where a proprietor is responsible, wholly or partly, for a contractor[18] being rendered unable to complete the works by the date of practical completion. It operates to render time at large, and the obligation to complete by a particular date is replaced by an implied obligation to complete within a reasonable time. The right to liquidated damages is lost (because it depends upon the existence of an express completion date) unless the contractor either agrees to complete by the due date irrespective of the delay, or there is provision in the contract for extension of the date for practical completion.[19]
If time for completion has already passed when the proprietor’s act or omission occurs so that liquidated damages were already accruing, those already accrued are unaffected; but the right to recover or retain liquidated damages is lost from the time of the act or omission.[20] However, a builder who has contractual rights to extend the date for completion which he fails to exercise has, in some circumstances, been held to be unable to rely upon the prevention principle because the act of the proprietor does not stop the performance of contractual obligations; instead, it entitles the builder to an extension of time.[21]
[17]SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391, 397.
[18]Mort’s Dock & Engineering Co Ltd v Wadey (1905) 22 TLR 61.
[19]Peak Constructions (Liverpool) v McKenney Foundations Limited (1970) 69 LGR 1
[20]SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391.
[21]Turner Corporation Limited (Receiver and Manager Appointed) v Austotel Pty Limited (1994) 13 BCL 378.
This Tribunal accepts that Lida Build can rely on the prevention principle. Here the time for practical completion was 20 January 2009 so that liquidated damages were already accruing and those that had are unaffected. But here the right to recover liquidated damages was lost by the Millers from 20 March 2009 when they determined to connect the pool house to a third water meter and applied for approval to install that water meter. The Millers are entitled to liquidated damages from 20 January 2009 to 20 March 2009 which is 59 days[22] amounting to $2,950.
[22]11 days in January, 28 in February and 20 in March.
Has the poll house been completed according to the contract?
On 16 March 2012, Mr Miller claimed to be entitled to on-going late completion damages because he submits the pool house is still not complete.
On 23 June 2009, Brisbane Certification Group carried out a Final Stage Inspection which ticked most of the boxes other than Certificates and recorded Comments/Advice as follows:
“Ensure stormwater is directed away from building.
Unable to finalise part construction not started! Is this to be deleted or finished at a later date?
Please provide certificates”
Part of the construction on the plans had been deleted from the contract and, as the plans and approval were the responsibility of the Millers, the Tribunal finds that they need to have the plans amended so that they could obtain final approval. The Tribunal also finds that the stormwater was being undertaken by Mr Flynn for the Millers and that the Millers, therefore, should have had this attended to and to have obtained final approval. The Tribunal heard no evidence about the certificates and therefore, can make no findings in this regard.
If these matters had been attended to by the Millers, the Tribunal finds that they could have obtained final approval in June 2009. However, that is not the end of this matter.
On 15 December 2010, some almost 18 months later, Mr Walton of Brisbane Certification Group again carried out a Final Stage Inspection which reversed some of the items which he had marked as satisfactory on 23 June 2009. He did this specifically for Site Preparation, Drainage and Safe Movement and Access. The later being in regard to ceiling heights. Under Comments/Advice it states the following:
“1. Head clearance at pump-house/pool gate area external to building is insufficient. That is, it is less than required height of minimum 2.0 metres. Approx 1.946 metres.
2. Visual barriers for termite protection to the building need to be maintained – lower external ground levels to comply with AS 3660 whilst maintaining falls to stormwater drains/spoon drains away from building.
3. Water ponding is evident indicating inadequate falls to paved/tiled areas.”
The head clearance issue was first raised by the Millers on about 22 December 2008 which resulted in the rectification of the fascia by Lida Build. It has resulted in the claim by the Millers for rectification in the sum of $37,638.98 or the claim for diminution in value in the sum of $52,500. Both claims depend on the Tribunal’s answer to the question about completion of the pool house.
As discussed above, both parties have contributed to this outcome, which must be described as unsatisfactory as the height fails to comply with the minimum height of 2.0 metres. The BSA Report shows that the fascia outside the pool equipment room was 1970 mm and because it is in a traffic area to the pool gate, the BSA assert that it needs to comply. Lida Build conceded this at the September 2009 hearing, without conceding the means of rectification.
Lida Build asserts that the Millers warranted the suitability of the plans for the works and that Lida Build carried out the works in accordance with those plans.
The Tribunal has already addressed the deficiency of the plans with regard to the degree of pitch but does not accept that Lida Build carried out the works in accordance with the plans because the approved “Beams” plan dated 17 January 2008 clearly shows a roof overhang required of 790 which has not been achieved. This measurement also appears on the approved Floor Plan of the same date. The approved “Sections & Elevations (New Additions)” plan dated 17 January 2008 at C-C shows the floor to roof measurement as 2450 but this is somewhat complicated by a notation “Top of timber bearer”.
Mr Sweeney at the hearing on 15 July 2010 referred to this as the ”pitching height” and stated that using it and a 790 eaves overhang would give a 2150 clearance. He went on to say that “…the thing could have been built exactly as the drawings are drawn. I think that there is another issue that if there was any uncertainty once someone has gone on site and found that there is a significant difference between what was built in the existing building and what’s shown on the drawings, that it’s absolutely normal to come back to whoever is drawing the drawing and say “Hey, there seems to be a problem with the drawings. What’s on site is different”.[23]
[23]Transcript of 15 July 2010 Page 45 Mr Sweeney.
The Tribunal finds that the pool house could have been built exactly as the drawings are drawn. It also rejects Mr Jovey’s evidence that Lida Build took the roof pitch from the existing house which has now been shown to be at a pitch of 25 degrees. On the basis of the evidence, the Tribunal finds that the pool house has not been completed by Lida Build in accordance with the contract.
From this decision it is clear that the Millers are entitled to the cost of rectification to have the pool house built in accordance with the contract. There was only the evidence from the Millers’ son-in-law, Simon, of AJ Plumbing in the sum of $11,805.20 and from his friend, Barrai Moran of MCD Carpentry, in the sum of $25,833.78 making a total of $37,638.98. While a Tribunal is normally wary of quotations from related parties, in this case because Lida Build did not acknowledge the problem, it did not present any alternative evidence. Lida Build did not even want to cross-examine these parties in relation to their quotes.
The quotation submitted by Lida Build from Adroit Projects Pty Ltd only addressed the rectification of a small area of the roof and did not deal with the entire problem. Therefore, it was unhelpful to the Tribunal.
In summary, the Tribunal accepts that this work is required for the pool house to conform to the contract and that this amount of $37,638.98 is a fair estimate of the cost of rectification.
Having accepted the Millers’ claim for rectification, the Tribunal dismisses their claim for diminution in value in the sum of $52,500 as they cannot be entitled to both and the claim for rectification will put them in the position they should have been in if the contract had been completed. In Bellgrove v Eldridge the High Court emphasised that the relevant contract entitled the building owner to ‘have a building erected upon her land in accordance with the contract’[24] and that damages assessed according to the rectification measure — rather than that of diminution in value — were the appropriate means of giving her ‘the equivalent of a building on her land which is substantially in accordance with the contract.[25] For these reasons, the Tribunal also rejects the valuation evidence from Planet Valuations filed by Lida Build.
[24][1954] HCA 36; (1954) 90 CLR 613, 617 (Dixon CJ, Webb and Taylor JJ) (emphasis in original).
[25]Ibid
The Tribunal must now return to the Millers’ claim for late completion damages having found that the pool house is still not complete. The Tribunal has awarded them damages from 20 January 2009 to 20 March 2009 amounting to $2,950. Are the Millers entitled to liquidated damages from 23 June 2009, when Brisbane Certification Group carried out a Final Stage Inspection, to 16 March 2012? This would result in 192 days in 2009, 365 days in 2010, 365 days in 2011 and 76 days in 2012 making a total of 998 days resulting in liquidated damages of $49,900.
In Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (‘Tabcorp’) the High Court referred to the principle for the calculation of contractual damages for defective building work as the ‘ruling principle’[26] for ascertaining the quantum of damages for breach of contract derived from the famous dicta of Parke B in Robinson v Harman (‘Robinson’): ‘[The plaintiff] is, so far as money can do it, to be placed in the same situation ... as if the contract had been performed.’[27]
[26]As acknowledged by the High Court in Tabcorp (2009) 236 CLR 272, 286 (French CJ, Gummow, Heydon, Crennan and Kiefel JJ), the ‘ruling principle’ description is derived from WertheimvChicoutimiPulpCompany[1911] AC 301, 307 (Lord Atkinson for Lords Macnaghten, Atkinson, Collins and Shaw).
[27][1848] EngR 135; 154 ER 363, 365.
In Willshee[28] (Martin CJ) said:
“Mr Willshee entered into a contract which he considered served his interests, and he is entitled to the performance of that contract quite irrespective of the views which other people might form in relation to the advancement of those interests, such as views relating to the aesthetic appearance of the house.”
[28][2009] WASCA 87 (Unreported), Martin CJ, Buss JA and Newnes AJA, 18 May 2009) [60] Martin CJ.
In the opinion of the Tribunal, on the basis of Willshee, it could not be argued that the pool house is complete where the eaves and over-hang do not comply with the contract. In the opinion of the Tribunal, the roof pitch is not simply a matter of aesthetic appearance to justify not rectifying the roof.
The Tribunal considers that liquidated damages cannot continue forever. Owners are obliged to mitigate their loss and the builder will not be liable for liquidated damages beyond the time it was reasonable for the owners to have kept the contract on foot and left the works incomplete. In the circumstances, the Tribunal considers that 12 weeks is a reasonable time for liquidated damages to accrue against the builder. Twelve weeks is almost twice the period of the original contract and, therefore, would have been more than enough time for the Millers to have the roof rectified. They already had a quote from their son-in-law and his friend for this work. They have a duty to mitigate their loss.
This results in an award of damages to the Millers of 84 days by $50 per day amounting to $4,200. Limiting the period in this way would also appear appropriate given the Millers’ responsibility for the deficiency of the plans, which in part, contributed to the delay.
Lida Build’s Claim for Interest
This claim was split into two parts. Firstly, Lida Build claimed interest on the fixing stage claim which under Clauses 4.5, 4.8 and 33 of the contract was an unpaid progress claim on which default interest is payable until paid in full. The Tribunal finds that this amount became a debt within five days of receiving the claim which the Tribunal finds meant on 24 June 2009 as it was received on 19 June 2009.
Therefore using the Tables at page 6 filed in Lida Build’s submission dated 13 February 2012 showing an amount of $7,731.17 and reducing it by $36.92 to account for starting from 24 June 2009 and not 19 June 2009, and then adding 32 days x $8.14/day amounting to $260.48 to bring it to 16 March 2012. This results in a total award of $7,954.65.
Secondly, Lida Build claimed interest on the practical completion stage claim, which under Clause 4.8 is subject to set-off by the Millers. Therefore, the Tribunal finds that it only becomes a debt when this dispute is determined and then, only if an amount is determined to be owing to Lida Build after the set-off. Therefore, the date from which interest accrues will be the date of this decision. The Tribunal considers that it would not be in the interests of Lida Build to award interest on the claim after deducting the counter-claim from the date of this decision until payment as this may raise uncertainty as to the amount or result in a delay in payment if a number of days or a date is nominated in the calculation. Therefore, for these reasons the Tribunal dismisses this part of the claim.
Lida Build’s Claim for costs
This claim by Lida Build is based on Clause 34 of the contract which states the following:
The owner must pay to the contractor any debt collection costs, including any legal fees on a solicitor and own client basis, associated with recovering or the attempted recovery of an amount under this contract.
The variations approved in the decision of 6 September 2010 were not under the contract and, therefore, debt collection costs in relation to them are not claimable under this Clause.
Lida Build, in its submissions of 19 October 2011, suggested that the Tribunal should adopt a formula based on the percentage that claims for moneys owing under the contract were of all claims by Lida Build. They estimated claims for moneys owing under the contract as $18,528 (fixing stage claim) plus $15,675 (practical completion claim) plus $5,329.50 (delay cost). This Tribunal has determined the delay costs at only $367.75 of the $5,329.50 claimed by Lida Build on 19 June 2009 and, therefore, a debt from 24 June 2009. The practical completion claim of $15,675 was subject to the Millers’ set-off so the Tribunal finds that it could not be described as a debt until this Tribunal determines all issues.
On this basis, as at 24 June 2009, Lida Build had a debt owing by the Millers of $18,895.75. Adopting Lida Build’s submissions of 19 October 2011, this results in the debt recovery costs being in relation to $18,895.75 of all claims by Lida Build of $59,483.65 or 31.76%. From the affidavit of Mr Jover of 19 October 2011, the Tribunal accepts that the legal costs incurred by Lida Build in relation to recovery of all amounts was $7,830.68 and, therefore, the Tribunal awards Lida Build its debt collection costs in the sum of $2,487.02.
Lida Build’s Claim for Filing Fee
This claim by Lida Build is based on section 102 of the QCAT Act. However, section 100 states as follows:
100. Each party usually bears own costs
Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.
Section 102 states as follows:
102. Costs against party in interests of justice
(1) The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.
(2) However, the only costs the tribunal may award under subsection (1) against a party to a proceeding for a minor civil dispute are the costs stated in the rules as costs that may be awarded for minor civil disputes under this section.
(3) In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following—
(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);
(b)the nature and complexity of the dispute the subject of the proceeding;
(c)the relative strengths of the claims made by each of the parties to the proceeding;
(d) for a proceeding for the review of a reviewable decision—
(i) whether the applicant was afforded natural justice by the decision-maker for the decision; and
(ii) whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;
(e)the financial circumstances of the parties to the proceeding;
(f)anything else the tribunal considers relevant.
The Tribunal does not accept that there are any compelling reasons under section 102 for it to depart from the general principle of section 100 and award these costs to Lida Build. In this regard, the Tribunal was asked by Mr Miller at the hearing on 16 March 2012 to award costs to the Millers despite the fact that they had not previously sought costs. The Tribunal does not accept that there are any compelling reasons under section 102 for it to depart from the general principle of section 100 and award costs to the Millers and in addition notes that they produced no evidence of costs to substantiate their late claim.
Summary of Lida Build’s Entitlements
The Millers really have no defence to Lida Build’s claim of $18,528 for its fixing stage. Under the contract it should have been paid five days after being provided to the Millers as stated above. The Millers only defence to Lida Build’s claim $15,675 for its practical completion stage is by way of set-off of their counter-claim, which includes the cost of rectifying the pool roof so that it complies with the contract.
On the basis of the above decisions, the Tribunal awards Lida Build as follows:
Claim (12 June 09) for its fixing stage of $18,528
Claim for its practical completion stage of $15,675
Delay Costs of $367.75
Claim for electrical variations $12,433.21
Claim for ceramic tiling variations $1,346.40
Claim for external tiling variations nil
Claim for roof rectification withdrawn
Claim for Interest $7,954.65
Claim for costs $2,487.02
Claim for Filing Fee Dismissed
Total $ 58,792.03
Summary of the Millers’ Counterclaim Entitlement
On the basis of the above decisions, the Tribunal awards the Millers as follows:
Roof Pitch
Claim for rectification $37,638.98
Claim for diminution in value of the work of $62,500 DismissedDamages to the Millers' Property Dismissed
Items lost or thrown away by Lida Build Dismissed
Late Completion Damages $4,200
Claims for shuttering, fitting door furniture and paint $3,865.21[29]
Rectification of Minor Defects identified in BSA Report $1,267.50[30]
Claim for costs DismissedTotal $ 46,971.69[29] Approved by the Appeal Tribunal at paragraph 2(b).
[30] Approved by the Appeal Tribunal at paragraph 2(c).
Conclusion
On the basis of the above decisions, the Tribunal awards Lida Build their claim in the sum of $58,792.03 less the amount of the Millers’ counter-claim in the sum of $46,971.69 amounting to an award of $11,820.34 to Lida Build.
ORDER
Therefore, after determining both Lida Build’s claim and the Millers’ counterclaim, the Tribunal orders that the Millers pay Lida Build the sum of $11,820.34 by 4pm on 23 April 2012.
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