Mastro 5 Design Pty Ltd v Beaumont (Civil Dispute)
[2016] ACAT 35
•3 May 2016
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
MASTRO 5 DESIGN PTY LTD v BEAUMONT
(Civil Dispute) [2016] ACAT 35
XD 1256/2015
Catchwords: CIVIL DISPUTE – contract – building dispute – claim for payment – calculation of labour costs – calculation of cost of materials
Cases cited:Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Pavey v Matthews Pty Ltd v Paul (1987) 162 CLR 221
Tribunal: President G McCarthy
Date of Orders: 3 May 2016
Date of Reasons for Decision: 3 May 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 1256/2015
BETWEEN:
MASTRO 5 DESIGN PTY LTD
Applicant
AND:
JOHN BEAUMONT
Respondent
TRIBUNAL: President G McCarthy
DATE:3 May 2016
ORDER
The Tribunal Orders that:
The application is dismissed.
………………………………..
President G McCarthy
REASONS FOR DECISION
In February 2015, the applicant, Mastro 5 Design Pty Ltd (Mastro 5), entered into an oral contract with the respondent, Mr John Beaumont, for the applicant to install two shaving cabinet mirrors and doors on existing shaving cabinets in the respondent’s bathroom. I received evidence, and accept, that additional work was necessary, namely recessing the shaving cabinet and cutting out a section of the fibro cement sheeting in order to strengthen a part of the stud wall. This was necessary in order to provide better support for the shaving cabinet. Mastro 5 also installed two hand towel holders. The work was to complete an unfinished renovation of the bathroom by another contractor.
Mr Beaumont explained, and I accept, that the necessary work was uncertain because Mastro 5 was finishing work commenced by the earlier contractor. He explained, and I accept, that the parties therefore agreed that the contract price would be payment of labour on an hourly rate plus the cost of materials and any labour subcontracted to a third party.
Mr Pietro Mastrocinque, the managing director of Mastro 5, disputed this characterisation of the contract. In an email to Mr Beaumont sent on 12 August 2015, after the work was completed, he said:
As far as breaking down the invoice to hourly rates this has not been a practical process in running my business and therefore I cost my jobs at a fixed price which is applied to all my customers.
I am not persuaded that Mr Mastrocinque ‘costed’ this job at a fixed price. Mr Mastrocinque provided no evidence, oral or written, as to what the fixed price was (or would be), how he “costed” it or the circumstances by which Mr Beaumont agreed to that price.
It might be that Mr Mastrocinque meant he does work (and did so in this case) for an unstated price, and then ‘fixes’ a price after the work is done. If that is so, it would fall to the Tribunal to determine whether the price was reasonable: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Pavey v Matthews Pty Ltd v Paul (1987) 162 CLR 221. That exercise, for the reasons discussed below, would still cause me to conclude that a ‘price’ less than $2,000 was reasonable and so dismiss the application.
On 26 July 2015, Mastro 5 submitted a tax invoice dated 18 June 2015 for the work. It gave a lengthy description of the work and stated a single sum for payment of $3,600 plus GST.
With reference to the contract, Mr Beaumont queried the amount sought to be paid and requested a breakdown of how the total cost was calculated. Mr Mastrocinque refused to provide a breakdown. Instead, on 17 September 2015, he submitted another invoice also dated 18 June 2015 that was identical to the earlier invoice save that the total amount now sought was $4,500 plus GST.
In an outline of its claim to the Tribunal under cover of a letter dated 3 February 2016 from its representative (Capital Collection Service), Mastro 5 claimed that the additional $900 plus GST was “further administration costs for collection” arising from non-payment of its earlier invoice.
At hearing, Mr Mastrocinque said that the additional $900 plus GST was (instead) interest payable on the unpaid earlier invoice, but then equivocated as to whether that was so.
The second invoice made no mention of an additional payment for interest or for administrative costs. Nor was there any evidence that the contract included liability to pay administrative costs or interest in the event of non-payment of Mastro 5’s invoice within a stated period.
Accordingly, I reject the applicant’s claim for $990 as an “administrative cost” arising from non-payment of the earlier invoice.
I also reject the applicant’s claim for $990 as interest for non-payment of the earlier invoice. Taking $900 as 25% of $3,600, Mastro 5 was seeking interest of 300% per annum on its unpaid account arising from the one month non-payment delay from when the first invoice was rendered. It was a fanciful claim, and without any contractual basis.
Mr Beaumont continued to seek details of how the invoice, or either of them, had been calculated but no information was provided. In an email to Mr Beaumont sent on 20 August 2015, Mr Mastrocinque said:
I don’t have the capacity to make a time to discuss anything in the invoice. I have been very clear with all the work that has been carried out on the invoice and there is nothing further to discuss.
In an effort to try and resolve the matter, Mr Beaumont obtained quotes from suppliers of mirrors and doors of the size and kind that were installed. He also made an estimate of the labour component for the work based on the hours that he recorded had been spent on the job and the hourly rates provided to him by an employee of Mastro 5, Mr Jason Sloan. Mr Beaumont calculated $400.40 owing for labour and $1,058.00 for materials to a total of $1,458.40.
Mr Beaumont paid $2,000 to Mastro 5 in an effort to resolve the dispute. However this payment was not acceptable.
Mastro 5 then brought these proceedings against Mr Beaumont seeking the balance owing under the later invoice, being $2,950, plus interest of $134.59 plus the Tribunal filing fee of $280.
In circumstances where I accept that the contract price was for labour at an hourly rate plus external costs for materials and subcontracted labour, I have assessed Mastro 5’s claim by reference to those two parts of the contract.
Labour
Despite Mr Beaumont’s repeated requests to Mastro 5 for any business records evidencing time spent on the job, nothing was provided. At hearing on 16 March 2016, I ordered Mastro 5 to provide the Tribunal and Mr Beaumont with business records evidencing the hours spent on the job by Alexander Beaumont, Jason Sloan and Mr Mastrocinque. Nothing was provided, save for a table stating their names, the hours they worked, and the hourly rate charged for each of them to total amounts rounded to $1,300.
The table stated:
Worker
Hours
Rate
Total
Rounded to
Pietro Mastrocinque
6
$80.00
$480.00
$500.00
Jason Sloan
8
$50.00
$400.00
Alexander Beaumont
8
$50.00
$400.00
Total Labour $1,300.00
I do not accept that this table is a contemporaneous business record. I regard it as no more than Mastro 5’s claim of time spent and rates charged. This is consistent with Mr Mastrocinque’s earlier statement, at paragraph 3 above, that to provide records of time spent was not “a practical process in running [his] business”. I am left to conclude that there are no records to provide.
By email sent on 23 October 2015, Ms Carroll from Capital Collections gave Mr Beaumont a breakdown of Mastro 5’s invoice in an endeavour to address his concerns. Her email stated:
Our client has given the breakdown for the invoice as follows:
$300-Project Management
$200-Administration
$1300-Labour for 3 men
$500-Materials
$120-Machinery Hire
$880-Supply and Install Custom Mirrors
$300-Supply and Apply Silicone
I received no evidence nor can I understand how Mastro 5 justified or calculated fees of $300 for ‘project management’ or $200 for ‘administration’ where the work was simply the installation of two bathroom mirrors and doors, particularly where those fees were in addition to a labour fee of $1,300 that included a claimed six hours of Mr Mastrocinque’s time. The fees are particularly perplexing where a third-party contractor supplied the doors and another third-party contractor supplied the mirrors and then came to Mr Beaumont’s home and installed the mirrors on the doors.
It is hard to envisage any “project management” beyond telephone calls to engage the third-party contractors to provide these routine goods and services.
Mr Sloan provided a statement dated 30 November 2015 in which he advised he was an employee of Mastro 5 “for the previous 8 years” and throughout this time Mr Mastrocinque advised that the hourly rates “whilst quoting” were $35 per hour for labourers and apprentices and $77 per hour for the “managing director” whom I understand to mean Mr Mastrocinque.
Ms Carroll submitted that these were amounts that Mastro 5 “paid their workers”, not the prices that Mastro 5 “would have charged their client”, but provided no documentary evidence that that was so. Mr Beaumont stated that Mastro 5 paid a labourer $28 per hour and an apprentice $17 per hour, but likewise provided no evidence in support. I prefer Mr Sloan’s evidence regarding Mastro 5’s chargeable rates to those stated in the table set out in paragraph 19 above. However, as discussed below, the difference between the rates does not make any difference to the outcome of this case.
Mr Alex Beaumont gave a detailed breakdown of the dates he worked, the work he did on each occasion and the time he spent totalling five hours. I prefer Mr Beaumont’s evidence about the amount of time he spent to the eight hours stated in the table set out in paragraph 19 above. At a rate of $35 per hour payable by a customer, the amount chargeable to Mr John Beaumont for this time was $175. If Mr Alex Beaumont’s rate was $50 per hour, the amount chargeable was $250.
I did not receive any evidence from Mr Sloan as to the time he spent performing work on the job. The only evidence I received was from Mr John Beaumont who stated he was present when work was performed and that he recorded Mr Sloan was present for a total of two hours. Having regard to the relatively simple nature of the job, and that Mr Alex Beaumont and Mr Mastrocinque provide descriptions of the work they performed that appear to cover fully the work necessary to install the cabinets, it is difficult to understand what further work Mr Sloan performed. I am not persuaded per the table at paragraph 19 above, that Mr Sloan performed eight hours work (being a full day’s work) in addition to the work done by the other men. However, noting Mr John Beaumont’s record, I allowed two hours for Mr Sloan’s work, namely $70. If Mr Sloan’s rate was $50 per hour, the amount chargeable was $100.
Similarly, I did not receive any evidence from Mr Mastrocinque as to the time he spent performing work on the job. In circumstances where third parties supplied the doors and installed the mirrors, the only remaining work so far as I can ascertain, was recessing the cabinets (which included cutting a tile or some tiles), strengthening the stud wall and hanging the doors. Again, the only evidence I received was from Mr John Beaumont who stated that he was present when work was performed and that he recorded Mr Mastrocinque was present for a total of two hours. Having regard to the relatively simple nature of the job, and that Mr Alex Beaumont performed most of it, I allow two hours for Mr Mastrocinque work, namely $154. If Mr Mastrocinque’s rate was $80 per hour, the amount chargeable to Mr Beaumont was $160.
In all, the amount chargeable for labour was (or should have been) between $399 and $510.
Materials and subcontracted labour
Mr Beaumont provided quotes from various subcontractors for provision of suitable shaving cabinet doors and mirrors. He did so in an endeavour to ascertain what those costs were likely to be because Mr Mastrocinque was refusing to provide any evidence of Mastro 5’s third-party costs. By reference to the quotes he received, Mr Beaumont calculated the total amount for materials and subcontracted labour to be $1,058.
Mr Mastrocinque was very reluctant to provide copies of the invoices he received for work done in connection with the job. He protested that these were confidential. I appreciate that sometimes such costs are confidential, particularly where a fixed price quote has been offered and accepted before the work began. The costs to the service provider are a matter for it. That is not this case.
Sometimes service providers add a margin to their trade costs, particularly where they have purchased parts or labour from suppliers that have a trade price and a retail price. However, there is no suggestion that that occurred in this case. The third party suppliers provided goods and services for supplying and installing the mirrors, supplying the doors and installing silicon. They provided invoices for their goods and services without suggestion from them or Mastro 5 that these were trade costs to which Mastro 5 would add a margin or that the invoices could not be provided to Mr Beaumont or anyone else.
Mr Mastrocinque was anxious that the invoices nevertheless be kept confidential. I did not receive any plausible reason for why that should occur. There is no suggestion from the subcontractors that they did not wish Mr Beaumont to know the prices they had charged. Nevertheless, should there be a concern I have overlooked, I do not record the individual amounts stated in the invoices, and only note the total amount for (i) supplying the doors, (ii) supplying and installing the mirrors and (iii) installing silicon was $1,190.
At hearing much discussion occurred in relation to a crack in one of the mirrors, and who was responsible for the damage and replacement of the mirror. I have put this issue to one side because a third-party contractor supplied and installed a replacement mirror without charge rather than debate who was responsible for the damage.
The total amount that Mastro 5 paid its subcontractors was reasonably close to the total amount of the quotes Mr Beaumont obtained himself. Nevertheless, I accept that prices vary for many reasons including competition and quality of product. I accept that Mastro 5 appropriately chose competent third-party suppliers, that their invoices were reasonable and that those invoices should be preferred to the quotes Mr Beaumont obtained.
Of concern is that Mastro 5’s actual costs for materials and subcontracted labour ($1,190) bear no resemblance either to the component parts of the amounts stated in Ms Carroll’s email as set out in paragraph 21 above, or to the total. I am left to conclude that the amounts stated in Ms Carroll’s email, including the labour component, were ‘just numbers’ not referenced to anything.
For example, Ms Carroll’s email stated that $120 was for “equipment hire”. Yet Mastro 5 later acknowledged that did not hire any equipment as it owned its equipment. Ms Carroll then recast the cost as being “for the upkeep of the machines used for completion of the job”, meaning (it would seem) the tile cutter and power tools to cut a piece of timber installed in the stud wall, to cut a section of fibro cement sheeting to access the stud wall and to re-install the shaving cabinet. I reject the submission. There was no evidence of such “upkeep” costs and they are not apparent from the work done.
The invoice too was inaccurate. For example, it refers to a “tip fee” yet Mastro 5 later acknowledged that no such fee was incurred. Ms Carroll then contended that there “may not have been a direct trip to the tip ... however, the rubbish was removed from site and disposed of.” I regard that circumstance as irrelevant. I expect the waste from re-installing the cabinets was very little and could have been readily removed in a bucket.
Having regard to the matters above, I have concluded that the appropriate amount that should have been rendered in Mastro 5’s invoice was between $1,589 and $1,700.
In these circumstances, Mr Beaumont has already paid more than was reasonable by paying $2,000. However, where a counterclaim for a refund has not been made, I am unable to order Mastro 5 to refund any of the money already paid.
Conclusion
For the above reasons, the application is dismissed.
………………………………..
President G McCarthy
HEARING DETAILS
FILE NUMBER: | XD 1256/2015 |
PARTIES, APPLICANT: | Mastro 5 Design Pty Ltd |
PARTIES, RESPONDENT: | John Beaumont |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | N/A |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | N/A |
TRIBUNAL MEMBERS: | Mr G McCarthy |
DATES OF HEARING: | 16 March 2016 |
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