Mehrtens v Stega
[2012] QCAT 176
•30 April 2012
| CITATION: | Mehrtens v Stega [2012] QCAT 176 |
| PARTIES: | Mr David John Mehrtens (trading as Dave Mehrtens Constructions) |
| v | |
| Mrs Sally Stega |
| APPLICATION NUMBER: | BDL439-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 4, 5 October 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Andrew McLean Williams, Member |
| DELIVERED ON: | 30 April 2012 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | I order that the Respondent pay to the applicant the sum of $51,921.74 within 28 days of the date of these orders. |
| CATCHWORDS : | Residential Building Dispute – Entitlement or otherwise of the Respondent to terminate the contract for alleged non-completion – Calculation of completion date in light of agreed variations Domestic Building Contracts Act 2000, s 18(4), 18(6) |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr David Mehrtens, in person |
| RESPONDENT: | Mr Juris Stega, as appointed representative for Mrs Sally Stega |
REASONS FOR DECISION
Mr David John Mehrtens (‘the Applicant’) trading as Dave Mehrtens Constructions, has been a registered builder for more than twenty years, holding a license issued to him by the Queensland Building Services Authority (QBSA).
Prior to 7 November 2007, Mr Mehrtens conducted his operations as a sole trader, yet from that date (and then acting on advice from his accountant), Mr Mehrtens transformed his business model and commenced to trade by means of a family trust, termed the McKenzie Park Family Trust (“McKenzie Park”).
Mr Mehrtens is the sole trustee of McKenzie Park. McKenzie Park was also registered for GST purposes on and from 7 November 2007. By reason that it is not possible to register a family trust with the QBSA, Mr Mehrtens, in personam, remains registered as a builder with the QBSA.
I have been informed in evidence (and now accept), that all invoices for construction works performed by Mr Mehrtens since the date of inception of McKenzie Park have been issued on letterhead entitled ‘Dave Mehrtens Constructions’, yet that these invoices also contain a clearly legible footer, that reads: “David Mehrtens as Trustee for the McKenzie Park Family Trust trading as Dave Mehrtens Constructions”.
For reasons that will become apparent, the business structure selected by the Applicant is a matter to which I shall return, later in these Reasons for Decision.
At all material times the Respondent Mrs Sally Stega (whom was represented in these proceedings by her husband, Mr Juris Stega) was the owner of a waterfront home situated at 66 Fitzwilliam Street, Carrara.
In about October/November 2009, Mr and Mrs Stega retained the services of the Applicant in order to construct a deck for them. By the end of it, some time in mid November 2009, the Applicant was also asked by the Stegas to quote on a large renovation project at the same property. The requested works were referred to by Mr and Mrs Stega as ‘stages two and three’, and these would see stage two of the renovation taken through to completion, and stage three taken to the “lock up” stage. Stage one of the project had been performed by another builder, some time prior to any work on the property by Mr Mehrtens.
On or about 19 November 2009 the Applicant provided an initial written quote for the scope of requested works quoting $240,067 to complete stage two, and a further $230,325.00 to complete stage three (total: $470,392.00). Further discussions between the Applicant and Mr and Mrs Stega then ensued during the lead-up to Christmas. As becomes apparent from correspondence sent by Mr Stega to the Applicant on each of 17 November 2009 (by e-mail), and 7 December 2009 (by ordinary mail), Mr and Mrs Stega were very intent to see the renovation commence as quickly after Christmas as could be arranged, such that they were even prepared to authorise Mr Mehrtens to pre-order windows, steel beams, timber and roof trusses (and commit to an obligation for payment for same), even notwithstanding that the parties were still negotiating as regards the final agreed scope of works, and had not yet entered into a formal contract. In his evidence before me, Mr Mehrtens explained that he had told Mr and Mrs Stega that most building industry suppliers shut down in January, such that it would be necessary to pre-order materials in November in order to have these available for work to commence in January.
The Applicant’s initial written quote dated 19 November 2009 was revised in writing on 30 December, again quoting $240,067 for stage two works, yet now reduced to just $137,000 for stage three, making for a total price of $377,067.00. This quote was acceptable to Mr and Mrs Stega, as is now revealed by the fact of Mrs Stega shortly afterwards entering into a Domestic Building Works Contract for ‘Major Works’ with the Applicant, on 5 January 2010 (‘the contract’).
By the contract dated 5 January 2010, the agreed total contract price was set at $337,067.00 and the agreed commencement date for works was set as 11 January 2010. The agreed deposit sum, payable upon signing the contract, was set at $36,364.00. This sum clearly exceeds the maximum of 5 per cent of the total contract price permissible for deposits by condition 16 of the standard BSA Major Works Contract; yet the excess is made explicable in this case by the previous agreement entered into by the Stegas committing themselves to the cost of pre-ordering timber, trusses and windows back in November 2009. Moreover, the fact that the deposit sum was in excess of 5% would have been readily apparent to Mrs Stega at the time of her signing the contract, particularly in light of the prominent warning in relation to deposit amounts specified in the ‘Notes’ column next to item 9 (‘Deposit’) on page 3 of the Major Works contract signed by her on 5 January 2010. I infer therefore that the deposit sum was made up of 5% of the contract price, together with the extra sums necessary to pre-order materials, as had been arranged in the collateral agreement between the Applicant and the Respondent in November, 2009.
The contract provided for a total construction period of 112 days,[1] and specified[2] the date for practical completion to be 11 May 2010. By an attached payment schedule, the parties agreed to progress payments in accordance with the following schedule:
[1] See item 4 of the Schedule.
[2] See item 6 of the Schedule.
Progress payment One: ‘Deposit’ $36,364.00
Progress payment Two: ‘Slabs’ $50,000.00
Progress payment Three: ‘Frames & Trusses’ $80,000.00
Progress payment Four: ‘Lock Up’ $100,000.00
Progress payment Five: ‘Gyprock & Kitchen’ $60,000.00
Progress payment Six: ‘Tiling and Painting’ $45,000.00
Progress payment Seven: ‘Practical Completion’ $5,703.00
As is often the case with building disputes, initially, the working relationship between Mr Mehrtens and Mr and Mrs Stega was amicable and productive, yet the relationship progressively soured as works progressed. The evidence reveals that delays and extra costs were caused by additional works and agreed variations (of which there were five, in total, comprising an additional cost of $24,053.37); as well as further delays caused by Mrs Stega being slow in making decisions, particularly in relation to the window selections.
On or about 14 March 2010 (a weekend, when Mr Mehrtens was not present on the site), Mrs Stega also allegedly fell from one of Mr Mehrtens’ ladders, thereby sustaining a significant head injury, and necessitating that she be hospitalised. This resulted in a Workplace Health and Safety investigation, as well as a claim against the Applicant’s public liability insurer. This incident, no doubt, further degraded the working relationship between the Applicant and the Respondent. After that incident, Mr Mehrtens was instructed by Mr Stega not to have any further direct communications with Mrs Stega, notwithstanding that she was the other contracting party. The Applicant also complains that Mrs Stega, in particular, still continued to interfere with works on site, by her giving directions to subcontractors on site, yet without any consultation with the Applicant.
On 22 May 2010, the Applicant contends that he was locked out of the site by Mr and Mrs Stega, and thus prevented from completing the contracted works. The Applicant has not been allowed back on site since that date. Although locked out on that date, the Applicant says that his works on site were substantially complete, save for some rectification work and cosmetic finalisation, together with the installation of a balustrade (which has since been installed by one of the Applicant’s sub-contractors, by negotiation with the Respondent); and save for his undertaking the final site clean.
The Applicant’s Claim
As at 22 May 2010, the Applicant contends that he was still owed progress payments six and seven (totalling $50,703), although recognises that from that sum should first be deducted the costs of certain PC items that were provided by the owners during the course of the construction (which the applicant contends amounts to a credit in favour of the respondent in the sum of $7,210.00); as well as the $200.00 provision that he had made for an end-of-job “builder’s clean”, which was not ultimately performed by the Applicant, because of his exclusion from the site before that could happen. Accordingly the Applicant contends that he was still owed $43,293.00. Ultimately, at the end of these proceedings in his final written submissions the Applicant claims from the Respondent the following:
$42,717.10[3] Monies still owing pursuant to the contract
$22,785.29 legal costs to date
$255.00 QCAT Filing Fee
$6,599.79 interest$4,312.00loss of income (@ $560 per day) for 7 days to pursue this claim
$700.00Expert witness fees
$77,369.18Total
[3]This figure has been adjusted by the applicant from his original claim in the sum of $43,293, in order to acknowledge some difference in his calculation of PC items as supplied by the Respondent to that calculated by the Respondent, who contends that the credit figure in her favour should be $8,185.90.
The Respondent’s Position
The Respondent has filed[4] a response to the Applicant’s claim, and by that response contends that the Applicant breached numerous express and implied terms of the contract, as well as asserting that the Applicant repudiated the contract by his failing to achieve practical completion by the agreed date for practical completion, thus entitling the Respondent to accept that repudiation, which she says she did on 22 May 2010, by her excluding the Applicant from the site. The Respondent has then cross-claimed against the Applicant, and the sum ultimately claimed by her in her final written submissions in her cross claim is $65,556.02[5], which the Respondent submits should now be offset against the claim by the Applicant. The Respondent’s cross-claim is comprised as follows:
$19,135.40Rectification costs
$2,280.00Other exclusions
$8,185.90PC Items purchased by the Respondent
$4,098.60Legal fees incurred by the Respondent
$31,856.12GST claimed to have been “overcharged” by the Applicant to the Respondent
$65,556.02Total
[4] Filed 27 January 2011.
[5]The final figure claimed by the Respondent is $70,165.38, yet this includes an element of arithmetic error, given the sum claimed for GST is $31,856.12 and not $36,465.48, as later claimed in the Respondent’s final submissions. The corrected total claimed by the Respondent is that which is expressed in the body of the text.
Heads of Claim for Initial Exclusion
Before dealing with the more substantial aspects of this dispute there are aspects of the heads of claim brought by both the Applicant and the Respondent that may be dispensed by me, at the outset.
Firstly, the Applicant claims $22,785.29 as legal costs incurred by him in the initial stages of this dispute, when the parties were still exchanging solicitor’s correspondence. The Respondent then claims $4,098.60 for legal costs incurred by her at this stage, as well. Ultimately, each of the parties self-acted during the two day hearing before QCAT.
Without at this stage needing to determine whether the preliminary legal costs incurred by the parties prior to the commencement of any proceedings before QCAT might even qualify as “costs of the proceeding”, it nonetheless bears observing that the question as to whether either party may be entitled to claim legal costs against the other is a matter that is governed by section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (‘QCAT Act’). Section 100 of the QCAT Act provides that other than as provided under the QCAT Act or an enabling Act, parties must bear their own costs for the proceeding.
In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2),[6]Justice Wilson when discussing the relevant principles that must be taken into account when determining a costs application under the QCAT Act, said, in part:
“Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indicator against costs orders in section 100”.
[6] [2010] QCAT 412.
In my view, there is nothing about this case that serves to displace the strong presumption caused by s 100 of the QCAT Act that each party in this dispute should bear their own costs. I decline therefore to award either the Applicant or the Respondent the legal costs that have now been claimed by them.
Next, as a matter for preliminary dispensation, the Respondent contends that $31,856.12[7] previously paid by her as GST on the various progress payments paid by her to the Applicant should be refunded to her, on the basis of her contention that the Applicant is ineligible to charge for GST.
[7]Representing 1/11th of the GST inclusive payments of $350,417.37 paid by the Respondent to the Applicant.
In the Respondent’s Response and Counter-Application filed in the Tribunal Registry on 27 January 2011 the Respondent alluded to the possibility of a breach by the Applicant of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (‘the GST Act’), and this was later fleshed out by the Respondent in her final written submissions.
According to that argument, the Respondent says that she contracted with Mr Mehrtens in his capacity as an individual, and at no time during either their pre-contract negotiations, or when the contract was signed by them on 5 January 2010 did Mr Mehrtens mention the fact that he was trading through a trust entity (McKenzie Park). At least since the creation of McKenzie Park, Mr Mehrtens has not been personally registered for GST. The Respondent also asserts that the various tax invoices issued to her by McKenzie Park are invalid, because these specify the name and ABN of that trust, yet s 29-70(1)(a) of the GST Act requires that tax invoices for a taxable supply must be from “the supplier”. The Respondent asserts that the supplier was not McKenzie Park, but rather was Mr Mehrtens (in personam), who is not registered for GST and is thus ineligible to charge GST. In light of these arguments the Respondent says that she is entitled to be refunded the full amount of the GST paid by her to McKenzie Park, or at least to an offset of this sum against the sum now claimed by the Applicant.
In response to these arguments Mr Mehrtens states that he has traded under the aegis of McKenzie Park for approximately eleven years and that all the progress payment invoices issued to Mrs Stega have been issued under the McKenzie Park ABN, and that all amounts received from Mrs Stega for GST have since been remitted to the Australian Taxation Office, as required by law.
I am entirely unpersuaded by the Respondent’s GST argument. Firstly, in final oral submissions Mr Juris Stega (himself an accountant) conceded on behalf his wife that domestic building works qualify as a taxable supply for purposes of the GST Act. Allied to that concession, item 8 in the contract dated 5 January 2000 clearly indicates that the total price ($337,067.00) was always expressed to be inclusive of GST. Item 8 in the schedule to the contract is then confirmed by Item 15 of the general terms and conditions (see Exhibit One) that specifies, in part, that the parties agree and acknowledge that all pricing, consideration and amounts otherwise payable under the contract (including any variations) have been, or will be, calculated on a GST inclusive basis. On that basis it is not possible to assert that the total contract price can be reduced below the aggregate total of the original contract price and any agreed variations on the basis of any alleged non-compliance with the registration requirements of the GST Act, as these requirements inure to suppliers, as that term is used in the GST Act. At all times the agreed contract price, together with any increase thereon as the result of agreed variations included a component for GST. That is a matter agreed between the parties under their contract and is not a factor that then becomes contingent on the registration requirements of the GST Act.
The central tenet of the GST argument now advanced by the Respondent is that McKenzie Park is not entitled to charge for GST because it was Mr Mehrtens in personam, and not McKenzie Park who was ‘the supplier’ as that term is used in the GST Act, such that it is only Mr Mehrtens who has any entitlement to issue tax invoices. In my view, this argument is based on flawed reasoning, for it fails to take any account of the fact that the various tax invoices were issued by Dave Mehrtens, in his allied capacity as the sole trustee for McKenzie Park. This is a common and lawful business arrangement, and one no doubt come across many times previously by Mr Stega in his profession as an accountant.
As the Respondent has correctly identified in her final written submissions, the term supplier is not defined in the GST Act. Despite that, all of the tax invoices for various progress payments issued by the Applicant to the Respondent in relation to the renovation at Fitzwilliam Street at Carrara appear, in all respects, to comply with the requirements for a lawful tax invoice under s 29-70(1) of the GST Act, such that is perfectly open to thereby conclude that these were in fact issued by ‘the supplier’. As these were issued by “Mr David Mehrtens as Trustee for the McKenzie Park Family Trust trading as Dave Mehrtens Constructions” I conclude that McKenzie Park is “the supplier” for purposes of the GST Act and as it is registered for GST purposes, it was at all material times eligible to charge for GST. Ultimately it does not matter that Mr Mehrtens in personam was not registered for GST because he did not issue the invoices. The fact that the full name ‘Mr David Mehrtens as Trustee for the McKenzie Park Family Trust trading as Dave Mehrtens Constructions’ did not appear on the original contract dated 5 January 2000 is then made readily explicable by the fact that the form of the contract requires that the builder’s name on the contract must be the same as that which appears on the builder’s licence. Equally, Mr Mehrtens is entitled at law to “wear twin hats”, in the sense that he can be, at once, a builder registered with the QBSA, and at the same time the trustee of McKenzie Park, which is no more than a legitimate tax vehicle for his building operations. In my view the discrepancy that the name McKenzie Park does not appear on the contract dated 5 January 2009 does not and cannot afford any basis for the Respondent now evading her statutory (and contractual) obligation to pay to the Applicant amounts for goods and services tax. On that basis I will not allow the Respondent a credit of $31,856.12 for GST in the manner requested.
The final matter for exclusion before dealing with the more substantial aspects of the claim and cross-claim relates to the Applicant’s further claim for $4,312 as compensation for earnings that have been foregone by him, as the result of his being required to invest approximately seven days of his own time pursuing his claim before QCAT, when he could have been elsewhere and more productively engaged, earning a living. Unfortunately this is an opportunity cost that confronts all litigants, no matter the jurisdiction in which their claim is brought. Having freely elected to litigate the matter the Applicant has also thereby elected to spend his time unrewarded before the Tribunal rather than performing remunerated work. For good reasons of public policy this is not a loss that is ever compensated.
Having dispensed with those unmeritorious heads of claim, focus can now return to those that remain and that are more arguable. The Applicant claims for monies still owing to him under the contract; for interest on those monies; and for filing fees and witness costs. Meanwhile the Respondent claims for the costs of various rectification works; as well as for credits that should be afforded to her for various PC items purchased by her, and $2,280 for what have been termed “other exclusions”.
PC items purchased by the Owner and “other exclusions”
Throughout the hearing the parties were in agreement that some PC items that had been originally allowed for in the contract were instead purchased directly by the Respondent, such that the Respondent ought be entitled to a credit, for those items. The parties were however unable to agree regarding the list of PC items that had been purchased by the Respondent. At the end of the hearing each party was invited to include in their final written submissions a list of PC items that they believed had been purchased by the Respondent. The Respondent says that she purchased items totalling $8,185.90 whereas the Applicant says that the items purchased by Mrs Stega amount to only $7,210.00. Having considered the two lists of PC items I prefer the evidence of the Applicant builder, and conclude that the credit for PC items that should be allowed to Mrs Stega should be set in the amount of $7,210.00.
Under the heading “other exclusions” the Respondent claims $300 for hardwood beams, on the basis that the Builder recycled some timbers reclaimed from demolition rather than purchasing new timber beams, yet did not then allow a credit for same. Mrs Stega then claims a further $1,980 for tile-laying labour in an outdoor Cabana area, which it is alleged was part of the original contract price, yet was not ultimately performed by the applicant. In response thereto the builder admits that he recycled some seasoned hardwood beams as these were available quality timbers and oversized for the required engineering specification, and would have gone to waste had he not recycled them. The builder admits that the owners should be entitled to a credit given that he was not required to purchase these beams and says that the appropriate figure is $363.00 (inclusive of GST). I accept that figure and allow that sum accordingly. By e-mail dated 18 April 2010 Mr Juris Stega advised the Applicant not to have his subcontractor tiler lay the tiles in the Cabana area, and that the contract price should be reduced accordingly. The plans (Exhibit 2) reveal the Cabana to be approximately 36 metres in area. I will allow labour for tiling at the rate of $45 per metre, plus GST ($49.50) such that the sum that should be allowed as a further credit to the Respondent is $1,782.00.
In light of the above, the total credit that should be allowed to the Respondent for PC items purchased by the home-owner and for other matters excluded from the original contract price should then be $9,355.00.
Cost of rectification works claimed by the Respondent
The Respondent now claims $19,135.40 as the cost to rectify various defects that she claims were the fault of the Applicant. Whether there is any entitlement to claim these costs requires, as a preliminary, determination as to whether Mrs Stega was entitled to exclude the builder from the site on 22 May 2010; and then retain the services of other contractors to set about these rectification works, particularly in circumstances in which no complaint was ever made to the QBSA about the standard of the Applicant’s work.
Throughout this dispute the Respondent has contended that the contract dated 5 January 2010 specified the date for practical completion to be 11 May 2010, and that at no time prior to 22 May 2010 did the Applicant request any time extensions on that date for practical completion; and that the date for practical completion was only subsequently changed to 21 May 2010 quite late in the piece, by mutual agreement between Mr Juris Stega and Mr Mehrtens, after the builder had indicated that he still needed “about two weeks” to complete the scope of works. In light of that, the Respondent contends that the Applicant was locked out of the site on 22 May 2010 on the basis that he had then demonstrably failed to complete the contract by 21 May 2010 and had thereby repudiated the contract, after which the owners contend they were perfectly entitled to arrange to have the contracted works performed by other tradespeople and then seek to recoup these costs against the Applicant, as an expense flowing from the Applicant’s repudiation.
As against that contention, it is undoubtedly the case that the Applicant did present to Mrs Stega five written variation documents (BSA Form 5) after various changes to the scope of works had been requested by Mr and Mrs Stega. Each of these have been signed by Mrs Stega, and each of these has estimated that additional time would be required in order to accommodate the variations, as follows:
Variation One 27 January 2010 an additional 5 days
Variation Two 24 February 2010 an additional 15 days
Variation 3 16 February 2010 an additional 3 days
Variation 4 4 March 2010 an additional 2 days
Variation 5 15 April 2010 nil extra days
Total: 25 additional days
In light of the variation notices that have been signed as accepted by Mrs Stega, the Applicant contends that the Respondent has thereby agreed to extend the date for practical completion by 25 business days (or 35 calendar days); such that the adjusted date for practical completion became 15 June 2010. Because of that, the Applicant contends that the date for practical completion had not yet been reached when he was locked out of the site, and he had not been afforded his contractually agreed allotment of time within which to complete the works; such that it is now wrong, in principle, for the Respondent to seek to categorise merely incomplete works as defective. The builder says that these works only remained incomplete as at 22 May 2010 by reason that his ability to perform under the contract had become frustrated by Mr and Mrs Stega having locked him and his sub-trades out of the site before work was complete.
By way of reply to the Applicant’s position the Respondent says that although BSA ‘form five’ variation documents were signed by Mrs Stega, these contain only the builder’s reasonable estimate of the extra time likely to be required by reason of the requested variation. Form five itself specifies:
Note to Contractor/Contractor’s Representative:
If the Variation causes you actual delay you must also submit a BSA Form 1 – Extension of Time Claim and Owner’s Response to Claim – to the Owner
The Respondent says that this is merely consistent with the requirements of s 18(4) of the Domestic Building Contracts Act2000 (‘the DBCA’) which provides that should the carrying out of the contracted works become affected by delay then the stated completion date must be adjusted to take account of the actual number of days involved in the delay. Because the Applicant has not furnished the Respondent with a BSA Form 1 the Respondent contends that the Form 5 variation documents – that afford only an estimate of additional delay likely to be caused by variations – are not sufficient to conform with the requirements of s 18(4) of the DBCA, such that the date for practical completion has not been properly adjusted beyond 11 May 2010 simply by reason of Form 5 variation notices having been presented to Mrs Stega and signed by her.
As a matter of evidence it is the case that the Applicant did not subsequently follow up the Form 5 Variation Documents with a Form 1 document. In light of that, it is now the case that there has not been strict conformity with the requirements of s 18(4) of the DBCA, by the Applicant. However, that is not the end of it. Section 18(6)(b) of the DBCA provides:
(6)If the contract is varied but the building contractor has not complied with a variation provision for the variation, the stated completion date or period –
(a)….;
(b)may, with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor, be adjusted to take account of any additional days required to carry out the subject work.
Section 18(10) of the DBCA then provides:
(10)The tribunal may give an approval for subsection 6(b) only if it is satisfied that –
(a)either of the following applies –
(i)there are exceptional circumstances to warrant an allowance being made for the additional delays;
(ii)the building contractor would suffer unreasonable hardship if an allowance for the additional days were not made; and
(b)it would not be unfair to the building owner to make an allowance for the additional days.
As mentioned previously, the variation provisions of the contract and the DBCA were not strictly complied with. However, I am prepared to treat the Applicant’s application to QCAT as an application pursuant to section 18(4) of the DBCA for approval by the Tribunal for adjustment to the building period as a result of these variations.[8] I find that the Applicant would suffer unreasonable hardship if an allowance for additional days were not now made, and that it is not now unfair to the Respondent to make this allowance. After all, Mrs Stega did sign five separate acknowledgements that it was likely that extra time would be required, because of her requested variations.
[8] Cf: Power v Catton Constructions Pty Ltd [2011] QCAT 397.
Accordingly I am prepared to adjust the date for practical completion until 15 June. It follows that the Applicant should not have been excluded from his own site on 22 May 2010, and that his lock-out on and from that date amounts to a contract repudiation conduct by the Respondent, thus entitling the Applicant to terminate the contract, as he subsequently did, on 30 June 2010.
I am not in these circumstances prepared to allow the Respondent’s claim for the cost of rectifying allegedly defective works in the sum of $19,135.40, or in any sum at all, on the basis that the Applicant remained at all times ready willing and able to complete the contract (which includes attending to defects rectification), yet was precluded from doing so only by the Respondent’s conduct.
Applicant’s Entitlement
As at the date that the Applicant was excluded from site he remained entitled to progress claims 6 and 7 in the sum of $50,703.00. From that should be deducted the $200.00 allowance that the Applicant had made for a final site clean, which in the circumstances could not be performed by him. In addition thereto, the $9,355.00 already assessed by me as being a credit due to the homeowner for various PC items and contract exclusions should also be deducted. In the circumstances the Applicant has a contractual entitlement to $41,148.00.
Interest
Pursuant to clause 19 of the contract interest is claimable on progress payment sums that remain unpaid at either the rate set in item 13 of the schedule or at default rate, which is the Commonwealth Bank Standard Variable Rate, plus 5 per cent. In this instance item 13 of the schedule has not been completed, such that the default rate is applicable. Regard to Exhibit 10 indicates that interest should now be calculated at 12.3%. I will allow interest from the date of the Respondent’s repudiation (21 May 2010) until 30 April 2012. Interest on $41,148.00 for 1.94 years at 12.3% amounts to $9,818.74.
Costs
As the Applicant has been substantially successful he should be entitled to recoup the costs of his QCAT filing fee ($255.00) together with the $700.00 out-of-pocket expense incurred by him paying the wages of two of his subcontractors to come to QCAT in order to testify so as to be able to meet the cross-claim brought against him by the Respondent.
Order
In light of the foregoing reasons I order that the Respondent pay to the Applicant the sum of $51,921.74 within 28 days.
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