Mortimer Constructions Pty Ltd v Palmer
[2012] QCAT 528
•15 October 2012
| CITATION: | Mortimer Constructions Pty Ltd v Palmer and Anor [2012] QCAT 528 |
| PARTIES: | Mortimer Constructions Pty Ltd |
| v | |
| Thomas James Palmer Cheryl Sue Palmer |
| APPLICATION NUMBER: | BDL251-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 8 September 2011 |
| HEARD AT: | Townsville |
| DECISION OF: | Keta Roseby, Member |
| DELIVERED ON: | 15 October 2012 |
| DELIVERED AT: | Townsville |
ORDERS MADE: | 1. Thomas and Cheryl Palmer to pay to Mortimer Constructions the amount of $10,164.00 within 6 weeks. |
| CATCHWORDS: | Subcontractors – where scope of works quoted is reduced – work performed by contractor and principal contractor Queensland Civil and Administrative Tribunal Act 2009, ss 100, 102 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Peter Mortimer |
| RESPONDENT: | Mr Thomas and Mrs Cheryl Palmer |
REASONS FOR DECISION
In or around September 2007, Mortimer Constructions entered into a contract with David Harney Constructions Pty Ltd to supply, install and fabricate the structural steelwork for a multi-unit development at Nelly Bay, Magnetic Island.
Specifically, Mortimer Constructions agreed to supply, erect and fabricate all structural work for the columns, floor framing, roof framing, wall framing, carports and stairs and landings, together with supply and install brace locks and PFC fascia inserts for the total contract price of $344,404.00 plus GST. The date for commencement was listed in the contract as “As per agreed date” which was 24 September 2007. The date for completion was listed as 30 weeks after the date for commencement. Liquidated damages were $500.00 per week.
Mr Thomas Palmer is a licensed steel fabricator and, together with his wife Cheryl, carries on business under the trading name Island Engineering.
On or about 27 October 2007, Mr Peter Mortimer, director of Mortimer Constructions, contacted the Palmers about carrying out the installation of steelwork at the Nelly Bay development; specifically the installation of prefabricated steelworks on Block A and the remainder of the installation of the prefabricated steel works on Block B. Following further discussions and site attendances, the Palmers provided Mortimer Constructions with two quotes:
a. to install all of the steelwork for Block A in the sum of $32,400 plus GST[1] (totalling $35,640);
b. to install awning sub-assembly steelwork to Block B in the sum of $1,200 plus GST per unit and to install awning support steelwork in the sum of $1,200 plus GST per unit (totalling $15,840 for 6 units).
[1]The resulting Order from Mortimer Constructions to Island Engineering stated that it was for Block A: Floor, Roof, Awning. Install steelwork, purlins and bolts supplied by Mortimer Constructions. Block A fully complete.
On or about 29 October 2007 Mortimer Constructions accepted the quotes and the Palmers were asked to proceed but there was nothing in writing to the Palmers about when work was to commence or to be completed by. The Palmers commenced work on or about 31 October 2007 and completed the work by the end of January 2008.
Following the completion of the work at the Nelly Bay development, Mortimer Constructions has made application to the Tribunal seeking payment of the sum of $17,996.00 from the Palmers as follows:
a. $11,396 for monies had and received by the Palmers to which they were not entitled; and
b. $6,600.00 for rectification of work unsatisfactorily carried out by the Palmers.
At the hearing, Mr Mortimer, appearing on behalf of Mortimer Constructions, said that the company was looking for reimbursement for the value of work that had been paid for, but not completed by the Palmers, within their scope of works.
It was apparent to the Tribunal that there was some lack of understanding, on the part of the Palmers[2], for the difference between work contained within the scope of work quoted and work that genuinely fell outside of that scope of works and could be charged for in addition to the quote. In response to direct questioning by the Tribunal member, the Palmers admitted that they had invoiced Mortimer Constructions and been paid for the full value of the scope of works quoted, that they had been paid for all work performed in addition to the scope of work quoted, that no amount had been deducted from the figure quoted (and claimed) and that Mortimer Constructions did not get any benefit for work quoted within the scope but not completed by the Palmers.
[2] Particularly Mrs Palmer.
$11,396.00 for monies had and received
Mortimer Constructions says that, because of delay in work by the Palmers, Palmers engaged David Harney Constructions (the principal contractor) to assist in the installation of the steelwork, unknown to and without the consent of Mortimer Constructions. The result was that David Harney Constructions deducted its cost to complete the work (being $11,396.00) from the value of its contract with Mortimer Constructions. Mortimer Constructions says that it has paid the sum of $11,396.00 to the Palmers to which they were not entitled because they did not do the work.
[10]In an affidavit provided by Mr David Francis Harney, Director of David Harney Constructions, he states that he became aware of delays with Mortimer Constructions, and its subcontractor – the Palmers, in completing the work in or around late October or early November 2007. He says he instructed his site supervisor, Mr Joel Hubert, to arrange for David Harney Construction staff to assist Mortimer Constructions to erect the first floor. Mr Harney goes onto say that Mr Hubert contacted Mr Mortimer by telephone and it was agreed that David Harney Constructions would assist Mortimer Constructions undertake part of the steelwork component of the works, including assisting the Palmers undertake their works, and that David Harney Constructions would deduct its costs in doing so from the amount payable to Mortimer Constructions.[3] Mr Harney says that following trades had been booked in and that David Harney Constructions had time frames to meet.
[3] Exhibit 16, page 2.
[11]The tax invoice from David Harney Constructions to Mortimer Constructions reads: “Backcharges for Labour Only for the Floor Steelwork on Block A, Beachside Apartments, Nelly Bay.”
[12]Mr Mortimer’s evidence is that, due to the extended time the Palmers were going to take to install the floor steelwork, Mr Hubert and Mr Jason Cheslin, the Palmers' foreman, agreed that David Harney Constructions’ men would work for the Palmers to install the floor steelwork.
[13]Mr Palmer says that they were never informed of any time schedules during the project and that any arrangement with respect to the floor was entirely between David Harney Constructions and Mortimer Constructions.
[14]Mr Cheslin’s evidence was that Mr Hubert had said that “his men had nothing to do” and that “he didn’t want to lose them off the site and would use this work to keep them on site”.
[15]Mr Hubert says that it had become obvious that the Palmers were not going to be able to complete the Block A flooring task within time (as they had indicated it would take them 18 days) and he had been told by David Harney to progress the work.[4] Mention was made by Mr Hubert that, whilst the Palmers were competent in their work, there just wasn’t enough of them on site to get the work done in the time frames required by the principal contractor.[5]
[4] Mr Hubert’s evidence was that it took 4 of his men 4.5 days to complete the flooring.
[5]Mr Palmer commented that he could have arranged for extra workers if need be, rather than have David Harney Construction employees perform some of the work in their scope of works, yet this doesn’t sit with his other comments that he was aware that Mortimer Constructions had fallen behind in its schedule with David Harney Constructions and that his workers were behind in their work due to having to rectify defects of Mortimer Constructions.
[16]Whilst there is obviously some debate as to how David Harney Constructions became involved in the work that they did, there was no dispute that the work performed was from the scope of works to be carried out by the Palmers. The Tribunal is satisfied that the issue was timing and the work performed by David Harney Constructions needed to be completed quickly to allow other trades to continue as scheduled.
[17]Any work performed by the principal contractor on a project, in respect of an area contracted to another, will necessarily reduce the scope of work required to be completed by that sub-contractor. The value deducted by the principal contractor may not be the same value as was the cost quoted by the sub-contractor for the work, but nevertheless, the scope of work is reduced. In this case Mortimer Constructions could have communicated with the Palmers, at an earlier point in time, in respect of the variation and reduction in scope of works.
[18]The Palmers say that they never requested David Harney Constructions to perform work for them[6] and therefore, shouldn’t have to pay their cost. However, what is clear to the Tribunal is that the Palmers have invoiced Mortimer Constructions for this component of the scope of works when they did not do the work.[7]
[6] Exhibit 14: Email from Cheryl Palmer to Peter Mortimer dated 7 March 2008.
[7]At the hearing the Palmers admitted that this aspect of the scope of work was not completed by them and that they knew that David Harney Constructions was completing the floor and that, therefore, it was not required in the scope of works.
[19]There is insufficient detail on the invoice from David Harney Constructions to determine how the figure was calculated. The evidence was that David Harney Constructions took four and a half days with four men together with Mr Cheslin marking it out. Mr Palmer agreed that it would take four men four and a half days to do the work completed by David Harney Constructions. At the rates charged by the Palmers[8], this equates to one man at $55 per hour plus GST and three men at $45 per hour plus GST for 4.5 days totalling $7,524.00 inc GST.
[8] Exhibit 10.
[20]Accordingly, the Tribunal finds that the Palmers claimed from, and were paid by, Mortimer Constructions for the floor steelwork which, although it was originally included in the scope of works, was actually completed by David Harney Constructions. The Tribunal orders that the Palmers pay to Mortimer Constructions the sum of $7,524.00, representing the value of the work deducted from their scope of works.
$6,600.00 for rectification work
[21]Mortimer Constructions says that it was required to pay for rectification work carried out by Jon Carr Welding & Fabrications, to the value of $6,600.00, as a result of the Palmers failing to properly carry out some of the work they were contracted to do.
[22]The Invoice from Jon Carr states:
“Fitting of awning purlins and bargeing roofing purlins as drawn on
Drawing No.MC 1187 – MP03
Drawing No. MC 1187 – MP02
At Beachside Apartments Block “B” Nelly Bay, Magnetic Island.”[23]At the hearing, Mr Carr confirmed that he was contracted to Mortimer Constructions and that he had been asked by Peter Mortimer to install purlins on Block B and carry out some rectification work.[9] He said that Mr Mortimer had asked him to install the purlins because he was so far behind on the job. When asked why he was asked to carry out the rectification work and not Mr Cheslin he replied that he didn’t know but that to keep the job going he had to fix it and move on. He confirmed that the work was carried out by himself and Mr Rod Norman and that Mr Cheslin was on site the “whole time”.
[9]In respect of the purlins, this is consistent with Mr Palmer’s and Mr Cheslin’s evidence, who say they had their own resources to handle the work and would not have asked for assistance, though in comparison to Mr Mortimer’s evidence that Mr Cheslin had asked for assistance from Jon Carr & Rod Norman. In respect of the alleged rectification work, Mr Cheslin denied that any such work was done on behalf of the Palmers.
[24]Mr Joel Hubert, the site supervisor for David Harney Constructions, gave evidence that he supervised John Carr and Rod Norman, employees of Mortimer Constructions, on Block B roof awnings.
[25]In evidence, Mr Palmer told the Tribunal that as soon as they started on 31 October 2007, they were confronted with an escalated workload and that Mortimer Constructions had never given them any deadlines for work to be completed by. He also said that the job changed as soon as it started: it started as an installation and became a design, construct and install.[10]
[10] This was consistent with Mr Cheslin’s evidence also.
[26]Clearly, from Mr Carr’s evidence, there was more than just rectification work being performed by him on Block B and the invoice reflects this. Importantly, the invoice does not distinguish between rectification and other work nor provide a break-up of the costs. However, Mortimer Constructions are claiming the entire value of the invoice on the basis it is rectification work. There was no evidence led, on behalf of Mortimer Constructions, as to the value of the rectification work alone.
[27]One of the fundamental principles in relation to rectification work and the ability to claim the costs of such work from the party allegedly responsible for its value is that that party first be given the opportunity to rectify the alleged defects. This of course not only alerts that party to the allegation that there are defects but, if agreed, allows them to rectify the defects at their cost as opposed to the cost of another contractor.
[28]Whilst the Tribunal is satisfied, particularly via the evidence of Mr Carr, that there was some defective work carried out by the Palmers which required rectification, the Tribunal is not satisfied that Mortimer Constructions notified the Palmers of the alleged defects and gave them the opportunity to inspect and, if agreed, rectify before Mr Carr was engaged. Furthermore, Mortimer Constructions did not seek from the Palmers the actual cost to rectify those defects. The Palmers told the Tribunal that had any alleged defects been raised with them, they would have addressed them[11] and the Tribunal accepts this evidence.
[11]Exhibit 17: See letter from Island Engineering to Mortimer Constructions dated 27 October 2008.
[29]What is clear, however, by their admission, is that the Palmers did not fit all of the purlins on Block B, though they have claimed from Mortimer Constructions for the full scope of works. Whilst there should have been some formal notification from Mortimer Constructions to the Palmers advising of a variation to the scope of works, the Palmers are unable to claim from Mortimer Constructions for work that they did not perform.
[30]On Mr Palmer’s evidence, he had allowed $2,400.00 plus GST (three days for two men at a combined hourly rate of $100 per hour plus GST)[12] or $400 plus GST per unit for the six units. In comparison, Mr Mortimer suggested that a more accurate figure would have been $800 plus GST per unit for the 6 units based on the quote provided by Palmers in respect of Block B.
[12]Exhibit 10: Letter sent by email 27 October 2007 from Island Engineering to Mortimer Constructions lists Palmer’s hourly rates as $55.00 plus GST for Tradesman, $45.00 plus GST for Tradesman assistant.
[31]Accordingly, the Tribunal finds that the Palmers claimed from, and were paid by, Mortimer Constructions for the purlins which, although they were originally included in the scope of works, were actually completed Mr Carr for Mortimer Constructions. The Tribunal orders that the Palmers pay to Mortimer Constructions the sum of $2,640.00 representing the value of the work deducted from their scope of works, at the rates suggested by the Palmers.
[32]As an aside, the Tribunal was provided with considerable evidence regarding the cost of works completed by the Palmers outside the scope of works quoted by way of rectification works and other additional works together with the claims for these works including overtime. However, as these factors are not relevant to the applicant’s claim, the value of those invoices is not an issue to be determined by the Tribunal.
[33]This case highlights the need to formalise sub-contract arrangements. The timing for the completion of work by the Palmers was one of the biggest issues between the parties on site (leading to issues with overtime and work completed by others), yet there was nothing in writing between them as to what was required in this regard.[13]
[13]The Tribunal notes Mr Mortimer’s comment that he was never given a formal schedule but was aware that timing would be tight.
Costs
[34]The starting point concerning costs in the Tribunal is that each part must bear its own.[14] 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.[15] 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.[16]
[14] Queensland Civil and Administrative Tribunal Act 2009 (the “Act”), s 100.
[15]Ibid, s 102(1). It is also noted that the Tribunal may award costs pursuant to section 77(2)(h) of the Queensland Building Services Authority Act 1991.
[16] Ibid, s 102(3).
[35]Mortimer Constructions did not claim costs in its application, nor were any submissions made as to costs at the hearing.
[36]Having regard to the discretionary power to award costs, the Tribunal has taken into consideration factors such as the self representation of the parties at the hearing and the outcome of the case as determined by the Tribunal and, following consideration, the Tribunal is not satisfied that it is in the interests of justice to make an order for costs.
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