Mt Cotton Constructions Pty Ltd v Butt Investments Pty Ltd - [2014] QCAT 130

CITATION:

Mt Cotton Constructions Pty Ltd v Butt Investments Pty Ltd [2014] QCAT 130

PARTIES:	Mt Cotton Constructions Pty Ltd (Applicant)
v
Butt Investments Pty Ltd (Respondent)

APPLICATION NUMBER:

BDL011-13

MATTER TYPE:

Building matters

HEARING DATE:

7 April 2014

HEARD AT:

Brisbane

DECISION OF:

Senior Member Oliver

DELIVERED ON:

9 April 2014

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The respondent pay to the applicant $13,520 by 30 May 2014.

2. No order as to costs.

CATCHWORDS:

CONTRACT – WHERE AGREEMENT NOT REDUCED TO WRITING - where shop fitout arranged by tenant – whether some of the work undertaken for the benefit for the lessor – whether oral agreement between the applicant and the lessor's agent for work to be done to the lessor's premises – whether lessor's liability limited to $8,000 – whether lessor liable to the applicant for $8,000 or more – whether cost charged by the applicant for the work done was reasonable.

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Mr Panayi, solicitor of Industry Lawyers for the applicant

RESPONDENT:

Ms Schloffer, solicitor of Quinlan Miller and Treston for the respondent.

REASONS FOR DECISION

Butt Investments Pty Ltd is the owner of commercial premises at 201 Elizabeth Street, Brisbane. It leased Level 1 to Ashlee and Ian Cunningham where they conducted a hair dressing business known as Paris Texas.
In 2010, the Cunningham’s wanted to undertake a refit of the hair dressing salon and sought a price from Mt Cotton Constructions to do the refit. Christopher Scroope, director of Mt Cotton Constructions, and the Cunningham’s were friends so Mr Scroope agreed to do the refit at cost price. Typically part of the refit involved work to, what might conveniently be called the lessor premises and therefore, in preparing a scope of work for the Cunningham’s, he included in the scope of work at Item 14 the work that he considered would involve the lessor’s premises and described that as “lessor cost”. The initial total costs for the lessor’s work was $40,515.28, but it is contended by Mt Cotton Constructions that at a meeting on 8 November 2010 at the salon, by agreement with the lessor’s representative, the work was significantly reduced to a limited number of items.
Mt Cotton Constructions carried out, what it says was the agreed work and sent an invoice for that work to Hillier Carter Properties, being the property managers for Butt Constructions, in the sum of $24,431. It is not contested that Hillier Carter Properties has no liability to pay. Butt Constructions did not pay and therefore Mt Cotton Constructions commenced proceedings in the tribunal against it to recover the invoiced amount.
The proceedings were commenced by application on 23 March 2013 and in an amended statement of claim Mt Cotton Constructions plead the necessary facts to establish the claim. There is no dispute that Hillier Carter Properties is the authorised agent for Butt Investments was represented by Christopher Hands who undertook the day to day management of the premises.
Butt Investments deny the claim and say that there was no contract entered into between it and Mt Cotton Constructions for the work that was carried out and, any liability for that work rests with the Cunningham’s. Butt Investments do however concede that there was authorisation for some of the work, but any costs for that work was to be limited to a total of $8,000. The lease between it and the Cunningham’s makes provision for this contribution but it is would only be payable to the Cunningham’s if they complied with the terms in the lease and were not in arrears of rent. In essence, Butt Investments contend that they have no liability to Mt Cotton Constructions.
The issues in dispute therefore are whether there was a valid contract between Mt Cotton Constructions and Butt Investments and if so, what is the proper quantum of Butt Investments' claim.
Prior to the commencement of the project, the Cunningham’s gave Mr Hands a copy of a scope of work prepared by Mt Cotton Constructions. Mr Hands had no direct contact with either Mt Cotton Construction, Mr Scroope or Mr Irving the project manager for Mt Cotton Constructions prior to the work commencing at the premises. However, he was aware what work Mt Cotton Constructions considered it should do under Item 14.
After the work started on 1 November 2010, on 8 November 2010 a meeting was arranged between Mr Hands and Warren Irving who was the site manager for the refurbishment of the salon. Mr Irving had the scope of works with the cost estimation on it and before carrying out any of the lessor’s works, wanted confirmation from Mr Hands as to what work was to be carried out. Mr Irving said that he was anxious to have this meeting because the electrician was on site and he wanted to go through the work to be undertaken by the electrician with Mr Hands.
The original scope of work[1] included 13 items at a total cost of $40,515.28. Of those 13 items, only three of those items were undertaken by Mt Cotton Constructions and they included:
[1]Exhibit 19 to Mr Hands Affidavit Exhibit 5.
·Light supply
Allowance for light supply, approximately 32 number lights – recessed, pendant and leds provisional allowance  $5,000
Extra over for pendant light to entry foyer above landing – provisional allowance  $2,700
·Air-conditioning
Allowance for extension of existing flexible ducts and provide 2 new registers into new beauty rooms  $2,120
Allowance to refit A/C registered to flexible ducts and refit into new ceiling   $1,800
·New ceiling to tenancy
Suspended ceilings
- Suspended ceiling to full tenancy  $13,052
Mr Irving says that during the discussion Mr Hands agreed to the new light fittings that were to be installed. With respect to the air-conditioning, new ducts would be run to two new registers. With respect to the ceiling, Mr Irving said that he was told not to replace the grid, which is the suspended frame of the ceiling into which foam tiles are inserted because this was too costly. Instead, Mr Irving suggested they simply should paint the underside of the grid and then level the grid by adjusting the droppers that hold the grid in place to ensure that the ceiling is level. Mr Irving says that Mr Hands agreed to this work.
In a separate conversation, it seems, although this was never put to Mr Irving or Mr Scroope, Mr Scroope went through the 13 items of lessor’s works with Mr Hands and there was agreement only about the lighting, refurbishment of the ceiling, which included replacing ceiling tiles and the air-conditioning. Mr Scroope said that he would be able to do that work at a price less than that which was contained in the original scope of works. Mr Scroope says that on the basis that Mr Hands agreed to this work, Mt Cotton Constructions then proceeded to do the necessary work to bring the ceiling and the lighting up to an acceptable standard. The point was made, and well made in my view, that if the whole salon was going to be refitted, and given the state of the ceiling as described by Mr Irving as old and unsightly it would significantly detract from the new work. As well, he said that the lights were old, showed signs of rust, and were unsafe and therefore needed to be replaced. I accept unreservedly Mr Irving’s evidence as the state of both the ceiling and the light fittings not only as he was on site during the process of demolishing the old fittings in the salon, but also he was also working with the electrician and expressed concerns about the condition of the lighting and the need for it, and the ceiling to be refurbished. Photographs taken subsequently, and annexed to Mr Hand’s affidavit are of little assistance.
Mr Hands denies firstly that there was any agreement with Mt Cotton Constructions that the respondent would contribute to the costs, and the extent of the work that was agreed to be undertaken. He says that there was nothing wrong with the ceiling and did not require repainting nor the lights and any new light fittings was the responsibility of the tenant. However, in the correspondence that passed between the managing agent to Mt Cotton Constructions after the invoice was sent to Hillier Carter for the work undertaken, no issue was raised about the extent of the work done other than Butt Investments was never liable to Mt Cotton Constructions. If there was any liability for the work that liability was to pay the Cunningham’s the $8,000 under the lease, if the terms of the lease were complied with. In fact, Mr Hands says that at the meeting he discussed this with the Cunningham’s but not necessarily anyone else, in particular Mr Scroope or Mr Irving.
There is no direct challenge in writing, that I can see, which disputes the content of the invoice sent to Hillier Carter Properties on 17 December 2010. It is worth recording the email response to that invoice which is as follows:
Firstly, Hillier Carter Properties has no contract or agreement with Mt Cotton Constructions Pty Ltd, as such, we refute your claim that we are in breach of the Building and Construction Industry Payments Act 2004 (Qld).
As part of the refit works of their salon the lessor agreed with Paris Texas to contribute $8,000 plus GST towards the cost of new ceiling tiles, this agreement is between the lessor and the tenant not a third party. All works are the sole responsibility of Paris Texas. All invoices in respect of your contract with Paris Texas should be directed to them.
In an attempt to resolve the matter on 1 February 2013 Mt Cotton Constructions wrote to Hillier Carter as follows:
Further to your phone call to our office today, our company will reduce the ceiling works to $8,000 but we are not going to accept any other deductions in this bill. We will expect your company to pay for the body corporation items that are included in this cost that needed to be upgraded as was agreed by the representatives of your firm at Paris Texas salon with our site manager.
There is also another email from Mr Hands on 2 December 2010 to Mr Cunningham stating, “the lessor’s contribution for the ceiling is to be $8,000.00 plus GST and your contractors invoice should be for this amount”. This supports the expectation that the respondent was expected to be invoiced for at least this amount. There was no further compliant from either Butt Investments or Hillier Carter about the work undertaken by Mt Cotton Constructions.
On the basis of this evidence, I have come to the conclusion that Mr Hands did authorise Mt Cotton Constructions to proceed with the work generally as set out in the invoice of 17 December 2010 save for some further qualifications. Mr Hands may have believed that his was limited to $8,000 as he discussed with the Cunninghams but I accept both the evidence of Mr Irving and Mr Scroope that no such qualification was made to them or that the money would be paid to the Cunninghams. I also accept, and the email above seems to confirm that Mt Cotton Constructions was to invoice the owner Butt Investments.
There can be no doubt that the work the subject of the invoice was carried out by Mt Cotton Constructions. In respect of that work, the bulk of it was for the benefit of the lessor who would continue to have the benefit of this work after the expiration of the lease with Paris Texas.
With respect to the light fittings, the Mt Cotton Constructions concede that part of this work was for the benefit of the tenant and not the lessor. This related to special down lights for the salon. It concedes that of the $7,310 only $4,020 is attributable to lessor works. I accept this to be the case and is consistent with the fit out of the salon.
With respect to the air-conditioning ducts and two new registers in the beauty rooms, I have decided that this work is for the benefit of the tenant in the new fit out and could not properly be described as for the benefit of the lessor. There would be no benefit to the lessor after the expiration of the lease. I do not propose to allow this amount.
With the refitting of the air-conditioning registers and painting of the new ceiling grid, together with the insulation of ceiling tiles I propose to allow part of the claim because clearly, this is for the benefit of the lessor. The cost of the ceiling tiles is supported by some independent costings of Mr Leck which is set out in the schedule of reasonable costs.[2] There is however one complication in that there was no new ceiling grid, only repainting. This is all a little confusing but what is clear, on the evidence of Mr Scroope is that there was no agreement as to the replacement of the ceiling for $13,000. Mr Hands did not agree to this. The work done, amounted to only the painting of the bottom side of the grid, levelling the grid and replacement of tiles. For this work, I propose to allow $9,500 (GST incl). All of this work was clearly for the benefit of the lessor.
[2]Exhibit 3.
With respect to the reasonableness of the costs, I accept Mr Scroope’s evidence that, because of his friendship with the Cunninghams, the whole job was priced on a cost basis and therefore the costs charged for the work allowed is reasonable.
Therefore the amount recoverable claim is, inclusive of GST, $13,520. I therefore propose to order that the respondent pay to the applicant $13,520 by 30 May 2014.