Naylor & Forward v Simpson
[2015] QCAT 403
•9 October 2015
| CITATION: | Naylor & Forward v Simpson [2015] QCAT 403 |
| PARTIES: | Denise Naylor and Duane Forward (Applicant) |
| v | |
| Robert Alan Simpson | |
| APPLICATION NUMBER: | BDL207-14 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 11 June 2015 and 12 June 2015 |
| HEARD AT: | Cairns |
| DECISION OF: | Member Favell |
| DELIVERED ON: | 9 October 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The Applicants pay the Respondent $50,229.24 within 21 days of the respondent providing all the certificates held by him as set out in paragraph 53 herein. |
| CATCHWORDS: | Building matters – cost plus contract – whether contracts works could reasonably be calculated – whether contracted contain fair and reasonable estimate – claim for repayment – where no schedule of works - sections 9, 39, 47, 55 and 67 of the Domestic Building Contracts Act 2000. |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Duane Forward |
| RESPONDENT: | Robert Simpson |
REASONS FOR DECISION
Duane Forward and Denise Naylor are the owners of 14 Garland Close, Kanimbla, Cairns. On 10 April 2012 they signed a contract with Robert Simpson for works to be carried out at 14 Garland Close described as “demolition, renovation and new work”. The contract was a cost plus contract.
The contract documents were described as plans prepared by Davies Design signed on 10 October 2011 with specifications prepared by Davies Designs. The plans and specifications were the one document consisting of nine pages.[1] The contract documents also included foundations data. That data was also included in the plans document.[2]
[1]Exhibit 5.
[2]Exhibit 5.
Item 6 of the contract provided for an estimated total cost of the works. It stated:
“The estimated total cost of the works is provided in good faith to be a fair and reasonable estimate of the total amount the contractor is likely to receive under the contract to the extent the amount is known at this time.”
The amount estimated was $245,000.00.
Item 6, the estimated total cost of the work section contained a warning as follows:
“The estimated total cost of the works is not guaranteed by the contractor and is subject to adjustment by the actual cost incurred in respect of the works. It may also be subject to change in accordance with clauses 7.3, 7.7, 9, 11.9, 11.12, 12, 13, 14, 18, 25, 26 and 29 of the general conditions.”
It also warned that the estimated total cost of the works did not include amounts payable directly by the owner to a third party.
Clause 29.14 provides:
“the estimation of the total amount that the contractor is likely to receive under the contract and shown at item 6 of the Schedule as the estimated total cost of the works has been made on the basis of such information as to the nature and extent of the works then available to the contractor, but will not be of any contractual significance whatsoever between the parties.”
According to the application, the work commenced on the renovation on 18 April 2012 and was completed on 11 December 2012. Payments made totalled $284,700.63.
The respondent has issued a number of invoices:
| Invoice no. | Date issued | Amount claimed | Amount paid |
| 923 | 4/4/12 | $12,250.00 | $12,250.00 |
| 931 | 17/6/12 | $50,108.87 | $50,108.87 |
| 934 | 6/8/12 | $102,341.76 | $102,341.76 |
| 942 | 9/12/12 | $126,933.49 | $20,000.00 |
| 945 | 17/10/12 | $44,130.10 | $10,000, $40,000, $50,000 |
| 946 | 19/11/12 | $121,063.59 (made up of claim 3 and 4, invoices 942 and 945 less payments of $10,000.00 and $40,000.00) | |
| 957 | 31/5/13 | $39,951.24 | |
| 957 | 5/6/13 | $40,761.21 | |
| 1008 | 16/9/14 | $63,276.34 |
Invoice 957 deducts from an account rendered amount of $51,063.59, the sums of $1,567.50 for timber hand rail work carried out by others and $9,544.85 for SP Glass Solution paid for by the applicants. It also charges $809.97 as 20% p/a for 37 days at $21.88 per day.
Invoice 1008 charges for SP Gum and TK+GFM Floor in the sum of $10,278.00 plus 15 months interest since 5 June 2013 in the sum of $10,190.30 and adds that to the amount in invoice 957 to give a total of $63,276.34.
By late October 2012 the applicants could not afford to make further payments and sought to make part payments. That proposal was rejected on or about 5 June 2013 after the applicants had lodged a complaint to the Building Services Authority for what they said was defective and incomplete works.
By 17 October 2012 the applicant was seeking the release of further funds from their bank and the bank was requiring an inspection to confirm the level of work completed. Denise Naylor emailed the respondent seeking amendments to invoices and details of costs billed to the invoice and that which were required to complete the job.
On 20 November by email the applicant and Denise Naylor advised the respondent that they were in a difficult financial position and that after reviewing the additional funds they could access they advised that they could only access $145,000.00 to finalise works.
On 19 December 2012 Mr Forward and Ms Naylor wrote to the respondent raising concerns with respect to the management of the extension works undertaken, total costs to date and the estimate to complete the works. At that time the parties had reached an impasse and the builder was refusing to do anything else until he had been paid.
On or about 3 September 2013 Mr Simpson caused a letter of demand to be sent to Ms Naylor seeking the collection of $40,761.21 being for invoice 957 amended to include an interest component for 37 days of $809.97.
That demand was met with the response from a lawyer acting for the applicants dated 10 October 2013. The letter advised that the applicants having taken their lawyers advice considered that Mr Simpson contravened sections 55(1) and (2) of the Domestic Building Contracts Act 2000 (Qld) by entering into the cost plus contract in circumstances where as at the time of the contract the cost of the contract works (or at least a substantial part of the contract works) could reasonably be calculated without any of the works being carried out and the contract did not contain a fair and reasonable estimate of the total amount likely to be received by Mr Simpson under the contract. Accordingly they denied that they were indebted to Mr Simpson for any further amounts under the contract or otherwise and considered that Mr Simpson was liable to them for damages. That letter advised of the applicant’s election to terminate the contract for what they say was a breach of the contract and the Domestic Building Contracts Act 2000 (Qld).
In August 2014 the applicants sought release from the payment of $40,761.26 and restitution of $83,389.34.
The application contained the reasons why they want the tribunal to make orders as follows:
“1. Relief from payment of an amount claimed by a respondent of $40,761.21 and relief from any further claims for payment including interest from the respondent based on the respondents failure to comply with his responsibilities under the contract and based on the respondent entering into a cost plus contract in breach of the Domestic Building Contracts Act 2000 (Qld) section 55.
2. Repayment by the respondent to the applicant of $83,389.34 being funds paid to the respondent above the contracted/quoted amount, adjusted for additional works completed on our direct request and for works within the respondents scope either not completed or paid for directly by owners.
3. Where determined by the council certifier that any works completed by the respondent or his subcontractor is noncompliant and/or if additional information/documentation is required from the respondent regarding his works to enable final certification that he is to bear all costs associated with making the works complaint and is required to provide the information within 14 days of a written request. Respondent is also to provide a copy of all correspondence between himself and the private certifier regarding any previous stage or final inspection of his works within 14 days of the tribunals order.
4. Direct the respondent to provide copies of all certificates/form 15 or 16 required by council certifier for works completed by sub trades that are required for final certification as per council letter dated 2 June 2014, with copies to be provided with 14 days of the tribunal’s decision.”
The respondent in his response requested the applicants pay him for outstanding amounts claimed of (sic) works already completed and denied having to make payments to the applicants for material chosen and paid for by the applicants.
An essential consideration in the dispute between the parties is the nature of the contract entered into by the parties.
The contract is a cost plus contract. It does not of itself provide a fixed price for a scope of works.
An important part of the applicants’ case is their reliance on a breach of section 55 of the Domestic Building Contracts Act 2000 (Qld).
Section 55 provides as follows:
“Cost plus contracts
(1) A building contractor must not enter into a cost plus contract that would be a regulated contract unless –
(a)the contract is included in a class of contracts prescribed under a regulation; or
(b)the cost of a substantial part of the subject work cannot reasonably be calculated without some of the work being carried out.
Maximum penalty – 100 penalty units
(2) A building contractor must not enter into a cost plus contract that would be a regulated contract unless the contract contains a fair and reasonable estimate by the building contractor of the total amount the building contractor is likely to receive under the contract.
Maximum penalty – 100 penalty units
(3) If a building contractor enters into a cost plus contract in contravention of this section, the building contractor cannot enforce the contract against the building owner.
(4) However, the Tribunal may, on an application made, as provided under the QCAT Act, to the Tribunal by the building contractor, award the building contractor the cost of providing the contracted services plus a reasonable profit if the Tribunal considers it would not be unfair to the building owner to make the award.”
The contract is a regulated contract under the Domestic Building Contracts Act 2000 (Qld).[3] The contract is not included in a class of contract prescribed under a regulation for the purposes of section 55(1)(a) of the Domestic Building Contracts Act 2000 (Qld).
[3]Domestic Building Contracts Act 2000 (Qld) s 9.
The applicants by their lawyer’s letter assert that they had paid $44,751.24 to third parties for works within the scope of works under the contract; Mr Simpson had charged the applicants $2,332.95 for rectification works required to rectify defective works performed by him; Mr Simpson had not completed works within the scope of works under the contract valued at $8,342.40 and the applicants incurred $2,927.90 for the cost of rectifying defective works carried out by Mr Simpson.
An examination of the contract does not disclose a scope of works. There is no definition of scope of works nor is there in any provision a detailed description for scope of works. There is in item 3 a description of works but it is simply described “demolition, renovation and new work to the existing dwelling 14 Garland Close, Kanimbla, Qld 4870.”
The applicants sought to rely on a document provided by Mr Simpson dated 2 March 2012 headed “Estimate and Quote”. It is not a document said to be included in the contract documents.
In that document Mr Simpson said:
“I am pleased to submit my estimate:
(a)The work consists of the removal of existing roof over proposed two storey new structure area.
(b)The construction of a new floor in place of this area and the addition of a deck and extend the car port.
(c)Removal of ground floor partitions.
(d)The addition of two stairways, type and material to be determined.
(e)Costs vary depending on type of finish and fit-out work methods, scaffolding to two storey roof areas.
(f)If you opted for a floating floor instead of T&G Solid Floor this would give a working platform and reduce the scaffolding costs and cover to the lower level from the elements, then laid the floating floor out, it or even back to HW T&G Flooring. The benefit of a floating floor is that you save sanding and polishing costs.
(g)The fit-out in the kitchen and bathroom are standard fittings in my estimate. This is where cost plus (sic) is an advantage as you select the finish as you proceed at costs depending on your taste. This is also where I can advise you on choices and what works best, it costs less and looks just as good.
(h)There will be a fair bit of time (sic) to access the site, blocks, trusses, etc. This will also speed up the works.
(i)There are lots of things not included on the plans #018GAR9-9 and can be interpreted many ways. This can be solved with weekly site meetings to discuss what you want as we proceed. This kind of work usually costs from $1,1700 per metre like main area included, petition ceiling, rafters and roof covering would be around $2,000 per square metre and patios cost around $800 per square metre. Having considered all of this I have arrived at estimate of $245,000.00 overall. This price could change if we get a good go at it weather (sic) permitted and saved time and depending on our choices along the way. For a fixed price you would need to draw up a specification containing all finishes and items.”
An examination of the plans and the notations on the plans[4] shows that the plans are not drawn to scale. I was told that some of the measurements were wrong and the depiction of the steps in the staircases meant that there was a problem associated with the construction of the stairs. The plans lacked a lot of specification.
[4]Exhibit 5.
Evidence was given that after demolition was carried out, it became apparent that various levels were wrong and unanticipated work had to be completed before bond beams could be placed. I was told that such work took two men up to four days. I was told the bricklaying needed to be done separately and getting the levels correct was a substantial part of the work.
In my view the evidence I heard and the wording that appears in the quotation points to a conclusion that the cost of a substantial part of the subject work could not be reasonably calculated without some of the work being carried out.
Mr Simpson gave evidence that the estimate was reasonable and it was what he thought he could carry out the building work for. He said that if it was to be a fixed price contract, it would have included at least another $73,000 because of the risk.
A cost estimate and specification proposal was obtained for Constructions dated 2 April 2012. It was for a sum of $310,140.00 inclusive of GST. That estimate was subject to a set of special conditions. The cost estimate provided for some prime cost items and provisional sums which could be changed. The estimate was subject to a set of specifications which in part required the owner to undertake certain demolition works. It then set out certain specifications and selections.
The applicants also obtained a quotation dated 21 February 2012 from AJ Ratcliffe Building Pty Ltd in the sum of $293,370.00. The inclusions were the removal and demolition of all necessary components and construction of a new garage upstairs dwelling and deck area. It stated that as plans were limited to finishes, allowances had been made for Hardies horizontal cladding, kwiler decking, spotted gum flooring and wall tiles for shower areas only. A sum of $20,000.00 was allowed for the staircase and balustrading and $10,000 for the kitchen. All other finishes were allowed for a lower to medium budget.
Both applicants gave evidence and were cross examined. Their statement of evidence is contained in exhibit 2. Both say that they approached four builders to quote the works. Each was provided with a copy of the plans and an efficiency report and a design book wherein Denise Naylor had collated her preferred kitchen, stairs, flooring and balustrade finishes. That document is included in the evidence but it did not form part of any specification or scope of works in the contract.
In their evidence they complained about a number of aspects which seemingly prior to the standoff, were not of particular concern. Much of their evidence in my view is unnecessary to consider because it seems to assume that the contract is something other than a cost plus contract and that the use of the cost plus contract here was in breach of section 55 of the Domestic Building Contracts Act 2000 (Qld).
The applicants and Mr Simpson when giving their evidence were obstinate and uncompromising. On occasions there was unnecessary criticism, rudeness and irrelevancies.
Mr Simpson openly admitted that he has taken the view that he will not provide necessary certifications until he is paid. He had sought to make life difficult for the applicants with approaches made to their bank and others. The applicants at the stage that they realised that they could not afford the cost of the construction as it was proceeding made complaints about Mr Simpson and have left no stone unturned in an endeavour to reduce their costs and not make the payments claimed by Mr Simpson.
It is not necessary for me to go through all of the items canvassed over the two days because in my view Mr Simpson is not in breach of section 55 of the Domestic Building Contracts Act 2000 (Qld) and because the contract was a cost plus contract which did not have any schedule of works. Therefore, the claim for repayment of money paid has no basis.
The claim for money for the reimbursement of money paid assumes that the contract is somehow converted into a fixed price contract with a designated schedule of works for which the applicants have paid the builder when in fact they paid others. That is not correct.
The applicants gave evidence that they consider that the work carried out was not managed with reasonable diligence and was in breach of section 47 of the Domestic Building Contracts Act 2000 (Qld). In that regard they cite an alleged failure to provide fortnightly invoices as required by the contract, the failure to provide timesheets for approval from 2 July 2012, and the timing in completing the work.
Section 47 of the Domestic Building Contracts Act 2000 (Qld) provides that if a regulated contract is a cost plus contract and the contract does not have a stated completion date or period, the building contractor warrants the subject work will be carried out with reasonable diligence.
In my view on the evidence presented the claim that it has not been managed with reasonable diligence is not made out.
The assertions that Mr Simpson’s management of the work was deceitful in my view are not made out.
The applicants contended that Mr Simpson was not entitled to demand full and final payment for the works because under section 67 of the Domestic Building Contracts Act 2000 (Qld) final payment is only to be made after practical completion.
Section 67 applies to a regulated contract for which the subject works consists of (relevantly) the renovation, alteration, extension, improvement or repair of a home to a state suitable for occupation. If that applies the building contractor must not demand all or part of the completion payment unless the practical completion stage has been reached. It also provides that the building contract under a regulated contract must not receive all or part of the completion payment unless the practical completion stage has been reached and if the building owner claims the stage has been reached with minor defects the requirements of subsections 4 and 5 of section 67 have been met.
The subject contract is a regulated contract but on its face it does not require subject work to be at a stage suitable for occupation. There is no date provided in item 14 for practical completion stage. The contract does not contemplate in method A in part D a practical completion stage.
The applicants contend that they gave Mr Simpson a list of defects by email of 19 December 2012 and 10 April 2013.[5] An examination of the email shows that it contains complaints about the timeframe, timesheets, the original quote estimate and five dot points concerning incomplete or unsatisfactory work. Those matters were the subject of some evidence. In my view the worksite subject of those complaints were in the mainly unfinished and were explained in the course of evidence.
[5]Attachments 7 to part C section 2 the reasons the orders should be made.
The applicants also complain that Mr Simpson is in breach of the building regulations, section 34, as he continued on the building without ensuring that all required stage inspections were fully completed. Their complaints concern what they call ‘required stage inspections’ specifically the framing stage inspection. I note that the contract does not provide for any of those stages, but nevertheless under the Building Regulations, I am not satisfied that he did breach the regulation such as to require any order from this Tribunal or such as to require a finding that he is not entitled to payment he otherwise would be entitled to.
The applicants also complain of a breach of section 39 of the Domestic Building Contracts Act 2000 (Qld) which requires the building contractor under a regulated contract to provide certificates of inspection to the building owner as soon as practicable after receiving a contract related document including a certificate of inspection.
I agree with the applicants that the building contractor was not entitled to withhold copies of those documents and he should provide them to the applicants forthwith.
In my view the respondent should be required to provide all of the certificates held by held him respect of the property, including form 15 prefabricated trusses, form 15 and 16 glazing certificate, form 16 waterproofing certificate, form 16 energy efficiency certificate-installation and form 16 installation of sustainable building materials (plumbing) forthwith.
The applicants also sought to make an argument concerning GST and relied on a goods and services tax ruling 2000/1. In my view it has no relevance to any of the claims sought to be made in this Tribunal.
Two engineers were called during a course of the hearing. Their evidence was particularly relevant to the requirements of wind bracing to the upper level of the residence. They also dealt with the stairs shown in the plans.
Peter Lennox provided a report exhibit 9 dated 20 April 2015. His evidence and the report was to the effect that sufficient bracing had been provided to the upper level of the structure. Heath Paul Rogers disagreed with that finding partly on the basis that he thought that the brace walls had not been built in accordance with the drawing and partly because he disagreed with the methodology employed by Mr Lennox particularly in his evidence in chief as to the adequacy of the overall bracing.
I preferred the evidence of Mr Lennox who explained his reasoning clearly. In my view his reasoning was not faulted and any complaints about it in the end were minor and not substantiated. Further the evidence of the methodology applied in the construction in my view was corroborative of the findings of adequacy.
For the above reasons I am not satisfied the appellants have made out their case for the orders. They seek except for the provision of the relevant certificates. The application is dismissed.
The respondent has claimed “for outstanding amounts claimed of works already completed.” The claim made in the response and counterclaim does not particularise an amount. The applicants have provided a reconciliation (exhibit 8) of the deposit claim and four subsequent claims which as of 7 December 2012 showed $335,764.22 claimed and $284,700.63 paid until $51,063.59 owing. That figure is reflected in the first invoice 957 which after two credits we deducted left $39,951.24 still owing. The second invoice 957 added $809.97 interest to that amount.
Invoice 1008 claims to be the final amount which adds $10,278.00 for SPGumT+GEM floor and 15 months interest claim. I note there is no interest claim made in the counterclaim.
Otherwise I am satisfied that the appropriate claim reflected in the evidence is $39,951.24, (first invoice 957) plus $10,278.00 for the floor in invoice 1008. I am satisfied that claim is proved.
The order is that the applicants pay the respondent $50,229.24 within 21 days of the respondent providing all the certificates held by him as set out in paragraph 53 herein.
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