Nicol v Luke
[2016] QCAT 421
•31 October 2016
| CITATION: | Nicol v Luke [2016] QCAT 421 |
| PARTIES: | John Nicol (Applicant) |
| v | |
| Steve Luke (Respondent) |
| APPLICATION NUMBER: | BDL097-15 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 15 July 2016 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howard |
| DELIVERED ON: | 31 October 2016 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The application is dismissed. 2. Steve Luke must file in the Tribunal two (2) copies and serve on John Nicol one (1) copy of any application for costs of experts, together with supporting submissions, by: 4:00pm on 25 November 2016. 3. John Nicol must file in the Tribunal two (2) copies and serve on Steve Luke one (1) copy of any submissions in reply, by: 4:00pm on 9 December 2016. 4. Unless otherwise ordered, any application for costs will be determined on the papers, by written submissions from the parties; and without an oral hearing, not before 12 December 2016. |
| CATCHWORDS: | DOMESTIC BUILDING DISPUTE- where builder seeks damages for defective work and/or restitution from sub-contractor for alleged defective brickwork- where builder in separate proceedings settled a claim with the homeowner forgoing part of his final claim- where homeowner had claimed various defects in building works- where no documentation recording the basis for accepting the reduced amount- whether brickwork defective- whether builder has suffered any identifiable loss- whether total failure of consideration Building and Construction Industry Payments Act 2004 (Qld) |
APPEARANCES:
| APPLICANT: | Mr John Nicol represented himself at the hearing |
| RESPONDENT: | Mr Steve Luke represented himself at the hearing |
REASONS FOR DECISION
Background
Mr Nicol is a licenced builder. Mr Luke is a licenced bricklayer. Mr Nicol engaged Mr Luke to lay the bricks at a home which he had contracted to build. Mr Luke performed the work. Mr Nicol has paid Mr Luke in full for the work, in the amount of $23,032.90.
The homeowners failed to pay Mr Nicol’s final claim in full. He brought proceedings in QCAT against them (File number BDL075-15), seeking a total amount of $123,431.52.
Ultimately, those proceedings were settled at a compulsory conference on 17 June 2015. Mr Nicol agreed to accept the sum of $105,000.00 in full and final satisfaction of his claim. There is no documentation to indicate the basis for the reduced amount as negotiated with Mr Nicol, although he says it relates to the defective brickwork. Mr Nicol says that the sum was reduced because of the homeowners’ claims that the brickwork is defective. The homeowners relied upon a report of Mr Helisma in relation to the alleged defective works at the premises, including those raised about the brickwork. Mr Nicol says that he had earlier performed some rectification to the brickwork at the premises in response to issues raised by the homeowners. He says he did this work himself, with the assistance of a contract labourer who was paid $40 per hour. He has filed an invoice for $3,461.00, including materials, for the rectification work done.
He says that when he settled BDL075-15, he had paid $18,000.00 to Mr Luke (and he was not intending to pay the balance because the work defective, but under the Building and Construction Industry Payments Act 2004 (Qld) (‘BCIP Act’) an adjudicator subsequently ordered that he pay the balance to Mr Luke).
Mr Nicol’s claim in this proceeding
Mr Nicol filed this (second) domestic building dispute application against Mr Luke on 22 May 2015. Although his documents filed at different stages of the proceedings refer to various other claimed amounts, Mr Nicol seeks damages in the amount of $23,032.90 (being the full amount he paid Mr Luke) and claimed rectification costs of $3,461.00. Further, he seeks the costs of engaging an expert, Mr Chris Boyle to prepare two reports (in the amount of $2,981.25) and the cost for Mr Boyle to attend at the hearing (in the amount of $650.00), as well as interest.
Mr Luke responds that the application should be dismissed. He argues that he has done the work and been paid for it. Other than in relation to some minor works in the period immediately after he had completed the bricklaying, which both parties acknowledge he did, he says that he has not been requested by Mr Nicol to rectify any work. He disputes that any further rectification has occurred having regard to the reports of experts engaged by him in the proceedings, namely Mr Clive Whyman and Mr Peter Alexander. He argues that Mr Nicol has not supported his claim of loss with any appropriate documents, such as invoices. He also claims that he was engaged as a labourer on piece meal rates by Mr Nicol and was not required to use his licence as a bricklayer, Mr Nicol being responsible for site supervision. Mr Luke seeks his costs of engaging experts (in a currently unquantified amount).
For reasons to be explained, I have concluded that Mr Nicol’s claim should be dismissed.
The contract between Mr Nicol and Mr Luke
It is uncontroversial that Mr Luke’s engagement by Mr Nicol was arranged through an employee of Mr Luke’s, a Mr Brenton. It is common ground that in arranging the engagement, Mr Nicol acted upon a recommendation, and did not ask for Mr Luke’s QBCC licence information, although he says he employed him because he is a licenced bricklayer. Mr Luke acknowledges that he was obliged to do the work in an appropriate and skilful way, with reasonable care and skill.[1] He insists that he did so.
[1]Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’), Sch 1B Part 3.
It is common ground that a copy of the plans were available at all times at the site. Mr Luke further asserts, and Mr Nicol acknowledges, that although Mr Nicol did not instruct him generally in relation to how to lay bricks (Mr Nicol relying upon Mr Luke’s knowledge and skill), he gave him the recommended level for the Damp Proof Course (DPC) and instructed him about where the control joints were to be installed. The expert evidence is that although the position of the control joints would ordinarily be specified by an engineer in the plans, it was not specified in the plans in this case.
Is the brickwork defective?
Mr Nicol’s claim relates only to the amount he paid Mr Luke and the claimed costs of items 1-5 below. However, he makes the claim on the basis of numerous alleged defects in the brickwork, in addition to items 1-5. For convenience (although for reasons explained later the potential costs of rectification of items 6-9 are irrelevant to the application that Mr Nicol says he makes), I also discuss, in this section of my reasons for decision, the controversies arising from the expert evidence about the potential costs of rectification in the case of defects.
As earlier discussed, Mr Helisma prepared a report for the homeowners in Mr Nicol’s proceedings against them. However, Mr Helisma was not a witness in this proceeding, although I was provided with his report of 15 February 2015.[2] In his report, Mr Helisma expressed the opinion that the building works performed by Mr Nicol were defective in a number of respects, some of which related to what he considered major defects in the brickwork. Other alleged defects included, in his view, major issues concerning the termite barrier, site drainage and waterproofing.
[2]Exhibit 3, Attachment SL 11.
As discussed earlier, Mr Boyle, a carpenter and builder of many years experience, was engaged as an expert in the proceedings by Mr Nicol. Mr Luke engaged Mr Whyman, a builder and quantity surveyor and estimator of many years experience, and Mr Alexander, a builder of many years experience.[3] Because of Mr Whyman’s qualifications and experience as a quantity surveyor, I am satisfied that his evidence about the cost of any rectification works should be preferred over either Mr Boyle’s or Mr Alexander’s. Indeed, Mr Alexander generally acknowledged that he was not as well placed to provide estimates.
[3]He had also engaged a Mr Brown, but ultimately Mr Brown did not attend the conclave of experts and was not relied upon at the hearing.
Mr Boyle has not been to the homeowners’ premises. Both Mr Whyman and Mr Luke had inspected the alleged defects at the premises, including on the day before the hearing.
Using the numbering adopted in the experts joint report,[4] there are nine alleged defects in the brickwork performed by Mr Luke.
[4]Exhibit 15.
Items 1-5: brickwork generally
It is common ground between the expert witnesses, and I am satisfied that, as Mr Helisma’s report suggests, the brickwork has the following defects:
1.mortar missing in patches at the windowsills;
2.the air conditioner penetration is poorly grouted;
3.the brickwork is uneven under the brick sills;
4.untidy brick and bed joints at the weep holes and the DPC line in numerous locations;
5.A gap at the window reveals to the garage entry window.
Mr Nicol’s evidence is that because he formed the view, based on Mr Helisma’s report, that these items were defective, he rectified them. He acknowledges that he did not contact Mr Luke to ask him to rectify them. Mr Nicol prepared an invoice for $3,461.00 for his own work and that of his employee and the costs of materials. The invoice includes a total cost for materials of $105.00. At the hearing, he explained that the labourer was paid for approximately 16 hours at $40 per hour to engage in this work. The other alleged rectification work outlined in the invoice was done by Mr Nicol. He says that the labourer is employed by him, but is paid only for hours he works.
Mr Alexander reports that the normal contractual procedure would be for the builder to issue a defects list to the subcontractor responsible and establish a time for the subcontractor to complete the rectification work.
Mr Whyman went to the premises on several occasions as recently as the day before the hearing. He says that there was still mortar missing to some windowsills and the air conditioning grouting has not been attended to. Mr Whyman estimates the cost to rectify items 1 to 5 is in the vicinity of $900.00 based on eight hours of work for a bricklayer and a labourer, plus materials. He includes cost of a bricklayer at $50 to $55 per hour and a labourer at $30 to $35.
I do not accept Mr Nicol’s invoice. Other than any costs incurred for materials of $105.00 and extra wages paid to his labourer, he did not incur any costs, even if he rectified the work. He has not supported the invoice with time sheets or other documentary evidence.
In any event, Mr Whyman went to the premises the day before the hearing. His evidence is that items have not been rectified. Mr Boyle has not been to the premises and was unable to comment. Although Mr Nicol says it has been done, Mr Whyman is an independent expert, and therefore has no personal interest in the proceedings. Because of that, I give more weight to his evidence than Mr Nicol’s evidence. I am not reasonably satisfied that rectification work claimed for has been performed.
Observations
Further, even if I accepted that Mr Nicol had rectified the works and incurred some costs of rectification, I would not be satisfied that Mr Nicol had mitigated his loss, by requesting Mr Luke to perform the rectification work in accordance with what I accept is the usual practice. In the circumstances, I would not be satisfied that Mr Luke bears full responsibility for the reasonable costs of rectification. I make the observation that if I had to decide what those reasonable costs were (which I do not as I am not satisfied on the evidence that the rectification works have been performed), I would allow them at the $900.00 estimated by Mr Whyman, plus materials of $105 claimed by Mr Nicol.
Item 6: the control joint
It is common ground between the experts that as a matter of building practice, control joints are usually continuous from the base of the building. At the subject premises, the control joint ‘steps across’ at the windowsill. None of the experts could point to a requirement in the Building Code or the Australian Standards for the joint to be continuous, but all expect that as a matter of experience and good building practice that it should be continuous.
In evidence, Mr Nicol acknowledged that he specified for Mr Luke the positioning of the control joint. He also acknowledged that as the builder on the project he had overall responsibility.
Mr Boyle has not been to the premises and is unable to comment upon whether there is currently an issue caused by the manner in which the control joint has been constructed, but says that the control joint is defective.
Mr Alexander and Mr Whyman suggest that the positioning of the control joint is usually established at the design stage of construction by the engineer. In this case, it was not on the drawings. Mr Whyman points out that the engineer issued a form 15 confirming construction was in accordance with design. Mr Alexander, on the basis of his inspections, considers the control joint is doing what it is required to do at the moment. He says that the building would have to move before the sill would come under stress. Mr Whyman does not consider the control joint is defective and is appropriately allowing movement.
Mr Boyle and Mr Whyman agree that $245.00 is the estimated cost to rectify the control joint by constructing a slip joint, although Mr Boyle says that assumes that the work is carried out concurrently with other rectification works.
I am not satisfied, on the basis of the evidence, that the placement of the control joint is defective work. Although I accept that it is unusual and not in accordance with established good building practice, the evidence is that it is not contrary to an established standard, has been signed off by the engineer, and the construction is performing.
Observations
Even if it is defective, I would not be satisfied that the defect is Mr Luke’s responsibility. Mr Nicol had overall responsibility for the project. He instructed Mr Luke as to the positioning of the control joint. Mr Luke was entitled to rely upon those instructions, in the expectation that Mr Nicol as the builder with overall responsibility for the works had taken any necessary steps to clarify its positioning with the engineer, given that it was not on the drawings.
Item 7: clearance between window frames and brick sills
Mr Boyle opines that the usual required clearance between the window frame and the brick sills of 10 mm has not been allowed and that the work is therefore defective. The issue which Mr Boyle says is created by failing to leave a gap is due to the expansion and contraction of the wooden house frame. He says that this will dimensionally change over the seasons. As he had not inspected the house, he was unable to comment upon whether there is any current issue at the premises.
The three experts agree that the QBCC Guide to Standards and Tolerances states that the work is defective if there is not a 10mm clearance at the windowsill. The requirement is not contained in the BCA, but the industry guide produced by the Australian Window Association refers to the correct installation of windows and doors requiring that sill bricks are to be at least 10mm clear of the window frame to allow for settlement in a brick veneer construction.
Mr Whyman opined that it does not matter that there is not a 10mm gap in this building, and that the gap is often foregone because it allows vermin in. Mr Whyman says that because excellent quality kiln dried wood was used for the frame, the maximum amount of dimensional change will be 1.5 to 2 mm, although he later revised that to 1 to 1.5 mm. He says that the shrinkage of the frame takes place within 12 months of the building becoming watertight. He considers the frame in the home in question has stabilised. Mr Alexander confirmed that it is an excellent quality timber (MGP) frame and that the dimensions of the timber on his inspection were exactly as the new dimensions, even though it had been installed for several years at the time of his inspection. He also consider the frame has stabilised.
I am satisfied that the evidence supports a finding that the work is defective in a technical sense. However, I accept the evidence of the experts who have inspected that the frame has stabilised, and that because of the high grade timber used there is unlikely to be any future shrinkage. Although the industry guide should generally be followed, there is no evidence that the construction is not performing. In any event, it is common ground that work has not been done to rectify this issue. Therefore, Mr Nicol has incurred no loss as a result of it.
Observations
In the event that my conclusions are wrong, I make some observations. Mr Boyle estimates the cost of rectification at $8,795.21. Mr Boyle was unable to explain precisely how he had calculated that figure, but said it was a proportion of the amounts explained in his estimate[5] and that it assumed that the work was done at the same time as repairing the DPC (discussed in later paragraphs).
[5]Exhibit 11.
Mr Whyman estimates the cost at $3,140.00. Mr Whyman says that the cost of removing the brick sill and re-laying with a 10mm gap would be based on two and a half days for a bricklayer and a labourer and include plant and material, although he was unable to be specific about the costs of materials. He said that he had allowed a cost of $50 to $55 per hour for the bricklayer and $30 to $35 per hour for the labourer as per Exhibit 15. He considers Mr Boyle’s estimate is excessive.
If it was necessary to decide the matter (which it is not, given my conclusions), I would accept Mr Whyman’s estimate for rectification costs for the reasons earlier explained.
Items 8 and 9: the Damp Proof Course
Items 8 and 9 relate to the Damp Proof Course (DPC). The experts agree that Item 9 is encompassed in Item 8.
It is common ground that the cavity flashing is set back some 10-15 mm from the face of the brickwork. That is, the DPC is not the full width of the brickwork. The experts agree that the DPC is therefore non-compliant with the Australian Standard (AS) 4773.2—2010 which requires:
a) At 12.4.16 that the damp proof materials must be either flush with the face of the wall or turned down; and
b) At 9.6.1 that in masonry walls, the DPC must extend through the entire width of the wall and be visible at its face.
The construction of the DPC has the potential to allow water to rise above the DPC, thereby facilitating rising damp.
Mr Alexander and Mr Whyman both say there is no sign of rising damp, despite the non-compliance with the AS. They both say that the DPC is adequate. Mr Whyman says that there is no efflorescence (which occurs in the presence of moisture when visible salts appear on bricks) or other signs of rising damp. Further, he considers rising damp is uncommon in Queensland. He also says that in his opinion the DPC will be adequate, based on the performance of the DPC as an effective water barrier to date and an experiment that he conducted. The experiment involved soaking a similar brick in water. He indicated that other similar experiments have been done overseas, but conceded that his experiment had been done over only a few days.
Mr Alexander commented that because of the aesthetics concerned with white mortar and brick that often, if the DPC is not set back by a small amount, as it is here, that homeowners complain about the dark line that it causes around the home. Therefore, he says it is common to set it back.
Mr Boyle disagrees that it is uncommon to see rising damp in Queensland.
I am satisfied that the DPC is non-complaint with the AS and technically defective, irrespective that it may have been completed in accordance with common practice. However, I am not reasonably satisfied on the evidence that the construction has failed. On the contrary, it is performing.
In any event, it is common ground that work has not been done to rectify the DPC, and nor is it contemplated at this point in time. Therefore, Mr Nicol has incurred no loss as a result of it.
Observations
In case I am wrong, I make the following observations. Mr Boyle estimates the cost of rectifying this issue at $16,308.81 (being a proportion of his original estimate as discussed earlier).
Mr Whyman says that if rectification was required, a chemical injection system is appropriate to overcome the issue at a cost of approximately $3,500.00 (calculated by working out the perimeter meterage of the home at an estimated cost of $70.00 per square metre). Although he acknowledges that Mr Boyle’s methodology and estimate for overcoming the difficulty is effective, he says it is a long-winded way of achieving what is required, that technology has moved on, and that the chemical injection system is an effective alternative.
Mr Boyle disagrees. He opines that a chemical injection system is sometimes successful and sometimes not, because you cannot be sure the chemical will reach the full width of the brick. Mr Whyman does not agree and asserts that manufacturers warrant the performance of the system. Mr Alexander points out that the DPC is in any event there is only 10 to 15mm unprotected, and that the DPC itself will do the rest. Mr Whyman and Mr Boyle both acknowledge that this is so.
If I had to decide the reasonable cost of rectification (which I do not given my conclusions), I would prefer Mr Whyman’s evidence, noting that the solution is required for a small proportion (10-15 mm) of the width of the brick. I would be satisfied that it was as estimated by Mr Whyman, $3,500.00.
Does Mr Nicol have a basis for his claim against Mr Luke?
There is an apparent lack of clarity about the basis for the claim made by Mr Nicol.
However, Mr Nicol said repeatedly, when giving his evidence at the hearing, that there is no component for future loss in his claim: he claims his loss to date. That is, he says, the amount he paid to Mr Luke for the brickwork and the amount of his invoice for the alleged rectification of Items 1-5. Accordingly, although he presented evidence about the potential estimated costs of rectification for items 6 to 9, those estimates are irrelevant to the claim that Mr Nicol says he makes.
Mr Nicol settled his claim for his final payment and their counter-claim of defective works with the homeowners. They raised a variety of alleged defects. Mr Nicol says he accepted a lesser amount than his full claim, effectively being the costs he paid to Mr Luke for the brickwork. The documents about the settlement do not reflect that to be the case. They do not reveal the basis for the settlement. Mr Helisma’s report specified a variety of unrelated alleged defects, as well as those raised in these proceedings, at least some of which he described as major defects in his report. Even if the reduced amount agreed at settlement was reached entirely because of the brickwork issues (which I am not satisfied is the case), Mr Nicol alone, and for his own reasons, made the decision to settle those proceedings on the basis he did. He did so without affording Mr Luke the opportunity to rectify any of the works. He now seeks to have Mr Luke reimburse to him the amount he was paid for the brickwork, as well as the costs of Mr Nicol’s invoice for rectification of items 1-5.
In support of his claim, he asserts that ‘everyone agrees the work is defective now’ and he had to put a price on it. He says this is the amount he paid of $23,032.90, plus the claimed rectification costs of $3,461.00. When asked to explain how the claimed amounts reflected his loss or damage, he submitted in essence that because the Helisma report said the work was defective, he had to accept no payment for the amount or deduct it from his bill. Further, he fixed Items 1-5 so he claims those costs also.
Mr Luke submitted that Mr Nicol had not suffered any loss or damage and had not produced documentary evidence to support his claims for rectification. Further, he submitted that he was not given any opportunity to rectify the claimed defects. Finally, he submitted that he was engaged as a labourer on piecemeal rates and not required to use his QBCC licence as a brick-layer. I would not accept the latter argument. He was engaged as a licenced brick-layer and, as he acknowledged, he had an obligation to perform the works with reasonable care and skill. I am satisfied that he was a subcontractor.
The claim for reimbursement of the monies paid to Mr Luke may be a claim for restitution although Mr Nicol has not articulated it with clarity. A claim for restitution is distinguished from a claim for damages for breach of contract, which involves recovering a loss incurred because of the other party’s default under the contract. The underlying basis for the claim could only be that it would be unjust for Mr Luke to retain the benefit of the monies paid to him for the work, because he has been unjustly enriched at Mr Nicol’s expense. On the basis of the evidence, an allegation of unjust enrichment could only potentially arise because of an alleged total failure of consideration. However, there has been no such total failure. In exchange for the payment, Mr Luke performed the brickwork, although there are some defects. It does not seem to me that Mr Nicol’s decision to settle his claim with the homeowners could found a successful claim for restitution against Mr Luke, even if I was satisfied (which I am not), that it related entirely to the brickwork.
If instead the claim for the amount of $23,032.90 is a claim for damages for breach of contract, Mr Nicol has not suffered a loss to this extent. Even if, Mr Nicol settled with the homeowners on the basis that they not pay for the brickwork (or as much of it as Mr Nicol had at that stage paid for), he did so for his own reasons. His loss or damage could only be the cost of rectifying it. Even on Mr Nicol’s own case, only minor rectification work is alleged to have been done, although I have not accepted that even that rectification work was done. It is common ground that the more significant defect items raised in the proceedings have not been done, and nor is it anticipated that they will be done by Mr Nicol. The entire amount he paid for the brick work to be done is not a proper measure of his loss or damage.
Then, (perhaps inconsistently with an apparent claim for restitution), the claim for the alleged rectification costs in the amount of $3,461.00 appears to be a claim for breach of the sub-contract to perform the works in a skilful manner, resulting in loss or damage to the builder. Putting aside, whether the claim could legitimately be made contemporaneously other than in the alternative with the claim for restitution (if that is what it is), for the reasons explained above I do not accept that the rectification works were done as alleged. Therefore, the claim for that amount should be dismissed. Even if I was wrong and the rectification was done, for the reasons explained, I would not allow damages in the amount claimed by Mr Nicol. At most, I would allow damages in the amount of $900.00 for labour and $105.00 for materials.
Orders
I make orders dismissing Mr Nicol’s application. If Mr Luke wishes to seek any costs for engaging experts, he should have the opportunity to do so. I make directions providing for him to do so.
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