Office Shop Renovations Australia Pty Ltd v Zhou
[2014] QCAT 510
•13 October 2014
| CITATION: | Office Shop Renovations Australia Pty Ltd v Zhou & Anor [2014] QCAT 510 |
| PARTIES: | Office Shop Renovations Australia Pty Ltd (Applicant) |
| v | |
| Ming Hu Zhou Hau (AKA Tracey) Zhong |
| APPLICATION NUMBER: | BDL335-12 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 21, 22, 23 and 24 July 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howe |
| DELIVERED ON: | 13 October 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The applicant Office Shop Renovations Australia Pty Ltd pay to the respondents Ming Hu Zhou and Hau Zhong the sum of $76,160.81 within 30 days of the date of order. 2. The applicant pay the respondents interest in the sum of $5400.52 within 30 days of the date of order. 3. The respondents file and serve on the applicant any submissions as to costs by no later than 4:00pm on 20 October 2014 and the applicant file and serve on the respondents any submissions as to costs by no later than 4:00pm on 27 October 2014. |
| CATCHWORDS: | Building matter – Variations – unsigned variations – variations lacking compliance with statutory requirements – exceptional circumstances – unreasonable hardship – overpayment of variations – restitution – cost plus terms of variations – fixed price costs of variations – variation work covered by the contract – builder’s margin – extent of costs of supervision covered by builder’s margin – defective and incomplete work – expert evidence – lack of evidence – representation by experienced counsel – tribunal not bound by rules of evidence – interest – interest on damages and restitution Domestic Building Contracts Act 2000 ss 9, 42, 44, 79 – 84 Better Homes Queensland Pty Ltd v O’Reilly [2012] QCATA 37 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | The Applicant was represented by Mr David de Jersey of Counsel instructed by Ellem Warren Lawyers |
| RESPONDENT: | The Respondents were represented by Mr Timothy Matthews QC instructed by Romans and Romans Lawyers |
REASONS FOR DECISION
On 27 April 2011 the applicant building company through its sole director, Yan Hartono (Hartono), entered into a building contract with the respondent owners of an existing dwelling at 9 Zara Street, Robertson. The contract was for extensive renovation work and the agreed price less GST was $550,000.
There were many variations by way of additions to the work throughout the project. Some were evidenced in writing signed by the owners, or at least one of them, Hau Zhong (Tracey). Others were not. The variations more than doubled the cost of the project. According to the builder, practical completion was reached about 7 December 2011. That is disputed by the owners on the basis there were significant incomplete and defective work at that time. The owners paid for everything save for variations worth $97,499.93. The builder now brings these proceedings seeking to recover those last monies.
The owners refuse to pay. They say with respect to many of the variations in dispute the builder failed to comply with the requirements of the Domestic Building Contracts Act 2000 (DBC Act). Many of the variations were not signed by the owners and those signed did not comply with other DBC Act requirements.
The owners bring a counter application against the builder denying the relief sought by the builder and claiming costs of rectification of defective work of $133,391. They also seek recovery of overpayments to the builder of an additional $88,669.26.
Unsigned Variations
The building contract is a regulated contract.[1] Accordingly the variations had to be in writing and none of the variation work could be done until a variation document containing required information[2] was signed by the parties.[3]
[1]DBC Act s 9.
[2]Ibid s 80.
[3]Ibid s 79(4).
The builder says the variations in dispute were requested and agreed to by the owners. The variations comprise invoices 271 and 305 dated respectively 20 December 2011 and 3 April 2012. The builder relies on s 84(4) of the DBC Act for recovery. That provision allows the Tribunal to approve recovery if satisfied that either there are exceptional circumstances warranting the contractor recovering a variation, or the building contractor would suffer unreasonable hardship if not permitted to recover a variation, and it would not be unfair that the building owner pay.
The builder says there are exceptional circumstances here. The variations were requested by the owners. The variation work represented a considerable departure from the original contract works. Apart from some defects, the owners were generally happy with the work done. Most significantly, the variations were documented but not signed by the owners, or at least Tracey on behalf of the owners. When she was asked to sign variations she responded with words to the effect that signed variations were not necessary, they always paid and the builder should trust them and not bother them with paperwork.
I note Hartono says Tracey’s husband, Ming Hu Zhou (Ming), the other owner, was away for most of the build. Hartono says Ming told him before he left Australia that Tracey would be acting as his authorised agent.[4] I accept that was said and Tracey acted as agent for her husband throughout the project. The owners do not dispute that in their evidence.
[4]Ex 1 at [8].
The builder also says he would suffer unreasonable hardship if he was not paid for the work done; it would not be unfair for the owners to pay.
Signed Variations Unnecessary
The builder says the owners didn’t want to sign variations. Hartono refers to exchanges between him and Tracey on or about 6 September 2011, 6 October 2011, 17 November 2011 and 25 November 2011.
Hartono says he discussed certain variations with Tracey on 6 September 2011, specifically concerning gas bottles, an airlock corridor and work on the study room and a granny flat. He reminded her that these would be additional to the agreed contract work and she seemed exasperated and told him to just do it. His evidence is she acknowledged she kept asking for extra work but not to keep bothering her with signatures. She said they had always paid and ‘don't you trust us?’ Just get it done, and he said he would.[5]
[5]Ibid at [58].
Then on 6 October 2011 Hartono says he spoke to Tracey and she told him to proceed with certain variations referred to in an e-mail of 4 October 2011. On his evidence he told her variation forms would have to be signed and she responded in an aggressive tone with words to the effect ‘why do you always ask me that? You know that I will pay you. I have been paying all your bills and you should trust me’.[6]
[6]Ibid at [78].
Then there was a discussion on 17 November 2011 when she said she and her husband would not withhold payment if the work was done and invoiced later. She just wanted to get on with the job and worry about the invoice later. She wanted to move back into her home.[7]
[7]Ibid at [107].
On or about 25 November 2011 Hartono says rather than approaching Tracey to have her sign separate variations for the kitchen and most of the bathroom work, because she was increasingly irritated whenever he asked her to sign written variations and would raise issues about trust, he offset other variations against a reduced kitchen cost that had been achieved. He did this to avoid arguments.[8]
[8]Ibid at [116].
Invoices 271 and 305
Four of the variations in invoice 271 are evidenced by a signed variation document. They are discussed separately below.
There is no explanation why four invoices were signed and the other 12 were not. There were a lot of other variations signed during the course of the job. Variations comprising invoice 219 were signed on 28 August 2011. Variations comprising invoice 230 were signed on 6 October 2011 and those set out in invoice 258 were signed on 17 November 2011, as were the four signed variations included in invoice 271. One wonders why all the variations in invoice 271 and 305 could not have been signed when others were signed. An explanation for that is necessary.
Similarly with respect to invoice 305. That has 21 variation claims. None are signed. There is no explanation why they could not have been signed together with others that were contemporaneous and were signed.
The builder’s claim is that the owners told him not to bother them with signatures for variations. It was put to Tracey at hearing that she discussed a quotation for work to be done on the airlock corridor and that Hartono asked her ‘Are you going to sign a variation for that work?’ to which she responded ‘Don't you trust us? I always pay. We always pay’. Though she had some limitations with her spoken English and utilised the services of an interpreter at hearing, I am satisfied she understood what was put to her and she agreed she had said that. She was clear that she said it once to Hartono and twice to Mr Watford[9], the builder’s supervisor on site, when he produced documents[10] for signature. But that admission was not an admission of a general refusal to sign variations.
[9]Transcript 3-126 L47.
[10]T3-105 L41.
She agreed she refused to sign variations presented for her signature ‘a few times’ but she also clearly explained that that was on the basis she wanted the builder to get a better price.[11] Again that did not amount to a refusal to sign variations generally.
[11]T3-108 LL10 – 32.
She said she only had one discussion about signing variations with Hartono and that happened at the end of the project.[12] She wanted an explanation why a kitchen cabinet was the wrong size. That was why she refused to sign the particular variation document concerned. She said there was no other reason why she refused to sign. I accept her evidence on this. Where her evidence conflicts with Hartono’s evidence on this I prefer the evidence of Tracey.
[12]T3-127 L12.
I conclude Tracey did not tell either Hartono or Watford not to keep bothering her with signatures as claimed.[13] The submission made by the builder is that all the variations were documented and the builder’s requests for signature rebuffed by the owners. I do not accept that. I do not accept Tracey on behalf of the owners refused to sign variations generally or that the builder attempted to have variation documents signed but failed because she refused to sign. There is nothing in the builder’s material to suggest the unsigned variations found in the primary source documents[14] were ever presented to her for signature.
[13]Ex 1 at [58].
[14]Ex 23.
There may have been complaints about signing some documents, but I conclude that was no more than minor grumbling and the refusals to sign variations linked to costs of particular variations and on one occasion a question about the wrong size cabinet.
Hartono was asked in cross-examination why invoice 305 was issued so late. Invoice 305 is dated 3 April 2012, some four months after the builder claimed practical completion had been reached. None of the variations making up that invoice were signed. He said it was issued late because most of the variation work involved was done by his workers rather than subcontractors. Where subcontractors were engaged it was easy to prepare a variation document. He simply added his 20 per cent builder’s margin on top of their cost. Where his workers did all or most of the work of a variation he refrained from preparing variation documents in case the owner (Tracey) changed her mind.[15]
[15]T1-41 LL40 – 47 and T1-42 LL1 – 5.
I conclude with respect to the unsigned variations in both invoice 271 and 305 that there are no exceptional circumstances to warrant their recovery by the builder. The builder was simply lax in his compliance with the requirements of the DBC Act. He relied on the assurances of the owners that they would pay upon invoice. With respect to invoice 305 variations, ignoring the requirements of the DBC Act was simply a matter of choice and convenience for the builder.
The phrase “exceptional circumstances” in the Act directs attention to the circumstances that applied to prevent compliance or explains non-compliance with the statutory requirements.[16] Here, I conclude the builder was very casual about his obligations under the legislation. Given that, the other submissions by the builder that the variations were requested by the owners, that they were happy with the work done and that the work of the variations was a significant departure from the work covered by the original contract have, in my opinion, limited if any significance. The latter factors were considered and rejected as exceptional circumstances by the Appeal Tribunal in Better Homes Queensland Pty Ltd v O’Reilly.[17] They lack similar conviction as exceptional circumstances in this matter before me.
[16]North J in Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286 at [15].
[17][2012] QCATA 37.
In end result, I find there are no exceptional circumstances warranting the conferring of an entitlement on the builder to recover the value of the 12 unsigned variations comprising invoice 271 nor those comprising invoice 305 pursuant to s 84(4)(a)(i) of the DBC Act.
Unreasonable Hardship
The builder also claims pursuant to s 84(4)(a)(ii) that the builder would suffer unreasonable hardship by the operation of the strict requirements of the DBC Act if unable to recover on the variations.
The builder submits the magnitude of the sum sought for variations, $97,499.93, is large. He says his company is a modest operation. This matter was a significant project for it in terms of contribution to turnover. There is obvious hardship to be found in the circumstances alleged that the owners rebuffed the builder’s attempts to have variations signed. The builder was led to believe there was no need for signed variations. These factors in combination amount to unreasonable hardship on the builder if the variations are not paid.
‘The test of unreasonable hardship requires an assessment of the impact of that sanction on the builder in the circumstances in which the non-compliance occurred. That is both a subjective and an objective inquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs.’[18]
[18]Better Homes Queensland Pty Ltd v O’Reilly & Anor [2012] QCATA 37 at [28] per Kingham DCJ.
I have rejected the builder’s submission that the builder’s attempts to have variation documents signed were rebuffed and that is why the variations were not signed.
Concerning the magnitude of the sum sought for variations, that is a relevant consideration both objectively and subjectively. Objectively, whilst the sum claimed for variations is large, the value of the other paid variations should also be noted and taken into account. The variations cost approximately the same as the original agreed cost of the contract, though the owners say they have overpaid on the variations by some $88,669.26. That is dealt with below.
Subjectively and most importantly however, there is no evidence or no adequate evidence that the builder would suffer unreasonable hardship if he does not recover the cost of the unpaid variations. There must be some evidence of the adverse financial impact of enforcing the requirements of ss 79, 80, 82 and 83 of the DBC Act on the builder. That is the way the matter should be understood, not simply considering the question would the builder suffer unreasonable hardship if his variations are unpaid.[19] Mr de Jersey attempted to file evidence of unreasonable hardship at the commencement of hearing but that was objected to by Mr Matthews QC and that objection was upheld given the lateness of the evidence and the prejudice the owners would face having to meet such late claim.
[19]That was the way McGill DCJ approached the question in Poiner v Quirk & Anor [2007] QDC 299 at [73].
There must be more than an inference of the modest means of a builder before the Tribunal is able to conclude the builder would suffer unreasonable hardship if the statutory requirements about variations were enforced against him. That inference is all there is here however. But even that inference is hard to draw given the evidence by Hartono at hearing. He said the company did a lot of office renovation work, did house renovation work, dealt with retirement villages and a golf driving range and ‘do houses, as well’. The company had done building work worth more than half a million dollars before the job at 9 Zara Street.[20]
[20]T1-24 LL32 – 47.
I am therefore not satisfied that the builder would suffer unreasonable hardship as envisaged by s 84(4)(a)(ii) of the DBC Act if unable to recover on the unsigned variations and he is not entitled to recovery on that basis.
Four Signed Variations
Four variations forming part of Invoice 271 all dated 17 November 2011 were signed by Tracey. They were for additional cabinets and associated work at a cost of $9,812.88, additional vanities for $5,368.80, floor levelling for $10,032 and concreting the rear area at the back of the property for $16,632.
The owners say the variations are not valid. They breach various requirements of s 80(2) of the DBC Act in that they fail to state a reasonable estimate of the delay involved in carrying out the variation work, do not provide a methodology to allow the owners to determine how the change in the contract price has been calculated and given the contract provides for progress payments, do not make appropriate provision for payment of the adjusted contract price resulting from the variations. Further, they say the variations breach similar contractual provisions in clause 12.4 of the general conditions of contract.
It is appropriate at this point to mention the general conditions of contract. They are additional to the contract schedule and appendix. The general conditions were not tendered in evidence at hearing. Only the contract schedule and appendix are exhibited to an affidavit of Mr Hartono.[21] I take it this was simply an oversight. The general conditions were referred to by both counsel at various times during hearing and referred to in final submissions.
[21]Ex 1.
Though the Tribunal is permitted to inform itself in any way it considers appropriate and is not bound by the rules of evidence[22], where the parties are represented by experienced junior and senior counsel rather than parties representing themselves or by less experienced representatives, reliance on material not formally tendered and subjected to scrutiny and testing at hearing, where that scrutiny has been close throughout hearing, may be unfair to the parties. Extracts from the general conditions were tendered and submissions made on the general conditions but the full conditions themselves were not tendered. This in my opinion was simple oversight. I therefore rely in this matter only on documents formally tendered, save for the general conditions of contract. The general conditions are exhibited B to an affidavit of Mr Hartono sworn 21 February 2013. That affidavit was not tendered in evidence. I do not rely on it other than exhibit B for the full terms of the generic general conditions.
[22]QCAT Act ss 28(3)(b) and (c).
Turning to the complaints by the owners, s 80(2)(d) requires that if a variation results in delay in performance of the contract, an estimate must be given of the delay. But there is no evidence suggesting the project was delayed because of these four items of variation. Further in any case I note item 8 of the contract schedule states 217 days for the total construction period including delays. It says ‘refer to part C of the appendix’. But the appendix part C goes on to list 180 days actual construction period, 10 days delay for inclement weather and an additional 60 non-working days. By my calculation that totals 250 days. The period from signing of the contract on 27 April 2011 to claimed date of completion, 7 December 2011, is 224 days. I conclude the failure to nominate a period of delay on the variation documents in this matter should not be considered a breach s 80(2)(d), nor the similar provision in clause 12.4(c) of the contract.
Concerning the requirement under s 80(2)(g) that where the contract provides for progress payments the variations must state when any adjustment to the contract price is to be paid, the builder sent an invoice for practical completion stage on 11 November 2011.[23] The stage aspects of the original contract was finished as at date of the four signed variations. There was only payment on practical completion left. This requirement was of little significance as at 17 November 2011.
[23]Ex 1 at [100].
There is however an additional significant failure to comply with the requirements of the DBC Act. Section 79(1)(b) and (4) requires no domestic building work the subject of a proposed variation be carried out until the variation is in writing and signed.
In all four variations, save for one item, the building work involved was done or the materials and goods purchased before the variation documents were signed.
The only variation item which postdates the execution of the variation document concerned appears to be the supply and installation of a vanity by Invoke Joinery.[24] All other variations were finished before the builder took the trouble to have the variations documented and signed. The floor levelling variation goes back to work done in June 2011.[25] I might note this is well before September 2011, the date the builder claims the owners first said they wouldn’t sign variations.
[24]Ex 23 at 271.9.3.
[25]Ex 1 at [19].
Save for the vanity variation therefore, again the builder has not complied with the requirements of the DBC Act and must rely on exceptional circumstances or unreasonable hardship to recover.
For the reasons previously stated, there is no evidence or no adequate evidence that the builder would suffer unreasonable hardship if he does not recover the cost of unpaid variations. That leaves only the exceptional circumstances avenue to pursue.
The four variations are documented but breach perhaps the most fundamental of the requirements of the DBC Act that before variation work is performed the variations be documented. As at the date of completion of the work none of these variations, save for the vanity item, were signed or perhaps even documented in draft. In that circumstance I see nothing to distinguish these variations from those considered above where there were no signed variations. There are therefore no exceptional circumstances warranting the conferring of an entitlement on the builder to recover the value of these four signed variations either. A signature to a variation document is not of itself an exceptional circumstance. The builder is entitled to be paid in respect of the vanity variation however. The pre-GST cost of that is $3,540. Adding a builder’s margin of 20 per cent and then GST on that combined amount, $4,672.80 is due.
Restitution
The owners say they have paid too much for many variations. They say the builder was entitled to be paid for variations only in accordance with the terms of the contract and the provisions of the DBC Act. The relevant provisions in the contract are clause 12 of the general conditions of contract and item 6 of the contract schedule.
The owners’ claim for restitution is either to recover $88,669.26 or $32,203.19, the difference being the accepted costs of variations to the builder. Both are premised on the agreement between the parties concerning variations being the actual cost of variations plus 20 per cent builder’s margin. Mr Matthews QC put to Hartono in cross-examination that the formula for costs of variations was their cost to the builder less GST plus 20 per cent builder’s margin plus GST.[26] That basis of costing was put to Hartono on a number of occasions and on a number of occasions he variously agreed with the proposition and also disagreed.[27] I conclude Hartono answered truthfully but did not entirely comprehend what was actually being put to him. At times Mr Matthews QC prefaced his remarks to Hartono with the proposition that the contract made express provision for variations to be charged at their cost price plus his margin of 20 per cent plus GST.[28] Hartono’s position I conclude was that by the agreement between the parties he would estimate as best able at time of agreement the actual cost of the variation and then on top of that he would add his 20 per cent builder’s margin.
[26]T2-44 L24 – 29.
[27]T1-37 LL5 – 14 and T1-54 LL26 – 35.
[28]T1-54 LL34 – 46 and T1-77 LL24 – 32.
The contract is far from clear about how variations are to be calculated. The contract consists of a schedule, an appendix and general conditions of contract. Item 6 of the schedule simply states that if the contract price increases in accordance with ‘… clause 12, 13, 14 (variations) or clause 9 (Prime Cost Items & Provisional Sums) then the following contractor’s margin is to apply to that increase. Contractor’s margin on variations. Prime Cost Items and Provisional Sums 20% (if nothing stated - 20% to be applied)’.
Clause 12.5 of the contract was referred to in submissions, but that adds very little to clarify the agreement between the parties how variations would be charged. It states ‘Paying for Variations. Where a variation results in an increase to the contract price, the owner must pay the contractor the amount of the increase in accordance with the time stated in the variation document.’ The actual variation documents are un-enlightening. Under the heading ‘Cost of Variation’ the document provides ‘the variation affects the contract price by (complete which is applicable): an increase of…’ then goes on to provide for the completion of four items. The first is ‘net cost’ (exclusive of GST), after that is ‘margin on variation’, then ‘GST’ and then finally it provides for a ‘total (inclusive of GST)’. Alternatively there is a space which allows description of an alternative basis of charge. The alternative basis of charge was left blank in all the variation documents in this matter.
The owners simply submit that the variations were not calculated in accordance with the contract. That submission is premised on the proposition that the agreement between the parties about variations was that the owners would only be charged the actual costs incurred in carrying out the variations with a 20 per cent margin on top of that and GST on top of that again. But does the document do any more than explain how the price set by the builder is arrived at which allows the owners to either accept the total cost proposed or not?
I conclude Hartono’s stand is consistent throughout his evidence save as mentioned concerning his responses to Counsel in cross-examination. I find his evidence amounts to this, that in coming to an agreement on each variation he was to give an estimate of the cost to perform the variation inclusive of both supply of materials and labour to which he added a 20 per cent builder’s margin and then added GST. Accordingly he asserts an entitlement to an agreed fixed amount with respect to each agreed variation. He actually disagrees that the arrangement between the parties was that he would charge them the actual cost of each variation and add his builder’s margin to that and then add GST.[29] Accordingly he explains that on some occasions his estimate of his costs was light which resulted in an increased profit to that estimated at the time of entering into the variation, but at other times he erred in his estimate and the variation produced less than the 20 per cent margin anticipated.
[29]Ex 1 at [182].
The owners’ position about the agreement on costs for variations is far from clear. Both owners completed affidavits with identical wording on the point. ‘I refer to paragraphs 15, 19 and 22 which reference tax invoices 219, 230 and 258 and state that I agreed with amending the scope of works in the contract on the condition that the pricing would be consistent with the contract.’[30] That says very little. Consistency with the contract could suggest the variations were to be a fixed price. Equally the words could mean the variations were to be based on the contract provisions dealing with the subject. If the latter, there is little assistance to be found in the general conditions or item 6 of the schedule. As I have already stated the contract is virtually silent on the basis upon which variations were to be calculated.
[30]Ex 29 at [10] and Ex 31 at [11].
I conclude that nothing much was discussed about the basis upon which variations would be charged other than a variation would be submitted with a breakdown of how the charges were calculated and then it would be up to the owners to either accept the variation in full or not. The first time Ming was told about a 20 per cent builder’s margin, according to him, was at a meeting on 27 August 2011 concerning the high cost of the kitchen. That was after the variation document was submitted to him for signature. He knew nothing about any builder’s margin before that.[31]
[31]T3-18 L37 and T3-19 L7.
The affidavits I have referred to go on to speak about two variations in particular, one concerning the swimming pool variation and another concerning the kitchen and bar variation.[32] The owners say they agreed to those variations on the basis that they would be charged a 20 per cent profit margin on the amounts properly incurred by the applicant. If that is intended to mean that it was to be at cost plus 20 per cent builder’s margin, I do not accept that. They demanded a reduction in the price of the kitchen variation without any regard to the formula of cost plus 20 per cent. I conclude they saw the variation as a fixed price variation. As stated by Ming in cross-examination, after some bargaining they agreed ‘around $110,000’.[33] If the variations were not to be fixed price, the bargaining between them about reducing the nominated price of the kitchen variation was a nonsense and futile.
[32]Ex 29 at [11] and Ex 31 at [12].
[33]T3-20 LL1 – 6.
Hartono made clear his understanding of the basis of charge with respect to variations in an email of 16 March 2012. He explained there to the owners’ representative Peter Low
‘as I have explained at all of our meetings regarding variations, we don’t have to justify our costs to the client. The client has the right to make their own judgement on whether they are getting a good deal or not and get another price themself (sic) before they sign our variation. Once this is signed, they have no right to question how much profit was made.’[34]
[34]Ex 1 annexure 99.2.
I also find compelling that in respect of invoices 219, 230, 258 and 271, the documents are subtitled ‘Variations - Price includes Margin and GST (Fixed price as approved by Owners)’. That was never questioned by the owners. The invoices save for 271 (and 305) were all paid.
I conclude the agreement on variations between the parties was that the price submitted by the builder was a fixed price, not based on cost. The builder estimated what it would cost him to do the work, added his margin and GST and the total was the agreed price he would be paid. If that meant he would make more than the 20 per cent builders margin so be it, but if he made less he could make no complaint either. I conclude this was also the understanding of the owners. I conclude the builder is entitled to retain the full amount paid for the variations as specified in the variation documents, subject of course to the builder complying with the agreed formula as to margin.
The builder has claimed a 20 per cent builder’s margin but also in many variations in addition the cost of his supervisor on site, Mr Watford. In the matter of Judith Maree Chesterton as administratrix of the Estate of Damonde Laurence Southion deceased v Smith and Anor[35], the learned Member there accepted the evidence of an experienced builder that in the builder’s experience the contract administration and builder’s own work is absorbed into the builder’s margin and not factored into the contract price as a separate item. No evidence was led on this in the matter at hand. I am of the view that builder’s margins should include the builder’s costs of supervision and management of the contract and works. Had Hartono clearly advised that his 20 per cent margin did not include the costs of Watford as supervisor, I have no doubt that that would not have been agreeable to the owners. I conclude the owners’ consent to the variations was only on the basis all costs of supervision and oversight of the variations were covered by the 20 per cent builder’s margin. The builder has in fact charged a margin of 24.5 per cent. It is irrelevant what the relationship between Hartono and Watford was. Payment of the additional 4.5 per cent is a payment to the builder the builder was not entitled to under the formula for variations. The payments so made may be recovered from the builder.
[35]Judith Maree Chesterton as administratrix of the Estate of Damonde Laurence Southion deceased v Smith and Anor [2011] QCAT 307 at [149] – [150].
The erroneous 4.5 per cent supervision charge has been added to the cost of variations in invoices 219.1 – 219.9 (leaving aside 219.2), 230.1 – 6 and 258.1 – 19 (leaving aside 258.8). The total overcharge amounts to $28,382.07 based on the figures of Mr Matthews QC. I accept that calculation. That sum is recoverable by the owners.
The Kitchen and Bar Variation Invoice 219.2
The kitchen and bar variation is different to the other paid variations say the owners. According to Tracey, she never agreed to change the kitchen supplier from Dana kitchens to Invoke Joinery.[36] That resulted in a significant saving to the builder. At a meeting on about 27 August 2011 Ming questioned the cost of the kitchen variation. Tracey had visited the showrooms of Dana Kitchens and made a selection and the cost of the variation including builder’s margin and GST was $136,065. Hartono claims during the meeting he telephoned Dana Kitchens to renegotiate the price but he was told that the price was fixed and they had already received instructions to proceed from Watford. His evidence is that he informed Ming another price from a different supplier would have to be obtained whilst maintaining the same specifications. His evidence is that Ming agreed to that.[37]
[36]Ex 32 at [12].
[37]Ex 1 at [37].
Both Ming and Tracey dispute Hartono’s version of events. They deny they were told there would have to be another supplier. They have no recollection of any telephone call to Dana Kitchens or to anyone else during the meeting or that evening. Indeed their evidence is that the meeting was actually dinner at a friend’s house in the evening, at or about 7pm. Hartono recalls the meeting occurred on 27 August 2011. That was a Saturday.
In so far as they give conflicting evidence, in all the circumstances I prefer the evidence of Ming and Tracey on this point. I conclude Ming and Tracey at all material times understood and required the kitchen to be supplied to be a Dana Kitchen supplied by that company. The original kitchen variation was for a fixed price of $136,065.60 which included the builder’s 20 per cent margin and that margin was based on the cost of a Dana Kitchen quote of $115,892 given on 24 August 2011.[38]
[38]Ibid at annexure 28.
I find that as a result of the meeting on 27 August 2011 the agreed fixed price of the variation was reduced to $113,400 but at all material times that price was premised on and represented by Hartono as being for the supply of the Dana Kitchens kitchen selected by Tracey. I do not accept that the owners were advised by Hartono that a different kitchen would be sourced from different cabinetmakers. I do not accept there was a discussion at about 7pm on Saturday evening 27 August 2011 between Hartono and someone at Dana Kitchens.
Supply of a similar kitchen in accordance with similar specifications but from another supplier was outside the terms of the variation agreement between the parties. Had the builder advised the owners that he would be paying approximately half the cost of the Dana Kitchens quote, it is fairly clear to me that the owners would have required the variation to be reduced by that relevant sum and the cost of the variation would have been the reduced cost of the kitchen plus the builder’s margin of 20 per cent plus GST.
In these circumstances payment of $113,400 for the kitchen variation constituted an overpayment. The payment was made by reason of a mistake of fact, namely that a Dana Kitchens kitchen had been supplied. The builder has been wrongly enriched at the expense of the owners and that enrichment is unjust in the circumstances. I conclude the builder understood the owners were acting under a misconception. The owners are entitled to restitution. In the circumstances the owners are entitled to recover as unjust enrichment (traditionally conceptualised as a claim for money had and received to their use) the additional monies mistakenly paid to the builder.
What is the overpayment? It is the difference between what was paid by the owners and the actual pre-GST cost of the kitchen to the builder plus 20 per cent margin plus GST. Apart from the Invoke Joinery expense, the other pre-GST costs for the kitchen supported by documentary evidence which I accept (items 219.2.7, 219.2.25, 219.2.26, 219.2.28, 219.2.30, 219.2.37 to 219.2.41)[39] amounts to $4,943.55. I do not accept the builder’s other claimed costs. They are vague and many of such general description they are as likely referable to work under the original contract as the claimed variation. They include invoices directed to another company of the builder and many invoices predate the quote from Invoke Joinery.
[39]Ex 23.
The pre-GST costs for the Invoke Joinery kitchen is $61,359.08[40]. The other costs of $4,943.55 take the costs to $66,302.63. A 20 per cent builder’s margin on that is $13,260.52. Add GST of $7,956.31 and the total becomes $87,519.46. The owners paid $113,400. The difference is $25,880.54. That is the amount they overpaid and it should be refunded to them.
[40]Ibid items 219.2.2 to 219.2.6.
Doubled claims and Termite Barrier Variation Invoice 258
The owners allege the exhaust canopy, insinkerator and tiles variation in this invoice are also claimed in other variations. The same Miele invoice is included in Invoice 258.17.2 as in 219.2.7. But Hartono points out there were two kitchens and I conclude on balance, taking into account that Tracey returned some kitchen items and not all initially ordered were available[41] he has simply exhibited the wrong document in support of his claim. I accept his evidence that these were not double up claims as alleged.
[41]Ex 1 at [30].
With respect to the payment for the termite barrier variation, the owners say this work was part of the original contract. I agree. The building certifier’s conditions of approval[42] states there was to be a termite barrier and that the builder had advised him that a visual barrier would be used. The builder suggests in his markings to the floor plan produced in support of invoice 271.3 that there were only two internal walls and some plumbing points to be protected under the contract.[43] That doesn’t accord with an external physical barrier called for under the conditions of certification. Nor do the marked areas of application shown by the applicator in his report show internal treatment, but rather the external rear and sides of the house are marked as treated.[44] The variation payment for the termite barrier of $4,224 is recoverable by the owners. They paid for this under the contract.
[42]Ex 1 at annexure 11.3.
[43]Ex 23 at 271.3.14.
[44]Ibid at 258.8.7.
Defective Work
The owners allege extensive defective building work done by the builder. The builder refutes that. Defective building work would breach both the contract terms[45] and the provisions of the DBC Act pursuant to which the builder warrants his work will be carried out in an appropriate and skilful way and with reasonable care and skill.[46] Under the general terms of contract the builder is required to rectify defects and omissions in the building work within six months of the date of practical completion.[47]
[45]Clause 101(1)(a).
[46]DBC Act s 44.
[47]Clause 19.1.
Both parties have sought the assistance of experts with extensive building experience to report on defects. Initially the owners engaged Mr Fritz, a builder, who provided a report dated 29 February 2012 (the Fritz report). He said there were defects. Unfortunately he passed away shortly after, and the owners have engaged Mr Groom and the builder Mr Salmon. Both of the latter have provided a number of reports and also prepared a report in the form of a Scott schedule following discussion in conclave. I find both experts knowledgeable though their evidence diverges at times.
Agreed Defects and Costs
Both experts agreed on a number of defects with the builder’s work and the costs of their rectification. In respect of some of these items however there was no agreement that the builder should pay.
Balcony Tiles Missing
A section of tiles is missing from the edge of the tiled balcony near the spiral staircase. The experts agree this is a defect and they agree the cost of rectification is $30. After the builder achieved what he said was practical completion on 7 December 2011 the parties settled four consecutive defect lists. This defect is not mentioned in any of them. It is noted in the Fritz report. Mr Fritz inspected the home on 22 February 2012, only 10 weeks after the claimed date of practical completion (hereinafter, given it is not of significance to the claims made, referred to as date of practical completion). That is not a long time and the defect could easily have been missed before that. I allow the claim at $30.
Water Ponding to Sandstone Paving Between Pool and Corner of House
The experts agree that water ponds but don’t really agree that it should be a remedial item. Mr Groom notes substantial water ponding to the sandstone pool paving between the pool and the corner of the dwelling. Mr Salmon says he ran a hose in the area during his inspection and there was some minimal ponding but no more than 2mm deep and the water was gone by the time he completed his inspection. There is no indication how long he was there but I take it he was not there for more than a couple of hours. I accept Mr Salmon’s evidence. The ponding issue doesn’t seem to be a matter of safety and there is no mention of a failure to comply with the Building Code of Australia (BCA). I am not aware of a definition of ponding in the BCA. This doesn’t appear to be a safety issue, but rather of cosmetic concern, and that not of great significance. No allowance is made in respect of this item.
Pool Equipment and Electrical Service Failure
The complaint is that the pool equipment and electrical services have not been protected against the elements by a roof covering and the pool heater has therefore suffered damage. Mr Groom suggests[48] there is a link and he refers to the Fritz report. In the Fritz report the comment is ‘pool equipment and electrical services have not been protected against the elements by the provision of a roof covering’.
[48]Ex 40 at [65].
Mr Groom says the matter will require a pool technician to both determine the extent of the damage and the reason for the failure of the water heating system. There could be numerous reasons why the pool heater does not work. There is in fact no evidence of a link between the pool equipment and electrical services not being covered by a roof and the failure of the pool heater. There needed to be. Mr Groom himself states a pool technician must determine the extent of the damage and the reason for the failure. The claim is not accepted as attributable to defective building work. It could simply be a warranty claim on the heater.
Three Access Doors from Laundry and Adjacent Rooms Bind
Both experts agree the binding of the doors is no longer an issue. Both experts agree the rebate doorstops have become detached and they both agree that the cost of rectification is $210. I accept their view on the matter. The costs for rectification suggested seems an appropriate amount to allow the owners to rectify the remaining problem.
The builder submits however that these defects are not on the four defect lists which followed practical completion and on that basis should not be allowed. Defective work often becomes evident only after practical completion. A complaint to the Queensland Building and Construction Commission alleging defective building work is available for such minor defects for a period of six months after the date of practical completion pursuant to the Rectification of Building Work Policy. I accept the defects constitute defective building work and should be rectified.
Front Door, Clearance, Opening and No Security Screen
The front door is a pivot door. Both experts agree there is a defect with a timber strip attached to the door by the builder. Both experts agree that what is necessary is to install correct seals and refinish the door and repair the holes at a cost of $320. Given it is a front door, it is a feature on entry and in my opinion should present an aesthetically pleasing and appropriate entry to an expensive home. That the timber strip which has defaced the entry was added by the builder at the request of the owners seems irrelevant given the gap at top of the door was unacceptable and was a responsibility of the builder from outset. The claim is allowed.
Two Glass Splashback’s not Sealed at Edges
The experts agree on this defect and agree the cost of rectification is $640. The cost appears to cover both replacement of the splashback and sealing the junction between the benchtop and the splashback with mould resistant sealant. Mr Salmon does not disagree with Mr Groom’s conclusion that the broken splashback is probably related to the material underneath swelling and causing water entry. I accept that. Water entry, I might note, is a significant defect. I accept the opinion of the experts that this is a defect that should be the responsibility of the builder and the proposed costs of rectification.
Concrete Slabs Are Cracked
The concrete slab outside the dwelling had significant cracking. That was cut out and filled but the result is a very poor finish. The experts agree that this is an aesthetic issue. They agree a topping coat could be applied at a cost of $3600. Mr Groom says the rectification already done by the builder has in fact highlighted the cracks in an unacceptable manner. I accept that further rectification is necessary and accept the recommended course and cost of rectification.
Cover Strip to Sheeting on Underside of Stairs
The experts agree a cover strip to sheeting on the underside of the stairs has been poorly joined. They agree on rectification at $72. I allow the claim.
Concrete Slab Forming Bottom Tread of Circular Stair Roughly Finished
This is an agreed defect. The riser height does not comply with the BCA and it should. They agree on the cost of rectification at $410. That is allowed.
Fish Tank Leak
Mr Groom says the internal fish tank has been leaking which has caused substantial damage to the timber flooring surrounding the fish tank. He says the fish tank cannot be filled with water because it leaks. The fish tank needs to be waterproofed.[49] He says at the time of his inspection the owners had had to remove the water from the fish tank and install ornaments to prevent water damage to the flooring. It is not clear how he learned that. Ming, together with one Mr Peter Low, was present during his inspection on 20 March 2013. Ming required an interpreter at hearing. Perhaps Mr Low was able to translate for him. I have no information about that.
[49]Ex 40 at [191].
Hartono’s evidence[50] is that he couldn’t get instructions from the owners whether the fish tank would be used as a fish tank and would require sealing. Tracey was to seek instructions from Ming which was not readily forthcoming. According to Hartono he was eventually told to simply leave it as is, that is, not seal it.
[50]Ex 1 at [104] and [107].
The second, third and fourth defect lists agreed between the parties provided for waterproofing of the fish tank. I conclude waterproofing was a responsibility of the builder under the contract and recognised as such by him. I conclude the sealing hasn’t been done and the builder should be responsible for the costs of having it done which is agreed between the experts at an amount of $500. That claim is allowed.
Wall Tiling behind Toilet Roll in Lower Floor Bathroom
The experts agree on this defect and agree the cost of rectification is $185. I accept their conclusion and the cost of rectification.
Agreed Costs of Rectification
In respect of some items of claim the experts agree on the costs of rectification but do not agree on the party responsible for the costs of rectification. In some cases they cannot say who caused it and in others who is responsible for it under the contract.
Rust Stained Floor Tiles near Stairs
The experts agree the rust stains exist but cannot say what caused them or who. Mr Groom simply repeats the observations by Mr Fritz and the cost to have them removed. Mr Salmon suggests the stains have come from the owners placing potted plants on the tiles. I conclude the suggestion by Mr Salmon is probably correct. It is not a defect to be rectified by the builder.
Broken Tiles near Base of Circular Staircase
The agreed fourth defect list after practical completion which was based on the Fritz report notes the builder agrees to replace six to ten broken tiles on the downstairs balcony with similar tiles. The work was done but both experts agree the result is poor. The photographs of the current repair in Mr Groom’s report supports that.[51] The experts agree the cost of rectification is $480. The builder is responsible for that. That cost is allowed.
[51]Ex 40 at [171].
No Bulkheads above to New Kitchen Cupboards
The kitchen cupboards in the kitchen areas do not have bulkheads to close off the space between the ceiling and the top of the cupboards. Mr Groom says that is not hygienic nor easily cleaned. According to Mr Salmon it is not unusual for kitchen cupboards not to go to the ceiling. I note there is no mention of bulkheads in the Dana Kitchens quotation nor is there assistance to be obtained from the Dana Kitchens drawings attached to the affidavit of Watford.[52] The owners have not persuaded me that this was a requirement of the kitchen variation. It is not allowed.
[52]Ex 37 pages 12 – 19.
Rectification of Certifier’s Defect to Obtain Certification
The claim here is that several certificates are missing and because of that, final certification has not issued. Hartono maintains all necessary certificates were handed over to the owners.[53] The last certificate was a plumbing certificate. He said he handed that over too. Attached to his statement of evidence is a copy of a signed final inspection plumbing certificate dated 16 December 2011 signed by a Brisbane City Council Inspector.[54] It is not clear what plumbing work it refers to though there is a plumbing application number noted on the document.
[53]T1-84 L33.
[54]Ex 1 at annexure 80.3.
But Hartono’s evidence is confusing. He says Tracey failed to comply with a requirement for plumbing set by the Council.[55] The plumber refused to give him a certificate until he paid for work outside the contract ordered by Tracey, which he did and he has now provided all certificates to the owners.
[55]T1-81 L47.
Mr Groom is of the opinion the builder has failed to meet his contractual obligations and should not have claimed the final stage payment without handing over a Form 21. The Form 21 is provided by the certifier. Hartono says he provided all the necessary Form 16 inspection certificates to the owners to enable them to obtain that final certification, though his evidence about the plumbing certification is confusing.
Mr Groom’s report goes much further than a commentary on a missing Form 21. He repeats hearsay from Mr Peter Low that the certifier will not issue a Form 21 because some Form 16s are missing.
Mr Salmon on the other hand says it is known that the certifier has inspected the property and issued requests on a lot of items to the builder which were outstanding at the time of his report on 23 March 2013. He says the builder has informed him that there are three outstanding items (I take that to be Form 16s), two the responsibility of the owners and one the builder concerning rectification of stairs.
The evidence is most unsatisfactory. The owners have not adduced sufficient evidence on this point to convince me that on balance the builder should be responsible as proposed by Mr Groom for four unspecified certificates at a cost of $360 each, a “potential” cost of unidentified defective work associated with certification of $5,000 plus certification fees of $2,400. The builder on the other hand has not altogether persuaded me that all necessary certificates have been provided as required by clause 17.1(b)(iii) of the general conditions of contract. If they had been, final certification would not be an issue. It remains unclear whether the plumbing certification has been produced, and the builder admitted to Mr Salmon that there was a separate issue concerning stairs.[56] In the minutes of the meeting between owners and builder on 5 March 2012 Mr Hartono notes ‘When the payment ($65,376.19) is made Office Shop Renovations will finalise and submit all certificates to the building certifier and obtain final building approval’.[57] In the circumstances I propose to allow half the claim in respect of missing and required certification but allow nothing for unidentified repair of defective work. The amount of $1,920 is allowed.
[56]Which is obliquely acknowledged or not challenged in cross-examination T1-83 L30.
[57]Ex 1 annexure 96.3.
Second hand Windows in Lounge Room
Mr Groom identified some additional defects not noted in the Fritz report. He noted windows used in the lounge room are second hand and not new. They are in poor condition. This complaint concerns the windows to the front of the house. The contract schedule, item 3, description of works provides ‘replace downstairs windows to right side and selected rear’. This does not cover the windows at the front. I conclude they were not to be replaced under the contract. The claim is not allowed.
All Wet Area Floor Wastes Have Lost Their Chrome Coating
Mr Groom raises this as a defect in his report of 23 March 2013 (the first report). As noted by Mr Salmon this is a new item of complaint raised approximately 18 months after expiry of the six-month defects period following practical completion on 7 December 2011. Leaving that aside, Mr Salmon also suggests the problem could well be caused by cleaning agents used by the owner. In the circumstances I am not convinced this problem is due to the supply of defective products by the builder. The claim is not allowed.
Fridge Not Plumbed Correctly to Provide Chilled Ice and Water
Mr Groom noted this as a defect in his first report. As submitted by counsel for the builder, no mention was made of this as a defect in either the Fritz report or in the various defect lists drawn between the parties. There is nothing in the signed variation document or the Dana Kitchens or Invoke joinery quotations about plumbing in a refrigerator. There is mention of leaving spaces for refrigerators in the quotation. Given most of the work completed in Christmas 2011, one might consider that, given the weather at that time of the year, the chilled water and ice attribute of the appliance would have been tested and had it not been working at that time and plumbing it in was part of the work under the contract or variations the owners would have required the builder to do it and listed it as a defect. They did not. I conclude it was not part of the builder’s work. The claim is not allowed.
Meter Box Timber Head Rotten and Collapsed
The experts agree timber used to over the top of the meter box under sandstone capping is not durable, has collapsed, and must be replaced. The issue is whether or not the builder is responsible for that timber. There does not appear to be any reference to the timber head above the meter box in any variation or the supporting material associated with the variations. It was simply identified as a defective item of construction at the residence by Mr Groom. The claim is not allowed.
Soil Collapse near Front Entry Gate Exposing Electrical Conduit Wiring
Mr Groom observes in his first report that soil to the side of the front entry gate has collapsed and subsided and that soil was supporting electrical conduit and electrical wiring. He says this is unacceptable and a significant safety hazard if the wiring and/or conduit breaks further. In his opinion the electrical conduit and wiring has not been installed in accordance with Australian Standard AS 3000. The builder argues this alleged defect was not noted in the Fritz report or in the four defect lists. There is no evidence that the defect existed at the time of practical completion. In my opinion that is not determinative of the matter. According to Mr Groom the soil has collapsed and subsided. That would naturally take some time to occur. Unfortunately Mr Groom does not elaborate on the requirements of AS 3000. It is not clear whether the requirement that is breached is the depth the wiring and conduit was placed or whether the depth is irrelevant and it is the lack of soil support beneath the conduit which breaches the standard.
The builder also submits that there is no evidence that the defect was caused by work undertaken by him. The work involved in this project was extensive. There were numerous variations and numerous tradesmen involved. It is not made clear in Mr Groom’s report what the electrical wiring and conduit was for. There was already power supplied to the front area in front of the dwelling prior to construction.[58] The conduit and wiring in question may have been in place before the construction commenced. The onus is on the owners to prove their case. I am not convinced the wiring concerned was placed by the builder and therefore erosion and exposure of the conduit the builder’s responsibility. Nor am I able to conclude, if the electrical work was laid by the builder, whether work was done by the owners post construction. The claim is not allowed.
[58]Ex 1 annexure 1.3.
Front Entry Latch to Door/Gate Incomplete and Not Working
Mr Groom says the back latch to the front gate/door is missing from the gate lock. Given there is no reference to this in Mr Fritz’s report nor in the four defect lists, I conclude the back latch has been removed by the owners. There is no evidence about why that might have been done. I conclude it is no responsibility of the builder.
Ceiling Heights to Both Upper and Lower Levels not 3 Metres
Mr Groom notes that the owners have advised him that the plans and specifications confirm the ceiling heights to both the upper and lower level of the dwelling were supposed to be a minimum 3 metres under the contract. Though he hasn’t inspected the ceiling height himself the owners advised him the ceiling heights vary between 2.6 and 2.7 metres. Ming’s evidence is that at a meeting with Hartono on 22 April 2011 before signing the contract on 27 April 2011, the ceiling heights were discussed and Ming stipulated that the ceiling heights must be 3 metres. He said the price was made on the basis of that required ceiling height.
Hartono’s evidence is that at the meeting on 22 April 2011 he told Ming that having a ceiling height of 3 metres downstairs might not be possible. He had checked with a surveyor. He told him that 2.7 metres would probably be the maximum height that could be achieved because of height restriction requirements. Given that the height restriction was to mind before the contract was signed, one wonders why Hartono entered into the contract with the owners and agreed to ‘raise ground floor ceiling level to 3.0 m to indicated areas’.
Hartono says there was a further discussion on 5 May 2011 when drawings were shown and they discussed the ceiling height again, and again Hartono told Ming he could only build to 3 metre ceilings downstairs if he was allowed to do it; there were restrictions in Australia. He said around 20 May 2011 he told Tracey that there would not be enough height to be able to build downstairs to 3 metres.
In the contract at item 3 there is no reference to both levels having 3 metre ceilings. What the ‘indicated areas’ refers to is not clear. The development approval states as a condition of approval ‘Building height – prior to commencement of work land surveyor shall setting (sic) out the levels such that the completed building will not exceed 8.5 m above the natural ground level. A certificate to be provide (sic) on completion certifying the completed building does not exceed 8.5 m above natural ground level’.[59] The approved drawings for the construction are Zenith Design drawings 1022 – 11 – 01 to 13.[60] Zenith Design drawing 10 shows a ceiling height for the lower floor of 3040 mm.
[59]Ex 1 annexure 11.3.
[60]Ibid annexure 11.18.
The evidence of Mr Watford is that he attended the meeting between the builder and Ming on 22 April 2011 and nothing was said about ceiling heights at that meeting. His evidence is a surveyor came to the site after the drawings had been done and he advised the 3 metre ceilings were not possible.
Hartono’s evidence is that on or about 20 May 2011 he told Tracey there would not be enough height to build the lower level at 3 metres. He links that conclusion with the discovery at about that time that the existing house (frame) was built from steel rather than timber. He says that meant there was not enough height to build downstairs to 3 metres. How that prevented him from building 3 metre ceilings is not explained.
He says that discussion took place on 20 May 2011. I note the Zenith Design drawings showing a ceiling height to the lower floor of 3040 mm are dated 31 May 2011 and the development approval based on the Zenith Design drawings was not given until 2 June 2011. This was well after the meeting of 20 May 2011.
Watford confirms Tracey was advised about ceiling heights although he says that was as a result of advice from the architect.[61]
[61]Ex 38 at [4j].
Counsel for the builder submitted that the contractual promise to build the lower level with 3 metre ceilings has been frustrated by the requirement to keep the total height of the structure under 8.5 metres. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[62] is relied on. I do not concur that the doctrine of frustration of contract is relevant in the matter at hand. In Codelfa frustration of contract was relied on because an implied term to resolve the unexpected problem of injunctive relief preventing the work proceeding on the timely basis anticipated by the parties was not available. Here the contract makes provision for the circumstances confronting the parties with respect to the 3 metre ceilings.
[62](1982) 149 CLR 337.
By clause 13.1(a) of the general conditions of contract the contractor is obliged to comply with all statutory requirements relating to the works. By clause 13.1(d) ‘…if the contractor’s compliance with the statutory requirements requires a variation to the works the contractor shall with the prior written consent of the owner vary the works as required and the cost to the contractor of the variation, together with the contractor’s margin on that cost, shall be added to the contract sum’. Clause 13.2 and clause 12.3 covers completion of a variation document evidencing the change. The owners must not unreasonably withhold their consent from the variation.
Here of course no variation document was prepared. I conclude that from in or about early June 2011 Tracey was advised that a 3 metre ceiling was not possible for the lower level. Given she attended throughout the course of the construction, albeit on an irregular basis, it is not credible to believe that she did not realise the height of the lower level ceiling didn’t change. Ming returned to Australia from China in about August 2011 and would undoubtedly have inspected the building work and observed the 2.7 rather than 3 m ceiling on the lower level.
The claim of the owners must be damages for breach of contract. The breach is not a failure to construct the lower level with 3 metre ceilings. That became impossible due to the height restrictions set by regulation. The contract made provision for this difficulty. It made provision in clause 13 for a variation of the contract. Clause 13 goes on to provide a procedure for such variation. By clause 13.2 before the contractor commences any work the subject of the variation he must give the owners an estimate of the cost involved in carrying out the variation and the parties must agree to vary the work and confirm their agreement in writing in accordance with the general variation requirements set out in clauses 12.3, 12.4, 12.5 and 12.7 of the general conditions. That notice was never given. The owners were not advised of any additional costs associated with the variation or more importantly any saving associated with the variation. That failure to follow the requirements for variation in those circumstances amounted to a breach of the contract between the parties.
What measure of damages are the owners entitled to claim in the circumstances? The basic purpose of any award of damages is to restore an injured party to the position he would have been in had the wrongful act not occurred.[63] But there is no evidence adduced as to any saving to the builder as a result of not having to construct the lower level with 3 metre ceilings, if indeed there was a saving. I am not convinced there was a saving to be made given the extensive nature of the renovations concerned. Neither expert addressed this issue. In the circumstances I conclude there is no evidence of damage and it is not appropriate to make any award in favour of the owners against the builder.
[63]Robinson v Harman [1848] Eng R 135.
Experts Disagree On Price
There are some alleged defects where the experts agree about the defect but not the price of rectification.
Loose Tap and Shower Fitting
Mr Groom says taps to the vanity units are not tightened[64]. Though usually an easy repair, in his opinion the builder has not provided sufficient access under the stone bench tops to access the taps. The stone bench tops will have to be cut to allow access to the screws and nuts under the tap mixers. Without that the taps and mixers cannot be maintained or tightened. He says the taps are currently unusable in their current condition.
[64]Ex 40 at [99] – [106] and Ex 41 at [48] – [51].
The bath and spa bath taps have not been tightened which he says shows that the grub screws holding the tap to the pipework is damaged. The bath and spa bath taps are also unusable in their current condition.
Mr Salmon disagrees. He says the hole in the stone bench tops are sufficient and the various taps can be tightened at minimal cost. Mr Salmon says there is a special plumber’s tool to access such mixers.[65] Both experts supply photographs to support their views. The stone bench tops do have a cut out and Mr Salmon shows a photograph of the tool used by plumbers. In the circumstances I prefer the evidence of Mr Salmon. However he does not give an opinion on what he describes as a minimal cost to tighten the taps. Additionally Mr Salmon doesn’t give an opinion about the potentially damaged grub screws. Mr Groom’s estimate of costs included a plumber working for two hours at $80 an hour rectifying the loose taps and spouts to the spa bath and bath and a materials cost of $360. I propose to allow that amount together with an additional hour for a plumber to tighten the mixers and taps beneath the vanity units, an additional $80. The total under this head of claim is therefore allowed at $600.
[65]Ex 16 addendum 2 at page 22.
Unnecessary Holes on Tread of Circular Stairs
In Mr Fritz’s initial report he commented that the top tread of the circular stair has seven unnecessary holes. Mr Groom says as at the date of his inspection the holes were rusting. They have a poor finished appearance and should be replaced. Mr Salmon confirms that the top tread of the circular stair has seven unnecessary holes but says the holes can be cleaned, filled and sprayed. He disagrees with Mr Groom’s costing. Mr Salmon doesn’t give a costing. Mr Groom refers to a total cost of $2,290. The extent of his repairs is somewhat puzzling because he seems to be proposing replacement of seven treads. Both experts referred to 7 holes in the top tread only. Given the rust, I conclude the top tread should be replaced, but not seven treads. I must make an attempt at estimating cost of repair. I allow an amount of $500.
Mismatched Pipework on Wall Basin on Balcony
Mr Fritz initially observed that the wall basin near a round table on the balcony has a short plastic waste fitting which does not match the other stainless steel pipework. He says it is unsightly. Mr Salmon agrees but says the builder cannot find a chrome fitting to fit. Mr Groom’s cost to replace the plastic connection is $160, for materials costing $40 and a plumber taking one and a half hours at $80 per hour to do the work. That estimate of time seems excessive to me. I allow the estimate for the material cost at $40 and allow one half hour plumbers time at $40. There are other jobs to be attended to by any plumber rectifying taps and mixers and they could attend to this simple job as well. The total amount allowed is $80.
Broken Benchtop in the Chinese Kitchen
Mr Fritz observed the narrower section of benchtop in the small Chinese kitchen was broken at the rear left hand end of the sink. Mr Groom says the benchtop is broken, not just cracked, in four different locations. In his opinion the benchtops cannot be repaired. The builder has already made some attempts at repair but they have not been successful. He says both sections of stone will need to be replaced.
Mr Salmon agrees the narrow section of benchtop is broken at the left rear end of the sink but he says the crack behind the sink is new and was not there at the time of the builder’s date of practical completion. He disagrees with Mr Groom’s costings but doesn’t give any of his own.
Given all cracks are in this one of the two kitchens, I conclude there was an issue with the laying of the benchtops and though the defects were not observed as at date of practical completion a crack to the benchtop is noted in the second defects list.[66] This makes the breakage to me more likely than not attributable to the stone masonry work than caused by the owners. The builder should be responsible for repairs.
[66]Ex 1 at annexure 81 item 9.
The breakdown of Mr Groom’s costings are a little hard to follow. He does not make clear what ‘Supply - $660 x 5’ means but I take it there are 5 separate sections of benchtop to be replaced or repaired. In the circumstances given there is no estimate from Mr Salmon or comment by him on Mr Groom’s estimate to replace, I accept Mr Groom’s estimate. That estimate totals at $4,715.
Cracked Ceiling Adjacent to Elevated Fish Tank
The experts agree that the ceiling adjacent to the elevated fish tank has cracked where the narrow section meets the wider section because a movement joint has not been formed as required at that position. The issue however is the cost of repair. Mr Groom says $875. Mr Salmon disagrees but doesn’t give a price. In the circumstances I have little to guide me on price except Mr Groom’s calculation and accordingly I accept his estimate.
Experts Disagree As to Whether a Defect Exists
Floorboards in Front of Elevated Fish Tank Damaged by Cupping
This was initially reported in the Fritz report. Mr Fritz said it was caused by water under the surface of the floor. I have already concluded that the fish tank requires sealing. Does that mean the floorboards have cupped because of water leaking from the fish tank?
The Fritz report gave no details of any investigation undertaken to ascertain the cause. In general terms, cupping is caused by floorboards being drier on top than on their bottom. That effect might be the result of a number of problems. Mr Fritz and then Mr Groom has claimed it is because of a leaking adjacent fish tank.
Mr Groom says the timber flooring around the front entry must be re-sanded and refinished at a cost of $2,508. He seems to say that when he inspected the floor the cupped areas had levelled out although the damage to the floor by way of cracks and finish was still evident. Mr Salmon simply says he cannot see any damage done to the floorboards.
Mr Groom attaches four colour photographs of the timber floorboards to his report of 23 March 2013.[67] One of the photographs clearly shows a raised lip on a floorboard. The other three photographs show very little, perhaps because of the angle chosen. Part of his costing includes $628 to re-waterproof the fish tank. That issue has already been determined and costs to waterproof allowed at $500.
[67]Ex 40 at [191].
Given there seems to be no complaint about any other area of the floor other than adjacent to the fish tank, I conclude there has been water leaking from the fish tank which has caused the underside of the adjacent floorboards to become wet and consequently expand and cause cupping of the floorboards. The cupping has apparently settled over time since the fish tank has not had water in it. That has left damage and poor finish to some of the floorboards however. That is a defect that should be remedied by the builder. Costs claimed for dusting of curtains and cleaning after the sanding and finishing required seems excessive and unnecessary. The amount of $1,480 only claimed to sand and finish is allowed.
Defective Spa Pump
Initially the claim here was for a defective spa pump. Mr Groom thought the pump was not installed or connected properly. That was on his first inspection on 23 March 2013. Subsequently on his inspection on 19 September 2013 he discovered there was no switch to turn the spa bath pump on or off from inside the bathroom. The switch for the spa bath pump was on the roof he says. One has to access the roof to turn it on or off.
Mr Salmon inspected the spa on 14 June 2013 and simply says in his report of 3 July 2013 that the owner turned the spa pump on at the main switch ‘outside’ and it worked. Then in his report of 23 October 2013, following an investigation on 17 October 2013, he says ‘There appears to be a problem with the spa switch. When turned on this time at the external power point it worked, however, I was unable to turn the spa off at the button attached to the spa’.
It would be exceedingly strange if there was no switch in the bathroom to turn off the spa bath pump. I conclude Mr Salmon probably has the right of it. What is wrong is that the switch doesn’t work on the spa bath. This was not a defect noted in any of the defects lists agreed to between the parties. It was not a defect brought to the attention of Mr Fritz. There is no evidence to suggest this is other than a defective switch in the spa and it was first observed by Mr Groom more than 12 months after claimed practical completion on 7 December 2011. It is more appropriately in my estimate a warranty claim against the manufacturer of the spa than defective building work. The claim for costs of rectification is denied.
Other Defect Items of Claim
Water Ponding on Deck
Mr Fritz originally commented that the balcony tiled area had been built without adequate fall to the edges which allowed rainwater to flow inwards. Mr Groom confirmed that in his first report and said it was a major problem because the water does not drain away. He says water ponding on the deck is contrary to the BCA and breaches the James Hardie technical installation specification. He doesn’t identify the provisions of the BCA or specification breached however to allow the Tribunal to reach that conclusion independently. In his report of 19 September 2013[68] (the second report) he explains that the floor joists to the deck run in the opposite direction to the manufacturer’s specifications and he identifies this as a reason why the deck ponds water.
[68]Ex 41 at [23].
He says in his first report that since the Fritz report, five separate leaks have developed in the deck causing water damage to the lined ceiling beneath. His evidence is that waterproofing regularly fails in areas where water ponds on decks because the waterproofing used is not designed for submersible situations. His cost to rectify is $23,342. He says the deck needs to be uplifted and reconstructed in accordance with the James Hardie deck installation technical specifications and waterproofed in accordance with AS465 4.2.
Mr Salmon agrees the balcony tiled area has been built without adequate surface fall to the edges which allows rainwater to flow inwards. However he is of the opinion that the areas with no fall are at least 2 metres from the edge of the roof line. He says the other areas do fall away from the house. He says the floor has a waterproof membrane and there is no sign of any water entry into the house. Two days before his inspection on 3 July 2013 there had been heavy rain but when he inspected it there was no sign of water lying on the deck or water stains to indicate water ponding. Furthermore the owners keep carpet, furniture, a telescope, and exercise bike and other furniture on the deck which indicates the roof adequately protects the patio in the areas in question from rain. He says there is water staining on the ceiling below only on the open ends just beneath the handrail fixings. In his opinion the problem is the handrail fixings have not been adequately waterproofed. There is no other sign of water damage in any other part of the ceiling beneath the deck. He disagrees with Mr Groom’s cost of rectification. He says all that is required to stop water getting into the ceiling beneath the deck is to remove the handrails, waterproof the fixings and put back the handrails. The water staining that he observed, considering the amount of rain that had recently fallen, was minor. In addendum 4 to Mr Salmon’s report in a Scott schedule Mr Salmon’s calculation of cost of rectification is $2,150 excluding GST.
The experts met in conclave on 15 August 2013. They agreed they couldn’t decide the extent or cause of the leak and an access hole should be cut in the ceiling beneath the deck to allow them to further investigate.
Two access holes were cut on 5 September 2013, apparently by Mr Groom. One was near the entry and stairs and another closer to the edge of the deck where there was significant watermarking to the ceiling. Then the deck was flooded with numerous buckets of water to confirm the extent of water ponding.[69] Mr Groom says water ponded on the floor against the wall of the dwelling. He says the flooding test confirmed that the water along the outer edge ponded to a substantially lesser degree than the back edge of the deck. In his opinion however the water ponding along the wall of the dwelling was excessive and would cause a failure of the waterproofing system if it was not rectified. The water ponding at the outer edge was not a major issue and could be adjusted within the grout lines.
[69]Ex 41 at [20].
I conclude it was the latter area that was leaking. Mr Groom says there is evidence of water ‘to the ceiling of the area’ near the entrance and stairs but I take his report to say that despite the flooding of the deck above there was no actual leak discernible in that area. Mr Groom says he saw evidence of water tracking along the ceiling. The hole cut near the edge of the ceiling beneath the deck confirmed there was leaking there. He says the Sycon sheet flooring joins have separated which has caused the failure of the waterproofing in that area. He does not attribute the fault to the balustrading fixings.
Mr Salmon inspected the holes cut in the ceiling on 17 October 2013 with Hartono separately to Mr Groom. Mr Salmon says he and Hartono poured water on the balconies. His report is hard to understand as to the precise areas where he poured water. His conclusions are clear however that the water was poured near the end of the balconies and it eventually flowed freely over the edge though over a different part of the balcony. The water did not pond for long. They then turned the tap on beneath the balcony hand basin near the wall of the dwelling and the water did not flow towards the south edge as it should have, but ran towards the middle before flowing towards the western edge, the front of the balcony. The water was able to get away. During this period and looking through the access panels cut in the ceiling beneath the deck there was no sign of water penetration. He could see no sign of water in the ceiling space beneath the balcony. There was no sign of water staining to the timbers or the ceiling sheeting. He disagrees with Mr Groom that the waterproofing has failed because he saw no evidence of it looking through the two holes cut in the ceiling beneath the deck.
Mr Groom had also commented in his second report that the deck did not have a drip mould as stipulated in the manufacturer’s installation specifications which meant water ran back under the edge of the sheet to the junction between the horizontal deck and the ‘vertical facing’. Mr Salmon disagreed with that too. He said there was an angle installed and ‘its fascia sheeting is finished a distance below the ceiling sheeting as required in standard building practice’.[70]
[70]Ex 16 at page 21.
In Mr Salmon’s opinion, generally, there was no substantial water leaking issue if any issue at all. He agreed the falls to the balcony were incorrect but water was getting away and it did not appear to be a major issue. He noted there was still a lot of furniture left on the balcony at the time of his second inspection.
The area beneath the deck is an open area like a patio.[71] The deck itself has glass balustrades around the edge but open between the top of the balustrade and the roof to the deck. From the photographs tendered in evidence it appears there is a fairly wide soffit extending out to protect the deck. Mr Groom said at hearing that it was on the edge near the basin where there was ponding.[72] He didn’t test the central part of the floor because there was furniture there. He didn’t find a problem with the centre of the floor area.[73]
[71]T4-103 L31.
[72]T4-105 at LL34 – 35.
[73]T4-106 at L7.
In cross-examination Mr Salmon agreed that water was ponding on the deck on the outside areas but the ponding was away from the house itself. He said there was no sign of water ‘getting through’.[74] It was put to him that the deck was not built in accordance with the BCA because there was no fall to the deck. Mr Salmon disagreed that the BCA required a fall on decks. He agreed that if there was a fall good building practice dictated that the fall should be away from the house, but his evidence seemed to be that he did not accept any water entered the house because of lack of fall or ponding. As I understand Mr Groom’s evidence,[75] he claims the deck falls the wrong way and allows water to flow towards the dwelling rather than away from the dwelling, the water ponds on the upper surface of the deck contrary to the BCA, and that the construction breaches the James Hardie technical installation specification.
[74]T1-95 LL15 – 17.
[75]Ex 40 at [48] – [49].
The relevant provisions of the BCA and the James Hardie technical installation specification referred to by Mr Groom was not put in evidence. I have had cause to consider whether covered “decks” exposed to the weather from the sides were obliged to have fall pursuant to the James Hardie technical specifications for compressed sheeting decking construction in Bakker & Kramer v Richards Projects Pty Ltd[76]. I found there the recommendations of manufacturers of materials did form part of the relevant criteria for use of such materials in construction[77] but that there was nothing in the technical specification which required decks undercover to have fall.
[76][2013] QCAT 388.
[77]Domestic Building Contracts Act 2000 ss 42(1), 42(6).
Additionally, in Mr Groom’s opinion the floor joists run in the wrong direction to the manufacturer’s specifications and he gave that as a reason why the deck ponds water. In the diagram extracted from the James Hardie installation specifications set out in his report of 19 September 2013 the floor joists are shown to run out from the house to provide fall and slope. In the approved Zenith Design drawing 6 of 13 described as the floor framing plan, the bearers in the balcony area run out from the house and the floor joists run parallel to the house. The deck or balcony construction here therefore appears to be in accordance with the approved design. It is far from clear from all this that this deck or balcony or covered verandah area was intended to have fall. The plan requires the verandah joists (rather than the sheeting on the joists one might note) to be wet sealed and accordingly the design apparently at least considers possible water entry to the area. I note in passing this plan also refers to the area as a verandah rather than a deck which may or may not have been intentional and further exclude the application of the James Hardie specifications.[78]
[78]Bakker & Kramer v Richards Projects Pty Ltd at [40] – [44].
The experts are divided about whether or not any provisions of the BCA have been breached in constructing the deck without sufficient fall to prevent any water on the balcony flowing inwards. Without the relevant provisions concerned being raised for consideration by the Tribunal, it would be unsafe to conclude there has been a breach of either the BCA or the James Hardie specifications, whether they be the compressed sheeting decking construction specifications or other.
The experts disagree about whether the waterproof membrane has been breached or has failed or is likely to fail other than at the edge of the deck near the balustrading. Mr Groom says the potential problem with flooding on the balcony is a major problem. Mr Salmon sees no real problem at all. Given the owners have seen fit to store a large amount of furniture on the balcony, apparently for some time, they would be in a good position to know if there was a problem with water ponding on the balcony. Judging from that there is little problem with water ponding on the balcony. If there is no consistent problem with water ponding, then Mr Groom’s concern that the deck waterproofing membrane being constantly submersed fades away. In all the circumstances I prefer Mr Salmon’s view on the matter. I conclude ponding is not a major issue with respect to the balcony and the rectification proposed is out of proportion to and not a reasonable course to adopt given the marginal benefit I conclude would thereby be achieved.[79] I conclude there is a waterproofing issue associated with the balustrade fixings and that should be rectified.
[79]Bellgrove v Eldridge (1954) 90 CLR 613.
Mr Salmon’s costs to rectify the problem with water entry to the floor near the balustrades is $2,150 excluding GST. That amount should be allowed to enable the owners to fix the problem with the balustrades. If necessary the work done to rectify should also rectify any problem with the drip mould.
No Ducting Installed to Exhaust Fans above Each of the Range Hoods
Mr Fritz identified a problem with no ducted outlets on the stove exhaust fans in both kitchens. He said that was evidenced by the absence of ventilation grills and the outer walls. The builder claimed they were vented through the roof.
In conclave the experts agreed the builder should provide documentary evidence of the ducting work. That was made an order of the Tribunal. The builder maintains the exhaust fans are ducted and exhaust into the ceiling cavity. Hartono provided a document or documents to Mr Groom in compliance with the order. Mr Groom says it is insufficient to prove or show anything with respect to the ducting installation. He is probably correct. However the order did not specify what was to be provided nor do the experts specify what documentary evidence of the ducting work would exist. The onus of proof in respect of this item of claim lies on the owners, and it is not Hartono that must prove that the work was done but rather the owners must prove either that the work is defective or not complete. This is a claim that the work is not complete.
The work must arise from the kitchen variation dated 25 August 2011. There is no mention of ducted exhaust fans in the variation itself however nor do the Dana Kitchens or Invoke Joinery quotations assist in that regard. The builder doesn’t seem to contest that he was required to duct the exhaust systems though.
Mr Fritz relied on the absence of ventilation grills in the outer wall to enable him to conclude there are no ducted outlets from the exhaust fans in both kitchens. The builder says the exhausts vent through the roof and Mr Salmon confirmed[80] he could hear what seems to be wind noises coming from the range hood which indicated it was externally vented. I am surprised neither expert nor anybody else has ventured into the roof cavity for visual confirmation. In all the circumstances I am not persuaded the range hoods are not externally vented and the onus of proof in that regard is on the owners. This claim is not allowed.
[80]Ex 16 at page 21.
Termite Barrier Not Installed Correctly
Mr Groom’s initial complaint[81] here was that the termite barrier to the perimeter of the building did not contain an inspection zone as required under AS 3660.1. His estimate of cost was a vague $10,000 to $20,000. I assume he wants it all done again. He said a relevant Form 16 certificate was missing and had been requested by the building certifier.[82] There is nothing about that from the certifier himself. He noted that there was a notice in the meter box showing a reticulation system had been installed.
[81]Ex 40 at [239] – [240].
[82]Ex 40 at [239] – [240].
Form 16 certificates were evidently provided subsequent to his first report. I surmise they are the Form 16s supporting the claim to the variation for termite treatment to the front of the house.[83]. One tendered is of such poor quality no details at all are discernible and the other, from Scope Termite and Pest Management, is very faint and the date of the document cannot be read.
[83]Ex 23 at 271.3.10-14.
Mr Groom says[84] a certificate from the firm Ant Attack dated 30 November 2012 (I assume the very poor quality Form 16 referred to above) fails to provide any detail on what works were carried out. He says the certificate is unacceptable and does not comply with AS 3660.1.
[84]Ex 41 at [37].
The building certifier is responsible for deciding whether the evidence submitted in support of a termite barrier system is sufficient. The building certifier must be satisfied that the system meets the performance criteria of the BCA. I have nothing from the certifier himself on this issue. He may be satisfied. I note in his third report of 26 September 2013[85] Mr Groom refers to a report or note from the certifier dated 4 May 2013 concerning alleged defects identified by the certifier. If the certifier had found a problem with the termite barrier I assume that would have been commented upon by Mr Groom. He made no reference to any comment about defective termite barrier by the certifier. I am not prepared to order the builder to treat the entire construction area again or part of the area without evidence of dissatisfaction from the certifier. The claim is not allowed.
[85]Ex 42.
Leak to Upper Main Level
In a third report on defects by Mr Groom dated 26 September 2013[86] he identified new leaks occurring in the main bedroom at the upper level of the eastern wall. He says this has caused the paint to blister approximately 1200 mm from the floor in the south-east corner of the bedroom and there are watermarks on the skirting and floor coverings at the bottom of the wall. He concluded the builder had failed to flash the lower roof outside as required by HB 39. I assume by “HB 39” he is referring to the installation code for metal roofing and wall cladding. He said the upper roof gutter was leaking at the gutter mitre and the valley gutter did not contain a downpipe within 1.2 metres of the valley gutter as required. Additionally the builder had rendered over the drainage system under the window contrary to the manufacturer’s installation specifications and the relevant standard. The window was adjacent to the leak and was a possible cause of the problem although in his opinion the roof flashing and gutter installation and the missing downpipe was the real cause. His estimated cost to rectify all the identified possible problem areas is $2,640 excluding GST.
[86]Ibid.
Mr Salmon agrees[87] there is a problem but he thinks the flashing has been installed correctly. The window is approximately 3 metres away from the corner where water damage has occurred. Therefore he thinks neither of these factors is the problem. He noticed movement to the internal corner of the outside wall where the water damage has occurred. In his opinion this cracking is part of the problem. He suggests the internal corner where the wall sheets abut should be cleaned out and a waterproof sealant such as Sikiflex installed. He agrees another downpipe should be installed. He agrees with Mr Groom’s estimate to install the downpipe at $360 and to prepare and repaint the internal damage at $1,000. His estimate of the costs of rectification is therefore $1,360.
[87]Ex 16 at page 25.
It seems clear that there is water entry and this is a defect. Neither builder seems to think the window is an issue and as Mr Salmon observes the window is approximately 3 metres away from the corner where water damage has occurred and there would be damage closer to the window if the window was allowing water entry into the house.
Water entry is a serious issue. In the circumstances I agree with Mr Groom’s estimate of costs of rectification leaving aside his estimate of the cost of re-flashing or sealing the window sill. In the circumstances it is appropriate to ensure the flashing is not leaking. His estimate of cost of repair is $1,800. That cost is allowed the owners.
Leak from Upper Level Bathroom into Kitchen Ceiling
Mr Groom refers to a hole cut in the ceiling under the toilet pedestal at the time of his inspection on 5 September 2013. The hole was made by the owners because they found water or sewerage leaking through the kitchen ceiling. At the time of his inspection he thought the waterproofing in the floor of the bathroom above had been penetrated by the waste pipe and screws holding the toilet pedestal to the floor. His estimated cost to rectify that included removing the tiles from the bathroom floor and skirting, re-waterproofing the floor and re-tiling the floor, as well as repairing the damage to the ceiling in the kitchen.
Mr Salmon inspected the problem after that on 17 October 2013. In his report he said the owner had informed him the problem had been the toilet waste pipe. The owner had engaged a plumber at a cost of $700 and the problem was fixed. He does not dispute that cost as unreasonable. I take the true cost of rectification of the leak as therefore largely known and the experts agree on the estimate to repair the ceiling at $1,080. The builder is responsible for this defect to the tune of $1,780.
Floor Level above Garage Causing a Water Issue to Bedroom Six
Mr Groom identifies this as an issue raised by the certifier. He refers to a report by the certifier identifying defects dated 4 May 2013.[88] As mentioned, a copy of that report was not tendered in evidence.
[88]Ex 42 at [58].
As with the following item, how the present construction does not comply with BCA 3.1.2.3 is not made clear. Mr Groom says a proper drainage system, namely 18 lineal metres of stainless steel drain, should be installed and doors and windows removed to do that. This will however be subject to certifier approval, particularly so because the solution proposed by Mr Groom is taken from another standard that doesn’t apply to this building. There is nothing from the certifier about any of that.
Mr Salmon says, the builder says, there was an existing slab and that was the problem. Nothing done by the builder was part of the contract work. The only thing done by the builder was to try to stop the existing problem by removing tiles and dropping the level of the concrete by some 40 mm and then waterproofing the area and applying sealant between the sliding door sill and the cut down slab.
Without input from the certifier I am not prepared to accept the remedy proposed by Mr Groom is acceptable to the certifier or any more efficacious than the remedy attempted by the builder. I do not allow the costs of rectification proposed by Mr Groom in the circumstances.
Spiral Stairs Non-compliant with BCA and Balustrade at Ground Level does not comply with BCA 3.9.2
Again Mr Groom refers to defects he says was identified by the certifier with respect to the spiral stairs. The first defect is that the landing at the upper level of the spiral stairs does not comply with BCA 3.9.1.3 Stair Construction. But then Mr Groom concludes the entire spiral stair structure is non-compliant with BCA 3.9.1.3 and his costs to rectify are based on replacement of the entire structure. Exactly how the landing is non-compliant with BCA 3.9.1.3 is not explained. The cost of compliance with the certifier’s defect may be minimal rather than the entire structure having to be replaced. The certifier’s report is not in evidence.
Mr Salmon agrees that both ‘the spiral stairs and landing as noted in BCAG’s inspection report does not comply with the BCA’. But he then goes on to note that the only rectification work required (by the certifier) is to the landing.
Mr Groom also talks about the certifier noting a defect with the balustrade at ground level. It doesn’t comply with BCA 3.9.2 because a sphere should not be able to ‘pass through openings’. But then in his commentary Mr Groom talks about the riser spaces not complying rather than the balustrade spacing. He doesn’t say what the riser spacing is. Spiral stairs have different permissible riser spacings to other stairs.[89] It is for the Tribunal to determine whether there has been a failure to comply with the BCA. Mr Salmon says the balustrading does not comply with the BCA but that was not part of the building contract and it was existing work done by the owners before the builder commenced work. Again, evidence should have been led on that to allow the Tribunal to determine whether the work was within or outside the contract, and it was not.
[89]BCA Figure 3.9.1.2
The evidence of defective work with respect to the spiral stairs is conflicting as between experts and unsatisfactory. I am not persuaded by Mr Groom’s assessment of the matter which seems to go much further than the certifier. In the circumstances, the onus being on the owners to prove the defect and the costs of rectification, I conclude this claim against the builder in respect of the spiral stairs or landing or balustrade has not been proven and is not allowed.
Certificates Outstanding
An amount of $1,920 has already been allowed the owners in respect of missing certificates.
Conclusion
The builder is entitled to recover the amount of $4,672.80 for the unpaid vanity variation.
The owners are entitled to restitution in respect of overpayments on invoices 219.1 – 219.9 (leaving aside 219.2), 230.1 – 6 and 258.1 – 19 (leaving aside 258.8) totalling $28,382.07. They are also entitled to recover overpayments with respect to the kitchen variation of $25,880.54 and the cost of the termite variation of $4224 which was covered by the costs of contract. They are entitled to recover damages for the costs of rectification and completion of building work under the contract of $22,347. That makes a total of $80,833.61. Setting off the monies due the builder for the unpaid vanity variation, the builder must pay the owners the sum of $76,160.81.
The parties also claimed interest. This matter is a building dispute. By s 77(2)(c) of the Queensland Building and Construction CommissionAct 1991[90] the Tribunal may award damages and interest on damages at the rate and calculated in the way prescribed under regulation. The Tribunal may also order restitution. There is no provision however in s 77(2)(d) allowing interest on amounts ordered to be paid by way of restitution. I note the matters listed in s 77(2) are without limit to the Tribunal’s powers to resolve disputes, but in my opinion the legislation requires interest to be awarded prima facie on awards of damages only. An order for restitution is not an award of damages but recovery of monies paid.
[90]Queensland Building and Construction Commission Regulation 2003 s 34A.
As such the owners are entitled to interest on the award of damages of $22,347 at the rate of 10 per cent from the day the amount became payable. Here, the appropriate date in my opinion is 7 May 2012 the date of expiry of the defects liability period. Interest at 10 per cent from that date to 7 October 2014 is $5400.52. That is awarded.
7
1