P and G Builders Pty Limited v Flaherty (Civil Dispute)
[2018] ACAT 58
•25 May 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
P AND G BUILDERS PTY LIMITED V FLAHERTY (Civil Dispute) [2018] ACAT 58
XD 1047/2017
Catchwords: CIVIL DISPUTE – unpaid final progress claim and variations claim arising from a residential building contract – termination of contract for non-payment of money owed – counterclaim for defective works – onus of proof in response to a debt application – builder not liable to rectify defects where contract validly terminated
Legislation cited: Building Act 2004 ss 42, 69
Cases cited:Chetty and Anor v Automotive Computer Diagnostic Centre (ACDC) Pty Ltd [2016] ACAT 38
Gordon v Macgregor (1909) 8 CLR 316
Leeper v The Primary Producers’ Bank ofAustralia Ltd (1935) 53 CLR 250
Inglis v John Buttery & Co (1878) 3 App Cas 552
Onesteel Manufacturing Pty Ltd v United Kg Pty Ltd [2006] SASC 119
PCM Office Services Pty Ltd & Anor v Mi [2018] ACAT 36
York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11
Tribunal: Presidential Member G McCarthy
Date of Orders: 25 May 2018
Date of Reasons for Decision: 25 May 2018
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 1047/2017
BETWEEN:
P AND G BUILDERS PTY LTD
Applicant
AND:
RAYMOND FLAHERTY
Respondent
TRIBUNAL:Presidential Member G McCarthy
DATE:25 May 2018
ORDER
The Tribunal orders:
1.The respondent pay the applicant $22,634.28 within 28 days comprised of:
(a)$10,000 as payment of the applicant’s final progress claim;
(b)$11,066 as payment of the applicant’s variations claim;
(c)$1,268.28 as payment of interest payable under the contract; and
(d)$300 as payment of the applicant’s Tribunal filing fee.
………………………………..
Presidential Member G McCarthy
REASONS FOR DECISION
1.This dispute arises from the performance of a residential building contract dated 22 December 2016 between the applicant builder, P and G Builders Pty Limited (P and G), and the respondent owner, Mr Raymond Flaherty. The contract price was $254,790.
2.Mr Flaherty did not pay P and G’s final progress claim of $10,000 made by tax invoice FLA0007 dated 24 July 2017 (the final progress claim). Mr Flaherty contended that he was not liable to pay it because the building works had not reached practical completion.
3.Under clause 21 of the contract, Mr Flaherty was able to ask for variations to the contract. Under that clause, he asked for 23 variations to the contract. Mr Flaherty did not pay P and G’s tax invoice FLA-Vari 3 (amended) dated 17 July 2017 for $12,867.60, being the stated net amount owing after Mr Flaherty’s payment of $5,131 towards variations work done (the variations claim). Mr Flaherty contended that the variations had not been carried out in accordance with clause 21 and/or that many of the amounts claimed were unreasonable. Mr Flaherty’s claim that he was not liable to pay for the variation works included some variation works that he had paid for.
4.P and G claimed for payment of its final progress claim ($10,000 and its variations claim ($12,867.60), plus the Tribunal filing fee ($300) plus interest payable under the contract.
5.In addition to denying his liability to pay the final progress claim or the variations claim, Mr Flaherty made two claims by way of counterclaim against P and G:
(a)$15,919.50 for the cost of completing work, or for which he had been charged twice or as compensation for damage (the completion claim).
(b)$78,710 for the cost of rectifying 27 items of defective work (the defective works claim).
6.Although Mr Flaherty’s claimed losses exceed $94,000, he accepted that his claim against P and G must be capped at the Tribunal’s jurisdictional limit of $25,000. Mr Flaherty also contended that if the final progress claim is payable, it should be offset against his counterclaim.
7.I heard this matter on 19 and 20 February 2018. Mr Peter Gillett, a director of P and G, appeared for P and G assisted by his son Mr Mark Gillett. Mr Flaherty appeared for himself assisted by his wife, Ms Ping.
8.I deal with the four claims in turn.
The final progress claim
9.Clause 13 of the contract provided for progress payments to be paid on completion of eight sequential stages of work. Mr Flaherty paid the first seven progress claims. The final progress claim became payable upon the building works reaching the final stage, entitled “practical completion”.
10.Clause 23.1 – 23.4 of the contract provided for practical completion as follows:
1. When the building works have reached the stage of practical completion, the builder must give the owner a notice of practical completion and the final progress claim.
2. Within 5 days, the owner and the builder must meet together to inspect the building works. The owner must give the builder a written and signed list of any work required by the contract which the owner claims is defective of unfinished and which is to be rectified or done for practical completion to be reached. If the owner fails to do so within 5 days, the owner must immediately pay the amount of the final progress claim.
3. The builder must promptly rectify the listed defective or unfinished work in accordance with the contract.
Handing over the keys
4. When the builder has rectified the listed defective or unfinished work necessary to reach the stage of practical completion, the builder must notify the owner. The owner must pay the final progress payment in full within 5 days of receiving the notice.
When the owner pays the final progress payment, the builder must hand any keys for the building works to the owner.
11.‘Practical completion’ was defined in clause 2 of the contract as follows:
practical completion means that the building works have reached the stage where the builder certifies that they have been completed in accordance with the contract, except for minor omissions and, where applicable, has done all that the builder is required to do under the contract to enable a certificate of occupancy to be obtained.
12.By letter dated 24 July 2017, P and G gave Mr Flaherty notice pursuant to clause 23.1 of the contract that the works had reached the stage of practical completion. P and G sent the notice to Mr Flaherty by email on 26 July 2017, together with its final progress claim.
13.On 26 July 2017, Mr Flaherty met with Mr Mark Gillett on behalf of P and G and the certifier, Mr John Mihaljevic, for the purpose of inspecting the building works per clause 23.2. By agreement, Mr Gillett waited outside the property while Mr Flaherty and Mr Mihaljevic carried out an inspection of the works.
14.By email sent on 27 July 2017, Mr Flaherty wrote to P and G regarding the outcome of the inspection. The relevant parts of the letter were as follows:
Hi Peter,
Thanks for arranged the inspection yesterday (26th July 2017). As the assessor John told us yesterday, we are not reach the stage of practical completion. This is because the inspection did not passed, due to you have some works need to be fixed. Once he gives you the certificate for the inspection passed, you have to give a copy to us. Then we can reach to the stage of practical completion. (sic)
We found the following works need to be done by handover on 7th August 2017.
Laundry - Double Power Point x 2 in laundry (inclusion list) One upper and one under the bench. The wire was put into this area. Mark knows this and I have two photos to prove this.
Outside - Power Point outside for the water pump (This should be in the quote)
Kitchen- One of the Kitchen drawer has paint on it. We told Mark before he said will clean it or change it for us.
Alfresco - Sliding screen doors missing on one side and other side very lose and not fitting correctly.
We look forward to moving in on the 7th August and paying all money to you. (sic)
15.By email sent on 28 July 2017 at 9:27pm, Mr Flaherty confirmed his position as follows:
Morning Peter,
Thanks for your letter date on 24 July 2017 about the stage of the practical completion. Due to the inspection failed on 26 July 2017, we cannot reach to the stage of practical completion until we pass the inspection (information advised from Mr John Mihaljevic - Principal Building Surveyor from Certified Building Solutions Pty Ltd). Once the inspection passed and you received the notification or certificate from John. Then we can successful reach the stage of practical completion.
Thanks for your arrangement for the inspection. We look forward to reach the stage of practical completion and handover the keys. (sic)
16.On 28 July 2017, P and G wrote to Mr Flaherty as follows:
We hereby acknowledge receipt of your defects list pursuant to clause 23.2 of the contract dated 22/12/2016. Emailed 27/7/2017.
17.Mr Flaherty did not agree that his list of works to be completed constituted a defects list. By email sent on 28 July 2017, Mr Flaherty said:
Peter
We didn’t send any defect list you on 27 July. We only send a incompleted works to you as per contract. You have to complete all works as the contract. If not, we cannot pay you the last payment.
You are a experienced builder, the owner didn’t go to check the house and works how to prepare the defect lists to you? You are a licensed builder you should know what is the right things to do to the owner and yourself.
You need to do the power point under the bench in laundry and put other screen door. Once the inspection pass and signed by the certifier. Then we go to the practical completion and then we will pay. (sic)
18.By letter dated 1 August 2017, Mr Gillett notified Mr Flaherty that P and G had completed all the defective and/or unfinished work described in Mr Flaherty’s email sent on 27 July 2017 and drew his attention to clause 23.4 of the contract.
19.On 1 August 2017, the certifier, Mr Mihaljevic provided an inspection report dated 1 August 2017 which stated:
An inspection of the building work has been carried out:
As a result of that inspection I hereby certify that the building work complies with section 42 of the Building Act 2004.
Work completed and the registrar would be justified in issuing a Certificate of Occupancy under section 69(2).
20.Section 42 of the Building Act2004 provides that building work must be carried out in accordance with a list of requirements including that the materials used, and the way they are used, comply with standards under the Building Code; that the building work must be carried out in a proper and skilful way; and that the building work be carried out in accordance with approved plans.
21.Section 69(2) of the Building Act 2004 provides:
(2)If building work involving the erection or alteration of a building as completed is not strictly in accordance with the prescribed requirements for the building work but is substantially in accordance with the requirements, the construction occupations registrar may, on application made by the owner of the parcel of land where the building work has been carried out, issue a certificate that the building as erected or as altered is fit for occupation and use as a building of the class stated in the approved plans for that building work.
22.Having regard to the definition of ‘practical completion’ and that on 1 August 2017 Mr Mihaljevic certified that the registrar would be justified in issuing a certificate of occupancy, I am satisfied that the works had reached the stage of practical completion. It follows that P and G was entitled to issue its final progress claim and receive payment of it.
23.Under clause 23.4 of the contract, Mr Flaherty was required to pay the final progress claim by 6 August 2017, being five days after receiving P and G’s notice that it had rectified the defective or unfinished work necessary to reach the stage of practical completion. Mr Flaherty did not make the payment.
24.The fact that Mr Flaherty did not agree that his list of works to be done, as sent on 27 July 2017, constituted a defects list is tangential to the main issue: by reference to Mr Mihaljevic’s certificate of occupancy, the works had reached the stage of practical completion. I also note that P and G, at that time, remained liable to correct any further defects that Mr Flaherty notified during the maintenance services (or defects) period as detailed in paragraph 32 and following below.
25.It follows that Mr Flaherty’s claim that he was not liable to make the final progress claim must fail. He was liable to pay it by 6 August 2017.
The variations claim
26.By letters dated 24 February 2017 (for Contract Price Variations (CPV) Nos 1 and 2), 2 June 2017 (for CPV Nos 3 – 10) and 17 July 2017 (for CPV Nos 11 – 23), P and G confirmed with Mr Flaherty 23 variations over the time of the construction work and the additional or deducted cost that each involved. My addition of the stated costs of variations by way of additional work totalled $20,347.60. My addition of the stated value of deleted work (CPVs 10, 21 and 23) totalled $2,400, leaving a net amount owing of $17, 947.60. In its invoice dated 17 July 2017, P and G stated the net value of the contract variations to be $17,998.60: I could not account for the additional $51. I have treated the amount in issue to be $17,947.60, less $5,131 that Mr Flaherty has already paid, being $12,816.60.
27.The letters did not require Mr Flaherty to pay for the variations work. They simply confirmed the details of each variation and what the cost (added or deducted) would be.
28.By invoice dated 17 July 2017, P and G sought payment for the variation works but Mr Flaherty did not pay. As a result, by letter dated 1 August 2017, Mr Gillett wrote to Mr Flaherty as follows:
Dear Ray
Pursuant to clause 24 of the contract dated 22/12/2016, we hereby notify you that you are in breach of the contract and that we, as of today’s date suspend the building works. The details of the breach set out below.
Description of breach:
clause 21.6
29.Clause 21.6 of the contract provided:
The price or cost of the variation, as the case may be, is added to or deducted from the contract price. Payment for the variation must be made at the next progress payment stage (unless a different time is stated in the variation agreement). Any credit to the owner is to be made to the final progress claim.
30.Under clause 21.6, payment for variations work, from time to time, was due “at the next progress payment stage” but there was no evidence as to when that was. I had no evidence as to when the progress payment prior to the final progress payment was paid, although its description in the contract as “fit off joinery, tiling and services fit off completed” for 20% of the contract price suggests that it was paid prior to 17 July 2017. Assuming that to be so, it would seem that payment for the variations needed to be made “at the next progress payment stage”, meaning the final stage, i.e. when the final progress claim was due: by 6 August 2017.
31.It follows, in my view, that P and G suspended the contract 5 days earlier than it was entitled to, but nothing turns on that breach. Mr Flaherty did not pay the tax invoice for the variations work by 6 August 2017, or at all. Further, had he paid the tax invoice and the tax invoice requiring payment of the final progress claim by that date, P and G would have been required to resume the ‘building works’ defined in the contract, clause 2, to mean “the work to be done on the site by the builder under the contract”.
32.Work to be done under the contract included work to be done after practical completion in the maintenance services period. Clause 23.7 of the contract provided as follows:
Maintenance services period
7. Within 65 days after the date of practical completion, the owner must provide the builder with a written list of the claimed defects if any, in the building works. The builder must within 15 days after the expiry of the 65 day period rectify the defects resulting from work or materials not being in accordance with the contract.
33.Mr Gillett gave evidence that if Mr Flaherty had complied with the contract, by paying P and G’s tax invoice for the variations work, the contract would have resumed and continued which would have included P and G’s obligation to correct all defects notified in the maintenance services period. Mr Gillett also gave evidence that Mr Flaherty never requested P and G to return to the site and never refused, “verbally or in writing to rectify any defect or perceived defect that Ray Flaherty put to us.”[1] Mr Flaherty did not dispute Mr Gillett’s evidence. Mr Flaherty said that once P and G suspended the contract “we just take it they are not going to do any work”.[2]
[1] Transcript of proceedings, 19 February 2018, page 113, lines 1 - 19
[2] Transcript of proceedings, 19 February 2018, page 113, lines 23 - 44
34.Despite P and G’s contractual obligations (at the time) to correct maintenance defects notified within 65 days after practical completion, all work ground to a stop and the problems escalated.
35.By email sent on 3 August 2017, Mr Flaherty complained about lack of access to the inside of the house to inspect all the works in order to check for any defective or unfinished works, but P and G refused access because its final progress claim and its variations claim remained unpaid.
36.By letter dated 4 August 2017 to Mr Flaherty, perhaps in an effort to assure him that any defects he later found would be rectified, P and G acknowledged its contractual obligation under clause 23.7 to correct defects that Mr Flaherty identified and advised within 65 days after practical completion. Mr Gillett referred to this liability in his letter as a “defects liability period”.
37.P and G’s ongoing obligation to correct maintenance defects operated independently of Mr Flaherty’s obligation to pay all money owed to P and G, and P and G’s obligation under clause 23.4 to hand any keys for the building works to Mr Flaherty after receiving its final progress payment. However the whole question of P and G doing ongoing work to correct defects that Mr Flaherty identified during the maintenance services period never arose because P and G had suspended all building work until its tax invoice for the variations work had been paid.
38.It was understandable, in my view, that P and G would not return to the site to correct defects where it had not been paid for work that it had already done.
39.In an effort to secure the site for OH&S purposes, and where the works had reached practical completion but P and G’s final progress claim and variations claim had not been paid, P and G locked the house and disconnected the power that had earlier been connected.[3]
[3] Transcript of proceedings, 19 February 2018, page 101, lines 35 - 43
40.Still Mr Flaherty refused to pay. Instead, on or about 7 August 2017, Mr Flaherty engaged a locksmith to unlock the house and an electrician to reconnect the power. He then took possession of the house. Mr Gillett gave evidence that upon driving past the house the curtains were drawn and signs had been placed on the windows stating:
Private property. Trespassers will be prosecuted to the full extent of the law[4]
[4] Transcript of proceedings, 19 February 2018, page 35, lines 40 - 41
41.By letter dated 7 August 2017, P and G gave Mr Flaherty notice that he was in breach of clause 23.5 of the contract which provided as follows:
The owner must not take possession of the building works without the builder’s consent until all outstanding money owed to the builder is paid.
42.Still Mr Flaherty refused to pay. P and G therefore moved to termination of the contract.
43.Clauses 25.1-25.3 provided for ending the contract for the owner’s breach:
1.If the owner breaches the contract the builder may suspend the building works and must notify the owner of the breach in writing by certified mail or personal service.
2.The builder may end the contract if:
a. 10 days have passed since the builder gave notice of the breach;
b. the owner is still in breach of the contract; and
c. The builder notifies the owner in writing by certified mail or personal service that the contract is at an end.
3.If the owner disputes the builder’s notice before the contract is ended, the owner must notify the builder in writing by certified mail or personal service. The builder may suspend the building works and the dispute must be taken to dispute resolution.
44.By letter dated 18 August 2017, 11 days after giving Mr Flaherty notice of his breach of clause 23.5, P and G notified Mr Flaherty pursuant to clause 25.2 that it was “as of today’s date ending the contract”.
45.With this background, I turn to the question whether Mr Flaherty is liable to pay, wholly or in part, P and G’s variations claim.
46.Mr Flaherty first contended that P and G’s tax invoice for the variations work is invalid because all of the tax invoices FLA0001 – FLA006 for earlier progress payments had stated, in each case, the value of the contract price variations as “$0.00”. Mr Flaherty contended that only after his disagreement with P and G about completion of the building work did they send their variations tax invoice “asking for money”.
47.In my view, nothing turns on the stated value of $0.00 for contract variations in each of the earlier tax invoices for progress claims. Each of the invoices sought payment only of contract progress claims by reference to item 13 of the contract which stated the amounts payable at the completion of each stage of the contract, save for FLA0004 which sought payment for the total of stages 4 and 5. All that can be said about the stated value of “$0.00” for contract variations is that the progress claim tax invoices were not seeking payment for variations work at those stages – as P and G could have done under clause 21.6.
48.I reject the proposition that the stated value of “$0.00” for contract variations was a statement that nothing was owed at all. Mr Flaherty knew from P and G’s earlier letters dated 24 February and 17 July 2017 the stated amounts owed, or for which credit had been given, referenced to each variation.
49.Mr Flaherty next submitted that the variations invoice was invalid because P and G did not comply with clause 21 of the contract; because there were no quotes in writing for the variations work; because there were no invoices or receipts to prove the costs; and because some of the variations work was already included in the contract price.
50.In my view P and G did not deal with variations to the building works in accordance with clause 21 of the contract. First, clauses 21.1 and 21.6 both provided that payment for a variation “must be made at the next progress payment stage.” Although this requirement would appear to be for the benefit of the builder, P and G did not seek payment for any variations work until 17 July 2017 despite notifying Mr Flaherty of CPVs 1 – 10 and the amounts owing in February and June 2017. However I do not see that breach to have consequence. The fact that that P and G sought payment later than it was entitled to did not excuse Mr Flaherty from liability to pay, especially where he was on notice of the variations and the costs from P and G’s earlier correspondence.
51.Clauses 21.3-21.5 were more problematic. They provided as follows:
3. If the owner asks for a variation, the builder must reply in writing to the owner within 5 days of the request, or as soon as is reasonably practicable. The owner is, at the builder’s election, to pay the administration fee stated in item 14 of Attachment A for any variation requested by the owner.
4. The builder has the right to refuse a variation.
5. The builder and the owner must both agree in writing to the variation, its details and how much it will cost or save prior to commencement of the variation work.
52.In my view, the proposed variations were not dealt with in accordance with clause 23.3 or clause 23.5. Contrary to clause 21.3, P and G did not reply to Mr Flaherty “in writing” within five days of Mr Flaherty’s request for a variation, or as soon as practicable, or at all, prior to commencing the work. Contrary to clause 21.5, there was no agreement in writing to any variation “prior to commencement of the variation work”.
53.Mr Gillett contended that it is his practice, and industry practice, to read the words “as soon as practicable” as allowing P and G “to undertake the works without delay and [to] inform the client of the cost as soon as practical [meaning] as soon as we have the costs available to us.”[5] I accept Mr Gillett’s submission that clause 21.3 permitted, or more accurately required, P and G to reply (in writing) to the variation request as soon as practicable, but there is no basis for a conclusion that the words enabled P and G, or any builder, to conduct the work without delay. Clause 23.5 clearly states that there must be agreement in writing “prior to commencement of the variation work”.
[5] Transcript of proceedings, 19 February 2018, page 61, lines 42 - 45
54.I accept that P and G replied orally to Mr Flaherty’s requests for variation work as soon as was reasonably practicable, but problems arose from the fact that there was no agreement in writing “prior to commencement of the work” about – per clause 23.5 – each “variation, its details and how much it [would] cost” even if the “writing” is no more than an exchange of text message or emails.
55.I recognise that in many cases an owner would not quibble with minor variation costs, for example (as in this case) the cost of obtaining two toilet seat brackets, extra wall tiles or a requested glass panel in the laundry door, but unfortunately the absence of documentation regarding the variations work, and the absence of Mr Flaherty’s agreement in writing to any of the variations work and the cost of it, led to the disputes about these items.
56.I reject however Mr Flaherty’s complaint about not receiving quotes in writing for the variations work or invoices or receipts to prove the costs. Nothing in clause 21 required P and G to provide those documents, even if their provision might have assisted in reaching agreement with Mr Flaherty about the cost of the proposed variation work. What matters is the absence of agreement in writing to any of the variations work prior to commencement of the work.
57.P and G’s non-compliance with clauses 23.5 does not mean that Mr Flaherty is not required to pay for the variations work. He obtained the benefit of that work and so, under principles of quantum meruit,[6] he should pay for it. Where there was no agreement about price for each variation, it becomes necessary to assess whether P and G’s claimed costs for this work, later sought in its variations tax invoice, are reasonable.
[6] For these principles, see Chetty and Anor v Automotive Computer Diagnostic Centre (AC/DC) Pty Ltd [2016] ACAT 38 at [18] – [25]. Quantum meruit means, in substance, an obligation to pay a reasonable sum for a benefit obtained
58.P and G brings its application to the Tribunal as a debt application. In my view, where the debt was challenged, the onus was on Mr Flaherty to show why he should not pay it. In PCM Office Services Pty Ltd & Anor v Mi[7] the Tribunal said:
Onus of proof must be approached with caution, especially in Tribunal proceedings. However in my view, in a claim for unpaid fees, the person seeking payment must at least be able to demonstrate in a reasonably transparent manner the tasks done referenced to the time spent. Only with that information disclosed can the reasonableness of the time spent, and implicitly the fees charged, be considered. For example, in Onesteel, the builder itemised its costs by reference to different components and/or sequential tasks that it contended were necessary to construct the building. Having done so, the onus moved to the builder’s client to show why, in relation to each costed component, the amount was “neither reasonable nor proper”.[8]
[7] PCM Office Services Pty Ltd & Anor v Mi [2018] ACAT 36]
[8] PCM Office Services Pty Ltd & Anor v Mi [2018] ACAT 36 at [45]
59.By Onesteel, the Tribunal was referring to a decision of the Supreme Court of South Australia in Onesteel Manufacturing P/L v United Kg Pty Ltd [2006] SASC 119 in which the Court addressed onus of proof in relation to building costs.
60.I have dealt with each of the challenged CPVs chronologically.
61.CPV No 6 dealt with kitchen, laundry and pantry joinery adjustments. For the kitchen, P and G allowed $14,000 under the contract but the variations caused the actual allowance to be $15,501.01. For the laundry, P and G allowed $1,500 under the contract but the variations caused the actual allowance to be $1,743.00. For the pantry, P and G allowed $1,500 under the contract but the variations caused the actual allowance to be $2,357.00. The cost of variations totalled $2,601, to which P and G added its builders margin of $522 to a total of $3,132.
62.Mr Flaherty contended he should not have to pay for the variations for three reasons. First, because Mr Moloney, who gave evidence as an independent building consultant, had identified the cabinetry work as defective. Second because the cabinet work was 170mm shorter than the original design. Third, because the joinery company cancelled a scheduled meeting on 3 August 2017 and did not arrange a further meeting.
63.I reject each of these contentions as reasons for why the cost of the variations is not payable. Mr Moloney, as far as I could tell, identified only minor defects in the cabinet work (for example glue over runs and incomplete painting) and agreed these were maintenance defects that P and G would ordinarily repair under clause 23.7 in the maintenance defects period. Mr Gillett gave evidence that the cupboards were not 170mm shorter than they should have been, and that the drawings Mr Flaherty relied on were earlier superseded drawings. He said “The final drawings that were agreed with by Mr Flaherty accurately reflect the joinery for the kitchen and laundry installed as it is.”[9] There was no evidence to contradict Mr Gillett’s evidence. Mr Flaherty repeatedly stated that he did not want to give oral evidence.[10] Last, I reject the proposition that because the joinery company cancelled a meeting Mr Flaherty should not have to pay for the additional cabinetry work: there is no connection between the two facts. I am satisfied that the amount stated in CPV 6 is payable.
[9] Transcript of proceedings, 20 February 2018, page 253 line 45 - page 254, line 1
[10] Transcript of proceedings, 20 February 2018, page 255 lines 5 - 9
64.CPV No 7 concerned a claim of $1,510 for constructing a wall and door opening into an existing bathroom, toilet and bedrooms. Mr Flaherty relied on drawing A202-A which depicts a right angle wall between the existing bedroom and living room. He submitted that because the wall and door opening were on the drawing as part of the quoted works he cannot be ‘double charged’ by this work becoming the subject of variation claim CPV 7.
65.In response, Mr Gillett agreed that the right angle wall was part of the works depicted on the contract drawing. He gave evidence as to why the wall became the subject of a variation claim as follows:
Through the course of the negotiations to reach a final contract sum, Mr Flaherty and his wife present at the time, instructed me to remove that wall and door. I then did that and the amount was deducted from the previous contract amount. I didn't document that in the inclusions list or have the plans amended. Through the course of the work, Mr Flaherty spoke to both myself and Mark and requested us to reinstate those works. We reinstated those works and charged a variation accordingly.[11]
[11] Transcript of proceedings, 20 February 2018, page 250, lines 8 – 15
66.Mr Gillett agreed that the pre-contract change not to construct the wall and door was a verbal variation not reflected in the contract itself.[12] He described himself as “gullible” for not amending the drawing or in some way noting in the contract, for example by a note in the Exclusions list, that the wall shown on the drawing was not included as part of the contract works for the contract price.
[12] Transcript of proceedings, 20 February 2018, page 250, lines 20 – 22
67.Mr Flaherty contended that in response to his wish to reinstate the wall as part of the construction works, after execution of the contract, Mr Gillett said that P and G could do so and that there would not be any difference to the price. Mr Flaherty said he therefore asked P and G to proceed. Mr Gillett said in evidence “That’s incorrect. That was never put to me.”[13]
[13] Transcript of proceedings, 20 February 2018, page 252, line 14
68.It is, in my view, inherently unlikely that Mr Gillett agreed or would agree to conduct further works at no charge. I accept his evidence on oath that he never did so. However that does not cause CPV 7 to be payable. Mr Gillett properly accepted that the contract provided for installation of the wall as part of the contract works to be done for the contract price. A basic rule of contract is that where parties have committed their contract to a formal written document, in determining what the contract really was or meant, the court must look to the formal document and implement it. In Inglis v John Buttery & Co[14] adopted by the High Court in Gordon v Macgregor[15] Lord Blackburn said:
Now, I think it is quite fixed - and no more wholesome or salutary rule relative to written contracts can be devised -- that where parties agree to embody, and do actually embody, their contract in a formal written deed, then in determining what the contract really was and really meant, a court must look to the formal deed and to that deed alone. That is only carrying out the will of the parties.
[14] Inglis v John Buttery & Co (1878) 3 App Cas 552 at 577
[15] Gordon v Macgregor (1909) 8 CLR 316 at 323
69.It follows that where P and G agreed under the contract to construct the wall as part of the contract works, it should be held to its bargain. Mr Flaherty has taken advantage of a prior oral agreement that the wall would not be included, and I accept that Mr Gillett priced the contract on the basis that the wall would not be included, but none of that affects the contract that both parties signed. As Mr Gillett sagely observed, he was “gullible” by not excluding the wall as part of the contract works before signing the contract. For these reasons, I find that CPV 7 is not payable.
70.CPV No 9 concerned a claim of $133 plus a builder’s margin of $26 to a total of $159 for installing a glass panel into an external laundry door. Mr Flaherty contended that because the panel was stated as a requirement under contract drawing A401A, by the words “laundry external door half height glazing” and so was part of the contract works, it should not be the subject of an additional payment by way of a variation.
71.Mr Gillett relied on the contract’s “Inclusions list” under the heading “External” that provided “all other external doors-exterior quality dura coat doors paint finish per unit”. He contended, by reference to the Inclusions list, that the selection of a door with a glass panel was an ‘extra over’ from the door to be provided under the Inclusions list. It followed, he said, that a variation cost for the glass panel was payable.
72.I also considered whether the Exclusions at Attachment C of the contract, which provided “As per P & G Builders Inclusions list”, supported P and G’s submission in the sense that any inconsistency between the specification in drawing A401A and the Inclusions list should be resolved in favour of P and G.
73.I am not persuaded that the description of the doors in the Inclusions list is a sufficient basis to override or disregard the stated requirement in the drawing. A generic statement in the Inclusions list that all external doors (except the front door) are to be “exterior quality dura coat doors paint finish” is not inconsistent with a specific requirement in drawing A401-A that the external laundry door have “half height glazing”. The Inclusions list specified the kind or quality of the external doors (including the laundry door) that would be installed, but that is, or can be, consistent with a requirement for half height glazing of the laundry door per drawing A401A. For these reasons, in my view CPV No 9 is not payable.
74.CPV No 11 concerned a claim of $622 plus a builder’s margin of $124.40 to a total of $746.40 for replacing existing bathroom and bedroom doors and/or furniture, and the door furniture for two other existing doors. At hearing, Mr Flaherty stated he was not pursuing his objection,[16] and so I allow CPV 11.
[16] Transcript of proceedings, 20 February 2018, page 276 lines 15 - 21
75.CPV No 14 concerned a claim of $700 plus a builder’s margin of $140 to a total of $840 for provision of melamine robe sliding doors instead of “MDF paint finish” as stated in the Inclusions list. Mr Flaherty contended that the doors were badly installed, and do not properly close, which I deal with below as a separate claim.
76.Mr Gillett stated that Mr Flaherty asked to provide a melamine finish rather than an MDF paint finish as included in the Inclusions list, and that the extra cost to P and G was $700 plus the builders margin of 20%. Mr Flaherty has not led any evidence to contradict that position, or explain why the claimed extra ‘over cost’ of $700 plus the builders margin was unreasonable. Where the onus was on Mr Flaherty to prove, and in my view he has not done so, I have concluded that CPV No 14 is properly payable.
77.CPV No 15 concerned a claim of $137 plus a builder’s margin of $27.40 to a total of $164.40 for additional wall tiles in the ensuite bathroom. Mr Flaherty contended that if there was a shortage, it was P and G’s mistake. He also contended that he should not have to pay the builder’s margin; that the charge was unreasonable where the tiles were $37.50 per box; that P and G has not produced an invoice for the purchase; and that he was told that the tiler was only a few tiles short.
78.Mr Mark Gillett explained that because Mr Flaherty had decided to buy the tiles himself, P and G gave him the exact measurements of the areas to be tiled and allowed Mr Flaherty to determine with the tile supplier how much waste to allow. In other words, Mr Flaherty was responsible (acting on the advice of the tile supplier) for deciding the quantity of tiles to provide. In the event, there were insufficient tiles. Mr Mark Gillett telephoned Mr Flaherty requesting further tiles but Mr Flaherty could not promptly obtain them because he was at work. Mr Gillett therefore travelled to the tiling shop to collect another box of tiles but arrived after closing time. He returned the following morning at 6:00am in order to collect a box of tiles and return to the site in time for the tiler to continue work. The variation claim arose from the significant time and cost that P and G incurred consequent upon Mr Flaherty supplying insufficient tiles. As mentioned below, I reject the proposition that P and G needed to provide a tax invoice from the supplier in order to make a variation claim. For these reasons, I am satisfied that CPV No 15 is properly payable.
79.CPV No 16 concerned a claim of $169 plus a builder’s margin of $33.80 to a total of $202.80 for two toilet seat brackets. Mr Flaherty relied on a tax invoice evidencing his purchase of two toilets from a supplier which (he said) should have included the brackets. Mr Gillett explained that when they opened the boxes containing the toilet suites the brackets were missing. Mr Gillett advised Mr Flaherty by telephone that the brackets were missing, and Mr Flaherty requested that they source brackets from a plumbing supplier. Mr Gillett did so.
80.Mr Flaherty contended that he should not have to pay for the brackets by way of a variation cost if P and G cannot produce receipts to evidence the purchase. To use his words “no receipt, no money”.[17]
[17] Transcript of proceedings, 20 February 2018, page 262, lines 39 - 40
81.Mr Gillett relied on his letter dated 20 July 2017 to Mr Flaherty in which he gave a breakdown of the variation cost for the toilet brackets of $70 materials and $99 for labour (which I take to mean ‘time’). Mr Gillett accepted that he did not have a receipt or quote for the brackets because the brackets were placed on P and G’s account.
82.In my view, Mr Flaherty’s objection misunderstands an aspect of building work. It is not a matter of Mr Flaherty simply reimbursing P and G for its out-of-pocket costs of purchasing the brackets. Consistent with what occurred with the tiles, it was not P and G’s fault that the brackets were not in the box with the toilet suites. Where Mr Flaherty requested P and G to expend time and money sourcing replacement brackets he must reasonably expect to pay P and G for doing so, which involved more than the disbursement cost of the brackets. In my view, CPV No 16 involves a relatively small sum for P and G’s time and the disruption that occurred and is properly payable.
83.CPV No 18 concerned an ‘extra over’ claim of $243 arising from Mr Flaherty’s selection of entry door furniture (meaning handles). Mr Flaherty contended he was shown a book with illustrations of different styles of handles and then made a selection. He contended that he did not realise he would have to pay extra for his choice.
84.Mr Mark Gillett contended that Mr Flaherty did not want the handles specified in the Inclusions list as part of the contract price and needed to pay ‘extra over’ upon choosing a more expensive option. The Inclusions list specifies Gainsborough Lennox for external door furniture. Mr Flaherty did not dispute that he chose door furniture other than Gainsborough Lennox. He did not lead any evidence as to what he did choose or evidence to show that his choice was equal to or less than the cost of Gainsborough Lennox. The only evidence about the cost of the option Mr Flaherty chose is the contemporaneous record of the variation claim.
85.There being no evidence to show why the variation claim is not properly made, reflecting Mr Flaherty’s choice of a different and more expensive option, and where Mr Flaherty has not discharged the onus on him to show why it should not be paid, I have concluded that CPV No 18 is properly payable.
86.CPV No 20 concerned a claim of $4,002.67 plus a builder’s margin of $800.53 to a total of $4,803.20 for various additional electrical services, particularly an additional 16 light fittings for a cost of $2,600.64. Mr Flaherty contended he should not have to pay for the additional electrical work because it should be offset against his costs of obtaining a certificate of electrical safety in relation to the electrical services and re-connecting the power as mentioned in paragraph 40 above. Mr Flaherty relied on a tax invoice for $1,188 from the electrical company that did this work.
87.The question whether Mr Flaherty is liable to pay the variation claim for the additional electrical works is separate from whether P and G should compensate Mr Flaherty for his costs of obtaining a certificate of electrical safety and reconnecting the power, which I deal with below. CPV No 20, as part of the variations claim, is properly payable.
88.CPV No 23 concerned a claim for relocating the Telstra wiring underground rather than overhead. Mr Flaherty stated in his submission that the claim was for $813 plus a builder’s margin of $162.20 to a total of $975.60. Mr Flaherty referred to an email from Mr Gillett sent on 6 February 2017 in which Mr Gillett stated that the cost of relocating the cable in ground would be $816. At hearing, Mr Flaherty stated that he wanted a receipt as proof of the cost.
89.Mr Gillett stated that he did not have an invoice or a receipt for this work, and that the cost of relocation formed part of the electrician’s stage progress claim to P and G. Mr Flaherty and Mr Gillett both relied on Mr Gillett’s email sent on 6 February 2017 stating the quoted price ($816), and that that quote provided before the works were done.[18]
[18] Transcript of proceedings, 20 February 2018, page 272, lines 4 - 30
90.Two difficulties arise. First, CPV 23, noted in P and G’s letter dated 17 July 2017, states the quoted cost at $748, plus the builders margin (20%) of $149.60 to a total of $897.60, not $975.60. Second, Mr Gillett’s email of 6 February 2017 stated the proposed cost ($816) but makes no mention of the builder’s margin or that a margin would also be payable.
91.As mentioned above, I do not accept that a client is entitled to quotes, receipts or invoices for subcontracted work, even if a builder might be willing to produce a quote in the interests of obtaining agreement to proposed variations work. I accept the primary position that a builder, like any person contracting with another for provision of goods or services, is entitled to propose a price which the buyer can accept, reject or discuss. In the absence of prior agreement to the contrary, a builder is not required to prove or disclose their overheads or costs incurred in order to provide those goods or services.
92.I am not persuaded, however, that Mr Flaherty should be required to pay the builder’s margin for relocating the Telstra wiring. The central requirement under clause 21 of the contract is disclosure and agreement about the cost of the proposed variation work prior to its commencement. The stated cost to Mr Flaherty was $816, not 20% more than that. Mr Flaherty appears to have agreed to the variation by reference to the stated cost and so should be liable only for that cost. I do not accept that Mr Flaherty should have assumed, as perhaps Mr Gillett assumed, that the quoted cost was a base cost to which would be added the builder’s margin. If a margin was to be added, Mr Gillett should have said so. For CPV No 23, I allow $816.
The offset claim
93.Mr Flaherty made the following claims to a total of $15,919.50 regarding, he said, incomplete work, work for which he had been charged twice or damage:
(a)Screen doors to be Crimsafe mesh for screens $6,718
(b)Glass wall $1,200
(c)Robe-master room $920
(d)Robe-new room $690
(e)Linen cupboard $920
(f)Door furniture-ensuite $311
(g)Incomplete electrical works $1,188
(h)Water damaged old ceiling $1,967.50
(i)Replace TV antenna $495
(j)CPV 7 - reinstate wall into old section of house $1,510
94.Regarding the claim for Crimsafe mesh, Mr Flaherty relied on Mr Gillett’s letter dated 20 December 2016 by which P and G quoted “to carry out the building and associated works … as per the following documents”, which included the drawings for the proposed renovation works. Among those drawings was drawing A 401-A entitled “window schedule” which detailed proposed windows and doors. Regarding proposed doors, a note on the drawing states “provide screen doors to all openings use Crimsafe mesh for screens”.
95.The screen doors installed at the house are flyscreen doors, not Crimsafe mesh security doors.
96.Mr Flaherty claimed for the incomplete work. In support of the amount said to be payable, Mr Flaherty provided two quotes dated 10 August 2017 from Monaro Screens for four “sliding Crimsafe screen security doors” in the lounge area, and two in the bedroom plus a track set, to a total of $6,718.
97.In reply, P and G referred to its Inclusions list forming part of the contract documents that lists under the heading “External”:
Powder coat aluminium sliding windows and doors, double glazed, standard colour, all with fly screens and locks.
98.Mr Gillett submitted that the Inclusions list was to identify what had been allowed, and that it’s “really only to speed the process up and stop [the need for] the drawings to [be] amended at every sort of change”. He contended that the Inclusions list was to make sure Mr Flaherty understood what P and G was to provide. Mr Gillett contended that because the Inclusions list provided for flyscreen doors, P and G did not have to provide Crimsafe screen security doors or Crimsafe screen mesh as stated on the drawing.
99.Mr Gillett also relied on the Exclusions at Attachment C, page 18 of the contract, which provided “As per P & G Builders Inclusions list”. Mr Gillett submitted that where the Inclusions list provided for flyscreens, the Exclusions – which ‘picked up’ anything on the Inclusions list – necessarily excluded anything that was inconsistent with the Inclusions list and in particular Crimsafe screen mesh stated on the drawing.
100.The contract must be read as a whole. In my view, the inconsistency between the drawing and the Inclusions list regarding Crimsafe screen mesh and flyscreen must be resolved by reference to the stated exclusions. It follows that by construing the contract as a whole P and G was not required to provide Crimsafe screen mesh as stated on the drawing.
101.Even if there was uncertainty under the contract about whether Crimsafe screen mesh or flyscreens were to be provided, the uncertainty is resolved by the conduct of the parties. In connection with rainwater that entered the dining room during the renovation works Mr Gillett said:
Mr Flaherty brought this to our attention as soon as it happened, as he did with every part of the works on the job through the process of building, as Mr Flaherty was living on the site.[19]
[19] Transcript of proceedings, 20 February 2018, page 233, lines 22 - 24
102.In connection with the Crimsafe screen mesh, Mr Gillett contended that if there was conflict between the drawings and the Inclusions list he would have expected Mr Flaherty to bring it to P and G’s attention.[20] Mr Gillett stated that there was “no clarification at any point in time, even after the flyscreens were installed, until after the contract had ended”.[21]
[20] Transcript of proceedings, 20 February 2018, page 195, lines 10 - 34
[21] Transcript of proceedings, 20 February 2018, page 195, line 33
103.In my view, if Mr Flaherty had understood during the construction works, and particularly after the flyscreen doors were installed, that P and G should have installed Crimsafe screen mesh he would have said so. The absence of Crimsafe screen mesh could hardly have escaped his attention: he was living on the site. Instead, the absence of Crimsafe screen mesh did not arise until after the contract had ended and the parties were in dispute.
104.In my view, when endeavouring to resolve an uncertainty regarding the terms or performance of the contract, Mr Flaherty’s conduct was relevant. In York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth[22] the High Court said:
When the parties have shown by their conduct that they understand and can apply the terms of a contract without difficulty, a court should be very reluctant indeed to pay no attention to such conduct by holding that the terms of the contract are unintelligible by reason of uncertainty.
[22] York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11 at 53
105.Mr Flaherty’s conduct during construction is consistent with his understanding that flyscreen doors, not Crimsafe screen mesh doors, were to be provided.
106.For these reasons, I disallow the claim for the cost of installing Crimsafe screen mesh.
107.Regarding the claim for a glass wall, Mr Flaherty relied on Mr Gillett’s quotation letter dated 20 December 2016 in which P and G stated under the heading “Inclusions”:
Alter the glass ensuite wall as directed and described in the amendments prepared by Ray and Ping Flaherty. An allowance of $1,200.00 has been included for the glass section of this wall.
108.Where this inclusion was later deleted, Mr Flaherty said, a credit for that amount should be given.
109.In reply, P and G referred to CPV 22 by which it gave Mr Flaherty a credit of $1,000 for deletion of the glass wall. Mr Gillett explained that the credit was $1,000, rather than $1,200, because the remaining $200 represented the builder’s margin which factored in P and G’s overhead or fixed costs of doing the renovation works as a whole.
110.I accept that the deduction reflected in CPV 22 accounts for P and G’s reduced cost by no longer having to install the glass wall. Mr Flaherty obtained a credit of $1,000 against the variations that entailed increased costs beyond the contract price. In issue is the builder’s margin of $200.
111.Mr Gillett submitted that the builder’s margin should remain. Mr Gillett said:
Because in deleting a component like that, it doesn't reduce the time of the project, which - and the time that we're on the job relates to our overheads, and our profit isn't based on the amount of work that we do, our profit is based on the job in itself, so if there isn't a significant change to the actual scope of the works which would significantly impact on our profit, then our profit that we have deemed that we require to do this work stays as is[23]
[23] Transcript of proceedings, 20 February 2018, page 200, lines 30 - 35
112.Mr Gillett also referred to P and G’s time spent implementing the variation. This is reflected in clause 21.3 of the contract which required Mr Flaherty, at P and G’s election, to pay the administration fee of $220 stated in Item 14 of Attachment A to the contract.
113.I am satisfied that P and G was entitled to refund only $1,000, which it did by CPV 22, consequent upon Mr Flaherty varying the contract by no longer requiring the glass wall. Under the contract, regardless of assessment of any remaining overhead costs, P and G could have retained $220 by way of an administration fee leading to a refund of $980. Instead, Mr Flaherty received in effect a refund of $1,000. For these reasons, I disallow the claim.
114.Regarding the claim for a robe in the master bedroom, Mr Flaherty noted that this was part of the original quoted works but was then deleted. Mr Flaherty obtained a credit of $920 for the deleted works, as evidenced by CPV 10. Mr Flaherty queried why that amount should be allowed where P and G had not provided a quote to evidence the value of the deleted works. Ms Ping submitted that the wardrobe was worth more than $920 and an amount more than $1,000 should have been deducted.
115.Mr Gillett stated that he assessed the value of the deleted robe at $920 and gave Mr Flaherty a credit for that amount. It is for Mr Flaherty to prove that the deduction is insufficient. He has not done so. He led no evidence as to the value of the wardrobe. I have no evidence or basis to disagree with Mr Gillett’s assessment. I disallow the claim.
116.Regarding the claim for a robe (meaning a built-in wardrobe) in the new room, Mr Flaherty noted that this was part of the original quoted works but was then deleted at his election as a variation to the contract. Mr Flaherty obtained a credit of $480 for the deleted works, as evidenced by CPV 21. Again, Mr Flaherty queried why that amount should be allowed. Ms Ping said that she measured the cupboard that was deleted and calculated that it should have cost $690, and so seeks that deduction from the contract price, not only $480.
117.Mr Gillett disputed the claim. He stated that he worked out from his costings the value of the deduction and deducted it accordingly.[24]
[24] Transcript of proceedings, 20 February 2018, page 217, lines 20 - 21
118.Again, it was for Mr Flaherty to prove that the deduction is insufficient. He has not done so. Ms Ping tells me that she conducted their own measurements, but I have no evidence as to what they were or how she arrived at her costings or any basis to disagree with Mr Gillett’s assessment of the variation value. I disallow the claim.
119.Regarding the claim for a linen cupboard, Mr Flaherty stated that he originally wanted an additional (third) cupboard, being a linen cupboard, but later asked for this to be deleted. Mr Flaherty sought a credit of $920 for the deletion.
120.Mr Gillett disputed the claim. He stated that he was instructed not to perform that work, and that he was instructed prior to execution of the contract to provide only two cupboards, evidenced by the words “robe and linen cupboard” in the Inclusions list. When Mr Flaherty later instructed him not to include those two cupboards, Mr Gillett gave Mr Flaherty two contract price deletions evidenced by CPV 10 and CPV 21. Deletion for a third cupboard was not given because a third cupboard was never part of the contract works.
121.Again, it was for Mr Flaherty to prove. He has not done so. I have no evidence as to what was agreed or not agreed or any basis to disagree with Mr Gillett’s response that a third cupboard was not part of the contract. The only evidence relevant to the question is the Inclusions list, which supports Mr Gillett’s position that two cupboards, not three, were part of the contract works. It follows that for a third cupboard there was nothing to deduct. I disallow the claim.
122.Regarding the claim for door furniture in the ensuite bathroom, Mr Flaherty submitted that where the Inclusions list provided for door furniture to the ensuite, and no door furniture was provided, he should receive a credit. He claimed $311 by reference to CPV 11 (i.e. 50% of CPV 11), by which P and G claimed a cost of $622 (before payment of the builders margin) for replacing existing bathroom and bedroom doors and door furniture and replacing door furniture to two other existing doors.
123.Mr Gillett stated that the reference to ‘ensuite’ in his Inclusions list was a typographic error and should not have been stated. He did it through habit because an ensuite bathroom usually has a door. He noted that in this case there is no door to the ensuite, as detailed on the drawings, and therefore no handle on a door that does not exist. He also stated that P and G did not quote for a door or a door handle to the ensuite. Mr Gillett also disputed the relevance of CPV 11 where it was a variation claim for much more work than the cost of supplying and installing two door handles.
124.In my view, Mr Flaherty’s claim is unfounded. There is no evidence that an ensuite door was to be included in the quoted works, or a handle on a non-existent door. The drawings contradict Mr Flaherty’s claim. It is nonsensical that P and G should be required to compensate Mr Flaherty for an absent door handle when the contract never provided for the door. I accept Mr Gillett’s evidence that the words “and ensuite” were nothing more than a typographic error. I disallow the claim.
125.Regarding the claim for incomplete electrical works, Mr Flaherty seeks reimbursement of the costs he incurred, evidenced by a tax invoice from an electrician for $1,188, for completing electrical work and reconnecting the power to the house.
126.Mr Gillett disputed the claim. Mr Gillett acknowledged that to address P and G’s concern that Mr Flaherty intended to change the locks and move into the house without paying P and G’s final progress claim or variations claim, he instructed his sub-contracted electrician to inspect and test his works and then make the electrical services inoperable (meaning disconnect the power).[25]
[25] Transcript of proceedings, 20 February 2018, page 290, lines 10 - 15
127.In my view, Mr Gillett’s actions were reasonable and responsible to protect the asset. Mr Flaherty acted as Mr Gillett feared. In breach of clause 23.5 of the contract, Mr Flaherty incurred the cost of an electrician to reconnect the power in order to take usable possession of the property. He had no right to do so. Also, I have no evidence regarding the alleged additional electrical work, or whether it was work (for example maintenance defects work) that would have been completed by P and G at its own cost had it remained in possession of the site. I disallow the claim.
128.Regarding the claim for water damage of the old ceiling, Mr Flaherty submitted that variation claims CPV 4 and CPV 5 for $1,100 and $867.50 (before payment of the builder’s margin of $173.50) were not properly payable. He seeks a refund of the total, $1,967.50, although he paid those variation claims on 14 June 2017.
129.The claims arose – indirectly – from rainwater damage when the house was partly open during the construction works. Parts of the ceiling were damaged. Mr Gillett agreed to replace the parts of the ceiling that was water damaged at P and G’s cost. Mr Flaherty did not wish that, and wanted all the ceiling and all the insulation replaced for health reasons. P and G did as requested, and CPV 4 and CPV 5 reflect the variation cost of replacing the undamaged ceiling and undamaged insulation.
130.Mr Flaherty and Mr Gillett disagreed about the extent of the water damage.
131.Mr Gillett gave evidence about the damage as follows:
There was an area of the existing building that was damaged by rain entry in the building which was caused by the works that we had exposed. That water damaged part of the ceiling through the existing residence. We had a discussion with Mr Flaherty, we being myself and Mark Gillett, in which we advised Mr Flaherty that at our cost we would repair those water damaged areas. Mr Flaherty advised us that he wanted the whole of the ceiling replaced and insulation. We advised him of an estimate of the cost, which I can't recall at the time the amount was, and we were given an instruction to go ahead and do that work. We went ahead and did that work, charged Mr Flaherty for those amounts that were extra over the costs for the water damage that we accepted to repair ourselves at our cost.
Do CPV4 and 5 represent any component of the damage done by the water?‑‑‑No.
…
But I can say for certain that none of those costs in either of those variations included any of the works that we agreed with Mr Flaherty that we would repair that were water damaged by that leak[26]
[26] Transcript of proceedings, 20 February 2018, page 248, line 39 page 249, line 44
132.In answer to Mr Flaherty’s questions, Mr Gillett denied that the whole area was water damaged.
133.In support of his claim, Mr Flaherty relied on photographs of water damage, but I am not persuaded that those photographs show damage by rainfall to the whole of the ceiling. Despite my repeated inquiries, Mr Flaherty was not willing to give oral evidence in support of his claim or any other claim or in response to any of P and G’s claims.[27]
[27] Transcript of proceedings, 20 February 2018, page 247, lines 40 – 43 and page 255, lines 5 - 8
134.On the evidence before me, I am not persuaded that CPV 4 or CPV 5 involved any cost of replacing those parts of the ceiling that were damaged by rainwater. I accept Mr Gillett’s evidence on oath that these variation claims arose from Mr Flaherty’s wish to replace the whole ceiling and all the installation, rather than only those parts of the ceiling and installation that were damaged by the rainfall, in the interests of his health. That was, in all probability a sensible decision on Mr Flaherty’s part, but it does not excuse Mr Flaherty from paying for the additional work. I disallow the claim.
135.Regarding the claim for replacement of the TV antenna, Mr Gillett acknowledged that he damaged the TV antenna in the course of doing work on the roof. Mr Flaherty sought compensation of $495 for repairing the antenna. He relied on a quote for $495 from an electrician to “fix/replace” the antenna.
136.P and G disputed the claim on the basis that it could and would have repaired the antenna following completion of the roofing work, and at its own expense for much less than $495.
137.There was little evidence regarding the extent of the damage. Mr Flaherty referred to a text message sent on 9 May 2017 in which he requested the roof contractors “to fix the TV aerial as part of it is missing”. He provided a photograph of an aerial that at least appears to be intact. A quote to “fix/replace” the antenna does not address the question whether it could have been (or has been) repaired at much less cost.
138.This claim has no connection with the building works, and does not arise in connection with the contract. It is a separate claim, presumably in negligence, arising from P and G damaging the antenna. The general rule, when assessing damages, is to put the plaintiff (and Mr Flaherty in this case) in the same position he would have been if the negligence had not occurred. In other words, compensation should be assessed by reference to what is necessary to make good Mr Flaherty’s loss.
139.I have almost no evidence on which to make that assessment. I have no evidence, for example, about the extent of the damage; whether repair was possible; the age and condition of the antenna prior to the damage; whether the quote is for repair or replacement of the existing antenna; if replacement, whether the proposed replacement is ‘like-for-like’ especially where television technology has changed significantly in recent years; whether the damaged antenna is still on Mr Flaherty’s roof and functioning; or whether Mr Flaherty has spent any money repairing it or replacing it.
140.There is also the difficulty that P and G were willing to make good the damage at its own cost, but there is no evidence that Mr Flaherty has ever asked them to do so. Also, in relation to all of the identified defects following completion of the contract, Mr Gillett gave evidence that P and G has never refused to correct defects and Mr Flaherty has never asked it to do so.[28]
[28] Transcript of proceedings, 20 February 2018, page 249, line 44
141.I am required to decide a claim by reference to the evidence. Where I had no evidence as to the nature or extent of the damage to the antenna, and no evidence as to the value of the antenna or the cost of repairing it, I am obliged to reject the claim.
142.Regarding the claim arising from CPV 7, I have already determined in dealing with P and G’s variations claim that CPV 7 is not payable. Having allowed for it in response to the variations claim, I make no further allowance for it in the context of the completion claim.
The defective works claim
143.Mr Flaherty submitted that the renovation works were defective in many respects, and that P and G is liable to compensate him for those defects.
144.In support of his claim, Mr Flaherty relied upon a report dated 8 September 2017 prepared by Mr Damien Moloney of Capital Building Consultants in which he identified 28 defects arising from his visual inspection of areas where safe and reasonable access was available. His report states that his inspection was referenced to required standards under AS4349. 1-2007, and that the purpose of his inspection was to provide advice to a prospective purchaser regarding the condition of the property at the date and time of his inspection. The 28 defects were as follows (noting “18” was stated twice):
1. Bowed timber front entry causing door to bind.
2. Front bedroom floorboards springy and becomes uneven when standing on the edge of middle board.
3. Noticeable gap in architrave on front window at front bedroom.
4. Vertical plumpness of the internal wall at entrance deviate 5 mm over 1.2 m.
5. Hole in office ceiling.
6. Bow in plasterboard at dining room wall deviates 5 mm over 1.2 m.
7. Timber door jamb has not been repaired before it has been painted making defects noticeably visible.
8. Benchtop has noticeable bow when straight edge is placed on it.
9. Noticeable glue over run from edge banding in on kitchen cabinetry.
10. Gaps between benchtop and cabinetry. This is possibly due to the bow in benchtop described in item 8.
11. Ceiling in the kitchen plasterboard deviates +20mm over 2m.
12. Concrete levels in bedroom 1 and kitchen area ranged between 5-7mm out of level.
13. Painting not completed around light switch in laundry.
14. Bedroom door external door bricks still +6mm out of level over 2m.
15. Noticeable glue overrun from tiles from ensuite into bedroom 1.
16. Roof sheeting bowing up and down.
17. Roof sheeting dense.
18. Sand used under water tank slab instead of crusher dust.
18. Charged downpipe to be painted.
19. Pantry door out of plumb +6mm over 1.2 m.
20. Lounge room and kitchen external doors sill bowing out of level.
21. Kitchen external door frame twisted.
22. Painting not completed in built-in cupboards in front bedroom and bedroom 1.
23. Paint flaking off around all existing door jams.
24. Chipped tile under heating control in ensuite.
25. Tiles not finished flush against toilet.
26. Toilet is loose and squeaky.
27. Hole in ceiling at shower rose.
145.Regarding the cost to make good the defects, Mr Flaherty relied upon a letter dated 30 September 2017 from Mr Steve Henson from Living Now Homes in which he stated the work he said was required to make good the defects and his estimate of the cost to do so. The relevant parts of that letter were as follows:
No Comment Cost 1 Remove door, plane down and refit $290.00 2 Remove existing sheet flooring, fix floor frame and resheet $2300.00 3 Fill and repair $190.00 4 Remove sheet, straighten walls, replaster and paint $2600.00 5 Patch and repaint ceiling $650.00 6 Remove sheets, straighten walls, resheet and plaster and paint $1680.00 7 Patch and repaint $280.00 8 Remove bench top, disconnect sink, remove cupboards, level existing base, replace cupboards and make good all defected area $3600.00 9 Clean $120.00 10 Included in item 8 $0 11 Ceiling is 25mm out of level. To fix all trusses need to be removed and cut framing down to correct height which will cost over $14,000. It would be done on a cost plus builder's fee $14,000 (est.) 12 This is unable to be fixed unless you remove the glass sliding door, top the whole floor with a levelling agent $5,300 13 Patch and paint $130.00 14 Remove glass sliding door frame and pack level. Replace $1,960.00 15 Remove, patch, plaster and repaint $720.00 16 This is because the new timber wall frame from the extension to the existing house was 30mm higher. You would have to remove the roof sheets, cut down the wall frames etc. This would effect the internal gyprock, cornice, external facia and gutter, eave sheets. Would cost over $25,000. Charged at cost plus builder's fee $25,000 17 Replace and resheet $1,800.00 18 Remove tank and concrete slab and pump. Replace concrete slab on proper gravel base with new concrete slab, refit tank and equipment $3,270.00 18 (sic) Repaint $120.00 19 Pull out pantry cupboards, remove wall sheets, plumb up existing sliding cavity door frame, replaster and paint, make good all areas $4,700.00 20 Remove door frame and accommodate substructure floor $3,600.00 21 Warranty by window manufacturer $0 22 Repaint $370.00 23 Sand back original timber architraves and skirtings in all existing bedrooms affected and repaint $3,200 24 Replace tile and regrout $370.00 25 Remove toilet by plumber, remove tiles. Refix toilet properly and refix tiles $1,380.00 26 Remove and fix correctly $960.00 27 Patch and paint affected area $120.00 146.The costs totalled in excess of $78,000, noting Mr Henson’s statements that to correct the defects in items 11 and 16 would cost in excess of $14,000 and $25,000 respectively.
147.Mr Gillett disputed many of the items and objected to the tender of Mr Henson’s letter. He also wanted Mr Henson to be available for cross-examination. I explained to Mr Flaherty on the first day of the hearing that if he wished me to place any weight upon Mr Henson’s letter, Mr Henson would need to be available for cross-examination.[29] Mr Henson was not called to give evidence. Whilst I accepted the letter as part of the evidence, I gave it no weight having regard to the evidence of Mr Moloney who attended the hearing and gave evidence on oath in relation to the character of the defects and his estimate of the costs to make good the defects. Mr Moloney gave his evidence in an independent and objective manner consistent with his obligations under the Tribunal’s expert witness code of conduct.
[29] Transcript of proceedings, 19 February 2018, page 129, lines 21 - 26
148.Mr Moloney accepted “absolutely” that defects are routinely identified after practical completion of building works and that the standard ACT residential building contract for alterations and additions, as was used in this case, requires a builder to rectify defects reported by the client to the builder during a 65 day maintenance period after practical completion.
149.Mr Moloney agreed that the provision in the contract for rectification of defective work does not permit an owner to engage its own contractors to rectify defects and then seek reimbursement or compensation from the builder. Mr Moloney agreed that the maintenance defect provisions allow the builder to assess the identified defects and to determine the best and most cost-effective means for it to rectify them at the builder’s cost.
150.Mr Moloney agreed that defects that would be classified as maintenance defects are defects to be rectified by the builder during the maintenance services (or defects) period that are not of a nature or kind that means that the building work had not reached practical completion.[30] Mr Moloney agreed that “all of the items in [his report] are maintenance defects and [his report] is a maintenance defects list compiled for the Flahertys”.[31]
[30] Transcript of proceedings, 20 February 2018, page 143, line 11 – page 144, line 15.
[31] Transcript of proceedings, 19 February 2018, page 177, lines 10 - 21
151.Mr Moloney gave evidence regarding each of the 28 items of defective work identified in his report as follows.
152.For item 1, Mr Moloney said that the tread was bowed but agreed that the door opens and closes. He agreed that the defect was a maintenance period defect.
153.For item 2, Mr Moloney said there was a noticeable spring under the flooring. Mr Mark Gillett submitted that the spring was under the old (existing) flooring, and therefore outside the contracted works. Mr Moloney replied that a builder would nevertheless fix the spring, because it was right next to the new flooring, so that there would be no spring in the step. He agreed however that the defect could be rectified by blocking under the joists. In Mr Moloney’s view, the work should signed off by an engineer because it was structural, but agreed that the work would not need to be checked by a certifier. Although not put to Mr Moloney, it was apparent from his agreement that his whole report was a maintenance defects list that the spring could have been reported and corrected by blocking during the maintenance period.
154.For item 3, Mr Moloney agreed that the many painting defects noted in his report were minor jobs involving filling and repainting, and that the commercially expedient way to rectify the defects was to engage a painter to rectify all the defects at one time. He agreed that the painting defects were maintenance defects that could have been reported and corrected during the maintenance period.
155.For item 4, Mr Moloney rejected the proposition put by Mr Gillett that his spirit level was not correctly positioned when identifying the defect, and maintained that the wall was not straight, but agreed it was a maintenance defect.
156.For item 5, Mr Moloney agreed that Mr Henson’s estimate of $650 to carry out the repairs was unreasonable. He estimated $60 derived from an hourly rate of $45 plus materials. He also agreed that the defect was a maintenance defect.
157.For item 6, Mr Moloney agreed it was a maintenance defect.
158.For item 7, Mr Moloney agreed that the defect was to an original door jamb (not part of the refurbishment works) and that the defect did not affect the operation of the door. He maintained that the painter should not have simply painted over the defective door jamb, but agreed that the defect could be rectified and was a maintenance defect.
159.For item 8, Mr Moloney agreed that stone benchtops can have an acceptable level of deviation but he did know what that acceptable level was. He agreed that the bow in the benchtop could not be seen in the normal viewing position, but said that did not necessarily mean that the bow is not a defect. He stated that by placing a 2m straight edge on the benchtop he identified a 4 mm gap at the lowest point of the bow. Mr Moloney stated that there is nothing in AS4349. 1-2007 dealing with acceptable deviations in stone benchtops, and that deviations occur because stone is a natural product. He agreed that the bow did not affect the operation of the benchtop, and that it could rectified during the maintenance period.
160.On the evidence, I am not satisfied that the benchtop was not to an acceptable standard allowing for its status as a natural product and where I have no evidence as to whether the bow is or is not within tolerance. I disallow the claim regardless of whether it constitutes a maintenance defect.
161.For item 9, Mr Moloney agreed that the defect could be rectified using a rag and methylated spirits at no cost. It was a maintenance defect.
162.For item 10, Mr Moloney agreed that the defect did not affect the operational use of the kitchen, could be rectified using filler at negligible cost, and was a maintenance defect.
163.For item 11, Mr Moloney stated that he did not know how the ceiling was attached, and had assumed it had been glued and screwed. In response to a statement that the new ceiling had been fixed using hanging brackets and blended to an existing ceilings which is significantly bowed and out of level, Mr Moloney agreed that it is reasonable for a ceiling to be out of level at the transition between the old and the new ceilings and that despite packing of existing trusses there will be a bit of deviation because of the transition. He agreed that the deviation, which is a function of the transition, is acceptable. I am not satisfied that the deviation between the old and new ceilings is a defect. I disallow the claim.
164.For item 12, Mr Moloney agreed that a self-levelling compound cement is acceptable to industry standards when used well, and is used to correct slab defects and blend floor levels and could be done during the maintenance period, noting that floor coverings were not part of the scope of works.
165.For item 13, Mr Moloney estimated the cost to rectify the defect at $35 as part of a whole job, and agreed that it was a maintenance defect.
166.For item 14, Mr Moloney agreed that the defect did not affect the use of the door and that it was a maintenance defect.
167.For item 15, Mr Moloney stated he was not aware that the glue overrun was at a place where a glass panel was to be installed, but was then not installed at the request of Mr Flaherty. He agreed that if the glass panel had been installed the defect would “possibly not” have been visible and therefore not a defect at all. In any event, he agreed that the glue overrun was a maintenance defect even without a glass panel.
168.For item 16, Mr Moloney stated he could not see a defect in the ridge line of the roof and agreed that any number of causes including spacing of the trusses were possible causes of the wavy roof line. He agreed that upon the certifier “passing” the construction of the trusses, as occurred, P and G was entitled to rely upon that certification as evidence that the trusses have been correctly spaced. He agreed that installation of the heating flue (installed by an independent subcontractor) could be the cause of the bow. Mr Moloney also agreed that the bow in the roof line was a maintenance defect that could have been rectified in the maintenance period.
169.For item 17, Mr Moloney agreed that the dents in the roof sheeting could have been caused after P and G lost control of the site by Mr Flaherty’s heating sub-contractor, and that in any event the dents are a maintenance defect which does not affect the serviceability of the roof.
170.For item 18, first appearing, Mr Moloney agreed that although the tank manufacturer’s installation guide advised the use of crusher dust not sand, sand is an acceptable material if used correctly. Mr Moloney could not state whether the sand had been used correctly, but agreed that any defect in the support materials for the tank to ensure that the sand was not susceptible to movement under the tank would be a maintenance defect.
171.For item 18, second appearing, Mr Moloney agreed that the need for the downpipe to be painted was a maintenance defect.
172.For item 19, Mr Moloney agreed that the incorrect the hanging of the pantry door was a maintenance defect.
173.For item 20, Mr Moloney explained that the internal door sills need to be supported, and that packers need to be inserted to rectify the defect, but agreed it was a maintenance defect.
174.For item 21, Mr Moloney detailed that the defect concerned a sliding panel in the door frame, not a fixed panel. He agreed that this was a defect that would “typically be fixed by the window manufacturer during a maintenance period” and that it was a maintenance defect.
175.For item 22, Mr Moloney agreed that to complete the paintwork was a maintenance defect.
176.For item 23, Mr Moloney agreed that to complete the paintwork was a maintenance defect.
177.For item 24, Mr Moloney agreed that the chip in the tile did not affect the operation of the heating controller, or waterproofing, and was a maintenance defect.
178.For item 25, Mr Moloney agreed that the incorrectly cut tile did not affect the operation of the toilet. He agreed that a gap of between 1 and 2 mm between the tile and the toilet pan was acceptable, but stated that the gap in this case was larger. He stated that there was no need to remove the toilet, and that it was necessary only to remove the small cut tile and replace it with a resized cut tile. He agreed it was a maintenance defect.
179.For item 26, Mr Moloney agreed that if the toilet cistern was loose a possible explanation was that the system screws needed to be tightened. He agreed that the loose cistern did not affect the operation and use of toilet, and was a maintenance defect.
180.For item 27, Mr Moloney stated that the hole in the ceiling was approximately the size of a five cent piece and that it did not affect the waterproofing of the shower area. He agreed it was a maintenance defect.
181.In my view, P and G is not liable to compensate Mr Flaherty for any of the defects that were maintenance defects. Had the contract run to completion, Mr Flaherty could have required P and G to rectify them at its own cost under clause 23.7 of the contract. P and G acknowledged its liability do so in its letter to Mr Flaherty dated 4 August 2017. Despite that acknowledgement, still Mr Flaherty did not pay P and G’s final progress claim or its variations claim even after P and G advised by letter dated 1 August 2017 that it was suspending the building works. Had Mr Flaherty paid the amounts owing, P and G would have been required to recommence building, and the contract would have remained on foot.
182.P and G’s termination of the contract on 18 August 2017 following Mr Flaherty taking possession of the property in breach of the contract, included termination of its obligations under clause 23.7 to correct maintenance defects notified within the 65 day maintenance period, but that consequence was of Mr Flaherty’s own making.
183.Nor is it a situation where Mr Flaherty has paid the final progress claim or the variations claim, and now wants P and G to make good the maintenance defects notwithstanding termination of the contract. Indeed, at hearing, Mr Flaherty did not dispute that he has never asked P and G to return to the property to make good the maintenance defects. Instead, he seeks an order that P and G pay him money which he may (or may not) use to engage independent contractors to repair the defects. Where P and G was never liable to compensate Mr Flaherty for the defects, and where its obligation to rectify the defects itself under clause 23.7 is no longer applicable consequent upon P and G’s lawful termination of the contract under clause 25.2, I disallow Mr Flaherty’s claims for defective works, all of which Mr Moloney characterised as maintenance defects.
Conclusion
184.P and G’s final progress claim is payable in full, being $10,000.
185.P and G’s variations claim is payable, less $51 for which I cannot account, the claim for $1,510 for CPV 7, the claim for $159 for CPV 9 and $81.60 arising from reduction of CPV 23. I calculate the amount owing to be $11,066.
186.Interest is payable under clause 25.8(e) of the contract, calculated under clause 12.3(a) and Item 11 of Attachment A at the rate “applicable to unpaid judgments of the ACT Supreme Court”.
187.In the case of the final progress claim, interest must be calculated from 6 August 2017 when the final progress claim became payable to 25 May 2018. I calculate the amount owing to be $602.05.
188.In the case of the variations claim, which became payable five days after Mr Flaherty received the final progress claim, interest must be calculated from 6 August 2017 to 25 May 2018. I calculate the amount owing to be $666.23.
189.Where P and G has been almost entirely successful in its claim, I will also order Mr Flaherty to pay the tribunal filing fee of $300.
190.Mr Flaherty’s completion claim and defective work claim will be dismissed.
………………………………..
Presidential Member G McCarthy
HEARING DETAILS
FILE NUMBER:
XD 1047 of 2017
PARTIES, APPLICANT:
P and G Builders Pty Limited
PARTIES, RESPONDENT:
Raymond Flaherty
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
N/A
TRIBUNAL MEMBER:
Presidential Member G McCarthy
DATES OF HEARING:
19 and 20 February 2018
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