Phoenix Form Pty Ltd v Remiche Pty Ltd t/as Darren Sander Building Design
[2022] QCAT 401
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Phoenix Form Pty Ltd v Remiche Pty Ltd t/as Darren Sander Building Design [2022] QCAT 401
PARTIES:
PHOENIX FoRM PTL LTD (applicant)
v
REMICHE PTY LTD t/as DARREN SANDER BUILDING & DESIGN (respondent)
APPLICATION NO/S:
BDL214-21
MATTER TYPE:
Building matters
DELIVERED ON:
17 November 2022
HEARING DATE:
4 November 2022
HEARD AT:
Brisbane
DECISION OF:
Member King-Scott
ORDERS:
The Orders of the Tribunal are:
(a) The application by Phoenix Form Pty Ltd is allowed.
(b) The counter-application by Remiche Pty Ltd t/as Darren Sander Building Design is dismissed.
(c) Remiche Pty Ltd t/as Darren Sander Building Design pay Phoenix Form Pty Ltd the balance of invoices outstanding in a sum to be determined after receipt of further submissions by the parties.
(d) The parties file and exchange submissions addressing the final orders to give effect to these reasons by 30 November 2022.
CATCHWORDS:
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – dispute between contractor and sub-contractor – variations not in writing – not a domestic building contract – dispute over variations
Queensland Building and Construction Commission Act 1991 (Qld)
APPEARANCES & REPRESENTATION:
Applicant:
Self-represented
Respondent:
Self-represented
REASONS FOR DECISION
Jurisdiction
This is a building dispute between a sub-contractor Phoenix Form Pty Ltd (Phoenix) and a contractor, Remiche Pty Ltd t/as Darren Sander Building Design (DSBD).
The Tribunal has jurisdiction to hear such a dispute.[1] A building dispute means, inter alia, a domestic building dispute. The latter term is defined as, inter alia, a claim or dispute arising between 2 or more building contractors relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work. “Reviewable domestic work” means domestic building work under Schedule 1B, Section 4 of the QBCC Act, except that for applying Schedule 1B, section 4(8), the definition excluded building work under the schedule is taken not to mean anything mentioned in paragraph (b), (c) or (d) of that definition.[2]
[1]Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act)
[2]Schedule 2 of QBCC Act
“Domestic Building work is defined in s.4 of Schedule 1B of the QBCC Act. It includes the erection or construction of a dwelling and includes work associated with the erection or construction of a dwelling.
It should be noted that a “domestic building contract” does not include a contract between a building contractor and subcontractor.[3]
[3]S. 3(2)(a) of Schedule 1B
Background
This matter involves the construction of a house at Lakeland Key, Broadbeach Waters on the Gold Coast.
Phoenix was a company that supplied and installed formwork. DSBD was the contractor that it is alleged engaged Phoenix. Phoenix says the initial work approval was with the owner, Dion Raja. That seems to be the case from the documentation.
There are a series of emails from 23 September through to 10 November 2020 from the owner to Phoenix relating to plans, changes to the plans and Phoenix’s quotations. Phoenix, according to the material, submitted 5 quotations ranging in value from $218,938.17 to $522,704.60, before the final quotation was agreed upon at $241,741.50. Most of the quotations had attached to it a trade breakup which was, essentially, the scope of works.
In any event, it seems that other than the initial quotes DSBD sub-contracted the work to Phoenix.
The quotation dated 5 November 2020 was never reduced to a formal sub-contract document.
The works proceeded. Phoenix complained DSBD had fallen behind in progress payments that was causing Phoenix financial stress as it was unable to pay its suppliers. DSBD alleged that Phoenix had charged extras that it alleged were variations that had not been approved. It relied, erroneously, upon the provisions of the QBCC Act relating to a domestic building contract that required variations to be in writing signed by both parties. That is not the case here. Phoenix says the amount claimed was $41,295.69 not $83,497.86 as DSBD allege.
Mr Saati submits that if DSBD did not agree with the variations it should have disputed the invoices, but it didn’t, indeed, it paid many of them.
I set out the invoices and payments verified by bank statements:
Invoice No
Date
Amount
Date paid
Paid
Lake 001
14/12/20
$12,106.44
23/12/20
$12,106.44
LKPC 1
15/1/21
$17,394.47
3/2/21
$7,394.47
5/2/21
$5,000.00
8/2/21
$5,000.00
LKPC 2
8/2/21
$51,200.14
18/2/21
$15,000.00
15/2/21
$17,270.82
15/2/21
$7,000.00
16/2/21
$6,929.32
17/2/21
$5,000.00
LKPC 3
12/3/21
$27,144.15
11/3/21
$3,144.15
15/3/21
$20,000.00
LKPC 4
12/3/22
$35,233.44
15/3/21
$10,000.00
15/3/21
$20,000.00
16/3/21
$20,000.00
LKPC 5
31/3/2021
$37,078.31
17/3/21
$16,311.75
18/3/21
$10,000.00
LKPC 6
31/3/21
$27,068.33
8/4/21
$4,995.00
12/4/21
$5,000.00
31/3/21
$17,068.33
LKPC 7
15/4/2021
$31,060.80
25/4/21
$5,000.00
21/4/21
$5,000.00
22/4/21
$6,060.80
19/4/21
$10,000.00
24/4/21
$5,000.00
LKPC 8
28/4/2021
$25,701.50
6/5/21
$2,701.50
10/5/21
$9,000.00
11/5/21
$10,000.00
8/2/21
$4,000.00
LKPC 9
25/5/2021
$47,306.60
12/7/21
$16,169.00
14/6/21
$19,000.00
LKPC 10
28/5/2021[4]
$51,366.24
$0
LKPC 11
19/7/2021
$9,899.10
$0
$372,559.52
$299,151.58
[4]Sent by email on 2 June 2021. See Phoenix response in red paragraph 21 to Appendix 2 of document filed 14 December 2021
It was difficult to reconcile the invoices and payments. Rarely was an invoice paid in full, usually by instalments, some for differing amounts on the same day. Phoenix claims it has issued 12 invoices for a total value of $340,447.28, in fact, on my calculations the total of the 12 invoices is $372,559.52.
Invoice LKPC 02 was for $46,545.58 (ex GST)[5] but elsewhere it is $17,270.82 (ex GST)[6], which seems to ignore the second page of the invoice. The difference is $29,224.76 which happens to be the difference between $340,447.28 and my calculation of $372,559.52. The correct amount of the invoice appears to be $46,545.58 or $51,200.14 inclusive of GST. I say this because DSBD has paid the invoice in full.
[5]Page 2 attachments to statement of Mohammad Saati 23 September 2021
[6]Attachment 4 page 2 statement of Mohammad Saati filed 7 January 2022
Phoenix alleges that DSBD has paid the sum of $289,151.66 but in fact it has paid $299,151.58[7] and not $309,151.58 that DSBD claims, the discrepancy being the sum of $10,000 paid directly by DSBD to a sub-contractor when it should have been paid to Phoenix. It has claimed the $10,000.00 as part of its payments to Phoenix. The sub-contractor has been paid twice and has not refunded the sum. However, that does not reconcile with the payments made by DSBD which amount to $299,151.58. I accept that it has paid this sum and I accept that the amount invoiced is $372,559.52.
[7]See NAB Internet banking statements attached to filed documents
Phoenix claims the amount of $41,295.69 is due and owing not $83,497.86 as claimed by DSBD.[8] Obviously, that is an error of accounting as the correct amount should be $73,407.94. [9] On the above reconciliation, $73,407.94 is owing.
[8]$340,447.28 - $299,151.58 = $41,295.69
[9]$372,559.52 - $299,151.58 = $73,407.94
Variations
There was no requirement for the variations to be in writing. Mr Saati says that Mr Sander was aware of the variations. DSBD says that they only became aware of variations upon reviewing the invoices. An example of a variation is contained in a brief email dated 23 February 2021 where revised engineering drawings were sent to him for additional screw piers.
An issue was the increase in cost associated with the quality of formwork used. The surface finish of the concrete depended on the quality of the form work timber used and the carpentry skills associated with that formwork. The parties referred to the AS3610 - Formwork for Concrete. Various classes relating to surface texture are specified. Class 1 being the highest quality down to Class 4 where texture was not important. DSBD says the plans stipulated a Class 1 finish, but the finish attained was about a Class 4 finish.
Phoenix says that DSBD verbally agreed to the change. Certainly, it appeared to implicitly agree with a change from Class 1 to Class 2 which it referred to as Type 1 to Type 2 in its adjusted payment schedule.[10] Mr Saati says that he verbally informed Mr Sanders that Class 1 ply was unsuitable for the job, and Mr Sander accepted that.
[10]Email dated 12 July 2021 DSBD to Phoenix
Mr Saati says that Phoenix was under financial stress because of the late payment of instalments so much so that in some instances their accounts with suppliers were closed.
There is a series of text messages[11] between Mr Sanders and Mr Saati. It is instructive to refer to some of the conversation in detail. I set them out below without correction.
[11]Appendix 1 Phoenix Response filed 28 January 2022
Date/Time
Mr Mohammed Saati
Mr Darren Sanders
14/6/21:12:42 pm
I have just paid the maximum I can today $19k
Thank u
Will pay some more tomorrow
Thank u very much, will try organise men to get there if not tomorrow the day after for sure
17/6/21 12:14 pm
Hey Darren any more money coming this week?
17/6/21 3:10 pm
Yep call you shortly
21/6/21 8:51 am
Hey Darren,
Can you tell me how much we’re getting paid today or this week please? I have Concrete and steel contractor to pay. Everything is over due
Ohh also post tension too
I will pay another 10K today. Can you please work out what you think the variation is for what I paid to do on the Hobbs, concrete, pump hire and labour etc Thanks
don't u have all these details in the invoices??? You paid us $19,000 out of $98,000. another 10K won't even get me to pay the concrete! I need 60K this week come on keep the rest on you till we finish fixing the walls and do the cleaning. Also need money to buy the rock coat to fix up the upstand so 10K won't take me anywhere thank you.
I will follow up with my accounts lady very soon. She is in a meeting right now. As far as she understood it was only the last invoice of 47K to be paid. I will let you know as soon as I talk to her.
Thank you
22/6/21 1:56 pm
it's been 3 weeks mate, I think u got everything you need now. I have people chase me for bills
23/6/21 8:52 am
Roger is on his way to see u. you got everything u need, we need to get this done today. Call him please
25/6/21 2:02 pm
Are u going to call me back?
At least reply to my msg. Got bills to pay order concrete for a new job bcz my accounts on hold, not a good way yo trade I subcontractor that was looking after five trades for u
2/7/21 10:08 am
Any news mate?
5/7/21 10:52 am
Hey Darren! How are you?
Where are we standing with our overdue?
I had to loan 5K today, thank u for dragging me down.
7/7/21 4:04 pm
can I get a reply from you? My concrete account is on hold
6/9/21 9:59 am
I just want you to know this. Today I finished paying all the outstanding invoices from steel and concrete and post tension that u didn't pay us the last 2 invoices so he can pay them, and also had my accounts suspended because of you. We're dealing with QCAT atm to get them chasing you to pay, maybe later on we will end up in the court too.
So don't think you'll get away with your action.
Also we still go and rectify the upstand walls once you have the scaffold removed from the top, even if we don't get paid we will still get that fixed 100% and acid wash the ceiling. I don't like to have my name on any bad finish at get other trade to come and fix it up.
Have a good day
Mr Saati’s requests show some degree of desperation and Mr Sander’s responses together with the prior history of payment by instalments are suggestive of some liquidity problems. Certainly, there is no suggestion in the texts of dissatisfaction with the amounts being charged. Is it difficult to accept Mr Sander’s explanation for his failure to respond to the text messages sent by Mr Saati. The parties exchanged messages in the exhibit[12] from 2 June 2021 up to 21 June 2021.
[12]Appendix 1 Phoenix Response filed 28 January 2022
In giving evidence, Mr Sander said that he stopped responding to the text messages because Mr Saati had commenced legal proceedings. However, that was not until 24 August 2021 and there are 5 messages which were not responded to before that date. Mr Sander then said he responded by email. He was asked to refer to the emails in the documents he had filed but was unable to do so. He was unable to refer to emails in his own material after being given some time to search. I find that he did not respond to Mr Saati by email and he avoided responding to the text messages.
There is a reference in the material to a Roger Rogerson who was an estimator employed by Phoenix. It seems that Mr Sander, on occasions, dealt with him on some of these matters. However, that does not excuse his lack of response to Mr Saati who was a director of Phoenix.
Mr Saati referred to a tax invoice by the steel fixer S&R Concreting Pty Ltd dated 22 May 2021[13] addressed to Phoenix which described the work as including “extra to place a tie still due to changes made to balustrade and step downs”. The sum was $5,200. Mr Sanders said there were no variations of any consequence to justify Phoenix’s variation that this was a labour only component he paid directly, however, he did not include the steel component which was used in the “extra”. Mr Saati said he was left to pay that amount.
[13]Invoice #76
I am satisfied that all the variations were agreed to.
Rectification costs
Mr Sander has claimed $63,663.20 for the cost of rectification by alternative contractors for work that Phoenix did which he maintained was defective.
DSBD says that the formwork constructed on level 1 failed during the casting of the level 1 upstands. It is alleged that this resulted in the hob walls on all sides of the house malfunctioning. They were 40 mm out of plumb in some areas. It is alleged that the cold joint blew out. To rectify it needed to be ground and jackhammered off and a new cold joint installed.
Phoenix says that DSBD did not inform them of the pour. Phoenix says that the formwork was not ready for the pour and had not approved it.[14] DSBD took responsibility for supplying and pouring the concrete without Phoenix’s representatives being involved.[15] Phoenix says that they should have supervised the pour and it should have been done in layers and not in one pour.[16] Mr Sander said DSBD undertook the pour because Phoenix had no credit left with the supplier. The text passages suggest otherwise. When the walls blew out Mr Saati says that they should have stopped the pour and rectified the form work. Phoenix workers were working a level below and would have been available. Mr Saati says in good faith Phoenix had started work on the rectification but stopped due to the outstanding payments. Phoenix has always been ready, willing and able to complete the rectification.
[14]Phoenix Response filed 28 January 2022 paragraph 6
[15]Response to DSBD statement paragraph 11 filed 1 December 2021
[16]Ibid paragraph 6
DSBD claimed $112,494.53 which included the rectification costs of $63,663.20 for engaging alternative contractors to complete the works. The balance was the value of the remainder of the contract or uncompleted works which he thought was approximately $49,231 33. Put aside the fact that he refused to pay Phoenix which put them in a difficult financial position and the reason why it ceased work, DSBD did not provide any details of the breakup of that sum nor any evidence of payment such as invoices or receipts. Phoenix always offered to complete the works. Had it been allowed to, there would have been no additional cost. I find the claim is not only lacking in merit, but also not supported by evidence.
Additionally, DSBD relied upon an expert report of Edge Consulting Engineers. The author Stephen Kohout gave evidence that he was generally happy with the work and that the only area of particular concern was the durability of concrete upstands due to reduced cover of the reinforcement. As a minimum cover of the reinforcement had not been achieved and the upstands no longer conformed to the relevant Australian standards, they would require rectification. He went on to say that to ensure the durability of the concrete upstands for life of the structure the following rectification procedure would need to be carried out on both upstands.
(a)All ligatures are to be scabbed back and revealed.[17]
(b)2 coats of Nitroprime sealant was to be applied to all exposed reinforcement.
(c)Concrete upstands to be made good with Renderoc HB 40.
[17]The process as I understand it is that the concrete had to be jackhammered down to the steel work.
It became apparent when Mr Sander was cross examining Mr Kohout that he had carried out the rectification work himself and was attempting to get Mr Kohout to resile from his opinion and agree with the method that DSBD used to rectify the work. The basis of his cross-examination was that the method recommended by Mr Kohout would not provide long term protection which exposed DSBD to a long-term liability. I accept Mr Kohout opinion as contained in his report and his assessment that it would involve no more than a day's work. Unfortunately, I'm unable to speculate as to the cost of such work.
A second report was obtained from Edge Consulting Engineers dated 7 June 2022. The author was Tim Peters, Managing Director, who opined that if all repairs were carried as per their previous reports, then the long-term performance and durability of the upstand will be suitable.
I allow the claim by Phoenix for the balance of unpaid invoices. The amount which I have assessed is greater than the amount being claimed by Phoenix which is probably a result of an accounting error. I invite the parties to make submissions as to the correct figure, whether it be $41,295.69 as claimed by Phoenix or $73,407.94 as assessed or some other figure.
I dismiss the cross-application by DSBD.
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