| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : PINNER -v- BRICE & ANOR [2002] WADC 201 CORAM : O'SULLIVAN DCJ HEARD : 6-15 MARCH 2002 DELIVERED : 20 SEPTEMBER 2002 FILE NO/S : CIV 2787 of 1998 BETWEEN : FRANK ALEXANDER PINNER Plaintiff
AND
JEFFERY BRICE
AMANDA O'HARA
Defendants
Catchwords: Building dispute - "Cost plus" contract - Cost of works - Breach of contract - Damages for defective work and late completion
Legislation: Nil
Result: Plaintiff's claim dismissed
Damages of $14,816 plus interest paid to defendants on counterclaim
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Representation:
Counsel:
Plaintiff : Mr P A Monaco
Defendants : Mr J D Finlay
Solicitors:
Plaintiff : Godfrey Virtue & Co
Defendants : J D Finlay & Co
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20
Central Exchange Ltd v Anaconda Nickel Ltd (2001) 24 WAR 382
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Foron & Anor v Wight & Anor (1989) 168 CLR 385
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Heyman v Darwins Ltd [1942] AC 356
Holland v Wilkshire (1954) 90 CLR 409
McBratney & Anor v Boston, unreported; SCt of WA; Library No 940567; 4 October 1994
Renard Construction (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Rubel Bronze & Metal Co Ltd v Vos [1918] 1 KB 315
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Sharp & Ors v Ramage & Anor (1995) 12 WAR 325
Toteff v Antonas (1952) 87 CLR 647
Tropical Traders v Goonan (1964) 111 CLR 41
Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251
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1 O'SULLIVAN DCJ: The plaintiff is a registered builder who brings a claim for monies owing under a contract to build a house for the defendants and for damages for breach of the contract. The defendants deny liability and counterclaim for damages.
2 The defendants own land in Kalamunda and in 1996 and 1997 engaged the plaintiff to carry out some earth-moving works on the property. There is some dispute as to whether he was fully paid for that work but no dispute that during this period the plaintiff became aware that the defendants wished to build a house on the land and the possibility that he should build it was discussed.
The plaintiff's case 3 The plaintiff said in evidence that the first named defendant asked him whether he knew someone who could draw up plans for a house and he referred him to a Mr Reagan, whom his son knew. Mr Reagan produced preliminary sketches and then working drawings and one day Mr Brice showed them to him and asked how much he thought it would cost to build the house. The plaintiff replied that he did not know and suggested he see a costs estimator, Mr Ron Jessett, who produced an estimate for $166,101.92, excluding any allowance for a builder's margin or profit, and certain other items. 4 The estimate and list of items not included in it were handed to Mr Brice by the plaintiff who said that he was asked whether he would be interested in building the house himself and he replied that he was. Mr Brice asked him what he thought the total cost would be and the plaintiff made some calculations and came up with a figure of $186,000. When that sum was mentioned the plaintiff said that Mr Brice commented that that was "pretty dear" and asked him for two building contracts in standard form, one providing for the building of a house for a lump sum and the other providing for it on a "cost plus" basis. 5 The plaintiff said that a week or so later Mr Brice came back to him and said that he was interested in having the house built on a cost plus basis because he had contacts in the building industry and could save money by arranging for certain materials and work to be done himself. The plaintiff also said that Mr Brice produced a copy of Mr Jessett's estimate from which he had deleted a large number of items. 6 A contract was then made out in the presence of both defendants and the plaintiff. Specifications and an addendum were prepared at the same
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time and all these documents were signed on 27 July 1997 after which the plaintiff said that plans which Mr Reagan had prepared were submitted for approval to the Kalamunda Shire Council. 7 A little while later the plaintiff said that Mr Brice asked him to sign a letter (Exhibit 9) confirming that the estimated costs of building were $140,000. He did so assuming that it was a document that the defendants required for finance purposes. He was happy to put his name to the letter because he had seen Mr Jessett's estimate and was aware of the items which had been deleted from it and after allowing for those deletions and adding about $3,000 for contingencies and an amount for his own profit he considered that $140,000 was a reasonable sum. He also thought that in some respects Mr Jessett's estimate was on the high side. 8 After signing this letter the plaintiff said that the defendants wanted substantial amendments to be made to the plans. Mr Reagan was approached to do them but he was ill and therefore they were attended to by the plaintiff's son and by the plaintiff himself. The amended plans were submitted to the Council and approved on 5 December 1997. 9 Following the approval the ground floor slab and footings were poured and the plaintiff said that the site was then handed over to him on 12 or 13 January 1998. Progress claims were submitted in February 1998, March 1998 and April 1998 and the plaintiff said that there was no dispute as to these, although some adjustments were made by agreement in the course of discussions between himself and Mr Brice. 10 The plaintiff said that after presenting the third progress claim difficulties started to arise between the defendants and himself. He said that Mr Brice was to arrange for certain materials to be on site and for certain work to be done but on occasions the materials were not there and the work had not been carried out and this disrupted the progress of the job. The plaintiff said that this caused his relationship with the defendants to sour and that at about this time Mr Brice also started to complain to him about the cost of the work. 11 On 22 May 1998 the plaintiff said that Mr Brice rang him and asked for a meeting and one was arranged. At it he told him that he had exceeded his budget and that he was only prepared to pay the plaintiff $25,000 even though at that time something like $50,000 was owing. According to the plaintiff Mr Brice said that he, the plaintiff, could "take it or leave it"; that as an employee of a construction company he had the
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full support of the company's legal team and that he would cause the plaintiff "all sorts of problems" if he was not prepared to accept $25,000. 12 The plaintiff said in evidence that he responded by asking Mr Brice whether he wanted to suspend the works and that Mr Brice said that he did. After the meeting the plaintiff then wrote to the defendants confirming that the works were to be suspended as requested. The letter reads as follows: 13 On 25 May 1998 the plaintiff received a reply from the defendants reading as follows: "ATTENTION: Mr Frank Pinner and Mr Terry Walsh Thankyou for your correspondence dated 22 May 1998 regarding the cost escalation for our residence at 79 Kalamunda Road, Kalamunda. We estimate that the cost to complete construction of our home to the stage indicated in your contract is approximately $60,000 above your written estimate dated 12 August 1997. Furthermore we consider that the construction will not be completed by the end of contract date of 16 June 1998. Please advise of your intentions to rectify the situation. In the mean time we advise that a building consultant has been appointed to inspect the construction. We will advise of our intentions pending the outcome of his report and your response to this correspondence.
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We await your response. Yours faithfully J Brice A O'Hara" 14 The plaintiff's son, Kristen Pinner, who was working for the plaintiff gave evidence that he was on site on 25 May 1998 when the first defendant approached him and told him that he did not want any more work to be carried out. Kristen Pinner said that Mr Brice indicated that he wanted the plaintiff's plant and equipment to be removed from site within two days, and this was done.
The defendant's case 15 Mr Brice is the technical and quality assurance manager for the concrete division of a group of companies. 16 The defendants bought the land in about early 1995. In 1996 they began to build retaining walls on it and to arrange for sand to be brought onto the site. Commencing in about June 1996 Mr Brice engaged Mr Pinner, who had a Skidsteer loader (a machine somewhat larger than a Bobcat) to place sand behind the retaining walls and on the building pad and to carry out some excavation. The work was done from time to time between June 1996 and about May 1997. 17 In about September 1996 the defendants obtained a quotation to build a home and Mr Brice said that he showed it and a sketch of the house to the plaintiff. Mr Brice said that he told Mr Pinner that they did not intend to accept the quote because it was too dear and that Mr Pinner agreed with him and said that he could build the house for $125,000. According to Mr Brice it was only then that he realised that the plaintiff was a builder and he told him that when the defendants were ready they would be interested in talking to him. 18 Mr Brice said that in about April of 1997 he showed Mr Pinner the floor plan of a home which the defendants had prepared. He sought Mr Pinner's advice in relation to various matters and Mr Pinner recommended that a proper set of plans be made up by Mr Reagan. The defendants' plan was given to the plaintiff who met with the defendants again on 7 May 1997 at their rented house in Forrestfield. On this occasion he had a set of plans drawn by Mr Reagan and, according to Mr Brice, Mr Pinner told the defendants that he thought that the house could be built for approximately $125,000.
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19 Mr Brice said that on 7 May the defendants and the plaintiff discussed altering the plans by the provision of a mezzanine floor and an extension of the first floor of the house. He said that Mr Pinner said that the extra cost of the alterations would be in the order of $15,000. This was within their budget and they therefore asked Mr Pinner to take the plans away and have them modified by Mr Reagan. Mr Brice said that Mr Pinner also recommended that Mr Jessett prepare an estimate of the cost of the works. The defendants agreed that this should be done.
20 On 30 May 1997 the plaintiff returned to see the defendants and according to them he had with him the altered plans which became Exhibit 10 and Mr Jessett's estimate (Exhibits 5A and 5B). Mr Brice said that the fee for altering the plans was $60 and he wrote out a cheque for that amount and gave it to Mr Pinner on 30 May together with a cheque for $175 for Mr Jessett. 21 Mr Jessett's estimate (Exhibit 5A) indicated a figure of $167,101.92 excluding the builder's margin and a number of other items specified in a list (Exhibit 5B). Mr Brice said that at the meeting he indicated concern that this was much greater than the figure of $140,000 which Mr Pinner had mentioned on 7 May. He said that Mr Pinner suggested that the defendants should go through the Jessett estimate to see what savings could be made. He also said that Mr Pinner said that his experience in doing other work the subject of Mr Jessett's estimates was that he could probably build for 10 per cent less. It was agreed that the estimate should be examined and that the plaintiff and the defendants should meet again. 22 According to Mr Brice the plans which the plaintiff had brought with him on 30 May were left with the defendants and there were no alterations to them after that date. 23 The next meeting between the parties was in July of 1997 and was again at the defendants' house. Mr Jessett's estimate was discussed but no agreement was reached as to what savings could be made and Mr Brice said that towards the end of the evening he told Mr Pinner that he was getting quotes from other builders. This seemed to make Mr Pinner very upset and he left. 24 Mr Brice said that three or four days later Mr Pinner contacted him and arranged a meeting at the "Somewhere Else Café" in Kalamunda. At that meeting Mr Pinner said to him that he thought that his wife was trying to build a house he could not afford and that that was why he wanted to talk to him alone. Mr Brice denied that that was the case and
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said that he and his wife had agreed upon a budget and they did not want to exceed it. He said that he told Mr Pinner that he had received other quotes and that they were in an amount of approximately $170,000. Mr Pinner asked him what he was going to do and Mr Brice responded that, because the plaintiff's figure including builder's margin was in the order of $183,000, the defendants were going to accept one of the other quotes which they had received. Mr Pinner responded that he shouldn't be rash because "there was a way that [he] could build for $140,000." According to Mr Brice it was then that Mr Pinner mentioned "something that [he] had never heard of called a 'cost plus' contract". It was agreed that he would drop a copy of such a form of contract to his house for him to examine. 25 Mr Brice said that Mr Pinner claimed that by using a "cost plus" contract he could build the house for $140,000 and upon being asked why he repeated that he thought he could build for a figure lower than the Jessett estimate. He also said that he had his own plant and equipment which the defendants would not have to pay for and that some savings could be made in the purchase of materials. 26 A little later Mr Pinner dropped off a form of "cost plus" contract at the defendants' house and there was a further meeting at the defendants' home on 27 July 1998. At that meeting the Jessett estimate was discussed and savings which could be made were noted. The notes were made by Mr Brice on a copy of the estimate which is Exhibit 42. The amount arrived at was $145,558.51 including the builder's margin of 10 per cent. This was still above the defendants' budget of $140,000 but Mr Brice said that the plaintiff again expressed confidence that the lower figure could be achieved and said that that was also the opinion of his partner Mr Terry Walsh. 27 Mr Brice said in evidence: "Mr Pinner said that he was currently building homes that were based on the Jessett estimate and that those constructions were under the Jessett estimate. He foresaw that ours would be the same. Mr Pinner asked would I be willing to work every weekend doing work on the dwelling at his direction. He indicated to me that his plant and equipment would not be charged for and he also indicated to me that because it was a cost plus contract we had the added advantage of being able to buy things at a discount price that wouldn't be available in a lump sum because a lump sum … ."
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28 Mr Brice said that he told Mr Pinner that if the latter was prepared to provide written confirmation of the opinion of Mr Walsh and himself that the house could be built for $140,000 the defendants would be willing to enter into a "cost plus" contract. He said that Mr Pinner agreed to do this and that a contract was then signed upon the understanding that it would be subject to the defendants obtaining bank finance.
29 The contract documents were then taken away by the plaintiff and a copy returned to the defendants on 12 August 1997 when they were also given a document signed by Mr Pinner and stating as follows: "TO WHOM IT MAY CONCERN Frank Pinner and Terry Walsh, Builders Registration No 10116, the builders appointed to construct a home for Mr and Mrs J Brice, estimate in accordance with the plans, specifications and further details provided by Mr Brice, that the cost of the home will be approximately $140,000. Yours faithfully F A Pinner" 30 The defendants' application for finance was approved on about 27 August 1997 and documentation in relation to it was signed at the end of September. A deposit of $6,000 was paid to Mr Pinner by cheque dated 3 October 1997. The plaintiff attended to the application for a building licence with the Shire of Kalamunda and the licence was ultimately granted on 15 December 1997. 31 The defendants obtained quotes for the pouring of a concrete slab and Mr Brice said he passed those quotes on to Mr Pinner who attended to the laying out of the site on 17 December. The footings were poured on the 19th and the slab was poured on 23 December. 32 It is the defendant's case that the site was handed over to the plaintiff to commence the building works on 23 December, the day the slab was poured. Mr Brice said that after that date he next saw the plaintiff on site in early February 1998 when framing work commenced. The work was being done by Mr Pinner himself and his son Kristen, the plaintiff's partner Mr Terry Walsh and Mr Walsh's son Michael. 33 On 10 February 1998 the defendants received the plaintiff's first progress claim. It was in an amount of $21,763.85 and Mr Brice said that
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he was "absolutely appalled" at what he found. His concern, he said was as follows: "The immediate thing was that there was a large amount of materials claimed and the receipts … that Mr Pinner had forwarded, constituted only a fraction, so I had no way of verifying that these materials had been done and there was a considerable amount of labour with no description whatsoever prior to 2 February. I was aware that the framing commenced on 2 February and I was very concerned at … what the huge amount of additional labour was." 34 On 12 February 1998 Mr Brice wrote a letter which the plaintiff denies receiving. It read as follows: "Frank With regard to your first progress claim I have a number of concerns. Firstly only two invoices have been forwarded totalling $8,639.14 however I have been charged $10,695.94 for materials. As we agreed that all invoices and your payment cheque stubs would be forwarded with your progress claims can you please supply these. I have no way of checking material costs without them. Secondly, can you please explain your labour costs dated 1997 which total $4,850. The only work done in 1997 was pouring of the concrete which I organised. Thirdly, can you explain why the $6,000 deposit paid to you on 3rd August 1997 has not been deducted from the first progress claim." 35 Mr Brice said that he received no written reply to this letter but that his concerns were discussed with Mr Pinner and that the plaintiff "explained that any mistakes … would be corrected in the next progress claim". He also said that Mr Pinner explained that the 1997 labour costs were for "liaising with the shire and engineers". 36 On 14 February 1998 Mr Brice wrote again to Mr Pinner stating:
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correspondence dated 12th February and discussed verbally with you will be corrected in your next progress claim. The bank has however, after assessment of the works to date, advised that payment made will be only $16,029 as their assessor considers the claim to be in excess of the work completed. Can we discuss this discrepancy at your earliest convenience." 37 Work proceeded and a second progress claim dated 6 March 1998 was delivered by the plaintiff to the defendants. This claim was in an amount of $27,367.66. Mr Brice said that he complained of it and then wrote to the plaintiff on 8 March 1998 in the following terms: "Frank As per our telephone conversation today, will you please re-issue your second progress claim as there are numerous mistakes and discrepancies some of which were to be corrected from your first progress claim!!!! I am unwilling to forward this claim to the bank in its present form as no invoices have been forwarded with your claim as agreed and those items on your spreadsheets which do have dates (and most don't) are dated 1997!!! As it is my opinion that this project is running way behind time your urgent attention to this matter is requested." 38 Again the plaintiff denies receiving this letter. 39 Mr Brice said that after this letter the plaintiff delivered an amended second progress claim to the defendants. The amended claim is part of Exhibit 11 but the amount claimed was not significantly reduced and it was still in an unsatisfactory form. 40 On 10 March 1998 Mr Brice said that he wrote to Mr Pinner again stating:
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I accept your explanation that your computer program has problems but your suggestion that everything can be balanced in the end is not an acceptable way to do business. In the interests of having the project continue and because things now appear to be happening at a faster rate I have forwarded your second progress claim to the bank with a request for full payment as requested by yourself. Your next progress claim must however address all outstanding discrepancies, must provide all invoices and cheque payment stubs to date and must be free from computer errors." 41 Again the plaintiff denies receiving this letter. 42 Mr Brice said that in addition to sending the letter of 10 March 1998 he rang the plaintiff and told him that the amended progress claim was still unsatisfactory. 43 Work continued and a third progress claim dated 7 April 1998 seeking $42,611.22 was delivered. Again Mr Brice considered that the claim was not in a satisfactory form and on 15 April 1998 he said that he wrote to the plaintiff stating: "Frank I have today received your third progress claim. The situation regarding your progress claims has got completely out of hand. No adjustments have been made for previous discrepancies as promised. There are still numerous mistakes and overall your account keeping leaves much to be desired. Finally I do not believe that the claim to date is justifiable. I have requested the bank assess the works to date in relation to your claim. This situation must be rectified. I will ring you tomorrow to organise a meeting." 44 Mr Pinner denies receiving this letter and there is no evidence of any written reply to it. Nevertheless Mr Brice said that there was a meeting between himself and the plaintiff on 16 April at 5.00 pm when he went to the plaintiff's house and spoke with the plaintiff and Mr Walsh. At that meeting he said that he expressed concern that the amount claimed to date
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was grossly over-inflated having regard to the Jessett estimate of the cost of the works and that he went through a copy of it making handwritten notes on it in an effort to demonstrate his point. The document is Exhibit 6. 45 Mr Brice explained his notes as follows: "It's the summary page of the Jessett estimate. The total value I had there after things were omitted were $142,000. I went through the Jessett estimate to get a remaining cost, which was shown on here as $83,545. I subtracted those two to see what the cost of the work to date should have been, being the Jessett estimate minus what was remaining and came up with a figure of $58,477 and I had been charged at that stage over $91,000." 46 Mr Brice said that at the meeting he told the plaintiff that, "the error had to be either the original Jessett estimate or the fact that his materials and labour were over-charged. It has to be one or the other." He said that the plaintiff responded by saying that the Jessett estimate was wrong and that if this caused any problems "he would probably sue Jessett". Mr Brice said that he replied that he didn't believe that that was the case and that the labour costs were over-inflated and at this he said that Mr Pinner got "very angry; very angry and argumentative." 47 According to Mr Brice Mr Walsh, who was present at the meeting, commented that he thought that the labour costs were high and Mr Pinner said that he would look at the costs and that as the framing works had now substantially finished Mr Walsh and Mr Walsh's son would no longer be required and this would result in some saving. Mr Brice said that Mr Pinner conceded that the building was "slightly overpriced and that the finishing price would be somewhere between $153,000 and $155,000". 48 Mr Brice said that there was then discussion about the accounts and Mr Pinner agreed to deliver to him all invoices in relation to the project. 49 On 28 April 1998 Mr Brice said that he again wrote to Mr Pinner stating as follows:
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As previously discussed the variation between their valuation and your progress claim is increasing. This is of great concern. Your letter of credit dated 21 April has been forwarded to the bank and they have advised by return fax that payment of $28,176.11 will be made in relation to your third progress claim only because considerable work has progressed since this claim. Their valuation takes this work into consideration. They have also advised that further payments will not be made until the house is at lock-up stage." 50 Following the delivery of the invoices by Mr Pinner to Mr Brice the latter said that he spoke with Mr Pinner on 29 April and complained that he couldn't match them up with the progress claims. According to Mr Brice Mr Pinner responded "You either pay up or I stop the work". During that conversation Mr Brice said that he also asked Mr Pinner for a written estimate of the likely costs of completing the works. 51 On 18 May 1998 a fourth progress claim was made by the plaintiff and delivered to the defendants. Mr Brice said that he rang the plaintiff to discuss errors in it on 20 May and ultimately met with him on 22 May. The meeting was in the office of Margaret Thomas, the plaintiff's wife, at Parliament House. Prior to attending it Mr Brice said that he had prepared an estimate of the costs of work remaining (Exhibit 32) which he produced. It was Mr Brice's view expressed at the meeting that the job was over budget by "at least 40, maybe even $50,000". 52 Mr Brice said that after some discussion Mr Pinner refused to complete the exercise of estimating outstanding costs and screwed up his copy of the estimate which Mr Brice had prepared and threw it in the rubbish bin. He said that he then said to Mr Pinner: "We need to discuss this as gentlemen, Frank. We need to solve this issue. There's a problem and I'm not asking you to take a loss if that is the cost but I can't see that these costs were justified." Following that Mr Brice said that he made a proposal to Mr Pinner: "That we split the apparent over-costing of $40,000. I offered Mr Pinner $20,000". Mr Brice said that Mr Pinner said that he would have to discuss the proposal with his partner Mr Walsh and he responded that he would have to discuss the matter with his wife as well. There was also discussion of
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obtaining an independent valuation of the works and a building inspector's report to guarantee that the work done to date had been satisfactorily done. 53 As to whether work should continue in the meantime Mr Brice said that "because we had made an offer only to try and settle the dispute and nothing was arranged … " work was to continue. However Mr Brice asked that no major working such as gyprocking be done until the matter had been settled. 54 According to Mr Brice the meeting ended on that note and shortly after that he engaged a quantity surveyor, Mr John Stranger, to value the works to date and a building consultant, Mr Bob Wallis to report on the adequacy of them. He forwarded reports from both to Mr Pinner but before that the defendants received the letter from Mr Pinner dated 22 May 1998 quoted above. 55 The defendants responded by their letter dated 25 May 1998 which I have already set out.
The pleadings 56 By his statement of claim the plaintiff pleads the contract and certain of its terms. He then pleads that he commenced the works on 12 January 1998 and performed them until 27 May 1998 and that he has been paid the sum of $77,440.82 by the defendants "towards costs of the works and the plaintiff's builder's margin in respect of work invoiced to the plaintiff up to and including 6 April 1998." 57 By par 5(d) of the statement of claim it is then pleaded that the plaintiff "is entitled to be paid for costs of the works and plaintiff's percentage fee in respect of works invoiced to the plaintiff after the 6th April 1998, less amounts paid directly by the defendant to the suppliers full particulars of which are in Annexure A hereto." 58 It is then pleaded as follows: "6. By reason of the matters pleaded above, the Plaintiff is entitled to be paid by the Defendants $48,509.83 being the sum of $42,919.31 as costs of the works not paid for by the Defendant plus $5,590.52 builder's margin.
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Particulars of calculation of builder's margin
Costs of the work invoiced after 6 April 1998 $42,919.31 Amounts paid direct by Defendant $12,985.91 $55,905.22 Plaintiff's builder's margin at the rate of 10% $5.590.52 7. On or about the 25th May 1998 the Defendants demanded that: 8. The Defendants' conduct as pleaded in paragraph 7 was conduct in repudiation of the Defendant's obligations pursuant to the contract. 9. On or about the 27th May 1998: 10. By reason of the Defendants' repudiation of the contract the Plaintiff has suffered loss and damage.
Particulars
Loss of chance to earn the Plaintiff's percentage fee of $8,884.01 for the completion of construction of the works, calculated as follows: Estimated value of costs of works
for house as completed $214,442.00 LESS Costs of works (excluding builder's margin) As at 27 May 1998 125,601.95 Balance 88,840.05 Percentage fee (10%) 8,884.01"
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59 A claim expressed to be for unjust enrichment is also pleaded but it was not pursued.
60 By their Amended Defence, Set Off and Counterclaim the defendants plead that the terms of the contract between the parties included that all work should be carried out in a proper and workmanlike manner and in accordance with the drawings, plans and specifications and that the actual cost of works included in progress claims made under the contract would be reasonably incurred. 61 It is then pleaded in effect that: • Certain costs particularised in the three progress claims dated 10 February 1998, 6 March 1998 and 7 April 1998 and in par 5(d) of the statement of claim and Annexure A thereto were not in fact incurred or alternatively were not costs as defined in the contract (see pars 7, 8, 9, 9A, 10 and 11). • Certain work described as "the framing work" and "the builder's work" was not done or was carried out inefficiently and was therefore not work which can be claimed under the contract (see pars 12A, 13A, 13B, 13C, 13D, 13E, 13F). • Certain work was not carried out in a proper and workmanlike manner and the defendants have consequently suffered loss and damage which they are entitled to set-off against any claim (see pars 14, 15). • The plaintiff repudiated the contract and the defendants accepted his repudiation thereby bringing it to an end (see pars 21 and 22). • The plaintiff failed to complete the works in the time specified by the contract thereby causing loss and damage entitling the defendants to a set-off (see pars 27, 28 and 29). 62 By pars 33 to 37 of their counterclaim the defendants plead that prior to the making of the contract on 27 July 1997 the plaintiff made oral representations to the defendants:
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estimate that the approximate cost of carrying out the works on a cost plus sum basis would be $140,000 (par 34). • That they (the defendants) should not accept the lump sum "referred to in par 32 hereof" but should have the works constructed by the plaintiff on a cost plus basis at a cost of approximately $140,000 with him whereby they would save the difference between those amounts (see par 35). • That the plaintiff would construct the works utilising work methods that were cost effective and efficient (see par 36). • That it would be cheaper for the defendants to contract for the works to be performed on a cost plus contract basis rather than on the basis of a lump sum (par 37). 63 It is pleaded that each of these representations was false and in breach of the Fair Trading Act 1987 as amended. 64 It is then pleaded that the approximate cost to complete the works is $220,000 and that loss has been sustained. Damages are then claimed.
The contract 65 The contract signed by the parties on 27 July 1997 is entitled Cost Plus Contract and provided inter alia as follows: "1. AGREEMENT TO BUILD
(a) The Builder agrees to execute and complete for the Owner the building work described in Item 3 of the Schedule hereto ('the Works') upon the land described in Item 3 of the Schedule hereto ('the Site') in a proper and workmanlike manner and in accordance with the drawings, plans and specifications (inclusive of all addenda and colour schedules) agreed between the parties and annexed hereto and for the purpose of identification signed by each of them (which said drawings, plans and specifications and colour schedules are hereinafter referred to as 'the Construction Documents') for the consideration as described in Item 5a or 5b of the schedule hereto and upon the terms and conditions herein appearing. …
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6. COSTS The actual Costs of the Works shall include the following:- (a) The costs of labour and services supplied wholly in connection with the Works. (b) The nett costs of all subcontracts wholly in connection with the Works. (c) All fees payable to Statutory Authorities having jurisdiction over the Works. (d) Fees for licensed surveyor, structural engineer, architect or other professional consultants engaged by the Builder. (e) The premiums payable for all insurances as specified in Clause 8 hereof. (f) The nett cost of all building materials including temporary structures used wholly for the Works and including the cost of cartage. The costs shall be normal trade costs and any discounts applicable for prompt or cash payments shall remain with the Builder. (g) The cost to rectify any defects as part of the Defects Liability Period, other than making good faulty materials or workmanship. (h) Costs for plant, equipment and services used wholly for the Works. (i) Any costs to repair, replace and/or rebuild any damage or loss as a result of causes beyond the control of the Builder. Any amounts recoverable from an insurance claim shall be credited to the favour of the Owner. (j) Any excesses payable for Insurance claims by the Builder.
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7. COST EXCLUSIONS The following costs shall be borne by and at the Builder's expense and are not deemed as a Cost in accordance with this Contract. (a) Costs and expenses incurred in the purchase of plant and equipment which could otherwise be the subject to hire, unless otherwise agreed to in writing with the Owner. (b) Overheads incurred by the Builder for clerical staff for the preparation of accounts, statements, correspondence, drawings, estimates, supervision and other administrative duties. (c) Any expense whatsoever incurred by the Builder being an overhead incurred by the Builder's firm not wholly in connection with the Works. (d) The cost of making good defective materials or faulty workmanship not in accordance with this agreement. 10. PROGRESS PAYMENTS The Builder shall be entitled to make claims for progress payments for the Works by notice in writing to the Owner (herein after referred to as 'Progress Claims') at intervals of either:- (a) The Progress Claim shall identify all Costs incurred by the Builder up to and including the date of that progress claim together with the Builder's fee as specified in Item 5 of the Schedule. (b) Payments shall be payable by the Owner within FIVE (5) days of receipt of any Progress Claim.
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(c) If the Owner shall not within FIVE (5) days of receipt of any Progress Claim notify the Builder of their disagreement with any of the items therein specifying full details of the Owner's disagreement the Owner shall be deemed to have accepted and approved of that Progress Claim as true and correct. (d) If any dispute arises as to any item in a Progress Claim the Owner shall pay to the Builder the undisputed portion of that Progress Claim within the period specified in sub-clause 10(b) and the balance shall if not agreed and paid by the date of the next Progress Claim be resolved in accordance with Clause 18. (e) If any dispute arises as to any item in a Progress Claim which dispute remains unresolved at the date of the next Progress Claim the Builder may suspend the Works until the dispute is resolved or for any shorter period he may decide without prejudice to either parties rights in accordance with this Contract."
Some issues of fact 66 There are some stark differences in the evidence but perhaps none more so than in those concerning the following questions: The plans 67 Although cl 1 of the contract contemplates it, no plans were in fact signed by the parties for the purpose of identifying them as part of the contract documents. 68 It is the plaintiff's case that the plans which were in fact in existence when the contract was signed on 27 July 1997 were in the form of Exhibit 4 and that later there were substantial changes to them. The plaintiff says that it was those changes which resulted in a blow-out of costs for which the defendants alone are responsible. These changes, the plaintiff says
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were brought about at the defendants' request in September and October 1997, after the letter Exhibit 9 was signed. As a result the plaintiff argues, much more material and labour was required and this had a significant effect upon the progress, as well as the cost, of the works. 69 The plaintiff gave evidence that when he met with the defendants at their house in Forresfield on 7 May 1997 he produced the plans which had been prepared by Mr Reagan. He denied returning to see the defendants on 30 May with any amended plans. He did return on that date with the Jessett estimate which he said was based on the plans produced on 7 May. 70 The plaintiff said that when the time came to amend the plans: "We went to go back to Mr Reagan but he was ill. He was suffering from multiple sclerosis and, according to Kristen, was unable to do any work so my son Kristen started to alter the drawings himself which Mr Brice paid him for, I think $150, which led to these changes here and some of the changes I made as well." 71 Kristen Pinner gave evidence supporting his father. He is a qualified carpenter and a building supervisor and in 1997 was studying at TAFE. He met Mr Brice socially through his parents. It was he who asked Mr Reagan to draw plans for the defendants and he said that he went with his father to Mr Ron Jessett when Mr Jessett was asked to prepare an estimate upon the basis of them. He saw the Jessett estimate and said that sometime later he was asked by Mr Brice whether it would be possible to amend the plans to provide for an open space above the family meals area. He said that after discussing the matter with the defendants it was agreed that the extra costs involved were not worth it and that there was then further discussion during which the defendants "came up with another option of taking the whole house across to make it two storey completely". 72 Kristen Pinner said that at the defendants' request he then personally drew up amended plans. He said that these amendments were not done until about September 1997. He was paid for the work that he did but that he could not remember exactly how much he received. He agreed that it was "quite possibly" the sum of $60. It was not a "major task". The cheque was "more than likely" banked into a Visa account with the National Australia Bank and he did not know whether it might have been banked on 20 June 1997 which would of course have been much earlier than the date upon which he said he did the work. He said that if there
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was a cheque for $60 banked in June 1997 it might have been for photocopying or Mr Brice might have paid him in advance. 73 The plaintiff said that the amendments which he himself made were not done until October or November of 1997 and after the amendments made by his son in September of that year. He said that they were done just prior to the issue of the building licence which. 74 I have already noted that the defendants deny that there were any amendments to the plans after the plaintiff brought them to their home on 30 May 1997. 75 Peter Robin Crews is a building contractor who was called as a witness by the defendants. He trades in partnership with others under the name Longbeach Homes and gave evidence that at Mr Brice's request he provided a quote for the building of the home for the defendants on their property. He thought that he first met with Mr Brice in mid to late May of 1997 and was given plans so that he might prepare his quotation. He obtained prices for the supply of materials and the performance of work by various trades and it is clear from his records that the prices were provided to him in or about June of 1997. The plans which Mr Brice gave him are in the form of Exhibit 10. 76 It is quite clear that the plans, Exhibit 10, were in existence at the time the contract was signed on 27 July 1997 and I reject the evidence of the plaintiff and Kristen Pinner which is to the contrary.
The letters (Exhibit 17) 77 I have already noted that the evidence of Mr Brice is that he wrote a number of letters to the plaintiff and that the plaintiff denies receiving them. 78 The plaintiff's wife, Margaret Jean Thomas, gave evidence that she assisted her husband in his business in a secretarial capacity. She said that she handled all the mail addressed to the plaintiff. She said: "I open all the mail. I discuss it with Frank and help him prepare any answers etcetera, at night or on the weekend … ." 79 Ms Thomas denied receiving any of the letters the subject of Exhibit 17 and said she had never received any telephone calls about them. Ms Thomas is a Certified Practising Accountant and said that she
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would certainly have dealt with any letters complaining about the state of the progress claims and would have been offended by them. 80 The letters which Mr Brice wrote all purport to express concerns over matters to do with the contract including delays in commencement, alleged errors in the progress claims and failure to correct those errors. His evidence was that he either posted or personally delivered each letter to the plaintiff's home. He received no written reply to any of them but the actions of the plaintiff as described in the evidence are in some respects consistent with the receipt by him of some of them. For example, the first four letters dated 3, 9, 12 and 15 December 1997 are all to do with arrangements for the pouring of the concrete slab and, as I have said reflect concerns being expressed by Mr Brice about delays in that regard. The evidence is that the slab was in fact poured shortly after these letters were written. 81 The fifth letter is dated 12 February 1998 and deals with the first progress claim. It queries the claim in a number of respects including a failure to bring to account the sum of $6,000 which had been paid by the defendants to the plaintiff by way of deposit on 3 October 1997. The second progress claim does bring that deposit to account. 82 After receipt of the first progress claim Mr Brice wrote to the plaintiff on 14 February 1998 stating: "Frank I have forwarded your progress claim to the bank on the understanding that the discrepancies mentioned in my correspondence dated 12th February and discussed verbally with you will be corrected in your next progress claim. The bank has however after assessment of the works to date advised that payment will be only $16,029 as their assessor considers the claim to be in excess of the work completed. Can we discuss this discrepancy at your earliest convenience. Regards" 83 After this letter the plaintiff did receive only the sum of $16,029 notwithstanding that his progress claim was for $21,763.85 and the plaintiff does not appear to have raised any objection to the underpayment.
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84 The letters written by Mr Brice dealt with matters of importance to the parties in connection with the administration of the contract and there is no good reason why, having written them, he would not have posted or delivered them to the plaintiff. The impression which I have gained from the evidence is that Mr Brice was careful and methodical in his dealings with the plaintiff and he would have been astute to put his complaints to the plaintiff in writing and in a timely manner.
85 In my opinion the letters written by Mr Brice were received by the plaintiff and I reject the evidence which is to the contrary.
Issues for determination 86 The parties have agreed that the issues for determination in this case are as follows: "1. The Plaintiff's entitlement to: 2. The Plaintiff's lost opportunity to complete the works and earn his margin of $8,884.01. 3. Whether the Plaintiff or the Defendants repudiated the contract. 4. Whether the amounts pleaded in paragraphs 8 and 9 of the Defence are costs incurred by the Plaintiff and payable by the Defendants pursuant to clause 6 of the Contract. 5. Whether the amount pleaded in paragraph 11(b) of the Defence is cost of labour (sic) incurred by the Plaintiff and payable by the Defendants pursuant to clause 6 of the Contract. 6. Whether the works pleaded in paragraph 12(a) and (b) of the Defence and Scott Schedule item 33 are: (a) changes to the contract scope of works, (b) authorised by the defendants,
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and whether the increased cost of the changes is payable to the Plaintiff by the Defendants pursuant to the contract. 7. Whether the labour charges of $31,501.16 for framing work pleaded in paragraph 12A of the Defence or any part of the charges is unreasonably incurred and if so are the Defendants liable to pay any part unreasonably incurred to the Plaintiff pursuant to the contract. 8. Whether the labour charges of $5,810.89 claimed by the Plaintiff between 28 April 1998 and 22 May 1998 pleaded in paragraph 13D of the Defence or any part of that charge is unreasonably incurred and if so are the Defendants liable to pay any part unreasonably incurred to the Plaintiff. 9. Is the work pleaded in paragraph 14 of the Defence not performed in a proper and workmanlike manner and in breach of clause 1(a) of the Contract. 10. The extent of faulty work and the cost of remedy (defence 14). 11. Whether there was delay on the part of the Plaintiff and if so, whether the Defendants are entitled to delay costs of $5,880.00. 12. Whether the Defendants were induced by the Plaintiff to enter a cost plus contract with the Plaintiff."
Issue 4: Whether the amounts pleaded in paragraphs 8 and 9 of the Defence are costs incurred by the plaintiff and payable by the defendants pursuant to clause 6 of the contract 87 It is convenient to deal with this issue first. 88 I have already set out clauses 6 and 7 of the contract which deal with costs recoverable by the builder under the contract. 89 The matters in dispute under this heading are the subject of a Scott Schedule and it is appropriate to examine them by reference to it.
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Item 1
90 Included in the amounts which the plaintiff has claimed are the sums of $1,200 and $1,800 which were the subject of the first progress claim. These amounts appear in the printout accompanying the claim as follows: "$1,200 Frank Pinner 1997 No other detail which might have explained these sums to the defendants appear in the progress claim or the accompanying documents. 91 Exhibit 23 is a letter dated 22 July 1998 written by the plaintiff's solicitors to the defendants' solicitors attaching a table prepared by the plaintiff in answer to the defendants' query concerning these two amounts. The amounts are described in the table under the heading "Item" as "Lab - Pinner" and under the heading "Date" the year 1997 appears. The plaintiff's comment in the table reads as follows: "Liaising with Kalamunda Shire and engineers, various plan alterations, submission to Shire at agreed price of $300 per day. Client approved of and paid for in previous claims." 92 In the Scott schedule filed in these proceedings the plaintiff's comments in relation to these items read as follows: "(a) Digging up and removal of 5 large boulders from the site by the builder over two full days including machine operation hire (machine hire $50 per hour). (b) There were three sets of plan alterations which required considerable time for the builder, including liaising with defendant, liaising with draftsperson and liaising with the engineer as well as seeking approval from the Shire for each plan alteration. The amount per day was agreed by the defendant." 93 In cross-examination the plaintiff at first denied and then agreed that the digging up and removal of five large boulders from the site was work done before the contract was entered into. It was then put to him and he said: "I'm told that it was done on 27 October 1996 and you were paid $1,500 for that work. What do you say to that?---I would
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have been paid $1,500 for that work. I can't argue with that and I'm not going to argue with it. It's that long ago I can't really recall but I know that if I was given a cheque for it then I would have been paid. Otherwise it would have been paid out of the draw down and I believe that to be the case." 94 The defendants each gave evidence, which I accept, that all excavation works carried out by Mr Brice were done and paid for before the contract was entered into. 95 In relation to par (b) of the plaintiff's comments in the Scott schedule I have already found that Exhibit 10 was in existence at the time the contract was entered into. It is my finding that there were no alterations to it giving rise to any claim by the plaintiff in respect of this item. 96 In my view the plaintiff has not established that he is entitled to the amount of $3,000 or any amount under this item.
Item 2 97 The sum of $1,500 was claimed in Progress Claim No 1 but no details were provided to explain the claim. The table accompanying the letter of 22 July 1998 (Exhibit 23) describes it as "Labour charges for site preparation and supervision of concrete pour". In the Scott schedule the plaintiff's comment reads as follows: "Included time and machine hire for Pinner to level the site, including excavating the back of the block and carting and spreading sand on the pad. Amount was agreed prior to start of construction." 98 In the course of cross-examination the plaintiff was asked to explain the basis of his claim for $1,500 and he gave evidence as follows: "It's for machine hire. The whole $1,500---Well I assume that that's correct. How is it made up?---It's $50 an hour for machine time. Every hour … When was the work done?---I can't recall the exact date we are talking five years ago.
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Was it done in one, two or more - - -?---It would have been done in 1997. On one occasion or more?---Or 1998. Sorry it may have been 98. 97,98. On one or more than one occasion?---It would have been more than one occasion. Can you give me an indication of how many occasions?---It's probably three or four days work …" 99 After giving this evidence Mr Pinner's attention was drawn to the description of the claim in the table accompanying the letter Exhibit 23 and he said: "What I'm saying, in that $1,500 – if that was provided in 1998 that would be more accurate than on the Scott schedule. I would agree with that." 100 I am unable to conclude that any levelling or excavation work or carting and spreading of sand on the land was done as part of the contract works. In my view there is no basis in the evidence for this claim.
Item 3 101 The amount of $150 claimed for attending to alteration of the plans is, I find not payable by the defendants to the plaintiff. I have already set out my findings in relation to the evidence concerning the alleged alterations to the plans after the contract was entered into. I can find no acceptable basis in the evidence for this claim.
Item 4 102 The amount claimed by the plaintiff is $200. Mr Brice conceded in evidence that at the time of the concrete pour on 23 December 1997 the plaintiff was present on site although the precise number of hours was not conceded. In the table attached to the letter Exhibit 23 the plaintiff wrote, "Incorrect 6½ hours on site. Agreed labour rate $300 per day." It is my finding (explained hereunder – see Issue 5) that the plaintiff and the defendants did not agree a labour rate for the plaintiff of $300 per day but did agree to pay $30 per hour. I would allow this claim upon that basis.
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Item 5
103 Power to enable the works to proceed was provided by means of a generator and the temporary power pole which the plaintiff brought to site was in fact never used. The plaintiff claims that it was the defendants' responsibility to provide power and that although it was going to be provided it never was and that is why the pole was not required. In my view that does not justify a cost for the hiring of the temporary pole which remained unused throughout the works. It was not an actual cost incurred nor one reasonably incurred. I would not allow the claim, which is for $250.
Item 6 104 This is a claim for $112.90 said to have been incurred for the cost of photocopying sets of plans for the defendants and various subcontractors. It is contained in Progress Claim No 1 and there are two other similar claims, one for $20 described as having been incurred on 9 October 1997 and another for $81.30 said to have been incurred on 30 October 1997. The amount of $112.80 is simply said to have been incurred in 1998 and the defendants deny that there was any need for photocopying in 1998 and put the plaintiff to proof of that amount. There is no documentary proof that this cost was incurred and other than to say that the year 1998 which appears in the printout accompanying Progress Claim No 1 was a mistake Mr Pinner gave no evidence justifying it. The defendants accept the other charges for photocopying to which I have referred. In my view this claim should be rejected.
Item 7 105 This is an amount of $245 claimed in the second progress claim as an administration cost, but in the Scott Schedule as the costs of hiring equipment. 106 Clause 7(b) of the contract excludes any administration charges and Mr Brice gave evidence, which I accept, that he pointed that out to the plaintiff. 107 I have already noted that it was also Mr Brice's evidence that the plaintiff agreed to provide his own plant and equipment at no charge but the plaintiff denied that.
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108 The plaintiff kept a diary (Exhibit 16) and in an entry dated "Wed 20th", which appears to refer to 20 May 1998, he wrote:
"Jeff rang said our book work left a lot to be desired told me labour cost was miles too dear didn't want to pay me for full time supervision. I explained that the only time I charged for was when I was actually working on site not when I was there making sure things were going OK. told him I hadn't charged for machine time truck time generator time scaffold I supplied etc." 109 The plaintiff said in cross-examination that by this entry he meant that he hadn't made any claim for the hire of plant and equipment at an hourly rate. He said: "There was just the flat rate and if you're driving a machine – at that time for 8 hours normally it would be $55 an hour. Mr Brice had all of this equipment there for $245 a week." 110 There is no reference in Mr Pinner's diary to a charge at a flat rate as opposed to an hourly rate and I do not accept this explanation. In my view the diary entry supports the evidence of the defendants that the plaintiff agreed to provide his own plant and equipment at no charge.
Item 9 (Item 8 has been withdrawn) 111 I am satisfied that the amount of $417.15 is in fact a credit due to the defendants and not a sum payable by them.
Item 9A 112 Mr Brice gave evidence that two and a half sheets of compressed particle board were left over on site. The compressed sheeting was used for the flooring in the upstairs bathroom and toilet area. It is depicted in photograph No 35 in Exhibit 27. Paul Rafferty, a quantity surveyor, called by the defendants gave evidence that he measured the dimensions of the sheeting and found them to be 2400 millimetres by 900 millimetres. He also measured the toilet and bathroom areas and calculated that only 5.56 sheets of that size would have been needed. If eight sheets were brought to site only six would have been required.
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113 In my view the plaintiff's claim for $605.88 has not been fully justified and should be reduced by the value of two sheets which amounts to $151.47.
Item 9B 114 I accept Mr Brice's evidence that only 16 stirrups were brought to site. The plaintiff is not entitled to the sum of $89.10.
Item 11 (Item 10 has been withdrawn) 115 This dispute concerns a question of whether the defendants have been properly credited the cost of crane hire when it was unnecessary. The amount involved is $80. 116 The third progress claim delivered by the plaintiff to the defendants charges an amount of $350 for crane hire on 30 March 1998 and $270 for crane hire on 2 April 1998. Trusses were brought to site on 30 March 1998 but they were not of CCA-treated pine as required by the contract and were removed. Mr Pinner's diary has an entry for that date which reads, "Wrong trusses". The crane hire of $350 would appear to relate to that date. The cost cannot be claimed. On 2 April, according to Mr Pinner's diary the new trusses were delivered and the crane hire of $270 on that date would appear to be a cost properly chargeable to the defendants. The defendants are entitled to a credit of $350 and not $270 as the plaintiff has allowed.
Item 12 117 In my view, the plaintiff has not established that these were screws bought for the purposes of the contract and I would not allow the claim which amounts to $51.49.
Item 13 118 This is an amount of $2,205 claimed initially as an administration cost and later as the cost of hiring machinery owned by the plaintiff. For the reasons set out in relation to Item 7 I consider that the plaintiff has not made out this claim.
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Item 14
119 In my view the plaintiff has not made out this claim. The Scott Schedule describes the claim as one for removing rubble including leftover timber from site and dumping it. Mr Pinner gave evidence that it was for removing timber from his workshop. In my view the charge has not been justified.
Item 14A 120 $572.20 is in dispute. The plaintiff has claimed for the cost of 20 western red cedar posts 6 metres in length. The defendants say that only 16 posts were ever used and that there were no 6 metre posts left on site. Mr Brice did not deny using some timber left on site to complete the verandah and carport but there were no posts of that length used. I accept that evidence. In my opinion the claim has not been made out.
Item 15 121 This is a claim for $150 said to be payable to the plaintiff for wages for half a day. The plaintiff has written in the Scott schedule "Pinner worked on site as tradesman, assisting other trades with scaffold shift, carpentry work and insulation installation. Rate agreed to by defendant at start of contract." I am not persuaded that Mr Pinner did do half a day's work on site as a tradesman on the day in question which was 23 April 1998. Mr Brice gave evidence that by reference to his diary no work was done on site on that day. The entry in the plaintiff's own diary reads as follows: "Thursday 23rd went onto several site (sic) to get bricklayer to do job at a cheaper rate than original brickies contracted at clients request. Spen. 5 hours. $150."
Item 16 122 The invoice which the plaintiff has produced to support this item (Exhibit 44) purports to show the purchase of fasteners on 8 April 1998 and the plaintiff has indicated in the Scott schedule that the fasteners were cuphead bolts used to bolt beams onto posts and footing brackets onto posts. Mr Brice denies that there was any further bolting done after 8 April 1998. I accept that evidence. In my view the claim for $24.72 has not been made out.
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Item 17
123 This is a claim for bolts, flat washers and nuts again said to have been bought on 8 April 1998 for the purpose of bolting frames and brackets. I accept the first named defendant's evidence that the framing works had been completed by that date and conclude that the plaintiff has no entitlement to $48.03 under this item.
Item 19 (Item 18 withdrawn) 124 The amount of $3,092 the subject of this claim has been paid by the defendants.
Item 20 125 The sum of $586 has also been paid by the defendants.
Item 21 126 The amount of $572 has been paid by the defendants.
Item 22 127 Mr Brice gave evidence that he provided six 30 metre rolls of "Sisalation" and that only one more roll was required. Mr Pinner said that he did not know whether Mr Brice delivered six rolls to site but I accept Mr Brice's evidence in that regard. The plaintiff has claimed for three extra rolls the subject of two invoices in Exhibit 44. The cost of two of them is not payable by the defendants and the plaintiff is therefore not entitled to the sum of $197.80 in respect of them.
Item 23 128 The plaintiff accepts that this is a duplication of Item 14. The amount of $52 cannot, therefore, be claimed.
Item 24 129 $305 is claimed as monies outstanding for work done on the roof of the house. I find that the work was completed and the amount is not therefore payable. $305 is in fact payable by the plaintiff to the defendant
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for the cost of completing the roof. (See Item 7 under Scott Schedule for defective work.)
Item 25 130 This is a claim for $563 sought by the plaintiff as costs in connection with removing equipment off site on 25 and 26 May 1996. It is, of course, the plaintiff's claim that the defendants repudiated the contract and thereby caused the plaintiff to suffer loss including this amount. 131 In my opinion that contention should be rejected. 132 In my view the evidence of Mr Brice concerning the meeting between the parties on 22 May 1998 is to be preferred to that of the plaintiff and Ms Thomas. The letter from the plaintiff of the same date confirms that, following the meeting, he continued to regard the contract as still on foot and the letter from the defendants in reply dated 25 May disclosed a similar attitude which is inconsistent with the evidence of Kristen Pinner that he was nevertheless ordered to remove all the plaintiff's equipment from the site. In my opinion that evidence should be rejected.
Item 26 133 The plaintiff claims $1,930.34 as the cost of electrical works carried out by Maranatha Electrics. Initially the whole of that sum was in dispute but, as I understand it, the defendants now accept liability for $903.34. 134 Details of the work carried out are contained in the invoice of Maranatha Electrics dated 28 September 1998 (Exhibit 40). 135 Mr Frederick Wharton is an electrical contractor who owns the business of Maranatha Electrics. He gave evidence that an underground cable had been laid by others and part of the work which he had to do was to add to that cable so that it could reach the switchboard. He did not know who had laid the cable but there was a problem with it in that water had penetrated it. Rather than pull it up and lay a new cable which would have been a major task compressed air was used to blow the moisture out and other work involving the removal of water was carried out. He did not know how the water got in. The work involving the removal of moisture was done on and after 9 May 1998.
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136 Having heard Mr Wharton's evidence the defendants accept liability for $930.34 of his account but deny that the balance of $1,000 upon the basis that that is a reasonable estimate of the costs and materials of attending to the water damage to the cable, for which they deny any responsibility.
137 Other than to confirm that he and Mr Wharton inspected the cables and found that there was a problem with water in them Mr Pinner was unable to say whether the invoice of Maranatha Electrics related to work done in removing water from the cables. 138 When asked whether it was the defendants' position that it was the electrician's fault that water entered the cables Mr Brice said: "I'm not ascertaining on whose fault it was. All I'm saying is that the cables were damaged and I don't consider that to be my liability." 139 Mr Wharton said that he didn't know how the water got in to affect the cables. It was not suggested to him that it was his fault that it did. 140 Counsel for the defendants submitted that the cost of work and materials relating to the removal of water from the cables was not a "cost of the works" within the terms of the contract and therefore could not be claimed by the plaintiff. I accept that submission. In any event I note that clause 7(d) excludes any claim by the builder for the costs of making good defective materials or faulty workmanship. In my view the plaintiff has not made out any basis for the claim.
Item 27 141 I am satisfied that the defendants did not repudiate the contract and that the plaintiff was not justified in removing his equipment from the site on 25 and 26 May 1998. It follows that this claim in an amount of $180 should be dismissed.
Item 30 (Items 28 and 29 have been withdrawn) 142 I have already dealt with this matter in Item 7 and for the reasons set out therein conclude that the sum of $1,292.50 for the hire of equipment cannot be claimed.
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Item 32 (Item 31 has been withdrawn)
143 Mr Brice gave evidence denying that he took a scaffold off site. I am not satisfied that the plaintiff has justified the claim for $55 in respect of it.
Issue 5: The cost of labour 144 I turn now to consider Issue 5 of the issues for determination agreed by the parties. The amount in dispute is $5,677.03. 145 The plaintiff gave evidence that after the contract was signed he and Mr Brice orally agreed that labour would be provided by himself and his partner Terrance Walsh at a rate of $300 per day and by their sons at a rate of $181.60 and $100 respectively. He said that it was agreed that fixed daily rates were to be charged whether eight hours or more were worked but that if only a half day's labour was provided the charge would be for half a day. 146 Mr Brice denied that there was any such agreement. He said that it was agreed that Messrs Pinner and Walsh would be paid at the rate of $30 per hour and that their sons would receive lesser hourly rates equivalent to trade rates payable to persons of their qualifications of about $18 and $10 per hour respectively. No daily rate was to be applied. 147 In my view the evidence of Mr Brice is to be preferred to that of the plaintiff. The contract itself allows only for the actual cost of labour and I think it most unlikely that the defendants would have agreed to payment on any other basis, particularly when budgetary considerations were so uppermost in their minds. 148 In any event I note that in his own diary the plaintiff has recorded the precise hours worked and it is difficult to see why he would have done that if it was enough to record whether it had been for a whole day or half a day. 149 Mr Brice said that using the plaintiff's own documents, including his diary, (Exhibit 16) he was able to calculate the exact number of hours worked by Messrs Pinner and Walsh and their sons and thus arrived at the conclusion that the number of hours worked between 2 February 1998 and 19 May 1998 was 1410.75. In fact the plaintiff has claimed for 1660.42 hours labour calculated upon the basis of an eight-hour day. The difference is 249.67 hours. The difference in monetary terms between a claim for 1660.42 hours of labour and one for 1410.75 hours was
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$5,677.03. I accept that evidence and find that the plaintiff's claim includes a claim for this amount to which he is not entitled.
Issue 6: Whether the works pleaded in paragraph 12(a) and (b) of the Defence and Scott Schedule Item 33 are:-
(a) changes to the contract scope of works
(b) authorised by the defendants and whether the increased cost
of the changes is payable to the plaintiff by the defendants
pursuant to the contract 150 The defendants complain that in three particular respects the plaintiff carried out work which was not authorised under the contract and accordingly it is said that there is no liability to pay for it. 151 The work in question involved the supply and fitting of four cedar (rather than aluminium) windows in the south wall; the supply and fitting of two additional windows in the east wall and the use of cedar rather than perma-pine in the framing work of the balcony. 152 There is no dispute that each of these items involved a departure from the scope of works contemplated by the contract but the plaintiff contends that the defendants knew and approved of the variations and should now pay for them. 153 Mr Brice gave evidence that when the windows for the house were delivered to site he noted that there were more timber windows than provided for under the contract and he raised the matter with the plaintiff. He said that the plaintiff responded that he had ordered extra timber windows for a room on the upper floor which would otherwise have had some aluminium and some timber windows in it. Mr Brice said that the plaintiff told him that "in his opinion that would not look proper". Mr Brice also said that the plaintiff told him that all of the windows had been bought "as a package deal" and that these four extra timber ones could not therefore be returned. 154 Mr Brice also gave evidence that when the framing work was being done he noticed that the plaintiff had provided for two extra windows in the east wall and he raised that matter with him. He said that the plaintiff responded: "… that the windows that I had asked for didn't line up with the rest of the windows; if we look at all other elevations of the house the windows were situated two above two, this one was
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different and his explanation was 'It would look better if they were all the same.' " 155 Mr Brice said in evidence that he did not argue with the plaintiff because he was told by him that it would be an expense to pull down the frames and rebuild them. 156 In relation to the use of perma-pine rather than cedar in the balcony framing the plaintiff gave evidence that at a time when the balconies had been substantially constructed he noticed that cedar rather than perma-pine had been used. Mr Brice gave evidence that he raised the matter with the plaintiff who told him that he considered that the balconies looked better in cedar and he had therefore used it. 157 Mr Pinner gave evidence denying Mr Brice's account. He said that it was Mr Brice who requested the extra windows and the change to timber "to aesthetically look better". 158 In relation to the use of perma-pine Mr Pinner said: "Mr Brice instructed me that he wanted to change all the verandah beams, the posts, the floor joists, the rafters, the support beam to the rafters and the batons in the verandah area and the balcony area and the carport – he wanted them changed to western red cedar. He showed me a picture of a house that he liked the look of and he wanted the cedar look. I told him that would cost extra money. He said 'It's no problem that's what Mandy wants', and that arrived on site. It was ordered, arrived on site. Mr Brice knew all about it." 159 Clause 9 of the contract is headed "Variations". It provides:
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160 In my view the words "in any event" in cl 9(a) of the contract contemplate that even in the absence of a written request for a variation a builder is entitled to payment for the works the subject of one but of course there is no authority in a builder to carry out variations other than at the request of the owner and no entitlement to be paid if he does so.
161 This matter clearly falls to be determined on the evidence and as to that I do not accept that Mr Brice requested the use of cedar rather than perma-pine. I accept his evidence that he raised the matter with Mr Pinner at a point when the balconies had been substantially constructed and that he neither asked for neither accepted the variation. In my view the defendants bear no liability for this extra cost. 162 As far as the windows are concerned I have come to a different conclusion. It seems to me that, as Mr Brice has frankly admitted, the defendants were made aware that the timber windows and additional windows were to be fitted before they were in fact installed and, although there may have been some inconvenience, it was open to them to demand that the terms of the contract be adhered to. They did not do so and in my view must now be taken to have agreed to pay for the extra costs involved. 163 Mr Paul Rafferty a quantity surveyor, gave evidence, which I accept, that the difference in cost between timber and aluminium windows amounted to $640 and the extra windows in the east wall cost $650. The added cost of cedar instead of perma-pine was $2,607. It follows that the plaintiff is not entitled to claim $2,607 but is entitled to the amount of $1,290.
Issue 7: Whether the labour charges of $31,501.16 for framing work pleaded in par 12A of the Defence or any part of the charges were unreasonably incurred and if so are the defendants liable to pay any part unreasonably incurred to the plaintiff pursuant to the contract 164 The defendants plead and the plaintiff accepts that it was a term of the contract that the plaintiff is only entitled to claim, as actual costs of the work, those costs which were reasonably incurred. 165 The defendants say that the plaintiff's claim includes an amount of $31,501.16 for the costs of labour to construct and erect wall, floor, balcony and roof-framing. There is a small difference between the parties
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as to whether that is the exact sum claimed by the plaintiff in respect of these amounts but the difference is of no great significance. 166 The defendants plead that the amount claimed by the plaintiff should be reduced by the sum of $20,140.16. 167 The defendants called two quantity surveyors who expressed the view that the labour costs charged by the plaintiff were excessive. 168 John Stranger is a quantity surveyor with considerable experience in the housing industry. He visited the site at the defendants' request in May of 1998 and again on 5 August of that year. He examined the framing work and noted and measured the amount of materials supplied and estimated the number of man-hours which would have been required to carry out the work. To carry out this exercise he used information contained in a publication known as "Rawlinson's Australian Construction Guide". The guide is used in the industry as a means of measuring the amount of time which might reasonably be expected as necessary to perform given tasks. It was Mr Stranger's view that a total of 515 man-hours would have been required to do the work and he calculated that that ought to have cost $11,361. He arrived at this figure by applying an hourly rate of $22.05 being the average of the rates charged by Mr Pinner, Mr Walsh and their two sons. This amount was Mr Stranger's estimate of the reasonable labour costs involved in manufacturing and installing the framing work. He did not allow for the cost of bringing frames to site and had assumed that they would be built on-site. If in fact they had been built off-site and in a workshop his evidence was that it was likely that the manufacturing costs would have been less. |