Potter v DMC Electrical and Air Cooling

[2021] QCAT 27

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:	Potter v DMC Electrical And Air Cooling [2021] QCAT 27
PARTIES:	MICHELLE POTTER
(applicant)
v
DMC ELECTRICAL AND AIR COOLING PTY LTD
(respondent)
APPLICATION NO/S:	BDL309-19
MATTER TYPE:	Building matters
DELIVERED ON:	21 January 2021
HEARING DATE:	13 October 2020
HEARD AT:	Brisbane
DECISION OF:	Member Richard Oliver
ORDERS:	The application is dismissed
CATCHWORDS:	CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – where the applicant entered into a building contract with a registered builder for the construction of a residential dwelling – where the contract included the installation of split system air-conditioners – where the respondent contracted with the builder’s subcontractor to install the split system air-conditioners – where ongoing problems with the split system air-conditioners requiring ongoing repairs and maintenance under the manufacturers warranty – where  two split system air-conditioners required replacement – where claim brought against the respondent on the basis of an implied contract – whether any contractual relationship between the applicant and the respondent – whether the respondent liable for the cost of the replacement air-conditioners – where damages claimed for future replacements – whether any allowance should be made for the benefit of the use do the original air-conditioners for seven years.
APPEARANCES & REPRESENTATION:
Applicant:	Self represented
Respondent:	Self represented

REASONS FOR DECISION

Background

1. Michelle and Michael Potter entered into a HIA New Home Construction Contract with Garth Chapman Regional Queenslanders Pty Ltd (the Builder) on 19 May 2011 for the construction of a new home at Bushland Beach which is in the environs of Townsville. Included in the Scope of Works for the house was the installation of 8 split system cooling – only air – conditioning units. The construction progressed without difficulty with practical completion being achieved on 13 December 2011.

2. DMC Electrical and Air Cooling was contracted by the Builder’s subcontractor, Tribute Homes, to supply and install the 8 air conditioning units for the new house. The type of unit was left to DMC so it decided on LG Units, and as to the specific product there has been no complaint. The air conditioning units were installed prior to practical completion. The Potters took possession of the house soon after practical completion.

3. They first experienced some difficulties with the air conditioning systems in early February 2012. DMC did a service call on 6 February 2012. That service call related to readjustment of a drain from one of the systems.[1]

   [1]All of the service call records are attached to Mrs Potter’s statement – Exhibit 1

4. Thereafter, between February 2012 and February 2017 the Potters had ongoing problems with the air conditioning systems and DMC, under the applicable LG warranties, returned to the house on numerous occasions to address their concerns. These services calls were at no cost to the Potters, save the last when the 5 year warranty expired.

5. Ultimately, in January 2019 the Potters had to install two new systems at a cost of $4,500. They have sought to recover that cost from DMC.

6. On 9 December 2019 the Potters filed an application in the Tribunal claiming a total of $9,120.50. This includes the cost of the replacement air conditioners and the further anticipated costs of the supply and installation of additional new air conditioners at an estimated cost of $4,500. DMC filed a response essentially contending that it is not liable because there was no contractual relationship between it and the Potters. Its contract for the supply and install of the air conditioners was with Tribute Homes.

7. However, prior to filing this application, the Potters first made a complaint to the Queensland Building and Construction Commission under the Home Warranty Insurance Scheme. The complaint was rejected by the Commission because it was not made with in time limit which is 6 years and 6 months from when the problems were first noticed by the homeowner. In a letter from the Commission in respect of the complaint the important dates are noted which are:

   (a)work completed – 13 December 2011;

   (b)items noticed – 6 December 2012;

   (c)complaint to QBCC – 21 October 2019.

8. The Potters then brought a claim against the Builder in the Tribunal.[2] The QCAT claim against the builder was ultimately dismissed because the building company was deregistered.

   [2]QCAT matter Q78/19.

9. Having exhausted all avenues they then, on some advice it seems from the Commission made a demand against DMC and instituted this proceeding.

10. The basis of the claim, in the application against DMC is set out in paragraph 7 “claim against respondent as (sic) on ‘implied contract’ in place”.

Discussion

1. There seems to be no real dispute that there were ongoing problems with the air conditioning systems as installed for a variety of reasons. Although not called to give evidence, and not required for cross-examination, the Potters relied on a statement from another air conditioning company, Chill Out, dated 2 August 2019 which noted:

   We carried out inspection of 6 x LG A/C installations at the above address as requested.

   Inspection of 6 x LG A/C units upstairs and downstairs, removed bottom plate of A/C’s and found clear evidence where water had been dripping and sitting. It was also noted that screws were rusted caused from water and water residue sitting to the bottom of the A/Cs, however none were dripping at the time the A/Cs were not being used.

   Upstairs bedroom A/Cs 2 and 3 both drains run uphill, bed 2 A/Cs runs uphill 2 inches before exiting into drain dish.

   Bedroom 3 A/C drains uphill approximately 10mm and is also not insulated. …

2. The Potters also rely on this evidence in establishing that if there is an implied contract, DMC are in breach. There is further evidence relied on by the Potters and that is a letter from CLR Electrical[3] which deals with the installation of new Fujitsu split systems. It states:

   The previous installation as per images below substandard. Images attached show how condensation drains were not lagged at all and this poor installation caused condensation, water damage to the wall and cavities. Drains required to be removed and lagged/re-insulated therefore the wall sheeting needed to be removed to rectify these issues.

   [3]Exhibit 3.

3. It is therefore evident from the independent evidence relied on by the Potters that serious questions are raised about the quality of the installation of the systems by DMC.

4. The evidence of DMC is contained in statements prepared by its director Mary Cameron.[4] Also the statement attached to the Response which is in a similar vein.

   [4]Exhibit 4

5. DMC denies any liability to compensate the Potters.  Its primary position is that there was no contract either between DMC and the Potters or in fact between DMC and Garth Chapman Regional Queenslanders Pty Ltd. DMC were engaged by Simon Griggs/Tribute Homes ABN 37 013 739 745 which, I assume, was a subcontractor. They also assert that the installation was at the direction of Simon Griggs in terms of their location and in accordance with the Standards in place at the time of the installation.[5]

   [5]Exhibit 4 – document 3.

6. DMC says that it followed the installation guidelines in the LG Installation Manual and all drainage complied with the manual. Furthermore, despite the problems the Potters were experiencing, DMC were never called back to undertake regular servicing and maintenance as is necessary particularly in a tropical climate. It is critical of the comments expressed by Chill Out and CLR Electrical because:

   They are impartial as they are unaware of the contract between DMC and Tribute Homes and Garth Chapman Builders and the Potters. Nor do they understand that the enclosing of the ceiling and walls in the lower part were not carried out after DMC completed the installation. The installation did not cause LG to fail.

7. Despite the above position taken by DMC as to the quality of the installation or whether it was done in a proper and workmanlike manner in accordance with the Standards, the difficulty the Potters face is similar to the complaint made to the QBCC. Not only is time against them, but also the fact that there was no contractual relationship between the Potters and DMC. The notion of some implied contract between the Potters and DMC is difficult to fathom. DMC responded to all of the problems and complaints under the LG warranties for 5 years and then when the Potters failed to pay an invoice of $137 for a call out, no further maintenance work was carried out by DMC.

8. The other difficulty, is that in assessing damages some allowance must be made for the benefit obtained by the original system for 7 years before the new systems were installed. This has not been quantified.

9. Unfortunately in the absence of any contractual relationship or other basis, the Potters’ claim against DMC must fail. Even if it were to succeed, the amount claimed for anticipated damages for future air conditioners is really just an ambit claim without, again, taking into account the benefit already received from the existing units.

10. The claim cannot succeed and the order of the Tribunal is that the applicants’ claim is dismissed.