Power v Catton Constructions Pty Ltd
[2011] QCAT 595
•28 November 2011
| CITATION: | Power v Catton Constructions Pty Ltd ACN 087539571 and Anor [2011] QCAT 595 |
| PARTIES: | Elin Power |
| v | |
| Catton Constructions Pty Ltd ACN 087539571 Pioneer Investments Pty Ltd ACN 070004045 |
| APPLICATION NUMBER: | BDL013-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 14 March 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick, Member |
| DELIVERED ON: | 28 November 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The applicant is to pay the second respondent the sum of $8,240.95 within 21 days of the date of this order. |
| CATCHWORDS: | Variations – early possession – prime cost items – delay damages Domestic Building Contracts Act 2000, ss 18, 84 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Self represented |
| RESPONDENT: | Catton Construction Pty Ltd represented by John Catton, Director |
REASONS FOR DECISION
Background
The applicant filed an application for a domestic building dispute in this Tribunal on 19 January, 2010. The orders sought by the applicant have changed since filing the application. The applicant now seeks the following orders:
(a) repayment to the applicant of overpayments made by the applicant to the builder;
(b) charges for unapproved variations be waived;
(c) compensation for her inability to redeem the Qld Government and BCC water rebates on rainwater tanks.
The first respondent, Catton Constructions Pty Ltd ACN 087539571 filed a response and counter-application on 3 June, 2010. Despite originally seeking other orders the first respondent now seeks an order that the applicant pay to the respondent the sum of $31,400.76, as moneys owing under the construction contract with the applicant.
On 31 August, 2010, Pioneer Investments (Aust) Pty Ltd ACN 070004045 sought an order that it be joined as a respondent to the proceedings and given leave to file a cross claim, on the basis that by a Deed of Assignment, Catton Constructions Pty Ltd assigned all its rights against the applicant to Pioneer Investments Pty Ltd.
On 1 September, 2010 the Tribunal directed that Pioneer Investments Pty Ltd be joined as a second respondent to the proceedings and that the response and counter application of the first respondent be taken to be the response and counter application of the second respondent.
Following a compulsory conference between the parties, it was directed that the matter proceed on the basis that the following matters are agreed between the parties:
(a) the applicant and the first respondent entered into a contract for the construction of a home by the respondent on a property owned by the applicant;
(b) the contract is a standard HIA “Peace of Mind” New Home Construction contract and was dated 26 November, 2007;
(c) the contract price was $492,000.00;
(d) work was begun on 10 January, 2008;
(e) the home is built and the applicant has resided in the home since 14 January, 2009;
(f) a final completion certificate was issued by Mark Cullinan on 21 October, 2009;
(g) the applicant has made a number of progress payments to the first respondent during construction totalling $406,710.35; and
(h) the first respondent has assigned its rights to any further payments under the contract (if any) to the second respondent.
The parties agreed following the compulsory conference that Catton Constructions Pty Ltd would undertake certain repair work. No repair work has been undertaken since the compulsory conference.
It was directed that the matter proceed on the basis that certain matters were disputed between the parties. Some of these matters, including in relation to defects are no longer relevant.
At the hearing the applicant said that she no longer sought any order with respect to alleged defects. In view of the first respondent’s admission that it was no longer trading, the applicant said that she intended to seek the assistance of the Queensland Building Services Authority to rectify the alleged defects.
The second respondent did not appear at the hearing. The hearing was conducted by Mr John Catton, Director of the first respondent on behalf of the first respondent. I intend to make no further reference to the second respondent in this matter.
Both parties relied upon their statements of evidence filed in the Tribunal, being Exhibit 1 tendered by the applicant and Exhibit 11 tendered by the first respondent. I have referred extensively to these statements in making this decision.
The Contract
The contract entered into between the parties was the HIA QC 2 2000 New Home Construction Contract. The contract is dated 26 November, 2007. It relates to the construction of a new home at 22 Gresham Street, Ashgrove.
Schedule 1 to the Contract contains the following terms:
“4. The works…
Highset timber & FC House with 4 bedrooms, media room, laundry, garage, fam, din, living & 3 bath rooms”
“5. …The contract price is …$535,500.00
WARNING
The contract price is subject to change. The clauses that allow for changes to the contract price are clauses 11, 15 and 19…
“10. Building Period (clauses 3 and 16)
The works must reach practical completion within 160 days after commencement, subject to Clause 16…
The contract was tendered in evidence by both parties as part of their statements of evidence. The contract includes a copy of the plans for the proposed residence. Both parties also tendered as part of their statements of evidence a copy of the quote given by the first respondent to the applicant dated 19 November, 2007. The quote sets out the scope of work in more detail than appears in the formal contract. It also sets out a list of “PC items”, (prime cost and provisional sum items), and their individual cost.
The total quote comes to $492,000.00 including GST. It is comprised of a fixed build cost of $381,100.00 for labour and materials plus $110,900.00 for PC Items. The parties agreed that the quote was accepted. At the hearing no explanation was offered for the difference in the contract price set out in the formal contract and the quote document.
The parties proceeded throughout the construction phase by referring to the quotation document and rely on that document for their analysis of the claims they each make. The quote was not referred to in the formal contract as a document forming part of the contract. Because of lack of specificity as to the scope of works in the formal contract and in the plans and drawings, I find that the contents of the quote are implied terms of the contract. I find that the contract price was $381,100 plus prime cost and provisional sums as set out in the quote. This implication is necessary in order to give the contract meaning and business efficacy.[i] The contract price and prime cost and provisional sum items are inclusive of GST.
I have dealt with each party’s claim on the basis that the amounts claimed are inclusive of GST.
First Respondent’s claim
The first respondent in its cross-application sought payment of the sum of $30,790.65 which was said to be a stage payment.
At the hearing the respondent relied upon Exhibit 13, being spreadsheets recording the first respondent’s claims for final payment and purported agreement to claimed items following a meeting with the applicant on 1 October, 2010. The total amount claimed by the first respondent on the basis of its reconciliation in Exhibit 13 was $31,400.76 (after deducting the sum of $29,303 which the first respondent agreed had been claimed twice). During the course of the hearing and in its final submissions the first respondent altered some of the claims set out in Exhibit 13. These issues are dealt with later in this decision.
Applicant’s claim
In her closing submissions filed 6 April, 2011 the applicant submitted a revised reconciliation of expenses and costs. It canvasses the items dealt with in Exhibit 13 and has the advantage of stating clearly which items are not in dispute and isolating those items which are disputed. These notations are consistent with the evidence given at the hearing.
The applicant asserts that taking into account liquidated damages for delay and overpayments the first respondent owes her $28,533.85.
The reconciliation provided by the applicant is set out below.
Build cost quoted, excluding PC items $381,100 Less build items included in the fixed cost paid by the applicant directly to contractor Airconditioner (agreed) $14,770.00 Cupboard frames/doors from China (Not agreed) $ 1,616.00 Peter Moore, Electrical (Not agreed) $ 7,481.50 Painter (agreed) $ 4,000.00 Extra stone bench tops to replace breakages. (Not agreed) $ 1,100.00 Hot water system (agreed) $ 1,096.00 Floor levelling pre floor laying (Not agreed) $ 700.00 Subcontractor floor layer (Not agreed)
$ 3,629.00
Floor wastes for bathrooms (Not agreed) $ 325.00 Water pump for tank to toilets (Not agreed) $ 975.00 Extra timber for relaying floor (Not agreed) $ 985.00 Sub Total $36,677.50 Balance $344,423 Plus agreed variations (quoted and approved) owing to the Builder (Agreed) Metal box fitting (letterbox) $ 258.00 Stone wall tiling $ 1,000.00 Shelving to garage and work bench $ 300.00 Supply mod wood front stairs $ 3,000.00 Gates to side of house $ 500.00 Skylights $ 1,051.00 Front gates, supply and install $ 1,495.00 Louvres in ensuite $ 1,096.00 Subtotal $ 8,700.00 Balance $353,123 Plus approved PC Items paid for by the Builder Landscaping (Not agreed) $ 2,000.00 Vacumaid intercom (Agreed) $ 1,062.00 Extra Tiling (Not agreed) $ 1,000.00 Extra Windows (Agreed) $ 4,081.00 Tile and Stone (Agreed) $ 143.00 Electric garage door and 2 handsets (Agreed) $ 1,485.00 Shower screens supply and install (Agreed) $ 2,533.00 Kitchen glass splashback (Agreed) $ 1,400.00 Covercrete driveway (Agreed) $ 3,850.00 Total fences, gates, retaining walls (Not agreed) $18,000.00 Subtotal $35,554.00 Balance $388,676.50
Less liquidated damages Start Date 10/1/08 Occupancy Date 14/1/09 Total Days 370 (Disputed by respondent whose calculation is 256) Less contracted days 160 (Disputed by respondent who says extensions were claimed) Days over 210 (Disputed by respondent who says extensions were claimed) Liquidated damages daily rate $50 per day $ 10,500.00 Balance payable by applicant $378,176.50 Payments made by applicant Deposit $ 27,675.00 Payment 24/4/08 $ 30,000.00 Payment 29/4/08 $ 76,935.35 Payment 28/5/08 $110,700.00 Payment 12/8/08 $110,700.00 Payment 16/10/08 $ 80,700.00 Less payment to applicant by respondent ($ 30,000.00) Total payment $406,710.35 Amount claimed as an overpayment by applicant $28,533.85
The applicant contends and the first respondent does not dispute that the applicant paid a number of suppliers direct for PC Items, in an amount totalling $75,400.00. It is not necessary that those items be dealt with in the reconciliation as they do not impact on the fixed build cost and are not claimed by the first respondent.
Items in dispute
Cupboard frames/doors
The first respondent asserts that doors imported from China needed to have door frames custom made onsite to suit the doors. The first respondent says that this work is a prime cost. I note that “Windows and doors” appear as an item on the PC list although there is no reference in the list to installation of doors.
The applicant says that wardrobes were specified on the design drawings. Wardrobe doors were supplied from China. She says that the same supplier supplied cupboard doors. I note Exhibit 20 contains an order form and quotation with respect to bedroom doors, garage cupboard, linen cupboard, and media cupboard doors. The applicant contends that door frames are a conventional build cost for which the builder is liable.
I accept the submission of the applicant that the plans require installed wardrobes and that therefore the door frames form part of the fixed construction cost. As the applicant has met this cost it should be deducted from the fixed build cost component of the contract price. The first respondent did not dispute that the sum had been paid by the applicant.
Peter Moore Electrical installation
Mr Moore was called by the applicant to give evidence. Consistent with his statement, Exhibit 2, he said that he was engaged by the first respondent to install electrical services and fittings to the Gresham Street house. He said that there was no electrical plan, no budget and no quote requested.
The electrical requirements were established in consultation with the applicant. Mr Moore undertook the work and rendered his fees to the first respondent. His evidence is that once $10,400.00 had been incurred the first respondent told Mr Moore that the electrical budget had been exhausted and that anything further would have to be paid by the applicant direct. The first respondent’s statement of evidence contains an assertion that at the time the electrical layout was prepared Mr Catton told the applicant that the sum of $12,500.00 was the budget in the fixed build cost and that anything over this amount would have to be at her cost. The applicant has not denied this assertion.
It is not disputed that once Mr Catton told the electrical contractor the budget had been exceeded, the applicant agreed to pay the electrical contractor direct for future work. She paid the sum of $7,481.50. $4,278.50 remained unpaid by the first respondent for work performed by the electrical contractor. The applicant has not paid the first respondent the sum of $4,278.50.
The applicant submits that the electrical work forms part of the fixed component of the build cost and that the first respondent must bear all the costs even if it has underestimated the true cost.
The quote provides that the first respondent will supply and install electrical services as per plans as part of the fixed cost component. Light fittings are noted in the PC list. The first respondent gave evidence that at the time the quote was given there was no electrical layout on the plans. That is apparent to me.
I find that there was a contractual requirement to provide electrical services to the property. In the absence of any specifications as to the nature and extent of those services, I find that there is an implied term for the sake of business efficacy, that those services be to a reasonable standard consistent with a house the size and configuration of the Gresham Street house. Mr Moore gave evidence that a reasonable price for a basic layout for this house would be $8,000.00. I accept that evidence and find that the first respondent contracted to install at least a basic layout of electrical services.
I find that the electrical work requested by the applicant, in excess of a basic layout, is work additional to that covered by the contract. The contract provides a mechanism for variations to the contract to occur to cover additional work requested by the owner.
Plainly the terms of the contract in relation to the formalities of a variation have not been complied with. There has been no variation document prepared by the builder to reflect the work requested and the price of that work.
Sections 79 and 80 of the Domestic Building Contracts Act 2000 (DBCA) also require variations to be in writing and signed. Section 84 of the DBCA provides that a building contractor may only recover an amount for a variation if, relevantly, sections 79 and 80 of the Act have been complied with or with the Tribunal’s approval, given on application by the building contractor.
Section 84(4) of the DBCA provides that the Tribunal may approve recovery of an amount by a building contractor for a variation only if the Tribunal is satisfied that:
(a) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation; or
(b) the building contractor would suffer unreasonable hardship by the requirement for a written variation; and
(c) it would not be unfair to the building owner for the building contractor to recover an amount.
I note that the applicant dealt directly with the electrical contractor and to that extent had control over the extent and nature of work performed.
I note the evidence of the applicant that she agreed to pay the electrical contractor directly for work performed after the first respondent advised that the budget in the quoted build cost had been exceeded. The applicant agreed to pay for new work, not completed work.
The first respondent in its submissions has sought recovery of all the costs of the electrician. I find that to the extent the electrician’s work fell within the work required to be done under the contract, there can be no recovery of an amount from the applicant beyond the fixed cost component of the construction cost. In the absence of clear evidence as to what work and which charges relate to a basic layout, I find that work done up to the point when the first respondent indicated its budget had been exceeded was work under the contract.
I find that the amount paid by the applicant direct to the electrician represents additional work to that contemplated by the contract. The amount of $7,841.50 was paid by the applicant to the electrical contractor. I find that sum is for additional work to that contemplated by the contract and is payment for a variation to the contract. The work falls within the definition of a variation under the contract.
As that sum has been paid directly to the contractor, the first respondent has suffered no loss to justify a claim for recovery of the sum from the applicant. However, because it is a variation at the request of the owner, it should not be deducted from the fixed build cost to which the first respondent is entitled.
Sections 79 and 80 of the DBCA have not been complied with. I find that the respondent’s cross application and submissions seeking recovery of the whole amount of the electrical contractor’s charges is an application to the Tribunal as contemplated by section 84 of the DBCA. I find that it would cause the first respondent unreasonable hardship to have a variation for additional work deducted from its fixed build cost. I find that it would not be unfair to the building owner to bear that amount. I make those findings on the basis that the owner ordered the work directly from the electrical contractor, knowing the fixed build cost allowance had been exceeded and is enjoying the benefits of the work.[ii]
Extra stone bench tops to replace breakages
The applicant seeks to have the first respondent bear the cost of replacement stone bench tops in an amount of $1,100.00. The original stone bench tops were ordered from China by the applicant’s brother in law, Mr Parker. There is a conflict in the evidence as to whether the first respondent contracted with Mr Parker or the applicant contracted with him. The quotation from the Chinese supplier appearing in the applicant’s statement of evidence, is directed to “Ms Elin”. It appears that the applicant paid her brother in law directly for the bench tops. The respondent denies that it directed her to pay Mr Parker.
The bench tops were seen to be damaged upon unloading of the container from China. There is speculation but no evidence as to how or where the bench tops were damaged.
I find on the basis that the applicant paid directly for the bench tops and the quotation was directed to her, that she agreed to provide those materials. In that case clause 21 of the general conditions of contract is engaged. Clause 21.4 provides that all materials supplied by the owner are at the risk of the owner. Accordingly I find that the replacement cost of damaged bench tops cannot be deducted from the fixed build cost of the first respondent. The cost of replacement is a cost to the applicant.
Floor levelling pre floor laying / Subcontractor floor layer
The applicant’s evidence is that she paid the floor laying contractor direct, at the request of the first respondent, the sum of $700.00 for levelling the concrete slab which was work necessary to lay a timber floor. The applicant also paid the floor layer direct the sum of $3,628.90 for installing timber flooring.
The first respondent’s evidence was that all work associated with laying the floor was a PC Item to be met by the applicant on top of the fixed build cost.
I note that the fixed cost component of the quote refers to “supply and lay timber hardwood floors to living areas…”. It is not noted in that part of the quote as a PC Item. In the PC Items list there appears the item “Timber floor to Kitchen, living, dining, and study.”
There is no reference in the contract conditions as to how PC Items under the contract are to be dealt with. The DBCA sets out a number of requirements when prime cost and provisional sum items form part of the contract. A prime cost item is defined by the DBCA as:
“…an item, including, for example, a fixture or fitting –
(a)that has not been selected, or the price of which is not known, when the contract is entered into; and
(b)for the cost of supply and delivery of which a reasonable allowance is, or is to be, made in the contract by the building contractor.”
Section 14 of the DBCA gives a meaning to “provisional sum” as:
“(1) A provisional sum, for a domestic building contract, is an amount that is an estimate of the cost of providing particular contracted services.
(2) However, subsection (1) applies only to contracted services for which the building contractor, after making all reasonable enquiries, cannot state a definite amount when the contract is entered into.
(3) The reference in subsection (1) to the cost of providing the contracted services includes a reference to the cost of supplying materials needed for the subject work”
The DBCA requires a building contractor to set out in a schedule the prime cost or provisional sum item and a breakdown of the cost estimates. The building contractor must give a copy of a supporting invoice or receipt to the owner when seeking payment. Finally, the DBCA provides that a building contractor must not enter into a contract providing for a prime cost item or provisional sum unless the contract is to the effect that any prime cost or provisional sum adjustment is to be allowed for in an increase or decrease in a related progress payment or the amount of the contract price.
The contract between the parties refers to certain clauses of the contract which may affect the contract price, but does not refer to the PC Item list. To that extent the first respondent has not complied with the DBCA. Despite that provision, section 92 of the DBCA provides that unless a contrary intention appears in the Act, a failure by a building contractor to comply with a requirement under the Act does not make the contract illegal, void or unenforceable.
The problem in this case is one of interpretation of the contract. I find that because the fixed cost component of the construction referred to the supply and laying of timber floors, it was intended that those costs were to be absorbed into the fixed costs component. The reference to “Timber floor” in the PC Items list suggests that the type and cost of timber to be used in the house had not been selected by the owner, accordingly only the materials component of the cost might change if the actual cost differed from the estimated cost.
I find that the applicant is entitled to reduce from the fixed cost component of the construction, the cost of floor levelling and installation.
Floor Wastes for Bathrooms
The first respondent contends that it was obliged to provide standard floor wastes, however, the applicant wanted to use and supplied square shaped wastes. These were more expensive and cost $325.00.
At the hearing the applicant conceded that she would pay half the cost of the floor wastes on the basis that the builder was obliged to supply standard wastes.
I find that the applicant has sought to vary the contract. She has waived compliance with the formal requirements with respect to variations by purchasing and supplying the new floor wastes herself.
Pursuant to the respondent’s cross-application, in accordance with section 84 of the DBCA, I find that the first respondent would suffer unreasonable hardship in not recovering the amount it is entitled to for the cost of standard wastes and that it is not unfair to the applicant for the respondent to recover that amount.[iii]
In the absence of evidence as to the cost of standard floor wastes, I accept the applicant’s concession and find that she is entitled to set off the sum of $162.50 against the fixed build cost, being half the cost of the wastes which she met herself.
Water pump for tank to toilets
The applicant contends that the first respondent was bound as part of the fixed price component of the build cost to supply and install a water pump from the rainwater tank to the toilets. The first respondent denies that at the time the contract was entered there was any statutory obligation to do so. The applicant has put into evidence an extract from the Queensland Development Code. As at 22 October, 2008 it was prescribed that “Internal fixtures supplied from a rainwater tank must have a continuous supply of water”.
At the time the contract was priced and entered that was not a requirement.
I find that the cost of the supplying and installing the water pump was a variation required to ensure compliance with a new law. The work falls within the definition of variation in the contract. The sum involved is $975.00. The cost is a cost to the applicant and should not be deducted from the fixed cost component of the construction.
The applicant has waived compliance with the formal requirements of the contract by arranging installation and paying the contractor direct.
Pursuant to the respondent’s counter application and in accordance with section 84 of the DBCA, I find that it would cause unreasonable hardship to the first respondent to have the fixed cost of the construction reduced by the cost of this variation. I find that the applicant has received the benefit of the pump and it is not unfair to the applicant for the first respondent not to bear this cost.[iv]
Extra timber for relaying the floor
The first timber floor laid at the house was laid in a pattern resulting in end joints lining up across the floor. The applicant objected to the outcome and the first respondent lifted the floor and arranged for it to be relayed. Extra timber was required in an amount of $985.00.
The applicant says that this was faulty workmanship and that the first respondent should bear the cost. The first respondent says that the work was not faulty, the floor layer was experienced and had laid timber in that way many times before and that the applicant should bear cost, as her objection was based on aesthetics.
The first respondent put into evidence a report given to the applicant from the Technical Manager of the Australian Timber Flooring Association (ATFA). The report said that “…there is no Australian Standard covering the installation of the product. As such the manufacturers recommendations for the installation will apply and cover aspects of performance and aesthetics. The Boral Silkwood installation guide is attached and indicates to:-
“Start new rows with a board at least 450 mm shorter or longer than the strip used in the previous row. This will prevent end joints from clustering throughout the floor”.
“Hence the expectation from this is that the boards would have a random staggered look throughout the floor and we are also aware that many installers concur with this.”
In the absence of any other evidence I accept that the floor was not laid in accordance with the manufacturer’s installation guide and that the respondent is responsible for the cost of rectifying the problem. On this basis I find that the applicant is entitled to offset the cost of extra timber from the final payment to the first respondent.
Landscaping
The applicant says that she expected to receive as part of the contract price, landscaping to the value of $5,000.00 to include lawn, basic garden beds and pavers/pebbles in the back yard. She said that the approved quote included a PC allowance of $5,000.00.
The applicant complains that the value of the work she received was $2,000.00 and involved only the laying of turf on the front yard. She said the cost of cleaning the site and reinstating the damaged footpath were costs to be borne by the first respondent as part of the fixed cost component of the contract.
The first respondent says that the sum of $5,000.00 was used for supply and laying of 30 cubic metres of top soil, machine hire to tidy and prepare the front yard and lawn for landscaping placement of garden edges and labour.
Despite the evidence of both parties that landscaping to a value of $5,000.00 formed part of the contract works, I cannot locate any reference to this item of work on the quotation, in the fixed cost component or in the PC Items list.
To the extent the first respondent agreed to perform that work, it was a variation to the contract. There is nothing in writing in evidence before me as to the scope of the variation. The parties are in dispute as to what was to be provided.
The applicant has submitted in her statement of evidence a copy of an invoice from Caboolture Turf, dated 13 January, 2009 for the supply of turf in the sum of $946.
Although I note in the first respondent’s statement of evidence a note that invoices and a breakdown of labour were provided to the applicant, they are not apparent on the material.
Without further evidence I cannot find any entitlement on the part of the respondent to a greater sum than the amount the applicant concedes is payable for landscaping work. I find that the first respondent is entitled to payment of $2,000.00.
Extra tiling
The applicant objects to paying any more for tiling undertaken at the house than $1,000.00 for stone wall tiling which she asserts is an agreed variation and $1,000.00 for extra tiling to the entranceway which she says was quoted for the work. The applicant makes no submissions in relation to the cost of tiling for the rest of the house, other than to say that the first respondent’s estimate in the PC Item list of 60 square metres of tiles was a gross underestimate, given the size of the house and the number of bathrooms.
The first respondent says that tiling was a PC Item. The PC Item list refers to “Supply tiles in selected colours 60 square metres internal and external - $1,800.00” and “Install tiles throughout 60 square metres - $3,000.00”. The first respondent submitted that the applicant supplied tiles and requested the laying of additional tiles to the entry area of the property.
At the hearing the respondent tendered Exhibit 14, being an invoice from DJB Ceramic Tiling in a total amount of $12,702.80. The invoice covered all the tiling work undertaken including for the internal feature wall and external feature wall which I take to be the stone wall tiling and entranceway tiling requested as extras by the applicant. The invoice also covers work said not to have been included in their original quote in relation to tiles in the downstairs laundry, WC, and end of bath to ensuite.
It appears that far more than 60 square metres of tiles were laid, and no tiles were supplied by the first respondent. That is different to the expectation of the first respondent set out in the PC Items list. I consider that this is not a case of a prime cost or provisional sum item costing more than first estimated. It is an enlarged scope of work.
I find that the work performed was additional to the originally estimated 60 square metres of tiles, supplied and laid. The work falls within the definition of variation in the contract.
I have no evidence as to how the work came to be expanded to cover the extent of tiling in fact undertaken. Given that the work was done, it is reasonable to assume that the applicant expressly or impliedly required it to be done. She did not give any evidence that she did not require the work to be done.
The first respondent was of the view that the change could be accommodated by treating the enlarged tiling requirement as a change to the prime cost estimate. I have previously found that this is a wrong analysis, given the change to the scope of the work.
The applicant appears to consider it is the first respondent’s responsibility to meet the cost of the tiling in the amount of an earlier quote. There is no quote in evidence for the amount of $1,000 for stone wall tiling and $1,000.00 for entranceway tiling. The respondent did claim the sum of $1,000.00 each for these items of work in his early claims. However, from 26 November, 2010 his submissions have claimed the full amount of the tiling work. No explanation is given as to why the first respondent might earlier have accepted the sum of $1,000.00 for each item and ignored the cost of the balance of the tiling work.
I find that:
(a) the first respondent did extra work for the applicant at her express or implied request; and
(b) the extra work was a variation, being additional to the scope of the original contract works, that is, more than the 60 square metres referred to in the PC Item list. The work falls within the contractual definition of a variation.
The formal requirements of the contract in relation to a variation were not met. No variation document was signed. However, I consider that the first respondent is entitled as part of its counter-application to a consideration of section 84 of the DBCA for recovery of the amount of work performed, despite failure to ensure the parties signed a variation document.
I note that clause 19.7 of the contract provides that if the price of a variation is not agreed, the price for additional work is, the reasonable price for that work, including an amount for the builder’s margin.
The applicant did not challenge the reasonableness of the DJB Ceramic Tiling Invoice. I find that the sum of $12,702.80 is a reasonable price for the work.
I find that it would cause unreasonable hardship to the first respondent if it is not paid the amount of the invoice rendered by DJB Ceramic Tiling and which it is liable to pay. I find that it is not unfair to the applicant for the first respondent to recover that amount in view of the fact that the extra work was of value to the applicant; and it would be unjust if the applicant were to keep the benefit of the additional work without paying for it. The applicant freely accepted the work, standing by and allowing the work to be performed in circumstances when she knew the first respondent had only estimated to lay 60 square metres of tiles, but undertook double that work.
I find that the applicant is obliged to pay the respondent the sum of $12,702.80 for tiling, not the two sums of $1,000.00 set out in the applicant’s reconciliation.
Fences, Gates and Retaining Walls
The first respondent claims the sum of $29,303.00 for the cost of erecting fences, gates and retaining walls. In the PC Items list the amount estimated had been $18,000.00 for “Blockwall fences and gates including retaining walls”. The first respondent says this work was put on the PC Items list because of the lack of plans, the lack of fencing scope and the uncertainty of the cut on the site.
After the site was surveyed it was recognized by the surveying engineer that the southern boundary was some 300mm inside the allotted boundary alignment.
During the course of construction a survey was conducted, engineering plans were undertaken and plans for this work were drawn and then approved by the applicant.
The first respondent says that additional work to that first contemplated includes work requested by the applicant, being:
· changing from timber fences with 1 metre retaining walls to block retaining walls and fences;
· building a retaining wall to the western side of the building out of besser block to attach a set of stairs;
· removal of boundary fence which was 300mm inside the boundary alignment, replaced by a timber retaining wall;
· removal of the chain wire fence to the western side boundary to create privacy for the alfresco area;
· northern fence replaced and block retaining walls built to retain the alfresco area and yard;
· rendering and painting retaining walls;
· blockwork front fence; and
· gates to side of house.
The applicant says that although she approved the drawings for the work, she thought that the PC Item of $18,000.00 was a quote and that if the work was to exceed that amount the first respondent had to seek a variation. She complains that she had no prior notice of the cost increase and if she had known the cost she may have chosen a cheaper option.
In relation to the front fence the applicant submits that the first respondent agreed to bear the whole cost of the front fence, because the plan was not followed for the garage. The applicant said that blueboard was used rather than blocks in the garage and as a result the first respondent agreed to construct the front fence in blockwork. Any such agreement was not recorded in writing.
The first respondent denies any such agreement was made and says that because these items of work were flagged as PC items it is entitled to charge the actual cost.
I accept the first respondent’s evidence that the work outlined above was different to and additional to the originally contemplated work. That was not disputed by the applicant. On this basis I do not think the cost of the work can be treated as if the work were all prime cost or provisional sum items.
The applicant agreed at the hearing that she signed the drawings and plans to reflect the new work. On this basis I find that the first respondent performed the work at her express or implied request.
In the absence of any supporting evidence in relation to an agreement that the first respondent would bear the entire cost of the front blockwork fence, I accept the evidence of the first respondent that there was no such agreement.
I find that the additional work was outside of the scope of the contract works, being different to the plans forming part of the contract and additional to the contract works where the plans were silent in relation to the work to be performed. The additional work was however capable under the contract of constituting a variation as defined by the contract.
The formal requirements of the contract in relation to a variation were not met. However, I consider the first respondent is entitled as part of its counter-application to a consideration of section 84 of the DBCA for recovery of an amount for the work performed despite failure to ensure the parties signed a variation document.
Clause 19.7 of the general conditions of the contract provides that where the price of a variation is not agreed, the price for additional work is the reasonable price for that work including an amount for the builder’s margin.
Exhibit 13, being the first respondent’s record of conversations with the applicant on 1 October, 2010 with respect to a final reconciliation of costs and invoices for the purpose of obtaining final payment, lists all the subcontractors’ costs associated with fencing and retaining walls to a total of $29,303.00. At the hearing the applicant agreed those costs had been incurred, however she submitted that the first respondent owed her more than any sum she may owe the first respondent.
On the basis that the amounts claimed for the fencing, gates and retaining walls are amounts for materials supplied and work performed by independent subcontractors, which have been accepted by the applicant as having been incurred, I find that the amount of $29,303.00 is a reasonable sum for the work performed. The applicant made no submissions at the hearing that the amounts were not reasonable. I note that no builders’ margin has been claimed.
I find that it would cause unreasonable hardship to the first respondent if it is not paid the amounts claimed from it by subcontractors for the materials supplied and work performed. I find that it is not unfair to the applicant for the first respondent to recover that amount, in view of the fact that the extra work was of value to the applicant; and it would be unjust if the applicant were to keep the benefit of the additional work without paying for it. The applicant freely accepted the work, standing by and allowing the work to be performed in circumstances when she ought to have known the first respondent’s subcontractors expected to be paid and the scope of work was different from and additional to the work first contemplated by the parties, on which the prime cost estimate was based.
I find that the applicant is obliged to pay the first respondent the sum of $29,303.00 for fencing, gates and retaining walls.
Liquidated Damages
The applicant seeks to offset against any money owing to the first respondent, the sum of $10,500 for liquidated damages, being $50 per day for a claimed overrun to the date of practical completion of 210 days.
The parties have been unable to agree on the date of practical completion. I am of the view however that in the circumstances of this claim for liquidated damages, the date of practical completion is not the key fact.
Clause 29 of the general conditions of contract provides that if the works do not reach practical completion by the end of the building period the owner is entitled to liquidated damages in the sum specified in item 11 for each day after the end of the building period to and including the earlier of:
(a) the date of practical completion;
(b) the date this contract is ended; and
(c) the date the owner takes control of, possession of, or use of the site or any part of the site.
The parties are agreed that the applicant and her family moved into the house at Gresham Street and commenced habitation, on 14 January, 2009. The first respondent contends that 14 January, 2009 was the date of practical completion. It is not necessary to make a finding on this point in view of possession and use of the site by the applicant on this date.
Pursuant to clause 29 of the contract, any entitlement to liquidated damages on the part of the applicant ended on 14 January, 2009. The question remains as to whether the building period extended up to 14 January, 2009.
“Building period” is defined in the general conditions of contract as the number of days stated in item 10 as extended by clause 16.
The contract provides for a building period of 160 calendar days to practical completion. The building period of 160 days is said to be inclusive of the following calculable delays:
· inclement weather – 10 days;
· weekends, public holidays, rostered days off and other days not generally available for the carrying out of the works – 10 days;
· any other matter reasonably likely to cause delay – 10 days.
The contract notes that the works will suffer an incalculable delay if rock is encountered during excavation or if there is a flood or cyclone.
The first respondent says that it suffered claimable delays within the terms of clause 16 of the contract, which entitle it to an extension of time to the building period.
In its 26 November, 2010 submissions and in its later statement of evidence, the first respondent said that the following delays occurred:
· failure by the applicant to make decisions regarding PC Items promptly. For example, the external gates were not ordered until January/February 2009, when steel gates were chosen;
· the letterbox needed to be installed into an already constructed fence;
· tiles for the laundry floor were not chosen until November, 2008;
· the contract estimated 60 square metres of tiles when 120 square metres were laid. No time period of delay is given for this extra work, other than an assertion that 15 extra days were needed for extra tiling for feature walls and laundry floors;
· inclement weather – 8 to 10 weeks were lost before commencement because it was too wet to get machines onto site. Twenty additional days were lost due to inclement weather;
· 15 extra days associated with insufficient plans and documentation;
· 40 extra days associated with:
oadditional painting of retaining walls;
othe applicant’s direction to demolish the fence on the southern boundary and to reconstruct it and a retaining wall;
oremoval of a chain wire fence on the western boundary and its replacement with a 6 foot timber fence and retaining wall; and
· 10 extra days associated with:
othe necessity for 5 additional changes to footings as a result of a Geotechnical report and rock encountered in footings.
Mr Catton said that he made verbal claims for extension of time.
The applicant says that only after she made a claim for liquidated damages did she receive a long list of reasons for delay. Her evidence was that there was no discussion about extensions of time.
Clause 16 of the general conditions of contract enables a builder to extend the building period for reasons such as those encountered by the first respondent, however clause 16.3 provides that the builder is to give the owner written notice of the extension of time.
Clause 16.4 enables the owner to dispute an extension of time.
The first respondent has not complied with the contract by giving written notice of an extension of time.
Section 18 of the DBCA is relevant. It provides:
· at subsections (3) and (7),
· if the need for additional days could not have been foreseen; and
· if additional days to those allowed in the contract for inclement weather, non-working days and any other matter likely to cause delay nominated in the contract are required to carry out the works;
· then the building period must be adjusted to take account of the additional days;
· at subsections (4) and (8):-
· provided the contract contains a statement in relation to incalculable delays; and
· the works are affected by a delay that is not a delay of a kind for which an allowance is required to be made under section 33 (inclement weather, non-working days any other matter likely to cause delay),
· then the building period must be adjusted to take account of the actual number of days involved in the delay;
· at subsection (6) and (10);
· provided there are exceptional circumstances or the building contractor would suffer unreasonable hardship if an allowance for the additional days were not made; and
· it would not be unfair to the building owner to make an allowance for the additional days; and
· if the contract is varied but the building contractor has not complied with the variation provisions for the variation,
· then the building period may, with the tribunal’s approval given on an application made to the tribunal by the building contractor, be adjusted to take account of any additional days required to carry out the subject work.
I accept the assertion of the first respondent that 20 days were added to the building period due to rain. The applicant did not deny this was the case. She has merely pointed to the delay and sought delay damages. Pursuant to section 18(3) of the DBCA I find that the additional days could not have been foreseen and that the time was required to carry out the works. In accordance with section 18(3) I find that the building period must be adjusted to take account of the 20 additional days.
I accept the evidence of the first respondent that 10 days were added to the building period due to a geotechnical report and the consequent five changes to footings as a result of rock encountered in the footings. The applicant did not deny that this was the case. These delays were anticipated in the contract and nominated as incalculable delays. The contract conforms to section 34 of the DBCA. In accordance with section 18(4) of the DBCA, I find that the building period must be adjusted to take account of the 10 additional days.
I accept the evidence of the first respondent that 15 days were added to the building period due to extra tiling, that 40 days were added to the building period due to new fencing, retaining wall and gate requirements of the applicant and that 15 days were added to the building period due to insufficient or inadequate plans, needed to meet the applicant’s requested variations. The applicant did not deny that the time nominated by the first respondent was the added time spent as a result of the variations.
I find that the extra 70 days were consequent upon variations requested by the applicant. As I have discussed earlier, the variation provisions of the contract and the DBCA were not complied with. However, I am prepared to treat the first respondent’s cross application and submissions as an application pursuant to section 18(4) of the DBCA for approval by the Tribunal for adjustment to the building period as a result of these variations. I find that the first respondent would suffer unreasonable hardship if it were to incur liquidated damages for delay and could not thereby recover money otherwise owing to it under the contract. I find that it would not be unfair to the applicant if an allowance were made for additional days, in circumstances where the delay arose out of variations requested by the applicant for the benefit of the applicant. Accordingly I am prepared to adjust the building period by a further 70 days.
It is agreed by both parties that the works commenced on 10 January, 2008. I calculate the period of calendar days until 14 January, 2009 to be 369. The stated building period under the contract was 160 calendar days. I am prepared to adjust the building period to take account of 100 additional days referred to in the preceding paragraphs. Accordingly there has been a time overrun to the date the applicant moved into the property of 109 days. Late completion damages are provided for at $50 per day, making a total of $5,450.00 which I find the applicant is entitled to offset against any moneys owing under the contract.
Rainwater Tank rebate
The applicant contends that because of delay by the builder in providing an invoice in the correct form she was unable to lodge a claim for the government rainwater tank rebate of $2,000.00 within time. She seeks a deduction from any money owing to the first respondent of the sum of $2,000.00.
The first respondent says that it was a matter for the applicant to determine the date the rebate scheme expired and that it should bear no liability for the applicant failing to obtain the rebate. I find that the first respondent had no contractual obligation to provide a rainwater tank invoice to the applicant at all or within a certain time. I do not find in favour of the applicant in relation to this claim.
Conclusion
Taking into account the findings made above and using the applicant’s methodology in reconciling the amounts owing with respect to the works, I find that the applicant is obliged to pay the respondent the sum of $8,240.95, calculated as follows:
Build cost quoted, excluding PC items $381,100.00 Less build items paid by the applicant directly to the contractor $ 26,958.50 Balance $354,141.50 Plus agreed variations (quoted and approved) owing to the Builder $ 7,700.00 Balance $361,841.50 Plus approved PC items paid for by the Builder $ 58,559.80 Balance $420,401.30 Less liquidated damages $ 5,450.00 Balance payable by applicant $414,951.30 Less payments made by applicant $406,710.35 Balance owing by applicant to respondent $ 8,240.95
Orders
In view of my findings I make none of the orders sought by the applicant.
I order that the applicant pay to the respondent the sum of $8,240.95 inclusive of GST, within 21 days of the date of this order.
The first respondent has not claimed default interest and put no evidence before me in relation to the rate of that interest under the contract. Accordingly I make no order as to default interest on the sum found to be owing from the applicant to the first respondent.
[i] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) CLR 266.
[ii] Ross v Rangel [2004] QCCTB 98.
[iii] Ross v Rangel [2004] QCCTB 98.
[iv] Ibid.
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