Pratt v Ogden
[2010] QCAT 324
•8 July 2010
| CITATION: | Pratt & Anor v Ogden & Anor [2010] QCAT 324 |
| PARTIES: | Robert David Pratt & Sandra May Pratt |
| v | |
| David Ogden & Catherine Ogden |
| APPLICATION NUMBER: | BD099-09 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 19 April 2010 |
| HEARD AT: | Mackay |
| DECISION OF: | Peta Stilgoe |
| DELIVERED ON: | 8 July 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. Within 30 days of today’s date, the respondents will pay 2. The applicants will complete the rectification of the defects within 90 days of notification that the trust money has been paid. Rectification will be carried out to the satisfaction of the Queensland Building Services Authority, whose decision shall be final. The Authority will forward a copy of its decision to both parties and Bill Cooper & Associates. 3. Bill Cooper & Associates will release the trust money to the applicants within seven days of receipt of the Authority’s decision and this proceeding will be dismissed without further notice. 4. If the respondents do not pay the trust money as required by this order, the applicants will, without further notice, be entitled to an order that the respondents pay them the sum of 5. If the applicants do not rectify the defects to the satisfaction of the Authority, or at all, upon notification of the Authority’s decision to that effect, Bill Cooper & Associates will release the trust money to the respondent and this proceeding will be dismissed without further notice. |
| CATCHWORDS : | Building contract – where no contract in writing –scope of work - quantum meruit - defects |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | self |
| RESPONDENT: | self |
REASONS FOR DECISION
The applicants, Robert and Sandra Pratt are builders. In 2008, David and Catherine Ogden engaged the Pratts to undertake building work on their home at McEwens Beach.
The Pratts say that they completed the work on or about 9 December 2008 and rendered a final invoice for $53,905.00. The Ogdens paid $20,000 of this account. The Pratts rendered a further “final account” on 20 January 2009 for $34,153.61. None of this account has been paid and that is the basis of the Pratts’ claim.
The Ogdens say that:
a)They engaged the Pratts to do certain work for a fixed price of $120,000.
b)The contract was varied twice.
c)The Pratts have done, and charged for, work that was not part of the original contract and not completed work that was part of the original contract.
d)Some of the work done by the Pratts is defective.
What was the “contract”?
The terms of engagement are at the heart of this dispute.
In early 2008, the Ogdens took Mr Pratt through the house, room by room, telling him what they wanted to do. Mr Pratt did not take notes of any of the matter discussed during that tour.
At the conclusion of the tour of the house, there was a discussion about the cost of the proposed works. Mr Pratt gave evidence that he indicated, in general terms, that the work would cost around $120,000, but, as there were no plans provided to him, he did not give a quote for that amount. He asserts that the work was to be done on a “cost plus” basis although he concedes that he did not discuss the detail of this method of charging with the Ogdens.
Mr & Mrs Ogden gave evidence that Mr Pratt was given draft plans. They say that Mr Pratt told them the work to the house would cost about $100,000, a proposed shed $15,0000 and then he said that they would “get change out of” $120,000.
Mr Ogden gave evidence that:
a)He told Mr Pratt (we) would look after the shed.
b)Mr Pratt then indicated he was willing to do all the work shown to him for $120,000 and that the Ogdens would get change out of that.
c)Mr Ogden told Mr Pratt that “if that is what it is going to come in at, (Mr Pratt) would get the job”.
d)Mr Pratt said “fine then”.
I asked the parties why the “contract” was not reduced to writing. Mr Pratt said that it was because the Ogdens didn’t really know what they wanted done at that point, so it was impossible to quote accurately. He says that fact is borne out by the many changes the Ogdens made as the work progressed. After some thought, Mr & Mrs Ogden said that they didn’t think a written contract was necessary because they knew and trusted Mr Pratt.
10. I think Mr Pratt’s explanation is more likely for these reasons:
a)Mr Ogden’s evidence as to what work was included in the fixed price of $120,000 is very detailed. He expressed concern that Mr Pratt did not take notes during the tour of the house, but he did not ask for a written quote nor did he provide written specifications to Mr Pratt. He did not descend to any written record about the work that was the subject of this dispute until this proceeding had been commenced. I find it unlikely that a homeowner would have no contemporaneous record – even a scrap of paper on which Mr and Mrs Ogden, perhaps, workshopped ideas - of such a detailed list of requirements.
b)Mr Ogden says he had draft plans at the time of Mr Pratt’s initial inspection. The plans before the tribunal are not detailed. Mr Ogden says, by way of explanation, that Mr Pratt told them that the internal work did not need to be shown on plans to be submitted to Council. All witnesses called by the Pratts stated that plans were not available at the commencement of the work but that they arrived some time later. I find that, at the time of Mr Pratt’s visit, there were no draft plans.
c)There is uncontradicted evidence that there were constraints on the Ogdens’ finances. They could only afford around $50,000 worth of work until they sold an investment unit. In those circumstances, it is unlikely that they would have been willing or able to enter into a fixed price contract that committed them to staged payments for the whole of the works.
d)The Ogdens paid a number of progress claims that were charged on a cost plus basis without complaint. Indeed, they did not complain about, or query, the method of charging until the final invoice even though it must have been plain to them at an early stage that they were not being charged in accordance with a fixed contract sum and that the cost of the works would exceed $120,000.
e)Without demur until this proceeding was commenced, the Ogdens took on many obligations and responsibilities that should have been included in a fixed price contract they have described. These include installation of the kitchen, installation of the patio roof, removal of asbestos from the site, the purchase of miscellaneous items including tiles and a vanity, and “completion” of the shed. That behaviour is not consistent with the Ogdens having a fixed price contract that encompassed all of the work in their detailed list.
11. I find there were no plans or specifications on which Mr Pratt could quote a fixed sum. Therefore, I find that there was not a fixed price contract for $120,000. This finding renders any discussion about whether an item was or was not part of the contract, or whether there was a variation or not, irrelevant.
12. I also find, however, that there was no “cost plus” contract. There was no discussion about labour rates or builders margins nor is there evidence of any discussion that would enable the tribunal to imply such terms into an agreement. The Pratts’ claim, therefore, must be assessed on a quantum meruit basis; that is, the amount which has reasonably and actually been incurred or outlaid, including any claim for a reasonable margin.
Other matters
13. There is some unrelated evidence that consumed the parties’ attention at the hearing. While not strictly relevant, it is important that I comment upon it.
14. Mr Pratt says that the Ogden’s financial circumstances, and their inability to commit to all of the works at the outset, s supported by his facsimile of 23 June 2008 to the Ogdens’ bank manager. He says that he sent this facsimile in response to a request from Mrs Ogden for a quote to support a bank loan to finish the work. The Ogdens agree that they had to borrow money to finish the work but deny that they requested the quote. They say, in fact, that they did not see the facsimile until after these proceedings commenced. The only finding I am prepared to make in relation to this facsimile is that the Ogdens did have to borrow money to finish the work. It is interesting, however, that the quote provided in June is closer to the ultimate cost than it is to $120,000 initially discussed.
15. The Ogdens’ principal complaint is that Mr Pratt performed, and charged for, work they did not request and did not approve. They do not deny that the work was desirable but say that, if this work was necessary, it should have been included in the initial quote of $120,000 because it should have been obvious to Mr Pratt at the time of quoting. The work complained of is straightening walls and ceilings before re-sheeting, levelling the downstairs bathroom floor and bracing and tie down work required to bring the home to current building standards.
16. Witnesses called by Mr Pratt gave evidence that the walls and ceiling were in a very poor state, with substantial bowing and buckling. Mr Webb gave evidence that he pointed out the ceilings to the Ogdens, who told him they wanted it fixed.
17. Mr Pratt concedes that he did not seek the Ogdens’ approval for this work prior to carrying it out. He also concedes that he did not tell the Ogdens that there was an additional cost involved. He says that he decided the work had to be done because it “had to be done properly”.
18. If the contract had been a fixed price contract, Mr Pratt’s decision to proceed without approval may have been significant. There are other factors that incline me to allowing Mr Pratt to claim the cost of this work. The Pratts carried out some of this work in the renovation of the upstairs area. The upstairs work was completed, and paid for, by May 2008. If the Ogdens were not happy to pay for this additional works, they could have said so before Mr Pratt started on the downstairs area. In addition, given the nature of the defects claimed by the Ogdens, I think it unlikely that they would have been happy with the walls and ceilings being re-sheeted without rectification of the bowing and buckling.
What is a reasonable charge?
19. The Pratts have provided an itemised schedule of costs. Labour is charged at $45.00 per hour. The builder’s margin is 10%. The total of the schedule is $173,041.61.
20. The Ogdens complaint about the quantum of the charges are as follows:
a)There was no discussion about a builder’s margin.
A builder’s margin is a usual inclusion in a cost plus contract and the Ogdens cannot deny that the Pratts are entitled to make a profit. An examination of cases of the former tribunal indicates that builders’ margin range from 10% to 27%, with 15% being usual. I find a margin of 10% is reasonable.
b)There was no discussion about charging for travel.
I note that the schedule of costs includes a charge for mileage/cartage but does not dissect the labour charge into “work” and “travel”. As Mr McMeekin SC (as he then was) observed in Ralph v Urban Homes Pty Ltd[1] there is no reason why a builder should not charge for travel. He is required to attend the site to carry out works.
Mileage is charged at $0.80 per kilometre. The cost of delivery is a legitimate component of the cost of supplying materials but I can find no case that supports the imposition of a mileage charge for the transport of labour unless specifically referred to in the contract. I disallow the sum of $1089.60 that is referred to not as “cartage” but as “Dave, car”.
c)A hire charge fee for a gurney has been incorrectly charged because it was Mr Pratt’s own equipment. I note a charge of $120 for 2 days’ hire of a “water blaster”. There is no invoice to support it and Mr Pratt did not deny the assertion.
d)They were charged $390 for 13 cubic metres of gravel that was not delivered. It is common ground that work on relocation of the sewer pit did not occur.
e)They received a quote for $4,800 for additional concreting work. They do not know how much they have been charged for this work but are reasonable sure that it was more than $4,800.
I can find $1,428.67 for concrete supplied. The labour claims following the supply of the concrete total $3,622.50. If all of these costs are applicable to the “extra” concrete, and I cannot tell, the cost is $5,051.17, a difference of $251.17.
[1] [2006] CCT B422-05
21. I find a reasonable charge to be:
Detail
Amount
Invoiced amount
$173,041.61
Less
Mileage claim
$1,089.60
Water blaster hire
120.00
Gravel
390.00
Additional concrete charge
251.17
$1,850.77
$171,190.84
22. The Ogdens have paid the Pratts $138,888. Before considering any claim for the costs of rectification, the Ogdens’ liability to the Pratts is, therefore, $32,302.84
Defects
23. I adjourned the hearing to enable the Queensland Building Services Authority to prepare a report on nine defects reported by the Ogdens. The Authority has provided the tribunal with a report dated 8 June 2010. Its view is that six defects require rectification (“the defects”):
a)There are noticeable gaps in the timber decking.
b)There is loose decking on the eastern length of the deck.
c)The timber handrails on the deck are bowed. The mid support post is 5 mm higher than the fixing brackets at either end of the handrail.
d)The exposed aggregate does not have an even surface finish.
e)There is bowing to the sliding door to the middle bedroom.
f)The horizontal wall joint in bedroom 3 has cracked.
24. The Ogdens have provided a quote for rectification in the sum of $37,125.00. The quote, provided by V C Hornick, covers removal and replacement of both the deck and the exposed aggregate. The Authority’s report does not comment on the method of rectification but I would be surprised if it involved the scope of work envisaged by Mr Hornick.
25. Mr Pratt has indicated that he is prepared to rectify minor defects providing the outstanding balance is paid.
Order
26. Within 30 days of today’s date, the respondents will pay $37,125.00 $32,302.84 into the trust account of Bill Cooper & Associates who shall hold that sum in trust on account of both parties (“the trust money”). Bill Cooper & Associates will forward evidence of the receipt of the trust money to the parties within 7 days of receipt.
27. The applicants will complete the rectification of the defects within 90 days of notification that the trust money has been paid. Rectification will be carried out to the satisfaction of the Queensland Building Services Authority, whose decision shall be final. The Authority will forward a copy of its decision to both parties and Bill Cooper & Associates.
28. Bill Cooper & Associates will release the trust money to the applicants within seven days of receipt of the Authority’s decision and this proceeding will be dismissed without further notice.
29. If the respondents do not pay the trust money as required by this order, the applicants will, without further notice, be entitled to an order that the respondents pay them the sum of $37,125.00 $32,302.84 and the applicants will be relieved of any obligation to rectify the defects.
30. If the applicants do not rectify the defects to the satisfaction of the Authority, or at all, upon notification of the Authority’s decision to that effect, Bill Cooper & Associates will release the trust money to the respondent and this proceeding will be dismissed without further notice.
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