Prestige Pool Paving & Landscaping Pty Ltd v Skordou - [2011] QCAT 653

CITATION:

Prestige Pool Paving & Landscaping Pty Ltd v Skordou and Anor (No 2) [2011] QCAT 653

PARTIES:	Prestige Pool Paving & Landscaping Pty Ltd
v
Andrew Skordou Vikki Comino

APPLICATION NUMBER:

BDL312-10

MATTER TYPE:

Building matters

HEARING DATE:

3 October 2011

HEARD AT:

Brisbane

DECISION OF:

Paul Favell, Member

DELIVERED ON:

9 December 2011

DELIVERED AT:

Brisbane

ORDERS MADE:

The Respondents pay the Applicant $27,924.34 by 4:00pm on 23 December 2011.

CATCHWORDS:

Building – Cost plus contract – Whether contract enforceable

Domestic Building Contracts Act 2000, ss 27-28, 30, 55

APPEARANCES and REPRESENTATION (if any):

APPLICANT:	Murray Willson, Anita Gallagher and Colin Rowe on behalf of Prestige Pool Paving & Landscaping Pty Ltd
RESPONDENT:	Andrew Skordou and Vikki Comino represented by Phil Scott of Crouch & Lyndon Lawyers

REASONS FOR DECISION

At the beginning of the hearing of this matter Mr Scott of Crouch and Lyndon Lawyers sought leave to appear on behalf of the respondents and to seek an adjournment of the hearing. I heard submissions made with respect to the adjournment application and refused the application. Mr Scott did not seek to be heard any further and withdrew.
In part, the basis for the adjournment application was that the applicant, although given leave previously to amend the statement of claim, had not done so as to make a quantum meruit claim.
A document entitled “Amended Statement of Claim” dated 8 August 2011 had been provided to the Tribunal. It did make a quantum meruit claim but did not particularise the basis of the claim or plead any facts which would support the claim.
Mr Scott submitted that the applicant required leave to amend the statement of claim and accordingly an adjournment should be allowed for an appropriate response to the amendment. The amendment was not opposed.
The amended statement of claim was referred to by the Tribunal in its decision on 1 September 2011 to refuse to strike out or dismiss the application. At that time the Tribunal was not convinced that the contract to which the Domestic Building Contracts Act 2000 (Qld) (“DBCA”) applied, was not, as required by the Act, a regulated contract in writing which set out required matters as stated in s 28 DBCA.
I note that by directions made on 15 June 2011 the applicant was required to file and serve any amended application and further statements of evidence by 4:00pm on 29 June 2011. That occurred on 30 June 2011. By directions made on 27 July 2011 the applicant was required to file and serve submissions in response to an application to strike out proceedings by 10 August 2011. That amended statement of claim was filed on 8 August 2011, as were submissions in reply to the application to strike out. Those submissions relied upon a quantum meruit claim.
Mr Willson of the applicant told me that he was given leave to file an amended statement of claim “at the hearing”.
The Tribunal and the respondents knew of the amendments made. Arguably, the filing of the amendments was made as the consequence of a direction made. In any event it was clear to the Tribunal, and it should have been clear to the applicant, that the amendments had been made.
This matter was set down for hearing at the directions hearing of 15 June 2011.
After hearing from Mr Willson about evidence in support of a quantum meruit claim I gave Mr Scott the opportunity to contact his clients and enquire as to why they could not attend the hearing later in the day. Mr Scott made a call and advised me that Mr Skordou could not attend but they had filed in two statements all the material sought to be relied upon.
There was no indication that Ms Comino could not attend. I was informed by the Tribunal registry that if the matter was adjourned the Tribunal could not hear it until 2012.
Mr Willson opposed the application for adjournment and was told that he would have to make out his case on the evidence which was filed.
In the circumstances, I was not prepared to adjourn the hearing and, being satisfied that the respondents knew of the hearing and had notice of it, I ruled that I would hear and decide the matter in the absence of the respondents.
I have heard evidence from Mr Willson and Ms Gallagher. I have had regard to the material filed on behalf of the applicant and the respondents.
On 10 March 2010, Prestige Pool Paving and Landscaping Pty Ltd contracted to construct a pool for Andrew Skordou and Vikki Comino.
The contract document, signed by both parties, had various items associated with pool building ticked and for those ticked items provided a cost of approximately $36,590.00 plus GST. The document included the statement “This contract deed agreement is a total honest up front comprehensive indication of costs and terms for an outstanding exceptional pool project”.
The second page of the document provided “Page 1 average = $35,000 to $38,000 plus GST plus 10%”. It then provided “Items on this page are Provisional Sum (PS) and/or Prime Cost (PC) items”. It then set out 21 items which allowed for extras over the items listed and ticked on Page 1. In most of the items there is a methodology for the calculation of a price. For some items a range of cost is provided, for some there is an estimate and for some no methodology or figures are provided.
On the third page under the heading “Additional Costs”, it is provided “In addition to the contract sum hereinbefore detailed, the following matters, if applicable, shall be the subject of an additional charge, (refer to “Extra Work” on Page 2)”. It then goes on to set out the matters in dot points.
The contract does not use the words “contract sum” on Pages 1 or 2.
In the response to the first application the respondents admit the claim relates to construction of a swimming pool on their property at 38A Appia Avenue, Seven Hills, Brisbane.
They contend that the construction work carried out by the applicant for the respondents is domestic building work as defined by the DBCA and any agreement for such work is a regulated contract pursuant to the DBCA and that Part 3 of Division 1 of the DBCA applies. The respondents contend that the contract document did not comply with Part 3 of Division 1 of the DBCA and that s 30 DBCA therefore applies.
Further, the respondents contend that if it is contended that the agreement is an agreement to construct on a cost plus basis, it is not enforceable pursuant to s 55(3) DBCA.
They contend that any agreement which existed was terminated by notice given on 27 September 2010 for the failure of the applicant to diligently complete construction of the swimming pool.
They contend that the applicant verbally quoted $50,000 to $60,000 for construction of the pool. They say that they have paid $46,000 to the applicant.
The applicant claims as “monies due and payable under the contract” the sum of $27,924.34, along with “damages for breach of contract” in the sum of $825.00.
Alternatively the applicant claims the reasonable value of the works performed.
Interest at the rate of 12.5% is claimed.
The work on the pool commenced on or about 24 March 2010. The work to April 2010 included clearing the site, digging the hole for the pool, completing the shell, obtaining Council approvals and approved plans as well as commencing landscaping works. The applicant claimed payment for those works and was paid $41,000.00 for the works as well as an additional $5,000.00 payment.
After that payment was made, the applicant contends that further work including landscaping, pool fencing, paving, pool tiling, coping and building and tiling a water feature was carried out. In addition, the applicant claims that variations were requested and carried out. The cost of the variation work is claimed to be $15,387.45.
The applicant claims the value of the total works performed is $73,924.34 and that it is owed $27,924.34 by the respondents.
The applicant also claims for loss of profit of $825.00 it being 7.5% (margin) on $11,000 (the value of work left to complete the pool).
A regulated contract under the DBCA is a domestic building contract for which the contract price is more than the regulated amount. A domestic building contract includes a contract to carry out domestic building work which includes work associated with the erection, construction of a detached dwelling or associated with the renovation, alteration, extension or repair to a home. This contract is a regulated contract under the DBCA.
Part 3 of Division 1 DBCA requires contracts to be in writing and signed, and provides for general contents of contracts and requires various matters and things.
Section 27 requires formal requirements to be complied with.
Section 28 sets out “required matters” for s 27(2)(d). One of the required matters is “the contract price or, for a cost plus contract, how the amount the building contractor is to receive under the contract is to be calculated”.
Section 53 provides that a building contractor must not enter into a cost plus contract that would be a regulated contract unless it is included in a class of contracts prescribed under a regulation or the cost of a substantial part of the subject work can not reasonably be calculated without some of the work being carried out.
Further, a building contractor is prohibited from entering into a cost plus contract that would be a regulated contract unless the contract contains a fair and reasonable estimate by the building contractor of the total amount the building contractor is likely to receive under the contract.
If those requirements are not met the building contractor cannot enforce the contract against the building owner.
However, this Tribunal may on an application made, award the building contractor the cost of providing the contracted services plus a reasonable profit if the Tribunal considers it would not be unfair to the building owner to make the award.
In response to the application to strike out, the applicant not only sought to rely upon a quantum meruit claim but also asserted an entitlement “to fair remuneration for the work done plus a fair percentage of profit”.
A cost plus contract is a domestic building contract under which the amount the building contractor is to receive under the contract cannot be calculated when the contract is entered into even if the prime cost items and provisional sums are ignored.
The contract here does not on its face claim to be a cost plus contract. It is difficult to see that the contract has had any regard to the DBCA. However, a close reading of it shows that it does not purport to specifically calculate the amount the builder is to receive. The contract lacks detail of what is to be constructed and provided. It seems to be drawn on the basis that much of that detail will be decided later. The wording in the contract is imprecise and only expresses a figure for ticked items as an approximation.
Even the ticked item which describes the pool is an approximation.
In all of the circumstances I am of the opinion that the contract should properly be described as a cost plus contract. Nowhere does the contract provide for a “contract price” except as I have already mentioned the term “contract sum” is used on Page 3. There is no contract sum provided elsewhere. “Contract Price” is defined in s 6 of the DBCA and in my view there is no contract price provided for in this contract.
The contract does provide some methodology to calculate the amount the builder is to receive. Unfortunately it is not precise and for the provisional sum or prime cost items some are left blank. Examples of the latter are items 4, 9, 10, 11, 16, 17 and 18. It may be that some of those items are not required but on the evidence it is clear that some are. An example is landscaping.
An examination of Item 14 of Exhibit 11 demonstrates that prices inserted in that document are not explicable in all cases by methodology appearing in the document. The same can be observed with respect to Items 17 and 18 in Exhibit 11.
I note that in Item 23 of Exhibit 11 the applicant makes reference to “cost plus estimates”. In that item and numerous other items the applicant seeks to justify, explain and detail the work done, how it is valued and how the sums claimed are calculated. That the claims are reasonable is not disputed apart from in the manner I have already described.
The contract, properly construed, was a cost plus contract.
I accept that at the time the contract was entered into the cost of a substantial part of the subject work could not be reasonably calculated without some of the work being carried out. At the time the contract was entered into, allowance had been made for a 22 lineal metre internal measurement pool. What was constructed was 3.5 metres larger. Excavation was by way of an allowance. The extent of the work to be done and the nature of the work to be done was uncertain. The contract did not set out the extent or scope of the work with certainty.
Even though the contract provided for an approximation of the cost of some of the work and some method of calculation of some of various identified provisional sum or prime cost items, it did not contain a fair and reasonable estimate by the building contractor of the total amount the building contractor was likely to receive under the contract.
Accordingly, the builder has entered into a cost plus contract in contravention of s 55 DBCA and it cannot enforce the contract against the building owner.
I accept evidence on behalf of the applicant that the charges are reasonable for the work done and that variations were requested and carried out. I accept that the margin claimed is reasonable.
I am satisfied that the work claimed has been carried out. There is a final inspection certificate. There is no claim that the work has not been done. There is no claim that the variations were not requested or not carried out. There is no claim that the work done was in any way defective.
I note some of the correspondence from Mr Skordou stating that there was a verbal quote of between $50,000 and $60,000. On 8 September he was prepared to pay $60,000. That quote is denied by Mr Willson on behalf of the applicant who says that he estimated between $55,000 and $75,000. Those two sets of figures do not seem to take into account variations necessary because of a pipeline. The variations are claimed at $15,387.45.
On the basis, as indicated in correspondence sent on behalf of the respondents, that the respondents were prepared to pay $60,000, and if that did not take into account the variations, the parties were not far apart.
In my view, even if there was a quote as alleged and it was enforceable, it is unlikely to have included the cost of variations.
Unfortunately, the evidence is such that I am unable to conclude precisely what was contracted. I do accept however that because of a sewer line running inside the boundary of the site, which was contrary to the representations made before work commenced, the pool had to be moved and different pool fencing was required.
By a letter dated 27 September 2010 the solicitors for the respondents purported to terminate “their agreement” with the applicant, for the reason that the applicant had failed to return to the site.
I note that the Development Application Decision Notice for the swimming pool was obtained on 6 April 2010. It is the only exhibit which has a site plan. That site plan shows the pool was moved on 1 April 2010 and the pool dimensions changed on 29 March 2010.
The evidence in Exhibit 11, the affidavit of Mr Skordou, is to the effect that a drawing from Majestic Pools without landscaping was used for the purposes of discussion with the applicant. Mr Skordou denies there were extensive problems with the site. That seems inconsistent with the evidence that the pool had to be moved and changed.
Mr Skordou swore that he had paid $47,000.00. That seems to have changed in the material provided. However, I accept the evidence given by Mr Willson that the payment of cash on 13 April 2010 was not paid but instead of two payments of $2,000.00 on 20 and 27 April 2010 there was one payment of $5,000.00 cash. That is noted in the correspondence.
I find that the applicant has proved that it carried out the work claimed and that the amount claimed is reasonable.
I consider that an application has been made as provided under the QCAT Act to award the building contractor the cost of providing the contracted services plus a reasonable profit. That is the effect of the amended claim and amended statement of claim.
I consider it would not be unfair to the building owner to make such an award. The owner has had the work done at their request and had not made any complaint about the quality of the work or shown any defective work.
The work is not completed. The owner purported to terminate the contract. The contract was to build a pool on a cost plus basis. In the circumstances outlined herein the builder is not entitled to claim damages for breach of contract. To do so assumes it had an ability to enforce the contract. For the reasons already given it did not have such an ability.
The owner has not advanced any claim against the builder.
A claim for interest is made by the builder. The contract provided that “Final payment is due 7 days after chemical treatment and handover which is practical completion, otherwise interest of 12.5% will apply”. Otherwise the contract does not provide for staged payment or otherwise. It is not shown that the time for final payment had been reached. In any event, the builder is not (as I have found) able to enforce the contract.
In all of the circumstances I do not consider it appropriate to allow the claim for interest.
I order that the respondents pay the applicant $27,924.34 by 4:00pm on 23 December 2011.
As to costs, I am not satisfied that this case requires a costs order to be made. The applicant was not legally represented. I do not consider the circumstances here or the interests of justice require a costs order to be made and there is no good reason to depart from what is provided in s 100 of the QCAT Act, namely, that each party must bear their own costs.