PW Woods (Builder) Pty Ltd v Watch This Space Builders Pty Ltd
[2014] QCAT 188
| CITATION: | PW Woods (Builder) Pty Ltd v Watch This Space Builders Pty Ltd [2014] QCAT 188 |
| PARTIES: | P W Woods (Builder) Pty Ltd (First Applicant ) and Watch This Space Builders Pty Ltd (Second Applicant) |
| v | |
| Mr Peter Hishon (Respondent) |
| APPLICATION NUMBER: | BDL358-12 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 25, 26 and 27 November 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member King-Scott |
| DELIVERED ON: | 8 May 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The claims by the First and Second Applicants are dismissed; 2. The Respondent’s counterclaim against the First Applicant is allowed and I direct the First Applicant pay the Respondent the sum of $76,973.27 by 30 June 2014; 3. The Respondent’s counterclaim against the Second Applicant is allowed and I direct the Second Applicant to pay the Respondent the sum of $39,484.95 by 30 June 2014. |
| CATCHWORDS: | Building dispute – Wrongful repudiation – Construction manager liable for incomplete and defective work of contractors |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | P W Woods (Builders) Pty Ltd and Watch This Space Builders Pty Ltd represented by their agent Mr Peter Woods. |
| RESPONDENT: | Peter Hishon represented by Leonard Watt, Solicitor of Doyles Construction Lawyers |
REASONS FOR DECISION
The First Applicant is a construction management company, PW Woods (Builders) Pty Ltd hereafter referred to as (“the Construction Manager”). The Second Applicant is a builder Watch This Space (Builders) Pty Ltd (WTP). Both companies have a common director Peter William Woods.
Peter Hishon is a Commercial Manager employed by a large well-known construction company. He is very experienced in the building industry and I expect skilled in project management.
He engaged P W Woods (Builders) Pty Ltd (“the Construction Manager”) to manage the construction involved in the alteration and addition to his home at 9 Greggor Street, Wynnum West.
The value of alterations and additions to be carried out were estimated to be $759,432.47 including GST.
A dispute has arisen between the parties. The Construction Manager commenced proceedings in the Tribunal against Mr Hishon. The Construction Manager claims the sum of $59,938.10 comprising $8,163.10 as an amount still outstanding under the contract including a 15% late payment fee, additional administration services of $40,775.00, $5,004.00 for liquidated damages and $6,000.00 for time delays.
WTS has claimed $59,938.00 being the amount owing under a trade contract with Mr Hishon and damages of $19,076.54.
Mr Hishon has counterclaimed against the Construction Manager for $389,599.67 for unlawful termination of the contract, breach of contract and termination of agency.
Against WTS Mr Hishon claims damages for repudiation of $53,066.86.
The issues the Tribunal has been asked to determine, as I understand it, are these:
a) whether Mr Hishon was in substantial breach of contract thereby entitling the Construction Manager to terminate contract;
b) did the Construction Manager lawfully terminate the contract;
c) whether the Construction Manager was entitled to terminate the trade contracts between Mr Hishon and WTS and other contractors;
d) whether the Construction Manager was in breach of contract;
e) whether the Construction Manager wrongfully repudiated the contract;
f) the respective rights of the parties to payment under contract and/or damages and the quantum of damages.
On 30 June 2011, Mr Hishon entered into a Construction Management Contract with the Construction Manager. The total construction management cost was $92,273.30.
The Construction Management Contract hereafter referred to as ‘the contract’ provided, inter alia, that the Construction Manager’s obligations were as follows:
3.1The Construction Manager must act as the agent of the Owner in providing the Construction Management Services stated in this Contract.
3.2The Construction Manager shall organise commencement of the Works and, coordinate and monitor the construction of the Works by the trade Contractors and use every reasonable endeavour to achieve completion of the Works in accordance with the terms of this Contract. In particular, the Construction Manager shall:
3.2.1Develop a preliminary procurement and construction program.
3.2.2Review the budget regularly and administer trade contracts on behalf of the Owner so as to minimise, where possible, increases in the budgeted costs of the Works.
3.2.3Evaluate proposed Trade Contractors and make recommendations as to their selection so as to best complete the Works in accordance with the terms of this Contract. Be responsible for interface between Trade Contractors so that variations are not a result of poor scope of works pertaining to each Trade.
3.2.4Prepare trade Contracts.
3.2.5Enter into trade Contracts with trade Contractors as agent for the Owner if requested by the Owner in writing under clause 4.4 or as otherwise authorised under clause 4.5. Any such written request by the Owner shall be in the format set out in Schedule F.
3.2.6Co-ordinate the work of trade Contractors.
3.2.7Review from time to time the project construction program and report to the Owner on the progress of the Works and identify potential or actual delays and administer trade Contracts so as to minimise such delays.
3.2.8Administer trade Contracts on behalf of the Owner including the review and processing of all payment claims, variations, costs, adjustments and applications for extensions of time by trade Contractors.
3.2.9Monitor the work of trade Contractors and recommend a course of action that may be available to the Owner when the requirements of a trade Contract are not being met.
3.2.10Arrange for the provision of work, materials and items at a price agreed with the Owner to complete those parts of the Works not being undertaken by trade Contractors, including requested for additional work by the Owner.
3.2.11Recommend desirable variations to the Works, reviewing requests by the Owner for any variations and negotiate with the trade Contractors for the variation of the trade Contractor’s work at all times with a view to minimising, where possible, increases in the budgeted costs, or time for completion, of the Works.
3.2.12Arrange and keep records of meetings with the Owner, the consultants and trade Contractors and participate in meetings with consultants as required by the Owner.
3.2.13Institute a system of cost control and certify the amounts properly owing to third parties in respect of all claims for payment in connection with the Works submitted to the Construction Manager and revise the estimated total costs of the Works to provide for changes to the Works as they occur.
3.2.14Notify the Owner that the Works are at the stage of Practical Completion.
3.2.15Coordinate each trade Contractor so that defects in that portion of the Works performed by them are rectified by them expeditiously, including, where necessary, during the defects liability period of each trade Contract.
3.2.16Provide the Owner with copies of contract related documents in accordance with Part 3 Division 4 of the Domestic Building Contracts Act.
3.2.17Maintain records of all correspondence and other documentation regarding the Works, including cost records, separated according to each trade Contractor to which they relate, and provide those records to the Owner when requested.
3.3The Construction Manager will ensure that the Works carried out by Contractors are built:
3.3.1In an appropriate and skilful way and with reasonable care and skill.
3.3.2Using materials which comply with this Contract and which are of good quality and suitable for the purpose for which they are used (having regard to generally accepted practices or standards in the industry and any instructions or recommendations of manufacturers or suppliers). All materials used by the trade Contractors must be new unless this Contract expressly provides otherwise.
3.3.3In accordance with all relevant laws and legal requirements.
3.3.4In accordance with the Plans and Specifications, detailed scope of works and any other Contract Documents.
3.3.5And so that the Works are suitable for occupation when the Works are finished to Practical Completion, and the Works conform with the requirements of this Contract.
3.3.6So as to, where possible, avoid and minimise delays to completion of the Works.
3.3.7So as to minimise the cost of the works, and use its reasonable endeavours to obtain cost savings in the form of trade deductions or discounts, or other credits such as early payment of suppliers or trade Contractors which will result in cost savings.
3.4The implied warranties set out in Part 4 of the Domestic Building Contracts Act are included in this Contract.
3.5The Construction Manager must coordinate the Works so that they achieve Practical Completion by the Date for Practical Completion.
3.6See Clause 17 – Delays.
Essentially, the Construction Manager says that Mr Hishon hindered it in its performance of the contract and demonstrated an intention not to be bound by the contract. Consequently, the Construction Manager elected to terminate the contract. Whether it did so lawfully is for the Tribunal to determine.
WTS was engaged by the Construction Manager under a Trade Contract to provide carpentry services to Mr Hishon.
The Construction Manager terminated the contract between WTS and Mr Hishon as it says it was entitled to do so under the terms of the Construction Management Contract. Its claim is for recovery of the balance of money it says WTS is due to it under its contract with Mr Hishon.
Mr Hishon says the contract was unlawfully terminated, and consequently he has suffered damage.
Was the Contract Lawfully Terminated?
The Construction Manager relies upon an email dated 1 May 2012 which was Exhibit 13, Attachment PW-15.
For convenience, I will set out a list of correspondence relating to the termination of the contract:
a) 18/04/12 – Letter Hishon to Construction Manager
b) 19/04/12 – Letter Hishon to Construction Manager
c) 26/04/12 – Letter Construction Manager to Hishon
d) 01/05/12 – Letter Hishon to Construction Manager
e) 02/05/12 – Construction Manager response to Hishon
f) 03/05/12 – Letter Hishon to Construction Manager
g) 11/05/12 – Letter Hishon to Construction Manager
h) 22/05/12 – Letter Construction Manager to Hishon
i) 24/05/12 – Letter Construction Manager to Hishon
j) 28/05/12 – Letter Hishon to Construction Manager
The dispute between the parties was initiated by Mr Hishon when he wrote to the Construction Manager on 18 April 2012. The letter sets out in some detail (7 pages) the instances where Mr Hishon believed the Construction Manager had failed to comply with the obligations under the contract. In the letter, Mr Hishon suggests that the Construction Manager’s fees should be reduced proportionately to equate with the service it had actually provided to the date of the letter. Other than pointing out the deficiencies in the Construction Manager’s performance, the letter makes no other demands.
The letter was followed by another the next day. That letter dated 19 April 2012 was a Notice purportedly given under clause 27.1 of the contract declaring that the Construction Manager was in substantial breach of the contract. Mr Hishon relied on clauses 27.5.1 and 27.5.2 as well as s 90 of the Domestic Building Contracts Act 2000. Clause 27.1 provides:
27.1If a party is in substantial breach of this Contract and the other party gives a notice to the party in breach stating the intention of the party giving notice to terminate the Contract if the breach is not remedied within seven (7) working days from the giving of the notice, and the breach is not so remedied, then, the party giving that notice may terminate this Contract by a further written notice given to the party in breach.
For completeness I include Clause 27.4 which provides:
27.4Substantial breach by the Construction Manager includes, but is not limited to:
…
27.4.3Substantially or persistently obstructing the Construction Manager in the performance of the work under this contract.
Clause 27.5 states as follows:
27.5Substantial breach by the Construction Manager includes, but is not limited to:
27.5.1Failing to perform the work under this Contract competently.
27.5.2Unreasonably failing to perform the work diligently or unreasonably delaying, suspending or failing to maintain reasonable progress; and failing to effect or maintain any insurance required by this Contract.
Mr Hishon’s Notice did not comply with the requirements of the clause as it did not give notice of intention to terminate the contract if the breach was not remedied within seven working days.
That was pointed out to Mr Hishon by the Construction Manager by letter dated 26 April 2012.
Mr Hishon wrote again on 1 May 2012, essentially advising the Construction Manager that the substantial breach had not been remedied. It made no further demands.
By letter of the same date, the Construction Manager wrote to Mr Hishon. The letter is riddled with claims, counterclaims, responses and evidence. The Construction Manager submits that this letter was a Notice of Substantial Breach under clause 27.1 of the contract; however, it suffers from the same deficiency as Mr Hishon’s Notice. That is, it does not set a time of seven working days for the breach to be remedied. Indeed, it states:
We choose at this stage that – regardless to the fact that we believe the contract has been repudiated by you – we will continue to proceed to the practical completion of the project – reserving our right to claims.
By letter dated 3 May 2012, Mr Hishon suggests that the dispute should be referred to QCAT. Mr Hishon advised the Construction Manager that he intended to file an Application for Domestic Building Dispute in the Tribunal on or about 1 June 2012, and invited the Construction Manager to contribute any information or documentation that would be beneficial.
A further letter by Mr Hishon dated 11 May 2012 advised the Construction Manager that the Construction Manager’s breach had not been remedied.
On 22 May 2012 the Construction Manager wrote to Mr Hishon on a ‘Without Prejudice’ basis with an offer to continue the contract on an agreement of a number of conditions. The offer was prefaced with a statement of intention to terminate the contract the following day.
An email by Mr Hishon in response dated 23 May 2012 addressed each of the conditions. The letter pointed out the consequences for the Construction Manager if it terminated the contract. It addressed the various proposals either by agreement or counter proposals. The intent of the letter appeared to be one of compromise with the intention that the contract remain on foot.
I should interpolate here that neither party took issue about disclosure of this correspondence.
Following upon that email, the Construction Manager by letter dated 24 May 2012, elected to accept Mr Hishon’s purported repudiation of the contract and terminated the contract, reserving its rights in doing so.
The letter of 24 May 2012 alleged that, Mr Hishon by his conduct, had repudiated the contract and the Construction Manager elected to accept the repudiation and terminated the contract. The Construction Manager detailed the reasons which I will summarise as follows:-
a) Mr Hishon provided contracts directly to trade contractors;
b) Mr Hishon provided various trades with direct instructions contrary to the provisions of the contract;
c) M. Hishon was uncooperative with the Construction Manager contrary to clause 2.5 of the contract;
d) Mr Hishon was unwilling to perform a contract according to its terms contrary to clause 2.6.
The Construction Manager in its submissions claims that the 1 May 2012 letter was a notice that met the requirements of clause 27.1 of the contract.
By letter dated 12 June 2012, the Construction Manager gave notice to WTS terminating the Trade Contract, pursuant to clause 29.1 of the trade contract. It gave similar notices to the plasterers, tiler, plumber and concreter.
Mr Hishon says that the termination of the contract by the Construction Manager was unlawful, the reason being:
· the letter of 1 May 2012 does not comply with clause 27.1 of the contract;
· it does not advise Mr Hishon that he was in breach;
· it fails to give notice to remedy the breach within seven working days and of its intention to terminate the contract;
· it affirms the contract by stating that it will proceed with the contract to practical completion.
The 1 May 2012 letter does allege, in various counterclaims, that it believes the contract has been repudiated by Mr Hishon and claims costs for various purported variations under s 84 of the Domestic Building Contracts Act 2000.
In my opinion, Mr Hishon’s submission is valid. The letter of 1 May 2012 does not constitute a notice given under clause 27.1. Further, the letter, if anything, affirms the contract and evinces an intention to proceed to practical completion: see Turner v Labafox International Pty Ltd[1].
[1](1974) 131 CLR 660.
The Construction Manager has failed to comply with the steps required by clause 27. There was at that time insufficient reason for the Construction Manager to terminate at law the contract for breach by Mr Hishon. Such a right only arises when there has been repudiation or breach of an essential term. This is not the case here.
In some instances, an incorrect interpretation of the contract by one party alleging repudiation by the other might not amount to a repudiation of the contract by the former. Although the Construction Manager’s breach in serving an invalid Notice may have been considered a trivial or immaterial breach, the subsequent suspension of the works amounted to a substantial breach, as defined in Clause 27.5 of the Contract.[2]
[2]Cardona v Brown (2012) 35 VR 538 at 560.
Although Mr Hishon, initially, gave notice purporting to comply with clause 27 of the Contract identifying a substantial breach of the Contract it is apparent from the trail of e-mails and correspondence that he desired the Construction Manager to complete the works in accordance with the Contract. That was still apparent in Mr Hishon’s e-mail of 23 May 2012. I do not accept the suggestion by Mr Woods that because Mr Hishon did not raise concerns or argue the validity of the notice that he accepted it as valid. The approach in such circumstances is, as McCardie J said in Rubel Bronze & Metal Co. Ltd v Vos[3]:-
In every case the question of repudiation must depend upon the character of the contract, the number and the weight of the wrongful acts or assertions, intention indicated by such acts or words, the deliberation or otherwise with which they are committed or uttered, and on the general circumstances of the case. If the matters alleged to constitute a repudiation are contained in written documents, then it is for the Court to determine whether such documents evince a determination not to be bound by the contract.[4]
[3][1918] 1KB 315.
[4]Rubel Bronze & Metal Co. Ltd v Vos (supra) at 322-323.
In DTR Nominees Pty Ltd v Mona Homes Pty Ltd[5] the High Court said at 432 per Stephen, Mason and Jacobs JJ.:
No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him.
[5](1978) 138 CLR 423.
On the other hand, it is my opinion, that the Construction Manager, did intend to terminate the contract. Its conduct in giving the invalid notice and in terminating the Trade Contracts was such that it could not be excused on the basis of a misinterpretation of its rights under the contract. The Construction Manager had evinced every intention of not continuing with the Contract.
The Construction Manager’s repudiation was not immediately accepted by Mr Hishon but he issued a Notice of Substantial Beach on 28 May 2012 and terminated the Contract by notice on 6 June 2012.
The Contract in the instant case is an entire Contract. In such circumstances, the party in default is usually prevented from recovering the contract price.
A building contract that provided for progress payments was held to be, essentially, an entire contract. See Chalet Homes Pty Ltd v Kelly[6] and Ownit Homes Pty Ltd v Bachelor[7]. For a more detailed discussion on entire contracts in building cases see Nguyen v Luxury Design Homes[8] particularly the judgment of McColl JA.
[6](1978) Qd R 389.
[7](1983) 2 Qd R 124.
[8][2004] NSWCA 178.
In Rocci v Diploma Construction Pty Ltd [2004] WASC 18 El Heenan J said at:-
[13] …
The fact that a contract contains provisions for progress or staged payments will not change its character from being an "entire contract", at least in relation to the entitlement of any one of the periodical payments, when that is claimed, or to the final payment when that is demanded. In each case the builder will only be entitled to the progress payment or final payment if it has fully performed the obligations provided in the contract and has met the conditions for entitlement to that particular or final payment.
It follows that the Construction Manager is not entitled to recover any payments outstanding and not performed. The Construction Manager’s claim includes an amount outstanding under the Contract of $7,098.35 and a 15% late payment fee, the total is $8,163.10. The Construction Manager has claimed $85,359.35 which represents 92.5% of the total fee of $92,273.00. It has in fact been paid 84.8% or $78,261.00. Mr Hishon claims that it has not completed work to the value claimed.
It is not necessary for me to make a finding whether that is the case as I am of the opinion that the Construction Manager is not entitled to the further payments of $8,163.10 as it was in breach before that payment became due.
Further, I am of the opinion that the claim for $40,775.00 by the Construction Manager is also not maintainable. Firstly, I have difficulty seeing as basis for the claim. For example, part of the claim is for assembling clear scope of works for the trades. That was part of the Construction Manager’s responsibility under its contract. Mr Woods conceded that he entered into the contract even though he suspected the schedule of works he was provided by Mr Hishon were inadequate. He says he took it on face value. He says that the trades had difficulty quoting but he was unable to point to any particular tradesman when asked to do so. As the preparation of the Scope of Works took more time than his company normally required (or had allowed for), he made a claim for the extra time and cost. Secondly, I can see no basis in the contract provisions for him to make such a claim except as a variation. As they amount to variations to the contract that were not in writing as required by the contract and by the Domestic Building Contracts Act 2000 it cannot recover these additional costs. Hardship is relied upon by the Construction Manager to relieve it from compliance with the Act. However, the evidence relied upon being some restrictions placed on the Construction Manager by the QBSA (as it then was) is not sufficient to persuade me to allow the claim. I dismiss the Construction Manager’s claim in its entirety.
Before I turn to the claim by WTS, it is necessary to comment on the prime protagonists in this sorry saga.
Witnesses
Peter Hishon as I said earlier in these reasons is, and was at the time experienced in construction work and I suspect a skilled project manager. He is from my observations a meticulous individual who pays considerable attention to detail. He was meticulous in the manner in which he planned and managed this project, as owner, which involved alterations and additions to his home at Wynnum West.
Mr Hishon's evidence was supported by detailed e-mails (over 600 as alleged by the Construction Manager) which contemporaneously recorded the various stages of the project and his conversations/directions etc. with the Construction Manager and its supervisors. There were also detailed spreadsheets and schedules recording the progress of the project.
Mr Woods, on the other hand, was a very different person. He was not as meticulous as Mr Hishon. He may be even described as lackadaisical in his approach. Certainly in giving evidence I found him to be disorganized, vague and prone to make general statements without resorting to detail even when invited to do so. His cross-examination was punctuated by long pauses whilst he searched for documents that, ultimately, were not found or which he conceded he had mis-described. Although, he often referred to receiving the more than 600 emails from Mr Hishon that caused him and his companies so much angst very few were actually referred to by him even when he was invited to do so. There were a lot of emails from Mr Hishon but they were relevant and reasonable emails albeit more detailed than a builder usually would receive from an owner.
I am sure on most occasions, left to his own devices, Mr Woods would manage a project such as the one in question to a successful completion. His attention to detail was not what Mr Hishon was used to. As Mr Woods said on many occasions when giving his evidence he and his companies did things in a traditional way or the way we have always done it, unfortunately, that was not always in accordance with the contract, plans and specifications.
When these two personalities met it was destined to end unhappily. Mr Hishon had a contract with the Construction Manager and from what I can see from all of the material (and there is a lot of it) he worked within the parameters of the contract, plans and specifications. He made demands on the Construction Manager, many demands, but I do not see those demands as being unreasonable.
Mr Ross Vincent Woods was employed as the supervisor on site. He was the son of the director of the Construction Manager, Mr Peter Woods. He was a shareholder in WTS, but said he did not know that at the time of giving evidence. He was also a director of the Construction Manager at the time the Contract was entered into, but no longer holds that position.
Mr Woods Jnr was a carpenter by trade and held an Open Licence as a Supervisor.
It became readily apparent during the course of his evidence that Mr Woods was not familiar with the Contract or with the Scope of Works for a number of trades; in particular, the Scope of Works in respect of the termite barrier.
Mr Woods’ statement[9] contained a number of generalised comments about the difficulties of working with Mr Hishon. He alleged that Mr Hishon gave inconsistent instructions[10], instructions that overrode the requests of trade contractors[11] and gave instructions directly to trade contractors contrary to the Construction Manager’s instructions[12].
[9]Exhibit 40
[10]Exhibit 40, paragraph 12.
[11]Exhibit 40, paragraphs 15 and 16.
[12]Exhibit 40, paragraphs 19 to 21.
At a meeting on 11 November 2011 Mr Hishon implemented a procurement programme in an attempt to assess progress. He invited the Construction Manager to provide a response and additions to each week’s record to ensure that nothing was misinterpreted in any of the points discussed at the weekly meeting.[13] The Construction Manager did respond on occasions to the weekly email from Mr Hishon, it certainly had a forum to records its concerns but apparently did not do so.
[13]Exhibit 15.
On each occasion, when cross-examined on the topic, Mr Woods was unable to refer to any contemporaneous documentation to support his contentions.
Mr Hishon’s main complaint was that there was not proper supervision by Mr Ross Woods and that he delegated some of that supervision to a Mr Joel Cottle who was a leading hand employed by WTS. This was strenuously denied by Mr Peter Woods and Mr Ross Woods. Mr Ross Woods did not know what qualifications he had. He was not licensed or qualified as a carpenter. It was apparent that Mr Cottle did attend site inspections with Mr Hishon in the absence of either Mr Woods. He is referred to as our supervisor in the Construction Manager’s letter[14] of 1 May 2012 page 10. Mr Hishon says Mr Cottle’s involvement was far more detailed than as stated by Mr Ross Woods. I find as a fact that he did supervise, more importantly I find that the overall supervision of the works was poor and led to many of the problems that eventuated.
[14]Exhibit 5.
There was an issue over the tiles ordered by Mr Hishon. The quantity of the tiles required ordered by Mr Hishon allegedly was less than recommended by the tiler or the tile companies; however, it would appear to have been consistent with the Scope of Works[15]. Interestingly, when cross-examined on this point, Mr Woods left the ordering to the tile company and appeared not to consider it his responsibility to check the assessment. One would have thought as the Supervisor he should have at least overseen the order and checked it.
[15]Exhibit 17.
The complaints about Mr Hishon giving orders to the painter also lacked substance. Mr Hishon did give instructions for the painter not to attend on site for good reason. The painter was concerned that work he had previously done was damaged by the carpenter because the other trades had not finished work. Secondly, it was apparent that he thought that the walls were not ready for painting, that is, the plasterers had not finished or not properly finished their work, and walls were out of tolerance. The painter’s email to Mr Woods referred to Mr Hishon and himself measuring the walls and checking the tolerances[16].
[16]Exhibit 18 – email from Sam Russo 26/04/12.
Mr Woods suggested quite unconvincingly that his request for the painter to attend on site followed this email and was not in relation to the subject matter of the email. He also expressed the view that he did not think that the walls were sufficiently out of tolerance that they could not be painted, stating that “nothing is ever perfect the first time”. In fact the walls were rectified by the plasterer.
Mr Woods in his evidence made it quite clear that he had not read the Contract which is quite surprising when he was responsible for the supervision of the construction. It was also apparent, when cross-examined on the door issue, that he did not understand the hierarchy of documents contained in the contractual documentation. He was referred to Exhibit 19 which contained the documents listed in order of hierarchy should there be any discrepancy. In respect of the doors, he was directed to the fact that the door schedule was number 4 in the hierarchy and that plans were number 10. His response was that he had been told by Mr Hishon to follow the door schedule. However, an issue arose with the front doors where the plans were not clear. Two equal sized 1400mm x 2040mm doors were installed when there should have been a smaller door and a larger door. Mr Woods’ explanation was that as the plans and door schedule did not match he followed the earlier advice he had been given to follow the door schedule. He did so without seeking any clarification from Mr Hishon as to what Mr Hishon wanted. His explanation was that he prepared the documentation which was to go to the door manufacturer and passed it by Mr Hishon for his approval. Mr Hishon did not raise any objection to it and it went forward.
I suspect in all the material going past Mr Hishon at the time, this escaped his notice. In my opinion, I do not think a Supervisor in a Construction Management Contract can obviate his responsibilities in that way, and he at least should have brought it to the attention of Mr Hishon where there was a clear discrepancy between the Contract and the door schedule.
Where there is conflict in the evidence of Mr Hishon, Mr Peter Woods and Mr Ross Woods I have no hesitation in accepting Mr Hishon's version as the correct and accurate account.
Claim by WTS
Following the Notice of Termination by the Construction Manager to Mr Hishon on 24 May 2012 the Construction Manager terminated the Trade Contract with WTS. That was by Notice dated 12 June 2012[17]. The Construction Manager purported to act under clause 29.1 of the Trade Contract.[18]
[17]See exhibit PW22 to Mr Peter Woods statement of evidence.
[18]See Exhibit 40 Contract which is Exhibit RW1 to the Statement of Ross Woods.
Mr Hishon advised that WTS did not attend the site after 24 May 2012. Mr Hishon says that on 8 June 2012 he contacted WTS and offered it the opportunity to return to the site to complete the works. He received no response.
Clause 29 provided:
29.Determination.
29.1Should the Construction Management Agreement be determined for any reason the Construction Manager may determine this Contract and shall be only liable to reimburse the Contractor in respect of work already carried out in connection with the Works and in respect of which the Contractor is unable to mitigate against, and the Contractor shall not be entitled to recover loss of profit on the part of the Works not executed at the date of determination hereof.
29.2Should the Owner decide for any reason whatsoever that the Project:
29.2.1is no longer feasible; or
29.2.2needs to be shut down completely for a period in excess of 3 months,
then the Construction Manager may determine the Contract. The Construction Manager will be the sole judge of whether the Owner has made the decisions referred to in this clause.
29.3The Contractor is to be reimbursed by the Owner in respect of work already carried out and any other expense incurred in connection with the Works.
29.4The Contractor is not entitled to recover loss of profit on that part of the Works not executed at the date of determination.
Mr Hishon submits that no dispute existed between the Construction Manager acting as his agent on the one part and WTS on the other. No Notices of Dispute were issued. He submits there was no right for the Construction Manager to terminate the Trade Contract.
There was some confusion as to which Contract the Notice was given under. Under the Contract Management contract clause 29A provided:-
29A. Dispute under Trade Contract.
If a dispute arises with a Trade Contractor under clause 30 of a Trade Contract, where the Contract has been entered into with a Trade Contractor by the Owner or the Construction Manager as agent for the Owner, and the Construction Manager considers that the Owner is acting unreasonably, the Construction Manager has the right to suspend this Trade Contract until the dispute is resolved under clause 28 of the Trade Contract. If this dispute is not resolved under clause 28, the Construction Manager has the right to terminate this Contract by notice in writing to the Owner.
The Notice given on 12 June 2012 was given under the correct clause.
WTS claims the sum of $39,037.34 for work it says it performed and for which Mr Hishon has unlawfully withheld payment. Mr Hishon says that there is no evidence before the Tribunal that such an amount is outstanding. He denies he is indebted to the Second Applicant at all.
I have found it very difficult on the material submitted to substantiate the claim. There is a spreadsheet entitled “Watch This Space (Builders) Pty Ltd All Transactions for Hishon, Peter” that referred to the sum of $58,113.88 as being outstanding but the figure is not substantiated by the data supposedly supporting it. I have examined the material submitted by the Construction Manager and WTS and by Mr Woods and I am sensing the same frustration that Mr Hishon experienced because of Mr Woods’ and his company’s inattention to detail.
In paragraph 6 of Mr. Woods’ statement, he refers to the sum of $39,037.34 as being carpentry services provided by the Second Applicant and damages of $11,076.54. There was also a claim for $8,000.00 for variations that were not in writing. Mr Ross Woods made the comment in his evidence that if we were going to put variations in it was just going to slow the job down. It seemed that the decision was made not to claim variations. It is questionable who Mr Ross Woods was speaking for when he made this decision. I would not allow the variations as they do not comply with the trade contract provisions or with the Domestic Building Contracts Act 2000.
In his evidence in cross-examination, Mr Woods said that that was a mistake and that in essence it was an Account Rendered for $39,037.54 and further amounts for which accounts had not been rendered at the time of termination. The Scott Schedule[19] contains a different amount of $13,699.15 as being outstanding. The agreed value of the contract was $74,252.00 and WTS alleges it has been paid $60,552.85 up to determination.
[19]Exhibit 24 page 37.
The claims by WTS have been challenged by Mr Hishon. The transaction report referred to above identifies 11 invoices totalling $21,067.66 all dated 24 May 2012 which was the date of the alleged termination of the contract. Mr Hishon says he has not seen nor been provided with these invoices. In cross-examination Mr Woods was asked to provide evidence of invoices relied on for this claim. Mr Woods continued to rely upon the Excel spreadsheet referred to earlier which is Exhibit 6. Mr Watt, on behalf of Mr Hishon, requested Mr Woods to produce the source material. Mr Woods undertook to do so before the end of the hearing. However, no invoices were ever produced.
In the course of cross-examination, Mr Woods had initially said that all carpentry work had been completed, but later conceded that a timber fence had not been completed and fairly quickly conceded $4,000.00 could be deducted for that work not carried out. I have assessed the cost of the fence at $18,000.00. This concession casts doubt about other aspects of the claim; although on balance one is prepared to accept that some of these items have been completed and/or not paid for, there is doubt as to the accuracy of the final amount. I am not satisfied that the claim has been proven.
Air Conditioning
This issue took up a considerable amount of hearing time. It is referred to in paragraph 10 of Mr Woods’ statement of evidence Exhibit 13. He says that at no time prior to 23 April 2012, and not until being forwarded the Contract directly from the Building Services Authority on 3 October 2012, did the Construction Manager have any knowledge that an agreement had been entered into between Wahoo Air Conditioning and Mr Hishon, let alone that it was Mr Hishon’s expectation that the Construction Manager administer this agreement. He then, in the course of cross-examination, referred to an amendment he had made to that statement, inserting that the agreement had been commented on by the Building Services Authority, as it then was, (BSA) as “possible fraudulent misrepresentation”.
The reference to “fraudulent misrepresentation” finds its genesis in an email from Ms McCall dated 5/10/2012. Ms McCall is employed by the BSA. The email was questioned by Mr Hishon and he asked for further details from the BSA. Nothing was forthcoming.
According to Schedule E of the Construction Management Contract, the only item excluded from the scope of works is “swimming pool”.
Wahoo Air Conditioning Pty Ltd provided a quotation dated 27 September 2011 to the Construction Manager. In an email dated 6 November 2011 to the Construction Manager’s Supervisor, Paul Woods, he attached the proposed Contract for the air conditioning.
Mr Peter Woods, in cross-examination, did not dispute the fact that the Construction Manager had negotiated with Wahoo Air Conditioning when obtaining the quote. Mr Woods said that as the email did not request the Construction Manager to sign the Trade Contract with Wahoo Air Conditioning, he did not do so. I found Mr Woods’ evidence on this point quite unconvincing.
Subsequently, Mr Woods was provided with a Procurement Program dated 11 November 2011. Mr Woods agrees that in the row referring to air conditioning he had written “not in our scope”. By way of explanation, he was saying that it was not his responsibility. Why he had excluded it from the scope of works remains unexplained.
Mr Hishon then signed the Contract as Owner. The Construction Manager and particularly Mr Woods has taken umbrage at that in that the Construction Manager’s name in the signature box is crossed out and clearly Mr Hishon has signed it as Owner on his own behalf, although the Contract is with the Construction Manager. I cannot understand why this could possibly be referred to as a fraudulent misrepresentation. I also cannot understand why Mr Woods wished to reintroduce this issue into his statement of evidence when it was so apparent on its face as not to be fraudulent to any degree. It was explained to Mr Woods that when making such an allegation care should be taken. However, he at no stage withdrew the allegation. It is also apparent that although he refused to accept the air conditioning contract with Wahoo Air Conditioning as part of the Scope of Works, he nevertheless did not provide any credit back to Mr Hishon in respect of the management of that part of the Works.
I found the whole issue on which considerable time was spent, to be quite nonsensical and one that did not reflect well on Mr Woods or the Construction Manager. As the Construction Manager has failed in its claim the matter need not be considered further.
Termimesh
Mr Hishon has complained that the termite protection system that was installed was not the agreed product in accordance with the Contract.
The Contract provides in its Scope of Works:
Termimesh – termite barrier protection system is to be designed, supplied, installed and guaranteed by an approved Termimesh provider.
Under the budgeted allowances for quoted provisional sum and prime costs allowance details, termite protection includes the following:
Termite total quote – under slabs (Brisbane Pre-Slab)
and a quoted amount of $1,360.
Mr Woods says that the Scope of Works he worked on allowed for Termimesh or the equivalent. He alleges that that Scope of Works was reviewed by Mr Hishon who did not change or alter the qualification that an equivalent provider could be used. The termite protection installed in the building was by Kordon and that was installed by Brisbane Pre-Slab who appear to be the agreed contractor. I use the word ‘appear’ deliberately as Mr Hishon complained that he ‘never sighted any competitive pricing, plans, warranties offered for the works’ or the Construction Manager’s recommendation prior to their completion. [20]
[20]See email Hishon to Paul Woods dated 30 October 2011. Respondent’s folder 3 p8.
Mr Woods says in his evidence that Brisbane Pre-Slab only dealt with Kordon products.
It is alleged by Mr Hishon that if there was provision for an equivalent termite barrier Kordon was not equivalent to Termimesh and he refers to the Contract definition provisions relating to what is equivalent. That is defined in the Scope Clarification Provisions as:
Where the word equivalent is used it means equal with respect to aesthetics, performance, maintenance and warranty.
Mr Hishon alleges that Kordon does not have the equivalent warranty that Termimesh provides.
It is clear from the email correspondence conducted by Mr Hishon with Mr Paul Woods that Mr Hishon was never provided with any details of the termite barrier being installed and was presented as a fait accompli with the accounts of Brisbane Pre-Slab for payment. He refused to make those payments until provided with the full details of the value of the work and the warranties. For a time, the Certificates were withheld by the Kordon provider until its account was paid. It appears that the Construction Manager eventually paid the account but still did not provide the information sought.
It was Mr Hishon’s claim that he preferred the Termimesh product over the Kordon product because the former allowed an unlimited guarantee whereas the latter was limited to $100,000 per claim.
He also expressed concern that the Kordon product may be affected by chemicals such as pool chlorine, acids and motor oil etc; particularly, in places such as the cold joints between slabs at the carport and near the pool equipment.
I should interpolate here that Termimesh is a physical barrier whereas Kordon is a chemical barrier. According to Mr Langley, an expert called by the Construction Manager, regular inspections by a competent inspector are a necessary part of the success of both systems.
I note that Mr Hishon claims that one conduit was not fitted with a collar as required by the Kordon system. However, I also note that that conduit was taped to a steel column which was fitted with a Kordon flange. This appears to have been an oversight by the installer. Nevertheless it weakens the system. According to Mr Langley, when the concrete was poured, that would compress the conduit to the steel column and would provide the protection needed.
Further, the BSA inspection revealed that conduit running underneath the slab which contained the original main power wires was not protected by the Kordon termite barrier. The BSA found it to be a category 1 defect. It found the installation was not in accordance with the Kordon Termite Barrier Manual Version 1. This was relied upon by Mr Hishon but does not appear to be raised as an issue before the Tribunal.
Mr Hishon has been provided with the appropriate Inspection Certificates and Warranty by Kordon.
Mr Hishon claims the sum of $137,500 representing an additional 11 inspections which will be required per year for a period of 50 years. He relies upon a publication of the BSA entitled “Termite Management Systems Edition 3” published in February 2010. I presume the reference to 11 is an error and Mr Hishon is claiming one inspection per year for the next 50 years. That would work out at a cost of $140 per inspection on the 5% actuarial tables. I think that amount is excessive for a number of reasons. Firstly, Mr Hishon has in place a termite barrier that may have some slight deficiencies. Secondly, he has in place a warranty with Kordon which in all likelihood would be held to be valid. What he does not have is an unlimited warranty so far as the amount is concerned. If inspections are carried out annually as recommended, even in the presence of properly installed barriers, either chemical or physical, then it is unlikely that damage would exceed the $100,000 limit under the Kordon Warranty. In all the circumstances, I will allow a sum of $10,000 as representing damages for breach in relation to this matter.
For the Construction Manager, Mr Salmon was asked to comment on the alleged defects and to assess the cost of rectifying the defects. Mr Salmon was an experienced builder who had been in business on his own as a builder for many years, but lately in the more specialised area of building inspections. I found him to be competent and more than qualified to make the assessments. He informed the Tribunal that he does so on a regular basis for the Building Services Authority. Mr. Salmon’s reports are contained in the Scott Schedule.[21] Mr Salmon noted in his evidence that where he had provided a costing in respect of an item that did not necessarily mean he accepted it as a defect but was assisting the Tribunal as to the cost. He noted that he attended the site after termination of the contract and at a time when the works were at an advanced stage of completion he estimated at 75% or more.
[21]Exhibits 22 and 23.
Mr Timmins was the author of the MCS Group Report dated 23 August 2013.[22] The report is extensive and supported by numerous photographs. Mr Timmins was a recent arrival to Queensland from New South Wales, he did not have a good working knowledge of the Queensland legislation but seemed to have considerable experience in the building industry having held a variety of positions from carpenter to project manager. Mr Timmins approach, in some instances, was one of counsel of perfection. Mr Salmon considered some of Mr Timmins’ assessments to be excessive. Examples were the demolition and replacement of the stairs and of the deck.
[22]Exhibit 31.
It is well established by authority that the measure of damages in a case such as this is the difference between the contract price of the works contracted for and the cost of making the works conform to the contract with the qualification that not only must the works be necessary to produce conformity but that it must be a reasonable course to adopt. See Bellgrove v Eldridge.[23]
[23](1954) 90 CLR 613.
The MCS report has close up photos of defects that are difficult to see with the naked eye from 1.8 meter distance. That distance appears to be a rule of thumb used by assessors, according to Mr Salmon. Mr Timmins agreed that a similar rule existed in NSW. Some of the defects fall within that category.
The costing of the rectification work was provided by M & E Spatuzzo Contractors. Mr Salmon agreed the trade costs were reasonable and that costs were assessed on a third party carrying out the work. He disagreed with the methodology adopted by Mr Timmins. What I understand Mr Salmon to mean by that is that he believed work could be rectified much more cheaply and efficiently by, for example, in some cases touching up the defect rather than replacing the whole item which would appear to be Mr Timmins preferred method in many instances.
The Construction Manager denies that it is liable for the defective work. Firstly, it says that the defects are not defects but rather the incomplete works brought about by the termination of the Contract. It then says that Mr Hishon is responsible for ensuring the various subcontractors rectify their alleged defective works as the Contract was validly terminated. It relies on clause 4.12 of the Contract.
The above argument assumes that the Construction Manager was not responsible for the wrongful repudiation of the Contract. Having found that it is, Mr Hishon is entitled to claim damages for breach of contract which would include the costs of rectification services for building work carried out for the Principal under the Construction Management Trade Contracts. Building Works Services is defined as meaning one or more of the following for building work:
a) administrative services;
b) advisory services;
c) management services;
d) supervisory services.
Building Contractor is defined as a person who carries on business that consists of or includes carrying out building work, and includes a sole contractor who carries out building work for a building contractor.
Under the QBSA Act, s 72 enables the Authority to direct a person who carried out building work to rectify the building work under s 72(1) within the period stated in the direction and that person under s 72(5)(v) includes the Construction Manager.
Section 108(d) prohibits the contracting out of the provisions of the Act.
The Respondent refers to two cases. The first Fontain v QBSA[24] where the Commercial and Civil Tribunal considered a challenge to a direction to rectify issued by the QBSA on the basis that the builder was not responsible for the defects as builder as he had followed plans designed and certified by an engineer. The CCT found the builder responsible for the defective work. It said at [15]:
It is the builder’s responsibility to ensure the building work complies with the relevant regulations and the Building Code of Australia.
[24][2004] QCCTB 163.
The second case is Glen Williams Pty Ltd v QBSA[25]. There, this Tribunal said at [16]:
The QBSA Act is quite specific in making the builder responsible for any defective work, despite the involvement of other professionals. Here for reasons of consumer protection, the intent of the Parliament was to clearly lay responsibility for defective building work squarely at the feet of the builder. …
[25][2012] QCAT 127.
It follows, according to Mr Hishon’s submission, that he is entitled to a civil remedy against the Construction Manager as being responsible for the defects and incompleted work of the subcontractors.
The Construction Manager denies that there is defective work but says rather that it is incomplete work brought about by the early termination of the Contract. It denies it is in any way responsible for the defects and says that Mr Hishon has fundamentally misinterpreted the terms of the Contract and his remedy lies in pursuing the individual subcontractors. The Construction Manager relies on clause 4.12 of the Contract.
Further, it relies upon the indemnity provisions of the Contract, namely clause 18.6.2 of the Contract. That clause provides as follows:
18.6The owner shall indemnify and keep the Construction Manager indemnified against all liabilities, costs, charges, losses, damages, expenses or fees (including legal fees on a full indemnity basis) which the Construction Manager may suffer or incur arising out of or in any way related to:
18.6.1the Owner taking possession of or using the works or any part thereof in breach of this clause 18; or
18.6.2the non-completion of the works or any defect in the incomplete part of the works; or
18.6.3any direction to rectify or complete the incomplete parts of the work by the Building Services Authority or the Commercial and Consumer Tribunal, but excluding any disciplinary action taken by the Building Services Authority or the Commercial and Consumer Tribunal.
It then argues that clause 18.6.2 of the Contract prevents Mr Hishon from bringing a counterclaim for the alleged defects to incomplete works.
Clause 18 of the Contract is entitled Owner Taking Possession and all of the sub-clauses are prefaced on the fact that the owner has wrongfully taken possession of the works or the Construction Manager has consented to that course, it has no application to events where the Owner has lawfully terminated the Contract, which is the case here. It would be an absurd construction if the clause was construed in such a way that permitted the Construction Manager to avoid the consequences of its wrongful repudiation of the Contract and/or its neglectful supervision of the sub-contractors.
In my opinion the defective and incomplete works are recoverable damages as for breach of contract.
Conflict of interest
As stated earlier Mr Peter Woods was a Director of both the Construction Manager and WTS. Mr Ross Woods who was supervising the Contract for the Construction Manager was at the same a shareholder in WTS.
Mr Hishon referred to a number of areas of conflict of interest. For instance, WTS fell behind in the progress of its contract. That gave rise to a claim for liquidated damages. The Construction Manager may not have pressed WTS as much as it should or would had it been completely independent. Similarly, there is provision for execution of variations which would also give rise to a conflict. The claim by WTS for $8,000.00 for variations demonstrates a clear conflict of interest. It is said that Mr Hishon was aware of the conflict, that, of course, does not excuse the Construction Manager. However, any damage that may have resulted from the conflict of interest has been subsumed by the damages claim and in view of the findings I have made here the conflict issue need not be considered further.
Liquidated damages claim against WTS
Mr Hishon has a claim of $25,900.00 for liquidated damages against WTS. Under the terms of the trade contract WTS was to complete its work by 27 January 2012. At the time work was abandoned on 24 May 2012 it was 118 days behind schedule. Up to the date of occupancy on 12 October 2012 (practical completion not yet achieved) was a further 141 days. A total of 259 days. The trade contract allowed for liquidated damages of $100.00 a day.
This claim was not in the Amended Response and Counterclaim and was introduced after the hearing. The reason it was not made earlier, it is said, is that Mr Hishon did not have an executed copy of the Trade Contract with WTS. I am of the opinion that is not a sufficient justification to allow the late claim. No application to the Tribunal was made by Mr Hishon to amend his claim. I do not allow the claim.
Mr Hishon’s claim for damages includes claims for defective work. The Construction Manager says a lot of this was uncompleted work which it would have completed prior to practical completion had the contract not been terminated. This claim is contained in the Scott Schedule[26].
[26]Exhibit 24.
Section B - General Items
B1 to B5 These items involve damage to doors provided by Stegbar. The door furniture was installed by WTS. Most of the claim is rejected by WTS on the basis that it is incomplete work. Stegbar nevertheless completed the work or at least quoted for it as damaged work. It was not subject to any specific dispute by the Construction Manager. Mr Salmon in some instances thought the amount claimed was excessive. However, I allow the claim. $2,118.33 B6 Carport roof leaks during the rain periods. Photographs of the area reveal evidence of leaking. Since those photographs were taken by Mr Hishon, the area has been sealed by a sealant specialist, however he could not access the ceiling space. Rainwater is currently still penetrating the carport ceiling in two places. The Construction Manager rejects this on the basis of incomplete work and as a variation of the Contract. However there is no variation in writing. I allow the claim. $3,423.03 B7 Block wall height at left hand side is too high. Needs to be cut down to correct height. The item is disputed as the plans do not indicate a height. I allow the claim. $888.99 B8 Bath is scratched. Needs to be replaced. This item was disputed by the Construction Manager on the basis that there was no evidence the damage was done prior to or after delivery. Photographs of the bath filled with debris and other refuse were shown to Mr Salmon who described it as bad building practice. The inference clearly is the damage was done during the course of construction. The amount of $578.02 is disputed by Mr Salmon who says the bath could be repaired easily ‘by touch up’. I note the bath was a second not a second-hand bath. The cost of touch up is $190.75 versus a new bath at $578.02. I allow the cost of the touch up. $190.75 B9 Toilets have been installed before walls behind have had 3 coats of paint. This was disputed by Mr Woods on the basis that the painter would not take instructions from Mr Ross Woods. The toilets were installed before the painting was done. And appears to be a supervision issue. The defect is apparent on the video. I allow the cost of rectification allowed by Mr Salmon of $193. $193.00 B10 The timber jambs on the French doors are splitting. The door numbers are Door 18 and Window 20. The jambs should have been pre-drilled before installing the hinges that would have eliminated the splitting. Mr Woods says they were pre-drilled. Mr Woods says that the splitting was a result of the enlarged hinges that Mr Hishon insisted on using. That was not commented on by Mr Salmon. My impression of the general workmanship is that there was little care taken in fastening the hinges. The amount claimed is replacement of 2 new door frames. The claim of $3,098.31 appears to be excessive, involving 20 hours work. Mr Salmon considers that only one hour’s labour is needed at $127.20. The problem with these doors is that they are clear lacquered and not painted so the repairs are observable. I allow the sum of $3,098.31. $3,098.31 B11 Deleted. $0.00 B12 Rectification of damage to external windows and general cleaning of external windows and doors. This was a final cleaning item. The complaint is of cement and other plasterer’s trade mess are in windows and tracks and some jambs, frames, sills and panels need replacing. The cost of replacing the aluminium bi-fold doors W10 was cost of materials $1,380.00, replacement of tracks was $1,180.00 according to Mr Spatuzzo’s quote. Mr Timmins says the damage to the aluminium frames requires replacement as they are powder-coated. Mr Salmon says that they can be touched up by material designed for that purpose. He allowed $578 against the cost of Mr Spatuzzo’s quote of $5,080.78. It is submitted that the cost is excessive and not commensurate with the damage alleged. I agree. I allow the lesser sum for touch up. $578.00 B13 The render on the wall (laundry, store, gym) is cracking. Mr Woods says this is incomplete work. It is alleged that the cracking has resulted because the filling material placed in the wall recess has moved at a different rate than the render/membrane system. The cracking has compromised the waterproof system. Photographs depict minor cracking. Mr Spatuzzo’s quote is $739.86. Mr Salmon says 2 hours + materials @ $179.20 would rectify the defect. I allow that sum. $179.20 B14 The external wall between kitchen and veranda has a gap between the weatherboard and render. The 6mm Hardiflex has not been finished off and is out of plumb vertically. This is described by the Construction Manager as incomplete work. Both parties agree the cost of $299.41. I allow the sum. $299.41 B15 Redundant electrical conduits are required to be cut off and patched over. This is described as incomplete work. Both parties agree the cost of $231.21. I allow the sum. $231.21 B16 The render is cracking and falling off the front block wall. BSA[27] considered not due to defective construction practice and exercised its discretion not to take further action. Photographs reveal the cracking has advanced since BSA inspection. Mr Woods agrees the renderer should rectify. Both parties agree on the quantum of this issue at $425.42. I allow the claim $425.42 B17 Vanity units that have been installed have chips off the finished coating. It is difficult to see the damage depicted in the photographs. It is minor. I allow a touch up cost. $115.60 B18 There is damage to the underbench cupboards in the bar where the panels have been scratched. Again, the damage appears to be minor. I allow the touch up sum of $115.60. $115.60
B19 There is damage to the gable panel to joinery where the range hood was installed. Mr Timmins says the range hood was not centrally installed, however that is not repeated in the Scott Schedule. There is a reference in Scott’s Schedule to water ingress causing swelling and further damage to the panels. That is not in Mr Timmins’ report. I am not convinced about the damage on the material provided. I allow the touch up amount. $115.60 B20 There is damage to the kitchen joinery to one of the gable ends to the fridge space. Again, the description of the damage has been expanded upon in Scott’s Schedule but is not found in Mr Timmins’ report. I allow a minor touch up. $115.60 B21 There is damage to the kitchen joinery at one of the underbench cupboards adjacent to the dishwasher space. I allow the touch up value. $115.60 B22 There is damage to the kitchen joinery at one of the underbench cupboards under the hot plate cutout (hot plate not installed). I allow minor touch up. $115.60 B23 There is damage on both gables where the rangehood is installed. It is submitted the damage was done by the carpenter whilst trying to adjust the rangehood. Cost of this item included in B19. $0.00 B24 There is damage to the back of the door panel to the underbench cupboard in the bar. This item was included in B18. $0.00 B25 The stairs are scratched and pitted. This was a matter of oral evidence. The stairs were left unprotected during the construction period. Mr Salmon accepted that that was unsatisfactory behaviour on the part of the Construction Manager and WTS. The claim to have the stairs replaced at a cost of $10,863.28 is excessive and not commensurate with the damage incurred. The stairs have been sanded and polished and the defects are barely noticeable from a distance. I allow the cost of resanding and recoating. $1,734.00 B26 A reinforcing bar has been found fixed through a pool pipe. This item was accepted by the Construction Manager. The cost agreed at $887.84. $887.84 B27 Remove PVC downpipes and replace with Colorbond. No complaint was made by the Construction Manager. This was the Construction Manager’s responsibility. I allow the sum to replace with Colorbond. Parties agree on the quantum. $4,277.34 B28 Downpipes incorrectly discharge onto carport roof. These are to discharge into carport ground slab. This is disputed on the basis that the Construction Manager paid the plumber without reference to the matter now raised. This is an example of poor supervision. This is included in Item F5 referred to hereunder. $0.00 B29 Carport/driveway slabs have not been constructed in accordance with the contract documentation. Demolish and reconstruct the carport/driveway slabs. This item is disputed on the basis the Construction Manager paid the concrete contractor without reference to the raised matters. It relies on clause 7.1.8 of the Contract. These matters should be raised immediately. It appears that Mr Hishon only became aware of it when he installed the gates and found that there was 100mm gap. That appears to be the main problem with the failure of the concreter to construct the driveway in accordance with the Contract and Specifications. There is also the absence of a spoon drain that was allowed for in the drawings. In my opinion the amount claimed for rectification of $19,530.10 which involves the demolition and reconstruction of the driveway is excessive and out of proportion to the improvement that might be attained and is, in my opinion, unreasonable. I do not allow the claim. $0.00 B30 Services (stormwater and carport gate conduit) are missing from carport/driveway slab. See B29 above. $0.00 B31 The blockwork boundary fence on the right hand side of the property is in the incorrect location. Demolish and replace blockwork boundary fence. The fence is 70mm out. The cost of demolishing and reconstructing it is $11,522. Again, I think that is excessive and out of proportion to the damage. I disallow the sum. $0.00 B32 The capping block has not been constructed on the blockwall fencing. Construct the capping block to blockwall fencing as per the contract documents. After hearing Mr Timmins’ evidence on this issue, I am not convinced that it is a real problem. The amount claimed is $849.69. I do not allow it. $0.00 B33 The aluminium sliding door openings have been constructed too large and there is rendered Hebel packing above the door heads. Demolish and reconstruct blockwork lintel above sliding doors. It is alleged cracks have already appeared and have been patched over to prevent water ingress. It is suggested it will continue to crack over time. The claim is disputed on the basis that it should have been notified earlier. I allow the claim. $479.77 B34 The main house external render waterproofing detail is incorrect and bad practice. There is a timber bead and mastic joint or no joint at all (rear stairs – Wall 35) that is required to be removed and replaced with metal flashing between Ground Level and Level 1 external walls. The Construction Manager and WTS appear to accept the claim. The quantum of repairs is disputed. A significant amount of the cost is the provision of new flashing Zincalume and labour for 2 days. In my opinion the amount appears to be reasonable. I allow the sum. $5,402.16 B35 The barge, wall and column at the front of the carport are not aligned and the column size is incorrect. The video clearly shows the problem. This is disputed on the basis that it should have been notified earlier. The quantum of the repair is not disputed. $3,891.22 B36 The incorrect sized Entry Doors have been installed – 2 equal leaves have been installed in lieu of 2 unequal leaves. Remove and replace with correct doors. This was disputed and the subject of oral evidence. It resulted from a failure of the Construction Manager to consult with Mr Hishon where there were discrepancies between Door Schedules and the Contract Plans. The cost of new doors is $2,400. The doors installed are not aesthetically displeasing and are properly fitted it is questionable whether it is a reasonable course to adopt to replace the doors. There would be salvage value in the doors replaced I allow the claim with a reduction of $500. $1,900.00 B37 The vanity units that have been wall hung have not been packed off the wall to enable the vanity basins to be installed flush with the benchtop. This is disputed on the basis that it is late notification. The amount claimed is $4,075.03. The amount, in my opinion, is excessive compared to the improvement in aesthetic value. $0.00 B38 The topsoil that was supposed to be stockpiled for later use has been removed from site. Additional topsoil is to be delivered to raise the finished ground level. This is disputed. Firstly, on the basis of late notification; secondly, that any soil removed contained debris and original demolition material and the only area not affected by demolition material was at the rear of the site where soil was not removed. I do not allow the claim. $0.00 B39 2 keys for access into the house that were given to the 1st Applicant were not returned resulting in security issues. The amount claimed is $683.92 for all locks to be re-keyed. I allow that sum. $683.92 B40 Damage to the Brisbane City Council footpath (nature strip) caused during the 1st Applicant’s control of the site. The Construction Manager refers to a photo of the area prior to commencement of work which showed shrubbery and exposed roots in the area. On the other hand the video depicts a deal of rubbish and damage. I do allow the sum. $942.17 B41 Damage to existing timber floors caused during the 1st Applicant’s control of the site. Remove existing and replace timber flooring to the First Floor level internally to the house. $31,692.99 is claimed. This was the subject of oral evidence. The original floor was the ground floor raised as part of the renovations. Certainly the builder had materials stacked on the floor and probably did not take proper care of the floor. Nevertheless, it was an old floor which already had base plate marks left after the original structure was removed. There was other damage apparent on the video which appeared to have been present or caused by removal of the original walls. The video depicts the state of the floor before sanding. The floor was then sanded and polished. The defects are minor and to replace the whole floor, which would require other adjustments to be made, in my opinion, is excessive and unreasonable. I do not allow the sum. $0.00 B42 Patching and repainting soffit to veranda and rear deck where it was dented after final paint. This is said to be incomplete work. The amount claimed is $1,560.10. Mr Salmon has assessed it at $635.80 for the cost of repair. I allow the full sum. $1,560.10 B43 Waterproofing certificates for wet areas have not been provided. No claim is made in relation to this. I direct the Construction Manager to provide the certificates. $0.00 $34,077.77
[27]Resolution Services Report 13 December 2012.
Section C – Carpenter (WTS)
C1 Mastic jointing between skirting and flooring. Very little detail is provided on this issue. It is disputed as not being a part of the Contract. No other details are provided. The BSA report considers the installation to not be in accordance with acceptable building practice. I allow the sum $852.53 C2 Fitting door furniture. This is disputed as being incomplete. The amount claimed is $2,034.63. The Applicant’s assessment is $1,399.80. I allow the full sum. $2,034.63 C3 Fitting bathroom/ensuite/toilet sundry hardware. Ensuite 1st floor bathroom and ground level bathroom. Disputed as incomplete work. I allow the sum. $762.98 C4 Install dryer support. Disputed as incomplete work. Allow the sum of $127.16. $127.16 C5 Install Bed 1 TV support bracket. Disputed as incomplete work. I allow the sum. $190.75 C6 Supply and install FC soffits to veranda and deck. Disputed on the basis it has no context to the objective of identifying alleged incomplete or defective work. I do not understand the objection. Mr Hishon reports that the work has been completed post termination at his expense, I presume. I allow the amount claimed. $4,161.74 C7 Supply and install bulkheads above kitchen and bar overbench joinery. This is disputed on the basis of late notification. The Respondent reports that the work has been completed post termination, I presume, at his expense. I allow the sum. $994.19 C8 Install rangehood – external grille. Disputed as being incomplete. The Respondent was to provide the grille installation. The Respondent reports that the work has been completed post termination, I presume, at his expense. I allow the sum of $445.07. $445.07 C9 Skirtings bowing (greater than 5mm in 1.8m) – remove, patch wall and replace skirtings. This is disputed on the basis of late notification. I allow the sum. $3,512.85 C10 Wall 59 is incorrect location. This wall was thought to be in the wrong location but the issue subsequently became the difference in height between the ground level and first floor level. No amount is claimed. $0.00 C11 Remove and install the architraves/jambs around Bed 2 robe. I allow the sum. $46.24 C12 The cavity door and frame into the pantry has not been installed level. Disputed as incomplete work by WTS. I allow the sum. $242.77 C13 Demolition works including disposal of materials has not been completed by WTS. Disputed as incomplete work by WTS. I have viewed the video and the materials should been removed at a much earlier time. I allow the sum. $739.86 C14 Supply and installation of timber fencing to rear and side boundaries. The amount claimed is $21,461.84. Disputed as incomplete work by WTS. Mr Salmon assessed the cost as quoted by Timber Queensland at $4,501.60 but he had no specifications to work from. It appears from the evidence that the fence has now been built but no adjustment of the figure has been sought. There are two other quotes in Mr Hishon’s material ranging from $18,784.00 and $17,660.00. The actual cost of the fence has not been provided. I am not confident Mr Salmon assessment is accurate. I allow the sum of $18,000.00 $18,000.00 C15 When some internal doors are closed there are large gaps between the face/edge of the door and the jamb/architrave and door. Disputed as incomplete work by WTS. I have viewed the photographs. I allow the sum. $924.83 C16 French doors to kitchen and entry doors do not meet flush when the doors are closed. Disputed as incomplete work by WTS. I allow the sum. $531.78 C17 Scaffolding required to provide for painter to access external soffits and internal walls and ceilings. This was to be provided by WTS for all trades. See email 30 October 2011 Mr Hishon to Paul Woods. This is disputed by the Construction Manager on the basis that the painter was engaged by Mr Hishon. I allow the sum. $920.00 C18 Demolition of incorrectly constructed gate nibs. Disputed as incomplete work by WTS. I allow the sum. $312.13 C19 Cutting out for recessed lights in blockwall, which WTS undertook to do to allow the blocklayer to be paid the full amount of his contract. The amount is disputed on the basis that the painter was engaged by the Respondent. I do not see the relevance. Mr. Woods reports that Mr Hishon reported that this work has been performed. I allow the sum. $1,664.69 C20 The architrave in the ensuite has been nailed to the wall. This is suggested to be a defect because it has penetrated the waterproofing membrane and could result in water problems and moisture. I allow the sum. $248.55 C21 Timber decking to the veranda and rear deck has not been constructed in accordance with the Contract. The claim is made to demolish and replace the decking. Malthoid strips have not been used to separate joists and decking timbers and top of joists and bottom of decking have not been sealed prior to fixing. Screw fixing was used instead of nail fixing as required by the Contract. The amount of $26,591.42 is claimed. Mr Salmon says that the timber flooring can be lifted and replaced. Malthoid strips can then be installed and the decking replaced. He sees no reason why the bearers and floor joists are required to be replaced. He has allowed the sum of $2,772.20. I allow that sum. $2,772.20 C22 Replace new timber flooring that has been cut short. Photographs depict this defect. It has been previously allowed for. $0.00 $39,484.95
Section D – Tiler
D1 Tile at the bottom of the rear stairs has been overcut and requires replacement. Not disputed.I allow the sum. $156.07 D2 Tile to the hallway outside the study is chipped and not covered by skirting. To be replaced. Not disputed.I allow the sum. $144.50 D3 Mirror space to ground level bathroom has been tiled. The tiles to be removed. Not disputed. I allow the sum. $554.90 D4 External angles to shower recess have not been mitred. Remove and replace wall tiling to external corners. I allow the sum. $660.10 D5 Laundry splashback – one tile near door has fallen off. Included in D9. D6 Floor waste in the Gym has sunk. Needs to be rectified/removed and replaced. I allow the sum. $574.55 D7 Tiling under the front stairs has not been done. I allow the sum. $497.10 D8 2 tiles cut out incorrectly in the ensuite for the heated towel rails. Remove and replace. I allow the sum. $208.09 D9 Spashback to laundry was not completed. I allow the cost of completing the work. $208.09 D10 Ensuite, 1st floor bathroom, ground level bathroom, 1st floor toilet and ground level toilet – caulking to all internal corners was not done by tiler. I allow the sum. $495.71 D11 Ensuite, 1st floor bathroom and laundry – floor tiling to ensuite does not fall towards the floor waste. Demolish floors and topping to the ensuite and reinstall. The amount claimed is $3,514.25. The BSA confirms this as a defect. This is disputed by the Construction Manager on the basis that there was no information provided to the tiler that shower screens would not be fitted and said it contradicts the drawing notes that shower screens were to be provided. However, water should not flow away from the wastes. See video. I allow the sum claimed. $3,514.25 D12 Tiling was not done to the pool area, pool coping, entrance walkway, front patio and rear patio. I allow the value to complete the works. $8,175.50 D13 The tile above the vanity in the ensuite and 1st floor bathroom had to be removed to allow installation of the vanity basins. I allow the sum. $439.29 D14 The tiling to the walls to the ground level bathroom were not within tolerance (deviating from the plane greater than 5mm in 1.8m). I allow the claim. $2,578.83 D15 The tiling to the walls to the first floor ensuite were not within tolerance (deviating from the plane greater than 5mm in 1.8m). I allow the claim. $1,693.59 D16 Tiling to the walls to the first floor bathroom were not within tolerance. Tiling and waterproofing to these walls to be demolished and replaced. I allow the claim. $993.04 D17 Removal of cement residue on all tiling to ensuite, 1st floor level bathroom and ground floor level bathroom. I allow the claim. $520.22 D18 Additional floor tiles required to be purchased due to Roache Tiling generating excessive waste. I allow the claim. $784.10 D19 Grouting/joint sealing in general to ground floor tiles at door jambs. I allow the claim. $127.16 $20,809.52
Section E – Plasterer
E1 Setting compound is on door and window frames, glass and timber floor requiring cleaning. I allow the claim. $346.81 E2 Setting of walls incomplete under stairs. I allow the claim. $317.91 E3 Internal corners do not have setting beads – they have been taped and set only. I allow the claim. $1,675.86 E4 Walls where skirtings are out of tolerance (bowing greater than 5mm in 1.8m) – remove skirting and rectify wall straightness. This is disputed as no defect. The BSA report found the plaster board was not in accordance with the Boral Plasterboard Installation Manual I allow the claim. $3,852.02 E5 Plastering to window reveals that it is not uniform (ground floor toilet and first floor level toilet). I allow the sum. $346.81 E6 Damage where services have been installed. I allow the sum. $572.24 E7 Patching to completed walls that have not passed the prepaint inspection. I allow the sum. $502.88 $7,614.53
Section F – Plumber
F1 Floor waste to kitchen has not been installed. I allow the sum. $427.73 F2 Plumber supplied and installed the downpipes in PVS in lieu of Colorbond. This was the subject of evidence. Also allowed as item B27. No allowance. $0.00 F3 Drainage for external showers has not been installed. This is disputed as being illegal and contrary to the Plumbing Act. As I have heard no other evidence on the matter, I disallow the sum. $0.00 F4 Install downpipe and hose cock to rear balcony correctly. Remove existing downpipe, relocate hose cock, make good render and paint. This is depicted in the video. I allow the sum. $462.42 F5 Install stormwater pipework for carport slab. This is disputed as it has already been claimed. See B29, B30. $0.00 F6 Connection of solar hot water unit. I allow the sum. $277.45 F7 Plumber did not fit off any vanity basins to ensuite, first level bathroom, ground floor level bathroom, bedroom 3. This is disputed as being included in Item B37. I do not allow any sum. $0.00 F8 Plumber did not fit off the tapware to bath. I allow the sum. $34.68 F9 Plumber did not fit off the tapware to the laundry. I allow the sum. $115.60 F10 Plumber did not fit off the water tank. I allow the sum. $1,303.92 F11 Plumber did not supply and install the following stormwater drains – rear carport and swimming pool (grassed area). This is disputed as having been completed. I have no other evidence. I do not allow the sum. $0.00 F12 Plumber did not fit off the dishwashers to the bar and kitchen. I allow the sum. $138.72 F13 Plumber did not supply and install the downpipe to the front carport roof. I allow the sum. $80.92 F14 Blocked drain in ensuite. I allow the sum. $404.61 F15 Remove water pipe from first floor level ceiling for the external first floor level hose cocks and relocate to columns as required. I allow the sum. $1,225.40 $4,471.45
I have insufficient evidence in respect of the matters raised in Section G to make any findings. I do not allow the sums.
Mr Hishon’s claim against the Construction Manager is made up as follows:-
Loss of income and other expenses to the value of $13,450.00;
a) Additional estimated costs of $15,576.33 of engaging another construction manager;
b) Damages for termite control of $137,500.00;
c) Overpayments to trade contractors approved by the Construction Manager to the extent of $28,276.05;
d) Damages of $144,292.36 for failing to supervise being the total of Sections B, D, E, F and G of the Scott Schedule.
I am not satisfied that the claim for loss of income has been proven or is maintainable on the evidence before the Tribunal. I disallow it.
I am not aware that another construction manager was engaged and that the costs were incurred and I disallow that part of the claim;
I have already addressed the termite control issue and have allowed damages of $10,000.00.
I am not satisfied that there has been overpayment to the extent claimed and I am concerned that any overpayment to the trade contractor will be duplicated in part or whole by damages I have allowed for the defective and incomplete works as detailed in the Scott schedule therefore, I will not allow that sum.
Damages for failing to adequately supervise the Trade Contractors being the sum total of Sections B, D, E and F amount to $66,971.27.
WTS is also liable to Mr Hishon for damages for the cost of defective work in the sum of $39,484.95.
Therefore the orders of the Tribunal are:
a) The claims by the First and Second Applicants are dismissed;
b) The Respondent’s counterclaim against the First Applicant is allowed and I direct the First Applicant pay the Respondent the sum of $76,973.27;
c) The Respondent’s counterclaim against the Second Applicant is allowed and I direct the Second Applicant to pay the Respondent the sum of $39,484.95.
I will receive written submissions in respect to costs. Such submissions, if any, to be filed by the Respondent by 23 May 2014 and the Applicants by 30 May 2014.
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