RCTC Pty Ltd v Rappa
[2010] QCAT 300
•29 June 2010
| CITATION: | RCTC Pty Ltd v Rappa [2010] QCAT 300 |
| PARTIES: | RCTC Pty Ltd |
| v | |
| Alejando & Frank Rappa |
| APPLICATION NUMBER: | BD252-07 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 25 & 26 February 2010; 10 June 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr Elena Marchetti, Sessional Member |
| DELIVERED ON: | 29 June 2010 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: |
1. That the respondents pay the applicant the sum of $272,304.06 by 4:00 pm on 31 July 2010.
| CATCHWORDS : | Claim for payment of final two stages of contract; lack of evidence to support counter-claim for defective and incomplete work; QCAT Act – s 48; costs and interest awarded in favour of applicants. |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Ms McNeil of Counsel, instructed by Mr Adames, of Maunsell Pennington Solicitors |
| RESPONDENT: | Mr Lion |
REASONS FOR DECISION
Introduction
On 17 March 2006 the applicant and the respondents entered into a contract for the construction of a duplex (“the building”) at Lot 14 Vista Drive, Ashmore. The contract price was $628,291.00.
The claim is for the payments, which were due for the ‘fixing’ ($125,658.00) and ‘practical completion’ ($94,246.00) stages of the contract, which remain unpaid, together with interest and costs.
The respondents dispute the payment of the unpaid portion of the contract on the basis that the work was incomplete and defective, and in return make a counter-claim for an unspecified amount for what they claim they spent to complete and rectify the work (further particulars in relation to this portion of the claim appear below), together with costs. In paragraph VII of the ‘Further Particulars on Counterclaim’ (“the Further Particulars”), the respondents note that they paid $103,263.70 to ‘complete work left unfinished by the Applicant or not even started at the time of taking possession’. It is unclear, however, if this amount includes all of the defects and claims of incomplete work listed by the respondents.
The respondents request that an amount equivalent to what they spent to rectify the defects and complete the work be deducted off any amount owing under the contract or in the alternative, that any amount owing for the work which was completed by the applicant be calculated on the basis of a quantum meruit claim, which the respondents submit would be covered by the $422,387.00 they claim they have already paid to the applicant.
The respondents also claim that the applicant did not complete the work within a reasonable time and claim an amount of $15.00/day (as per Clause 23 of the contract) for 167 days (totalling $2,505.00) as damages for late completion.
The Dispute
The dispute involves a number of issues, which relate not only to the standard of the building work, but also to what was and was not included in the contract.
The contract documents comprised a Housing Industry Association New Home Construction Contract (June 2000 edition) (“the Contract”), a ‘Full Build Inclusions’ document, and ASK Plans.
The respondents’ grounds for refusing to pay the ‘fixing’ and ‘practical completion’ stages of the Contract are:
· The respondents did not receive the completed version of the Contract;
· The respondents did not receive the final amended version of the Plans and were never advised of certain alterations to the building materials, inclusions and structure of the building;
· The building was never fully completed to the satisfaction of the respondents because certain works were incomplete or defective.
In particular, the respondents claim in their amended Defence and Counter-Claim filed in the Commercial and Consumer Tribunal Registry on 8 October 2007 that the following items were not completed according to their understanding of the Contract and Plans, or were defective:
· At the ‘fixing stage’ certain ‘important items’ such as ‘cabinets’ or ‘built-ins’ were not complete;
· An inferior quality of materials was used to construct the lower section of the building (i.e. Harditex was used instead of bricks) and for the external wall cladding (an estimate of $28,000.00 was provided in the Further Particulars for replacing the external wall cladding);
· The site was incorrectly cut, resulting in the need for an extra retaining wall, not included in the Full Build Inclusions;
· Roof overhangs on the balconies were omitted. An estimate of $13,260.00 was provided in the Further Particulars for ‘alter[ing] the level of the balconies to avoid water ingress’ and a request for credit to be given to the respondents by the applicants for the missing roof overhangs (however, no figure was given for what that credit should be);
· Swimming pools and landscaping were omitted. The Further Particulars notes that the respondents paid $28,665.00 for constructing the pools and a further $184.91 for rock excavations associated with the pool construction.
Further issues relating to the standard and completeness of the building work were raised during the sworn testimony of Jodi Rappa and in Mrs Rappa’s statement dated 28 February 2008, which was tendered into evidence and marked as Exhibit 11. The list of issues were not clearly drafted in the statement and were not able to be clearly articulated by Mrs Rappa during her testimony, due to the manner in which the respondents’ representative lead the Examination in Chief. As a result it was difficult to ascertain what grievances were material and formed part of the counter-claim. The following are the issues, which appeared to me to be of most concern to the respondents and which are not individually itemised in the Defence and Counter-Claim:
· It was unclear to the respondents, how the applicants had calculated the amount it would cost to complete the building. This resulted in the respondents being unclear about what fixtures or fittings had been included in the applicant’s ‘budget’, and which of the items they had selected were over budget and which had been under.
· There were quite a few delays, which Jodi Rappa claims were due to construction problems. Some of the problems Ms Rappa describes in her statement are problems with the installation of the windows, incorrect installation of the Harditex, incorrect plumbing connections, and problems with the type of tiles that had been selected.
· There were a number of things that the respondents had to do to complete the construction after they had taken possession of the building, including having to clean the site.
The respondents also make a number of other claims about the license, identification and qualifications of the builder, the lack of supervision during construction, and the manner in which the ASK Plans were used by the applicants. I am assuming (since it was never fully explained by the respondents’ representative) that these claims were made to support the fact that the work was defective. However, as will be explained further below, the evidence presented by the respondents did not support the claims made. The respondents also claim that the applicant failed to supply certain building and pest certificates, however, copies of such certificates were tendered into evidence during the hearing.
The Hearing
The hearing in the Queensland Civil and Administrative Tribunal began on 25 February 2010. It was listed as a two day hearing. The applicants indicated on the morning of the first day that they would be calling Mr Bevan Sim, an expert architect, Mr Darren De Brenni, the Director of the applicant, and Mr Keith Richardson, the Managing Director of Affordable Steel Kit Homes, which is a business that refers work to the applicant, as witnesses. The respondents indicated that they would be calling Mr Alejando Rappa, one of the respondents, Ms Jodi Rappa, Mr Alejando Rappa’s wife, and Mr James Holyman, a building expert, as witnesses.
During the first day of the hearing all of the applicant’s witnesses appeared to give evidence. The evidence of Mr De Brenni and Mr Richardson was clear and consistent with the notion that the respondents had been kept informed of variations to the Plans, which were required as a result of covenants that needed to be satisfied with the Royal Pines Committee and that they had been given a copy of the completed final version of the Contract and Full Build Inclusions, and the amended Plans.
Mr De Brenni also gave evidence that the respondents had been given an allowance for various building works and fittings and fixtures, and that they had been advised when they went over budget. If they went under budget or there had been an agreement that the applicant was no longer responsible for the item, the respondents were advised that they would be given a credit. Mr De Brenni confirmed that on 22 December 2006 he had prepared a ‘Contract Variation Request Form’, which reconciled the credits and debits of a number of variations to the Contract. He had attempted to arrange a meeting with Mr Alejando Rappa and Ms Jodi Rappa to provide them with the Contract Variation Request Form but, according to Mr De Brenni’s evidence, they failed to attend the meeting. The Contract Variation Request Form includes a number of items in dispute, such as the landscaping, fencing, curtains and blinds, and tiles, the cost of which were credited back to the respondents since such works and items were no longer the responsibility of the applicant.
Mr De Brenni gave evidence that over a cup of tea, he had informed Ms Rappa that the balconies did not have roof overhangs and that the respondents had been given a $4,500.00 credit for that variation. Mr Richardson confirmed in his evidence that the respondents had agreed to this variation.
Mr De Brenni gave evidence that he had organised various tradespeople to rectify and complete the items, which were listed in Mr Holyman’s report.
Mr Richardson also gave evidence that the respondents had been advised that Harditex would be used instead of bricks. This variation was in fact noted in the Full Build Inclusions.
Both Mr De Brenni and Mr Richardson gave evidence that swimming pools were never included as being part of the Contract.
Mr De Brenni and Mr Richardson informed the Tribunal that delays had occurred but that the respondents had been given early possession of the building as a result of this. Mr Richardson also stated that during most of the construction they had maintained good relations with the applicants.
The evidence given by Mr De Brenni and Mr Richardson did not change under cross-examination. I found both witnesses credible and reliable.
The evidence of Mr Sim was given by telephone. Mr Sim had provided a report attached to his statement dated 19 February 2008, which stated whether or not the list of defects identified by Mr Holyman were in fact defects. The report and statement was tendered into evidence and marked as Exhibit 9. A further report, which estimated what the cost would be to rectify the defects listed in Mr Holyman’s report was attached to Mr Sim’s second statement dated 24 February 2010. This report and statement was tendered into evidence and marked as Exhibit 10.
Mr Sim gave evidence that he had inspected the building on 2 August 2007. When he inspected the building he had a copy of the defects report prepared by Mr Holyman. Mr Sim stated that if all of the defects were found to in fact, exist, the cost of rectification would be between $17,700.00 and $21,600.00. However, the defects he believed were actually in existence at the time of his inspection would only cost between $2,200 and $2,700 to rectify.
On the first day of the hearing, the Tribunal was told that Mr Rappa and Mr Holyman would be available to give evidence either in person or by telephone between 9 am and 11 am, on the second day of the hearing.
Ms Jodi Rappa gave evidence on the first day of the hearing. Her evidence was, however, not fully completed by the end of the day.
It became clear during the cross-examination of Ms Rappa that she had made many assumptions about what was and was not included in the Contract, Full Build Inclusions and Plans, without seeking clarification. Ms Rappa also accepted that there was no provision for an extra retaining wall in the Full Build Inclusions. The respondents provided no evidence to confirm that the site had been incorrectly cut in a manner, which was inconsistent with what was on the Plans. Ms Rappa disputed the fact that Mr De Brenni had attempted to organise a meeting with her and her husband on 22 December 2006 to discuss and give them a copy of the Contract Variation Request Form. She said that, despite the fact that she had given birth to her baby on 8 December 2006, she had been back at the job site when the baby was two days old and she would have therefore been in a position to attend any meetings, had they been organised.
Just prior to the end of the day, Mr Gunter Lion, the respondents’ representative, attempted to tender into evidence a large Ring Binder full of invoices and receipts, which the respondents and Mr Lion claimed were evidence of the fact that they paid a number of tradespeople to rectify defects and complete the building work. The invoices and receipts had not been provided to the applicants and nor were they sorted into any particular order. When I asked Ms Rappa why a list of all the individual invoices and receipts had not been prepared and tendered as evidence, Ms Rappa responded that she thought that that had been done.
Due to the sheer volume of invoices and receipts tendered at such a late stage in the proceedings, and the lack of probative value of the documents, I refused to admit the folder into evidence.
On the second day of the hearing Mr Lion, the respondents’ representative and Ms Jodi Rappa requested an adjournment due to the fact that Ms Rappa had undergone surgery the previous evening to remove a cist from one of her breasts. Although no medical evidence was tendered at the time, Ms Rappa was clearly distressed and did not appear to be in a fit state to continue with her cross-examination.
When I asked Ms Rappa whether her husband and Mr Holyman were able to give evidence, Ms Rappa responded that Mr Alejando Rappa was speaking to their solicitors about whether or not they should settle the matter. I suggested a break so that Mr Rappa and Mr Holyman could be contacted to confirm whether they would be giving evidence that day. Ms Rappa reiterated that she wanted to adjourn the hearing to another day. The applicants vehemently objected to having the hearing adjourned.
After a short break, I was informed that Ms Rappa had been unable to have a ‘lengthy conversation’ with Mr Rappa and that she still wanted to adjourn the hearing to another day. Ms Rappa was still very distressed and did not seem to be in any fit state to be present at the hearing.
In the interests of justice I decided to adjourn the hearing and made the following Directions: (1) that the respondents file and serve any further statements of evidence, limited to the quantification of the counterclaim by 12 March 2010; (2) that the applicant file any statements of evidence in reply by 26 March; and (3) that the application be listed for a compulsory conference on 12 May 2010.
The applicant requested costs be awarded against the respondents but I reserved my decision in relation to that issue. I advised the respondents that they should consider obtaining legal representation and gave them leave to be legally represented at any future hearings or conferences before the Tribunal.
According to letter dated 7 June 2010 received by the Tribunal from the applicant’s solicitor, which was written in response to a facsimile dated 7 June 2010 from the Respondents’ representative, Mr De Brenni attended the compulsory conference on behalf of the applicant, however, neither of the respondents appeared. Mr Lion appeared as their representative. There was no particular reason given for the non-appearance of Mr Alejando Rappa, and the reason given for the non-appearance of Ms Jodi Rappa (who is not one of the respondents but one of the main witnesses for the respondents and who appears to be the respondents’ ‘unofficial’ family representative) was that she could not attend due to the fact that she may be contagious with whopping cough since other members of the family had recently contracted it.
The respondents did not file any further statements of evidence as previously directed by me.
The matter was relisted for a hearing before me on 10 June 2010 for finalisation of the hearing, despite the fact that Mr Lion requested I be replaced because, as stated in a letter to the Tribunal dated 13 March 2010, ‘the hearing should be before a person with extensive building experience, building contract law knowledge and specification and drawing requirements interpretation ability’.
On 7 June 2010, Mr Lion advised the Tribunal by facsimile that the respondents would not be able to attend the hearing on 10 June due to whooping cough. No medical certificates were provided to the Tribunal. A facsimile from the Tribunal was sent to Mr Lion in response to his correspondence advising him that the hearing would proceed as scheduled on 10 and 11 June 2010 and that I would consider any application for an adjournment at the commencement of the hearing.
Neither the respondents, nor Mr Lion appeared at the Tribunal on the morning of 10 June 2010. Mr De Brenni, Mr Richardson, and their barrister and solicitor were in attendance. I decided to telephone Mr Lion to find out why no-one was in attendance. When he answered the phone, he seemed surprised that the hearing was proceeding. Despite the fact that he had received the facsimile from the Tribunal advising him that the hearing was proceeding on 10 June, he assumed that he had been granted an adjournment. I advised him that he needed to submit medical certificates to support an application to adjourn the hearing. Mr Lion then faxed two medical certificates to the Tribunal, one claiming that Ms Rappa was ‘suffering from signs and symptoms’ of whooping cough and that Mr Rappa suffered from ‘panic attacks and generalised anxiety disorder’. Neither medical certificate stated that Mr or Mrs Rappa were unfit to attend the hearing. Mr Thomas Richard Adams, the applicant’s solicitor submitted an Affadavit in his name in which he swore that he had telephoned Ms Jodi Rappa’s place of employment on 8 July 2010 at 4.15pm and requested to speak to Ms Rappa and was put through to her. They had a brief conversation in which it was clear that Ms Rappa was not ill. Based on this evidence and the inadequacy of the medical certificates, I decided to reject the application for an adjournment and continued with the hearing. I suggested that Mr and Mrs Rappa could give evidence by telephone and I gave Mr Lion some time to contact them in order to organise this. I also asked him to contact Mr Holyman to advise him that he may be called to give evidence by telephone.
When the hearing resumed, Mr Lion advised the Tribunal that he was unable to contact Mr and Mrs Rappa. He stated that Mr Holyman would be available. When Mr Holyman was contacted by telephone, he stated that he was not prepared to give evidence on behalf of the respondents because they had not paid their account for the report he had prepared.
The only thing left was for the parties to make their submissions, which they did on 10 June 2010. Mr Lion made his submissions by telephone.
Decision
In view of the respondents’ failure to (1) attend the compulsory conference on 12 May 2010; (2) file a further statement of evidence to support their Defence and Counter-Claim according to the Direction made on 26 February, 2010 by the Tribunal; and (3) attend the final day of the hearing to give evidence, all without reasonable excuse, the Tribunal may, in accordance with section 48 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the Act”), make a final decision in the applicant’s favour.
In addition, the evidence presented by the respondents has been throughout the entire hearing, unconvincing and lacking in substance.
On the contrary, the applicant, its representatives and witnesses have at all times acted in a way that has assisted the Tribunal and which has been consistent with a desire to have the matter resolved. The evidence presented on behalf of the applicant has been convincing, and supported by documentation and statements from witnesses. I therefore accept the evidence of the three witnesses who appeared on behalf of the applicant. In particular, I accept the evidence of Mr Sim, who prepared a detailed report in response to Mr Holyman’s defects report.
I therefore find in favour of the applicant and order that the respondents pay the applicant the sum of $219,904.00 less an amount of $2,700.00 which is the maximum Mr Sim believed it would cost to rectify the defects which in his opinion were actually in existence at the time of his inspection.
Costs
The Tribunal’s jurisdiction in respect of costs is dealt with in Part 6 Division 6 of the Act, which states that each party to a proceeding must bear the party’s own costs unless the interests of justice require otherwise.
In deciding whether or not to award costs in the interests of justice, section 102(3) states that the Tribunal may have regard to ‘whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g)’ and ‘anything else the tribunal considers relevant’.
I find that the behaviour of the respondents since the hearing was adjourned on 26 February 2010, has unnecessarily disadvantaged the applicant since its representatives had to attend a compulsory conference the respondents were clearly never intending to attend and prepare further materials in response to any correspondence filed by the respondents and in support of an objection against further requests to adjourn the hearing. This has caused the applicant extra legal fees.
At my request, Mr Adams, the solicitor for the applicant, filed an Affidavit dated 11 June 2010 in relation to what extra costs the applicant incurred as a result of the adjournment of the final hearing.
On the basis of the evidence presented in the Affidavit I accept that the applicant incurred extra costs totalling $9,446.18. I therefore order that the respondents pay the applicant that amount.
Interest
The applicant also claims interest at 14% pursuant to clause 33 of the Contract. The amount owing has been outstanding for 949 days (from 4 April 2007 to 10 June 2010).
According to section 34B of the Queensland Building Services Authority Regulation 2003 (Qld), if the Tribunal awards interest pursuant to s77(2)(c) of the Queensland Building Services Authority Act 1991 (Qld), the applicable rate is the rate specified under the contract, if one exits. The rate of interest under clauses 33 and 38 of the Contract is ‘the annual rate equal to the Commonwealth Bank overdraft index rate: quarterly charging cycle plus 5%’. The current rate is 10.34%, however the applicant accepts the base rate of 9% (to take into account minor fluctuations), plus 5%, or a total of 14%.
Due to the fact that not all of the delays can be attributed to the parties, I am awarding interest for 18 months or 548 days. Therefore, the interest amount is calculated as $217,204.00 x 14% = $30,408.56 per annum or $83.31 per day. The total interest owing is therefore $83.31 x 548 days = $45,653.88. I order that the respondents pay the applicant that amount.
Summary
The amounts allowed on the applicant’s claim are:
(a)Unpaid balance of the Contract less cost to rectify
Defects $217,204.00
(b)Costs $ 9,446.18
(c)Interest $ 45,653.88
Total $272,304.06
I order that the respondent pay the applicant the amount of $272,304.06 by 4pm on 31 July 2010.
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