Rowan v Lead Constructions Pty Ltd
[2021] QCAT 214
•17 June 2021
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Rowan v Lead Constructions Pty Ltd [2021] QCAT 214
PARTIES: PETER ROWAN (applicant)
v
LEAD CONSTRUCTIONS PTY LTD (respondent)
APPLICATION NO/S:
BDL074-20
MATTER TYPE:
Building matters
DELIVERED ON:
17 June 2021
HEARING DATE:
On the papers
HEARD AT:
Brisbane
DECISION OF:
Senior Member Brown
ORDERS:
1. Lead Constructions Pty Ltd is to pay to Peter Rowan the amount of NINETEEN THOUSAND, TWO HUNDRED AND TWENTY-SEVEN DOLLARS AND SIXTY-EIGHT CENTS ($19,227.68) within 28 days of the date of this decision.
2. Lead Constructions Pty Ltd is to pay to Peter Rowan costs fixed in the amount of THREE HUNDRED AND FORTY-FIVE DOLLARS AND EIGHTY CENTS ($345.80) within 28 days of the date of this decision.
CATCHWORDS:
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – OTHER MATTERS – where the applicant hired the respondent builder to undertake building work – where the scope of works was “Enclosure of Patio to Store Room” – where work never progressed beyond framing stage – where no attempt to complete works made – whether applicant is entitled to damages
Queensland Building and Construction Commission Act 1991 (Qld), s 6, s 77, Sch 1B s 4, Sch 2
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48
Baese Pty Ltd v R A Bracken Building Pty Ltd (1990) 6 BCL 137
Bellgrove v Eldridge (1954) 90 CLR 613
IPN Medical Centres Pty Ltd v Van Houten & Anor [2015] QSC 204
J-Corp Pty Ltd v Mladenis [2009] WASCA 157.Ventura v Svirac [1961] WAR 63.
APPEARANCES & REPRESENTATION:
Applicant:
Self represented
Respondent:
No appearance
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
REASONS FOR DECISION
Mr Rowan engaged Lead Constructions to undertake building work. The parties fell into dispute and Mr Rowan commenced these proceedings. The proceeding is to be finally determined.
The background to the dispute
On 18 August 2019 the parties entered into a level 1 minor works contract for the performance of building work (the contract).
The contract price was $6,857.99. The contract described the scope of works as ‘Enclosure of Patio to Store Room’. The construction period was 9 days. The date of commencement of the works was set out in clause 8.1(b) of the contract and was within 10 days of the builder receiving certain stated documents and information. Lead Constructions was responsible under the contract for obtaining building approval. The date of practical completion was the last day of the construction period.
By clause 18 of the contract, if Lead Constructions did not bring the works to practical completion by the practical completion date, Mr Rowan was entitled to give to Lead Constructions a written claim for liquidated damages at the rate of $25.00 per day for each day after the date of practical completion the works remained incomplete until the date of practical completion or termination.
Mr Rowan says that the building works commenced on 25 August 2019 and ceased on 30 August 2019. On 7 January 2020 Mr Rowan terminated the contract.
The jurisdiction of the Tribunal
I am satisfied as to the following and make findings that:
(a)Mr Rowan is a building owner;[1]
(b)Lead Constructions is a building contractor;[2]
(c)The building work was domestic building work;[3]
(d)The contract was level 1 regulated contract for the performance of domestic building work;[4]
(e)The dispute between the parties is a domestic building dispute;[5]
(f)The tribunal has jurisdiction to hear and decide the dispute;[6]
(g)Prior to commencing the proceedings, Mr Rowan complied with s 77(2) of the Queensland Building and Construction Commission Act 1991 (Qld).[7]
[1]Queensland Building and Construction Commission Act 1991 (Qld) Schedule 1B, s 1.
[2]Ibid.
[3]Ibid, Schedule 1B, s 4(1)(b).
[4]Ibid, s 6(1).
[5]Ibid, Schedule 2.
[6]Ibid, s 77(1).
[7]Ibid, s 77(2).
The power of the Tribunal to assess damages
I am satisfied that service of the proceedings has been effected upon Lead Constructions.[8]
[8]Affidavit of service of Peter Rowan filed 30 June 2020; further Affidavit of service of Peter Rowan filed 30 June 2020.
Lead Constructions was directed to file a response to the application by 27 July 2020. The direction was not complied with. Lead Constructions was directed to file a response to the application by 14 September 2020 failing which Mr Rowan would be entitled to a final decision in the proceedings, conditional upon the assessment of damages. Lead Constructions failed to comply with the direction. The tribunal may make a final decision in a proceeding in circumstances where a party fails, without reasonable excuse, to comply with tribunal directions and thereby unnecessarily disadvantages the other party to the proceedings.[9] Such was the case here. The failure by Lead Constructions to comply with directions to file a response unnecessarily disadvantaged Mr Rowan by delaying the progress of the proceedings to a final determination. On 23 September 2020 the tribunal made a decision in favour of Mr Rowan conditional upon the assessment of his entitlement to damages.
[9]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48.
I am satisfied that it is appropriate to proceed to assess damages.
The assessment of damages
As I have earlier observed, Mr Rowan says that Lead Constructions commenced the building work on 25 August 2019. This seems curious, the 25th August 2019 being a Sunday. Weekends are defined in the contract as non-working days. However the evidence of Mr Rowan is uncontested as to the date of commencement of the works. In the final result, whether the works commenced on 25th August or 26th August is of no moment. The construction period being 9 days, the works were required to be brought to practical completion by 4 September 2019 at the latest if the works commenced on 26th August.
It is beyond doubt that the works were not completed by 4 September 2019. In fact, the works were never completed by Lead Constructions.
Mr Rowan paid to Lead Constructions $4,286.25 of the total contract price of $6,857.99.[10]
[10]Appendix B to statement by Peter Rowan filed 21 October 2020.
By clause 20.1 of the contract, in the event that Lead Constructions, inter alia, failed to proceed with the works with due diligence or unlawfully suspended the carrying out of the works, Mr Rowan could give to Lead Constructions a notice of intention to terminate the contract. The contract required that the builder be given ten business days to remedy the breach failing which the contract would be terminated. On 12 December 2019 Mr Rowan gave to Lead Constructions a Notice of Breach of Contract and Intention to Terminate contract.[11] The breach identified in the Notice was the failure by Lead Constructions to bring the works to practical completion within the time stipulated in the contract. The notice stated that Lead Constructions was required to remedy the breach within ten business days failing which Mr Rowan would terminate the contract.
[11]Ibid, appendix C.
Mr Rowan says, and I accept, that Lead Constructions took no steps to progress the building works after 19 December 2019.
By clause 20.2 of the contract, if after being given notice pursuant to clause 20.1 the builder failed to remedy the identified breach or breaches within the stipulated period, the owner was entitled to terminate the contract without prejudice to any of the owner’s other rights or remedies. On 7 January 2020 Mr Rowan gave notice in writing to Lead Constructions terminating the contract.
I am satisfied as to the following and make findings that:
(a)Lead Constructions, in breach of the contract, failed to progress the building works in a diligent manner and failed to bring the works to practical completion by the due date under the contract;
(b)On 19 December 2019 Mr Rowan gave notice to Lead Constructions in accordance with clause 20.1 of the contract;
(c)Lead Constructions failed to take any steps to comply with the notice and to progress the building works;
(d)On 7 January 2020 Mr Rowan gave notice to Lead Constructions terminating the contract in accordance with clause 20.2 of the contract;
(e)Mr Rowan was not, at the time of termination, himself in substantial breach of the contract;
(f)Mr Rowan lawfully terminated the contract on 7 January 2020.
Mr Rowan says that the works did not progress beyond the frame stage. He says that as a result of prolonged exposure to the elements the frame must be removed and the entirety of the works undertaken again.
Having lawfully terminated the contract, Mr Rowan is entitled to recover damages that will enable him to be placed in the position he would have been in had Lead Constructions performed its obligations under the contract. Accordingly, Mr Rowan is entitled to recover the costs of rectification and completion works subject to those works being both reasonable and necessary.[12] Credit must also be given for the unpaid part of the contract price.[13]
[12]Bellgrove v Eldridge (1954) 90 CLR 613.
[13]Ventura v Svirac [1961] WAR 63.
I accept the evidence of Mr Rowan, and find, that:
(a)The building works undertaken by Lead Constructions did not progress beyond the frame stage;
(b)In order for the works to be completed in accordance with the scope of works under the contract with Lead Constructions, it will be necessary for the framing to be removed and for the works to be undertaken afresh.
Mr Rowan lodged a non-completion claim with the Queensland Building and Construction Commission. The evidence of Mr Rowan is that the claim was accepted and in November 2020 Mr Rowan was paid $16,686.22 by the QBCC.
The evidence of Mr Rowan is that he has paid the following amounts in respect of completion and rectification works:
(a)MJU Pty Ltd (third party builder) $ 28,694.64
(b)Certifier costs $ 2,399.70
(c)Building design fees $ 3,510.00
(d)QBCC insurance $ 393.30
(e)Installation of termite and pest barrier $ 363.00
Total $ 35,360.64
In support of the claim for the amount paid to MJU Pty Ltd, Mr Rowan relies upon a number of tax invoices. The invoices refer to various building works undertaken by MJU Pty Ltd. The scope of works under the original building contract was described simply as ‘enclosure of patio to store room’. There are no plans before the Tribunal. The contract provided that the store room was to be externally clad in Colourbond corrugated iron, the roof was to be constructed of hi-trim deck and the internal walls and ceiling were to be lined with gyprock.
Referring to the works undertaken by MJU Pty Ltd in the various tax invoices to which I have referred, I am satisfied that the works were both reasonable and necessary to complete the works which Lead Constructions had contractually agreed to undertake.
There is in evidence a quote from MJU Pty Ltd addressed to Mr Rowan dated prior to the works being undertaken. The amount of the quote is $28,694.64. This is the amount claimed by Mr Rowan. The total of the various invoices is slightly greater than this amount. The discrepancy between the amounts is not explained. I will allow recovery of the amount as claimed by Mr Rowan.
I am satisfied that the certifier fees, design fees, QBCC insurance and termite barrier costs claimed are reasonable and I allow these amounts in full. I therefore assess the total amount of completion and rectification costs in the amount of $35,360.64.
By clause 18.1 of the contract, if Lead Constructions failed to bring the works to practical completion by the date for practical completion, Lead Constructions was required to pay to Mr Rowan liquidated damages of $25.00 per day. The date for practical completion was 9 days after the date of commencement. The evidence of Mr Rowan, which I accept, as contained in non-completion claim lodged with the QBCC, is that the building works commenced on 25 August 2019 and ceased on 30 August 2019. I find that the date for practical completion was 4 September 2019 at the latest.
By clause 18.1 of the contract liquidated damages were payable from the date for practical completion until the earlier of the date of completion of the works or the day on which the contract was terminated. I have found that the contract was terminated by Mr Rowan on 7 January 2020. The contract defined the date of practical completion as being the date on which the works reached practical completion. The contract defined practical completion as being, inter alia, that stage of the works when the works had been completed in accordance with contract save for minor defects or minor omissions that did not unreasonably affect occupation. It cannot be contentious that Lead Constructions never reached practical completion. The contract provided that Mr Rowan was not entitled to liquidated damages unless a claim for such damages was given to Lead Constructions within 28 days of the date of practical completion. I am satisfied that at the time these proceedings were commenced the works had not reached practical completion. I am satisfied that since the proceedings have been commenced the works have reached practical completion. I am prepared to find that the application for domestic building dispute filed by Mr Rowan constitutes written notice of an intention to claim liquidated damages as required by the contract. Liquidated damages are therefore payable by Lead Constructions for a period of 125 days at $25.00 per day which gives a total of $3,125.00.
The total contract price was $6,857.99. The evidence before the Tribunal, as contained in a letter from Mr Rowan’s solicitors to Lead Constructions, is that $4,286.25 was paid by Mr Rowan leaving a balance payable under the contract of $2,571.74. Credit must be given for this amount in calculating Mr Rowan’s entitlement to damages. Credit must also be given for the amount received by Mr Rowan in respect of the non-completion claim. I assess Mr Rowan’s entitlement to damages under the contract as follows:
Total costs of completion and rectification $35,360.64
Liquidated damages $ 3,125.00
Sub total $38,485.64
Less
Balance payable under the contract $ 2,571.74
Amount received for non-completion claim $16,686.22
Assessment $19,227.68
Mr Rowan also claims consequential loss being rental income he would otherwise have derived had the works been performed by Lead Constructions according to the contract. Mr Rowan says that had the works reached practical completion in accordance with the terms of the contract the property could have been rented at $350.00 per week. Mr Rowan says that the property was rented from 21 December 2019 at a reduced amount of $290.00 per week until 28 August 2020 when, presumably, the rent received increased to $350.00 per week.
Where a contract provides for the payment of liquidated damages this tends to favour a construction that the parties intended liquidated damages be payable, rather than common law damages be recoverable, in the event of delay. In IPN Medical Centres Pty Ltd v Van Houten & Anor[14] Jackson J stated:
In any event, the plaintiff would not be entitled to ignore the agreed amount of damages for termination of the (agreement) for breach by the first defendant and elect to claim a larger amount as damages for breach of contract at common law. To hold that the agreed damages are a genuine pre-estimate of the damages “does involve an implied limitation on the liability to pay damages”.[15]
[14][2015] QSC 204.
[15]Ibid [204].
The construction of a written contract involves ascertaining what a reasonable person would have understood the parties to the contract to have meant. Building contracts routinely include liquidated damages clauses. Where the parties clearly intend a liquidated damages clause to have effect, the parties have agreed to allocate risk arising from delay in the completion of the works. A liquidated damages clause in a contract is normally included for the benefit of the building owner.[16]
[16]Baese Pty Ltd v R A Bracken Building Pty Ltd (1990) 6 BCL 137.
In J-Corp Pty Ltd v Mladenis[17] the Western Australian Court of Appeal held:
It is clear that the parties to an agreement may, as part of their agreement, fix an amount that is to be payable by way of damages in the event of a breach of the agreement. Provided the amount so fixed is a genuine pre-estimate of the damage that would arise from the breach, and not so out of all proportion as to be by way of a penalty, that amount is recoverable without proof of the actual loss caused by the breach. It is immaterial that the amount of the actual loss turns out to be less than the amount specified. Equally, if the actual loss turns out to be greater than the amount of the liquidated damages, the claimant cannot ignore the liquidated damages clause and sue for unliquidated damages: Diestal v Stevenson [1906] 2 KB 345; Talley v Wolsley-Neech (1978) 38 P & CR 45 (CA). That is, ordinarily a valid liquidated damages clause fixes the amount that is recoverable in the event of a breach, regardless of whether the claimant's actual loss is greater or less than the amount specified. (emphasis added)[18]
[17][2009] WASCA 157.
[18]Ibid at [35].
I find that the amount of $25.00 per day stipulated as liquidated damages was a genuine pre-estimate of the damages recoverable by Mr Rowan in the event of delay by Lead Constructions in bringing the works to practical completion. I note that this equates to $175.00 per week, less than the weekly amount claimed by Mr Rowan for loss of rent. In addition, the liquidated damages clause permits the recovery of damages only to the date of termination or the date of practical completion, whichever was the earlier. It was open to the parties to agree to a different figure for liquidated damages or for the parties to agree that the right to pursue common law damages for delay would be preserved. Having entered into the contract they are bound by the terms of their bargain.
It follows from the foregoing that I favour a construction of the contract that damages for delay in the completion of the works was intended by the parties to be confined to the agreed liquidated damages. I therefore do not allow the claim by Mr Rowan of loss of rent.
Conclusion
I assess the total amount of the damages payable by Lead Constructions to Mr Rowan in the sum of $19,227.68.
It is appropriate that Mr Rowan also recover the filing fees on the application in the amount of $345.80.
I make orders accordingly.
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