RUZZI and PRIMA VERA HOMES PTY LTD - [2012] WASAT 66

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)

CITATION: RUZZI and PRIMA VERA HOMES PTY LTD [2012] WASAT 66

MEMBER: MS A DAVIES (SENIOR SESSIONAL MEMBER)
MR C MARSH (SESSIONAL MEMBER)

HEARD: 20 MARCH 2012

DELIVERED : 23 MARCH 2012

PUBLISHED : 5 APRIL 2012

FILE NO/S: CC 1969 of 2011
CC 1328 of 2011

BETWEEN: MICHAEL RUZZI
Applicant
AND
PRIMA VERA HOMES PTY LTD
Respondent

Catchwords:

Building Services (Complaint Resolution and Administration) Act 2011 (WA) - Whether certain regulated building services are unsatisfactory

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 3, s 9, s 11(1), s 11(1)(d), s 36(1), s 38(1), s 38(1)(a), s 41, s 41(2)(c), s 41(2)(d), s 133
Home Building Contracts Act 1991 (WA), s 15, s 15A, s 17

Result:

Application granted

Category: B

Representation:

Counsel:

Applicant: Self-represented
Respondent: Self-represented

Solicitors:

Applicant: Self-represented
Respondent: Self-represented

Case(s) referred to in decision(s):

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The respondent agreed to complete certain works, shown on drawings and specifications provided by the applicant, for a lump sum pursuant to a written contract. As works progressed the applicant was not satisfied with aspects of the work. The applicant lodged a complaint with the Building Disputes Tribunal which was transferred to the Building Commission. The applicant lodged a further complaint with the Building Commission. These complaints were transferred to the Tribunal and consolidated.
The Tribunal found that a number of items of work performed by the respondent were unsatisfactory within the meaning of s 38(1)(a) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA). The Tribunal also found that there had been a number of breaches of contract under s 17 of the Home Building Contracts Act 1991 (WA).
The Tribunal considered that the applicant's contentions regarding s 15 and s 15A of the Home Building Contracts Act 1991 (WA) did not form part of the applicant's application. However, if that was wrong, the Tribunal found that the builder's conduct did not constitute unconscionable conduct within the meaning of s 15 of the Home Building Contracts Act 1991 (WA) and, also, that the builder's conduct did not constitute misleading and deceptive conduct within the meaning of s 15A of the Home Building Contracts Act 1991 (WA).
The Tribunal ordered that the respondent pay the applicant $8,000.80 within 21 days after the date of the order.

Introduction

This is an application under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (Act).
Since 29 August 2011, when the Act came into operation, workmanship and contractual dispute complaints (originally made to the Building Disputes Tribunal, but in respect of which no substantive hearing had yet commenced) were transferred to the Building Commission pursuant to s 133 of the Act. The Building Commissioner is required to cause an investigation of any such complaint by an authorised officer under s 9 of the Act and, after having regard to a report of the authorised office, may determine that one of the alternative courses of action available under s 11(1) of the Act is to apply. This matter was validly transferred to this Tribunal pursuant to s 11(1)(d) of the Act.
The Tribunal's powers upon referral to it of a building service complaint are set out in s 38(1) of the Act including in the following terms:
(1)If the Building Commissioner refers a building service complaint to the State Administrative Tribunal, the Tribunal may -
(a)if the Tribunal is satisfied that the regulated building service that is the subject of the building service complaint has not been carried out in a proper and proficient manner or is faulty or unsatisfactory, deal with the building service complaint by making a building remedy order; or
(b)otherwise, decline to make a building remedy order.
A 'building service' is defined in s 3 of the Act and includes building work.
A 'regulated building service' is defined in s 3 of the Act and includes home building work that is carried out by a person for another person under a contract or arrangement for gain or reward.
A 'building remedy order' is defined in s 36(1) of the Act and includes an order that a person pay such costs remedying the building service as the Tribunal considers reasonable.
The Tribunal's powers upon referral to it of a complaint under a home building works contract are set out in s 41 of the Act including in the following terms:
…
(2)A HBWC remedy order in respect of a complaint by an owner or builder under a home building work contract referred to in the Home Building Contracts Act 1991 section 17 (other than a complaint about a breach of section 15 of that Act) consists of one or more of the following -
…
(b)an order that a person pay a specified amount payable under the contract;
(c)an order declaring that a specified amount is not payable to a person under the contract and, if already paid, an order that the builder or owner repay that amount;
(d)an order that a person pay specified compensation for loss or damage -
(i)caused by any breach of the contract …
…
(3)A HBWC remedy order in respect of a complaint by an owner referred to in the Home Building Contracts Act 1991 section 17 about a breach of section 15 of that Act consists of one or more of the following -
(a)an order declaring the contract or any provision of the contract against which relief is sought to be void from the beginning;
(b)an order modifying the provisions of the contract in such manner as the State Administrative Tribunal considers just;
(c)an order providing for the repayment to the owner of any specified amount paid by the owner under a contract or a provision that has been declared void or modified as referred to in paragraph (a) or (b).
Section 17 of the Home Building Contracts Act 1991 (WA) (HBC Act) enables an owner or a builder to make a complaint, inter alia, in respect of a breach of contract which is not a breach for which a building order remedy may be made.
Section 15 of the HBC Act provides that a builder must not, in connection, inter alia, with negotiations to vary a contract after execution, or the circumstances in which the contract or variation of contract is entered into, engage in conduct that is unconscionable, harsh or oppressive.
Section 15A of the HBC Act provides that a builder must not, in connection, inter alia, with negotiations to vary a contract after execution, or the circumstances in which the contract or variation of contract is entered into, engage in conduct that is misleading or deceptive.

The nature of the complaint

Prima Vera Homes Pty Ltd (respondent) agreed to complete certain works shown on drawings and specifications provided by Mr Michael Ruzzi (applicant) for a lump sum pursuant to a home building works contract dated 18 August 2009 (Contract).
As the works progressed, the applicant was not satisfied with aspects of the work. Subsequent to giving a series of preliminary notices, the applicant filed a complaint on 17 August 2010 and then a second complaint on 12 December 2011.
At a directions hearing on 10 January 2012, it was ordered that CC 1328 of 2011 be consolidated with CC 1969 of 2011. It was also ordered that a final hearing be listed for 20 March 2012 from 9.30 am to 1 pm to determine the contractual claims set out in the complaint lodged with the Building Commission on 14 November 2011 and the workmanship issues set out in the Building Commission Inspection Report (BC Report) dated 23 December 2011. It was noted in particular that the applicant seeks an order for remedial work in respect of items 0.4 and T.3 and an order for compensation in respect of items K2(a), T, J.2, J.3 and AD.
Each party provided written details of its respective position.
The applicant's evidence included principally two quotes, which quoted for the cost of rectification of each item in dispute, and oral evidence by the applicant's father, Mr Ruzzi Snr. The applicant's documents contained submissions including in relation to alleged breaches of the HBC Act and the Trade Practices Act 1974 (Cth). The applicant asked by written submission dated 12 December 2011 at page 281 of the hearing booklet (booklet) that the 'alleged' displays of unconscionable and misleading behaviour, undue pressure and deceptive conduct be taken into account when considering compensation in this matter.
In his opening submissions, the applicant said that building with the respondent had been a horrible experience. He felt that the respondent's strategy was to try to evade him. He picked one example relating to practical completion set out at pages 286 - 288 of the booklet in order to put his case into context.
The respondent relied principally on the aspect of the Scott Schedule prepared by it, setting out its response, its respective estimates of the cost of rectification and its method of repair. This was supported in relation to some items by evidence such as a quote and internal cost sheets, and also by oral evidence given by an employee of the respondent, Ms Kara Tripp. The aspect of the Scott Schedule prepared by the respondent was not included in the booklet but was admitted into evidence as Exhibit 4.
In his opening submission, Mr Figliomeni, the owner of the respondent, said that the applicant had a preexisting relationship with the company through a mutual business associate. He said there had been a lot of help given, which was not taken into account in terms of dollars. He said the applicant clearly had a budget to meet and certain aspects were deleted from the Contract, such as electrics. Mr Figliomeni referred to the letter dated 6 March 2012 regarding his company's response to the applicant's Scott Schedule at pages 244 - 248 of the booklet. The Tribunal notes that this includes submissions by the respondent that, in the respondent's opinion, the main cause of the majority of the applicant's complaints arise out of the poor design provided to the company, that on occasions, the company was unable to obtain the information and authority necessary to manage components of the work effectively, and that the outcome would have been the same no matter which builder had been chosen to carry out these works. It also includes a submission that the respondent believes that the applicant's continual attempts to find fault are aimed at reducing his cost of construction.

The hearing and findings

Having had the benefit of hearing both sides' submissions and the evidence, the Tribunal sets out its findings in relation to the workmanship issues (in the order set out in the Scott Schedule and using the numbering in the BC Report), followed by the contractual issues (in the order set out in the Scott Schedule and using the numbering in the applicant's preliminary notice dated 30 October 2011).

Item K2(a): render filled flush to head of bedroom 2 doorframe

The Tribunal accepts the inspector's measurement that the doorframe margin to the wall of bedroom 2 is 55 millimetres and the inspector's opinion in the BC Report that a flush rendered gap of 55 millimetres is unsatisfactory. The Tribunal does not accept the respondent's submission that the gap was only 50 millimetres. Accordingly, the Tribunal finds that this regulated building service was unsatisfactory within the meaning of s 38(1)(a) of the Act.
The Tribunal also finds that the reasonable cost of remedying this is $226.87. The Tribunal does not accept the applicant's quotes in this respect, as it regards them as excessive, even having regard to the fact that a builder's margin is reasonably included.

Item T: poorly executed joint between opposing materials on ground floor and first floor

The Tribunal accepts the inspector's opinion in the BC Report that the finished joint between two opposing materials is unsatisfactory. The Tribunal does not accept the respondent's contention that this could have been due to the applicant's subsequent painters. Accordingly, the Tribunal finds that this regulated building service was unsatisfactory within the meaning of s 38(1)(a) of the Act.
The Tribunal also finds that the reasonable cost of remedying this is $440 (being $400 plus GST) on the basis that this is the lowest quote provided by the applicant. The Tribunal does not accept the respondent's alternative estimations as being realistic as to what will be involved for the applicant in now having the item rectified by a third party.

Item J.2: nib wall in entry out of square

The Tribunal accepts the inspector's measurement in the BC Report that the nib wall is out of square by approximately 6 millimetres over 110 millimetres and the inspector's opinion that this is a poor attempt of sound trade practice. The respondent accepted that this item is unsatisfactory. Accordingly, the Tribunal finds that this regulated building service was unsatisfactory within the meaning of s 38(1)(a) of the Act.
The Tribunal also finds that the reasonable cost of remedying this is $1,470 (the quote by Ranieri Building & Design Pty Ltd being inclusive of GST) on the basis that this is the lowest quote provided by the applicant. The Tribunal does not accept the respondent's alternative estimations as being realistic as to what will be involved for the applicant in now having the item rectified by a third party.

Item J.3: doorframe protrudes too little to suit the skirting on one side and too much on the other side

The Tribunal accepts the inspector's measurement in the BC Report that the lefthand margin was approximately 20 millimetres wider than the righthand margin and the inspector's opinion that this variance in margin to the doorframe edge is unsatisfactory. We also accept the oral evidence of Mr Ruzzi Snr that the doorframe, when being moved, was deflected from its original profile to stretch over the plaster. The respondent accepted that this item is unsatisfactory. Accordingly, the Tribunal finds that this regulated building service was unsatisfactory within the meaning of s 38(1)(a) of the Act.
The Tribunal also finds that the reasonable cost of remedying this is $2,075 (the quote by Ranieri Building & Design Pty Ltd being inclusive of GST) on the basis that this is the lowest quote provided by the applicant. The Tribunal does not accept the respondent's alternative estimations as being realistic as to what will be involved for the applicant in now having the item rectified by a third party.

Item AD: the bulkhead over the bath is out of level

The Tribunal accepts the inspector's measurement in the BC Report that the underside of the bulkhead deviated from horizontal level by approximately 10 millimetres over 600 millimetres and the inspector's opinion that this is unsatisfactory. The respondent accepted that this item is unsatisfactory. Accordingly, the Tribunal finds that this regulated building service was unsatisfactory within the meaning of s 38(1)(a) of the Act.
The Tribunal also finds that the reasonable cost of remedying this is $2,160 (the quote by Ranieri Building & Design Pty Ltd being inclusive of GST) on the basis that this is the lowest quote provided by the applicant. The Tribunal does not accept the respondent's alternative estimations as being realistic as to what will be involved for the applicant in now having the item rectified by a third party.
The Tribunal notes that the applicant acknowledged that items O.4 and T.3 have now been fixed by the respondent.
In the applicant's preliminary notice dated 30 October 2011 at pages 274 - 276 of the booklet, the applicant sets out his contractual claims which are all on the basis of a breach of cl 17(j)(ii) of the Contract, except his contractual claim in respect of delay to completion.
Clause 17(j) of the Contract provides that:
Where practicable the following shall apply in calculating the price for extra work:
(i)the rates of labour shall be those set out in Appendix 1 Item 3 [being $92 per hour for a tradesperson and $55 per hour for a labourer inclusive of GST]; and
(ii)the price for materials used in the work shall be the actual cost, inclusive of GST, to the Builder plus the percentage stated in Appendix 1 Item 1 [being 25%].

AA.1: soakwells

The applicant contended that by variation he was charged $2,003 for soakwells despite them being included in the drawing supplied. The applicant seeks a refund of $2,003. The applicant did not dispute the variation of $548 to upgrade the soakwells.
A copy of the variation by which the applicant was charged $2,003 is at pages 255 - 256 of the booklet. A copy of the quotation setting out numerous variations, including for $548 to upgrade the soakwells, is at page 180 of the booklet. A copy of the plans showing that the soakwells were included in the drawings is at Exhibit 2. The applicant also relied on a quote for soakwells, provided by email dated 15 November 2010 from Plumbcrete, at page 295 of the booklet. In answer to a question put by the Tribunal, the applicant said that his calculation of the actual cost of the soakwells is $1,300 including GST plus 25%. The Tribunal notes that this did not include the $110 delivery charge and calculates the alternative quote at page 295 of the booklet as being $1,769.63.
The respondent contended that no refund is payable. The respondent submitted by letter dated 6 March 2012 at page 247 of the booklet that stormwater was not provided for in the Contract. The respondent also relied on the meeting minutes dated 6 November 2009 signed by both the applicant and the respondent at pages 252 - 253 of the booklet that:
The cost of soakwells were [sic] never included in the contract despite a variation being raised to cover the cost of upgrading the size of the soakwells to council specifications. A variation will be provided to the owner for the cost of the soakwells and will take into account the upgrade variation.
The respondent also relied on a quote from Nu-Start Plumbing Pty Ltd at page 254 of the booklet.
The Tribunal finds that there has been a breach of cl 17(j)(ii) of the Contract and that the applicant is entitled to a refund of $233.37 under s 41(2)(c) of the Act. The Tribunal accepts that the soakwells were part of the drawings and therefore part of the Contract. The Tribunal does not accept the respondent's quote from NuStart Plumbing Pty Ltd at page 254 of the booklet as reliable on the basis that it is dated 15 November 2011.
The Tribunal considers the applicant's contentions that s 15 and s 15A of the HBC Act were breached do not form a part of his application. If the Tribunal is wrong in that regard, it finds that the respondent's conduct in the circumstances in which this variation was entered into:
1)does not amount to unconscionable conduct within the meaning of s 15 of the HBC Act, principally on the basis that the applicant was able to understand the Contract and that the parties had comparable bargaining strength; and
2)does not amount to misleading and deceptive conduct within s 15A of the HBC Act, principally because there is no evidence that the applicant was led into error and also because, even if he was, any reliance would not have been reasonable as the applicant was able to check the Contract himself.

AA.2: cavity slider

The applicant contended that, by variation, he was overcharged in respect of the cavity slider door installed by the respondent; in particular, that the actual cost of a cavity slider door is $191.90 installed. The applicant seeks a refund, originally of $1,400 but after further consideration, of $683.
A copy of the variation by which the applicant was charged $1,147 is at page 258 of the booklet. The applicant also relies on a quote for cavity slider doors provided by Doors Plus at page 303 of the booklet.

The respondent contends that no refund is payable. The respondent relies in particular on the cost sheet summary for this item dated 29 July 2009 at page 257 of the booklet.
The Tribunal finds that there has not been a breach of cl 17(j)(ii) of the Contract. It accepts that the respondent's cost sheet represents a fair description of the costs involved in performing this item of the work.
The applicant did not pursue any allegation of unconscionable or misleading and deceptive conduct, within the meaning of s 15 and s 15A of the HBC Act, in respect to the circumstances in which this variation was entered into.

AA.3: gutter, facia and downpipe - change to colorbond

The applicant contended that, by variation, he was overcharged in respect of electing to delete painting of the zinc gutter, facia and downpipe and to upgrade to colorbond. In particular, the applicant contended that the upgrade should only have been $264.45. The applicant seeks a refund of $978.55.
A copy of the variation by which the applicant was charged $1,243 is at page 307 of the booklet. The applicant also relied on a quote for colorbond provided by Stratco at page 305 of the booklet.
The respondent contended that no refund is payable. The respondent relied in particular on the cost sheet summary for this item dated 29 July 2009 at page 260 of the booklet. The respondent did not contend that the painting of the zinc gutter, facia and downpipe was not included in the price of the Contract and the Tribunal notes Item K.1 of the Addenda to the Contract at page 168 of the booklet, which appears to include this item.
The Tribunal finds that there has been a breach of cl 17(j)(ii) of the Contract. It does not accept that the respondent's cost sheet represents a description of the cost of upgrading. The Tribunal concludes that it reflects the cost of performing this item of the work without regard to what was already included in the Contract. Accordingly, the Tribunal finds that the applicant is entitled to a refund of $978.55 under s 41(2)(c) of the Act.
The applicant did not pursue any allegation of unconscionable or misleading and deceptive conduct in respect to the circumstances in which this variation was entered into.

AA.4: rearranging of the ensuite - the shower screen

The applicant contended that when the relevant variation was raised he was not refunded the cost of the shower frame which he had subsequently agreed to provide. The applicant initially sought a refund of $538.
The respondent contended that only $121 is due to the applicant. The respondent relies in particular on the variation costing sheet dated 12 May 2010 at page 264 of the booklet.
The applicant accepted this and agreed that only $121 was due.
The Tribunal finds that there has been a breach of cl 17(j)(ii) of the Contract and that the applicant is entitled to a refund of $121 under s 41(2)(c) of the Act.
The applicant did not pursue any allegation of unconscionable or misleading and deceptive conduct in respect to the circumstances in which this variation was entered into.

AC: delay of completion

The applicant contended that the respondent did not bring the works to practical completion as defined in the Contract within the time required in the Contract, and claims damages, as amended by the Scott Schedule, in the amount of $2,896.01.
More particularly, the applicant contended that the date of commencement of the Contract was 16 September 2009, being the date that formal finance was approved. The Tribunal notes that special conditions at Appendix II of the Contract at page 145 of the booklet requires the owner to provide bank funding approval prior to the Contract commencement date, and that cl 10 of the Contract provides that:
The Builder shall commence the Works within 7 working days of the issue of all necessary approvals by authorities concerned …
The applicant further contended that the date the gas was connected was the date of practical completion and this, the applicant said in oral evidence, was 8 December 2010. The Tribunal notes that cl 27(a) of the Contract provides that:
Practical Completion is that stage when the Works are completed except for any omissions or defects which do not prevent the Works from being reasonably capable of being used for their intended purpose …
The applicant was willing to accept the respondent's claims for delay relating to 42 days of weather but was not willing to accept the other claims for delay made by the respondent by letter dated 18 October 2010 at page 404 of the booklet. The Tribunal notes that cl 20 of the Contract permits extensions of time in respect of delay caused, inter alia, by variations and acts by the owner but requires the builder to, not later than the date of the final claim for payment, notify the owner, stating the cause and extent of delay. The owner may object under cl 32 of the Contract and if the owner does not object, the time in which to bring the works to practical completion is extended by the amount stated in the builder's notice.
The applicant also provided written submissions at pages 286 - 287 of the booklet, and a statement of account from Electric Hire in respect of the cost to him of temporary site power at page 316 of the booklet.
The respondent contended that practical completion occurred on 5 November 2010 and relied on the letter to the applicant dated 1 December 2010 referring to this date, which is at page 268 of the booklet. Mr Figliomeni gave oral evidence that the Contract commenced on the date the works commenced. Mr Figliomeni was not able to say when all necessary approvals had been obtained.
The Tribunal notes that the special conditions at Appendix II of the Contract at page 145 of the booklet provides that the period of 210 calendar days for practical completion may be subject to variation due to critical path program or delays caused by unforeseen circumstances.
The respondent further contended that the applicant delayed installation. The Tribunal notes the letter dated 1 December 2010 to the applicant stating this at page 231 of the booklet. In his oral evidence, Mr Figliomeni said that the meter box installed by the company had to be moved because the authority was not willing to install the meter in the particular position. Mr Figliomeni agreed that it was part of the Contract to move the meter box to an acceptable position. Mr Figliomeni did not state that an extension of time had been obtained, although the Tribunal notes that 28 days were claimed for 'Meterbox & Changes to height of wall (still not resolved)' in the respondent's letter to the applicant dated 18 October 2010 at page 404 of the booklet. At the end of this letter, the respondent purports to reserve its right to amend the days claimed in accordance with final documentation, which is still in the process of being finalised, noting that some dates may overlap and that these will be adjusted before final claim.
The Tribunal notes that there is no evidence that this claim for extension of time was finalised prior to the final claim made, as required by cl 20(b) of the Contract, and therefore finds, except in relation to the claims for weather which were clearly finalised, that the letter dated 18 October 2010 did not constitute a valid notice until cl 20(b) of the Contract. Accordingly, the Tribunal accepts that the date for commencement was 16 August 2009 and that the date for practical completion was 8 December 2010. The Tribunal therefore accepts the applicant's claim that the days for which completion was overdue is 186 days.
The Tribunal finds that the respondent breached cl 10 of the Contract by not bringing the Contract to practical completion within the time required by the Contract. There is no liquidated damages clause in the Contract and the applicant is therefore entitled to be compensated for the amount of damage caused by this breach.
The Tribunal does not accept that the amount of the applicant's damage was the rent of $100 per week which he paid Mr Ruzzi Snr for staying at his father's house. The Tribunal is not satisfied that the applicant had assumed a legally binding obligation to pay his father and that this is more in the nature of a family arrangement. The Tribunal considers that the true cost of the applicant staying in his father's house was negligible in that the increase in cost of Mr Ruzzi Snr running his house would have been negligible and, therefore, that the respondent is not liable for the rent the applicant was paying his father.
However, the Tribunal does accept that, during the period of delay, the applicant paid for hire of temporary site power and that this constitutes damage as a consequence of the respondent's breach.
Accordingly, the Tribunal finds that the applicant is entitled to be paid $296.01 in damages by the respondent pursuant to s 41(2)(d) of the Act.
The Tribunal considers the applicant's contentions that s 15 and s 15A of the HBC Act were breached do not form a part of his application. If the Tribunal is wrong in that regard, the Tribunal finds that the respondent's conduct does not amount to unconscionable conduct within the meaning of s 15 of the HBC Act, nor to misleading and deceptive conduct within s 15A of the HBC Act, principally because any such conduct was not in connection with the circumstances in which a variation was entered into.

Order

The Tribunal orders that:
The respondent pay the applicant $8,000.80 within 21 days after the date of this order.

I certify that this and the preceding [72] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS A DAVIES, SENIOR SESSIONAL MEMBER