Saikovski v Bradlyn Nominees Pty Ltd
[2010] QCAT 517
•19 October 2010
| CITATION: | Saikovski v Bradlyn Nominees Pty Ltd [2010] QCAT 517 |
| PARTIES: | Mr Leo Alexander Saikovski |
| v | |
| Bradlyn Nominees Pty Ltd |
| APPLICATION NUMBER: | BM002-09 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 15,16 September 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Barry Cotterell – Member |
| DELIVERED ON: | 19 October 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. Bradlyn Nominees shall pay Mr Saikovski the sum of $28,480.32. 2. Bradlyn Nominees’s counter-claim is dismissed |
| CATCHWORDS : | Contract – Commercial Building Contract – Wrong form contract used - whether cost plus or fixed price contract; |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Leo Alexander Saikovski represented himself |
| RESPONDENT: | Bradlyn Nominees Pty Ltd represented by M. Cooke, Barrister instructed by MDRM Solicitors |
REASONS FOR DECISION
This is an application by Leo Saikovski (Mr Saikovski) arising out of a contract with Bradlyn Nominees Pty Ltd (Bradlyn Nominees) dated 22 August 2007 for the building of four townhouses.
Mr Saikovski’s claim relates to $28,480.32 for unpaid invoices from February to June 2009 relating to the work on the project.
Bradlyn Nominees is withholding these monies because it alleges, amongst other things, that the works are defective and that Mr Saikovski was late in completing the works resulting in Bradlyn Nominees suffering financial losses. Bradlyn Nominees’s counterclaim is for $278,093.31 or, in the alternative, for $1,036,696.70.
Witnesses
Mr Saikovski filed two statements from himself and one from Mr Alan Martens, his foreman on the job. He also sought and obtained a Notice requiring production of a Report dated 12 September 2008 prepared by Mr Sebastian Muscolino of Herron Todd White. This was produced to the Tribunal on the morning of 16 September 2010. Mr Saikovski was cross-examined as was Mr Alan Martens, who attended by telephone.
Bradlyn Nominees, the Respondent company, has two directors and shareholders, Mr David Shaw and Ms Alexandra Shaw. Mr Shaw is a builder but is suffering from motor neurone disease. Ms Shaw was the controlling director of Bradlyn Nominees throughout the relevant period. Global Building Resources (GBR), is a procurement company associated with Bradlyn Nominees, which supplied many of the items needed for the building project.
Bradlyn Nominees filed three statements from Ms Alexandra Shaw, one each from Mr Andrew Rauchle, a painter on the job; Mr Robert Rees an electrician on the job; Mr Glen Thompson of PJS Accountants and Ms Ruth Morgan, a bookkeeper for GBR and Bradlyn Nominees until October 2008. All of these witnesses were made available for cross-examination. Mr Shaw did not file a statement nor attend the hearing and this was understandable because of his illness. Apart from the statement from Mr Thompson relating the monies paid by Bradlyn Nominees, Bradlyn Nominees filed no expert evidence to support its case.
Mr Saikovski represented himself and Bradlyn Nominees was represented by Mr Cooke of counsel.
Where there was a discrepancy between the evidence of Mr Saikovski and that of Ms Shaw, the Tribunal found the evidence of Mr Saikovski to be more reliable. Ms Shaw’s evidence contained quite a lot of self-serving hearsay which was derogatory of Mr Saikovski. It appeared to the Tribunal that the witnesses most likely would have been available to back-up the hearsay. As an example of the unreliability of Ms Shaw’s evidence, Ms Shaw in her affidavit of 31 May 2010, stated that “The Applicant left our home with a full set of plans and Brisbane City Council (“BCC”) approval documents”. This meeting occurred in early August 2007. However, it became clear at the hearing that the plans for this building project were not approved until October 2007.
In the same affidavit, Ms Shaw refers to calling Mr Saikovski “when the money ran out in February 2009.” This is contrary to Bradlyn Nominees’s submissions that the invoices were paid up to 1 April 2009 which was clearly not the case because Bradlyn Nominees accepted that invoices from February to April 2009 were not paid.
10. Ms Shaw in her affidavit of 31 May 2010 also made a misleading and inaccurate statement about Mr Saikovski’s licence being suspended. She also stated that the $800,000 was exceeded without Mr Saikovski notifying her of the overrun where clearly the invoices claiming the Builder’s 5% referred to the progress amount and $800,000 was reached on 5 September 2008, $1,000,000 on 21 November 2008 and $1,200,000 on 23 January 2009. All of these invoices were paid by Bradlyn Nominees.
11. Another issue arose in relation to a Cost Report commissioned by Bradlyn Nominees from Herron Todd White in September 2008. Ms Shaw was the controlling director of Bradlyn Nominees at this time. When Mr Saikovski sought a copy of this Report from Bradlyn Nominees’s solicitors this year he was informed that no written report was provided to Bradlyn Nominees and, therefore, it could not be produced. Upon Mr Saikovski’s solicitor contacting Herron Todd White a Report was identified and after a Notice to Produce from the Tribunal was produced to the parties and the Tribunal on the second day of the hearing. Ms Shaw, through Mr Cooke, informed the Tribunal that the Report was sent to a staff member of Bradlyn Nominees by email and not to her. The Tribunal finds this explanation not to be credible because of her close involvement in this project.
12. The Cost Report is highly favourable to Mr Saikovski and damaging to Bradlyn Nominees’s case. For example, the Cost Report refers to the project being built under “a ‘Cost Plus’ Construction Management Contract having a Target Sum of $800,000…”. The Cost Report stated, “we find this amount to be lower than our expectations. It is our opinion that the Forecast Final Cost-on-Completion would be approximately $1,280,000 plus the GST, and that this Cost is deemed fair and reasonable for the type, style and quality proposed.” All of this is contrary to the Counter-claim.
13. In relation to Mr Saikovski, the Cost Report stated, “It is our understanding that the Manager (Mr Saikovski) has, wherever practical and/or necessary, sought alternative tender prices for various trades, and in this regard, we are generally satisfied that the Construction Manager is committed to delivering the Project to the lowest price, and in a timely manner.”
14. Ms Shaw used hearsay in her affidavits to allege that Mr Saikovski did not obtain quotes.
15. It also stated “With regard to the quality of workmanship and the conditions of the Site, we are generally satisfied that the Construction Manager is performing its obligations and carrying out the Works in an organised and competent manner.” All of this is contrary to the Counter-claim.
16. The Cost Report also stated “the Manager expressed its frustration in delivering the project, specifically with regard to:
§The general lack of detail of the documentation,
§The additional on-site requirements to work-in with current and proposed imported and non-standard building materials and methods, and
§The general lack of communication flow.
17. Mr Saikovski was not provided with a copy of the Cost Report in September 2008 when it was supplied to Bradlyn Nominees. It contained recommendations which if implemented would have improved the way the project was run. The Cost Report was clearly contrary to many of the allegations made by Bradlyn Nominees in its counter-claim in these proceedings against Mr Saikovski.
The contract
18. The contract form used by the parties was a Master Builders Residential Building Contract when this was a contract to build 4 townhouses. In addition, when it came to the contract price Cost + 5% was inserted as well as $800,000. On the first day of the hearing the Tribunal determined that the contract between the parties was a cost plus contract and gave reasons for that decision which do not need to be repeated here.
19. The contract required Bradlyn Nominees to pay the sub-contractors and materials by invoice as agreed by the builder and 5% of the total job cost to be paid to the builder on regular instalments every $200,000. This occurred up until February 2009, when all payments to the builder stopped.
20. The contract also refers to the construction period in days as 352 after 252+80 was deleted. No date for commencement was inserted but was to be determined under Clause 8 which was a reference back to the construction period in days of 352. No Date for Practical completion Stage was inserted but again 352 was inserted.
21. Mr Saikovski gave evidence that Bradlyn Nominees were to pay the Building Services Authority Insurance premium and to obtain the approval of the plans. He said that the Plans were collected by Bradlyn Nominees and provided to him in early October 2007.
22. Mr Saikovski gave evidence and the Tribunal accepts that he could not start work on the site until the plans were approved. The Tribunal finds that the fact that the plans which were initially drawn in 2004 may have been previously approved by Council is irrelevant to the start of this contract. On the basis of the evidence, the Tribunal finds that the commencement date was early October 2007.
23. To establish the exact date the Tribunal has examined the limited invoices for labour available to it and determined that the invoice date related to a week’s work ending on that day. The earliest invoice date for Mr Saikovski in October is 26 October 2007 and the only other invoice to assist was from Eagle Earthmoving dated 24 October 2007. On the basis of this evidence the Tribunal determines the commencement date to have been Monday 15 October 2007.
The Claim
24. Mr Saikovski claims a total of $28,480.32 relating to unpaid invoices as follows:
Date of Invoice Payment
Claim No.$ Amount
including GST6 February 2009 57 825.00 13 February 2009 58 2,060.20 28 February 2009 67 2,690.00 7 March 2009 68 1,350.00 13 March 2009 71 1,279.60 17 April 2009 82 8,698.20 26 June 2009 99 577.32 26 June 2009 100 11,000.00 Total 28,480.32
25. Bradlyn Nominees states in its counter-claim that the alleged “outstanding amount” is not $28,480.31 but rather $28,578.80. No explanation is given for the difference but Mr Saikovski maintained his claim for the lesser amount at the hearing.
26. Mr Saikovski stated that Bradlyn Nominees stopped paying his invoices in February without explanation. In its submissions, Bradlyn Nominees states that the invoices were paid until 1 April 2009. Ms Morgan stated that the invoices were paid when money was available and usually within1 to 3 weeks of Mr Saikovski issuing the invoice. It is clear from the Catalyst Property Services Reports (provided to Bradlyn Nominees’s Westpac Banking Corporation) that by February 2009 the funds the bank held to advance to Bradlyn Nominees were running low and the 17 April 2009 Report shows an additional amount of $346,800 was advanced to Bradlyn Nominees. Ms Shaw in her affidavit of 31 May 2010 refers to calling Mr Saikovski “when the money ran out in February 2009..”
27. On the basis of this evidence, the Tribunal accepts the evidence from Mr Saikovski that the payments stopped in February 2009. The Tribunal also accepts his evidence that he was given no explanation as to why the payments stopped. There was no evidence from Bradlyn Nominees on this point.
28. Bradlyn Nominees submits that Mr Saikovski was not entitled to some of these payments because his licence was suspended for some of the relevant period. While the Tribunal accepts that his licence was suspended, apparently for failure to satisfy the Queensland Building Services Authority’s (BSA) requirements relating to proving his financial capacity to undertake new work, this Tribunal does not have jurisdiction to deal with this issue which would require a disciplinary application by the BSA and involve a different standard of proof.
29. Bradlyn Nominees did not substantially challenge Mr Saikovski’s claim to this amount other than seeking to have its payment offset against Bradlyn Nominees’s counter-claim.
30. On the basis of all of the evidence, the Tribunal finds that Mr Saikovski’s claim for $28,480.32 is proved. It, of course, is subject to any adjustment arising from Bradlyn Nominees’s counter-claim.
Bradlyn Nominees’s Counter-Claim
31. Bradlyn Nominees firstly alleged that the contract was a fixed price contract for $800,000 but the Tribunal found that it was a cost plus contract involving cost plus “5% of the total job cost” and that the $800,000 was simply Mr Saikovski’s estimate of the value of his work for BSA insurance purposes. This decision and the reasons were given on the first day of the hearing and shall not be repeated here.
32. After the Tribunal gave its decision on the construction of the contract as a cost plus contract Bradlyn Nominees’s counter-claim revolved around the issue of delay.
33. As stated above, the Tribunal determined the commencement date to have been Monday 15 October 2007 and the period stated in the contract was 352 days. This should have resulted in completion by approximately October 2008. In coming to this finding the Tribunal rejects the submissions from Bradlyn Nominees that the contract period should start from the date of the signing of the contract. The Tribunal finds that the builder could not commence the works on site until the plans had been approved and Bradlyn Nominees was responsible for having the plans approved. This arises from a proper construction of the contract. A considerable period of the delay referred to in Bradlyn Nominees’s submissions related to the period between August and October 2007 or arose from the start date being October and not August.
34. It is clear from the Catalyst Property Services Report dated 23 October 2008, that as at 9 October 2008 only 80.78% of the work was completed. The Tribunal was then required to determine whether Mr Saikovski or Bradlyn Nominees contributed to this delay.
35. It is clear from the undisputed evidence that two of the sets of stairs supplied by Bradlyn Nominees through GBR were defective and had to be re-manufactured and supplied from China and were not able to be installed until February 2009. Therefore, the Tribunal finds that Bradlyn Nominees was responsible for delaying the completion of the contract until February 2009. The Tribunal accepts the evidence of Mr Saikovski that until the stairs were installed other finishing trades such as painters could not finish their work on site.
36. Bradlyn Nominees wanted the Tribunal to examine each of the individual delays caused by Bradlyn Nominees’s supply of unsatisfactory materials from China but this is unnecessary due to the delay relating to the stairs.
37. It is clear from the Catalyst Property Services Report dated 23 February 2009, that as at 20 February 2009, 96.67% of the work was completed. According to the Report what remained to be completed was painting with 95% complete, Electrical services with 98% complete and landscaping/external works with 20% complete.
38. In the view of the Tribunal, all of these are finishing trades and the Tribunal accepts that to a certain extent the painter and electrician would have required the stairs to be installed before they could complete their work in those two units.
39. Bradlyn Nominees referred to the fact that the landscaping was delayed but it became clear at the hearing that Ms Shaw selected and engaged the landscaper, with whom she had had previous dealings. Therefore, the Tribunal rejects Bradlyn Nominees’s submission that this delay should be attributed to Mr Saikovski.
40. It is clear from the Catalyst Property Services Report dated 17 April 2009, that as at 15 April 2009, 99.85% of the work was completed. According to the Report, the only thing that remained to be completed was painting which remained at 95% complete. It is not clear from the evidence when the painting was completed but the Tribunal finds that the delay was attributable to Bradlyn Nominees.
The Alleged Repudiation by Mr Saikovski and Termination by Bradlyn Nominees
41. As at 17 April 2009, Bradlyn Nominees had failed to pay Mr Saikovski $16,903 without explanation.
42. However, Bradlyn Nominees claims in its submissions that Mr Saikovski repudiated the contract by:
a)Breaching the implied term of good faith,
b)breaching the estimate of $800,000 for the value of the works when no variation or adjustment was provided,
c)breaching the 12 month construction time of works term when no variation or extension was sought.
43. Mr Saikovski was not notified of these alleged breaches and given an opportunity to rectify them before Bradlyn Nominees’s solicitors wrote to him on 21 May 2009 purportedly accepting his repudiation of the contract. His alleged repudiation appears to have mainly arisen from a telephone conversation he had with Ms Shaw on or about 17 April 2009. She said that “During the telephone call he was repetitive and most incoherent, but clearly stated many times that he wanted me to fire him. I did not comment as the call was unnerving and he seemed to be unbalanced and/or drunk.” Interestingly, she then states “It seemed to me to be pointless, and a not very prudent time, to sack the builder as the job was almost complete.”
44. Bradlyn Nominees terminated the contract for an alleged repudiation by Mr Saikovski when Bradlyn Nominees was clearly in breach of its obligations to pay Mr Saikovski under the contract. For this reason, the Tribunal finds that Bradlyn Nominees cannot rely upon the purported termination as it was not entitled to terminate the contract.
45. However, after 21 May 2009 it was clear that Mr Saikovski was not permitted to carry out any further work on site. While Bradlyn Nominees refers to defective work and claims the cost of rectification there was no expert evidence to justify this work or to quantify its cost. From the Catalyst Property Services Report dated 17 April 2009, as at 15 April 2009, 99.85% of the work was completed which does not support Bradlyn Nominees’s claim in its submissions that the building project was not completed until 19 October 2009. The Tribunal noted that there was no evidence in regard to the completion date and there was no reliable expert evidence in relation to any incomplete work. The Tribunal, therefore, dismisses Bradlyn Nominees’s claim in relation to both defective and incomplete work.
Bradlyn Nominees’s other claims
46. Bradlyn Nominees claimed $478,032.00 of construction cost overrun. This must be dismissed on the basis of the Tribunal’s finding that this was a cost plus contract.
47. Bradlyn Nominees claimed $167,712.00 for holding cost overruns comprising bank fees of $3,500, Council charges of $1,525 Administration costs of $47,687 and GBR’s margin of $115,000. Bradlyn Nominees did not provide expert evidence to the Tribunal to show how these claims against Mr Saikovski were justified. Clearly, the major cause of the delay was caused by Bradlyn Nominees in supplying the stairs. Therefore the Tribunal finds that these claims against Mr Saikovski must be dismissed.
48. Bradlyn Nominees also claimed interest from 21 August 2007 to various dates being firstly 21 May 2009, the date of the purported termination by Bradlyn Nominees, secondly to 19 October 2009 the date the building project was alleged to have been completed according to the submissions and to June 2010 the end of the financial year. As the Tribunal has found that the major cause of the delay was caused by Bradlyn Nominees these claims against Mr Saikovski for interest must be dismissed.
49. Therefore, Bradlyn Nominees’s counter-claim in its entirety is dismissed and Bradlyn Nominees is ordered to pay Mr Saikovski the sum of $28,480.32.
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