Spencer v Kube
[2013] QCAT 347
•15 July 2013
| CITATION: | Spencer v Kube & Anor [2013] QCAT 347 |
| PARTIES: | William Denis Spencer (Applicant) |
| v | |
| Mr John Kube and Mrs Gill Kube (Respondents) |
| APPLICATION NUMBER: | BDL027-12 |
| MATTER TYPE: | Building Matters |
| HEARING DATE: | 4 April, 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick, Member |
| DELIVERED ON: | 15 July 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Mr John Kube and Mrs Gill Kube pay to Mr William Denis Spencer the sum of $53,905.42 within 21 days of the date of this decision. 2. No order as to costs. |
| CATCHWORDS: | Domestic Building contract – valid termination – variations – no writing – claims for rectification and completion of work – money due and owing – interest under contract. Domestic Building Contracts Act 2000 Ansett Transport Industries v Commonwealth (1977) 139 CLR 54; |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Self Represented |
| RESPONDENT: | Self Represented |
REASONS FOR DECISION
Background
William Denis Spencer trading as WD Spencer Builders ABN 22 457 046 517 (Mr Spencer) was engaged by John and Gill Kube (the Owners) to perform building work on a house being constructed by them at 76 Wharf Road, Bli Bli. Mr Spencer is a licensed building contractor.
At the hearing Mr Spencer and Mr and Mrs Kube gave evidence. No other witnesses were called.
I note that the heading on all Tribunal documents has to date erroneously recorded the applicant as WD Spencer Builders. I have corrected the heading to reflect that the application is in fact in the name of Mr Spencer as the person carrying on that business.[1]
[1] Queensland Civil and Administrative Tribunal Act 2009, s 135.
Is the contract a regulated contract under the Domestic Building Contracts Act 2000?
As a preliminary matter I have considered whether the contract between the parties is a regulated contract under the Domestic Building Contracts Act 2000 (DBCA). The answer to that question affects the rights and obligations of the parties.
Mr Spencer asserts that the work to be performed by him was carpentry work only with respect to the frame and wall cladding of the dwelling and that Mr Kube was the owner/builder on the project. Mr Kube asserts that Mr Spencer was the builder on the project responsible for construction from the footing to floor frame trusses, all external rhino wrap and cladding, installation of windows and decks, soffits, all internal frames including built in wardrobe frames.
The material filed by Mr Spencer in the proceedings included notification by the Building Services Authority (BSA) that Mr Kube was pleading not guilty in the Maroochydore Magistrates Court to a charge of unlicensed contracting, in breach of s42(9) of the Queensland Building Service Authority Act 1991, by undertaking building work at the site in question without an owner-builder permit. After the hearing it was apparent that I required further assistance from the parties. I issued Directions to Mr Kube seeking information as to any order made in those proceedings and any finding made by the Magistrate. The Directions were copied to Mr Spencer.
Mr Kube responded that “There was no criminal conviction recorded for the works I had to complete of Mr Spencers and I don’t recall receiving anything from the court”.
Mr Spencer arranged for a transcript of the decision of Magistrate Taylor, handed down on 22 February, 2013 to be forwarded to me.
My only interest in the matter is to determine whether the contract between Mr Spencer and the Owners is a regulated contract pursuant to the Domestic Building Contracts Act 2000. The DBCA does not apply to a contract between the holder of an owner-builder permit and a building contractor.
I note from the decision that the prosecution was conducted only in relation to work carried out by Mr Kube at the site in relation to the slab and footings, plumbing and drainage work, metal roof and wall cladding, fascia and guttering, external painting and internal linings. The BSA did not seek to prosecute Mr Kube with respect to work carried out by Mr Spencer.
It is not necessary for me to refer further to those proceedings. Insofar as I have considered the decision I have done so in accordance with s79(2) of the Evidence Act 1977.
On the basis that the BSA has not asserted that Mr Kube was an owner-builder with respect to the work carried out by Mr Spencer, I find that Mr Spencer was not engaged by the Owners in any capacity as Owner-Builders. I find that Mr Spencer was engaged to undertake domestic building work, being partial construction of a detached dwelling and that insofar as the contract between it and the Owners are concerned it is a regulated contract pursuant to the DBCA.
Facts
The following facts emerged from the hearing or the material filed in the Tribunal and relied upon by the parties. Except as noted by me the facts are uncontentious.
A letter dated 29 September, 2009 was signed by the parties. The document sets out the contract amount including GST of $157,414.10, and the stages when payment was to be made. Mr Spencer asserts the letter was accompanied by 3 other pages dealing with the following issues:
(a)Items for which no allowance has been made;
(b)Extent of work; and
(c)Work allowed for in the contract price.
The Owners deny receiving the 3 extra pages at the time of signing the letter.
That document was preceded by a letter dated 16 September, 2009, unsigned by the parties, but bearing a list of work to be performed by Mr Spencer together with handwritten notes as to Contract Price.
Four Variation documents, were prepared with respect to extra work. At the hearing Mr Spencer said that variation documents 1, 3 and 4 were quotes for additional work, which if accepted would have become variations. He says variation document 2 was accepted and became a variation to the contract. The variation documents are:
(a)Variation document number one, dated 7 October 2009, to “supply and install colour bond fascia, gutter, scaffold roof battens, sarking and roof insulation 50mm, custom orb colour bond roof sheeting and flashings Supply and install custom orb colour bond wall cladding sarking and flashings as per WDS Design”. The document is signed by Spencer but not by the Owners.
(b)Variation number two, dated 6 October, 2009 to “supply aluminium windows and doors “Bradnam’s” as per WDS Dwg.” The document is signed by both parties.
(c)Variation number three, dated 7 October, 2009 to “supply labour and materials for internal fit out. Door quoted are 2340 high Hume Accent Style. Door locks Quoted Lockwood Meridon 5 Chrome Levers. No allowance in price for all wardrobe shelfing”. The document is signed by Mr Spencer but not by the Owners.
(d)Variation number four, dated 7 October, 2009 to “supply – fix – set –sand plaster board ready for painting all internal walls and ceilings including all wet walls cornice allowed 55mm”. The document is signed by Mr Spencer but not the Owners.
Work started on site on 30 October, 2009.
On 5 November, 2009, the parties signed a Master Builder’s Residential Building Contract (September 2009 version).
Mr Spencer alleges that extra work not referred to in variation 2 and the written contract was also performed.
By cheque dated 11 February, 2009 in the sum of $31,482.80, the Owners purported to pay Spencer for wall cladding ($15,741.41) and patio shot edge ($15,741.41), however the cheque was cancelled on 15 February, 2009. Both sums are referred to in the contract as instalment payments.
Mr Spencer left the site on 15 February, 2009. He asserts he could not return for a period of 3 weeks to complete work because of rain.
By letter dated 24 February, 2010, the Owners wrote to Mr Spencer requiring completion of the following work before payment would be made and asserting a default under the contract:
(a)supply glass louvres, keys, extension pole and correct ill-fitting windows and doors;
(b)complete soffit and beading and install front entry door lock and stops;
(c)construct entry patio and two-board edge and rectify deck ends to customer’s satisfaction;
(d)provision of all certified plans, approvals, warranties, certificates
On 26 or 27 February, 2009 Mr Spencer provided a list of incomplete work as follows:
“Finishing work to nrg.
EG; moulding to be completed
Bed one (1) patio soffit & beading.
Bed one (1) install 2 board shot edge trim around patio deck.
Install front door lock & stops.
“OWNER TO SUPPLY LOCK”
Construct entry patio deck & two (2) board shot edge fascia.
NB; this work can only be completed after render is completed, I refuse to glue any AC SHEET to the outside face of the NRG CLADDING.
This is not a sound method of construction as suggested again.”…
By letter, dated 4 March, 2010 the Owners wrote to Mr Spencer requiring completion of the same items of work as referred to in their earlier letter, before payment would be made.
At the hearing Mr Spencer gave evidence that his workers returned to the site during March and completed all work on the list. This is disputed by the Owners, although in a letter from them to Mr Spencer dated 3 April, 20010, they acknowledge that the wall cladding and shot edge work were completed on 10 March, 2010.
Invoices dated 7 March, 2010 were rendered by Mr Spencer for the patio shot edge and wall cladding. It is not clear when an undated invoice was rendered for final payment of $7,870.72, for frame completion and inspection, however a copy has been filed in the proceedings.
By letter dated 27 March, 2010 Mr Spencer suspended the Works in accordance with clause 16 of the General Conditions of Contract and required payment of outstanding instalment payments for wall cladding and patio shot edge.
By undated letter, but noted in handwriting in the Owner’s material as a copy dated 6 April, 2010, Mr Spencer advised the louvre blades would be installed once all trades had finished work because of the hazard to them if they fell through the float glass. Mr Spencer also said he would arrange for the windows to be serviced once all work on site was completed. He noted that work was otherwise complete.
By letter dated 3 April, 2010, faxed on 6 April, 2010, the Owners wrote to Mr Spencer denying default, requiring provision of all approvals and certificates, supply of keys and extension pole and correction of ill-fitting windows and doors before payment will be made. The Owners advised they had installed the louvre windows in toughened glass as required by the Australian standard, not float glass as proposed to be installed by Mr Spencer. They advised all costs would be deducted from final payment.
By letter dated 19 July, 2010 Mr Spencer gave a notice of intention to terminate the contract on the basis of a failure to remedy the breach specified in the notice of suspension dated 27 March, 2010 to pay the outstanding instalment payments.
By letter dated 2 August, 2010 Mr Spencer terminated the contract for failure to remedy the breach identified in the earlier notice of intention to terminate contract.
Mr Spencer claims the following sums. I note that although calculated in the proceedings to a set date the interest claim is a continuing one.
(a)$71,814.60 comprised:
Original contact sum $157,414.10
Aluminium windows and doors (extra) $19,625.37 $177,039.47
Less payments $137,685.93
$ 39,353.54
Other extras $ 13,729.02
Interest to 31 January, 2012 $ 10,369.02
Costs $ 8,363.02$ 71,814.60
(b)Part of the claimed sum for outstanding money relates to $31,482.80 for which a cheque was drawn on 11 February, 2010, and subsequently countermanded and dishonoured.
The Owners by counter-application seek $52,737.20 for the cost of completing the contract works, rectifying defective work and damages for delay. These claims are set out in the Scott Schedule filed in the proceedings.
By Directions made on 5 November, 2012 the Tribunal directed the Queensland Building Services Authority to provide a report to the Tribunal in relation to building work it considered to be defective or incomplete and an assessment of the time within which the rectification or completion work should be finished. A report dated 29 November, 2012 has been filed in the proceedings.
Issues to be determined
By Directions made on 22 May, 2012, the parties agreed that the following claims and issues are to be determined by the Tribunal:
(a)Mr Spencer’s claims;
(b)whether the document dated 29 September, 2009 governed the required instalment payments during the contract;
(c)whether there was a failure of consideration for the dishonoured cheque;
(d)whether the cost of further extra work is recoverable;
(e)whether any works were defective or unfinished and if so the correct measure of damages or correct allowance arising from this;
(f)whether Mr Spencer was contractually obliged to provide approvals, certificates and warranties and failed to do so;
(g)whether damages are recoverable and in what sum for the cost of completing work left unfinished by Mr Spencer and for the cost of correcting defective work;
(h)whether damages for delay are payable by Mr Spencer; and
(i)whether the Owners were justified in not making payments and whether the contract was validly terminated.
What documents constitute the contract?
The Owners assert that the contract is comprised of a letter dated 16 September, 2009 (attachment 3 to Exhibit 5 the statement of John Kube dated 16 July, 2012), the Master Builders’ contract dated 5 November, 2009 and Variation number 2 with respect to windows.
Mr Spencer asserts that the 29 September, 2009 letter plus the extra pages, form part of the contract and should be read with the 5 November, 2009 Master Builder’s contract as constituting the contract.
The Master Builders Residential Building Contract comprises a Schedule which at Item 5 provides that the contract includes Plans prepared by WDS Builders and Specifications prepared by WDS Builders.
The Master Builders Schedule to Residential Building Specification has been completed.
The Specification shows which parts of the Works are to be performed by the Owners and which by Mr Spencer. Relevant to the parts to be performed by Mr Spencer are cross references to the variation documents. Apart from variation 2 the reference appears to be for the purpose of isolating work excluded from the contract.
(a)Section 7 “Carpenter”. At 7.09 the Specification says “For roof insulation ref variation no. 1”.
(b)Section 11.01 in relation to completion of dry wall plastering work provides “Ref to variation on Dry wall render not included in contract price”.
(c)Section 12.01in relation to joinery provides “Refer to variation for internal fit out not included in contract price.
(d)Section 12.04 provides “Refer to variation on aluminium windows and doors not included in contract price.”
Part D of the Residential Building Contract sets out the method of making progress payments, which reflects the 29 September, 2009 letter.
Notably there is no reference in the Master Builders documentation to the 16 September or 29 September, 2009 letters or accompanying documents.
Clause 3.2 of the General Conditions to the Master Builders Contract provides that the terms of the contract are set out in the Contract and shall not be altered, varied, suspended, deleted or affected by reference to any prior representations, conditions or agreement, whether written or verbal. The Contract is defined to mean the General Conditions, the Schedule, the Plans, Specifications, and other documents annexed to or incorporated by reference in the Contract.
On this basis I find that the contract between the parties is comprised of the 5 November, 2009 Master Builders Contract, including the General Conditions, the Schedule, the Plans, Specifications and the variation documents referred to in that document.
I do not consider that any of the content of the 16 September, 2009 or 29 September, 2009 (including the extra 3 pages), should be implied as terms of the contract between the parties. None of that content is necessary to give the contract business efficacy.[2]
[2] See BP Refinery (Westernport) Pty ltd v Shire of Hastings (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 which discuss implication of a term in order to give business efficacy to a contract, so that no term will be implied if the contract is effective without it. Further if the parties have gone to lengths to reduce their agreement to writing, especially in a standard form contract, it is unlikely the parties have omitted a term necessary to give their agreement business efficacy. See Ansett Transport Industries v Commonwealth (1977) 139 CLR 54.
Accordingly, I find that insofar as Issue (b) set out above is concerned the letter dated 29 September, 2009, does not govern the instalment payments during the contract. Instalment payments were agreed to be made in accordance with Method B in the Appendix to the contract.
Mr Spencer’s claims
In a document headed “Response to the Schedule of Claims and issues”, filed 24 July, 2012, the Owners acknowledge the original contract sum, the windows, doors and flyscreens variation and the amount paid, leaving a balance of $39,353.54 owing. They do not admit they are liable to pay for any other extra work, nor interest or costs as claimed. They say that they are entitled to offset the sum of $52,737.20 from the sum otherwise owing to Mr Spencer, leaving a balance in their favour of $13,383.66.
Mr Spencer’s claim is reconciled later in this decision after relevant findings have been made.
Is the value of extra work performed by Mr Spencer recoverable?
Mr Spencer filed a Schedule of extra work, which he said was required by the Owners. The value of the extra work was not reflected in any change to progress payments or the final claim. The claim was asserted later, after termination of the contract.
The Owners deny liability for the claims on the basis that the work was not extra work, but fell within the scope of work in the contract and furthermore was not reflected in any written variation as required by the contract or the DBCA.[3]
Clause 12.3 and 12.4 of General Conditions of Master Builders Residential Building Contract; ss 79, 80, 81, 82 and 83 Domestic Building Contracts Act 2000.
Mr Spencer sought at the hearing to rely upon section 79(2)(a) and (b) of the DBCA as a ground for avoiding responsibility for failure to ensure the variations were put into written form. He asserted that the work was required to be carried out urgently and it was not reasonably practicable, in the particular circumstances to produce a variation document before carrying out the work. This was denied by the Owners. In relation to the claim for extra work associated with cladding the frame he relied upon section 84(4) of the DBCA.
Under section 84 of the DBCA, Mr Spencer may only recover an amount for the variation if the requirements of the Act with respect to writing are complied with or with the Tribunal’s approval on application under section 84(4) of the DBCA.[4]
[4] Domestic Building Contracts Act 2000 s 84.
Items 1 and 2
Mr Spencer asserts that the footings poured by Mr Kube were not level and that it was necessary to make adjustments to SHS columns so that the building platform was level. Mr Spencer asserts the work required more time than usual and was beyond what would ordinarily be required by way of adjustment. Mr Kube denied that the work required was out of the ordinary.
To constitute a variation to the contract which might increase the contract price, quite apart from the contractual and statutory requirements in relation to variations, the work performed must be an addition to the contract works or extra work.
Dorter and Sharkey in their work “Building and Construction Contracts” say that judges have shown a tendency to interpret a general work obligation as obliging the contractor to also perform works not specifically referred to in those documents where such works are indispensably necessary for completion and for the satisfaction of the general obligation.[5]
[5] Dorter and Sharkey, “Building and Construction Contracts in Australia” looseleaf service, 2nd ed.; Thomson Lawbook Co, at [8.50].
The obligation in this case appears at clause 8.01 of the Schedule of fittings and finishes “All structural steel work supplied by owners installed by carpenters”. I find that the work claimed by Spencer for adjusting SHS columns was a necessary part of performing its contractual obligation and does not constitute extra work sufficient to amount to a variation of the contract. The claim is rejected.
Notwithstanding this finding, I also find that there was no evidence of any circumstance of urgency attendant upon the work such that the requirements of the DBCA for writing and information about the effect on the contract price could not be complied with. There was no “urgency” in the sense that it was imperative the work be undertaken immediately. It was merely convenient. The result is that Spencer has no entitlement to payment for the work. Despite ensuring Mr Spencer was aware of section 84(4) of the DBCA, no application was made to me to approve a payment to Spencer.
Item 3
Mr Spencer claims he had to pack a wall because the concrete slab poured by Mr Kube was not level and even. Mr Spencer’s obligation appears at clause 7.01 of the Schedule of fittings and finishes to “Construct complete timber frame Ref WDS Design VDM Engineering Job No BM090662”
As with the previous items, I find that this work was a necessary incident of performing Mr Spencer’s contractual obligation and does not amount to extra work, which could form the basis of a variation.
Likewise I find that there was no urgency associated with this work to justify a failure to record the variation in writing before undertaking the work. No application was made to me under section 84(4) of the DBCA. The claim is rejected.
Item 4
Mr Spencer claims he had to pack bedroom 1 floor joists because the concrete slab was out of level. This work falls within the obligation to install structural steel work.
As with the previous items, I find that this work was a necessary incident of performing Mr Spencer’s contractual obligation and does not amount to extra work which could form the basis of a variation.
As before, I find that there was no urgency associated with this work to justify a failure to record the variation in writing before undertaking the work. No application was made to me under section 84(4) of the DBCA. The claim is rejected.
Item 5
Mr Spencer claims that an extra 4 hours work was involved in installing structural columns in circumstances where Mr Kube required a different method of work by welding H beams as one piece, to be installed in one piece.
Mr Kube’s evidence is that he undertook the welding to save 100 hours of work, multiple scaffolding and bolting. Mr Spencer’s evidence was that the saving was all to Mr Kube’s benefit.
Generally, it is a matter for the builder as to the method of work adopted by him. In this case, Mr Spencer has agreed to a different method of work at the request of Mr Kube, in circumstances where he had no contractual entitlement to require this change. I accept that the extra work is a variation. However, Mr Spencer has not complied with the contract or the DBCA to record the variation in writing before undertaking the work. He gave no evidence as to why the variation was not recorded in writing, other than a catch-all submission that the work was urgent and it was not reasonably practical to put the variation in writing. I find that there is no evidence of urgent circumstances to justify that submission. No application under s84(4) of the DBCA was made. I find that Mr Spencer has no entitlement to be paid for the extra work.
Item 6
Mr Spencer gave evidence that the extra 2 hours work claimed in this item relates to time taken arguing with Mr Kube in relation to the method of work for installation of posts. I reject the claim on the basis that the claimed variation is not in writing. There was no evidence of urgent circumstances as submitted generally by Mr Spencer and no application under s84(4) of the DBCA was made.
Item 7
Mr Spencer gave evidence that an extra 8 hours work was involved in drilling extra holes to all lower floor SHS columns, when the Owners supplied 3 x 10 mm bolts instead of the specified 2 x 12mm bolts.
I again reject the claim on the basis that even if the extra work was as a result of a variation, Mr Spencer is not entitled to payment because the variation was not put in writing before the work was undertaken. There is no evidence of urgent circumstances and no application under s84(4) of the DBCA.
Item 8
Mr Spencer claims the sum of $280.00 for the cost of measuring the roof so that the measurements could be provided to the roofing contractor.
Mr Kube’s evidence is that the work was done so that Mr Spencer could perform roofing timber calculations, which was an ordinary incident of his contracted work.
I find that the work was necessary for the completion of Mr Spencer’s contractual obligation in relation to construction of the timber frame. I do not consider it amounts to a variation for extra work. In any event there is no written variation for this work. There is no evidence of urgent circumstances to justify lack of writing and there is no section 84(4) of the DBCA application. The claim is rejected.
Item 9
Mr Spencer claims for an extra 8 hours work for arising timber posts 3 times and loading and unloading the posts 3 times after Mr Kube took them offsite to a contactor to plane them. Mr Spencer’s evidence is that it was an appropriate work practice to use rough timber and to dress it on site. For that reason he supplied rough timber. He relied upon a statement of a painting contractor Gary Failor, filed in the proceedings that rough timber was best used for stained external posts and that they should be sanded and finished on site.
Mr Kube says that the timber was not supplied dressed, but was rough and it was necessary to take it offsite to plane the timber smooth.
I accept Mr Spencer’s evidence that it was appropriate to supply rough timber and that the arising work was extra work which amounted to a variation. However I reject the claim on the basis that there was no written variation. Mr Spencer could give no explanation for why no written variation had been prepared. No section 84(4) of the DBCA application was made.
Items 10, 11, 12, 28 and 31
Mr Spencer claims extra labour costs for himself and his worker to clad the external lounge wall and kitchen wall with Newport cladding in an amount of $2,802.00 and the cost of material supplied in an amount of $99.00.
The plans forming part of the contract reveal a number of different types of external wall cladding, including Newport plank style cladding, metal custom orb sheeting and NRG sheeting.
Mr Spencer maintained in evidence that he was never contractually obliged to clad the exterior lounge and kitchen walls, shown on the plans as clad in metal, because his work was limited to carpentry, that is, work with timber. He says that he did provide a quote to expand his work to include the cost of installing custom orb wall sheeting, however, the quote to do so was rejected. Mr Spencer’s evidence is that the cost of cladding those walls was not included in the contract price because the price was calculated by reference to the plans, which showed those walls clad in metal, not timber. Mr Spencer’s evidence is that he was to erect the frame and undertake timber cladding, however, it was agreed that how the rest of the house was to be clad would be finalized once the frame was constructed, as the Owners were still unsure where and what cladding would be used.
The Owners’ evidence is that prior to signing the contract, they informed Mr Spencer that they did not want to clad any part of the lower part of the house in metal sheeting as depicted in the plans, but that they wanted to use Newport cladding. The Owners say that they expected the contract price to include cladding for the whole of the house.
The Schedule of fittings and finishes provides at clause 1.03 “Builder responsible for Carpentry work only; eg Total frame and wall claddings”.
The contract provides for an instalment payment when “all wall cladding installed”.
There is evidently confusion between the parties as to whether Mr Spencer was contractually obliged to clad all of the exterior of the house or only those parts not shown as clad in metal in the plans.
I accept the evidence of the Owners that they instructed Mr Spencer prior to signing the contract that they wished to change parts of the external cladding depicted on the plans. I accept their evidence that Mr Spencer suggested the plans not be amended before lodgement for approval as this was only a minor change. However, I accept Mr Spencer’s evidence that the decision as to what cladding would be used was to be made once the frame was erected. I find that the reference to “wall cladding” in clause 1.03 is a reference to wall cladding falling within the Carpentry section of the Schedule of fittings and finishes only and that there was no provision for work to be performed by Mr Spencer in the “Sheet metal” section of the contract where one would expect to find provision for the fixing of custom orb sheet metal as depicted in the plans.
The matter is somewhat confused because there is no express reference to cladding in the Carpentry section other than the statement that the extent of work is to complete the carpentry work in accordance with the contract drawings and the specification.
The drawings were not amended to show Newport cladding on the lower level at the time the contract was signed.
I accept Mr Spencer’s evidence that the 5 November, 2009 contract was drafted in the presence of the Owners. They did not require any amendment to the drawings or statement as to the type of cladding to be installed by Mr Spencer.
It seems to me that much of the confusion on this point has arisen because the Owners did not appreciate the significance of the quote to install custom orb metal wall cladding and that rejecting the quote meant this item of work was not covered by the contract.
That is unfortunate; however, a careful reading of the contract is consistent with the evidence of Mr Spencer as to the scope of the contract work. It is consistent with different cladding being determined once the frame was erected and being costed and installed at that time.
I am satisfied that installation of Newport cladding on the external lounge room and kitchen walls was a variation to the contract requested by the Owners.
At the hearing Mr Spencer applied to the Tribunal to approve recovery of the amount of $2,732.00, being calculated by reference to $70.00 per hour for his labour and $45.00 per hour for the cost of a labourer.
The amount of the claim was not challenged by the Owners as being unreasonable. Despite non - compliance with the contract and the DBCA in relation to providing a written variation prior to commencing the work, Mr Spencer is entitled to payment if on application to the Tribunal under section 84(4) of the DBCA the Tribunal is satisfied that either:
(a)there are exceptional circumstances to warrant recovery of the amount of the variation; or
(b)the building contractor would suffer unreasonable hardship by the operation of the sections of the DBCA requiring a written variation before payment can be made.
I do not think there are exceptional circumstances in this case to warrant recovery of the amount of the variation. However I consider it would be inequitable for Mr Spencer to bear the burden of the costs of these variations and for the Owners to have their benefit without just remuneration to Mr Spencer.[6] There is nothing to suggest that it would be unfair to the Owners to pay for work performed for their benefit when the cost of that work was not included in the original contract price.
[6] Ross v Rangel [2004] QCCTB 98.
Neither the contract nor the appropriate variation document addresses the way in which the amount of the variation should be worked out. Accordingly, under s84(6)(b) of the DBCA Mr Spencer is entitled to recover the cost of carrying out the variation plus a reasonable profit. I accept the claim for $2,901.00 plus GST on this basis.
Items 13, 15, 17, 19 and 22
These items relate respectively to the cost of straightening the bedroom 2 and 3 fascia work, straightening the lounge fascia, re-adjusting the study barge, straightening the kitchen patio fascia and adjusting the bedroom 1 high soffit.
Mr Spencer complains that the fascia work was poorly done by the Owners’ roofing contractors and that it had to be rectified before he could install the soffits.
Mr Kube’s evidence is that the problem was with the frame constructed by Mr Spencer so that the fascias could not be put on straight.
There is no independent expert evidence before me as to the state of the frame or the fascia’s so that I might determine where the source of the problem lay.
The fact is that Mr Spencer contracted to install the frame, including soffits. I find that it was a necessary incident of completing that work that Mr Spencer had to undertake some adjustments to work performed by other trades. I find that these items do not relate to extra work so as to amount to a variation.
In any event there is no evidence of urgency such that a failure to put the alleged variation in writing could be justified. Further, there is no application before me under s84(4) of the DBCA. I reject the claims.
Items14, 16, 18 and 20
These items relate to the cost of fitting bird proofing to bedrooms 2 and 3, to the fascia, kitchen patio fascia and kitchen fascia respectively.
Mr Spencer’s evidence is that there was nothing in the contract about this work and that bird proofing is usually put in by the roofing contractors as it goes in above the soffit fascia. He said the material was provided by the Owners and Mr Kube told him he would be paid for the work.
Mr Kube’s evidence is that the work was part of the contract and that it is installed after the roof and soffits have been constructed.
The work is not expressly referred to in the contract. Given Mr Spencer’s long experience as a building contractor and having no reason to doubt his veracity I accept his evidence that the work is normally done by the roofer. I accept that this was a variation requested by the Owners and agreed to be paid for by them.
However, the difficulty is that no written variation was prepared before the work was undertaken. There is no evidence of any urgency associated with the work to justify failure to prepare a written variation. There is no application before me pursuant to s84(4) of the DBCA. I reject the claims.
Item 21
The claim by Mr Spencer is for one hour’s work to frame up an extra door. There was dispute at the hearing as to whether the frame was installed and its location.
I accept the evidence of Mr Spencer that he performed the work. However, no written variation was prepared before the work was undertaken. There is no evidence of any urgency associated with the work to justify failure to prepare a written variation. There is no application before me pursuant to s84(4) of the DBCA. I reject the claim.
Item 23
The claim relates to two hours work by Mr Spencer and his labourer to install both patio electrical light wirings.
Mr Spencer’s evidence is that he was handed the cables by Mr Kube, who was roughing in the electrical work, and asked to put the electrical cables in before the soffit sheets were installed. Mr Spencer said it took time to run cables back to the switches.
Mr Kube’s evidence is that the work only took a matter of minutes and involved looping cables over the battens.
I find that the work was extra to the contract works, however the circumstances suggest that the work was voluntarily performed to assist Mr Kube, so that it would not have the character of a variation. I reject the claim on this basis.
Item 24
Mr Spencer’s evidence is that he was instructed by Mr Kube to install posts to enable dog boards to be attached. The post had to be cut to length and bolted in. Mr Spencer claims 8 hours labour to do this work. These posts are additional to the structural posts shown on the plans.
Mr Kube’s evidence is that the posts were intermediate posts necessary to hold the deck up and that when the concrete was poured stirrups were put in to take the posts, in accordance with Mr Spencer’s instructions.
It is difficult on the evidence to conclude whether this work was extra work. However, in any event if the work did amount to a variation, there is no evidence of any urgency to justify failure to put the variation in writing before the work was performed and there is no application before me under s84(4) of the DBCA. I reject the claim.
Item 25
This claim relates to the cost of grouting intermediate posts. Mr Spencer’s evidence is that this is the same issue as arose with respect to Item 2, however the work was done at a different time and at a different part of the house.
Mr Kube’s evidence is that the work is part of the contract works and not a variation.
Consistent with my finding with respect to Item 2 I find that the work was a necessary incident of completing the contract works and that it does not amount to extra work. I also find that notwithstanding that finding there is no evidence of any urgency to justify failure to record the alleged variation in writing and there is no application under s84(4) of the DBCA. I reject the claim.
Item 26
This claim is for the cost of 2 hours labour given by Mr Spencer and two labourers helping with the installation of high set metal wall cladding to the area above the kitchen, including building the scaffold.
Mr Kube says that the only work performed was one or two men holding one sheet while the wind was blowing.
I find that this was extra work. It is difficult on the state of the evidence to form a conclusion as to the extent of the work performed.
I find in any event that there was no evidence of urgency to justify a failure to put the variation in writing and there is no application before me under s84(4) to justify awarding any payment for the work. I reject the claim.
Item 27
This claim relates to 8 hours work for Mr Spencer and a labourer to install the fascia gutter, barges, roof battens, insulation and roof sheeting to the bedroom 1 patio and to help install high set metal wall cladding.
Mr Spencer’s evidence is that the roofing contractors left the site before the patio roof work was finished. He said that he was asked by Mr Kube to do this work. He said that the patio roof could not be done by the roofers until the main roof had been made strong with primary bracing.
Mr Kube’s evidence is that the roofers could do no more work because the back verandah was not on nor the bedroom patio. He said Mr Spencer had specified the date for the roofers to coincide with completion of the decks. To recall the roofers would be extra cost, so he asked Mr Spencer to do the work.
I find that the work was extra work to that specified in the contract and amounts to a variation. However, I cannot award any payment for the work because the variation was not recorded in writing before the work was performed. There is no evidence of urgency to justify a failure to document the variation. There is no application before me under s84(4) of the DBCA. I reject the claim.
Items 29 and 30
These items relate to the additional cost of labour and materials associated with the construction of what is said by Mr Spencer to be a larger deck than depicted on the plans. Mr Spencer’s evidence is that the bigger deck was requested by Mr Kube.
Mr Kube denied requesting a bigger deck and says that the bigger deck resulted from one of the workmen making a mistake in construction.
In circumstances where the only evidence is of one word against another it is difficult to conclude whether a bigger deck was requested or resulted from a mistake in construction. I make no finding in this regard, because even if a variation were to be found, it would not result in award in favour of Mr Spencer.
The alleged variation was not put into writing. There is no evidence of urgent circumstances to justify a failure to document the alleged variation before the work was performed. Finally, there is no application under s84(4) of the DBCA. I reject the claim.
Item 32
This claim is for the cost of wall sarking to both patios and kitchen high wall and the labour to install it.
Mr Spencer’s evidence is that he supplied and installed rhino wrap, or sarking in accordance with his obligations under the contract, but that this work relates to sarking needed for the metal cladding he was not contractually obliged to do.
Mr Kube pointed to clause 7.09 of the Schedule of fittings and fixtures which provided that “all external wall rhino wrap” would be supplied and installed to the timber frame.
It does not seem to me to be a reasonable interpretation of the contract that just because Mr Spencer is not obliged to install metal cladding on parts of the frame, that it is not obliged to insulate the whole of the timber frame, particularly where sarking is not referred to in the metal work section of the specification. The plain words of the contract suggest that all external wall rhino wrap will be supplied and installed.
I find that this work is not extra work which amounts to a variation. The work is part of the contract works. I reject the claim on this basis.
Findings in relation to extra work claims by Spencer
On the basis of the reasoning set out above I find that Mr Spencer is entitled to be paid the sum of $2,901.00 plus GST for extra work, being $3,191.10. There was no evidence as to the basis of the claim for $300 administration costs or how the claim for BSA fees and application fees relates to the successful claims. I reject the claim for those sums.
Was the contract was validly terminated?
If the contract was validly terminated, Mr Spencer is relieved of further performance of the contract and is only liable for rights which have accrued in favour of the Owners, prior to termination. If the contract was validly terminated Mr Spencer is entitled to damages for breach of contract or for moneys due and owing under the contract.
The notice of termination of contract dated 2 August, 2010 rested on failure by the Owners to remedy their alleged breach of contract by payment of the instalments due upon completion of wall cladding and shot edge work. A notice of suspension of work was given on 27 March, 2010 requiring payment of the wall cladding and patio frame shot edge instalments. Failure to remedy the breach referred to in the notice of suspension of work gave rise to the issue of a notice of intention to terminate contract and ultimately to termination.
In response to the notice of suspension the Owners admitted the wall cladding and shot edge work was completed by 10 March, 2010. However they said that payment was not due because they had not been provided with:
·a certificate of the type and insulation rating for the wall cladding relevant to the sustainability declaration; nor
·the certificate of frame approval relevant to the patio frame shot edge certificate.
The Owners said that payment would only be made when the certifier had performed final inspection and an approval certificate had issued to them.
Mr Spencer refused to release the certificates in his possession until payment of the claimed instalments.
In addition to denying that they were in default under the contract, the Owners made the following complaints against Mr Spencer:
·failure to provide the relevant certificates,
·failure to provide the louvre extension pole and keys; in circumstances where full payment had been made for them;
·Mr Spencer’s intention to install float, not toughened glass in the louvres which necessitated the Owners installing toughened glass in order to comply with Australian Standards; and
·compromising security and safety by ill-fitting windows and doors that do not close securely and not providing keys for windows and patio doors.
The relevance of the complaints against Mr Spencer is that under clause 22.3 of the contract the contractor may not terminate the contract if the contractor is in substantial breach of the contract.
Substantial breach is defined in the contract to mean a contracting party’s failure or refusal to perform its obligations under the contract.
I find that Mr Spencer is not in substantial breach of the contract in that he has not failed or refused to perform his obligations under the contract. As at 27 March, 2010 he had suspended work under the contract. I accept the evidence set out in the undated letter (marked 6 April, 2010) from Mr Spencer that he would supply and install the louvre blades as the last item of work on completion of work by all trades, that windows would be serviced after the internal fix-out was complete and certificates and keys would be provided upon payment.
I note the Compliance Certificate for Building Design or Specification –Glazing – Windows & Doors (Form 15) forming part of Mr Spencer’s filed evidence, certifies that glazed windows and doors supplied by Bradnams comply with the Building Act 1975. No expert was called by the Owners to over-ride this certificate and demonstrate that the float glass louvres would not meet Australian Standards.
As to non-provision of the certificates, I note that there is no contractual obligation to provide the certificates before payment of the relevant instalments. Section 39 of the DBCA is arguably relevant. The section requires provision of contract related documents to the building owner as soon as practicable after receiving the document. The section is a penalty provision. It does not give rise to give rise to civil consequences.[7] On this basis I find that Mr Spencer was not contractually obliged to provide the certificates and approvals sought by the Owners at the time they demanded them.
[7] Kovac Enterprises Pty Ltd v Paul Fuge Builders & Designers & Geyer (Qld) Pty Ltd t/a Adam Dew Project Management and Construction [2005] QCCTB 52 (11 April, 2005)
For these reasons I find that Mr Spencer was not in substantial breach of the contract so that he could not validly terminate the contract. Mr Spencer has complied with clause 22 of the contract in delivering relevant notices in order to terminate the contract.
On the basis of the Owner’s admission that the cladding and patio edge work were completed and invoices were tendered for payment, I find that the two instalment payments were due and owing as at the date of the notice of suspension and subsequent notice of intention to terminate.
The Owners have in their letter dated 3 April, 2010 categorically refused to pay the instalment payments until after a final inspection of the dwelling has been completed and the certificate of approval issued. That position bears no resemblance to their contractual obligation to pay instalments upon the following stages:
·Patio shot edge laid; and
·All wall cladding installed.
The contract at clause 20 requires payment within 7 days after the contractor submits its claim.
Clause 11 of the contract requires the Owners to make progress payments in accordance with the contract and that they have no right of set off or to hold any amount for retentions for defects or omissions.
I find that none of the complaints made by the Owners justify a failure by them to meet their obligations under the contract.
I find that the contract has been validly terminated.
The result is that under clause 22.4 of the contract, Mr Spencer is entitled to recover from the Owners all loss, costs, expenses and damages in connection with the Owner’s breach and their termination, as if the Owner had wrongfully repudiated the contract. Under clause 11.9 of the contract Mr Spencer is entitled to interest on outstanding progress payments at the rate of 15% calculated daily from the date they were due to the date of payment.
Were any works defective or unfinished and if so the correct measure of damages or correct allowance arising from this?
The Owners filed a schedule of defective or unfinished works. There are 26 items of defective or unfinished work alleged by the Owners which they assert has cost $42,987.00 to rectify or complete.
There are a number of difficulties with the Owners claims.
First, at the hearing the Owners were unable to provide any invoices, records of payment or other proof of the cost of completing or rectifying work. In most cases rectification work was performed by Mr Kube personally. He said that he attributed a cost to his own time. Otherwise, Mr Kube said that his records were lost in the floods and he made estimates of the cost of work. Other than as set out below, I am not satisfied on the evidence that the Owners have proved any loss as a result of breach of contract.
Second, in order to recover the cost of rectification or completion work, the Owners must establish that their entitlement to compensation accrued prior to termination of the contract with Spencer.[8]
[8] McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457.
The Owners must establish that the time for performance of Spencer’s contractual obligations had passed at the time of termination of the contract.
I have found that Spencer lawfully suspended work by notice dated 27 March, 2010. At the date of termination work was suspended so that the opportunity to rectify defects and complete incomplete works was unable to be undertaken prior to termination.
Other than as set out below, I find that the Owners have no entitlement to claim damages for rectification or completion work because no entitlement had accrued as at the date of termination.
The items of complaint were addressed by the Building Services Authority (BSA) in its report dated 29 November, 2012.
The BSA concluded that there were no incomplete or defective works as inspected, although some items were matters for contractual dispute on which they would not comment. I note that the BSA inspection was conducted after some work had been performed so that the matters the subject of the Owners complaint would not have been evident.
However, in relation to the following items which I understand to be in their original state, the BSA found:
(a)Item 2 incorrect windows in the main bedroom – consistent with the architectural drawings, complete/no visual defect;
(b)Item 3 incorrect glazing in bathroom window – frosted glass consistent with industry practice, complete/no visual defect;
(c)Item 14 poor workmanship in deck post installation – 3 posts have been cut short but are adequately supported/ are not clearly visible to the eye/ appear to be structurally adequate;
(d)Item 15 external soffits vary in depth of the boxed down areas when compared to the various elevations – the architectural plans are silent and do not show specific detail. The works as viewed are complete and finished in a tradesman like manner. Complete/ no visual defects noted;
(e)Item 18 metal stumps to the western elevation. Installation of 6 metal posts are defective in that the hold down bolts (4per post) have not been trimmed to a consistent length in accordance with good building practice. Minor defect in nature/cosmetic only, structurally sound. Approximate time to rectify 1 hour x 1 tradesman.
I accept the findings of the BSA that these items do not demonstrate defective or incomplete work, except for Item 18 which is of a minor nature.
In relation to the remaining items:
(a)Item 1- The owners assert that they accepted the quote from Mr Spencer, set out in the form of Variation no. 2 in the sum of $19,625.37 for the “supply of aluminium windows and doors “Bradnams” as per WDS Drawing.” The quote required payment of $2,943.00 on ordering and the balance on installation.
The Owners complain that the louvre windows, door locks and window locks and the extension pole to open and close windows were not supplied despite full payment. That is admitted by Mr Spencer. In his affidavit filed 20 February, 2013, Mr Spencer said that he would credit the amount of $806.00 for the supply of louvre blades and final service when all outstanding funds are paid and that he would hand over all keys when all outstanding funds are paid.
I find that installation of the louvres and final service were incomplete work at the date of suspension of works under the contract. In light of Mr Spencer’s concession that he would credit the amount of $806.00 for supply of louvre blades and final service, I am prepared to make that award in favour of the Owners. However, I find that there was no breach of contract at the time of the notice of suspension giving rise to an entitlement to recover the value of the louvres. The evidence is that it was Mr Spencer’s intention to install the louvres when other trades had left the site. There is no evidence of a refusal to install the louvres.
In relation to the claim for window and door locks, I cannot locate any specification for provision of locks by Mr Spencer. Further in complaints about failure to install the louvres or to supply keys, the Owners made no complaint about failure to supply door locks. I find that there is no contractual entitlement to locks for which Mr Spencer is responsible. I reject the claim.
(b)Item 4 - non supply of fly screens for doors and windows. I accept the evidence of Mr Spencer that the contract does not provide in the specification nor in the window variation document for supply of fly screens. I note it originally appeared by handwritten note in the 16 September, 2009 document, however, that document has been found not to form part of the contract. I find that there is no contractual entitlement to the value of fly screens. I reject the claim.
(c)Item 5 - windows not fitted correctly, not packed level. I accept Mr Spencer’s evidence that under the contract Mr Spencer’s work did not extend to internal work, which would ordinarily involve straightening jambs and sills. That is work which Mr Kube or another contractor is obliged to perform to prevent sagging given the break up of construction work the Owners contracted for. I find that there was no defective work consequent upon Mr Spencer’s performance of his contract. I make these findings based upon Mr Spencer’s long experience as a builder, whereupon I am prepared to accept his evidence as to an appropriate method of work in the installation of windows. I reject the claim.
(d)Item 6 –no final window service, missing extension pole. Consistent with my earlier finding, I find that as a result of the Owner’s failure to comply with the notice of suspension and notice of intention to terminate, the window service was not undertaken. The performance obligation had not arisen at the date of termination. I have assumed that the extension pole is dealt with as part of Mr Spencer’s concession dealt with in item 1. I reject the claim.
(e)Items7,8 and 9 – claims for Mr Kube’s own time in installing external Newport and metal cladding. I have found in dealing with Mr Spencer’s variation claim that Newport cladding to replace metal cladding depicted on the drawings did not form part of the contract, nor did any metal work associated with installation of metal cladding. The claim is rejected.
(f)Item 10 – reduction in contract price sought to reflect lesser form of scaffolding used by Mr Spencer on site, than scaffolding which it is alleged should have been used and which was included in the contract price. I accept Mr Spencer’s evidence that he complied with the contract to supply scaffolding for use by carpenters only on site. No type of scaffolding was specified in the contract. There is no evidence the scaffolding was inadequate and unsafe other than Mr Kube’s unsubstantiated allegation. I have no basis to find that there has been a failure to supply scaffolding. There is no basis on which to reduce the contract price. I reject the claim.
(g)Item 11 – The value of Mr Kube’s own time is sought for the cost of installing some edges to the sides of decks and installing dog-boards to create a skirt for the decks, said to be similar to photographs provided to Mr Spencer, which it is alleged he agreed to install. Mr Spencer’s evidence is that the work was completed in accordance with the plans. No photographs intended to amend the plans or to form part of the contract are in evidence. I find that the decks were completed in accordance with the plans. I cannot observe any dog-board skirt on the decks in the drawings in evidence. On the basis of Mr Spencer’s building experience I accept his evidence that the edge finish was in accordance with standard building practice. The claim is rejected.
(h)Item 12 – The value of cartage in Mr Kube’s own truck and the cost of dressing feature posts is sought on the basis that the Owner’s assert dressed posts should have been supplied.
This matter has been dealt with as part of Mr Spencer’s claim. The contract does not provide for the supply of dressed timber. I have found that it was intended that the timber be planed and dressed on site and that this was appropriate in the circumstances. Mr Kube incurred the costs claimed of his own volition. I reject the claim.
(i)Item 13 – the value of Mr Kube’s own time is sought in nailing flat decking nails which the Owners assert were protruding. Mr Spencer’s evidence is that decking nails are meant to sit with their domed head above the floor to stop the decking timber twisting. On the basis of Mr Spencer’s building experience I accept his evidence that the correct nails and nailing procedure were used. I reject the claim.
(j)Item 15 – the estimated cost of re-boxing and re-painting soffits which are not of uniform size and appearance is claimed. The soffits are said by the Owners to appear uniform on the drawings and that they did not receive what they contracted for. Mr Spencer acknowledged that the soffits were not of uniform appearance, but said this was a consequence of different sized beams and rafters being specified by the engineer for different parts of the house. Mr Spencer said in evidence that there was a means of fixing the problem, but that he would have to think about the cost.
I accept the evidence of the Owners that the soffits are not constructed in accordance with the drawings and that the soffits detract from the appearance of their house. I find that this is defective work, which would give rise to an entitlement to require Mr Spencer to rectify the work (if the Works were not suspended). However on the basis that the works were lawfully suspended at the time of termination of the contract I find that no entitlement to claim the cost of rectification had arisen before termination. I reject the claim.
(k)Item 16 – The cost of Mr Kube’s labour and 2 rolls of insulation is claimed with respect to cladding the upper part of the building with rhino wrap, which Mr Spencer refused to do. Consistent with my finding in relation to Item 32 of Mr Spencer’s claims, I find that the contract did provide for supply and installation of all rhino wrap to all parts of the exterior of the house. Mr Kube’s affidavit records that rather than suffer any further stress and argument he purchased the remaining rhino wrap and installed it and the metal cladding, not wanting another confrontation. I find that Mr Spencer was in breach of the contract by refusing to install the rhino wrap to the upper part of the building, which resulted in an accrued entitlement to damages prior to suspension of the works and termination of the contract. I find that the Owners are entitled to recover the cost of the insulating material said in evidence to be $120.00 per roll. I award the Owners the sum of $240.00 for the two rolls they purchased. I am not satisfied as to the value of Mr Kube’s labour and make no award in that regard.
(l)Item 17 – the Owners seek a credit of $1,350.00 for the value of a pantry and beam not constructed. At the hearing it transpired that the plans were varied to delete a pantry, wall and structural beam and to use a redesigned truss system to span the relevant area. The parties debated whether the extra cost of the truss was balanced out by the saving in the pantry and beam. There was no evidence tendered by either side in support of their contentions as to cost. The work is not defective. I find that there is no breach of contract to support this claim. To the extent that the work is a variation resulting in a reduction in the contract price, the Owners have not proved the reduction in contract price. I reject the claim.
(m)Item 18 - The Owners seek to recover the cost of 3 hours’ work for a gyprocker and 2 hours’ work by Mr Kube for work said to be consequent upon the frame not being straight, noggings not installed and battens not installed. No supporting evidence of this allegedly faulty work was tendered. Mr Spencer denies the work was defective and says that the value of the claims suggests it is an attempt to charge him with the cost of taking unwanted manholes out of a ceiling.
No evidence was tendered by the Owners in support of their allegation. I reject the claim.
(n)Item 19 – Similar to Item 17 the Owners seek a credit of $220 for the non- installation of a laundry nib wall when the plans were varied and a different truss was installed. Mr Spencer’s evidence is that the cost saving with respect to the nib wall was offset by the increased cost of the truss. I find that the Owners have not proved any reduction in contract price consequent upon the variation. I find that there is no breach of contract. I reject the claim.
(o)Item 20 – This item relates to a cosmetic defect found by the BSA in that hold down bolts have not been trimmed to a consistent length in accordance with good building practice. I accept the BSA’s finding. Mr Spencer takes a different view and at the hearing said he would not fix the problem. On that basis I find that there was a breach of contract at the time the bolts were installed which Spencer would always have refused to correct and that there is an accrued right to recover the cost of one hour’s work by a tradesman which is claimed by Mr Kube to be $240.00. I award the sum of $240.00 to the Owners.
(p)Item 21 seeks the cost of 4 sheets of plywood and the labour to cover the openings where the louvres were to be installed. I have previously found that installation of the louvres would have occurred but for the suspension of the work and termination of the contract. I reject the claim.
(q)Items 22, 23, 24, 25 and 26 seek the administrative cost to Mr Kube in obtaining copies of certificates. Mr Spencer’s evidence is that he had paid for all certificates and that all certificates were issued in his name. He asserted that the Owners had no entitlement to the certificates until he had been paid money due and owing to him. I accept Mr Spencer’s submissions and find that there is no breach of contract through failure to provide the approval certificates prior to payment.[9] I reject the claim.
[9] Kovac Enterprises Pty Ltd v Paul Fuge Builders & Designers & Geyer (Qld) Pty Ltd t/a Adam Dew Project Management and Construction [2005] QCCTB 52 (11 April, 2005)
Findings in relation to allegations of defective or incomplete work
I find that the Owners are entitled to recover the sum of $480.00 only by way of an accrued right to damages for breach of contract which occurred prior to suspension of the contract and termination. In addition they are entitled to the credit of $803.00 granted by Mr Spencer with respect to the louvres.
Claim for liquidated damages
The contract records in the Appendix that the contract will take approximately 70 working days. It does not appear that part C of the Appendix was completed by the parties. It was not tendered or filed with material relied upon by either party. Accordingly, I have no evidence before me of any agreed allowance for delays such as a Christmas shut down or wet days.
Further, there is some internal inconsistency in the contract, in that the Appendix refers to “working days”, whereas Item 8 of the Schedule to the contract refers to “days”. I am prepared to accept that the parties intended “working days” to apply.
The parties are agreed that work commenced on 30 October, 2009. Work was suspended on 27 March, 2010. Suspension of work has the effect under clause 16 of the contract of extending the date for completion by the period from the date of suspension to the date of recommencement. In this case the contract was terminated as a consequence of the Owners’ default, thereby bringing the entitlement to liquidated damages to an end.
By my calculations 70 working days expired on 5 February, 2010. Mr Spencer made no claims for extension of the date for completion under clause 15 of the contract.
On this basis I find that the Owners are entitled to liquidated damages at the rate of $50 per calendar day, under item 18 of the Schedule to the contract, from 6 February, 2010 to 26 March, 2010, amounting to $2,450.00.
Cancelled cheque
The question of whether there was a failure of consideration for a cheque of 11 February, 2010, purportedly in payment of two progress payments and subsequently cancelled has been raised as an issue.
I find that the issue is of limited relevance to the outcome of the proceedings. The notice of suspension under clause 16 of the contract upon which the notice of termination was ultimately based did not rely upon the cancelled cheque as a ground for suspension or termination, rather the unpaid invoices dated 7 March, 2010 were relied upon.
There is no evidence that the two instalment payments were due at the time the cheque was proffered. No invoices have been tendered in evidence. Rather it appears the cheque was volunteered to encourage completion of the works by the following Monday and cancelled when work was not completed on that day. It is not necessary to make any findings in relation to the issue.
Mr Spencer’s claim
I have found that at the time of termination of the contract two instalment payments totalling $31,482.82 were due and owing.
The final sum due under the contract in an amount of $7,870.72 represents Mr Spencer’s damages for breach of contract by the Owners. On the basis of all the evidence, I find that Mr Spencer had substantially performed his obligations under the contract. He is entitled to be awarded the value of the final instalment in order to put him in the position he would have been in had the contract been performed.[10]
[10] Robinson v Harman (1848) 1 Ex 850; Qline Interiors Pty Ltd v Jezer Construction Group Pty Ltd [2002] QSC 088.
I have found that Mr Spencer is entitled to the sum of $3,191.10, inclusive of GST, for extra work. This is a sum awarded by restitution.
Spencer claims interest in accordance with item 19 of the Schedule to the contract at 15% per annum calculated on a daily basis on overdue payments.
I find that of the amounts to which Spencer is entitled, the amount of the two outstanding instalment payments totalling $31,482.82 which fell due on 14 March, 2010 must bear interest in accordance with the contract. That sum is inclusive of GST. I will not apply interest to the GST component. I will calculate interest on the sum of $28,620.76 being the instalment amounts less the GST component which Mr Spencer records on his invoices as $1,431.03 for each instalment.
The sums awarded for damages and restitution do not constitute “overdue payments” within the terms of the contract on which interest is calculated.
I calculate interest in the following way:
$28,620.76 x 15% per annum = $4,293.11.
$4,293.11 ÷ 365 days = $11.76 per day.
$11.76 x 1,215 days (from 14 March, 2010 to 11 July, 2013) = $14,290.78.
On this reasoning Mr Spencer is entitled to recover the sum of $56,835.42.
I have found that the Owners are entitled to recover $480.00 by way of damages for breach of contract. Mr Spencer has agreed to credit the sum of $803.00. Finally, I have found the Owners are entitled to liquidated damages in an amount of $2,450.00. The total sum which they may offset against moneys payable to Mr Spencer is $2,930.00.
After offsetting the amounts due to the Owners from the amount due to Spencer, I find that, the Owners are liable to pay Spencer the sum of $53,905.42.
Orders
I order that Mr John Kube and Mrs Gill Kube pay to Mr William Denis Spencer the sum of $53,905.42 within 21 days of the date of this decision.
As the parties are unrepresented I make no order as to costs.
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