Style Coast Homes Pty Ltd v New Way Constructions (Qld) Pty Ltd

[2014] QCAT 497

CITATION: Style Coast Homes Pty Ltd v New Way Constructions (Qld) Pty Ltd [2014] QCAT 497

PARTIES:	Style Coast Homes Pty Ltd (Applicant)
v
New Way Constructions (Qld) Pty Ltd (Respondent)

APPLICATION NUMBER: MCDO74-14

MATTER TYPE: Other minor civil dispute matters

HEARING DATE: 26 June 2014

HEARD AT: Brisbane

DECISION OF: Adjudicator Bertelsen

DELIVERED ON: 30 September 2014

DELIVERED AT: Brisbane

ORDERS MADE: 1.    The respondent pay to the applicant the sum of $18,654.60.

CATCHWORDS:

Minor civil dispute - agreement to consult – part performance of agreement – relevance of prior payments – repudiation of agreement – loss of opportunity to consult for reward

Commonwealth v Amann Aviation Pty Ltd (1992) 174 CLR 64

APPEARANCES and REPRESENTATION (if any):

APPLICANT: Darryl Dalton, Director

RESPONDENT: Wayne Crosby, Director

REASONS FOR DECISION

Application

1. By application filed 15 January 2014 the applicant Style Coast Homes Pty Ltd (‘Style Coast’) seeks $18,370 for invoices issued for consulting services pursuant to its agreement with the respondent New Way Constructions (Qld) Pty Ltd (‘New Way’) dated 6 January 2012.

Background and Evidence

1. In 2011 Style Coast, through an associated entity, as builder, initially contracted with Dan and Christine Rowe (‘the Rowes’) to construct their new home at 70 McGahan Street, Carina Heights. A person Will Ackroyd was the company’s QBSA nominee at the time. For reasons not at the time readily discernable Mr Ackroyd did not want Style Coast to build the home but rather insisted that New Way construct the home. With the acquiescence of the Rowes the initial contract for Style Coast to build was cancelled.

2. On 6 January 2012 an agreement was entered into between Style Coast and New Way pursuant to which New Way was to pay Style Coast $58,370 for consultancy fees. These fees were to be paid generally as progress payments and in accord with a Master Builders Contract being entered into between New Way and the Rowes the next day.

3. On 7 January 2012 New Way and the Rowes entered into a Master Builders Residential Building Contact for construction at 70 McGahan Street, Carina Heights for a fixed price contract sum of $1,673,341. That contract at item 16 named the contractors representative as Style Coast and the owners agent also as Style Coast.

4. Mr Dalton of Style Coast stated that a sum of $83,667 being five per cent deposit on the contract sum of $1,673,341 had already been paid to Style Coast on 31 October 2011 and that such sum had been expended by Style Coast on working drawings, engineering drawings, assessments and reports necessary to all be in place so that New Way could commence construction in February 2012.

5. The agreement of 6 January 2012 stated

   New Way Constructions (Qld) Pty Ltd have agreed to the initial presite payment structure of all fees to be paid for council approval, BSA insurances, QLeave fees, local council approval fees by Style Coast Homes Pty Ltd. Style Coast Homes have now paid all fees as mentioned above with New Way Constructions (Qld) nominated as the major contractor.

6. The same agreement went on to acknowledge

   Style Coast Homes Pty Ltd has also paid for all working drawings, engineered drawings, hydraulic engineering, geotechnical and slope stability assessment in which New Way Constructions (Qld) Pty Ltd have all copies of all these reports and drawings in which the offer to build was presented by New Way Constructions to Style Coast Homes (Darryl Dalton) on the 2nd November 2011.

7. The same agreement records

   The contract price to construct the home is a total of $1,673.341 of which Style Coast Homes Pty Ltd (Darryl Dalton) has already received the full 5 % deposit that the client has paid as per the contract of $83,667. This payment has been used to pay for all the initial drawings, all fees and other works that was required to get a fixed price contract prepared.

8. The same agreement acknowledges that

   “A new Master Builders Contract has now been prepared exactly as per the Master Builders Contract that was signed and agreed to by New Way Constructions (Qld) Pty Ltd on 2-11-2011. …”

9. Pursuant to the same agreement and the eight progress claims referred to therein the first four at $10,000 each were paid in the period February 2012 through 31 May 2012. Progress claims 5, 6, 7 and 8 for $5,000, $5,000, $5,000 and $3,370 respectively have not been paid.

10. Mr Crosby for New Way stated that arrangements with Mr Dalton proceeded without any real difficulty up until the point that there was disagreement about footings and a retaining wall. He said he found out he was in trouble when a retaining wall (the house being built on a slope) that was represented as being 1 metre high now had to be higher; that such was the start of problems with Mr Dalton. Mr Crosby indicated that he was told by Mr Dalton not to have contact with the Rowes; that Mr Dalton would look after communications with the Rowes. Mr Crosby stated that he priced a set of preliminary working drawings and that he started building in about February 2012 as which time he was relying on a fourth revision of drawings. He considered himself to be as he put it behind the eight ball right from the start.

11. Mr Crosby stated that he did not know anything about the original Style Coast contract in late 2011; that he expected the deposit on his contract with the Rowes to be put into his own account. He stated that he was told by Mr Dalton that his (Mr Dalton’s) role was to get the contract signed sealed and delivered. He Mr Crosby expected Mr Dalton to come back with a cheque for $83,667 for New Way. Mr Dalton considered that the second contract that is the contract between New Way and the Rowes was produced after he Mr Dalton had retained the deposit of $83,667. He confirmed that Mr Dalton had stated that he Mr Dalton had paid all the relevant fees; that he Mr Crosby then approached the Rowes who indicated that Mr Dalton had paid all relevant fees but that they the Rowes had given Mr Dalton a cheque to pay for that, that is to say, such fees did not come out of the $83,667 deposit. New Way in its response asserted that Style Coast in breach of the agreement had received an additional $25,200 from the Rowes “to satisfy all upfront fees which were supposed to be paid from the deposit monies”; that Style Coast had “agreed to variations of the building contract without the respondents knowledge or approval” with the result that New Way “had additional costs of at least $13,000 only for plastering work”; that due to Style Coasts failure to obtain necessary engineering and architectural plans New Way incurred additional costs of $4,840; that engineering drawings were required to be updated due to changes made by Style Coast at a cost of $5,700.

12. Mr Crosby said that Mr Dalton in paying upfront fees neglected to ensure that, for instance, the engineer/certifier inspection fees were properly accounted for; that it was not an expectation that he Mr Crosby would be paying for inspection fees; that in due course neither he, nor the Rowes nor the engineer wanted Mr Dalton onsite; that is when he rang Mr Dalton and payments were stopped. He said he did not need Mr Dalton anymore; that he was dishonest and that he broke the law by taking the deposit.

13. Mr Dalton stated the house was being constructed on a fairly severe slop; that the footings for the retaining wall were inadequate – 300mm not 600mm as required; that he stopped the footing concrete pour concerned that any retaining wall constructed would collapse due to inadequacy of footings. He felt New Way was short cutting building practices. He spoke to the Rowes. They did not know who to believe.

14. Mr Dalton reiterated that the 5 per cent deposit was utilised to obtain all necessary approvals so that New Way could start construction with no reservations. He asserted that deposit monies had been paid as stated in the agreement dated 6 January 2012. He said that the $25,200 referred to by Mr Crosby was in respect of working drawings completed by Golden Beach Design well before any involvement of Mr Crosby or New Way. Mr Dalton stated he was the one pushed out of the building process by New Way; that New Way was discussing directly with the Rowes the building process; that if changes were made without his input then he could not be held liable for associated costs. He asserted that through Golden Beach Design he became aware that contractors on site “seemed to not understand how to build a home of this nature”.

15. Mr Dalton stated that New Way received its first payment $198,000 (the second payment nominated as $194,107 under the Master Builders Contract of 7 January 2012) and spent it promptly; that there was no complaint about the first progress payment of $85,667 at that point.

16. Mr Dalton stated in late July 2012 Mr Ackroyd Style Coast’s nominee withdrew his nomination without notice; that it transpired that Mr Ackroyd was actually the site supervisor for and employed by New Way. Though Mr Ackroyd had been Style Coast’s nominee since 2011 it further transpired that Mr Ackroyd was also New Way’s ‘nominee long before he was Style Coast’s nominee’. Neither Style Coast nor New Way appeared to be aware of Mr Ackroyd’s concurrence.

17. Mr Dalton asserted that Mr Crosby was well aware of the terms of the agreement of 6 January 2012; that the agreement was made in good faith and that payments were due as stated during the course of the building process; that four payments were in fact made each of $10,000 pursuant to that agreement; that he began to and kept finding construction faults; that the engineer did not want to continue onsite because of the way the site had been cut. Mr Dalton alluded to ‘other things’ as well but said he could not do anything about those because he was ordered off site about the end of July 2012. He said that Mr Crosby “did not want to pay anymore already paid enough”.

18. Mr Crosby said a real problem was that Mr Dalton kept varying the plans; that he went into the job knowing that the profit margin he had was not enough i.e. not enough to complete the job if there was any ‘little hiccup or unforseen things’. He confirmed that construction had been fully completed for the Rowes taking some 15 to 16 months; that he had relieved Mr Ackroyd of his duties during the course of construction and supervised the job to completion himself.

19. Neither Mr Dalton nor Mr Crosby asserted that the Rowes were disappointed with the construction of their house (although Mr Dalton suggested that further shortcuts were probably taken); nor was either aware of any action taken by or any dispute in train with the Rowes regarding the construction of their home, monetary or otherwise.

Conclusions

1. The agreement between Style Coast and New Way was entered into 6 June 2012. The very next day a Queensland Master Builders Contract was entered into between New Way and the owners the Rowes.

2. The schedule of payments to be made under the agreement of 6 January 2012 is styled “MBA Contract Progress Claims as per signed contract”. The contract, clearly enough, is the QMBA contract of 7 January 2012 referred to as the “new master builders contract has now been prepared”.

3. The QMBA contract of 7 January 2012 nominated Style Coast as the builder New Way’s representative and as the owner’s agent.

4. Mr Dalton was required to consult with both home owner and builder. It can be properly concluded on balance that Mr Dalton carried out his part of the bargain at least through to 31 May 2012 He was progressively paid $40,000 of the $58,370 to that point.

5. As of late July 2012 he was barred from site and unable to effectively consult. The primary reason given by Mr Crosby in the response for terminating the agreement was that Style Coast “in breach of the agreement, also received the amount of $25,200 from the owners of the property to satisfy all upfront fees which were supposed to be paid from the deposit monies”. Style Coast “was therefore in receipt of additional monies which were neither allowed for nor warranted under the agreement and at no stage forwarded any of this additional money to the respondent”. There was no evidence that the sum of $25,200 ought ever to be considered in the context of the agreement of 6 January 2012 other than the assertion that the Rowes had previously paid that sum to Style Coast directly. There was no statement from the Rowes nor were they called as witnesses. Nor was there any suggestion that the Rowes were about to make any sort of monetary claim. It seemed only to be the case that because the Rowes had paid Style Coast $25,200 some considerable time prior that such entitled New Way to relief in that sum.

6. The fact that the payment of $25,200 to Style Coast may have been for working drawings does not of itself establish a nexus with the agreement of 6 January 2012 such as to conclude that Style Coast was being deceptive or misleading. On the contrary, Mr Dalton asserted the $25,200 was in respect of matters completed before New Way ever came into the picture. The response alleged losses of a total of $23,540 due to contract variations without New Way’s knowledge, inadequacy of engineering and architectural plans and updated engineering drawings required to properly complete works. Even if construed as a claim in its own right no evidence whatsoever was produced to support the quantum of such alleged additional costs.

7. The purport of the agreement of 6 January 2012 and the QMBA contract of 7 January 2012 is clear enough. The revised arrangements were that New Way would be the builder and Style Coast the consultant to both New Way and the Rowes.

8. The pertinent portions of the agreement of 6 January 2012 are recited in paragraphs 6, 7, 8 and 9. The agreement makes it abundantly clear that $83,667 has been paid to Style Coast and has been separately accounted for. The agreement nominates $58,370 to be paid over the course of construction pursuant to the QMBA building contract. Through to 31 May 2012 that happens with the first four progress claims of $10,000 each being paid i.e. part performance of that agreement.

9. On 1 August 2012 Mr Crosby apparently terminated the agreement orally. That was followed by a written termination dated 22 August 2012.

10. Apart from alleged and unsupported difficulties regarding variations and engineering drawings and architectural plans it seems that Mr Crosby was dissatisfied that Mr Dalton had previously received $25,200 perceiving this as an overpayment to Style Coast at New Way’s expense. Without a proved nexus to the agreement of 6 January 2012 and the QMBA building contract of 7 January 2012 that perception is ill founded.

11. As the agreement of 6 January 2012 has been part performed and then terminated without adequate cause Style Coast has clearly suffered a loss.

12. The loss should be assessed on the basis of what fairly and reasonably arises from the termination. The services being and to be performed pursuant to the agreement of 6 January 2012 were, though corporate, personal in reality i.e. involved the performance of consulting services by a person, primarily Mr Dalton. Those services were constituted by his presence and consultations. No cost saving accrued to Style Coast in not having to perform the consulting giving rise to the four invoices claimed for. Quite the contrary Style Coast would more than likely have continued to pay its nominee Mr Ackroyd until he withdrew his nomination without notice in late July 2012.

13. Here the loss of profit equates to the consulting fee because the performance of the consultancy itself only required the attendance of a person as consultant as opposed to a fee or charge incorporating labour, materials and percentage profit. There is no issue of net profitability here. As stated in Commonwealth v Amann Aviation Pty Ltd[1]

    The onus of proving damages sustained lies on a plaintiff and the amount of damages awarded will be commensurate with the plaintiff’s expectation, objectively determined, rather than subjectively ascertained. That is to say, a plaintiff must prove, on the balance of probabilities, that his or her expectation of a certain outcome, as a result of performance of the contract, had a likelihood of attainment rather than being mere expectation.

    [1](1992) 174 CLR 64 at [24].

14. There was certainly a likelihood of attainment here. In fact the agreement had been part performed with construction being taken through to finality by New Way.

15. Style Coast has been denied four progress payments in circumstances where it ought properly to have been paid during the course of construction subsequent to May 2012 through to approximately April/May 2013, the construction itself having taken some 15 to 16 months.

Order

1. The respondent pay to the applicant $18,370 together with application fee of $284.60 a total of $18,654.60.