Turner v Zachary Developments Pty Ltd
[2010] QCAT 706
•23 December 2010
| CITATION: | Turner and Anor v Zachary Developments Pty Ltd [2010] QCAT 706 |
| PARTIES: | Wayne Turner Judith Elaine Turner |
| v | |
| Zachary Developments Pty Ltd |
| APPLICATION NUMBER: | B455-05 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 2, 3, 4, 5 and 9 August 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | John Bertelsen, Adjudicator |
| DELIVERED ON: | 23 December 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | (1) That the Respondent pay to the Applicants the sum of $31,878.26 by 31 January 2011. (2) That the Applicants file and serve submissions in relation to costs by 11 February 2011. (3) That the Respondent file and serve submissions in relation to costs by 25 February 2011. (4) That the issue of costs be determined on the papers. |
| CATCHWORDS: | Building contract dispute – termination – abandonment – rectification – expert assessment of works |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Wayne Turner and Mrs Judith Elaine Turner represented by Mr Poiner of counsel |
| RESPONDENT: | Zachary Developments Pty Ltd represented by Mr Hackett of counsel instructed by Wilson Lawyers |
REASONS FOR DECISION
Application
This application sought loss and damage suffered by reason of the Respondent’s alleged breach of a building contract dated 16 July 2001, that breach allegedly occurring in early 2002. The events, the subject of the application, occurred over 8 years ago with this application originally being filed on 4 August 2005.
Background
The parties entered into a Queensland Master Builders Residential Building Contract dated 16 July 2001.[1] It is not contentious that contract documents consisted of the following:
[1] Exhibit 48 paragraph 3.
a 17 page bundle of plans prepared by Robert Ayers Design and Drafting and Soil Test Australia signed by Mrs Turner on or about 16 July 2001;
impliedly, a 12 page bundle of plans by Robert Ayers Design and Drafting numbered 4198 and tables stamped “approved” by Brisbane Certification Group 18 December 2000;
specification prepared by Wayne Turner dated 8 June 2001 as amended in handwriting by the Respondent’s Wayne Johnstone (the Builder) and signed by Mrs Turner on or about 16 July 2001;
and finally engineering drawings dated 13 June 2000 prepared by Soil Test Australia approved by Brisbane Certification Group 18 December 2000 (the Contract).
Additionally the Applicants signed a letter from the Respondent dated 16 July 2001 that contained a quotation.[2] Construction was to take 120 days or as extended pursuant to the contract. Progress payments[3] were payable in accordance with method A, appendix part D of the contract as follows:
Deposit $ 6,600
Ground floor $ 13,200
First floor $ 19,800
Enclosed stage $ 46,200
Fixing stage $ 26,400
Practical completion $ 19,800
Total $132,000
[2] Exhibit 48 paragraph 4.
[3] Exhibit 48 paragraph 11.
The contract works consisted of the construction of a four bedroom extension joined by a breezeway to the rear of the existing dwelling situated at 14 Corsica St, Moorooka as well as some minor remediation to the existing dwelling. Construction was to commence on 31 July 2001. The deposit was paid. Construction commenced about 1 August 2001 with the ground stage being claimed on 7 September 2001 and the first floor stage being claimed on 12 October 2001, both of which were paid promptly. The enclosed stage was claimed on 3 December 2001 and paid on 5 December 2001. In the interim there were delays and claims by the Respondent for extensions. Subsequently on 25 January 2002 the Respondent requested payment of the “fixing stage” in the sum of $26,400. Particularly after this time the relationship between the parties appeared to deteriorate. The parties pursuant to an agreed statement of facts agreed that the term “fixing stage”[4] meant “that stage of the works when all internal linings, architraves, cornices, skirtings, doors to rooms, baths, shower trays, wet area tiling, built in shelves, built in cabinets and built in cupboards are fitted and fixed in position”.
[4] Exhibit 48 paragraph 5.
The Applicants by letter dated 1 February 2002[5] requested that the Respondent withdraw the “fixing stage” progress claim on the basis that certain of the works that would otherwise give rise to the fixing stage claim were incomplete. In the meantime it became apparent that the lower breezeway slab laid on 23 January 2002 was not constructed in accordance with approved plans. That slab was demolished and again laid about 16 February 2002. The Respondent subsequently by notices dated 5 March[6] and 13 March[7] 2002 sought the Applicants’ instructions on a number of issues which were otherwise holding up the “fixing stage” payment. The Respondent by notice dated 20 March 2002[8] again sought the fixing stage payment. By notice dated 4 April 2002[9] the Respondent sought responses to notices of 5 and 13 March 2002. The Respondent then gave notice on 9 April 2002[10] that it was suspending further work until it received the “fixing stage” payment and the Applicants attended to those matters substantially referred to in the notices of 5 and 13 March 2002. Subsequently by notice dated 3 May 2002[11] the Respondent advised, amongst other things, that unless matters referred to in previous notices were attended to within 7 days then the Respondent would proceed to terminate the contract. By notice received by the Applicants on 20 May 2002[12] the Respondent purported to terminate the contract.
[5] Exhibit 2 at JT 21.
[6] Exhibit 2 at JT 24k.
[7] Exhibit 2 at JT 24l.
[8] Exhibit 48 paragraph 48.
[9] Exhibit 45.
[10] Exhibit 46.
[11] Exhibit 48 paragraph 51.
[12] Exhibit 48 paragraph 52.
By letter dated 6 June 2002[13] National Building Solutions on behalf of the Applicants disputed the Respondent’s termination. The Respondent in February 2003 issued a claim out of the Holland Park Magistrates Court obtaining a default judgement which was subsequently set aside by consent in August 2003. No further action was taken by either party until the institution of the present proceedings in the former Tribunal on 4 August 2005.
[13] Exhibit 2 JT 25j.
For hearing purposes the Applicants’ claim (application) was constituted by the amended statement of claim incorporating further particulars received 15 December 2008, the further and better particulars of amended statement of claim received 8 January 2009 and amended annexure A to the amended statement of claim incorporating further particulars received 26 June 2009. The Respondent’s defence (response) was constituted by the second further amended defence and counter claim received 30 March 2009. Immediately prior to hearing the parties produced a joint statement of agreed facts/list of issues for determination.
The amended application sought complete demolition and reconstruction; alternatively rectification not allowing for completion; rectification allowing for completion; plumbing and drainage costs; penalty interest for delay; rental accommodation; interest on Applicants’ home loan; house rates and insurance; solatium for loss of enjoyment. At hearing the application was substantially modified and reduced claiming costs for completion of works, costs of rectification of certain defective work, cost of rectification of commonly agreed defective work, cost of rectifying storm water and sewerage, liquidated damages, rental costs, and solatium less sums unpaid and variations under the original building contract.
The Respondent modified its position at hearing from its original defensive stance of denial and counter claim to that of incorporating an admission of some defective work.
At hearing 4 witnesses were called for the Applicants and 5 for the Respondent. The Applicant Mrs Turner’s father, Mr Noreiks, was not able to attend through ill health. His statements were allowed into evidence but were accorded vastly reduced weight given that he lived next door at 12 Corsica Street, Moorooka and appeared to have observed building progress as well as having had conversations with the builder and others on site. His statements were disputed by the Respondent. That taken with the Respondent’s inability to cross examine him has led me to discount his evidence in any event (apart where it may have been of assistance in determining peripheral and non contentious issues). At hearing some 48 statements, reports, photos, correspondence and invoices were produced in evidence. Applicant Mrs Judith Turner and Respondent’s Wayne Johnstone gave evidence at hearing. In terms of expert witnesses Ray Griffiths, licensed builder and consultant, John Leddy, engineer and Damien Lacey, licensed plumber gave evidence on behalf of the Applicants and Wayne Dyer, registered builder and certifier, Eric Fox, engineer, Russell Fingleton, licensed plumber and Judith Cush, real estate agent, gave evidence for the Respondent.
[10] The Applicant Mrs Turner was a poor witness. She was hesitant, defensive and evasive at times having to have the same question put to her repeatedly. Her recollection required prompting which I found to be totally at odds with the plethora of detail exhibited in her statements. The Respondent’s Mr Johnstone was more open and forthcoming with what he did know and admitting what he did not. The tenor of his evidence accorded with his statements. Generally where I refer to the Applicants’ evidence it will be that of Mrs Turner and the Respondent’s evidence that of Mr Johnstone unless otherwise indicated. All other witnesses I found to be generally decent, honest and doing the best they could with such an old matter.
Issues to be determined by the Tribunal
[11] The application, apart from alleging the Respondent’s unlawful termination of the contract in May 2002, asserted that the Respondent’s standard of work was so below par that it evinced an intention not to be bound by the contract. The alleged defective or incomplete work is then detailed. Lawful termination of the contract on 26 May 2005 is also claimed.
[12] The response asserted the validity of the May 2002 termination and addressed in like detail the allegations of defective or incomplete work stating that such would have been the subject of attention within the defects liability period.
[13] Subsequent to this application being made on 4 August 2005 a meeting of experts was arranged for 30 November 2005 between Ray Griffiths and Noel Thomas, engineer since deceased, for the Applicants and Wayne Dyer and Eric Fox for the Respondent. The meeting referenced a prior report by Mr Griffiths dated 7 March 2005 and conclusions were reached. That agreement was followed by a subsequent agreement reached by engineers John Leddy for the Applicant and Eric Fox for the Respondent. Thereafter costings were completed by Ray Griffiths for the Applicants and Wayne Dyer for the Respondent. A final update on costings was provided by Ray Griffiths shortly before hearing. During the period 2004 through to 2010 numerous building, engineering, and plumbing and drainage reports were provided by various experts, a number of which I do not refer to. That said I have considered to a greater or lesser degree all material filed.
[14] The issues to be determined by the Tribunal are as follows:
(1) The rights and obligations of the parties to the contract;
(2) Whether or not the termination of the contract by the Respondent in May 2002 was valid;
(3) If not, was the termination of 26 May 2005 a valid termination of the contract by the Applicants;
(4) Whether the agreement of 30 November 2005 in any event constituted a new agreement between the parties and therefore determined the extent of rectification work to be undertaken by the Respondent or for which the Respondent was otherwise liable;
(5) If such new agreement was not determinative of the rectification work to be undertaken then what was and what is the reasonable cost of such rectification work and as at what date ought it be fairly determined.
(1) The rights and obligations of the parties to the contract
[15] Despite the somewhat voluminous nature of the contract it is trite to say that circumstances, problems and unforeseen difficulties may arise that require a contract variation. It is then a case of keeping practical faith with the purport of the contract to bring about the completion of the structure as detailed in the contract or as close thereto as possible.
[16] The parties agreed that the master builders written contract of 16 July 2001 and the associated documents constituted the whole of the original agreement between them for construction of the dwelling. The ground floor, first floor and enclose stage payments were all made promptly on receipt of claim.
[17] The Applicants suggested that as the breezeway slab was firstly not poured until 23 January 2002 that in fact the Respondent was not entitled even to the ground floor progress payment, that view presupposing that the ground level breezeway slab was part of the ground floor. There is no doubt the Applicants by reference to Mr Noreiks’ statements were being kept informed of progress next door at 14 Corsica Street, Moorooka. Moreover, the Applicant Mrs Turner was present in Brisbane during school holidays from 29 September 2001 to 14 October 2001 and again during December 2001 to the end of January 2002.
[18] In November 2001 issues in relation to roof height and trusses arose. Those were mediated by Gary Grimsey, building mediator, with agreement being reached on that limited aspect of construction on 29 November 2001. More to the point however the Applicants paid the enclosed stage claim in December 2001 on the advice of Mr Grimsey to the effect that it could be argued that the enclosed stage had been reached despite Mrs Turner’s reservation. Either way, whether in strict compliance with the contract or effectively as a variation the election to pay constituted an acknowledgement that the enclosed stage had been reached. To December 2001 the parties generally had the benefit of their rights and carried out their obligations under the contract. It was thereafter, particularly immediately after the laying of the first ground level breezeway slab on 23 January 2002, that dispute arose in interpreting the correctness of methodologies employed by the Respondent by reference to the contract and whether such resulted in what might be termed defects.
(2) Whether or not the termination of the contract by the Respondent in May 2002 was valid
[19] On 23 January 2002 the ground level breezeway slab was poured. A combine sewer traversed the premises passing across and under where the ground level breezeway slab was to be poured. Brisbane City Council conditions applied to concreting and in this case were articulated in its letter of 16 November 2000[14] to Brisbane Certification Group. Suffice to say the slab as poured did not comply. On 12 February 2002 Brisbane Certification Group advised the Respondent to demolish the slab which it did.
[14] Exhibit 2 JT 5.
[20] On 25 January 2002[15] the Respondent claimed the “fixing stage” payment and by response of 1 February 2002 the Applicants disputed entitlement to such citing 11 shortfalls in installation and fitting, rectification and failure to commence referring, inter alia, to failure to install windows and start the root wall barrier. In fact 3 additional pieces of correspondence was sent by the Applicants to the Respondent on 1 February 2002[16] those specifically addressing the bathroom tiling, breezeway roof trusses and root wall barrier. The Respondent replied on 8 February 2002[17] confining his comments and explanation to the tiling, breezeway roof trusses, root wall barrier and windows. The Respondent asserted that other items listed did not have any bearing on the fixing stage claim. The replacement ground level breezeway slab had not at this stage been poured.
[15] Exhibit 2 JT 5.
[16] Exhibit 2 JT 24d, JT 24e, JT24f.
[17] Exhibit 2 JT 24g.
[21] On 16 February 2002[18] the Applicants wrote to the Respondent. This correspondence was predominantly a running rambling commentary on construction to that time, the Applicants’ recollection of past events and discussions and a general dressing down of the Respondent expressing dissatisfaction generally. However at the very end under the heading “re payment for fixing stage” the Applicants stated at item 1, “as you have already been informed by my correspondence dated 1 February 2002, I will instruct the release of this payment when I am happy that the dispute over the slab which has been removed due to non compliance of engineering design and built over sewer conditions, has been resolved”. At item 4 the Applicants stated, “when you have satisfactorily replaced ground floor slab, and we have been provided with a copy of all certifications thus far, I will immediately arrange payment for fixing stage”.
[18] Exhibit 2 JT 24j.
[22] That correspondence did not raise any issues disentitling the Respondent to the fixing stage payment other than issues surrounding tiling, breezeway roof trusses, windows, root wall barrier and the ground level breezeway slab. These are dealt with as follows.
Tiling (and cornice)
[23] The tiling was originally to be performed by the Respondent. By contract variation confirmed on 7 January 2002[19] it was deleted. The Applicants planned for tiling to be done over Christmas 2001-2002. However, construction enabling tiling to commence was not completed until mid January 2002 according to the Applicants. As at 1 February 2002 the Applicants were still waiting on their tiler to commence work. In their correspondence of 16 February 2002 they blamed the Respondent for the delay in mid January 2002 and anticipated tiling to start at the end of February 2002 or earlier. On 5 March 2002 the Respondent enquired about tiling noting that a fibro strip had been installed to the top of the ceiling line in both bathrooms. The Respondent asked whether it was the Applicants’ intention to fix the cornice to the installed fibro rather than over the tile work. There appears to be no answer to that enquiry. By letter of 13 March 2002 the Respondent again enquired as to when tiling might be done and advice re fixing of cornice to the bathroom. On 4 April 2002 the Respondent requested a reply to letters of 5 March and 13 March 2002 but received none. By notification 9 April 2002 the Respondent suspended work.
[19] Exhibit 2 paragraph 88 and exhibit 41 paragraph 246.
[24] The fixing stage required the fitting and fixing of cornices. It was the Applicants’ responsibility to tile. Tiling was the prerequisite to cornicing. Despite repeated enquiry the Respondent was not able to elicit a reply from the Applicants as to when tiling would be done. I find the Respondent’s enquiries exhibited a willingness to fit and fix cornices but it could not do so.
Breezeway Roof Trusses
[25] The specification of 8 June 2001[20] under the heading “details specified in original quote” at item 10 stated that the Respondent’s original quote included “supply and install steel roof trusses (by South Side Steel)”. Under the heading “additions for inclusion into final price” at item 1 it provided for “supply and installation of trusses to breezeway. As South Side Steel is unable to fit the verandah roof, an allowance will have to be made for you to install”. Some time prior on about 24 April 2001[21], South Side Steel Frames had prepared a quote for the manufacture of steel roof trusses. Though prepared for the Applicants it was addressed to the Respondent. The Respondent contended that it must have originally been addressed to the Applicants as it appears on the face of the quote that the addressee’s name has been obliterated and the Respondent’s name inserted immediately to the right. There is nothing unusual or untoward about that as the quote was given at a time preparatory to finalising the building contract signed on 16 July 2001.
[20] Exhibit 2 JT 8.
[21] Exhibit 41 WJJ 13.
[26] The Respondent further contended that his hand written note adjacent to item 1 reading “priced on completion” referred only to the cost of installing the trusses. That was, in my view, because item 1 made it clear that South Side Steel although supplying could or would not install. Item 1 and the hand written note read together make it clear that the Respondent was to supply as per quote and install with the latter priced on completion. The fact that the Respondent had never dealt with South Side Steel did not in my view detract from his acceptance of its quote for provision of the trusses. The Applicants in their letter of 1 February 2002 (1 of them at least) focused on the breezeway truss issue. Due to the width of laser light sheeting which was to be attached to the trusses as roofing the Applicant sought the installation of additional trusses at their own expense. The acknowledgement for liability for payment of additional trusses is consistent with the Respondent’s obligation as contained in the specification. Agreed fact 23(c) refers to breezeway roof trusses not having been designed as at 3 December 2001 and to the Applicants sourcing an alternative supplier. That agreed fact, in my view, refers to delay consequent upon the otherwise generally complete state of construction referred to in agreed fact 23(a). There would be nothing unusual in them pursuing an alternative supplier in December 2001. For these reasons I find that the supply and installation of breezeway trusses was the responsibility of the Respondent.
Windows
[27] The 8 June 2001 contract specification under the heading “details specified in original quote” provided at item 8 for the “removal of existing windows and replacement of new windows or doors as noted on plan” in the existing dwelling. Under the heading “materials provided” 5 double casement windows were listed as being provided by Yatala Glass & Aluminium. These were listed as being “delivered to site as requested by the builder”. The Respondent in its letter to the Applicants of 8 February 2002[22] asserted that Mr Noreiks was the reference point relative to the existing dwelling windows; that it was Mr Noreiks who put a stop to removal and installation because he happened to be “going to hospital”. The replacement windows were never on site. The Respondent was precluded by Mr Noreiks from carrying out this work when the Respondent gave notice of its intention to do such work. It is abundantly clear from Mr Noreiks’ statements that he considered himself the Applicants’ onsite representative. I accept the Respondent’s Mr Johnson’s evidence that Mr Noreiks was the person who would arrange delivery of windows and doors. That the removal of existing windows and replacement with new ones was never carried out was no fault of the Respondent.
[22] Exhibit JT24g.
Root Wall Barrier
[28] The 8 June 2001 contract specification under the heading “additions for inclusion into final price” stated at item 6 the request “please construct a root wall down the full side boundary fence of 16 Corsica St and for the front of the garage to the rear fence on the other side”. To that are added the handwritten words in brackets “look at $ priced on completion”. On 1 February 2002 the Applicants sought a variation in the length and direction of the root wall barrier. On 8 February 2002 the Respondent replied stating the repositioning was acceptable on the basis that the Applicants expose any underground services prior to commencement. Such an undertaking was neither referred to nor contemplated in the specification. In any event the proposed variation did not proceed. That being the case the “failure to expose stormwater to the rear yard” is not a breach of the contract by the Applicants.
The ground level breezeway slab
[29] This slab as laid on 23 January 2002 was non compliant in that it was not laid in the manner required by Brisbane City Council for slabs over sewer lines. That slab was demolished and subsequently relaid on 16 February 2002.
[30] Agreed facts 41 and 43 are relevant here in that they confirm the Applicants’ building certifier “inspected the works prior to pouring the new breezeway slab and completed and signed a Brisbane City Council inspection report in which the certifier approved the works” and that “following further inspections by a registered engineer nominated by the builder… the ground floor slab to the breezeway was relaid”.
[31] The Respondent’s engineer was Peter Mackay. He apparently never issued an “original” inspection certificate for the relaid slab for the reason that he was apparently informed in late February 2002 that there was a dispute between the parties. He archived his file and only resurrected it in October 2005 at which time on 5 October 2005 he formally issued his inspection certificate.
[32] Oddly exhibit 18 to Mr Johnston’s statement of 29 September 2006 is Mr Mackay’s inspection certificate for the relaid ground level breezeway slab dated 25 February 2002.
[33] Whether or not Mr Mackay issued an inspection certificate in February 2002 does not change the fact that he carried out the 16 February 2002 slab inspection and was satisfied that it was correctly constructed.
[34] The quotation of 16 July 2001 provided for the use of Kordon as a pest control measure. It was not incumbent on the Respondent to use any other system. In correspondence received by the Respondent on or about 18 February 2002 the Applicants requested that a reticulated system be reinstalled for full termite protection. However according to the Respondent the Kordon termite barrier system was already in place. It was installed by Amalgamated Pest Control and/or Amalgamated Preconstruction Pty Ltd. Evidence of payment of 1 termite barrier treatment is exhibited to Mr Johnston’s statement of 29 September 2006[23]. It is unclear as to whether a termite certificate was ever issued although the Respondent claimed at agreed fact 45 to have provided a termite certificate at any event.
[23] Exhibit 41 WJJ 21.
[35] The Applicants argued that provision of inspection certificates to them was a prerequisite to payment and relied on the specification payment method. The contract general conditions override the specification (clause 3.3 general conditions). Clause 11.6 of those conditions spelt out how the Respondent was to make progress claims. It stated that the Respondent in the progress claim must “certify that the works have been completed to the relevant stage”. That being so it was never the case that the Respondent was required to give any inspection certificates to the Applicants or for that matter Brisbane Certification Group on behalf of the Applicants.
[36] Agreed fact 48 confirmed the Respondent’s claim for fixing stage payment. There was no evidence that the form of claim was deficient. The second ground level breezeway slab was properly inspected and certified as compliant.
[37] I find that the Applicants had no grounds to withhold the fixing stage payment on the basis of structural inadequacy of the second ground level breezeway slab as laid.
Fixing stage issues summary
[38] Findings in respect of the above 5 issues are summarised as follows:-
Tiling (and cornice)
The Respondent could not fit and fix cornice because the Applicants failed to tile.
Breezeway roof trusses
The Respondent was responsible for the supply and installation of breezeway roof trusses but failed to do either.
Windows
The Respondent was precluded by the Applicants and/or their representative from removing and replacing the existing dwelling windows.
Root wall barrier
The Applicants had no obligation to expose storm water in the rear yard preparatory to construction of the root wall barrier.
Ground level breezeway slab
The ground level breezeway slab was properly constructed.
[39] Clause 22.3 of the contract general conditions provided that the Respondent could not terminate the contract if the Respondent itself was in substantial breach. Whilst substantial breach is not defined I consider the Respondent’s failure to supply and install breezeway roof trusses substantial particularly so as it held up the fixing of the Laserlite roof and the bifold doors.
[40] The question arose as to whether the upper and lower breezeway levels were habitable areas. An Australian Building Code definition was produced at hearing. It provided, inter alia, a habitable room to include a television room, play room, family room or sun room. Both levels are spacious, could be used for any of the above purposes and could be fully or partially enclosed as a room. The laserlite roof and bifold doors at each end simply create additional or less light and shade.
[41] The breezeways as habitable areas or rooms were subject to the degree of completion required of each stage through to the fixing stage. That was not the case. There was no roof let alone bifold doors to form a habitable room.
[42] The Respondent therefore was not entitled to claim the fixing stage payment nor to terminate the contract.
(3) If not was the termination of 26 May 2005 a valid termination of contract by the Applicants
[43] The Respondent purported to terminate the contract on 20 May 2002. National Building Solutions on behalf of the Applicants replied by letter of 6 June 2002 disputing the fixing stage indebtedness and stating an intention to pursue its clients rights through the “Building Tribunal”. This letter also stated that no work had been implemented onsite since 25 March 2002. At this point the Applicants had a substantially completed extension and the Respondent was presumably out of pocket for the bulk of the fixing stage payment.
[44] It was not until February 2003 that the Respondent issued a claim out of the Holland Park Magistrates Court substantially for the fixing stage payment, obtained a default judgement and consented to that default judgement being set aside in August 2003. In fact the Magistrates order of 20 August 2003 setting aside judgement stated that the “matter be transferred to the Queensland Building Tribunal pursuant to section 117(1) of the Queensland Building Tribunal Act 2000.” That never happened.
[45] No action was taken by either party then until Mitchell Lawyers for the Applicant wrote to the Respondent by letter dated 26 May 2005. Attached to that letter was a notice terminating the contract pursuant to section 90 of the Domestic Building Contracts Act 2000. At this point 3 years had passed since the Applicants stated “we are pursuing the dispute, between our respective clients, through the Building Tribunal and will continue with this course of action”. The notice alleged failure to proceed with works, remove or remedy defective work and failure to adhere to the specification. There was no list of defects attached nor did the notice clarify, spell out or inform the Respondent about what it was in the specification that was not adhered to.
[46] It seems that this notice was issued years later to provide the platform for the numerous heads of damage to be pursued on issue of the claim some 8 weeks after; that the intention was nothing more than to provide the prerequisite notice to enable the applicants to allege the position that the contract was still on foot until the notice was issued.
[47] The contract in my view had well and truly been abandoned a long time prior for these reasons.
The Applicants, by their advisor, National Building Solutions, gave notice to the Respondent in June 2002 that the Applicants would be pursuing the dispute “through the Building Tribunal”. No proceedings commenced until well over 3 years later in August 2005.
The Respondent pursued what it considered its right for the fixing stage payment. After the judgement in that proceeding was set aside the Respondent made no further attempt to pursue the fixing stage payment or any other perceived rights it may have had under the contract.
The Applicants made no attempt to affirm the contract. There was at least a duty not to act unreasonably. Reasonable step or action here would have been, for instance, to have given their own notice of termination forthwith after the Respondents purported termination in May 2002 and proceeded to complete the extension. This is particularly so where the Applicants years later and at hearing claim an enormous sum of money for rent, bank interest and rates and insurance. However, simply to leave the extension in a substantially completed state for 3 years with no attempt to complete, maintain or occupy indicates to me the Applicants had no intention of further dealing with the Respondent. That the Applicants took no action to enforce any perceived rights for over 3 years would lead any reasonable person, particularly one involved in the building industry, to the conclusion that the contract had been abandoned.
The Applicants’ termination notice read on one plane was ludicrous. One basis was failure to proceed. On any interpretation of the evidence that would have been obvious to the Applicants in May 2002 yet they did nothing other than to state they would “pursue the dispute” which they never did.
The Applicants sought to justify delay by suggesting that they thought the Respondent would proceed first; that there was some sort of “Mexican stand off” but I find that implausible. The Applicants gave no evidence to explain or justify their inertia apropos the Respondent for 3 years.
(4) Whether the agreement of 30 November 2005 in any event constituted a new agreement between the parties and therefore determined the extent of rectification work to be undertaken by the Respondent or for which the Respondent was otherwise liable
[48] At the request of the Applicants, Ray Griffiths inspected the extension on 4 March 2005 and provided his report including photos dated 7 March 2005[24] addressing some 45 issues and defects. He recommended demolition. His reasoning was that “issues are very wide spread throughout the construction… and cannot be corrected without demolition”.
[24] Exhibit 10.
[49] Subsequently Mr Dyer on the Respondent’s behalf inspected the extension on 26 October 2005 and provided his report dated 7 November 2005.[25] He concluded some work was defective and some incomplete but did not agree that demolition was necessary for the reasons firstly that the structure had stood at that point in time for 3 years and there was no visual evidence of structural cracking or movement i.e. structural inadequacy. Secondly, he concluded that certain areas of construction were not as per the original design, that design changed during the course of construction and that works had been assessed and certified at all relevant stages. In reaching his conclusions he specifically addressed items 1 to 45 of Ray Griffith’s report of 7 March 2005.
[25] Exhibit 27.
[50] In the meantime in late 2002 Noel Thomas, engineer since deceased, on the Applicants’ behalf inspected the extension and made a number of criticisms including lack of edge beam, inadequacy of floor slab and a missing pier.
[51] Mr Fox, engineer, on the Respondent’s behalf had inspected the extension and prepared a report dated 23 November 2005. His conclusions included the following:-
“Clearly there are significant aspects of the extension as constructed that are not as documented; however it is also clear that substantial modification onsite was required to overcome site and design variations. This is neither unexpected nor alarming for this type of work. The various allegations regarding structural defects appear either unproven or marginal at best, and derived from projections of very limited investigation. Little weight appears to have been placed on the fact that most if not all the relevant work was inspected and certified during construction. Further, I could see no evidence at all of structural inadequacy in a style of structure where such evidence should be readily apparent. The nature of almost all the allegations is such that clear evidence of problems should be evident by now if the problems were in fact present. I do not believe there is significant evidence of structural problems and certainly no evidence to warrant the very extensive investigative and remedial work that has been suggested by some parties”.
[52] The meeting of 4 experts took place on 30 November 2005 at the office of the Respondent’s solicitors at which time a defence and counter claim dated 23 August 2005 had been filed in response to the Applicants claim issued 4 August 2005. At that meeting were Ray Griffiths, Building Consultant and Noel Thomas, Engineer since deceased, on the Applicants’ behalf and Wayne Dyer, Building Consultant and Eric Fox, Engineer, on the Respondent’s behalf. The meeting referenced the 45 issues raised in Ray Griffith’s report of 7 March 2005 and in longhand note form addressed each and every item 1 to 45.[26] Whose longhand was never identified but in any event the same day a typed version was produced headed up “Agreement of experts reached at meeting of experts on 30 November 2005”.[27] Underneath it records those present as being Noel Thomas, Ray Griffiths, Wayne Dyer and Eric Fox. Underneath that appear the words “Using the report of Ray Griffiths as reference and using the same numbering as set out in that report”. The agreement then addressed each and every one of the 45 issues so recording the handwritten record in type. It was signed by all 4 experts.
[26] Exhibit 27 WD 2.
[27] Exhibit 27 WD 3.
[53] This agreement is seminal to this proceeding. It took place on the instructions of the parties in the course of this proceeding. It was binding on the parties having been signed by all 4 representatives of each of the parties and was determinative of the issues to be addressed. That is clear in my view on the face of the document; nor was there any evidence by the surviving representatives to suggest otherwise. Demolition was off the table as an option and that was confirmed in the evidence of all 3 surviving representatives. One might ask was it certain enough. I think so because it was unambiguous in its language and provided a clear pathway to resolution. The agreement identified limits and articulated the issues to be addressed from that point onwards. It was not necessary in my view that the agreement stipulate exactly how that work was to be carried out or at what cost in respect of each defect or item of incomplete work. Obviously that was impossible at the time. Subsequent reports by those representatives and others bear out and add credence to the intention to quantify the extent of rectification and incomplete work.
[54] Mrs Turner gave evidence with respect to what seemed to be Noel Thomas rescinding his involvement in the 30 November 2005 agreement. I am satisfied on Mrs Turner’s evidence that she gave Noel Thomas information which caused him to doubt the veracity of Peter Mackay’s inspection certificate dated 5 October 2005, namely, that Brisbane City Council was not in possession of an independent certificate; that the certificate of 5 October 2005 was 3 years after the event and that Brisbane City Council was in possession of an inspection certificate but it was uncertain as to whether it was the same as that shown to Noel Thomas at the meeting.
[55] These concerns were unfounded the reason for Peter Mackay’s issue of the 5 October 2005 inspection certificate being fully explained at paragraphs 30 to 33 herein. Noel Thomas’ acceptance of or reliance on Peter Mackay’s inspection certificate at that meeting was in order. It is not clear whether Noel Thomas actually purported to rescind the agreement. It is of no consequence, he was not entitled to do so. Mrs Turner confirmed in her evidence that Messrs Griffiths and Thomas had signed the agreement on her and her husband’s behalf. There was nothing in the Applicants’ material or Mrs Turner’s evidence to suggest that the Applicants were not bound by the 30 November 2005 agreement though the tenor of Mrs Turner’s evidence gave the impression she was not very happy with it.
[56] By letter from Mitchell Solicitors to Ray Griffiths of 22 December 2005[28] the Applicants instructed Ray Griffiths to prepare a “scope and program of works” to include “not only the matters listed in your report of 7 March 2005 but also any other issues raised by their other experts and not already covered in your report”.
[28] Exhibit 22.
[57] Ray Griffiths further report is dated 21 June 2006[29] and provided for partial demolition and rectification. It went well beyond the 45 issues of 30 November 2005 agreement. Ray Griffith’s evidence confirmed his report responded to instructions from Mitchell Solicitors.
[29] Exhibit 11.
[58] Ray Griffiths then provided a statement dated 14 September 2006 which updated the total demolition and reconstruction cost calculated in his report of 7 March 2005. Why this update needed to be done is beyond me. Rectification and completion of incomplete work (as opposed to project completion) was the agreed course as of 30 November 2005.
[59] Wayne Dyer, on the Respondent’s behalf, provided his further report dated 26 September 2006.[30] To begin with it criticized Ray Griffiths’ report of 21 June 2006 stating that whilst it indicated the brief was to “compile a scope of work for rectification it, in fact, upon review of that scope of works appears to bear no resemblance to the items the experts deemed were the responsibility of the builder to rectify and has included items pertaining to the demolition and completion of the renovation works”. Wayne Dyer’s report then records his cost estimates for rectification stating, “based on the agreement of experts report dated 30 November 2005 we have produced a cost estimate report on items that were considered the responsibility of the builder to rectify… outlined below is the item number agreed by the experts that requires rectification and our cost estimates”. The report then lists items 1, 2, 10, 11, 17, 18, 21, 22, 23 and 40 at a 2006 cost by reference to Rawlinson’s cost guide of $1,841.00. Wayne Dyer concluded that there was no valid reason to demolish the structure or part of the structure as no deficiency is evident, which was originally agreed in the meeting of experts in November 2005”.
[30] Exhibit 27.
[60] At about this time John Leddy, engineer on the Applicants’ behalf produced a statement dated 15 September 2006.[31] Prior to that however he had produced a report dated 15 November 2004[32] in which he concluded, “from observations onsite it is evident that aspects of the building work are less than satisfactory. However, apart from cracking of brickwork in the original house and the apparent lack of edge beams and piers in the lower deck slab, there is no real evidence at this time of significant movements in the extension structure”. John Leddy’s statement of 15 September 2006 simply referred to the 15 November 2004 report and to material provided to him by the Applicants for the purposes of compiling that report.
[31] Exhibit 29.
[32] Exhibit 28.
[61] Additionally on 26 September 2006[33] Eric Fox, engineer on the Respondent’s behalf, produced a further report which attacked Ray Griffiths’ report of 21 June 2006 stating that, “this document does not refer to the experts meeting and is clearly not limited to the works agreed at that meeting. Rather it appears to reflect some other brief agreed with the owner”. He goes on to provide a representative list an example of one of which stated, “the scope includes removal and replacement of the rear brick wall to the existing residence, although there was no agreement to that effect at the experts meeting”. He concluded that his report (Griffiths) “is of no value as evidence in the context of the continuing dispute”.
[33] Exhibit 35.
[62] I conclude that at this point Messrs Dyer and Fox have kept faith with the 30 November 2005 agreement. Ray Griffiths has gone off, on instruction, on a tangent making no meaningful contribution in terms of the 30 November 2005 agreement. Noel Thomas does not feature and is replaced in due course by John Leddy who seemed to be more in tune with the Respondent’s builder and engineer. In terms of any further reports being undertaken after September 2006 there was a hiatus to August 2008.
[63] On 1 August 2008[34] John Leddy, Applicants’ engineer, produced a further report. He references his own report of 6 February 2006 which itself commented on a radiographic testing report of 22 December 2005 which suggested that additional trimming steel was lacking around the stair opening in the upper slab. In his 6 February 2006 report he concluded, “unless it can be proven that sufficient steel has been installed in the slab away from the zone tested, but within a structurally acceptable zone, this slab must be considered to be unsafe”. In his 1 August 2008 report he discussed Eric Fox’s reports and rectification work he considered necessary commenting at the outset that “this extension shows very few signs of structural distress”. This comment is significantly over 6 years post completion. He acknowledged, “It is not possible to comment on the matters agreed to or not agreed to as the undersigned was not present to hear the discussions” (that is at the 30 November 2005 meeting).
[34] Exhibit 30.
[64] Ray Griffiths produced a further report dated 2 August 2008[35] wherein he stated that “my scope of works was not generated for or as a result of the conference” (30 November 2005 agreement). He commented that his probable scope of works was a proposal and then gives an estimate of probable cost to demolish and rebuild at $301,793.60 and an estimate of probable cost to rectify and complete of $180,385.29. He then produced a further report dated 10 October 2008[36] amending the demolish and rebuild estimate to $152,727.07 with the rectify and complete estimate remaining the same.
[35] Exhibit 13.
[36] Exhibit 16.
[65] Damien Lacey, plumber, on the Applicants’ behalf produced a report dated 30 September 2008[37] identifying what he considered defects in the stormwater and sewerage drainage.
[37] Exhibit 37.
[66] John Leddy, engineer, produced a further report dated 10 October 2008.[38] It is a clarification of aspects of this report of 1 August 2008.
[38] Exhibit 31.
[67] Eric Fox, Respondent’s engineer, produced a further report dated 9 February 2009[39] the purpose of which was to report on the state of works 3 years after his initial inspection. In short he found no change of consequence. Significantly however he concluded that the radiographic report referred to in John Leddy’s report of 1 August 2008 was not definitive in determining the reinforcement used in the slab. He stated that it was not clear that the slab as constructed was inadequately reinforced noting that the existing slab had not deflected after about 7 years.
[39] Exhibit 36.
[68] It seems to me from the above chronology and from their evidence at hearing that Messrs Dyer and Fox had sought to address the issues identified in the 30 November 2005 agreement in a manner that could have quantified the rectification work required. Ray Griffiths’ reports departed from that agreement.
[69] Pursuant to the former Tribunal’s consent order of 31 March 2009 Messrs Fox and Leddy as the parties’ engineers were to produce their joint report identifying those issues they agreed on and those they did not giving reasons for the latter. Similarly Messrs Dyer and Griffiths, the parties’ building consultants, were to then identify those issues they agreed on and those they did not. In doing so they were to discuss:
For rectification works Messrs Fox and Leddy deemed necessary the cost of same at February 2002 and the then present day (first half 2009).
For rectification works (as identified in the Applicant’s material) where Messrs Fox and Leddy could not agree whether such were necessary the cost of effecting such works at February 2002 and the then present day (first half 2009).
The cost of works to complete works under the building contract such cost to be assessed as at February 2002 and the then present day (first half 2009).
[70] Messrs Dyer and Griffiths were then to produce a joint report identifying those issues they agreed on and those they did not. All the above was to be done without reference to instructions from the parties.
[71] Whilst this consent order bore an uncanny resemblance to the 30 November 2005 agreement (involving the same 4 experts bar 1 who was deceased and replaced and identifying what was agreed as defective and what was not), it did however specifically provide for costings as a basis for future quantification. In reality the consent order crystallised, extended and formalised the 30 November 2005 agreement by providing for matters not previously agreed upon. That 30 November 2005 agreement was not finally determinative of rectification work to be undertaken.
If such new agreement was not determinative of the rectification work to be undertaken then what was and what is the reasonable cost of such rectification work and as at what date ought it be fairly determined
[72] The resulting joint report of engineers, Fox and Leddy was dated 8 May 2009[40] with the subsequent resultant joint building reports of Messrs Dyer and Griffiths dated 7 June 2009[41] and 6 August 2009[42]. These reports were more extensive and required more rectification work in particular. Additionally Ray Griffiths provided an update of 12 July 2010 but that focussed on costings to complete the extension.
[40] Exhibit 32.
[41] Exhibit 14.
[42] Exhibit 15.
[73] These reports formed the basis to determine the extent of rectification work to be undertaken and the cost.
[74] In the meantime Russel Fingleton, plumber on the Respondent’s behalf, provided his report dated 24 June 2009.[43] He found sanitary drainage and storm water drainage both to be defective and requiring rectification.
[43] Exhibit 38.
[75] The joint engineers’ report identified 52 propositions on only 8 of which they specifically disagreed. The joint report of Messrs Dyer and Griffiths of 7 June 2009 exhibited some diverging calculations in addressing items to be rectified. By reference to the engineers’ joint report these items are addressed variously as at December 2008 and June 2009 as follows:
Item 1 No work contemplated.
Item 2 No work contemplated.
Item 3 Aesthetic work trimming concrete overspill on footing. This cost in my opinion goes to the issue of the concreting being professionally finished. It is therefore a legitimate item of rectification and is allowed at $2,722.48.
Item 4Landscaping to cover exposed footing once again a professional finish would demand that landscaping be such as to not leave footings exposed. The cost at $836.55 is effectively agreed between the parties.
Item 5 Widening of footing. That forms part of item 3.
Item 6 No work contemplated.
Item 7 No work contemplated.
Item 8 No work contemplated.
Item 9 No work contemplated.
Item 10Rectify exposed steel to breezeway. That really speaks for itself and in any event is agreed between the parties at $200.
Item 11Works and associated works to remove and replace breezeway slab. This is not necessary for the reasons previously stated in paragraphs 29 through 37 of this decision.
Items 12 - 21 These works and associated works to remove and replace the breezeway slab. These are not necessary by reference to item 11.
Item 22 - 26No work contemplated.
Item 27 Works and associated works to underpin and repair corner of existing house. By reference to the joint engineers’ report at item 27 as well as at items 45, 46 and 47 it is apparent that additional brickwork cracking has occurred. The engineers agree that additional cracking did appear in the brickwork during construction. On a balance it is fair to conclude that such is referable to construction and shrinkage of the upper breezeway slab. The cost of $5,675.70 is allowed.
Item 28Part of item 27.
Item 29Installation of carbon fibre strip. Both engineers agreed that investigations indicated that steel bars as specified in the slab design had not been installed. Remedial work is necessary and the installation of the carbon fibre strips is an economical solution and is accordingly allowed at $3,031.00.
Items 30 - 32 These form part of item 29.
Items 33 - 37 No work contemplated.
Item 38Replace roof tie down plate. Engineer Leddy comments that the steel plate is not properly supported giving an explanation that appears logical and I accept his explanation. However Mr Fox’s mathematical calculation regarding the cost and the number of the brackets appears to be correct. This item is allowed at $847.80.
Items 43No work contemplated.
Item 44 No work contemplated.
Items 45 - 47 Accounted for at Item 27.
Item 48 - 49 Accounted for at Item 47.
Item 50 - 52 No work contemplated.
[76] On my calculation the rectification costs allowed total $13,313.53. Adding to that sum a pricing guide adjustment of 5% a builder’s margin of 30% and GST of 10% the final rectification cost is $19,990.26. Given all that has gone before in the last 8 years I deem it reasonable that the Applicants have the benefit of an independent contractor to take over.
Further rectification – plumbing
[77] While Damien Lacey on the Applicants’ behalf reported on sewerage and stormwater defects stating that both were defective and needed to be addressed Mr Fingleton’s report for the Respondent addressed only stormwater defects. The Respondent contended that sewerage defects were not the responsibility of the Respondent sewerage connections having been installed prior to commencement of construction. However, during the course of Mr Lacey’s evidence it became apparent that a section of the sewerage connection had been lowered by the Respondent and that joints on PVC pipes were inadequate. It was not clear to me from the evidence of either exactly where the responsibility for sewerage works particularly outside sewerage connections started and ended. Those sewerage works carried out shortly prior to commencement of construction were put in place to facilitate the extension’s sewerage connection in due course not hinder it. The Respondent admitted some damage to sewerage connections in the course of construction. The preponderance of evidence suggests that the Respondent has occasioned some damage to existing sewerage connections such as to warrant rectification. I allow the cost of plumbing and stormwater rectification at $11,888.00.
Liquidated damages
[78] The contract was abandoned and with it any right to claim liquidated damages of $12 per day under the contract. It is not necessary to determine any specific date on which the parties abandoned the contract.
Costs to complete
[79] The 30 November 2005 agreement focussed on rectification of defective work and completion of incomplete work that otherwise ought to have been completed at that time (simply an aspect of rectification). It is apparent from the evidence of Mrs Turner and Mr Johnstone and the litany of experts’ reports somewhat laboriously recited above that the parties had parted company years before and that what was envisaged was rectification. The issue of completion was entirely in the hands of the Applicants and had been for a number of years. Moreover, contract abandonment in my view negated the right to pursue completion cost.
Rental costs
[80] Mrs Turner gave evidence that her sister and daughter were residing in the existing premises at the time of construction of the extension and that they have lived there ever since to the present day under what Mrs Turner styled as a “protective occupancy”. Her evidence was that no rent was ever charged to the sister. That in my opinion is nothing more than a euphemism for allowing her sister to housesit for free.
[81] Judith Cush, Real Estate Agent, gave evidence that the existing premises was a 3 bedroom, 1 bathroom house. The Applicants’ family consisted of 6 people. Whilst it may not have been ideal the existing premises were certainly liveable. Ms Cush stated that 6 people living in the existing premises would be “squishy”. It was not unliveable particularly in the short term. The Applicants could have taken steps a number of years ago to, for instance, add a basic bathroom that at some point having become a significant factor for the Applicants due to family health problems. It was simply not true for the Applicants to suggest that the existing premises could not be occupied. The Applicants returned to Queensland in December 2002 when Mr Turner was posted to Canungra. The Applicants elected to continue to rent over the years and were content not to take any immediate steps to rectify and complete works such that the existing premises and extension would be suitable for occupancy. I find that the Applicants could well have resided in the existing premises when not residing interstate thus totally avoiding their rental costs claimed.
Solatium
[82] The Applicants contended that Solatium had been awarded by this Tribunal’s predecessor in circumstances where the action of another party had caused stress and suffering. That is clearly not the case here. The construction out of which this application arose took place some 8 years ago. Delay in initiating proceedings lies with the Applicants. Delays during the course of these proceedings lies with the Applicants (particularly 2006-2008). Rectification and completion could have been addressed as early as 2002 making stress and suffering at most a short term passing phase. Some 8 years of stress and suffering if indeed that is the Applicants’ suggestion are entirely self inflicted.
Respondent’s counter-claim
[83] The Respondent abandoned the contract as did the Applicants. It is not competent for the Respondent to claim any loss of profit for work that may have been carried out had the contract not been abandoned. That is separate from the issue of rectification addressed on 30 November 2005 and subsequently. Mr Johnstone’s evidence was strongly affirmative of his preparedness to rectify defective works which he considered it his responsibility so to do. That preparedness sits well with my own perception of all the evidence throughout this proceeding and particularly subsequent to 30 November 2005 that rectification of defective work was the primary issue to be addressed and quantified.
Other claims
[84] There are no other claims by either of the parties relevant for determination.
Orders
[85] The Tribunal’s findings are therefore as follows:
That the Respondent pay to the Applicants the sum of $31,878.26 by 31 January 2011.
That the Applicants file and serve submissions in relation to costs by 11 February 2011.
That the Respondent file and serve submissions in relation to costs by 25 February 2011.
That the issue of costs be determined on the papers.
0
0
0