Urban Homes Pty Ltd v DBS Waterproofing (Qld) Pty Ltd
[2015] QCAT 444
•16 November 2015
| CITATION: | Urban Homes Pty Ltd v DBS Waterproofing (Qld) Pty Ltd [2015] QCAT 444 |
| PARTIES: | Urban Homes Pty Ltd (Applicant) |
| v | |
| DBS Waterproofing (Qld) Pty Ltd (Respondent) |
| APPLICATION NUMBER: | BDL223-14 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 24 September 2015 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Traves |
| DELIVERED ON: | 16 November 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The claim by Urban Homes Pty Ltd against DBS Waterproofing (Qld) Pty Ltd is dismissed. 2. There be no order as to costs. |
| CATCHWORDS: | DOMESTIC BUILDING MATTER – contract between building contractor and subcontractor – liability of waterproofer for deck which leaked – contract for work and materials – variation of implied terms – relevance of instructions given by Construction Manager – waiver and estoppel. Domestic Building Contracts Act 2000 (Qld), s 7, s 9, s 41, s 50, sch 2 Carrington Constructions Pty Ltd v Fiore Holdings Pty Ltd [1992] NSWCA 36 |
REASONS FOR DECISION
Introduction
The applicant, Urban Homes Pty Ltd claims payment for rectification costs of $31, 422 and the application fee of $295 against the subcontractor, DBS Waterproofing (Qld) Pty Ltd. The respondent has counter claimed for its costs.
The applicant was represented by Mr Brian Maloney, director of Urban Homes. The respondent was represented by Mr Lee Scriggins, director of DBS.
Background
Urban Homes was the building contractor engaged to construct a home at Jacobs Well. Urban Homes entered into a contract with DBS to apply a waterproof membrane to certain areas of the home before it was tiled. An unsigned Form 16 Certificate dated 14 August 2008 tendered at the hearing described the scope of work to be certified by DBS to be:
Installing waterproofing materials or systems for preventing moisture penetration.
The Form 16 listed the following under the heading “Description of components certified: bathroom, ensuite, toilet and laundry, wet areas to the upper and lower floor.”
The work involved applying a waterproof membrane to compressed sheeting. The compressed sheeting was supplied by James Hardie. James Hardie produce a Technical Specification for Decking using the HardiePanel Compressed Sheet. As the sheeting was supplied by James Hardie, its Specification, as manufacturer applied in preference to the relevant Australian Standard.
The terms of that Specification provided that the sheet membrane was to have a recommended “turnup” of 50mm minimum and 150mm maximum. It was accepted by both parties that this would apply to the posts towards the edge of the deck. The Specification also relevantly required that the sheets be laid with a gap of 5mm between them. The gaps were to line up with timber framing underneath and be filled with a 10mm diameter polyethylene backing rod and sealant.
It was accepted by both parties that the membrane was not applied in accordance with the Specification in parts of the area of the upper floor deck. In particular, the membrane was turned up only 10mm on the vertical posts at the outer edge of the deck and backing rods had not been inserted under the joins of the sheeting immediately under the membrane. It was also accepted that most water damage occurred near the posts.
The only part of the work done by DBS that was claimed to be defective was the waterproofing of the upper floor deck. Indeed it became apparent from evidence presented at the hearing that Mr Scriggins had performed many projects for Urban Homes, including personally for Mr Maloney, the director of Urban Homes. There was no suggestion at the Hearing that he was anything other than a competent waterproofer.
The deck, in this instance however, leaked. The leak was first reported approximately 6 months after completion. There were a number of reasons explored in the hearing as to why the deck may have leaked. Mr Coffey for example, in his evidence stated that he thought the membrane had cracked at the base of the posts because there was not enough support for the membrane around the gap between the sheeting and the posts.[1]
[1]Transcript at 1-139.
However, Mr Scriggins admitted that the failure to turnup the membrane to a sufficient height was a cause of the water damage. Speaking about the repairs he did to the deck in 2011 he said:
Mr Scriggins: I went down to see what the problem was. I could see straight away what the problem was, the membrane wasn’t taken high enough.
Member: You could see that was the problem?
Mr Scriggins: Yes.
Member: And how-why could you see straight away that was the problem?
Mr Scriggins: Because the tiles were higher than the membrane, allowing water to overflow- over- go higher than the membrane.
Member: …you mean the horizontal tiles at the bottom of the deck?
Mr Scriggins: Yes. Yes.
Member: So the horizontal tiles were higher than the membrane.
Mr Scriggins: Because I was only instructed to turn it up 10ml.[2]
[2]Transcript at 1-61.
I am satisfied that taking the membrane up only to 10mm created a situation which allowed for water ingress and which ultimately compromised the membrane by causing it to crack at the base of the posts. I am accordingly satisfied that it was a cause of the damage to the deck.
When the leak was first reported, minor remedial work was undertaken. The deck continued to leak and water began to “pond” on the surface of the deck. Further, more extensive, repairs were undertaken at a cost of $31, 422. Urban Homes is now claiming the cost of those repairs from DBS.
Why was the membrane not turned up to 50mm
The answer to this rests on a conversation alleged to have taken place between Mr Scriggins and Mr Coffey prior to the relevant work being performed.
Mr Scriggins said that Mr Coffey told him prior to commencing the waterproofing that in relation to the posts on the upper deck, he was to keep the waterproofing membrane to 10mm or below the level of the horizontal tiles.[3] This was because, Mr Scriggins said, the posts were to be painted and there was to be no skirting tile at the base of the posts.[4] Mr Scriggins said, when describing the process involved in waterproofing the deck:
Mr Scriggins: …and in regards to the posts, to keep the membrane down and not visible about the tiles. And that was instructed to me by the supervisor, Allan Coffey.
Member: Okay. So you put the waterproofing membrane – you were told to put the waterproofing membrane, the words were so that it wasn’t visible…
Mr Scriggins: Visible.
Member: …beyond the tiles?
Mr Scriggins: Yes.
Member: So you knew there was going to be a skirting tile along the base of the post?
Mr Scriggins: No. I was never – there was never going to be a skirting tile.
Member: So what tiles are you talking about then?...
Mr Scriggins: The tiles- the horizontal tiles on the deck.[5]
[3]Transcript at 1-62.
[4]Transcript at 1-62.
[5]Transcript at 1-60 – 61.
Mr Scriggins understood that this was at the owner’s request, for aesthetic reasons. The deck overlooked the water, with a modern glass and stainless steel balustrade, and he understood from the conversation with Mr Coffey that the owners wanted to paint the posts all the way down to the base. In Mr Scriggins words, a skirting tile “wasn’t the look they were after”.[6]
[6]Transcript at 1-63.
Knowing the look the owners were after, given Mr Coffey’s express instructions, and in view of the fact it was not possible to paint over a solvent polyurethane membrane, Mr Scriggins kept the membrane below the surface of the floor tile that abutted the post.[7]
[7]Transcript at 1-62.
Mr Coffey disputed this and said it was intended to have a skirting tile at the base of the post and that, as this was the case, Mr Scriggins could have taken the membrane higher up. This was reiterated by Mr Maloney who said it was always intended to put a skirting tile there.[8]
[8]Transcript at 1-55.
When specifically questioned about whether the owner had wanted a skirting tile or not on the deck posts, Mr Coffey was vague. He said that he didn’t recall the owner saying he didn’t want a skirting tile and that he didn’t “think” he could recall it being finished without one:
Member: And you don’t remember seeing the deck without a skirting tile finished?
Mr Coffey: I don’t think so.
Member: You don’t think you do?
Mr Coffey: I’m not going to say a hundred per cent but I don’t think so, no.[9]
[9]Transcript at 1-139.
During the course of the hearing the owner was able to be contacted by telephone to confirm whether or not a skirting tile had been proposed. The owner said that there was to be no skirting tile because that was not the look he was after.[10] He said that Urban Homes had proposed that a clear plastic ring be applied to the base of the post in its place. He said that this had not worked because the rings could not be fitted. The posts were then left how they were and it was not until the first significant repair job some years later that the membrane was taken further up the posts and a skirting tile fixed to each of them.[11]
[10]Transcript at 1-152.
[11]Ibid.
This supports Mr Scriggins’ version of events.
I am persuaded that, on balance, Mr Scriggins’ recollection of the conversation is correct. He was instructed by Mr Coffey to keep the membrane to a minimum and that, in view of the fact there was to be no skirting tile, that this meant to a level below 12-13 mm.
In this respect it is also relevant that for every other part of the home that required waterproofing Mr Scriggins applied a turn up of 100 mm because in every other case a skirting tile was being applied. As Mr Scriggins said in the course of the Hearing:
So why did I take up a hundred mil on the house and only 10 mil on the posts.[12]
[12]Transcript at 1-144.
I accordingly find that Mr Scriggins departed from the Specification because he was instructed to do the job a particular way by Mr Coffey.
The legal effect of the instructions
Urban Homes sought to recover damages from DBS on the basis that DBS had breached the contract. The precise basis on which the contract was breached was not articulated however it was clear that Urban Homes based its claim on the fact that the relevant work did not comply with the relevant Specification or, alternatively, that it constituted defective workmanship.
Urban Homes’ case appears to be that its contract was subject to a term, implied by law, that the work would be carried out with reasonable skill and diligence.[13] Urban Homes argued, in effect, that “reasonable skill and diligence” included compliance with relevant statutory requirements, Standards or Specifications. For the reasons below, it is unnecessary for me to decide whether that is so. Had it not been for the express variation of the contract, I am satisfied that the work fell short of the standard required by the implied term that the work be done with reasonable care and skill.
[13]Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463.
Further, it is not in doubt that warranties of quality and fitness for purpose may also be implied in contracts for work and materials.[14] In this respect I find that DBS was subject to a contractual warranty that the work when completed would be reasonably fit for the relevant purpose.[15]
[14]Helicopter Sales Pty v Rotor-Work Pty Ltd (1974) 132 CLR 1 at [9].
[15]McKone v Johnson (1966) 2 NSWR 471; Rea Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 42 ALJR 254.
The critical issue, however, is not the existence of the implied terms when the contract was entered into, but whether the implied terms were varied or waived by the parties’ actions which followed. In particular, the issue is the effect of the express instructions to keep the membrane to a minimum which, in the circumstances, meant to a level below 12-13mm.
It is accepted that terms which would normally be implied in a contract for work and materials can be held to have been modified or excluded by the circumstances of the case.[16]
[16]Helicopter Sales Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1; GH Myers & Co v Brent Cross Service Co (1934) 1 KB 46 at 55; Carrington Constructions Pty Ltd v Fiore Holdings Pty Ltd [1992] NSWCA 36.
In this case, I have found that the contractor expressly instructed the subcontractor not to turn up the membrane on the posts. This amounted to a departure from the Specification and from Mr Scriggins’ usual work practices.
I am satisfied, in these circumstances, that the contract was varied and that in respect of the relevant posts, the membrane was to be applied to a level below 12-13 mm. The implied term cannot stand in the face of that express variation in respect of the posts.
Alternatively, the effect of the instruction given to Mr Scriggins was that Urban Homes waived its right to require strict compliance with the terms of the Specification, in other words to rely on that as constituting a breach of contract by DBS. For waiver to exist there needs to be an intentional act with knowledge of the material facts.[17] The contractor’s agent, Mr Coffey was an experienced Construction Manager and would have known, or could reasonably have been expected to have known, that the instruction conflicted with the Specification. The Specification did not only apply to the application of the waterproofing membrane but to other aspects associated with the construction of the deck which would have been performed by employees of Urban Homes or other subcontractors. It is not necessary for a waiver to be in writing.[18] It can be inferred from conduct and there is no need, unlike a variation, for it to be supported by consideration.[19] Further, Urban Homes is estopped from relying on the failure by DBS to comply with the Specification, given the instructions given by it which were inconsistent with such compliance.[20]
[17]Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, at 326.
[18]Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, at 326.
[19]WJ Alan & Co Ltd v El Nasr Export and Import Co [1972] 2 QB 189, at 213.
[20]Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251.
I should note, for completeness, that the warranties implied by the Domestic Building Contracts Act 2000 (Qld) do not apply to this contract. The statutory warranties, although non-excludable,[21] only apply to “regulated contracts”.[22] A regulated contract is a domestic building contract for which the contract price is more than $3, 300.[23] A “domestic building contract” includes a contract to carry out domestic building work,[24] which would extend to waterproofing.[25] However it does not include a contract between a building contractor and a subcontractor.[26] It follows that the statutory warranties in the DBC Act are not implied.
[21]DBC Act, s 50.
[22]DBC Act, s 41.
[23]DBC Act, s 9; and Schedule 2, definition of “regulated amount”.
[24]DBC Act, s 7(1).
[25]DBC Act, s 8(3)(a).
[26]DBC Act, s 7(2).
DBS counter-claimed for its costs. However there was no evidence of legal costs having been incurred. Mr Scriggins, on behalf of DBS, did not provide any particulars of what he says the costs have been. In the circumstances I make no order as to costs.
Conclusion
I find that the conversation between Mr Coffey of Urban Homes and Mr Scriggins of DBS affected a variation of the original contract or had the effect that certain implied warranties were modified or excluded. Alternatively that Urban Homes, following the conversation, waived its right to insist on compliance with that requirement of the specification, or is estopped from doing so.
I find that DBS performed the contract in accordance with its terms. DBS can not be held liable for damage caused as a consequence of performing the contract as directed by Mr Coffey on behalf of Urban Homes. The contract was otherwise performed with due care and skill by DBS. I add that it is entitled to be paid for the work that it did in applying the membrane and in assisting Urban Homes in remedying the problem.
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