Urguhart v Partington
[2013] QCAT 133
| CITATION: | Urguhart v Partington [2013] QCAT 133 |
| PARTIES: | J B and B Urguhart trading as Hart Renovations (Applicant) |
| v | |
| Philip and Evelyn Partington (Respondent) |
| APPLICATION NUMBER: | BDL072-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 27, 28, 29 and 30 August 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Richard Oliver, Senior Member |
| DELIVERED ON: | 19 February 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | (a) The respondents must pay to the applicant the sum of $214,946.00 by 29 March 2013. (b) The respondents must pay to the applicant the costs thrown away as a result of the adjournment of the hearing and the experts conclave listed for 22 August 2011 to be agreed or assessed on the District Court Scale of Costs, or failing agreement; (i) The applicant must file in the Tribunal and give to the respondents a short form assessment of costs together with any submissions on the amount of costs payable by 12 April 2013. (ii) The respondent’s must file and give to the applicant any submissions in reply by 26 April 2013. (iii) The amount of the costs payable by the respondents will be determined on the papers without an oral hearing. |
| CATCHWORDS: | Domestic Building Dispute – where contract provided for progress payments to the enclosed stage – where respondents refused to pay the enclosed stage payment – whether the works reached the enclosed stage – whether the respondents in failing to make the payment of the enclosed stage were in breach of contract – where applicant carried out defective and incomplete building work – assessment of damages under the contract including “contractor’s margin” and interest – where respondents counterclaim for defective building work assessed and offset against the applicant’s damages. Costs – where hearing adjourned because of late production of expert report – whether applicant put at a disadvantage – whether the respondents should pay the costs thrown away by the adjournment. Queensland Civil and Administrative Tribunal Act 2009 ss 48, 100, 102 Ownit Homes Pty Ltd v Batchelor (1983) 2 Qld R 124 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | The applicant was represented by Ms Emery, solicitor of Doyles, Construction Lawyers. |
| RESPONDENT: | The respondents were self represented. |
REASONS FOR DECISION
In early 2008 the Partingtons decided to carry out a major renovation to their house in Sherwood. This included lifting the house, building in underneath and adding an extension. Plans for the project were prepared by an architect, Nicole Western, and engineering design drawings were prepared by Morgan Consulting Engineers Pty Ltd.
In early 2008 the Partingtons spoke to Mr Urguhart about the renovation and asked for a quote. Mr Urguhart engaged quantity surveyors, Total Estimating Services, to prepare a costing for the work. Their cost estimate was $561,617.38 and with other additions including the builder’s margin, the total price quoted to carry out the work in accordance with the plans was over $740,000.
Discussions continued and with some variations to the work to be undertaken, by 21 July 2008 Mr Urguhart gave the Partingtons a firm quote of $483,742.00. The quote was accepted and on 4 August 2008 a standard HIA contract was signed by the parties. It included a payment schedule as follows:
§Deposit $ 24,187
§Raise house $ 48,374
§Base $ 48,374
§Frame $ 72,561
§Enclosed $145,122
§Fixing $72,561
§PC $72,563
Work commenced on the house very soon after the contract was signed and progressed without too many difficulties although there were delays. On 20 April 2009 Mr Urguhart sent a tax invoice to the Partingtons for the enclosed stage together with claims for the cost of variations. The enclosed stage claim was for $145,122 with the totalled invoice being $151,669.41. The Partingtons did not pay the progress claim. They contended the house had not reached the enclosed stage and an agreed list of items of defective work had not been addressed by the builder.
There were ongoing negotiations, but by August 2009 all work had stopped and Mr Urguhart had removed all of his gear from site.
Subsequently on 29 January 2010 Mr Urguhart gave the Partingtons a notice to remedy breach in accordance with cl 28 of the contract. The Partingtons did not pay the stage payment and therefore did not remedy the alleged breach. On 18 February 2010 Mr Urguhart terminated the contract in accordance with cl 28.
Subsequent to the termination of the contract, Mr Urguhart filed an application in the Tribunal on 19 March 2010 claiming monies due under the contract, damages, interest and costs for breach of contract. The Partingtons filed a response to the application contending that the contract was not lawfully terminated by Mr Urguhart, the works did not reach the enclosed stage and they claimed damages for defective and incomplete building work.
When the matter came on for hearing on 20 August 2012 I asked the parties to assist in identifying the issues for determination by the Tribunal. It was agreed between them that the issues I had to decide were as follows:
(1)Did the building works reach the enclosed stage by 20 April 2009.
(2)Did the applicant lawfully terminate the contract on 18 February 2010.
(3)If “no” to (1) what is the value of the applicant’s quantum meruit claim, if any.
(4)If “no” to (2) what is the value of the applicant’s quantum meruit claim, if any.
(5)If “yes” to (2) what damages flow from the respondent’s breach including interest.
(6)What are the defects, if any, to the enclosed stage.
(7)What is the value of the cost to rectify or incomplete building work to the enclosed stage.
(8)If the contract was unlawfully terminated by the applicant what damages are claimed by the respondent and what damages are recoverable.[1]
[1] Exhibit 6.
At the conclusion of the hearing the parties were directed to file further submissions in writing. The final of those submissions was received in the Tribunal at the end of October 2012.
Further Background
After receiving the initial quote the Partingtons worked through the summary of costs and made changes to it to highlight where savings might be achieved. After this, and in discussions with Mr Urguhart, he provided a further quote. The effect of the final revised quote meant that the Partingtons would be responsible for a significant part of building work.
The contract for the carrying out of the renovation work imposed certain obligations on the Partingtons to supply hardware for the property for the works. This included: ceramic tiles; sanitary ware; white goods; timber windows and doors; aluminium windows and doors; external door locks; internal door locks; light fittings; house cleaners and water tanks. The Partingtons were also to supply and install: cabinets (joinery); painting; air conditioning; screens, showers and mirrors; floor sanding and polishing; landscaping; and floor coverings. The purpose of this was to reduce the contract price so that it would fall within their budget.
The financier raised some concern about the wording of the contract in so far as it imposed obligations on the Partingtons to provide materials and be responsible for work on the basis that it might be thought that they were owner builders. Therefore the Schedule to the contract[2] was amended by Mrs Partington to add in respect of some of the items ‘supplied and installed by owner’s contract’.[3] Nothing very much turns on this and I only mention it because the applicant’s solicitors contend that this conduct of Mrs Partington amounted to a type of misrepresentation to her financier so that she could get the funds for the project. This, it is said, impacts on her credit and therefore I should be cautious about accepting her evidence.
[2] Volume 1 page 182.
[3] Volume 8 page 63.
The job involved lifting the existing house so that underneath could be built in as part of the renovation. Expecting the contract to be signed Mr Urguhart had made arrangements for the partial demolition work to commence on 5 August 2008 by the company engaged by Mr Urguhart to do this work, A-Accurate. It was therefore critical, from Mr Urguhart’s point of view, that the contract be signed expeditiously.
He met with the Partingtons on the evening of 4 August 2008. The contract was signed about 8:30pm that evening. Mrs Partington says that the contract was signed under duress because Mr Urguhart said that if it was not signed that evening he would charge the Partingtons $30,000.00 for the steel he had already purchased for the job. Mr Urguhart denies that there was any threat about making the Partingtons pay for the steel.
I do accept that there was some pressure to sign the contract because arrangements had been put in place for the work to commence the following morning, 5 August. The late signing of the contract and the need to get a witness at a late hour, must have put the Partingtons under considerable stress and after what has happened with the builder since work stopped, they must think, on reflection, things may have been different if more time was given to the contract signing process. Despite the contention the contract was signed under duress, this has not been raised as a cause of action nor has any relief been sought because of it. Therefore the circumstances of the signing of the contract are largely irrelevant to the matters I have to decide in this case except, perhaps, in respect of credit.
Between the signing of the contract and April 2009 the works continued although there were delays. These delays were associated with the interruption of the demolition because of the presence of asbestos, the need to realign the house as it was originally too close to the boundary, the delay in the provision of windows and doors and ongoing difficulties with the Partingtons getting a work schedule from Mr Urguhart. In addition, there were some changes to the plans. This obviously caused frustration to the Partingtons because on any view, the works progressed slowly.
Mr Urguhart gave the Partingtons the first progress claim on 16 September 2008. It was paid however $6,611.00 was withheld. Although there seemed to be no entitlement to this retention Mr Urguhart says he decided to get on with the job and expected it would be paid in the next progress payment.
By April 2009 the works had reached the enclosed stage and Mr Urguhart delivered an invoice for $151,669.41. This included the stage progress claim of $145,122.00 with the balance made up of variations. Mr Urguhart acknowledges that at the time the progress claim was delivered the front door was not fixed to the house.
After receiving the invoice for the enclosed stage there were discussions between the parties about some incomplete work. In an email from Mr Partington on 29 April 2009 he lists items that required attention. He says these ‘tasks were to be commenced this week’.[4] There was also a complaint about Mr Urguhart failing to provide a schedule of works and essentially to get on with the job. There were subsequent emails and on 7 May 2009 Mr Partington wrote to say that he would like to see work done before he paid the ‘lock up payment’.[5] After some further emails about the project, on 11 May 2009 Mr Urguhart wrote asking when the progress payment would be made. Then on 12 May 2009 Mrs Partington wrote to him to say she will authorise the financier to release the payment for the enclosed stage but still insisted that the outstanding items be attended too. After this email, there were further emails relating to the project generally.
[4] Exhibit 28 Volume 5 1299.
[5] Ibid Volume 5 1293.
By 26 May 2009 Mr Urguhart telephoned Mrs Partington to see if Mr Partington had returned home as he had been working overseas during most of May. The purpose of the call was to arrange a meeting with the Partingtons to presumably discuss the outstanding payment, and incomplete work. In an email to Mr Partington on 26 May 2009 when Mrs Partington passed on Mr Urguhart’s request she expressed surprise in the email that Mr Urguhart had not questioned her ‘about his money yet’.[6]
[6] Ibid Volume 5 1268.
The next relevant event after this email was a letter from the Partingtons solicitors to Mr Urguhart on 26 May 2009. A number of issues were raised in that letter including delay in the provision of a schedule of works for the completion of a project and a possible claim for compensation for delay. The letter also said that no payment was due to Mr Urguhart as the works had not reached the enclosed stage. In respect of the enclosed stage, it was contended that the parties had reached and agreement that the payment for the enclosed stage was conditional upon Mr Urguhart completing the rectification work listed in a list attached to that letter.[7] This is the first time it was asserted in correspondence that the enclosed stage payment was conditional upon certain rectification being carried out and contrary to Mrs Partington’s evidence that she had authorised the financier to make the payment.
[7] Ibid Volume 5 1267.
Mr Urguhart’s solicitors responded on 5 June 2009 contesting the assertion that the work had not reached enclosed stage because the state of the works met the definition of ‘enclosed stage’ under the contract. Also reference was made to the list of items to be rectified and it was contended that even if the list was accepted, it had no relevance to the enclosed stage payment because such matters could be rectified during the completion of the build. Interestingly, the list of items to be rectified did not include the missing front door. It was also disputed that the enclosed stage payment was conditional upon the list of rectified items being attended to by Mr Urguhart.
The enclosed stage payment was not made and the works came to a halt. There was a further letter from the Partingtons solicitors on 10 July 2009 but this did little to advance matters and the parties were and continued to be at a stand off.
Did the house reach the enclosed stage
In the Partington’s response to the application they say, consistent with the above, that the works did not reach the enclosed stage, and further that Mr Urguhart failed to comply with the agreement between them that the list of items to be rectified had not been attended to by him. The list, which is “attachment A” to the filed response, is the same as that referred to in the Partington’s solicitors letter of 26 May 2012.
I will deal with the question of whether the payment for the enclosed stage was conditional upon completion of the list of items to be rectified. Prior to giving the Partingtons the invoice for the progress claim for the enclosed stage on 20 April 2009, there are a series of emails, mainly to Mr Urguhart, about the job. These emails relate to quotes for work or are otherwise job related.[8]
[8] Ibid Volume 5 1332-72.
The first email dealing with any complaint about the work is that from Mr Partington on 29 April 2009. That email makes reference to what can only be regarded as minor defects in the kitchen, living room, outside back area, and in the front upstairs room. There is also a request to replace a chamfer board that had a hole in it and also fix some trim to the underneath of a sill of a window on the upper western wall. The email does not make reference to any agreement but asks for Mr Urguhart to provide a ‘plan’ to deal with these matters. All of these defects are minor in nature.
The next reference to attending to defects is on 7 May when Mr Partington asked how Mr Urguhart was going with the defects he had discussed with him and he had emailed ‘in reference to lock up’. I take this to mean the email referred to above. There is no further reference to the listed items until after Mr Urguhart inquired about payment for the enclosed stage.
Mrs Partington, in an email of 12 May 2009, made reference to an agreement between Mr Partington and Mr Urguhart that the ‘issues of the exterior of the house would be completed to which you both verbally agreed prior to payment’. Despite making that assertion, and knowing the defective items had not been attended to, Mrs Urguhart said she would advise the financier to release the payment.
The payment was not made and the next mention of defects, in writing, is the letter from the solicitors attaching a list of items to be rectified. That list is completely different to the list referred to in the email of 29 April 2009 and includes many items that do not relate to the enclosed stage. The items include such things as: repair concrete to front and rear entrances; grind rear slab to prevent water from running towards the house; chasing of power line in concrete floor of the kitchen; repair of cladding to northern weather board; provide written evidence of 10 year roofing and guttering warranty; gaps in roof flashing to be sealed; and, written evidence as to why the owners were advised not to install ant capping to dwelling. There are other items but generally it can be seen, by their description, they are unrelated to the enclosed stage.
What follows is that this list, first raised in the solicitor’s letter, was never put to Mr Urguhart until he received that letter from the solicitors so the obvious question it poses is how he could have agreed to do that work before he was entitled to payment for the enclosed stage. In addition in the complaint form to the Building Services Authority the Partingtons say they informed the builder of their complaint about defects on 26 May 2009. This is obviously a reference to the letter from the Partington’s solicitors.
The point of these observations is that although, Ms Partington, with whom Mr Partington agrees, says there was an agreement to attend to these matters before the progress claim was paid, the documentary evidence contained in the emails is to the contrary, particularly when she expressly told Mr Partington that the money would be released to him. Not only did she say she would do this she actually took steps in writing by advising the financier to have the money released.
Those steps included Mrs Partington sending an application for progress payment to her financier on 13 May 2009 requesting that the invoice be paid except for the variations. The total amount approved by her for the enclosed stage payment was $145,122.00. There is no reason why this claim would not have been processed in the usual way. However, Mr Urguhart did not attend the site on 14 May 2009 to deal with some of the rectification work or continue with the project. Because he did not attend the site that day Mrs Partington contacted the financier and stopped the payment of the progress claim.
During the course of her cross examination, when asked why she stopped payment, Mrs Partington said that she would have made the payment on 14 May 2009 had Mr Urguhart attended the property on 14 May. There was no mention of the conditional agreement about rectification of defects. By that stage the relationship between the parties was fracturing and then on 26 May 2009 Mrs Partington had her solicitors write to Mr Urguhart concerning the progress of the work. Although the solicitors contended that the works had not reached the enclosed stage, no particulars of why this was being asserted were provided in the letter and the emphasis appears to have been on the conditional agreement, which is consistent with Mrs Partington’s conduct for the reasons for stopping payment.
For these reasons I do not accept there was an agreement of the type contended for by the Partingtons that Mr Urguhart agreed that the Partingtons would be entitled to withhold payment until he had attended to the list of items to be rectified. I also do not accept, because of the emails, that the reason for the Partington’s refused to pay the progress claim was because the works had not reached the enclosed stage.
The definition of the enclosed stage under the contract is
enclosed stage, for a building, means the stage when—
(a) the external wall cladding is fixed; and
(b) the roof covering is fixed, but without—
(i) soffit linings necessarily having been fixed; or
(ii) for a tile roof—pointing necessarily having been done; or
(iii) for a metal roof—scribing and final screwing off necessarily having been done; and
(c) the structural flooring is laid; and
(d) the external doors are fixed (even if only temporarily), but, if a lockable door separating the garage from the rest of the building has been fixed, without the garage doors necessarily having been fixed; and
(e) the external windows are fixed (even if only temporarily).
It is common ground that at the time the progress claim was made the front door had not been fixed by the applicant. It is also common ground that the Partingtons were to supply the front door. It had not been supplied at the time the progress claim was given to the Partingtons. Interestingly there was no mention of the front door in any of the emails passing between the parties nor is it listed in any of the lists of defects.
Mr Urguhart did not return to site, Mr Partington fixed the front door to the premises, the progress claim was not paid and the parties fell into dispute.
Nothing very much happened until August 2009. The Partingtons lodged a complaint with the Building Services Authority and a meeting was held on site with two of its officers in an attempt to resolve the dispute and get the contract back on track. A third party broker was also arranged by the Partingtons, Mr Newton, who attended the meeting. A central theme of the meeting was to consider and discuss whether the building had reached the enclosed stage although there is no reference to this in the complaint form to the Authority. The complaint only deals with defective work.
Paul Riches was an area manager with the Authority. He also has a trade qualification as a carpenter. He said the purpose of the onsite meeting was to decide whether the works had reached the enclosed stage and visually inspect several issues raised by the Partingtons.[9] He was firmly of the opinion that the house had reached the enclosed stage under the terms of the contract entered into. In his evidence to the Tribunal, he was asked whether there was any discussion about water penetration to the building. He could not recall any such discussion about water ‘leaks’ but even so this would not change his opinion about the enclosed stage because this could be rectified during the balance of the construction. He also said nothing stood out of concern. There is a contention by the Partingtons that because the structural flooring for the upstairs was not completely covered with ply the definition of the enclosed stage is not satisfied. Mr Riches conceded that he did not inspect the upstairs, not was he directed to. It seems that this was not an issue at the time of the inspection.
[9] Exhibit 8.
Christopher Boyle, also from the Authority, attended the site with Mr Riches. He holds a Builder Open Class licence. He agrees that the main purpose of attending the site was to decide if the works had reached the enclosed stage. In the statement[10] provided to the Tribunal Mr Boyle referred to the definition of ‘enclosed stage’ in the Domestic Building Contracts Act 2000 and said he was satisfied that each of the elements in the definition had been met. Although he acknowledged that there was some defective work this did not mean that the enclosed stage had not been reached. He specifically addressed the issue about the upstairs flooring and in his opinion, and he says in the opinion of Mr Riches and Mr Newton, the structural flooring related to the slab and not the upper floor which did not add anything structural to the house.
[10] Exhibit 7.
Mr Newton, the third expert at the meeting, is a Registered Builder and has considerable experience in the industry. He conducts his own business as a consultant in the building industry. His expertise was not challenged. His evidence[11] was consistent with Mr Boyle and Mr Riches in respect of whether the works had reached the enclosed stage. He also agrees that the structural flooring in the definition means the slab and not the floor to the upper story.
[11] Exhibit 11.
The Partingtons rely on the evidence of Mr John Groom of J. Groom Building Consultants. He as provided expert report[12] following inspections of the works on 8 June 2011 and 8 July 2011. He concluded that the enclosed stage had not been reached because
(a)the front door was not installed and therefore the premises were not lockable;
(b)the structural flooring to the upper level was not complete;
(c)bracing and frame was incomplete from the frame stage meaning rectification to the frame was necessary; and
(d)the upper level ceiling height did not meet the minimum requirements of the Building Code.
[12] Exhibit 22.
He did not consider the roof leaks had any impact on the enclosed stage as this could be dealt with as the construction progressed. Other matters related to post enclosed stage work. In cross examination Mr Groom agreed that the frame issues were really relevant to the frame stage rather than the enclosed stage. He acknowledged that the door had been fixed by the second inspection. Mr Groom’s evidence was not particularly helpful to this issue because firstly, he had to rely on other reports and secondly, he did not inspect the work until 2011 two years after the inspection by Messrs Boyle, Riches and Newton.
Mr Salmon, another building expert said that there were just too many defects to permit payment of the enclosed stage but he also conceded that in respect of the defects, this could be addressed with a retention from the enclosed stage payment stage to ensure they were rectified. They could also be rectified as the work progressed.
Mrs Partington, in her written submissions, makes reference to some additional items. The first is the use of T nails to fix the external chamfer boards. Mr Groom says this is not satisfactory because this method of fixing has a tendency of splitting the boards and may cause them to separate from the frame. The rectification of this would require the boards to be removed and replace and fixed with a proper nailing system. Even if this is correct, it is a matter of rectification that does not impugn the finding that the enclosed stage has been reached.
There is also a complaint that the roofing system installed does not have a 10 year guarantee. The roof leaks and that is of course a serious defect if not rectified. By reference to the definition of enclosed stage above the roof does not have to be completely finished for the stage to be reached. Once again this is a matter of rectification work to be done as the construction continues.
Structural flooring is another issue raised by the Partingtons but I have dealt with that above. The same with the absence of the external door at the time the progress was claimed. Also at the time of the claim there were some broken louvers which, rendered the property insecure. This could easily have been remedied had the builder continued on site. I am not satisfied this impacts on the enclosed stage. The same can be said for other minor matters raised.[13]
[13] Respondents submissions [155]-[158].
The submissions from the respondents, and the evidence from Mr Groom and Mr Salmon, is not persuasive when compared with the consensus of the industry experts who attended the site meeting in August 2009 whose evidence can leave little doubt that the building had reached the enclosed stage. In the face of this evidence I have no alternative but to make a finding consistent with this evidence that the works had reached the enclosed stage.
An agreement of sorts was reached at the meeting which is reflected in a letter from the Authority to the parties on 13 August 2009. Mr Newton was to assist with the implementation of that agreement. The letter also emphatically states that the works had reached the enclosed stage.
Mrs Partington set out her understanding of what was discussed in an email to Mr Urguhart on 19 August 2009. This acknowledged that Mr Newton was to be the owner’s representative, Mr Urguhart was to provide a detailed project schedule and a list of major defects was provided which were to be attended to by Mr Urguhart. It was also acknowledged that the ‘enclosed stage accounts’ were to be reconciled and a revised invoice submitted to the owners. It also listed the ‘key accounts’ to be reconciled and requested this documentation by 26 August 2009.
In an email to Mr Newton, as the Partington’s representative, Mr Urguhart took issue with some of the points made by the Partingtons in particularly any obligation to ‘reconcile’ accounts for the enclosed stage payment. He requested that information be provided by the Partingtons about the provision of items for installation in the house so a schedule could be prepared. He affirmed his position that the enclosed stage had been reached and he was entitled to payment. He said he would send another account for the enclosed stage to meet some of the Partington’s concerns with his earlier invoice.
After this exchange Mr Urguhart did not hear further from Mr Newton or the Partingtons. That is not surprising because Mrs Partington said in evidence that she did not accept Mr Newton’s advice either.
Did the Applicant lawfully terminate the contract on 18 February
After the August meeting Mr Urguhart sent another invoice on 25 August 2009 for the enclosed stage. The loose agreement reached at the meeting was not put into effect. The parties were at a stalemate and nothing further happened until 29 January when Mr Urguhart gave the Partingtons a notice to remedy breach in accordance with cl 28 of the Contract which permits the contractor to give a notice to remedy breach if the owner is in substantial breach of the contract. A substantial breach includes a failure to make a progress payment. Included with the payment was a copy of the invoice dated 26 August 2009 together with supporting documents.
The Partingtons acknowledge receiving these documents but did not pay the progress payment and on 18 February 2010 the applicant issued a Notice to Terminate the Contract under cl 28.4 of the Contract because the Partingtons, by not paying the progress payment, were in substantial breach, the breach was not remedied within the required time of 10 days which then gave Mr Urguhart a right to end the contract.
The Partingtons submit that they never refused to pay the progress claim but wanted the applicant to ‘reconcile’ his accounts and give them a schedule of when he would attend to the defective work and complete the project. They rely on the discussion and ‘agreement’ made at the site meeting. The point here is that neither party abandoned their respective rights under the contract. This was an informal agreement with a view of progressing the works, it was not collateral to or part of the building contract.
Clause 4 of the contract deals with progress payments and is quite specific. The builder must give the owner a written claim for the progress payment at the completion of the stage. The claim must state the amount claimed, any additions or deductions for variations, and addition or deduction for provisional sums and any other amount as well as a total of the claim. The owner’s obligation is to pay the amount within five working days of receiving the progress claim.
It is clear that the Partingtons did not pay the first progress claim for the enclosed stage although the financier was authorised to make the payment at one stage. The second progress claim was also not paid within the required period. Mrs Partington says that the August progress payment was never received by her until 29 January 2012. The point of whether the invoice was sent is unclear. Mr Urguhart does not say in his material that it was sent although he did say in an email to Mr Newton subsequent to the date of the invoice that it was being prepared. The evidence is unclear on the point. It does not appear as an attachment to the email to Mr Newton on 31 August 2009, despite Mr Urguhart’s evidence that it was. However, it was sent with the notice to remedy breach in January 2010 in substantially the same form as that sent in May 2009. Although I am prepared to accept Mrs Partington’s evidence that she did not get it in August, It cannot see that it makes any difference to the outcome because payment of the enclosed stage payment was discussed at the meeting on 13 August 2009, there was an expectation that it would be paid and the Partingtons did not respond to the Notice sent on 29 January 2010.
On the basis of my finding that the enclosed stage had been reached the contract obliged the Partingtons to pay the progress payment and a failure to do so put them in substantial breach.
As a consequence of not paying the progress claim, the applicant was entitled to terminate so I therefore find that his termination was lawful.
What damages flow from the respondent’s breach including interest.
Because I have found that the contract was lawfully terminated by Mr Urguhart it is not necessary to consider issues (3) and (4) above.
Defective building Work
A number of experts have been engaged by the Tribunal to assess the work undertaken, determine what is defective work and the cost of rectification. Although they have come to an agreement about the extent of the defective work which is set out in a schedule[14] they do not agree on the value of the rectification work.
[14] Joint Experts Report.
The only two experts that have costed the rectification work is Richard Ray of Accurate Estimating Services, Quantity Surveys and John Groom of J Groom Building Consulting.
Before I deal with the items of rectification set out in the Joint Experts Report I should deal with a general submission made by the applicant applicable to his liability for the cost of rectification of some of the defective work. He contends that all of the defects present when he stopped work would have been attended to by him during the balance of the build. Some items would be rectified during the fixing stage with others later and also during the defects liability period. Because it has been found that he lawfully terminated the contract he cannot be responsible for the cost of rectification of defects he would have attended to if the contract remained on foot.
Although the argument has some attraction it ignores the builders fundamental obligation under to contract to carry out the building work in a proper and workmanlike manner, in accordance with the Building Code of Australia, the Australian Standards (where relevant) and in compliance with the plans and specifications. Although it might be common practice to attend to defects as the job progresses, there should not be defective work in the first place. Tested another way defective building work will always be subject to a direction to rectify by the Building Services Authority under s 72 of the Queensland Building Services Authority Act 1991 (‘QBSA Act’) if the Authority becomes involved after the contract comes to an end.
In Ownit Homes Pty Ltd v Batchelor[15], Thomas J had to consider a similar situation to this. In that case the builder carried out work and issued progress claims. The home owner did not pay the second and third progress payments because he claimed that the builder did not attend to the rectification of defective building work. The builder terminated the contract and then sued for recovery of the outstanding amount of the progress claims, $18,000.00 and in the alternative, $23,513.00 damages for breach of contract. There was a counterclaim for the cost of rectifying the defective work. With respect to the cost of rectification the builder argued that he would have attended to this if the contract proceeded to its conclusion. His Honour said;
The homeowner will be put the expense of rectification and is entitled to be compensated for this after taking into account any mitigation issues in not giving the building an opportunity to carry out the rectification work.
[15] (1983) 2 Qd R 124.
The Defects
There is dispute between the parties about the extent of any defective and incomplete work, and if there is defective work whether the applicant should be held liable for the cost of rectification because he says he would have attended to rectification as the job progressed. Similarly in respect of incomplete work up to the enclosed stage, the applicant says this also would have been attended to as the work progressed. He says he should not be held liable for this cost.
Exhibit 1 is a Scotts Schedule prepared by the various experts who have inspected the house at Dudley Street. The schedule lists the defective and incomplete work, some of which is in dispute and some agreed. Similarly, there is some disagreement about the cost to rectify and complete the work. All experts have signed off on the Scotts Schedule but the reports of Mr Salmon and Mr Wilde are mainly concerned with the issues surrounding the enclosed stage.
As mentioned Mr Ray Groom, of J. Groom Building Consultants has provided a comprehensive report identifying defective and incomplete work and the costings for this work. Mr Groom has considerable experience in the building industry, is a registered builder and a Private Building Certifier, he has been providing expert building reports for some 13 years and has given evidence in many building disputes in various Courts and Tribunals.[16] Mr Groom’s costings do not include GST.
[16] Exhibit 21 52.
Mr Richard Ray, the manager of Accurate Estimating Services, Quantity Surveyors and Construction Cost Consultants has provided a report which only costs the rectification and incomplete work. Mr Ray’s qualifications establish that he is an experienced quantity surveyor who costed the work by reference industry standard cost allocations such as Rawlinson’s Australian Construction Cost Guide, Cordell Commercial and Industrial Cost Guide, AIQS the building economist, trade base advice and his professional opinion as a quantity surveyor.[17] The cost estimates include the builder’s margin and GST. Mr Ray did not pass any opinion as to whether the work was defective or incomplete, he simply costed the work.
[17] Exhibit 15 5 [4.3].
Therefore Mr Groom’s comprehensive report is accepted as identifying the work undertaken by the applicant that requires rectification and the work that should have been completed by him up until he left the job. It is acknowledged that he submits that some of this work would have attended to as the work progressed and therefore it would have been cheaper for him to do it than another contractor.[18] This is a matter that will ultimately be taken into account.
[18] Ownit Homes v Batchelor ibid.
Without being critical of the Partingtons submissions which are thorough and competently compiled, for ease of reference though I propose to follow the report of Mr Ray which both identifies the defect and includes the cost nominated by Mr Groom. These are also set out in Scotts Schedule in a methodical way but there is often a double up and it becomes confusing when trying to identify those items that have been referred to twice or more. The amounts I propose are in bold and include GST. Relevantly Mr Ray’s report commences on page 30 s 11.
a) 11.1 Remove and repair front entrance slab: I accept Mr Groom’s evidence that the falls do not meet the requirements of the Building Code of Australia 2008 and either need to be repaired or replaced. This is also supported by the evidence of Mr Salmon. As I understand the evidence this rectification has been carried out by the owners and although Mrs Partington, in her submissions, suggest that the cost for this work was part of the base stage and she should be reimbursed a percentage of that payment, I prefer to adopt the evidence of Mr Groom or Mr Ray who agree the actual cost of rectification at $3,863.00.
b) 11.2 Remove and replace western slab: agreed at $1,007.00
c) 11.3 Remove and replace flashings: The applicant says that this could have been attended to during the balance of the build and did not affect the enclosed stage. This is probably correct but it is still defective work requiring rectification. Mr Groom says it will cost $4,493.50 to rectify and Mr Ray says $3,682.80. I propose to allow $4,000.00*
d) 11.4 Install overflows to gutters: Similarly there is agreement of $280.00.
e) 11.5 Install sarking to exterior fascia and reinstate blue board: It is a manufacturer’s requirement that sarking be installed behind blue board. This needs to be rectified. Both costs are the same. I will allow $2,200.00.*
f) 11.6 Front door not installed: Allow $200.00
g) 11.7 Sheet flooring missing in master bedroom: Allow $1,200.00*
h) 11.8 Install Laundry bracing. Clearly this should have been done as the job progress, it goes to structural integrity: Allow $435.00*
i) 11.9 Pack and straighten wall to both levels of the house. This is work that the applicant says he would have attended to during the course the job. However rectification is necessary: Allow $858.00*
j) 11.10 Jackhammer kitchen floor for electrical cable: Allow $542.00.*
k) 11.11 Ponding water to rear patio slab (insufficient fall): Mr Urguhart blames the respondents for this problem because they insisted on the internal floor slab being dropped by 34mm but did not permit Mr Urguhart to drop the slab the equivalent amount thereby creating insufficient fall and allowing water to pond. Mr Urguhart says that he would have fixed this during the course of the construction by grinding off the slab and then laying tiles to gain sufficient fall. The difficulty here is that Mr Urguhart is the registered builder and responsible for the work.[19] Clearly water is ponding on the slab or running towards the interior of the house, this is unsatisfactory and it must be fixed. The cost of this rectification varies significantly with Mr Ray suggesting a slab replacement would cost $8,981.00 and as and alternative re- levelling the slab would cost $4,567.00. Mr Groom on the other hand suggests that engineers advice would be required, there would necessarily be reinforcing protection and there would be the cost of the door removal and reinstatement. The total cost according to Mr Groom would be $33,350.00. Clearly the slab needs replacing rather than it being scrabbled and falls being adjusted with tiles. This would involve the removal of the slab and replacement. Mr Groom is concerned that as the internal floor slab and the outside slab has been poured as a monolithic slab and is unsure whether it is a simple case of cutting and removing the external slab. He suggests that engineering advice might be necessary to ensure structural integrity. I can appreciate Mr Groom’s concerns but there is no evidence to support his concerns or his costings for this work. Mr Groom’s estimate is, as I see it, is the worst case scenario whereas Mr Ray has costed each component part of the work. In this instance having regard to the method of costing I prefer Mr Ray’s approach but I think I should make some addition allowance to take into account Mr Groom’s concerns. Doing the best I can having regard to both estimates I propose to allow $15,000.00.
[19] Ownit Homes Pty Ltd v Batchelor; ibid 133.
l) 11.12 Roof, gutters and roof flashings: Once again this is work that the applicant says was in progress and would have been completed during the remainder of the build. However Mr Groom, whose evidence I accept, says that the roof is poorly installed contrary to the Building Code of Australia, HB39 and manufacturers recommendations. There are insufficient overflows to the gutters, insulation blankets are hanging in the gutters, spreaders are inadequate and the flashings are inadequate and incorrectly rely on silicone. This is defective work for which the applicant is responsible. There is a variation in the cost to rectify (Groom $4,026 and Ray $5,233). I propose to allow $5,000.00
m) 11.13 Framing to Eastern blade wall. This is not to plan and is not plumb and therefore requires rectification (Groom $1,540 and Ray $2,320). Allow $2,000.00.*
n) 11.14 Master bedroom ceiling height: The master bedroom has not been built in accordance with the plans thereby reducing the height albeit minimally. It is supposed to be 2.400mm but is 2395mm. Mr Grooms says the certifier Mr Harris will not certify unless is 2400mm is maintained under the BCA. It will reduce further once plasterboard is applied to the ceiling, which is about 10mm thick. Mr Groom says the cost will be substantial with an estimate of $12,980.00. He does not give any detail as to how this is to be done or how it is made up. Mr Ray on the other hand sets what would be necessary to lift the height. A similar situation arose in Ownit Homes where the ceiling height was 2390mm with 2400mm specified. Thomas J (as he then was) considered the question of allowable tolerances in building work and concluded that the difference of 10mm was within accepted tolerances. However, here there is a question of certification. I find it difficult to accept, without hearing form Mr Harris who was not called, that a 5mm differential would not fall within acceptable tolerances resulting in certification. Having said that I am still prepared to allow the cost of rectification as recommended by Mr Ray, that is to dismantle the frame and rebuild the to gain the extra height. I also take into account that the respondents are entitled to have the room built in accordance with the plans and I propose to allow $1,617.00.*
o) 11.15 Chamfer boards not installed as contracted: This also relates to a hole in one of the weatherboards. The cost of rectifying this is minimal however the larger issue is with respect to the fixing of the chamfer boards with the incorrect fixings and the supply of the incorrect boards. Mr Groom is of the opinion that the boards will have to be replaced and the proper fixing used instead of ‘T’ nails as has been used by the applicant. This has lead to the boards splitting and installation done in a poor and unprofessional manner. Not only were the incorrect fixings used, also a cheap quality chamfer board was also supplied. To remove and replace the chamfer boards, Mr Groom estimates the cost will be $48,000.00 plus $7,000.00 for scaffold.[20]
[20] Exhibit 22, 39
Mr Ray has also provided a very detailed costing of this work. He has broken it down, as one would expect resulting in a cost of $15,247.36. Because the claim for this item is a significant amount, some breakdown from Mr Groom would have been preferable rather than a lump sum figure. The photographs would indicate that the work is defective and I accept Mrs Partington’s evidence that the incorrect chamfer board was used. In the absence of any breakdown by Mr Groom I prefer Mr Ray’s evidence on this point because it addresses the cost of all the component parts to remove and replace the chamfer boards and to carry out this rectification work. I will allow $15,247.00
p) 11.16 Control Joint missing to eastern wall: The applicant blames the owners for this defect because he says they did not want control joints. It is his responsibility to build to insure structural integrity. There is a difference in opinion on cost of rectification (Groom $2,750 and Ray $1,617) and I propose to allow $2,000.00.*
q) 11.17 North eastern window leak: The cost to rectify varies (Groom $1,210 and Ray $488). I propose to allow $800.00.*
r) 11.18 Blue-board clad areas: There are areas at the rear where blue-board has been fixed without sarking installed under the Blue-board. The BCA specifies that sarking should be installed behind Blue-board as does the Hardies sheet installation specification. The photographic evidence supports this contention. There is very little difference in the cost of rectification so I will allow $8,000.00.
s) 11.19 Block wall on rear patio. There is no cost nominated for this or any commentary.
t) 11.20 Thickness of the lounge wall not as per plan. The applicant says there was a discrepancy between the measurements on the plan and the actual sizes on site. This should have been addressed with the owners at the time or referred back to the architect. It is incumbent on the builder to follow the plans and if there is a discrepancy resolve it with the owners. This was not done and it needs to be rectified. In this instance I prefer Mr Ray’s detailed costings for this rectification work because having regard to the photographs I can generally see the method of rectification suggested by him. I will allow $1,017.00.*
u) 11.21 Thickness of the lintels. I will allow $285.00.
v) 11.22 Access hatch missing from western riser. I will allow $130.00.*
w) 11.23 Kitchen wall/column construction has been incorrectly installed resulting in a 215mmwide wall rather than a 90mm wall as designed: The justification for this deviation from the plans is that the subject wall is load bearing and therefore it had to be widened. I can only assume the decision of the builder to widen the wall was for structural purposes. There is a vast difference in the cost of rectification with Mr Groom estimating $8,552 and Mr Ray $1,537. Again considering Mr Ray’s detailed costing and the photo it is difficult to see how Mr Groom’s figure in this instance can be justified, particularly when I harbour some doubt as to the need for rectification. I propose to allow $1,500.00.*
x) 11.24 Windows to main bedroom. No cost nominated.
y) 11.25 Upper window in lounge room reduced in height. No cost nominated
z) 11.26 Ant capping. To install ant capping I will allow $1,554.00.*
Total cost of rectification is $68,735.00. I indicated that there are some defects that the builder would have attended to during the next stage of the works which would have saved him on cost of rectification. I have identified those items with an asterisk above. They total about $20,000.00. Mr Urguhart would have saved at least the builder’s margin and some savings on materials. In my view a fair discount for this saving would be to allow $6,000 on the cost of rectification and completion. This then reduces the respondents assessed damages to $62,500.00.
Assessment of the applicant’s damages
Although there is an offsetting claim for damages for defective or incomplete work, it is logical to deal with the applicant’s claim for damages before dealing with the respondents’ counterclaim as was done in Ownit Homes.
Clause 28.8 of the contract sets out the agreed damages that can be recovered by the builder as a debt the greater of the following amounts:
(a)5% of the contract price; or
(b)Damages including:
(i)the costs of all work carried out by the contractor under this contract;
(ii)the costs to the contractor of any materials purchased by the contractor and delivered to the site or ordered by the contractor from suppliers and which orders can not be cancelled;
(iii)the costs of the contractor quitting the site;
(iv)the contractor’s margin on the total of the amounts payable under subparagraphs (i), (ii) and (iii);
(v)default interest on any unpaid moneys under Clause 33;
(vi)all other costs and losses incurred by the contractor as a consequence of this contract being ended.
Clearly the damages claimed exceed 5% of the contract price so an assessment has to be made under the various heads set out in cl 28.8(b).
The contract price for the construction of the renovations was $483,742.00. The amount paid by the Partingtons up to the enclosed stage was as follows:
Deposit 5% $24,187.00
Raise House Stage 8% $41,762.20
Base Stage 10% $48,374.00
Frame Stage 15% $72,561.00
That is a total of $186,884.20. The balance that would have been payable would have been $296,858.00. In addition, to the enclosed stage payment of $145,122.00 (30%) there were variations of $6,547.41 for additional works.
Costs of work (including materials) carried out under the contract
Mr Urguhart has provided a spreadsheet which sets out the total cost of the job[21] at $396,970.39. Mrs Partington was critical, rightly, of some of the items of expenditure which included such things as employee superannuation, travelling allowances, rostered days off and sick pay etc. which were not applicable to the job. The applicant concedes that these expenditure items should not be charged to the job and has allowed a credit of $20,797.62. this reduces the cost of the job to the enclosed stage to $376,172.77.
[21] Exhibit 5.
Mr Ray, in his report, provided an assessment of the cost of the building work up to the enclosed stage if the Tribunal was to assess the claim on the basis of a quantum meruit should it have found that the builder was in breach. His assessment, after adjustment, is $374,385.80 which is similar to the actual cost which certainly supports the applicant’s position.
Therefore after deducting the amount paid by the Partingtons which obviously must be brought to account, the total cost of all work carried out and materials supplied is $189,913.42.
The cost of quitting the site
The only amount cost claimed for quitting the site is the necessity to supply temporary fencing to protect the building site. The claim is $181.50 which seems to be reasonable.
Contractor’s margin
The amount claimed for the contractor’s margin is 20%[22] of $189,913.42 which is $37,982.68 on the total amount of cost of the job not paid for. However the cost to rectify and complete a significant amount of this work must be taken into account when determining on what amount the 20% margin should apply to. It would be unfair to the owners to allow a contractor’s margin on that work that is not of a satisfactory standard and does not comply with the Building Code and the Australian Standards. Not all of the applicant’s work meets this criteria. Therefore if the total cost of work and materials is reduce by $62,500.00 being the cost of rectification the contractors margin is ($189,913 - $62,000 = $127,913 x 20%) is $25,582.00.
[22] Definition of ‘contractor’s margin’ in the contract is 20%.
Default Interest
The unpaid sum under the contract was the progress payment to the enclosed stage plus variations of $155,669.00 ($145,122.00 plus variations of $6,547.00). However, taking into account the extent of rectification and the associated cost the applicant was never entitled to the full claim and to award interest on a sum he was not going to recover would be unjust to the Partingtons. I therefore propose to allow contractual interest at 15.68% (which I accept from applicant’s submissions to be Commonwealth Bank overdraft interest rate plus 5%) on $127,913.00 from the date of termination of the contract on 18 February 2010 to the date of judgment in the sum of $60,170.00. In assessing interest I am also mindful of the fact that Partington’s have retained the progress claim of $145,122.00 to their own benefit, even if some of it has been spent on rectification.
Quantity Surveyor’s costs
This item does not seem to be in dispute so I propose to allow the claim for the pre-contract quantity surveyor’s cost of $1,100.00.
Assessment of the Respondent’s damages
The Partingtons have made a raft of claims premised on the basis that I would find the applicant in breach of the contract. As I have found to the contrary the only claim they have is for the cost to rectify defective work carried out by Mr Urguhart or his subcontractors.
Referring to Appendix 6 of Mrs Partingtons submissions I will briefly deal with her ‘heads of damage’.
Rental, Removalist and L/Ds costs: These costs may be recoverable if they were incurred as a result of the applicant’s breach of contract. As the contract was lawfully terminated by the applicant the respondent’s must bear responsibility for these extra costs.
Inspections and Reports: I cannot see how the costs of these reports are recoverable in the circumstances. They, at best, may recoverable as part of the respondents costs of the proceedings if a costs order was made in their favour.
Cost of Rectification: The claim made is for $182,513.76 in reliance on the report from Mr Groom. There are a couple of thing to say about the Summary (in Appendix 6). Firstly, the builder’s margin is included in Mr Groom’s cost estimate for each item of rectification work. Secondly, is seems that GST has been included twice. Thirdly, I have considered each item and have come to a different conclusion on some of the items of rectification. Fourthly, because I found the Partingtons in breach I allowed a discount on the cost of rectification because Mr Urguhart would have attended to some rectification as the job progressed in line with what was said in Onwit Homes.
Valuation to rectify Remaining Defects: This also refers to the defects in the Groom report and the Ray report that have already been dealt with. As for the Barac Quotation, there was no evidence about this and at the commencement of the hearing any reliance on Mr Barac evidence was abandoned by the respondents.
Administering the Project: there may be some substance to this claim if some evidence was produced about the cost to administer the cost of rectification. The mere assertion of $1,000/wk for 28.57 weeks is not sufficient for me to make a finding about the reasonableness or otherwise about this claim.
Legals: If this is a claim for costs it will be discussed below. The submission that the respondents have spent $135,000 on legals is disturbing and demonstrates how counter productive contentious litigation in domestic building cases can be rather than resolution at mediation.
It follows that the Partingtons are only entitled to recover the cost of rectification as assessed above.
Overall Assessment of Damages.
The applicant’s assessed damages are:
Cost of work and materials to date of termination $189,913.00
Contractor’s margin of 20% $ 25,582.00
Termination costs $ 181.00
Interest of outstanding money $ 60,170.00
Quantity Surveyor’s cost $ 1,100.00
Total $276,946.00
The Partington’s damages for rectification and completion work is assessed at $62,000.00.
In the result there will be an order that the respondents pay to the applicant the sum of $214,946.00 by 29 March 2013.
Costs
Both parties, in their written submissions have asked for orders that the other party pay their/his costs of the proceeding. Both complain about the conduct of the other in the way the matter progressed to the hearing.
On 22 August 2011, the day this matter was listed for hearing, it was adjourned on the application of the applicant. The Tribunal made an order that any costs thrown away because of the adjournment of the hearing and an experts conclave, which I assume was listed on the morning of the hearing, were reserved. The applicant asks for those reserved costs and also for the costs of the proceeding.
This matter has had a long and tortuous history with multiple directions being made to try and get the matter on for hearing. On 12 May 2011 the application was listed for a four day hearing on 22 August 2011. That direction was made after a compulsory conference held on 12 May 2011. The matter had actually been listed for an earlier hearing date commencing on 14 June but was adjourned for a further compulsory conference.
Mr Urguhart has set out in the submissions the history of the matter leading up to the August hearing date in some detail. The history commences with a direction of the Tribunal on 10 December 2010 that the parties filed expert reports by 12 February 2011. An expert’s conclave took place on 18 February 2011 and the only two experts involved in the proceeding at that stage were Mr Wild and Mr Salmon. They signed off on a joint expert report. At the compulsory conference on 12 May 2011 the Tribunal ordered that the parties’ file any further material relied on by 21 July and the August hearing dates were set. However, on 5 August 2011 the Partingtons produced the expert report from Mr Groom[23] as is evident from a perusal of that report it is detailed, includes a number of defects that were not addressed in the earlier report, and also provides costings for rectification and completion. In addition to the Groom report, the respondents delivered further statements on 8 August 2011 which included the comprehensive statement of some 40 pages of Mrs Partington. A further statement of Mr Groom was delivered on the 18 August as well as another statement by Mrs Partington.
[23] Exhibit 22.
Understandably, on the receipt of Mr Groom’s report the applicant needed time to consider the contents and decide whether he should address the costings in that report. The total cost of rectification suggested by Mr Groom in that report was between $150,000 and $165,000 if the builder’s margin of 20% was included. All of this was new evidence not only to deal with the issue of rectification, there was also commentary in the report about whether the works had reached the enclosed stage.
It was obvious that the Groom report changed the structure of the respondents counter-claim and the Tribunal really had no choice but to adjourn the proceeding.
The applicant relies on s 48 of the QCAT Act in that he says he has been unnecessarily disadvantaged because of the Partingtons non-compliance with the Tribunals orders, and the delivery of the late report. At that point, he had prepared for the hearing engaged counsel and was ready to proceed. It is for this reason also, one infers, why the Tribunal reserved the costs thrown away by reason of the need for the adjournment.
The applicant also submits that the respondents blatantly disregarded compliance with Practice Direction 4 which sets out how expert evidence should be dealt with.
The Partingtons say the applicant should pay the costs thrown away by the adjournment. They say that the applicant’s claim was amended late in the day to rely on a quantum merit as an alternative if the applicant did not succeed on its breach of contract claim. The respondents content that as the applicant did not have any evidence at that time to support a quantum merit claim he would have had no option but to seek an adjournment if he was going to press that alternative claim. They say that on the 16 August 2011 their ‘Quantitative Estimators’ report was given to them after the matter was adjourned. I am not quite sure what report they are referring to because the only expert report going to quantities and costs is that of Mr Ray which was prepared after the adjournment and dated 15 September 2011. Perhaps it was a draft that had been prepared earlier but in any event, it was, in my view, the Groom report which was the catalyst for not only a change in the respondents case, but also necessitated the applicant to address the issues in detail that were raised in that report. The respondents also contend that there was obfuscation by the application with respect to the preparation of the joint experts reports and the non engagement of Mr Wild in the process.
Section 100 of the QCAT Act provides that each party must bear their own costs for the proceeding other than provided in the QCAT Act or the enabling act. The enabling act here which confers jurisdiction on QCAT to hear and determine building disputes is the Queensland Building Services Authority Act and s 77 of that Act confers power on the Tribunal to award costs. In Lyons v Dreamstarter Pty Ltd[24] the Appeal Tribunal held that the usual position on costs under s 100 of the QCAT Act is displaced by s 77. And therefore although there is no provision that costs automatically follow the event, any application for costs must be considered under the general law having regard to discretionary factors.
[24] [2011] QCATA 142 at [34].
In my view, the applicant was caused a disadvantage by the respondents conduct in first not advising the applicant that they intended to engaged Mr Groom to provide an expert report as soon as they decided to adopt this course and secondly, producing the report, which is dated 10 July 2011, only days out from a hearing which had been listed for four days. Also, I note from Mr Groom’s report that he carried out his first onsite inspection on 8 June 2011.
In these circumstances, I propose to make an order that the respondents pay the applicants costs thrown away because of the adjournment of the expert’s conclave and the hearing that was to commence on 22 August 2011 on the District Court Scale of Costs.
As for the costs of the proceeding, the applicant relies on s 102(3) of the QCAT Act. In particular, that this was a complex proceeding, having regard to the relevant strengths of the claims made by each party and the financial circumstances of the parties to the proceeding.
These reasons demonstrate that this was a complex matter which involved not only legal questions as to the application of the written contract, but also for a determination of disputed facts as to whether or not the building had reached the enclosed stage or whether the contract was lawfully terminated. I have no hesitation accepting the submission that the matter was complex.
Although I have held that there was no justification for withholding the progress claim resulting in the respondent’s breach of the contract, the respondents clearly had a valid complaint about defective work. The report by Mr Groom identified extensive defective and incomplete work and even though it was contended by the applicant that that defective work would have been addressed throughout the remained of the build, it does call into question the competency and expertise of the applicant to undertake a major renovation of this type. In my view the finding that extensive rectification work was required to be carried out provides some justification for the stand taken by the respondents. Clearly they had a strong case in respect of their counterclaim.
As for the financial circumstances of the applicant I can empathise that the non-payment of the progress claim would have put him under financial pressure, but also I take into account that the respondents were under similar financial pressure in not having their renovation completed in a timely fashion and having to engage other contractors to attend to rectification work so the renovated works could be made liveable.
As I have indicated, although the applicant relies on s 102 and the matters to be taken into account in that section, which are always helpful general principles to apply with respect to costs any award of costs is discretionary. In my view, having regard to the outcome in this case where both parties have been successful both on the application and the counterclaim I am of the view that other than the order for costs already made, each party should bear their own costs.
The orders of the Tribunal are:
(a)The respondents must pay to the applicant the sum of $214,946.00 by 29 March 2013.
(b)The respondents must pay to the applicant the costs thrown away as a result of the adjournment of the hearing and the experts conclave listed for 22 August 2011 to be agreed or assessed on the District Court Scale of Costs or;
(i) Failing agreement the applicant must file in the Tribunal and give to the respondents by short form assessment of costs together with any submissions on the amount of costs by 12 April 2013.
(ii) The respondent’s must file and give to the applicant any submissions in reply by 26 April 2013.
(iii) The amount of the costs payable by the respondents will be determined on the papers without an oral hearing.
11