Ustinoff v Hagstrom & Hagstrom
[2014] QCAT 439
•27 August 2014
| CITATION: | Ustinoff v Hagstrom & Hagstrom [2014] QCAT 439 |
| PARTIES: | Mr Leon Ustinoff (Applicant) |
| v | |
| Mr Lloyd Hagstrom (First Respondent) Mrs Robyn Hagstrom (Second Respondent) |
| APPLICATION NUMBER: | MCDO71/14 |
| MATTER TYPE: | Other minor civil dispute matters |
| HEARING DATE: | 14 August 2014 |
| HEARD AT: | Holland Park |
| DECISION OF: | Adjudicator Gordon |
| DELIVERED ON: | 27 August 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The application is dismissed. |
| CATCHWORDS: | CLAIM FOR PAYMENT FOR CONCRETING WORK – unlicensed builder – most work requiring licence – other work not requiring licence - work defective – costs to remedy greater than chargeable work |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Ustinoff in person |
| RESPONDENT: | Mr and Mrs Hagstrom in person |
REASONS FOR DECISION
Background and issues
The Applicant was asked by the Respondents to construct a slab with footings at the rear of their house ready for the erection of a deck above, and also to construct a concrete path around the existing house. The parties agreed that he would be paid at an hourly rate of $50 for labour, $80 for machine work and that he would be paid his “net material costs”.
Although the Applicant asked for $13,010.20 for this work he was only paid $1,000 and now claims the rest. The Applicant was not licensed to do this work and so the Respondents say he is limited in the amount he can recover. They also say that there was no contract signed or quotation accepted, and so there is no basis on which the claim can be made.
They also say that the work was done so badly that it needs to be broken up and replaced at a cost to them of $19,500, and there is other remedial work required. Although they did seek to claim this amount in their Response, the difficulty is that the claim was brought on Form 3 and the Queensland Civil and Administrative Tribunal Rules 2009 (QCAT Rules) do not permit a counterclaim to be lodged in respect of a Form 3 claim[1]. This means that the counterclaim is not formally before the tribunal. In discussion with the Respondents at the hearing they indicated that they are content only to rely on the defects to defeat the claim and if necessary as a set-off against the claim.
[1]QCAT Rules r 48(3).
The need for a licence
The statutory provision which applies is section 42 of the Queensland Building and Construction Commission Act 1991 (1991 Act):-
42 Unlawful carrying out of building work
(1) A person must not carry out, or undertake to carry out, building work unless the person holds a contractor’s licence of the appropriate class under this Act.
Maximum penalty—250 penalty units.
(2) However, subsection (1) does not apply to a person to the extent that the person is exempt under schedule 1A.
(3) Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
(4) A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed—
(a) is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
(b) does not include allowance for any of the following—
(i) the supply of the person’s own labour;
(ii) the making of a profit by the person for carrying out the building work;
(iii) costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
(c) is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
(d) does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
“Building work” is defined in the dictionary to the 1991 Act in Schedule 2. It includes site work related to the renovation, alteration, extension, improvement or repair of a building. Certain types of work are excluded from the definition of building work and these are contained in Schedule 1AA of the Queensland Building and Construction Commission Regulation 2003. The most well known exception is for work of a value of $3,300 or less.[2] The value of building work means ‘an amount representing the reasonable cost to a consumer of having the work carried out by a licensed contractor on the basis that all building materials are to be supplied by the contractor (whether or not the work is in fact carried out by a licensed contractor on that basis)’.[3] It is clear therefore that the $3,300 should include the cost of materials even if they are to be supplied by the employer.
[2]This does not apply to all types of work – see paragraph 2 of Schedule 1AA.
[3]This is from the dictionary in Schedule 2 of the 1991 Act.
None of the other exceptions in Schedule 1AA apply except the exception in paragraph 32 which covers work consisting of earthmoving and excavating.
There are certain exceptions to the requirement to have a licence for building work related to the status of the person doing the work. These are largely in Schedule 1A to the 1991 Act and cover employees, subcontractors, persons in partnership with licensed builders, those with owner-builder permits, and in certain circumstances those acting as a head-contractor when subcontracting to licensed trades.
Section 42(1) prohibits the “carrying out” of building work without a licence. Carrying out is defined in the dictionary to the 1991 Act in Schedule 2 as meaning either carrying out the work personally, or directly or indirectly causing the work to be carried out, and also includes providing administration advisory management or supervisory services for the building work.
It is clear therefore that beyond the earthmoving and excavating work, the Applicant needed a licence to enter into the contract to carry out the work at the premises, and he needed a licence to carry out the work.
The Applicant did until 18 November 2013, hold a Builder Licence but it then expired. At the time of contracting and doing the work he held a Nominee Supervisor licence only. This entitled him to supervise other licensed contractors but did not permit him personally to contract to do and carry out building work.
The Respondents state that they thought from a licence search which they carried out on the QBCC site that the Applicant had the correct licence. They were misled by the result of the search showing as follows:-
Licence class Licence Grade Condition Status Builder - Open Nominee Supervisor No Active
I accept this. I agree that this result from the QBCC licence search is not easy to understand. It could easily be read as meaning that the person has a Builder – Open licence which is active, and that the person can also be a nominated supervisor.
On 29 April 2014 the Applicant calculated the amount owing for the work done and materials supplied at $13,010.20, being made up of $7,440.20 materials and $5,570 labour made up of 57 hours at $50 and 34 hours at $80. The Respondents not only challenge that these hours were spent on site but dispute that the time on site was spent efficiently or to good result, and they dispute the extent of the materials used.
Because of the licence issue though, the Applicant is only entitled to be paid the contract price for the work which did not need a licence, that is the earthmoving and excavation work. For the work he carried out without a licence he is only entitled to the reasonably incurred cost of materials, and any payments to others for their labour.
The “no contract” point
The Respondents say that there was no contract or acceptance of quotation and therefore there is no basis on which the claim can be made.
Here there was an oral contract to do the work. It was agreed at an hourly rate of $50 for labour, $80 for machine work and also that the Applicant would be paid his “net material costs”. Whilst it is true that under the Domestic Building Contracts Act 2000 this contract should have been in writing[4] the failure to do this does not affect its validity or enforceability.[5]
[4]By Domestic Building Contracts Act 2000 s 26.
[5]By Domestic Building Contracts Act 2000 s 92.
The Respondents say that the Applicant quoted “approximately $6,000” before starting the job. The Respondent disputes this and says that he was asked to do extras as the job progressed, a point denied by the Respondents. I think on the balance of probabilities that these differences are explained by a misunderstanding about the extent of the work actually being quoted for by the Applicant, which is often the case where quotes are not put in writing. It explains why the Applicant gave a much lower figure than he charged later. In any case, the difficulty with relying on the quote for $6,000 was that it was only approximate and so would not be firm enough to become a contractual promise. There was no contract requiring the Applicant to do specified work for $6,000 therefore. The contract was for him to be paid at a specified hourly rate for a reasonable number of hours.
The Respondents main point however is that the work was so defective that effectively they need to start the work again.
Was the work defective?
The Respondents rely on the opinion evidence of no less than seven people with an expertise in concreting and the Applicant relies on two. As is the nature of things in minor civil disputes, there is no formality in the way in which these opinions have been obtained or given.
Michael Saunders, Technical Officer Civil Engineering at Brisbane City Council gave evidence on the telephone at the hearing in accordance with his email of 11 April 2014. He had attended the property to look at the work and had also spoken on site with the Applicant. The Applicant told Mr Saunders that he had decided to do the whole concreting job himself but could not work it quickly enough resulting it curing too fast and turning chalky and flaky. In addition to this problem there were no expansion joints, nor expansion foam where it joins the existing. The edges were far from straight, and also had not been formed correctly causing some chipping and sharp edges in other areas. There was also insufficient fall to get the water away from the house sufficiently. Mr Saunders expressed the view that the job was completely unacceptable and that no professional concreter should ask for payment for a job like that.
Harley Gray of Ideal Concrete Solutions also inspected the work and found that the concrete had not been laid properly causing it to dust quite severely. There were no expansion joints or expansion foam separating the new slab from the existing slab. The edges of the slab had been left with a sharp edge and were very far from straight. The work was completely unacceptable and he did not believe it had been carried out by a licensed or qualified concreter.
Nick Syvertsen another concreter, and Fred Pylypenko of Great Outdoor Pools also expressed the view that the job was not satisfactory. David Beckett Constructions described the slab as ‘up and down like waves in the ocean’.
Adam Rooney of Adlay Concreting gave a long report. He said he was appalled at the job. He gave a long list of defects including extremely uneven surfaces, incorrect fall, numerous areas of cracking, chalkiness and dusting, extensive areas incorrectly finished, no control joints, incorrect formation of edges and steps with missing areas, damage to the driveway, steps replaced without proper support, holes caused by tree roots due to poor preparation work, missing steel in an area of the footpath, steel in other areas placed too deep, and deviation from the engineering drawings. The central cause of the problems was the Applicant’s attempt to complete the job without assistance and also in Mr Rooney’s opinion a demonstrated lack of concreting experience.
Finally, Noel Henning of Queensland Building Inspections found major defects in the slab and footpath similar to those listed by Mr Rooney. He considered that there was a safety hazard in several areas requiring immediate rectification. He was unable to recommend any further work until the problems were rectified. He strongly advised that the cracking should be monitored and examined by a structural engineer for further assessment and advice.
The Applicant counters these views with reports from Ian Rickard a consulting engineer and Gary Holley a building surveyor. Their reports show that they did not visit the site, but relied on the engineering plans and photographs taken by the Applicant during the course of the work. From these they were able to say that generally the footings and internal beams and the slab were constructed in accordance with the plans. Mr Holley had certain reservations however. He noted the absence of a moisture barrier and questioned the slab’s structural adequacy bearing in mind the property was flood affected. He also made comments about the poor surface appearance.
Overcharging in the invoice
Adam Rooney expressed the view that the job should have been done much more efficiently, therefore saving plant hire, time and the amount of concrete used. Mr Hagstrom says that the Applicant has charged for many items of materials that were not in fact used. For example he saw only four bags of concrete mix used out of fifteen, the remainder being taken off site. He also says that the invoices he has seen include materials which were not used on site.
I accept that evidence. Mr Hagstrom was on site keeping a detailed watch on the work and is precise in his comments.
These things mean that the Applicant’s invoice for materials cannot be relied on. The proper charge for materials is likely to be substantially less than the $7,440 claimed.
Work required to remedy
One part of the work has already been removed by the Applicant. This was a 12 square metre area of path at the side of the house. Photographs of the work are in exhibit R4. The Applicant accepted that it was not a good job and that it was not possible to rectify the work in any realistic way other than to remove the concrete completely and start again.
As for the rest of the work, the Respondents say that they will have to break up the concrete entirely and start again. In the view of Mr Saunders this is the best way to resolve the problem. Mr Rooney is of the same view. He says that in the longer term it is cheaper and easier to do this than try to repair the existing because any concrete that is put on top of the existing will not adhere to the surface and will continually peel off and will have to be patched on annual basis.
Another option is to grind the top area of the concrete and put down pavers. The problem with this option is that there is no guarantee that the concrete below would not deteriorate. Mr Saunders did not think this would work and in his view was not the best way to resolve the issues.
The Respondents have obtained quotes from six different contractors. Four of these give quotes for more than one option for remedial work. The quotes for a repair job on the existing slab and paths are $9,240, $9,350 and $9,545[6]. There are two quotes for complete removal and relaying: $18,937 and $19,500.
[6]Being $7,645 for the patio and paths plus $1,900 for the 12 square metre path = $9,545.
Considerations
The Respondents have had some benefit from the excavation work done by the Applicant, and that work did not require a licence because it was within the exception in Schedule 1AA of the regulations for “earthmoving and excavation work”. No complaint is made about this work. On the face of it therefore, the Applicant is entitled to be paid by the Respondents for the reasonable hours he spent on that excavation work at the contract rate, including plant hire and materials supplied.
The Respondents also have some benefit from the construction of the footings and internal beams for the new slab, which the consulting engineer Mr Rickard says was structurally adequate for a patio slab. This work however was building work requiring a licence, so the Applicant is only entitled to payments he has made for materials for this work. There is no evidence that he paid others for their labour in respect of this work.
As for the remainder of the work, it is in two parts. Firstly, the existing patio slab and paths. I am satisfied from the evidence that the Respondents intend to have these removed entirely and re-laid because they have been advised that a repair job could be short lived and there could be difficulties getting the work certified. In my view their decision is a reasonable one. The second part of the work is the 12 square metre area of path and this has already been taken up by the Applicant. However it needs to be re-laid. When all this work is done, the Respondents will reach the position in which they would have been had the Applicant carried out the contract with reasonable care and skill which was his contractual obligation.[7]
[7]Implied by section 44 of the Domestic Building Contracts Act 2000.
As can be seen from the quotes, the cost of the work which the Respondents intend to carry out far outweighs any amount that the Applicant could properly charge for his work bearing in mind the licence issue.
Even if contrary to my view, it would be reasonable for the Respondents to repair the work done by the Applicant rather than removing it entirely and starting again, this is still going to cost a minimum of $9,240. Again this is more than the Applicant could properly charge for his work bearing in mind the licence issue, and particularly also taking into account the $1,000 he has been paid.
It follows that the Applicant is not entitled to any remuneration for the work done. The application fails.
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