Vakuke Pty Ltd v Sabohian
[2015] QCAT 169
•20 May 2015
| CITATION: | Vakuke Pty Ltd v Sabohian & Anor [2015] QCAT 169 |
| PARTIES: | Vakuke Pty Ltd (Applicant) |
| v | |
| Saeed Sabohian Parvaneh Sabohian (Respondents) |
| APPLICATION NUMBER: | BDL313-13 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 14-15 August 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member McLean Williams |
| DELIVERED ON: | 20 May 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Saeed Sabohian and Parvaneh Sabohian pay Vakuke Pty Ltd the sum of $3,000.00 within 21 days of the date of these orders. 2. Vakuke Pty Ltd is to provide Saeed Sabohian and Parvaneh Sabohian any outstanding final certificates, (excluding any certificate relating to the installation of insulation) within 21 days of the date of these orders. |
| CATCHWORDS: | DOMESTIC BUILDING CONTRACT – circumstances wherein variations do not comply with requirements of Part 7 of the Domestic Building Contracts Act 2000 – circumstances in which parties obtain agreement in resolution of their dispute prior to QCAT proceedings, yet then seek to abandon it – inadequate evidence in substantiation of either claim or counterclaims, approach by the tribunal in these circumstances – impact of previous agreement in resolution of dispute on claims before QCAT for payment for variations, under s 84(4) of the Domestic Building Contracts Act 2000 Domestic Building Contracts Act 2000 (Qld), s 84 |
APPEARANCES:
| APPLICANT: | Mr Saied Maboudi (principal) |
| RESPONDENT: | Saeed Sabohian Parvaneh Sabohian Saman Sabohian |
REASONS FOR DECISION
The applicant company, Vakuke Pty Ltd, is owned and operated by Mr Saied Maboudi. Mr Maboudi is a civil and structural engineer, and is also a registered builder. Vakuke Pty Ltd is the means by which Mr Maboudi conducts his business as a builder.
On 14 March 2012, Mr Maboudi, on behalf Vakuke Pty Ltd, entered into a BSA New Home Construction Contract with the respondents, Mr Saeed Sabohian and Mrs Parvaneh Sabohian, to construct a new home for them, at 15 Cascade Street, at Springfield Lakes. The agreed price for the new home was $280,000.00. This amount was to be paid as a series of progress payments, upon the project attaining each of the following stages:
Deposit: $14,000
Base stage: $28,000
Frame stage: $42,000
Enclosed stage: $98,000
Fixing stage: $56,000
Practical completion: $42,000
At the outset, I record that the written contract makes provision (at item 12), for liquidated damages, and specifies that the parties should either insert an amount, or write ‘nil’ in the event that it has been agreed that there was not to be any provision for liquidated damages. In the event that item 12 is merely left blank, then the standard form contract provides that a default rate, of $50.00, is to apply for liquidated damages. In this instance the parties have neither inserted an amount, nor have they written ‘nil’, such that the default rate of liquidated damages becomes applicable.
Although the contract did not specify a starting date, the total construction period allowed under the contract was specified to be 27 weeks, (including a seven day allowance for delay), from the date of commencement. Equally, it becomes clear from insertion of ‘NAB’ as the lender, at item 14, that it was intended that the contract be conditional upon the respondents obtaining loan approval. However, the parties have not inserted the loan approval date on the contract. Equally, it would seem that the deposit sum was not paid by the respondents when it ought to have been, (when the contract was signed), as Mr Saeed Sabohian says, in his statement of evidence,[1] that the deposit sum was not paid until 3 July 2012, rather than on 14 March 2012 when the contract was entered.
[1]Filed in the QCAT registry on 9 July 2014, at [7].
At the end of the evidence it remains unclear to me when construction works actually commenced on the site at Cascade Street. The contract is silent as regards the defined starting date (item 3), by reason that the parties have not thought it important enough to specify a starting date. Equally, a BSA Form 1 Commencement Notice has not found its way into evidence and, given the very low level of observance by the parties with the formal requirements of the contract, I much doubt that one of these was completed. It is to be noted that Mr Sabohian says[2] in his statement that construction should be deemed under the standard contract terms to have commenced on 9 August 2012. It does seem at least logical to infer that the builder would not have commenced until after having received the deposit; and the builder did not, in all events, have an approved set of plans until sometime after 26 July 2012.
[2]Ibid, at [11].
Although it is surprising, Mr Maboudi was unable to inform the Tribunal as to the actual commencement date for building works, saying that works started sometime around the end of August, 2012.[3]
[3]Affidavit of Saied Maboudi, filed 28 May 2014, at [2], and what he said during his oral evidence before the Tribunal.
In the end, the state of the evidence is so unsatisfactory that I am unable to identify the actual commencement date. This is particularly unhelpful, in terms of my being required to calculate the construction period in any case (such as here) where the contract has ended in a dispute between the parties that includes claims for liquidated damages because of allegations of a failure to comply with the contract timeframes. That however is another unfortunate consequence of the lack of regard by these parties for their needing to properly document the terms of their agreement. Failure to follow the process required by the contract has other consequences, which will be explained, further below.
Because of the failure by the parties to specify a starting date, the default specification in clause 29 of the standard conditions makes the starting date 10 business days after the issue of plans duly approved by the Assessing Certifier. The construction plans that have been received into evidence have been stamped as having been approved by the Certifier on 26 July 2012, hence requiring that the default starting date become that as now contended by the respondents: 9 August 2012. Accordingly, the date for practical completion becomes 27 weeks after that date, or, in other words 14 February 2013.[4]
[4]Ultimately the contractually calculated date for practical completion is of no more than academic interest, as the date for practical completion was in all events varied, by subsequent agreement between the parties.
Ultimately, construction of the house at 15 Cascade Street took a good deal longer than had been contemplated by either the applicant, or the respondents, no matter the actual starting date. While there is no dispute that the construction took a good deal longer than had been envisaged, the parties are now considerably at odds as regards the reasons why that state of affairs came to pass, with each now blaming the other. Mr Maboudi contends that the project did not attain practical completion until 30 September 2013, entirely in consequence of Mr and Mrs Sabohian requesting numerous variations; taking much too long to provide necessary instructions to him in his capacity as the builder; and because of the respondents having been inordinately slow when making progress payments to him.
Mr Maboudi acknowledges that, by the later stages of the construction, he and the respondents had fallen into dispute about a multitude of issues, yet the substance of his evidence was that he was still working to resolve their differences and to bring the project to a conclusion. I accept his evidence in that regard. The fact that Mr Maboudi was trying to resolve the dispute amicably is clearly evidenced in subsequent agreements between himself (on behalf the applicant) and the respondents, towards the end of the project.
In this regard, Mr Maboudi acknowledges[5] that a meeting took place with the respondents and their son, Mr Saman Sabohian on site on 15 August 2013, at what he says was the practical completion stage, in the presence of a person described by him as ‘a mutually agreed mediator’, Mr Kamran Samimi. This site meeting was convened in order to discuss various issues, including the respondent’s materials selections; their delay in progress and variation payments; and the remedying of minor defects, all in an attempt to resolve these issues, and conclude the project.
[5]See the Affidavit of Saied Maboudi, filed 28 May 2014, at [5].
During that site meeting, Mr Maboudi says that he was attacked - physically and verbally - by the son of the respondents, who then had to be restrained by both Mr Kamran Samimi and by his mother, Mrs Sabohian. In consequence of those attacks - and his therefore feeling intimidated and threatened - Mr Maboudi says that he unwittingly agreed to forego some payments to which he claims he would otherwise have been entitled, for variations.
In late September 2013 Mr Maboudi says that attended to the rectification of some of the minor defects and outstanding items that had been identified on 15 August 2013. He says that, on 25 September 2013, the applicant sent the respondents formal notice of practical completion (pre-dated for 30 September 2013), together with each of the following documents:
a) Form 7 (Certificate of Practical Completion);
b) Form 6 (Defects Document);
c) Final Approval Certificate from a Private Certifier (Form 21); and
d) Claims for payment for the final progress payment and the requested variations
On 28 September 2013 Mr Maboudi sent one of his employees to the house at 15 Cascade Street in order to retrieve some tools that were on the site and stored in the garage of the house. Unbeknown to the applicant, the respondents had already moved into the house a few days prior to this, and Mr Maboudi’s employee was refused entry. The police were called.
Two days later, on 30 September 2013, Mr Maboudi says that the respondents requested that he attend to further minor defect rectification, which he says that he did and that those things were all completed by the applicant, in very early October, 2013.
Mr Maboudi says that, in early October, Mr and Mrs Sabohian requested that he attend to the installation of insulation in the ceiling space and wall cavities of the house at Cascade Street, in conformity with the requirements of the original contract specification, an item that had hitherto been overlooked by the builder. He says that Vakuke Pty Ltd was at all times willing to comply with this final request, yet were unable to do that, because the respondents refused his workers and subcontractors any further entry to their premises. With the exception of this insulation, the applicant contends that the house has attained practical completion, and all of the contract works have been completed. Despite demand, the applicant says that the respondents have yet to pay the remaining outstanding amount from the final progress payment sum (being a sum of $14,000.00), together with the variation invoices.
As at the commencement of its claim before QCAT, the applicant contends that it is still owed $58,132.02 by the respondents, comprised by the following components:
Variation Payments: $36,825.58
Final progress payment: $14,000.00
Legal costs: $2,722.60
12 months interest, at 15% $6,748.84
QCAT Application fee: $285.00
The Respondents’ Position
Although acknowledging having received the applicant’s certificate of practical completion dated 30 September 2013, the respondents say that they did not sign this document, because the house still contains significant defects and incomplete items. Accordingly, the respondents contend that the house has never actually attained practical completion, and that the applicant should now be liable, under clause 19 of the contract, to pay them liquidated damages (at the contract default rate, of $50.00 per day), for every day beyond 4 October 2013, (which they say became the new agreed date for practical completion).
Although Mr Maboudi has attributed the delays in bringing the project to completion entirely to the respondents, Mr and Mrs Sabohian deny that they have caused any delay, and observe that Mr Maboudi has never particularised any of his vague complaints that they were unduly slow in providing him with their instructions. Moreover, they observe that if they were in fact slow, that the contract contains a mechanism, in clause 14 of the general conditions, that may be used by the builder if the owners are ‘dragging the chain’, to the extent that any delay by the owners is impacting on the prospects of the builder achieving the date for practical completion. The respondents note that Mr Maboudi did not ever given them any notice under Clause 14, such that they assert that the contractor did not express any wish to claim extra time, and did not provide the information with which to lay the basis for any claim for delay; such that the applicant ought not now be entitled to point to any delay by the respondents, which in all events they still deny.
I agree that failure by the builder to send the respondents any notice pursuant to clause 14 of the general conditions has the result that the applicant is now precluded from seeking to rely on any alleged delay by the homeowners.
Further, the respondents point to the agreement made between themselves and Mr Maboudi on 15 August 2013, which was reduced to writing, and then signed by them in the presence of Mr Kamran Samimi, by which they say Mr Maboudi agreed that the full amount of the applicant’s entitlement for variations was $16,860.15, of which they have now already paid $8,000.00 to the builder.
The respondents also point to the fact that none of the variations claimed by the applicant comply with clause 22 of the building contract; nor therefore with the requirements in Part 7 of the Domestic Building Contracts Act 2000 (Qld) (‘the DBC Act’). The respondents also note that shortly after the meeting on 15 August 2013 that they had paid the builder $28,000 towards the $42,000 practical completion stage claim as an act of good faith, even notwithstanding that the project had not yet attained practical completion to their satisfaction, and that no payment at all was required by them to the builder at that time.
Whilst Mr Maboudi claims that various defects and omissions were rectified after the site meeting on 15 August 2013, the respondents say that only some of these defects and omissions were in fact rectified, such that there are still numerous defects and omissions that require remediation. The respondents have since obtained a quote from another builder, and contend that the cost for them to now independently rectify the defects and omissions that have been left incomplete by the applicant will be $98,274.00, inclusive of GST.
Although the respondents say that it is true that they had already commenced occupation of the premises when Mr Maboudi’s employee turned up to collect tools on 28 September 2013 (when the police were called), they contend that they were entitled to occupy the house once Mr Maboudi had sent them the Form 21, and in those circumstances they were entitled to refuse entry to Mr Maboudi’s worker, who had turned up without any prior arrangement.
The respondents also point to the terms of another agreement between themselves and Mr Maboudi – this one made on 12 October 2013 - in a further attempt to resolve their differences, by which Mr Maboudi agreed to attend to six matters (listed in the agreement as 1 – 6), whereupon they would pay him $3,000.00 in final satisfaction of all claims. The respondents say that, in the end, the applicant did not attend to items 1 – 6, and hence they are not now obliged to pay to the applicant the agreed $3,000.00 and are now entitled to instead seek damages caused by the applicant’s breach of their building contract, before QCAT.
Ultimately, the respondents position is that this dispute should be resolved on the basis of an order for payment of $135,829.67, in their favour, (in other words, a counterclaim), made up as follows:
Monies still owed by them, for variations: ($8,860.56)
Cost of rectification of builder’s work: $98,274
Liquidated damages (as at 31 July 2014) $15,000
Recovery of their overpayment for the
practical completion stage: $28,000
Recovery of advance payment for materials: $2,886.23
Additional amount for portable long service levy: $530.00
In addition, the respondents make a claim for interest, and costs.
The parties to this dispute were self-represented. At the end of the hearing, the state of the evidence presented before the Tribunal was generally unsatisfactory, and much of it has ultimately proved to be unhelpful – in terms of assisting me – in the resolution of this dispute.
None of the builder’s claims for payment for variations comply with the requirements of clause 22 in the contract’s general conditions; nor therefore do they comply with the requirements of Part 7 in the DBC Act. Despite that, Mr Maboudi did not even seem to be aware of the need for the applicant to satisfy the requirements of s 84(4) of the DBC Act in order to now obtain any form of payment for the variations.
Equally, the quality of the evidence relied upon by the respondents in order to show their counterclaim and prove that they are now left with the need to expend more than $98,000.00 in order to rectify defects and omissions left behind by the builder is rather dubious. In this case there are no expert reports: that unpack and then explain any of the alleged defects; and the builder who has provided the respondents with a one page quote for $98,274.00 as being the cost to now undertake the allegedly required rectifications was not called to give any evidence before the Tribunal.
Despite the very obvious shortcomings in the evidence, it seems to me that resolution of this dispute must entail acknowledgement that the parties have already previously agreed – on 15 August 2013 and then again on 12 October 2013 – to a mechanism in an effort towards resolution of their dispute.
Although the parties contend that these attempts at resolution have fallen over – such that they are now seeking to enforce their respective rights under the original contract – I take the view that these subsequent agreements have not fallen over, and have in fact overtaken the original agreement, such that these cannot simply be overlooked, in the retelling of the story.
On 15 August 2013 Mr Maboudi met with Mr and Mrs Sabohian on site at Cascade Street along with Mr Kamran Samimi and also the son of the respondents, Mr Saman Sabohian. On that occasion an agreed list of defects and omissions was drawn up by Mr Kamran Samimi and was signed by the parties. During that meeting, the builder’s variations claims were also discussed, because the owners contended that many of these were within the original scope of works. Ultimately, an agreement was reached about these variations, and this list was also reduced to writing, and signed, by Mr Maboudi, Mr Sabohian, and Mr Kamran Samimi, and the respondents agreed, as a sign of good faith, to pay to the builder $28,000.00 towards the practical completion stage claim. The respondents did not have to pay that money at that time, but they did.
In his affidavit[6] Mr Maboudi says that he unwillingly agreed to forego payment for some variations to which he was entitled, because Mr Saman Sabohian, who is the son of the respondents, had assaulted him. The applicant appears to contend that this affords reason enough to now overlook the effect of the agreement obtained on that date. Whilst there may conceivably have been some physicality and terse language used on 15 August 2013 by Mr Saman Sabohian (a matter that is flatly denied by Mr Saman Sabohian), this is not a question that I need to determine in the resolution of this dispute.
[6]Affidavit of Saied Maboudi, filed 28 May 2014, at [5].
In the end, I do not accept that Mr Maboudi unwillingly (or perhaps unwittingly) gave up any entitlement to his claim for payment for variations. On this point the available evidence just does not lend any credence to that suggestion. Rather, the evidence suggests that Mr Maboudi entered into the agreement brokered by Mr Kamran Samimi quite willingly. In his statement, Mr Kamran Samimi says that Mr Maboudi agreed that the total claim for variations – being matters that were ultimately agreed to be matters that were outside the scope of the original scope of works – was $16,860.56. This also accords with the documents put into evidence that have been initialled by Mr Maboudi on 15 August 2013. The contention that he made this agreement unwittingly is also not consistent with Mr Maboudi’s own subsequent email to Mr Kamran Samimi dated 20 August 2013, which gives every indication that he agreed with the negotiated outcome derived on 15 August 2013, (even therein thanking Mr Kamran Samimi for his helpful intervention in this dispute), and undertaking to have the defects and omissions remedied by 17 September 2013. Mr Samimi says[7] that the respondents then agreed to extend the date of practical completion until 17 September 2013. The fact that an agreement had been obtained is also confirmed by an email[8] sent by Mr Saman Sabohian on behalf his parents, the respondents, on 21 August 2013.
[7]Statement of Kamran Samimi filed 9 July 2014, at [17].
[8]Statement of Saman Sabohian, filed on 9 July 2014, Appendix B.
On 16 September 2013 Mr Maboudi sent another email to the respondents (again via their son, Mr Saman Sabohian) informing that the house was now complete. This affords further evidence in confirmation that an agreement had been reached to extend practical completion until 17 September 2013. Yet, in an email response sent by Mr Saman Sabohian on behalf his parents on 19 September 2013, the respondents rejected the assertion that the defects and omissions had all been rectified, although it was acknowledged that by that stage a good many of the items on the agreed list of defects, as drawn up on 15 August 2013 had been dealt with, by the builder. In a response to that email, also sent on 19 September 2013, Mr Maboudi indicated that he had been waiting for further instructions from the owners in relation to the insulation. In light of that, and further discussions between the parties, the respondents then agreed, by another email on 23 September 2013, to once more extend the date of practical completion: this time until 4 October 2013.
On 4 October 2013, Mr Saman Sabohian sent back to Mr Maboudi a copy of the Form 6 (as had been sent to the respondents by Mr Maboudi on 25 September 2013), listing the defects and omissions that the respondents contended still existed, thereby disagreeing with the builder’s contention that the house had attained practical completion. Despite that, it seems that Mr Maboudi remained of the view that the project had reached practical completion. Because of this impasse, another site meeting was convened between the parties on 12 October 2013, with Mr Kamran Samimi again attending in his capacity as an informal mediator. A further agreement was reached by an exchange of emails on that date.
By the further agreement brokered by Mr Samimi on 12 October 2013 the parties resolved that, in exchange for the payment of another $3,000.00 by the respondents to the applicant, the builder would:
(1)supply the final certificates;
(2)supply a letter that all warranties relating to his work are valid;
(3)not do any further work listed in the previous agreement (15 August 2013) for the builder’s attention ‘unless required by law’;
(4)not do any more remedial work;
(5)not lodge any claim against the respondents relating to this construction; and
(6)allow the respondents to take possession of the house.
Mr Samimi requested that the parties acknowledge their agreement to the terms set out in his email of 12 October 2013 by a reply email acknowledging an agreement. The respondents agreed to those terms by a reply email sent at 11.21am on 12 October 2013. Mr Maboudi’s response email (sent to Mr Kamran Samimi at 11.49 am on 12 October 2013) agrees to those terms yet says: ‘As per peel (sic) phone conversation I will supply final occupancy certificate, only’.
Determination of the Applicant’s Claim
Claim for Variations
It seems to me, for reasons that I have already explained going to non-compliance with Part 7 of the DBC Act, that the applicant’s claim for payment for the variations must fail. In these circumstances, a builder, such as the applicant, may only recover a sum for variations pursuant to s 84(4) of the DBC Act. Yet, in this case, no ‘exceptional circumstances’ have been identified by the applicant, and nor are any circumstances revealed in the evidence that might qualify as ‘exceptional’ under s 84(4)(a)(i) of the DBC Act.
In the specific circumstances of an agreement having been obtained on 15 August 2013 regarding the value of variations and an obligation by the respondents to pay for them, I am prepared to find that the applicant would suffer ‘unreasonable hardship’ (DBC Act s 84(4)(a)(ii) refers) and that it would not be unfair to the building owners for the building contractor to recover ‘an amount’ for variations. The parties agreed on 15 August 2013 that the correct amount was $16,860.15 (of which $8,000.00 was actually paid by the respondents), yet the only sum that should now be ordered to be paid by the respondents as ‘an amount’ for variations should be $3,000.00: because of the further agreement between the parties made on 12 October 2013.
Claim for the Final Progress Payment
In my view, the applicant is not entitled to the outstanding amount from the final progress payment ($14,000.00), as now also claimed by it. There are two reasons for my conclusion in that regard: firstly, due to various omissions from the project specification (such as, for example, the insulation), the house at Cascade Street has not actually attained practical completion. Secondly, I have found that the parties have agreed that in lieu of any further works towards practical completion that the respondents ought merely pay to their builder the sum of $3,000.00, in resolution of all claims.
Applicant’s Claim for legal fees, costs and interest
In the circumstances that I have described I decline to award the legal costs sought by the applicant ($2,722.60). These are, presumably, for some solicitor’s fees that the applicant must have incurred at some stage during this dispute for legal work, yet the basis of the claim was never actually explained by the applicant. I also decline to make any award for interest under the contract, as the circumstances do not warrant it.
The parties were self-represented, and I make no order for legal costs in these proceedings.
Determination of the Respondent’s Counterclaim
The respondents contend that they are not obligated to pay the $3,000.00 agreed on 12 October 2013 because of the failure by the applicant to meet the pre-conditions (1 – 6, at [38], above) of that payment. Because of that, the respondents contend that the settlement obtained on 12 October 2013 has fallen over, such that they are entitled to instead sue for damages under the contract.
It seems however that the respondents are primarily concerned with preconditions (1) and (2), in the sense that they have obtained only the final occupancy certificate from their builder and have not received a warranty letter from the applicant. The applicant has complied with items (3), (4) and (6) from that agreement and might on one view of it be considered to have breached item (5), by having now brought this claim before QCAT. In response to the contention that the agreement from 12 October 2013 is now of no effect, I offer the following observations: Firstly, requiring that the applicant supply a letter that all warranties relating to his work are valid (item 2 in the agreement) was an otiose stipulation, given that there are already statutory warranties for type 1 defects, and the agreement itself obviated the builder from needing to attend to any type 2 defects (the six month period for which has in all events now passed). In relation to item 1 of that agreement, the builder has provided the final occupancy certificate, and the need to provide any other certificates (if these have not since been provided) can easily be remedied by an order from this Tribunal. Although item 5 of the agreement required that the applicant not lodge any claim against the respondents relating to this construction, it bears remembering that this requirement was always conditioned on the respondents paying the applicant $3,000.00, which is still outstanding. It follows therefore that I find that these factors are not sufficiently impelling to impede the ability of the Tribunal under s 77(3) of the Queensland Building and Construction Commission Act 1991 (Qld) to resolve this dispute, by enforcing the agreement reached between the parties on 12 October 2013.
Accordingly, the orders of the Tribunal will be as follows:
1. Saeed Sabohian and Parvaneh Sabohian pay Vakuke Pty Ltd the sum of $3,000.00 within 21 days of the date of these orders.
2. Vakuke Pty Ltd is to provide Saeed Sabohian and Parvaneh Sabohian any outstanding final certificates, (excluding any certificate relating to the installation of insulation) within 21 days of the date of these orders.
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