| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA) CITATION : VITTE and STUDIO 8 BUILDERS & DESIGNERS PTY LTD [2013] WASAT 43 MEMBER : MS L WARD (MEMBER) HEARD : 15 MARCH 2013 LAST DOCUMENT RECEIVED 21 MARCH 2013
DELIVERED : 22 MARCH 2013 PUBLISHED : 2 APRIL 2013 FILE NO/S : CC 2048 of 2012 BETWEEN : EDGAR VITTE SVETLANA VITTE
Applicants
AND
STUDIO 8 BUILDERS & DESIGNERS PTY LTD
Respondent
Catchwords: Variation under contract - Variation under Home Building Contracts Act 1991 (WA) - Variation by agreement - Turns on own facts
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Legislation: Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5, s 41(2), s 43, s 43(1), s 49
Home Building Contracts Act 1991 (WA), s 5(2), s 7, s 7(3), s 8, s 12, s 17, s 20, s 27(1), Sch 1, cl 5
State Administrative Tribunal Act 2004 (WA), s 32(4), s 87(1) Result: Application successful
Summary of Tribunal's decision: The central issue in this case is whether the sum of $7,874, which the builder, Mr Ken Sopp of Studio 8 Builders & Designers Pty Ltd, claimed from the owner, Mr Edgar Vitte, as a variation in August 2011, is due from the owner.
The owner claims that he is not liable to pay $7,874 in summary because earthworks, apart from a small specified portion, were excluded from the contract. The owner submits that he never agreed expressly or impliedly to any additional work beyond the piling and footing work, which he approved of in contract variation item 3695 on 13 December 2010.
The builder says that he was entitled to the sum of $7,874 because the owner changed the levels on the block after the contract was signed and excavation was later required to the rear of the yard.
Based on the evidence before the Tribunal, the earthmover, Mr Rick Gleeson of Alpha Earthmoving, did two lots of work on the block.
The first work was done by Alpha Earthmoving in mid December 2010, and it relates to the concrete footing and pile work, which was the subject of contract variation item 3695.
The second lot of work was done by Alpha Earthmoving at the end of January/early February 2011, and was the spreading and compacting of the soil. The Tribunal found that the owner paid Alpha Earthmoving $8,100 in cash for the earthmoving work done at the end of January/early February 2011. The owner's evidence in this regard was supported by the credit shown on the invoice issued by Alpha Earthmoving in February 2011.
The Tribunal has not had the benefit of Mr Gleeson of Alpha Earthmoving giving evidence before it. Accordingly, it has been unable to establish if Alpha Earthmoving did any additional work for the builder to justify the additional amount in his February 2011 invoice.
The Tribunal examined the requirements for a variation under the owner's contract, the Home Building Contracts Act 1991 (WA) and a variation by
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agreement. The Tribunal found that there is no evidence of the owner agreeing to any variation regarding earthmoving, apart from the work done in December 2010. In these circumstances, the Tribunal is not satisfied that the owner is required to pay the builder $7,874. Accordingly, an order was made for the builder to repay the owner the amount of repayment of $7,874.
The Tribunal also found that the owner was entitled to be reimbursed for the cost of his Houspect report in the sum of $800.
The reasons for this decision were delivered orally to the parties on 22 March 2013 based on the written decision below, with some minor modifications for the sake of clarity of the published decision.
Category: B
Representation: Counsel:
Applicants : Self represented
Respondent : Self represented
Solicitors:
Applicants : N/A
Respondent : N/A
Case(s) referred to in decision(s):
Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264
Frankowiak and Chambers [2012] WASAT 175
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1
Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188
Jones v Dunkel (1959) 101 CLR 298
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REASONS FOR DECISION OF THE TRIBUNAL:
Introduction 1 The central issue in this case is whether the sum of $7,874, which Mr Ken Sopp of Studio 8 Builders & Designers Pty Ltd (builder, respondent or respondent builder) claimed from Mr Edgar Vitte and Mrs Svetlana Vitte as a variation in August 2011, is due from the owners. For simplicity, the Tribunal refers to the owner or applicant throughout; however, this reference is to be taken to include both owners. 2 The owner says that he is not liable to pay the sum of $7,874, in summary because: • Earthworks, apart from a small specified portion, were excluded from the contract. • No variation was submitted to the owner before the work was done in December 2010 and February 2011. • The variation does not specify with any detail the work which was done. • The owner never agreed expressly or impliedly to any additional work beyond the piling and footing work, which he approved of in writing on 13 December 2010. 3 The builder says that he is entitled to the sum of $7,874 because: 4 Based on the evidence before the Tribunal, in summary, the earthmover, Mr Rick Gleeson of Alpha Earthmoving (AE) did two lots of work on the block: • The first work was done in mid-December 2010 and it relates to the concrete footing and piling, which were the subject of contract variation item 3695 signed by the owner on 13 December 2010. This work is not in dispute and was the subject of an invoice from the builder dated 1 March 2011 and paid by the owner on 8 March 2011. (Page 5)
• The second lot of work was done by AE at the end of January or early February 2011 and was the spreading and compacting of the soil delivered by the owner. The fact that this work was done is not in dispute between the parties. 5 What is in dispute is who paid for the work carried out in February 2011, and whether AE has carried out additional work on the site beyond the two jobs described above, and as shown on the February 2011 invoice. 6 The Tribunal will now determine these issues once it has considered all of the relevant evidence before it.
Building Commission complaint process 7 By way of background, these proceedings arise out of a complaint made under s 5 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BS(CRA) Act) made on 29 May 2012. A conciliation order was made by the Building Commission (BC) on 23 November 2012 which resolved all of the workmanship issues. The outstanding contractual and costs aspects of the complaint, items 38 and 39, were referred to the Tribunal by the Building Commission and received in the Tribunal on 7 December 2012. 8 The Tribunal's powers upon referral to it of a Home Building Work Contract complaint (HBWC complaint) are set out in s 43(1) of the BS(CRA) Act. 9 A 'HBWC complaint' is defined in s 5(2) of the Home Building Contracts Act 1991 (WA) (HBC Act), and is a complaint about 'a matter referred to in the [HBC Act] s 17 or s 20 or Sch 1 cl 5'. 10 The Tribunal's powers upon referral to it of a HBWC complaint are set out in s 43 of the BS(CRA) Act including, in the following terms: (1) … the Tribunal may - … (Page 6)
11 Specifically, s 41(2) of the BS(CRA) Act sets out what a HBWC remedy order may consist of in the context of a breach of contract, and this includes: … (b) an order that a person pay a specified amount payable under the contract; (c) an order declaring that a specified amount is not payable to a person under the contract and, if already paid, an order that the builder or owner repay that amount[.] 12 Accordingly, the Tribunal is satisfied that it has jurisdiction to deal with this matter.
Items referred to the Tribunal 13 As set out above, the only issues before this Tribunal relating to the building of the owner's home at No 31 Oldham Street, Hillarys are items 38 and 39 listed in the BC Conciliation Order dated 29 November 2012. These two items were not resolved at the BC conciliation. In summary, the issues are: (Page 7)
14 In summary, the owner seeks repayment of $7,874 plus costs of $1,000 from the builder. 15 At the hearing, the owner increased the amount he sought from the builder on the basis that he was also owed a credit of $3,500 for the PS and 25% interest on the payment as payable under the contract to the builder. According to the owner, this made the amount he now seeks from the builder a total of $14,217.50 under the contract.
Proceedings in the Tribunal 16 On 10 January 2013, the first directions hearing was held. Both parties attended the directions hearing and it was programmed for final hearing. 17 On 15 March 2013, the final hearing took place. 18 On 21 March 2013, the Tribunal requested additional documents from the applicant regarding the December 2010 variation. This request was made under s 32(4) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) under which the Tribunal may inform itself on any matter as it sees fit.
Documents before the Tribunal 19 The Tribunal has the following documents before it, of which Exhibits 2 to 5 were additional documents provided by the owner at the hearing: • Exhibit 1 Hearing Booklet (HB) of 268 pages. • Exhibit 2 AE quotation - dated 8 December 2010. • Exhibit 3 Carramar Resource Industries invoice for sand dated 28 January 2011. • Exhibit 4 Letter from applicant to Mr Ken Sopp for respondent dated 5 February 2013. • Exhibit 5 Email and letter from applicant to Mr Ken Sopp for respondent dated 12 February 2012. (Page 8)
Witnesses 20 Only the parties gave evidence before the Tribunal. Both were subject to crossexamination. There are several factual conflicts in the evidence of the parties. Therefore, the Tribunal must weigh the evidence before it and make findings on whose evidence it prefers and why.
Applicant's evidence 21 The owner gave his evidence in a straightforward and detailed manner. His evidence was internally consistent, in that it followed chronologically. His evidence was also consistent with independent documents, most importantly, the invoice from AE dated 21 February 2011 (HB 260). The AE invoice shows a credit of $8,100, being the same amount which the owner has consistently claimed that he paid in cash to Mr Gleeson of AE at the completion of the earthworks in February 2011. The Tribunal viewed the owner as being a witness of truth.
Respondent's evidence 22 Mr Sopp is a registered builder and a director of the respondent building company. 23 Mr Sopp's evidence before the Tribunal was very general in nature, and in a number of aspects Mr Sopp could not offer any plausible explanation for certain occurrences. 24 Firstly, as an example, Mr Sopp's failure to advise the owner of the dramatic increase in the cost of earthworks from a PS of $3,500 in the contract to $17,500 based on the quote provided by AE to the builder in December 2010. He said that he did not provide a copy of the quote or inform the owner of the increased cost of the earthworks when he received the quote because the owner was providing his own fill and the AE quote included the fill. Mr Sopp said that it was difficult to estimate how much fill was required. Mr Sopp also said that he thought that he was not under any obligation to inform the owner of the increased cost of earthworks because it was obvious that extra work would need to be done on the block. Clearly, however, it was not 'obvious' to the owner that extra work was required. Mr Sopp's failure to advise the owner of the increase in cost does him no credit at all. 25 Secondly, according to Mr Sopp, the credit of $8,100 on the invoice from AE was not the subject of any enquiry between the builder and the earthmover. His evidence on this point was general in nature. The $8,100 (Page 9)
deduction shown on the invoice is at odds with Mr Sopp's claim that the respondent contracted AE to spread and compact the fill. He said, in effect, that the invoice was presented by AE and, according to Mr Sopp, he simply paid AE the full amount, although no documents to support the payment have been provided to the Tribunal. 26 Overall, Mr Sopp strikes the Tribunal as someone who did not ask too many questions of the earthmover, where and whenever it suited him. Nor did he seek any agreement from the owner for any additional site work above that required for the footing and piling work.
Failure to call a relevant witness 27 Neither party called the earthmoving contractor, Mr Gleeson of AE. 28 The owner said that he did not try to call Mr Gleeson as a witness because he did not think that Mr Gleeson's evidence would add any substance to his case. 29 The builder said that because the owner's case was that earthworks were not part of the contract, he did not see the point in calling Mr Gleeson. 30 The builder's submission seems to overlook that Mr Gleeson is in the best position to describe the work he did, in support of the invoice he issued to the builder on 21 February 2011 (HB 260). 31 Applying the well established principles in Jones v Dunkel(1959) 101 CLR 298, in effect, there is a need for the owner to raise a prima facie case before any adverse inference could be drawn as to the failure of the builder to call a witness. In the Tribunal's view, the owner has raised a prima facie case in relation to his payment of $8,100 to AE in February 2011, such payment corresponding to the figure in the earthmoving invoice (HB 260). It was therefore incumbent upon the builder to call Mr Gleeson. Mr Gleeson is best placed to describe precisely when, and what work he did on the site.
Applicant's position 32 The applicant submits that he has paid for both lots of earthworks carried out on the block. He has achieved this in the variation signed on 13 December 2010 and in the $8,100 paid in cash to Mr Gleeson of AE in early February 2011. (Page 10)
Respondent's position 33 The respondent submits that the whole of the AE invoice is payable because it was within the PS or it is otherwise a variation.
Facts 34 Having listened very carefully to the parties' evidence and submissions at the final hearing on 15 March 2013 and considered the documents, the Tribunal will now consider the evidence before it and make its findings. 35 By way of background, the owner said that he was personally responsible for: 36 Both parties agree that in its original state the owner's block was a very difficult block to build on because it had a variation in soil levels of up to 2 metres. The block in its original state had terraced retaining walls in the backyard and a home on it. 37 The owner said that the as a result of the difference in soil levels on the block he had two options: 38 The owner's second option required a considerable amount of additional fill being brought to the site. The builder was not willing to estimate how much fill would be required to level the block. The builder also, quite properly, warned the owner that the local council may not permit the block to be filled. This was because in some parts of the block the owner would require retaining of more than 500 millimetres in height and, therefore, a building approval would be required. 39 For this reason, the owner's evidence was that the contract with the builder was limited to include only minor earthworks; for example, filling (Page 11)
of potholes and minor cut and fill. For these minor earthworks, the builder estimated and stated in the contract that the PS was $3,500. 40 On 10 May 2010, the builder provided his Costing Schedule to the owner (HB 213 and HB 214). The relevant items included: Item 7 provisional sum for earthworks $3,500; and Item 65 retaining walls and costs to be established Final price reflecting contract price of $488,165. 41 On 12 May 2010, the final sketch was provided by the builder. The builder noted that no retaining walls are shown on the sketch (HB 216). 42 On 13 May 2010, the owner sent an email to the builder regarding his retaining plan and stating that he prefers a retaining wall on the boundary line (HB 217). 43 On 17 August 2010, a site plan was provided by a surveyor. The owner says that the site plan shows the block as level with an 11.5 metre finished floor level (FFL). The owner says that the 11.5 FFL is what the contract related to and what the council approved. The site plan also shows the proposed limestone retaining walls at the rear of the block (HB 228). 44 On 15 September 2010, the parties signed the Housing Industry Association (HIA) Lump Sum Building contract. Site works were excluded from the contract except for the cut and fill (HB 75 and HB 232). A PS of $3,500 was allowed for the 'cut and fill'work(HB 196). 45 On 4 October2010, the builder issued a variation certificate for a credit of $12,000 for demolition (HB 233). The builder says that there was no request to delete site work as a provisional sum at this time. The owner's response is that the PS for site work was for the stated minor works. The variation also confirms that the limestone retaining was to be carried out by the owner (HB 233 and HB 234). 46 On 1 November 2010, the City of Joondalup wrote to the builder requesting a structural engineer's report regarding the proposed retaining wall and construction details for the wall (HB 235). In response, on 12 and 15 November 2010, the engineers then provided the builder with two reports as requested by the City of Joondalup (HB 237 and HB 243). (Page 12)
47 Mr Sopp said in his evidence that the Water Corporation required that 4 metre concrete piles be installed on the block, due to the close proximity of the sewer. The owner says that the piling work was the subject of a variation by the builder and was agreed between the parties. 48 On 30 November 2010, the owner sent an email to the builder regarding the construction of the foundation for the retaining wall (HB 247). 49 The builder says that making a foundation for the retaining wall was not in the contract and so this was additional work. This is accepted by the owner. Accordingly, the builder issued a variation certificate dated 3 December 2010 relating to 'Item 3695 Add concrete footing for retaining as quoted' at a cost of $8,345. 50 On 8 December 2010, Mr Gleeson of AE provided a quote dated 8 December 2010 for $17,500 (notincluding GST) for: Earthworks FFL $11.586 Work included in quotation Excavate for boundary retaining walls and prepare for footings Supply fill and backfill retaining walls to underside of floor slab Provide compaction certificates (Exhibit 2). 51 On 13 December 2010, the owner signed the variation confirmation of authority to proceed in relation to contract variation item 3695 (HB 248). 52 The builder has provided the Tribunal with six colour photographs of the block (HB 249 254). The photographs show the 'date taken' as being 14 December 2010. The date of the photographs is not disputed by the owner. According to Mr Sopp, the photos show: • a cut (HB 249); • exposed footings which he says would have been done by the earthmover and not during the demolition (HB 250); • concrete piles which he described as a major cost to dig the piles down, and some clearing done as well (HB 252); and (Page 13)
• soil stock piled on site (HB 254). 53 In the Tribunal's view these photographs confirm the work which was done, and which is not in dispute, which relates to the concrete footing and pile, which was the subject of contract variation item 3695. 54 On 18 January 2011, the owner sent an email to the builder stating that the retaining wall people promised to finish the wall on Saturday morning. The owner asked the builder for a quote for sandfill. The owner also wanted to meet the builder on site to finalise the block level, because he had concerns regarding the water meter being at 12.07 FFL and the house being at 11.6 FFL, as he thought that water could end up in his garage (HB 255). 55 On 19 January 2011, the builder sent an email to the owner regarding meeting the 'earthworker' on site early next week once the retaining was complete (HB 256). On 19 January 2011, the owner sent an email to the builder stating that he wanted to meet on site as soon as possible and asked the builder how much clean fill he would need overall (HB 257). 56 The owner stated in his evidence that two or three days before the fill was purchased in 2011, the builder introduced him to Mr Gleeson of AE on site. The owner says that after the introduction, the builder left. The owner and Mr Gleeson agreed that the owner would supply the sand and that AE would spread and compact it. The price was agreed between the owner and Mr Gleeson as being $8,100 in cash (HB 192 and HB 193). Mr Sopp said that AE was one of three earthmoving contractors which his building company used. 57 In contrast, the builder said in his evidence that the purpose of the meeting on site in early 2011 was for the owner to be told by Mr Gleeson of AE how much fill he needed, not for the owner to contract directly with Mr Gleeson. For the reasons set out below, the Tribunal finds that there was, in fact, a contract directly between AE and the owner for the spreading and compacting of the fill. 58 On 28 January 2011, an invoice from Carramar Resource Industries (Carramar) was issued to the owner for a quantity of 450 cubic metres of yellow fill at a cost of $4,950 (GST included) (Exhibit 3). A note on the invoice states 'Onsite Rick & his mobile no. & owner Edgar & his mobile no.'. There is no mention of the builder in any of the details on the Carramar invoice. These notations tend to support the owner's evidence that he contracted directly with the earthmover for this work. (Page 14)
59 When the work, spreading and compacting the fill, was completed in early February 2011, the owner paid Mr Gleeson of AE $8,100 in cash for the work (HB 193). Theowner says that Mr Gleeson said that he would send him a receipt, but he never did. The owner said that he had the cash in his safe, left over from an overseas holiday. 60 In contrast, the builder says that he was not aware that Mr Gleeson of AE was paid by the owner until 1 September 2011, when the owner wrote to him after the earthwork variation was issued (HB 199). In the Tribunal's view, the builder's lack of knowledge of the payment is also consistent with the builder not being a party to the contract to spread and compact the fill. 61 On 1 February 2011, Structerre Engineering completed a compaction certificate on the block and addressed it to AE (HB 258). 62 On 21 February 2011, AE's invoice was issued and it was addressed to the builder: Earthwork as quoted $17,500. Less credit for fill supplied by the owner $8,100, $9,400, Plus GST $940, in the amount of $10,340. (HB 260) 63 On 1 March 2011, the owner was invoiced for the contract variation item 3695 concrete footing. The invoice was paid by the owner on 8 March 2011. 64 Some months later, on 31 August 2011, a variation letter was issued by the builder to the owner, and enclosed the invoice from AE dated 21 February 2011 (HB 261). 65 The builder says that there was a delay of six months in providing the August 2011 variation claim to the owner because: 66 On 31 August 2011, an invoice was issued by the builder for a variation of $7,874. (Page 15)
67 On 31 August 2011, a variation certificate was provided to the owner (HB 262). 68 On 1 September 2011, the owner wrote to Mr Sopp regarding the builder's mistake with reference to the said invoice from AE and setting out his position (HB 199). 69 On 3 February 2012, the builder, owner, and Mr Gleeson of AE met on site. The owner said that the builder asked, 'Can you prove that you've paid Mr Gleeson?' and the owner said, 'No', because he had no receipt and no bank account details' (Exhibit 4). 70 On 17 April 2012, the builder wrote to the owner enclosing the final statement of $57,449. The builder said that once the final payment was made, handover could be completed (HB 263). The owner then made the final payment and received the keys to his home.
August 2011 variation 71 Both parties accept that the earthworks were completed on the block in early February 2011. The owner says that he was then surprised to be provided with a contract variation some six months later on 31 August 2012 (HB 262). The August variation included: 72 The builder submits that the work was necessary and was done by AE and therefore the owner was liable to pay the amount of $7,874, and that therefore no refund is required. He says in his letter to the owner dated 7 May 2012 that the owner varied the scope of works by two items (HB 34), namely: 73 The builder says that due to these factors, the earthworks price increased substantially, especially when backfilling the owner's retaining walls in layers and compacting. (Page 16)
74 In response, the owner stated in his letter to the BC dated 4 July 2012 that: 75 The owner queries why a variation was not raised by the builder for the additional site works. The owner says that a variation ought to have been raised after the builder received the quote from AE on 8 December 2010 (Exhibit 2). This is because the site works quoted by AE were $15,750 more than the provisional sum of $3,500. The owner's approval was then required beforethe work proceeded. Unlike in the case of contract variation item 3695, no variation was raised by the builder for the additional site works until August 2011, after the work was completed. 76 The builder contends that the decision by the owner to fill and level the site was a change in circumstances. The builder said in his evidence that as a result of this alleged change in circumstance, it should have been obvious to the owner that there would be costs associated with it, and that is why he did not raise a variation under the contract. 77 The parties agree that the piles and concrete footing were additional work outside of the contract. These items were dealt with by way of contract variation item 3695 and were agreed by the owner. 78 This is in stark contrast to the alleged additional earthworks which were the subject of the August 2011 variation, well after the work was completed in February 2011 at the latest. 79 The difficulty for the Tribunal is that it is far from clear what work was done for the balance of the invoice; namely, for the sum of $9,400. Once again, Mr Gleeson of AE is best placed to give such evidence on behalf of the builder; however, his evidence is not before the Tribunal.
Applicable law 80 Turning now to the legal aspects of the application, namely: (Page 17)
• variation agreement by conduct or otherwise.
Variations under the contract 81 The owner signed a HIA Lump Sum Building Contract Form 16G July 2007 (HB 77) (Contract). 82 Clause 12 of the Contract deals with variations, and the relevant parts are set out below:
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83 The Tribunal notes that clause 12(b) of the contract states that the builder 'shall' be entitled to vary the works made necessary by two circumstances set out in clause 12(b)(i) and clause 12(b)(ii) of the contract. Then, under clause 12(c) of the contract, the builder 'shall' give to the owner the statement referred to in clause 12(b)(ii) within 10 working days. The giving of a statement referred to in the clause 12(b)(ii) notice in accordance with clause 12(c) of the contract is a condition precedent to any entitlement to an adjustment to the contract price for a variation. 84 As noted by McLure JA in Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264 (Elvidge), at [35]: [Where] the parties failed to follow the agreed variation provision under the building contract … [t]he failure to follow the contractual procedure does not prevent a finding of a variation agreement by conduct or otherwise; at most it is a relevant consideration in determining the parties' intention: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at 62. However, the failure to follow the manner and form requirements prevents it from being a variation under cl 5 [of the contract].
Variations under the HBC Act 85 Section 7 of the HBC Act requires a variation of a home building contract to be in writing and signed by the parties before the work to which the variation relates is commenced. A builder who is a party to such a variation must ensure the 2 7 requirements are complied with and failure to do so attracts a maximum penalty of $500 (s 7(3) of the (Page 19)
HBC Act). A breach of s 7 of the HBC Act does not render the contract or a provision of the contract illegal, void or unenforceable (s 27(1) of the HBC Act). 86 However, as set out by McLure JA at [36] of Elvidge, a breach of the HBC Act: … does not alone, or in combination with the other particulars, prevent a finding of variation by conduct. … 87 Section 8 of the HBC Act provides some exceptions to s 7 of the HBC Act. However, s 8 still requires that a statement be required setting out the reason for and the cost to be incurred. 88 Section 12 of the HBC Act makes it an offence for a builder to understate the PS by entering into a contract that misstates by being less than the least amount it could reasonably cost to perform that work.
Variation of agreement by conduct or otherwise 89 McLure JA, at [35] of Elvidge, refers to GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 (GEC Marconi), at 62, in relation to variation of an agreement. The following relevant principles are set out by Finn J in GEC Marconi, at 61 [217] [218]: (2) The principal cases in this country dealing with non-compliance with contractually imposed written modification clauses are those dealing with claims to be paid for extra work or services rendered under contracts which require written orders or written agreements for such works or services: Liebe v Molloy (1906) 4 CLR 347; see generally, Halsbury's Laws of Australia, vol 3(2), 65–1145. The conclusions to be drawn from the cases in this category are that (i) notwithstanding the writing requirement, it is open to the parties by express oral agreement or by contract implied from conduct to impose further or different rights and obligations on each other from those contained in the original contract: Liebe v Molloy at 353-355; Commonwealth v Crothall Hospital Services (Aust) Ltd(1981) 54 FLR 439at 448; or (ii) that one party may so induce or encourage the other's assumption on which it relies that the relevant formal requirements need not be complied with, as to be estopped from later setting up those requirements: Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd(1990) 20 NSWLR 251. The relevant principle, for present purposes, was stated concisely by Ellicott J in the Crothall Hospital case in the following terms (at 449): (Page 20)
It is open to the parties to a written contract to vary it. This may be done in writing or, except where the contract is required by law to be evidenced in writing, by oral agreement. The agreement to vary may be express or implied from conduct. (Emphasis added.) The common, often fatal, difficulty experienced by a party in seeking to make out a contract to vary has been the evidentiary one of proof of the contract itself: see Liebe v Molloy, above; Trimis v Mina, above at [64]. (3) For an alleged subsequent variation to be contractually effective notwithstanding non-compliance with the written modification requirement, it must itself otherwise satisfy the requirements of a valid contract, that is, 'the terms of the arrangement must be certain, and … there must generally be real consideration for the agreement': Ermogenous v Greek Orthodox Community of SA Inc(2002) 209 CLR 95 at 105; and see below, 'Formation of a contract of variation'. 90 Accordingly, if the Tribunal were to find a valid contract of variation, it must give it full effect, notwithstanding the express terms of clause 12 of the owner's Contract and the HBC Act. However, as stated by Finn J in GEC Marconi, the difficulty in such matters is establishing that a contract of variation 'must … satisfy the requirements of a valid contract'. 91 Turning now to the consideration of the facts as found by the Tribunal and the application of the relevant law.
Findings 92 The owner's Contract with the builder included 'Site works: Strip vegetation, remove rubbish and cut and fill to average levels PS: $3,500'. 93 AE provided a quote to the builder dated 8 December 2010 for $17,500 (not including GST) for earthworks with a FFL of 11,586, which is precisely the FFL shown on the plans attached to the contract (HB 259). Accordingly, the Tribunal does not accept that the FFL of the block changed after the contract was signed, as the builder contends. The Tribunal accepts the owner's evidence that his preferred position, and the way the plans were presented to council and accepted by council, was to have the block levelled with the use of fill and a long retaining wall along the boundary. (Page 21)
94 The work in the AE quotation included: 1) Excavating for boundary retaining wall and preparation for footings. • The Tribunal accepts that this work was additional to the contract, as it was required for engineering purposes and the council required it. According to the owner, this work formed part of the footing and pile variation he signed on 13 December 2010, which is contract variation item 3695. The builder has not countered this evidence of the owner, although, once again, Mr Gleeson of AE is best placed to give evidence in this regard, and the builder did not call him. • However, even if work was done by AE over and above the footing and pile variation, then it needed to be the subject of an agreed variation before the work was undertaken in midDecember 2010. There is no evidence of any agreement before the additional earthwork was undertaken, beyond contract variation 3695. In fact, there is evidence to the contrary from the builder, who said that he thought that he was not under any obligation to tell the owner of the increased cost of earthworks when he found out about it from the AE quote dated 8 December 2010. 2) Supply fill and backfill retaining wall to underside of floor slab. • This aspect of the quote was additional to the contract because it went beyond the 'cut and fill' PS item. • The owner's very clear evidence is that due to the unusual nature of the block, this aspect of the earthmoving was never part of the contract. The owner's evidence is supported by the very limited scope of the site works included in the contract and the low PS. Nor was this work ever the subject of a variation (Page 22)
which was approved by the owner before the work was completed. Accordingly, the Tribunal accepts the owner's claims in this regard. 3) Provide compaction certificate. • The Tribunal accepts that the certificate was provided to AE by Structerre Engineering and that AE provided it to the builder as per AE's quote. However, in the Tribunal's view, there is no basis to draw any inference adverse to the owner from the provision of the certificate to the builder rather than the owner. 95 The invoice from AE states that it is for the earthworks as quoted, less the credit for the fill supplied by the owner (HB 260). The August 2011 variation describes the work as 'Actual cost of earthworks spread and compact owner supplied fill as requested $11 374' (HB 262). The quote and variation both refer to spread and compact of ownersupplied fill. Neither document refers to cut and fill as outlined in the contract. The descriptions of the earthworks undertaken, noting that the Tribunal has not had the benefit of Mr Gleeson's evidence in relation to the work done, include spreading and compacting. 96 The Tribunal accepts that the presence of the figure of a credit of $8,100 on the AE invoice confirms the owner's claim that he paid Mr Gleeson for the 'fill supplied by the owner'. The Tribunal finds that the description 'fill', in the context of the invoice, relates to the spreading and compacting of that fill by AE for the owner. 97 Accordingly, the Tribunal is satisfied on the balance of probabilities that the owner did pay Mr Gleeson of AE the sum of $8,100 in cash for the spreading and compacting of 450 cubic metres of fill provided by the owner. 98 In relation to the sum of $7,874 claimed under the August 2011 variation, the Tribunal is not satisfied that there was ever any agreement between the owner and builder to pay for the additional works. 99 Further, the Tribunal notes that it is far from clear to the Tribunal exactly what work, if any, was done by AE which gave rise to the additional costs. This is because the evidence before the Tribunal from the builder is that the work involved the footing and piling, spreading the soil and providing the compaction certificate. Obviously, had the builder (Page 23)
called Mr Gleeson of AE to give evidence, the precise nature of the work carried out by AE may have been clearer to the Tribunal. 100 Notwithstanding this finding, even if the Tribunal were to accept that extra work was done by AE to the invoiced value of $9,400, being work which was over and above the contract and the footing and pile variation, there was no statement of variation and there was certainly no evidence of an express or implied agreement by the owner for any such additional work. 101 Accordingly, the Tribunal is satisfied that there was no agreement between the owner and builder for any additional earthmoving beyond the footing and piling (the subject of contract variation item 3695). Further, the owner contracted directly with AE for the spread and compacting of the owner's fill. The owner arranged for and paid for the fill. The owner paid AE for the spreading and compacting of the fill. This is confirmed by AE's invoice which applies a deduction in the exact same amount claimed to have been paid by the owner. 102 The Tribunal is unable to make any finding as to what the remaining work claimed on the invoice relates to. The builder has been unable to provide any satisfactory evidence in relation to the precise nature of the work done by AE for $9,400. It may be the case that the quote, invoice and August variation are poorly worded and do not accurately reflect the actual work done by AE. However, the Tribunal can only deal with the evidence it has before it. It cannot make findings on what may or may not have occurred. The builder's claim that it was obvious that extra work was required falls well short of there being some implied agreement with the owner to undertake further earthworks. In fact, the opposite is true. Because of the unusual nature of the owner's block, the owner took steps to ensure that earthworks were almost completely excluded from the contract. 103 In any case, even if the earthmover did undertake additional work to the extent of $9,400, there was no agreement between the owner and builder to vary the contract beyond the PS and contract variation item 3695. In accordance with Finn J in GEC Marconi,the Tribunal must give full effect to a valid contract of variation, notwithstanding the express terms of clause 12 of the contract and the relevant provisions of the HBC Act. However, as there is no such valid contract of variation in this case, that is the end of the matter. (Page 24)
104 In summary, the Tribunal finds that no statement of variation has been provided by the builder regarding the additional $9,400 (excluding GST) worth of earthworks as required under the contract and the HBC Act, and there was no agreement between the parties for the work to be performed at any time. 105 For the sake of clarity, the outstanding figure of $7,874 is calculated by deducting the PS of $3,500 from the amount of $11,374 (being the amount of $9,400 (plus GST of $940) plus the builder's margin of $10%, totalling $7,874). 106 Accordingly, the Tribunal is not satisfied that the builder has any entitlement to the amount of $7,847 for which he has invoiced the owner and which the owner has paid in order to obtain the keys to his new home.
Builder's interest and PS credit claim 107 At the hearing, so very late in the day and without adequate notice to the builder, the owner increased the amount he sought from the builder on the basis that he was also owed a credit of $3,500 for the PS and 25% interest on the payment, as payable under the contract to the builder. 108 However, the Tribunal is not satisfied that the owner is entitled to either of these sums for the reasons set out below. 109 In relation to the PS of $3,500, as far as the Tribunal can ascertain, this amount has been deducted from the August variation (HB 262). It is shown in the August variation certificate as a credit. Accordingly, the claim for a credit of $3,500 is not made out by the owner. 110 In relation to the interest claim under the contract, the Tribunal notes that the entitlement to claim interest is the builder's entitlement for an additional percentage in the circumstances set out in clauses 11 and 12 of the contract. It is not a basis for the owner to claim interest on outstanding sums from the builder. 111 Therefore, both additional amounts sought by the owner are disallowed. 112 The builder will therefore be required to repay the owner the sum of $7,847 because it was not the subject of any agreement. (Page 25)
Reimbursement of the Houspect report fee and filing fee 113 The Tribunal will now consider the owner's claim for reimbursement of certain fees. 114 Section 87(1) of the SAT Act provides that: Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal. 115 Section 49(1) of the BS(CRA) Act provides, inter alia, that: Subject to this section, the Building Commissioner or the State Administrative Tribunal may make such orders for costs as they think fit in relation to proceedings arising from a building service complaint or a HBWC complaint. 116 The principles applicable to the award of costs in the Tribunal's building jurisdiction are set out inHoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188. 117 Applying these principles, the Tribunal considers that in relation to item 39, the owner seeks to be reimbursed for the sum of $800 he paid for an inspection report from Houspect on 2 May 2012. He claims that the report assisted him in resolving the outstanding defect claims at the BC. The builder says that it was the owner's choice to get the report and therefore the builder should not have to pay for it. The Tribunal accepts that having the Houspect report, the matter may have proceeded more quickly in the BC. However, it notes that the builder only accepted liability after the BC inspector's report was available on 29 August 2012. The Tribunal notes that the BC inspector's report largely follows the items raised in the Houspect report. 118 The case of Frankowiak and Chambers [2012] WASAT 175 (Frankowiak) is relevant and applicable to this case. In Frankowiak, Senior Member Raymond stated, at [30] [31]: (Page 26)
119 Accordingly, in the Tribunal's view, the items raised in the Houspect report were crucial to the matters the subject of a conciliation order and, therefore, there was no legal basis for the builder to protract the workmanship application after the report was available. Therefore, there was no arguable legal basis for resisting the applicant's claim after the report had been put to the BC. Accordingly, the costs of $800 are to be paid by the builder to the owner. 120 In relation to the claim for the $200 application fee in the BC, the matters before the Tribunal relating to the August 2011 variation were the subject of a genuine dispute. Accordingly, in the Tribunal's view, it is not appropriate in the circumstances of this case to award the cost of the application fee to the owner.
Orders 121 Accordingly, the orders are: 1. The Tribunal declares that a specified amount, namely, $7,874, is not payable to the respondent under the contract and, as it has already been paid, an order is made that the builder repays that amount. 2. The respondent pay the cost of the applicant's Houspect report, namely, $800.00. 3. By close of business on 5 April 2013, the respondent pay to the applicant the total of $8,674.00. |