Vize Design Interiors Pty Ltd v Soroka

[2010] QCAT 66

CITATION:  Vize Design Interiors Pty Ltd v Soroka [2010] QCAT 66

PARTIES:  Vize Design Interiors Pty Ltd

v

Henry Soroka

APPLICATION NUMBER:    BN076-08

MATTER TYPE:                   Building matters

HEARING DATE:                 18 and 19 February 2010

HEARD AT:  Brisbane

DECISION OF:  Dr Elena Marchetti

DELIVERED ON:                  17 March 2010

DELIVERED AT:                  Brisbane

ORDERS MADE:                  The respondent pay the applicant the sum of $6,520.64 by 4:00pm on14 April 2010.

CATCHWORDS:                  Claim for unjust enrichment for benefits obtained from building work; no signed domestic building contract or agreement for variations; effect of carrying out unlicensed building work; counter-claim for repair to tiles and for completion of painting work

APPEARANCES AND REPRESENTATION (if any):

Mr McConnel of Counsel for the applicant.

Mr Taylor of Counsel for the respondents.

Introduction

1. The applicant is an interior design business and the respondent is the owner of a house and property at 21 Bowsprit Crescent, Banksia Beach, Bribie Island.  This is an application by the applicant for the payment of monies owing as a result of work completed to refurbish the house owned by the respondent. 

1. The respondent disputes the claim and counter-claims for a refund of the balance of monies paid over and above the reasonable costs of the work completed, damages for repairing defects in the Travertine tiles which were laid and the cost of completing painting work to the carport.

The Dispute

1. In early February 2007, the respondent, Mr Soroka, contacted the applicant in order to seek advice in relation to refurbishing his newly purchased house at 21 Bowsprit Crescent, Banksia Beach, Bribie Island.

1. The applicant prepared a Fee Proposal for design consultancy work, which was signed by the respondent on 15 February 2007.  The Fee Proposal is Attachment ‘A’ of the Statement of Laurel Vize, the Director of the applicant company, dated 6 February 2009, which was tendered into evidence and marked as exhibit 1.  The Fee Proposal contained:

(1)confirmation of the brief to refurbish the property, which included a list of works to be completed;

(2)a scope of works, which at the time was limited to preparing layout and design work, and lodgement of layout drawings with the Building Authority;

(3)a fee structure for the design work;

(4)an hourly rate for work completed outside of the brief, but which expressly excluded ‘reimbursement items, council fees and associated consultants fees unless listed in the scope of works’;  and

(5)terms of payment.

1. The applicant and respondent then entered into a further agreement whereby the applicant agreed to project-manage the refurbishment work.  By way of a series of letters and facsimiles a ‘scope of works’ was prepared, which included a budget estimate of $115,000.00 - $135,000.00 plus GST.  The documents which reflect this agreement appear as Attachments ‘B’ and ‘D’ to the Statement of Laurel Vize dated 6 February 2009.

1. The applicant and respondent never signed a domestic building contract for this agreement as required by section 30 of the Domestic Building Contracts Act 2000.

1. The building work was mainly supervised by Heino Voogd, an employee of the applicant, who was not available to give evidence as a witness during the hearing because his whereabouts were unknown.

2. During the course of the work, variations were made to the scope of works, which affected the cost of some of the fixtures and fittings and the scope of the refurbishment.  None of the variations (apart, it may be argued, from some ‘adjustments’ which were listed on a facsimile from the respondent to the applicant dated 15 February 2007, which is Attachment ‘C’ to the Statement of Laurel Vize dated 6 February 2009) were agreed to in writing.  The applicant made a series of progress claims from September 2007 to October 2008.   The respondent paid for some of the work.  The applicant claims that there is still an amount outstanding of $46,803.25 to be paid by the respondent. 

1. There are also two separate counter-claims made by the respondent, which relate to repairing holes which had formed on the surface of natural stone tiles, known as travertine tiles and completing painting work to the entry to the house and garage extension.

The Claim for Unpaid Progress Claims

1. The applicant submits that the following amounts are outstanding:

(1)       $7,150.00 for the design work; and

(2)$39,653.25 for work relating to managing or supervising the building work. 

1. Both the design work and work relating to managing or supervising the building work would be considered ‘domestic building work’ associated with the renovation, alteration, extension, improvement or repair of a home as per section 8(3)(b) of the Domestic Building Contracts Act 2000 (Qld) (DBC Act).

1. A contract for work where the contract price is more than the regulated amount is, according to section 9 of the DBC Act a regulated contract. Section 30 of the DBC Act requires regulated contracts to be signed by the building contractor and building owner in order for such contracts to have any effect.

1. The Fee Proposal, which was signed by the respondent on 15 February 2007, constitutes the contract for the design consultancy work.

1. The total of the instalments to be paid for the design consultancy work according to the Fee Proposal is $5,700.00 plus GST (which equates to $6,270.00 including GST).  According to the invoices attached to the Statement of Laurel Vize dated 6 February 2009 as Attachment ‘G’, the following Certifier, Engineer and Council fees were incurred (inclusive of GST):

(a)       Brisbane Certification Group  $1,170.00
(b)       DEQ Saunders, Design Engineers Queensland  $1,320.00
(c)       DEQ Saunders, Design Engineers Queensland                   $    137.50
(d)       Caboolture Shire Council  $      30.00

Total  $2,657.50

1. A further invoice of $1,100.00 is also included in Attachment ‘G’ for preparation of working drawings by Linear 56 Design.  However, I accept the submissions of the respondents that this fee should have been included as part of the $5,700.00 fee for the design consultancy work, since it is arguable that the dot points listed in paragraph 2 ‘Scope of Works’, in the Fee Proposal could be interpreted as including the preparation of working drawings.

1. Therefore the total amount due under the contract for the design consultancy work is $8,927.50 comprising $6,270.00 for the applicant’s fees plus $2,657.50 for the Certifier, Engineer and Council fees. 

1. The respondent paid the applicant some money for this work.  The applicant’s counsel in closing submitted that the respondent had paid the amount of $3,300.00 for the design work.  However, according to Vize Design Tax invoice No 2388 dated 25 September 2007, which appears as Attachment ‘E’ to the Statement of Laurel Vize dated 6 February 2009, the amount paid by the respondents for the design work was $2,970.00 (including GST) and the balance owing was $3,300.00 (including GST).  The respondents did not make any submissions in relation to this issue. 

1. According to the Application filed in the Commercial and Consumer Tribunal on 29 August 2008 and the Amended Defence and Counterclaim dated 17 August 2009, the respondent paid an amount of $219,863.05 as progress payments during the course of the refurbishment of his home.  In her Statement dated 6 February 2009 (which was marked as exhibit 1), Laurel Vize states that the total amount paid by the respondent during the course of the work was $216,700.00. 

1. The evidence provided by the applicant in relation to amounts paid and owing, by way of Laurel Vize’s statements and testimony, progress claims and invoices is confusing and difficult to follow.  After taking into account the totality of the evidence, I accept that the total amount paid by the respondent during the course of the work, is the amount noted on the Application and Amended Defence and Counterclaim of $219,863.05.  This amount will be deducted from any amounts I find are outstanding at the end of this decision.

1. Although there is no valid contract for the work relating to managing or supervising the building work upon which the parties can rely in order to determine the quantification of damages, I accept the submission of the applicant that a claim for unpaid works can be based on an action for unjust enrichment as per the principles outlined in Pavey and Matthews Pty Ltd v Paul (1987) 16 CLR 221.

1. The question for the Tribunal to determine is then one of quantification of the quantum meruit for the work relating to managing or supervising the building work.

1. The applicant submits that the quantum meruit should be determined by considering the benefit that the respondent received at the applicant’s expense.  In closing, the applicant’s counsel submitted that the respondent received ‘an improved house in which to live and an improvement to the land which has a realisable value upon sale’.  According to the applicant this benefit is evidenced by the invoices, which appear as Attachment ‘K’ to the Statement of Laurel Vize dated 6 February 2009. 

1. The invoices, which pertain to payments made to subcontractors on behalf of the respondent amount to $217,456.19.  The applicant also claims an amount of $14,537.70 for labour costs and $24,359.36 for profit margin.

1. The respondent accepts that the Tribunal has jurisdiction to deal with the application on the basis of a claim for unjust enrichment, however, he claims that it is difficult to determine from the evidence provided, whether the work was over-inflated and whether it included ‘extra’ work which should have come within the original scope of works and therefore within the original budget estimate.

1. There are a number of additional refurbishment works listed in the Statement of Laurel Vize dated 6 February 2009, which form part of the claim made by the applicant. 

1. In cross-examination, the respondent admitted that he had probably not properly read the scope of works, which contained the budget estimate.   In giving evidence, the respondent indicated that the only work, which he considered to be ‘extra’ and outside the work listed in the documentation which comprised the ‘scope of works’, was the work relating to fitting five new timber windows, extra carpentry work for the front entry, electrical work relating to the pool pump, and extra air conditioning units.  The respondent disputes, however, the costs claimed in relation to this extra work. 

1. In closing, counsel for the respondent argued that in calculating the quantum meruit, the Tribunal should use the highest amount in the range contained in the original budget estimate of $135,000.00 plus GST (or $148,500.00) and a total of $30,675.20 for what the respondent considers, undisputed extra work.  

1. Since none of the variations, which comprised the alleged extra work were agreed to in writing, and since the documentation comprising the scope of works was insufficiently detailed (eg in relation to the type and quantity of tiles to be used, and type of bathroom fittings to be used) it is difficult to ascertain from the evidence, what work came within the original budget estimate and what work can, with certainty, be considered ‘extra’.

1. Such reliance on the documentation, which comprised the original scope of works, is in any case, irrelevant since it does not form a valid building contract and since the quantification of the costs of the work completed will be based on a determination of the value of the benefit accrued by the respondent.

1. In this case, I accept that the most equitable manner in which to determine the benefit accrued by the respondent is by accepting the evidence of the invoices paid by the applicant to subcontractors for the refurbishment work.  The total of those amounts is $217,456.19 (including GST).

1. According to section 42 of the Queensland Building Services Authority Act 1991 (Qld) (QBSA Act), in order for a person to be able to claim for labour and profits for carrying out building work, the person must hold a contractor’s licence under section 30 of the QBSA Act. That section provides:

30       Classes of contractors’ licences

A licence (a contractor’s licence) may be issued authorising the licensee –

(a)to carry out all classes of building work;

1. ‘Building work’ is defined in Schedule 2 of the QBSA Act as meaning:

(a)the erection or construction of a building; or

(b)the renovation, alteration, extension, improvement or repair of a building; or

(c)the provision of lighting, heating, ventilation, airconditioning, water supply, sewerage or drainage in connection with a building; or

(e) any site work (including the construction of retaining structures) related to work of a kind referred to above; or

(f)the preparation of plans or specifications for the performance of building work; or

(fa)contract administration carried out by a person in relation to the construction of a building designed by the person; or

(g)fire protection work; or

(h)carrying out site testing and classification in preparation for the erection or construction of a building on the site; or

(i)carrying out a completed building inspection; or

(j)the inspection or investigation of a building, and the provision of advice or a report, for the following--

(i)termite management systems for the building;

(ii)termite infestation in the building;

but does not include work of a kind excluded by regulation from the ambit of this definition.

1. Schedule 2 of the QBSA Act defines the term ‘carry out’ for building work (other than for part 4A) as:

(a)…

(b)provide building work services for the work.

1. Schedule 2 defines ‘building work services’ as meaning one or more of the following for building work:

(a)     administration services;
(b)     advisory services;
(c)     management services;
(d)     supervisory services.

1. According to Schedule 2 of the QBSA Act ‘administration services’ includes ‘(b) arranging and conducting on-site meetings and inspections; (c) arranging payment of subcontractors’ and ‘management services’ includes ‘(a) coordinating the scheduling of the work by building contractors including as agent for another person’. The applicant admitted in evidence, at the very least, to having engaged in administration and management services in relation to the refurbishment work, which forms the basis of this dispute.

1. Laurel Vize, as Director of the applicant company, admitted in cross-examination that neither the applicant, nor any of the applicant’s employees held a contractor’s licence.  The applicant is therefore unable to recover the cost of labour or the making of a profit for carrying out the building work. 

1. For these reasons I find that the only amount the applicant can recover by way of unjust enrichment for the supervision and management of the building work is $217,456.19.

The Counter-Claim for Repairing the Tiles

1. The respondent claims that the surface of the travertine tiles laid in the house formed holes on the surface soon after moving back into the house.  According to a report prepared by The Marble Man dated 26 June 2009, which both parties submitted to the Tribunal as evidence, and according to the sworn oral evidence given by Corey Worthington, Director of Bellagio (Australia) Pty Ltd travertine tiles sometimes develop holes on the surface of the tile some time after they are laid due natural fissures being exposed from wear and tear. 

1. The respondent had organised for the tiles to be repaired at a cost of $2,574.00 and tendered into evidence invoice number 5008 from Stone Seal dated 27 February 2009, which was marked as exhibit 6, as evidence of the repair.

1. In Corey Worthington’s statement dated 21 September 2009, which was tendered into evidence and marked as exhibit 5, Mr Worthington states that none of the travertine tiles he examined approximately two years after they were laid, were defective. The tiles he inspected at the respondent’s house were as he would have expected them to be after two years.  In cross-examination and in his statement dated 21 September 2009, Mr Worthington stated that it would be normal practice to refill the fissures if the pitting occurs within the first few weeks after installation.  The report from The Marble Man was consistent with the evidence of Mr Worthington.

1. Both tile experts state that the repair that had been carried out was ‘amateurish’ and ‘had not been completed properly’.

1. After having considered the evidence of the tile experts and the respondent’s testimony in relation to the condition of the tiles, I have come to the conclusion that the tiles that were laid were not defective and that any pitting that may have appeared was minor and normal for that type of travertine tile flooring.  Any unsightly imperfections, I believe, are as a result of the faulty repair and not due to the quality of the tiles that had been laid. 

1. The respondent’s counter-claim in relation to the tiles is therefore rejected.

The Counter-Claim for Completing Painting Work

1. The respondent claims that certain painting required as a result of extensions to the carport and refurbishment of the entry to the house was part of the original scope of works and should have been completed by the applicant.  The original scope of works, in fact, only referred to painting of internal walls and ceilings under the heading ‘Painting’. 

1. In any case, the original scope of works was never signed and therefore is not a valid domestic building contract for the purposes of determining what work came within the agreement reached between the applicant and the respondent in relation to the scope of the refurbishment.  For this reason, it is difficult for the respondent to argue that the applicant had an obligation to perform certain work and I therefore reject the counter-claim in relation to the painting work.

Costs

1. The Tribunal’s jurisdiction in respect of costs is dealt with in Division 6 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), which states that each party to a proceeding must bear the party’s own costs unless the interests of justice require otherwise.

1. Neither party has made any submissions, which convince me that it is in the interests of justice that the other party should bear their costs.  I therefore propose to order that each party will bear their own costs.

Summary

1. The amounts allowed on the applicant’s claim are:

(a)Design consultancy work

(including Certified, Engineer and Council fees)                    $8,927.50      

(b)Unjust enrichment claim for refurbishment

work  $217,456.19

Total  $226,383.69

1. The total of the payments already made by the respondent, totalling $219,863.05 need to be deducted from this amount.  The balance then remaining on the amount allowed on the applicant’s claim is $6,520.64.  I order that the respondent pay this amount to the applicant by 4:00pm on 14 April 2010.

1. There is no order as to interest.