WCK Pty Ltd v Fowler; Fowler v Daniels
[2016] SADC 142
•29 November 2016
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
WCK PTY LTD v FOWLER; FOWLER v DANIELS & ANOR
[2016] SADC 142
Judgment of His Honour Judge Millsteed
29 November 2016
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - GENERAL
Building contract - action brought by builder to recover from owner the sum of $32,216.85 for unpaid variations to contract - whether claim related to items included in the contract prices, as asserted by the owner - judgment entered for the builder in the amount of $15,691.50 (inclusive of interest) - judgment amount less than that sought by the builder on account of concessions made by the builder in relation to certain items and builder's failure to prove certain other items.
Cross-action brought by owner for damages in the amount of $2,583,074.00 for alleged economic loss arising from alleged breaches of contract/negligence - claim dismissed except in respect of two minor items resulting in an award of damages in the amount of $599.00, included as an offset in amount awarded to the builder.
Development Act 1993 s 32, referred to.
Browne v Dunn (1893) 6 R 67; Bulstrode v Newton [1970] VR 840; MWJ v The Queen (2005) ALJR 329, considered.
WCK PTY LTD v FOWLER; FOWLER v DANIELS & ANOR
[2016] SADC 142INTRODUCTION
Mr Keith Daniels is the Managing Director of WCK Pty Ltd (‘WCK’) a licensed builder which trades as Keith Daniels Building Co (‘KBDC’). Mr Glen Fowler was, at the time of the relevant events, the registered proprietor of Lot 27, 89 Mortlock Terrace (‘the property’) and Trustee for Draig-Teine Trust (‘DTT’).
On 15 March 2006 a written agreement (‘the Contract’) was executed in which KBDC (nominated as the Builder) agreed to construct commercial premises on the property for DTT (nominated as the Owner). The works performed under the Contract involved the construction of a building and carpark. They were completed in late 2006.
The proceedings comprise of an action brought by WCK against Mr Fowler (Action No 2010 of 2008) for the payment of variations to the Contract and a cross-action brought by Mr Fowler, as Trustee for DTT, against Mr Daniels as First Defendant and, in the alternative, against WCK as Second Defendant (Action No 599 of 2014) seeking damages primarily for economic loss due to breach of contract and/or negligence.
PROCEEDINGS: BACKGROUND
This matter has an unfortunately long and vexed pre-trial history. The following is a sufficient summary of that history.
On 13 August 2007 WCK commenced proceedings against Mr Fowler by filing a claim in the Magistrates Court of South Australia for unpaid costs of variations to the Contract totalling $32,216.85 plus interest.
On 2 October 2007 Mr Fowler filed a Defence and Cross Action (Counterclaim) in which he pleaded: (i) that he could not be sued by WCK because he had not executed the Contract in his own right but as Trustee for DTT, accordingly no privity of contract existed between them; and, (ii) that no money was owed for variations in any event. Mr Fowler counterclaimed against WCK for alleged economic loss due to breach of contract/negligence.
In late 2008, the proceedings instituted by WCK in the Magistrates Court were transferred to this Court (Action No 2010 of 2008).
In the course of protracted interlocutory proceedings, Mr Fowler amended his pleadings on several occasions before filing the Fourth Amended Defence and Cross Action (Counterclaim) in June 2013 on substantially the same grounds as set out in his previous pleadings.
On 17 April 2014 Mr Fowler, as Trustee for DTT, filed a Statement of Claim[1] against Mr Daniels, as First Defendant, and in the alternative, against WCK, as Second Defendant (Action No 599 of 2014) seeking damages in excess of $2,500,000 for alleged economic loss on grounds identical to those pleaded against WCK in the Fourth Amended Defence and Cross Action (Counterclaim).
[1] FDN 2.
On 19 May 2014 Mr Fowler filed in Action No 2010 of 2008 the Fifth Amended Defence and Cross Action (Counterclaim)[2] in which he abandoned his counterclaim against WCK by reason of having filed the Statement of Claim in Action No 599 of 2014.
[2] Fifth Amended Defence and Cross Action (Counterclaim) - FDN 45.
On 20 May 2014 Mr Daniels and WCK filed a Defence in Action No 599 of 2014.[3]
[3] Defence - FDN 5.
On 10 June 2014 WCK filed a Reply and Defence to the Fifth Amended Defence and Cross Action (Counterclaim) in Action No 2010 of 2008.[4] The parties treated these pleadings as constituting a Defence to Mr Fowler’s Statement of Claim (Action No 599 of 2014).
[4] Reply and Defence to Fifth Amended Defence and Cross Action (Counterclaim) - FDN 47.
The parties were represented by solicitors for a substantial part of the interlocutory proceedings, WCK and Mr Daniels by the firm Jenkins Anderson and Mr Fowler by Coates PL. However, in about August 2012, Mr Fowler became self-represented and, in the course of 2013, Mr Daniels commenced representing WCK.
The trial commenced on 16 June 2014 but due to several adjournments, was not completed until 17 December 2014.
Mr Daniels represented himself and WCK. Mr Fowler represented himself. Both Mr Daniels and Mr Fowler gave evidence, called witnesses and tendered a substantial body of documentary exhibits. The witnesses called by Mr Daniels were:
· Wayne Goodwin (Mr Daniels’ business partner);
· Christopher Short (Senior Building Consultant);
· Stephen Kemp (Real Estate Agent);
· Wayne Murphy (Civil and Structural Engineer, Building Surveyor and Private Certifier);
· Branco Milic (Manager Development and Environmental Services, Port Lincoln City Council); and
· Dr Rufus McLeay (present owner of 89 Mortlock Terrace, Port Lincoln).
Mr Fowler called:
· Kenneth Fowler (Mr Fowler’s son);
· Sally Kunze (Architect); and
· Michael Coates (Mr Fowler’s former solicitor).
By reason of their lack of legal expertise, Mr Daniels and Mr Fowler were distracted by irrelevant issues, especially Mr Fowler. Despite my attempts to assist Mr Fowler (to the extent my duties as trial judge allowed), he examined and cross-examined witnesses and conducted his case in a generally disjointed and confusing manner. His own testimony suffered from the same deficiencies. But for the tender of Development Approval files produced under subpoena by the City of Port Lincoln (‘the Council’)[5] I would have been unable to determine the detail and sequence of certain events, said to be relevant on his case.
[5] Exhibit P58.
ISSUES
The following is a distillation of the issues raised in the pleadings and evidence.
WCK’s claim (Action No 2010 of 2008)
The price for the work to be carried out under the Contract was $299,810.00 plus the costs of variations. WCK contends that it is owed $32,216.85 plus interest for variations. Mr Fowler contends that no money is owed for variations (‘Variations issue’) and that, in any event, it is not open to WCK to enforce the Contract against him because (i) he executed the Contract as trustee for DTT and (ii) the Contract nominated KDBC and not WCK as the Builder (‘Privity Issue’).
Fowler’s Claim (Action No 599 of 2014)
The claims against Mr Daniels and WCK are pleaded in the alternative. The claims assert that Mr Fowler, in his capacity as trustee, suffered economic loss to the date of trial in the amount of $2,583,074.11 arising from breach of contract/ negligence. The loss is alleged to comprise loss of rental income from the property, diminution in the property’s market value and minor costs of remedial works.
The alleged contractual breaches may be summarised as follows:
(i)The building was unfit for its intended commercial purpose because:
· Mr Daniels/WCK sought and obtained from the Council Development Approval, pursuant to s 32 of the Development Act 1993 (‘the Act’), for commercial premises rather than for commercial premises with a residential component (‘Development Approval Issue’).
· the building work was not completed in accordance with the Contract’s plans and specifications, the Building Code of Australia (BCA), Australian Standards (AS) and the Minister’s Specifications referenced in the Development Regulations 1993 (‘the Regulations’) (‘Defective Work Issue’).
(ii)The building was not completed to a standard that would permit certification and commercial use of the building by 1 September 2006, as the parties had contracted (‘Completion Date Issue’).
(iii)Mr Daniels/WCK submitted to the Council, without Mr Fowler’s authority, an amendment to the car parking plans which delayed completion of the works (‘Car Parking Issue’).
(iv)Mr Daniels/WCK failed to issue an Essential Safety Provisions Certificate and a Statement of Compliance pursuant to regs 76(3) and 83(2)(a), respectively, in consequence of which Mr Fowler was unable to obtain from the Council a Certificate of Occupancy under s 67 of the Act (‘Certification Issue’).
The claim in negligence asserts that the Builder breached its duty of care to Mr Fowler by ‘not adequately supervising and completing the works as required in the contract’ in consequence of which Mr Fowler suffered the aforementioned economic loss.
EXTENSION OF TIME
By force of s 35 of the Limitation of Actions Act 1936 (SA) (LAA), actions in contract and negligence must be commenced within six years of their accrual. Pursuant to s 48 (1) of the LAA, a court may extend the time within which an action must be commenced ‘to such an extent, and upon such terms (if any) as the justice of the case may require’. Mr Fowler’s claims against the Builder (No 599 of 2014) were more than two years out of time.
Upon the commencement of the trial, I was informed by the parties that the issue of extension of time had been raised before a Master who deferred the matter for consideration by the trial judge, though I was unable to find reference to such an order in the Court’s Record. I heard an application by Fowler for an extension of time. I determined that the justice of the case required that an extension of time be granted to the extent required, primarily because Mr Fowler’s action was based on substantially the same issues raised in the First Defence and Cross Action (Counterclaim) filed in 2007.
CREDIBILITY
I found the Builder’s witnesses to be honest and straightforward. Mr Daniels and Mr Goodwin had some difficulty recalling the details of certain events. This was hardly surprising having regard to the staleness of the relevant events. I was left in no doubt that they were witnesses of integrity.
The expert witnesses called by the Builder, Mr Murphy and Mr Short, are well qualified and highly experienced members of the building industry. Mr Murphy, who acted as the Private Certifier in the present matter, is a qualified structural engineer, licensed builder and building supervisor with over 37 years in the industry.[6] Mr Short is a licensed builder and building consultant with over 40 years of experience.[7] He prepared a report[8] for the Builder (dated 10 May 2010) on the basis of an inspection of the building and the surrounding site conducted on 6 March 2006. I was impressed by both of these witnesses. They were knowledgeable and pragmatic and their evidence was of considerable assistance.
[6] T 544 (W Murphy).
[7] T 423 (C Short); see Exhibit D49 (Report of C Short) for curriculum vitae pp.38-39.
[8] Exhibit D49 (Report of C Short).
Making all due allowance for the fact that he was an unrepresented litigant, I found Mr Fowler to be an unimpressive witness. He focussed on irrelevancies but more significantly he was unconvincing, and at times, disingenuous in important issues. His son Kenneth Fowler supported him on several minor issues but in the main he was unable to salvage Mr Fowler’s credibility on important matters. I accept the evidence given by Mr Coates, indeed it was not challenged. His evidence was of assistance to the court but did not advance Mr Fowler’s case.
Ms Kunze, the expert witness called by Mr Fowler, is a qualified architect who conducts her practice in Port Lincoln. She has substantially less practical experience in the building industry than the Builder’s experts. Nonetheless I accepted her findings on several matters. However, I found that in a number of other respects her opinions and findings were speculative. She prepared a report for Mr Fowler dated 3 November 2008, following five inspections of Mr Fowler’s property between 20 March 2008 and 3 November 2008.
FACTUAL BACKGROUND
Before analysing the relevant issues it is appropriate to provide a chronological overview of the key events.
The parties
At the time of the relevant events, Mr Daniels was Managing Director of WCK which traded as KBDC (hereinafter referred to as the Builder, except where it is necessary to specifically refer to WCK or KBDC). The Builder had several regional offices with its head office located in Port Lincoln and held a franchise to construct ‘Hotondo Homes’. Mr Wayne Goodwin, a shareholder in WCK, was employed by the Builder as project manager.
Mr Fowler testified that he was a ‘neuro-clinician’ with no medical qualifications. He conducted research with ‘Adelaide Hyperbaric’ and assisted deep sea divers who had suffered injuries such as ‘the bends’. He conducted his business in Port Lincoln where he had lived for over 20 years. He owned the property at 89 Mortlock Terrace from late 2005 until 2013 when it was sold.[9] During that time the property was mortgaged to the ANZ Bank.
[9] Exhibit P15 (Property Search Extract).
Mr Fowler said that DTT came into existence on 14 December 2004 through a trust instrument drafted by solicitors in Port Lincoln. His description of the trust suggests that it was a family trust created for reducing personal income tax and providing for his superannuation.[10] To prove the existence of the trust I suggested to Mr Fowler that he should produce and tender the trust instrument but he never did. Nevertheless, I will proceed on the basis that DTT was a valid trust and that Mr Fowler was appointed trustee. These facts were not challenged by Mr Daniels and were implicitly accepted in the Builder’s pleadings.[11]
[10] T 626-629, 681 (G Fowler).
[11] Reply and Defence to Fifth Amended Defence and Cross Action (Counterclaim) - FDN 47 [2.1].
The property was an irregularly shaped block which extended from Mortlock Terrace (western boundary) to Quiberon Street (eastern boundary). Broadly speaking, the block was divided into two sections. The larger section (rectangular) faced Mortlock Terrace (‘the Mortlock section’) and the smaller section (almost triangular) faced Quiberon Street (‘the Quiberon section’). These two sections of the blocked were connected by a driveway about three metres wide.
The works performed under the Contract by the Builder involved the construction of a single storey building in the Mortlock section (the front of the building faced west towards Mortlock Terrace) and the construction of carparks at the front of the building, along the southern side of the building and in the Quiberon section.
The Act
Before proceeding further it is appropriate to provide a brief overview of the general scheme of the Development Act and the Development Regulations to the extent that they are relevant to this case.
Pursuant to s 32 of the Development Act, no development may be undertaken unless the development is an approved development. Such approval may be given by a ‘relevant authority’. Where the development is undertaken in the area of a council, the relevant authority is the council (s 34). Before development approval may be granted the relevant authority must have granted provisional development plan consent and provisional building rules consent (ss 33(1)(a) and (b)). The latter may be granted by a private certifier (s 89 and regulation 89).
A building must have a classification determined in accordance with the regulations s 66(1) which the Council may assign (s 66(2)). The owner of a building must not permit the building to be occupied unless the building is constructed, maintained and operated in accordance with the classification appropriate to its use (s 66(6)). The relevant classifications are those defined in the BCA which are adopted under the regulations (regulation 4). At the time of the relevant events the BCA provided nine classifications of which only the following are relevant:
Class 4: a dwelling in a building that is Class 5, 6, 7, 8 or 9 if it is the only dwelling in the building.
Class 5: an office building used for professional or commercial purposes, excluding buildings of Class 6, 7, 8 or 9.
The BCA permits multiple classifications. For example, a building that falls within the definition of Class 5 commercial premises may have a part 4 residential component.
Early events
On 22 December 2004 Mr Fowler lodged with the Council an application to develop on the property ‘medical offices, consulting rooms and residential premises’ and plans for (i) a two storey building to house the medical offices and consulting rooms and (ii) separate residential units (3) to accommodate visiting medical specialists.[12]
[12] See Exhibit P58 (City of Port Lincoln Council file - Development Application No: 931/497/04) copy plans contained therein.
By letter dated 6 January 2005 Ms J Isle (the Council’s Senior Development Officer) requested further information from Mr Fowler about the proposed development and placed his application on hold.[13]
[13] See Exhibit P58 (City of Port Lincoln Council file - Development Application No: see 931/497/04) copy letter contained therein; see also Exhibit D61.
In about August 2005, Mr Fowler attended the Builder’s Port Lincoln office and consulted Mr Goodwin (possibly Mr Daniels as well) about the proposed development. From that point onwards Mr Goodwin became Mr Fowler’s principal point of contact with the Builder. He conducted the pre-contract negotiations, arranged for the preparation of building plans, executed the Contract and managed the development.
Pursuant to instructions received from Mr Fowler, the Builder engaged the firm, Concept Drafting, to prepare fresh building plans for the proposed development. Following their preparation, the Builder provided Mr Fowler with a written quote, dated 27 September 2005 (‘the first quote’):[14]
[14] Exhibit D30.
ESTIMATE OF QUOTATION
Estimate for proposed Consulting Rooms as per Preliminary Plans.
1. Connections
o Sewer connected to the legal point of discharge Included
o Storm water connected to the legal point of discharge Included
o Water Tapping Included
o Electrical connection underground/overhead power Included
o Gas connection Included
Note: Meter box will be placed at the closest and most practical place. Movement will constitute an additional charge.
2. Soil Conditions/Slab Costs: Price is based on Class “M” Soil Classification.
Price is based on a flat level site and any Excavation to level the site is an extra charge.
We understand that this fixed price is valid for the period of 14 days from date of issue.
Included:
1.Brick veneer Construction – 255ms
2.Iron Roof
3.2.700 ceilings
4.Our Traditional Specifications
5.Hot Mix Bitumen Paving – 650m2
6.Kerbing – 100LM
7.Paving – 60m2
8.Land Scaping – 60m2
9.Excavations
PC ITEM $10,000.00
Total Estimate: $255,000.00
PRICE DOES NOT INCLUDE ANY DEMOLITION WORK.
Note: Client to note that unless items are expressly noted in this tender, the client must assume that they have not been allowed for.
On 23 October 2005 the Builder provided Mr Fowler with a further written quote (‘the second quote’):[15]
Acceptance of Quotation
Proposed Commercial Building 260m2 as per our Luxury Specifications $295,260.00
Price Includes:
·65m2 Paving; PC Item
·785m2 Hot Mix PC Item
·100Lm Kerbing PC Item
·Excavations & Site Preparation PC Item
[15] Exhibit D63.
Price does not include:
·Under Cover Private Car Parking
·Any Retainer Walls
·Any Landscaping
·Floor Coverings or Window Treatments
As set out above, the second quote ($295,260.00) was expressed to apply to the proposed building ‘as per our Luxury Specifications’ in contrast to the first quote ($255,000.00) which made no reference to such specifications, a point to which I will return.
Plans submitted to Council
On 28 October 2005 the Builder applied to the Council for Development Approval, pursuant to s 32 of the Act, with respect to the plans drawn up by Concept Drafting. The plans provided for a single storey building containing the following: reception/waiting area, filing room, four consulting rooms, two examination and treatment rooms, staff/lounge room, kitchen, store room and toilets.[16] The plans did not provide for the construction of separate residential units, as proposed by Mr Fowler in 2004.
[16] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) copy application contained therein.
On 14 November 2005 Mr V Ritger (the Council’s Planning Consultant) wrote to both Mr Fowler and the Builder acknowledging receipt of the plans and seeking clarification as to whether Mr Fowler still wanted ‘a residential component to the application’. The letter also requested a response to the issues raised by Ms Isle in her letter of 6 January 2005.[17]
[17] See Exhibit P58 (City of Port Lincoln Council file - Development Application No: 931/497/04) and Exhibit D61 copy letter contained therein.
By letter dated 15 November 2005,[18] Mr Fowler advised Mr Ritger that the proposed building could be used for both residential and commercial purposes. Mr Fowler suggested three options:
· a building containing a single bedroom, four consultation rooms and two treatment rooms; or,
· a building containing a single bedroom occupancy and six offices; or,
· a mixture of the above with or without a bedroom.
[18] See Exhibit P58 (City of Port Lincoln Council file - Development Application No: 931/497/04) copy letter contained therein; see also Exhibit D61.
By letter dated 29 November 2005, Ms Isle informed Mr Fowler that building options which included a bedroom were inconsistent with the non-residential plans submitted to Council on 28 October 2005.[19] The letter further stated:
The application must be clear in regard to what is being proposed. Accordingly, Council requires clarification of the following matters:
·The location of the residential area – this should be depicted on the floor/site plan.
·Confirmation of the proposed use of the rooms – ie consulting rooms/medical offices and/or offices (not associated with the medical profession). (This clarification is required, as the Development Act separately defines consulting rooms and offices). The plans must clearly illustrate the proposed use of the rooms.
[19] See Exhibit P58 (City of Port Lincoln Council file - Development Application No: 931/497/04) copy letter contained therein; see also Exhibit D61.
On 30 November 2005 Mr Fowler wrote to Ms Isle stating that there were ‘three scenarios of the building use that might include a blend of offices, consultation rooms and residential occupancy’.[20] The letter concluded:
I do want to provide you all the information you seek but I would ask you to advise us if you wish separate floor plans be submitted to cover each possible tenant use scenario or to have one floor plan filled with multiple tenant room use and car parking identification.
Please contact Wayne Goodwin on [telephone number provided] as I am certain he would very quickly provide to you …the plans you seek.
[20] See Exhibit P58 (City of Port Lincoln Council file - Development Application No: 931/497/04) copy letter contained therein: see also Exhibit D61.
By letter dated 8 December 2005, Ms Isle informed Mr Fowler that the possible uses of each room should be clearly identified ‘on either separate plans for each scenario or by notations on the one floor/site plan’.[21]
[21] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) copy letter contained therein; see also Exhibit D61.
The Builder subsequently submitted three sets of plans, drawn by Concept Drafting, which provided for the following options:[22]
· Option 1 - reception/waiting area, four consulting rooms, two examination/treatment rooms, lounge, kitchen and one bedroom (drawing no. 05-179.A – revision C).
· Option 2 - reception/waiting area, four consulting rooms, two examination/treatment rooms, lounge, kitchen and one bedroom (drawing no. 05-179.B – revision C).
· Option 3 - reception/waiting area, four consulting rooms, two examination/treatment rooms, two offices and kitchen (no lounge or bedroom) (drawing no. 05-179.C – revision C).
[22] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) copy plans contained therein.
The three options were identical in relation to the structure and configuration of the proposed building. The plans differed only in relation to the rooms’ descriptions. In particular, the ‘lounge’ and ‘bedroom’ in options 1 and 2 were described as ‘offices’ in option 3. In other words, unlike the first two options, option 3 had no designated residential use.
On 6 February 2006 the Council’s Development Assessment Panel (DAP) granted Provisional Development Plan Consent with respect to all three options pursuant to s33 of the Act, subject to various conditions.[23] The Decision Notification Form described the ‘Nature of the Proposed Development’ as ‘CONSULTING ROOMS AND RESIDENTIAL PREMISES’.
[23] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) Provisional Development Plan Consent contained therein.
Final quote
On 28 February 2006, following further discussions between the parties, Mr Fowler accepted and signed the following ‘fixed price quotation’ of $299,810.00 (‘the final quote’):[24]
[24] Exhibit P13.
QUOTATION OFFER OF ACCEPTANCE
We are happy to confirm the following fixed price quotation for the construction of your new home, based on the Hotondo Traditional Specification.
1.Proposed offices
2.Connections
·Sewer connected to the legal point of discharge Included
·Storm water connected to the legal point of discharge Included
·Water Tapping Included
·Electrical connection underground/overhead power Included
·Gas connection Included
Note: Meter box will be placed at the closest and most practical place. Movement will constitute an additional charge
3.Soil Conditions/Slab Costs: Price is based on Class “S” Soil Classification.
Price is based on a flat level site and any Excavation to level the site is an extra charge.
We understand that this fixed price is valid for the period of 14 days from date of issue.
Extras Included:
Proposed Commercial Building 260m2 as per our
Luxury Specifications $299,810.00
Price Includes:
·65m2 Paving PC Item $ 3,500.00
·785m2 Hot Mix PC Item $ 9,500.00
·100Lm Kerbing PC Item $ 3,850.00
·Excavations & Site Preparation PC Item $20,000.00
Price does not include:
·Under Cover Private Car Parking
·Any Retainer Walls
·Any Landscaping
·Floor Coverings or Window Treatments
Note: Client to note that unless items are expressly noted in this tender, the client must assume that they have not been allowed for.
Signed by G Fowler
Signed by W Goodwin
The final quote was marginally greater than the second quote (just over $500.00) for reasons which are of no significance. As with the second quote, it contained the expression ‘as per our Luxury Specifications’. There is no dispute that, following the first quote ($255,000.00), the price for the proposed development was increased to allow for upgrades requested by Mr Fowler. However, Mr Fowler contends, and the Builder disputes, that those upgrades included works and materials which the Builder now claims as variations to the Contract for which the Builder is entitled to be paid (‘the Variations Issue’). For reasons discussed later, I reject Mr Fowler’s case on this issue (see [103]-[145]).
The Contract
On 15 March 2006 Mr Goodwin and Mr Fowler executed the Contract in which the Builder agreed to construct ‘commercial offices’ for DTT for $299,150, inclusive of GST, subject to soil classification.[25] The Contract was a standard form ‘South Australian Commercial Building Contract - Plain English - SABC1 2004’ issued by the Master Builders Association South Australia Inc.
[25] Exhibit P1.
The Contract provided that the building work was to be carried out:
According to the Drawings, Specifications, any other relevant documents as identified below, which have been signed by or on behalf of the parties:
Drawings prepared by…Concept Drafting…
Numbered …….. No. of sheets ….. Dated ………..
Schedule of finishes ………... Dated …..…..
Specification prepared by …..….. Dated ….…..
Footing Construction Report prepared by …….…..
Numbered …….... No. of Pages …….... Dated …….…..
Together with other documents as follows: ……………..
and which are hereby incorporated in this agreement.
The only completed entry in this section of the Contract was a handwritten reference to ‘Concept Drafting’. Although the Contract stipulated that the building work was to be carried out in accordance with drawings signed by or on behalf of the parties, no such drawings existed at the time. The only plans which had been drawn by Concept Drafting, to this point, were those submitted to Council for Development Approval (i.e. options 1, 2 and 3) which had not been signed by the parties. I will return to this point later.
The above section of the Contract was silent on the required specifications. However, subject to one qualification, there is no dispute that the parties executed the Contract on the basis that the specifications were included in two documents signed by Mr Goodwin and Mr Fowler on 14 March 2006; namely, a standard form ‘Master Builders Specification’ booklet[26] and a document prepared by the Builder called ‘Traditional Project Specifications’.[27]
[26] The ‘Master Builders Specification’ booklet was not produced by either party but a copy of the signed document is contained in Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04).
[27] Exhibit P18.
The qualification is Mr Fowler’s assertion that there was a common understanding between the parties that certain upgrades or ‘Luxury Specifications’ (not referred to in the specifications) that were to be included in the contract price are among the items the Builder now claims were variations to the original scope of works (‘the Variations Issue’) .
Other relevant aspects of the Contract were as follows:
· The Contract stipulated that the Builder ‘begin work on the date agreed subject to any extension of time for commencement’ (Builder’s Main Obligations p8 [1]) but did not specify the date for commencement (Schedule Item A).
· The Contract stipulated that the Builder ‘finish the work by date agreed subject to any extension of time for completion’ (Builder’s Main Obligations p.8 [1]) but did not specify a date for Practical Completion or a Period for Completion of the Work (Schedule Items B.1 and B.2).
· The Contract defined ‘The Date Practical Completion’ as the date ‘when the Work is largely finished and ready to use and/or occupy’ (Special Meanings p7) and contained the following additional clause with respect to Practical Completion:
24. PRACTICAL COMPLETION
24.1 Practical Completion is when the work is largely finished and ready to use.
24.2 Once the Work is practically completed, the Builder must tell the Owner in writing.
24.3 Within give (5) days of this the Owner must inspect the Work with the Builder and either agree that it is complete or say why it is not.
24.4 If the Owner thinks it is not, he must give the Builder a list of any defective or incomplete work and the Builder must do all things necessary to bring the work to practical completion.
24.5 The Work is the responsibility of the Owner from the date of Practical Completion.
24.6 If the Owner takes possession and/or uses part of the Work without the written consent of the Builder, the Work shall be deemed to be practically complete on the date such possession is taken or use occurs.
NOTE:It is important that the Owner places insurance cover on the building and contents from the date of practical completion.
25. POSSESSION ON PRACTICAL COMPLETION
25.1 The Owner cannot move in until final payment has been made to the Builder.
·The Contract provided for a ‘Maintenance Period’ beginning on Practical Completion and continuing for a period of 13 weeks (cl 26.1, Schedule Item M) and required the Owner to tell the Builder of all defects or other faults which appear during that time (cl 26.2). The Builder was required to fix any such defects within 30 days or as agreed between the parties (cl 26.3). The Owner was obliged to give the Builder reasonable access during working hours to undertake any such work (cl 26.4).
·The Contract provided that the Owner agreed to ‘pay for any variations that may arise’ (Owner’s Main Obligations p8 [2])) and defined ‘variation’ as ‘a change to the work that was originally agreed to’ (Special Meanings p7). The Contract contained the following additional clause with respect to variations:
12.1 This Contract may be varied by changes to the Work.
12.2 These changes can be either for extra work or by leaving out part of the Work.
12.3 The Builder may refuse to do any extra work unless the changes asked for by the Owner are first put in writing.
12.4 If extra work is needed to comply with Acts, By-Laws and/or Regulations, the Builder must ask the Owner in writing for approval to go ahead, providing full details cost and the reason for the variation.
12.5 If possible, the price for the extra work shall be given to the Owner by the Builder before the extra work is started otherwise as soon as possible after it is available to the Builder.
12.6 If a price is not agreed before the extra work is started, the Builder may proceed with the extra work requested or required and the price of the extra work shall be the actual cost to the Builder together with a percentage as stated in item D.1 of the Schedule and GST.
12.7 The Builder may claim payment of the price for any extra work requested with the next progress claim following the completion of the extra work.
12.8 If the changes requested involve less work by leaving out part of the agreed works, the cost and GST will be deducted from the Price. The Builder will be entitled to keep an allowance for overhead and profit as set out in Item D.2 of the Schedule.
12.9 The Builder may ask the Owner to provide the Lender’s written approval for any large variations to the Work and may refuse to do any extra work until the written approval is given.
Building Rules Consent
On 7 April 2006 final draft plans for the proposed building work were drawn up by Concept Drafting (05-179 (A) Revision, A Sheet 2/9).[28] The plans mirrored Option 3 in that they provided for a reception/waiting area, filing room, four consulting rooms, two examination/treatment rooms, two offices, a kitchen and toilets. No provision was made for a residential component (lounge room and bedroom).
[28] See Exhibits P16 and P22.
By letter dated 28 April 2006[29] the Builder requested Mr W Murphy, a Civil and Structural Engineer, Building Surveyor and Private Certifier under the Development Act and the Regulations, to act as Private Certifier in relation to the proposed development. Mr Murphy was supplied with, among other things, the final plans, dated 7 April 2006, the Traditional Project Specifications dated 14 March 2006 and the standard form Master Builders Association Specifications.
[29] Exhibit P53.
On 12 May 2005 Mr Murphy certified the final plans and the Traditional Project Specifications, granted Provisional Building Rules Consent pursuant to s 93 of the Act and provided the Builder with a Decision Notification Form as required under Regulation 42.[30]
[30] Exhibit D9.
On 30 May 2006 the Council granted Development Approval with respect to the certified plans and specifications and issued a Decision Notification Form.[31] The form described the ‘Nature of the Proposed Development’ as ‘CONSULTING ROOMS AND RESIDENTIAL PREMISES’ and detailed various planning conditions including the following:
1.The development herein granted Provisional Development Plan Consent shall be undertaken in accordance with the plans (05-179.A 05-179.B 05.179.C sheets 1-4 revision C dated 26/10/05 drawn by AB) and details accompanying the application to the satisfaction of Council.
2.An amended site plan which provides a detailed landscape plan schedule and any other changes imposed by the conditions of this approval shall be submitted prior to or in conjunction with the Building Application.
3.Road connections to Council roads shall be designed and constructed to acceptable engineering standards and to the satisfaction of Council’s Director of Operations.
4.The carparking layout for this development shall be designed in accordance with Australian Standards AS2890 Parts 1 to 4.
[31] T 601-602 (B Milic); see See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) copy notice contained therein; see also annexure to Exhibit P49 (Report of C Short).
It is clear that, whilst the Decision Notification Form referred to consulting rooms with ‘residential premises’, approval was granted in relation to the certified plans which did not have a residential component. Mr Milic confirmed that the description of the nature of the proposed development was an error.[32] It would appear that the Council employee responsible for drafting the Decision Notification Form had erroneously borrowed the description used in the Decision Notification Form for the grant of Provisional Development Plan Consent, on 6 February 2006 (see [43] herein).
[32] T 606-607 (B Milic); Exhibit P17 (synopsis of events prepared by Mr Milic).
Mr Fowler contends that he authorised the Builder to seek Development Approval for commercial premises with a residential component (lounge room and bedroom). He claims that he was deceived or misled by the Builder into believing that only such an application would be made.[33] He further suggests that he was unaware that Development Approval had been granted with respect to option 3 until sometime after he took possession of the property. He claims that the Builder’s failure to obtain the appropriate approval contributed to economic losses from which he has suffered (‘Development Approval Issue’). These allegations are disputed by the Builder. For reasons discussed later, I reject Mr Fowler’s case on this issue (see [153]-[167]).
[33] T 641-642, 644 (G Fowler).
Carpark Approval
A car parking site plan which had been submitted to Council as part of the application for Development Approval provided for a total of 18 off-street car parking spaces with seven spaces to be located on the western side (front) of the building, seven on the southern side of the building and four in the Quiberon section.[34]
[34] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) copy carpark plan marked ‘Attachment Q’ contained therein.
As earlier noted, Development Approval granted on 30 May 2006 was subject to various conditions including a stipulation that ‘the car parking layout for this development shall be designed in accordance with Australian Standards AS2890 Parts 1 to 4’.
Prior to the grant of Development Approval concerns had been expressed by the Council about the layout of the car park as set out in the certified plans.
On 8 June 2006 the Council advised the Builder by email that the proposed carpark spaces at the front of the building were too small by Australian Standards.[35]
[35] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy email from J. Isle dated 8 June 2006 contained therein.
To address this problem the Builder submitted to the Council, on or about 11 June 2006, an amended carpark plan reducing the total number of proposed carpark spaces from 18 to 14.[36]
[36] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/497/04) copy amended carpark plan marked ‘Attachment Q’ and stamped ‘Superseded’ contained therein.
On 10 July 2006 DAP determined that the amended carpark plan remained unsuitable.
By letter dated 17 July 2006 the Council informed the Builder of DAP’s decision.[37]
[37] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy letter from Mr B Milic to KDBC dated 17 July 2006 contained therein.
On 21 July 2006 the Builder submitted to the Council a further amended carpark plan reducing from 14 to 13 the total number of car park spaces (‘the July carpark plan’).[38]
[38] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy letter from Builder to Mr B Milic dated 21 July 2006 contained therein.
On 14 August 2006 DAP endorsed the July carpark plan as part of the Development Approval granted on 30 May 2006.[39]
[39] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy of endorsed car park site plan contained therein.
By letter dated 16 August 2006 Mr B Milic, the Council’s Manager of Development and Environmental Services, informed Mr Fowler of DAP’s decision.[40]
[40] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy letter from Mr B Milic to Mr Fowler dated 16 August 2006 contained therein; see also Exhibit D69.
On 30 August 2006 Mr Fowler lodged with the Council a Development Application Form requesting amendments to the July carpark plan together with a plan drawn by Mr Fowler (‘the August carpark plan’).[41]
[41] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy Development Application Form contained therein.
The primary differences between the July and August carpark plans related to four carpark spaces (10-13) that were to be positioned at the rear of the property. The August carpark plan proposed that carpark spaces 10 and 11 be garaged and that carpark spaces 12 and 13 be set at an angle of 45 degrees rather than 90 degrees.
On 15 September 2006 Mr Milic wrote to Mr Fowler seeking further information in relation to his application.[42]
[42] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy letter from Mr B Milic to Mr Fowler dated 15 September 2006 contained therein.
On 25 September 2006 Mr Fowler responded by letter.[43]
[43] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) copy letter from Mr Fowler to B Milic dated 25 September 2006 contained therein.
On 25 October 2006 the Council issued a Decision Notification Form granting Development Approval for the August carpark plan.[44]
[44] See Exhibit D68 (Decision Notification Form).
Mr Fowler claims that he did not authorise the lodgement of the July carpark plan and upon finding out that it had been approved submitted the August carpark plan. He claims that the Builder’s unauthorised lodgement of the July carpark plan unnecessarily delayed completion of the development contributing to his economic loss. I reject Mr Fowler’s evidence and argument on this topic (see discussion of Carpark Approval Issue [168]- [178]).
Progress of works
The Builder commenced work on the property shortly after the grant of Development Approval on 30 May 2006.
There is no serious dispute that the works reached the point of Practical Completion on or about 8 November 2006.
Prior to the grant of Development Approval, and in the course of April 2006, Mr Fowler received from Mr Goodwin a copy of a time schedule for the works (‘the Works Schedule).[45] The Works Schedule proposed preparatory excavation of the site occurring on 26 April 2006 with ‘handover’ to Mr Fowler occurring on 1 September 2006.
[45] Exhibit P5.
Mr Fowler contends that, in accordance with the Works Schedule, the Contract required the works to be completed by 1 September 2006. The Builder’s delay prevented him from using and leasing the premises for commercial purposes resulting in him suffering financial losses. (‘Completion Date Issue’). For reasons set out later, I reject Mr Fowler’s argument (see [147] - [152]).
Dispute about works
On 1 November 2006 Mr Goodwin received from Mr Fowler a written list of defects which resulted in the Builder undertaking remedial works.[46]
[46] Exhibit D3 (letter from Coates PL to Builder dated 8 November 2006, list of defects set out therein).
By letter dated 8 November 2006 Mr Coates, from Coates PL advised KDBC that he had been instructed by Mr Fowler in his capacity as trustee for DTT[47] to indicate that the point of practical completion had been reached and to confirm that remedial works were in progress.
[47] Exhibit P3.
Following the receipt of the letter, the Builder continued with remedial works sought by Mr Fowler. They were carried out except for those which the Builder disputed.
On 23 November 2006, Mr Coates wrote to the Builder and advised that certain costs claimed as variations to the Contract were in dispute.[48] The letter asserted that the Works Schedule indicated that completion was to have occurred on 1 September 2006 and that in all the circumstances Practical Completion should have been achieved by at least 1 October 2006.
[48] Exhibit P4.
The letter further complained that Mr Fowler had suffered economic loss due to delay in the completion of the works and flagged the possibility of legal proceedings. The letter demanded delivery of keys to the premises within one working day of receipt of the letter to enable Mr Fowler to take immediate possession in order to mitigate his losses.
On Saturday 25 November 2006 Mr Fowler took possession of the property. An acrimonious confrontation took place on the property between Mr Fowler and Mr Daniels which resulted in Mr Fowler leaving the premises. Mr Daniels arranged for an employee to stay on the property for one or two nights.
Mr Fowler regained possession of the premises on or about 27 November 2006.[49]
[49] T 830 (G Fowler).
Mr Fowler contends that the building suffered from numerous defects and that there was a failure on the part of the Builder to complete construction in accordance with the Contract’s plans and specifications, the Regulations and other specifications. As a result he has suffered economic loss due to loss of rental income from the property, diminution in the property’s market value and minor costs of remedial works (‘Defective Work Issue’). For reasons to be canvassed later, Mr Fowler’s claims of defective work are for the most part rejected. To the extent that there were any inadequacies they were relatively minor and warrant only trivial damages for remedial costs incurred by Mr Fowler.
Certification
To be able to lawfully occupy the premises Mr Fowler required a Certificate of Occupancy issued by the Council, pursuant to s 67(2) of the Act, accompanied by such certificates, reports or other documentation as required under the Regulations, including: a Statement of Compliance in the form prescribed by Schedule 19A (reg. 83A); and, an Essential Safety Provisions Compliance Certificate in the form prescribed by Schedule 16 (reg. 76 (3)).
In February 2007 Mr Fowler lodged with the Council an urgent application for a Temporary Certificate of Occupancy pursuant to reg. 83(4) on the grounds that the Builder had failed to provide a Statement of Compliance and an Essential Safety Provisions Compliance Certificate.[50]
[50] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06), letter Exhibit P17 (letter from Mr B Milic to Mr C Short dated 20 April 2010) and Exhibit D61 (application contained therein).
On 23 February 2007 Council issued a Temporary Certificate of Occupancy for a period of 12 months. Further Temporary Certificates of Occupancy (each for a period of 12 months) were issued to Mr Fowler by the Council on 22 February 2008, 16 February 2009 and 15 March 2010.[51]
[51] Exhibit P17 (Temporary Certificates of Occupancy annexed to letter from Mr B Milic to Mr C Short dated 20 April 2010). Note: each Temporary Certificate of Occupancy provided that the certificate was ‘for a period of 12 months only, or until a Statement of Compliance and Form 2 Essential Safety Provisions is received from the builder within this Twelve month period’. Each certificate incorrectly described the subject building as ‘Consulting Rooms & Residential Premises’ but correctly specified that it had been classified as ‘Class 5’.
Mr Fowler contends that the Builder was obliged to provide to him the Statement of Compliance and the Essential Safety Provisions Compliance Certificate and that their failure to provide these documents prevented him from obtaining a Certificate of Occupancy which in turn compromised his ability to lease the premises and resulted in him incurring financial loss (‘Certification Issue’). For reasons to be canvassed later, Mr Fowler’s argument on this point is also rejected ([428]-[435]).
Sale of property
The ANZ Bank held a mortgage over Mr Fowler’s property. Mr Fowler experienced financial difficulties and defaulted under the mortgage. Subsequently, by Deed of Appointment dated 30 November 2011, the ANZ appointed Mr P. Lanthois and Mr C. Powell from Korda Mentha as receivers and managers with respect to the property due to Mr Fowler apparently having defaulted under the mortgage.
By letter dated 14 November 2012 Mr Lanthois advised the Council of the Deed of Appointment and applied for a Certificate of Occupancy. The application was accompanied by a Statement of Compliance dated 12 November 2012 which had been obtained from Mr Daniels by Korda Mentha.[52]
[52] See Exhibit P58 (City of Port Lincoln Council file – Development Application No: 931/316/06) for Application for Certificate of Occupancy, Statement of Compliance and associated correspondence.
On 4 October 2013 the ANZ exercised its power of sale under the mortgage and sold the property to Dr Rufus McLeay.[53]
WCK’s CLAIM: ANALYSIS
[53] See Property Search Extract Exhibit P15; T 82-84 (R McLeay).
PRIVITY ISSUE
The Contract executed on 15 March 2006 nominated KDBC and DTT as ‘Builder’ and ‘Owner’, respectively. The common law privity of contract doctrine provides that only a party to a contract may sue on it or be subject to the obligations created under it.[54] Mr Fowler contends that he cannot be sued on the Contract because neither he nor WCK were parties to the Contract.
[54] Coull’s v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460 Barwick CJ at 478.
Mr Fowler testified that when he first attended the Builder’s Port Lincoln Office in 2005 he informed Mr Goodwin and Mr Daniels that he was undertaking the development in his capacity as trustee for DTT.[55] Mr Goodwin said that he had no recollection of Mr Fowler having done so.[56] Mr Daniels testified that he had no recollection of meeting Mr Fowler on this occasion or any other occasion before Mr Fowler took possession of the building in November 2006.[57]
[55] T 635-636, 678 (G Fowler).
[56] T 266-267 (W Goodwin).
[57] T 55-56 (K Daniels).
I accept that Mr Fowler executed the Contract in his capacity as trustee. However, that fact does not prevent him from being sued on the Contract. A trust is a legal instrument under which one person (the trustee) holds property on behalf of another (‘the beneficiary’). The trustee holds the legal title to the property on behalf of the beneficiary who holds the equitable interest. The trust is not an entity recognised as separate and distinct from its constituents.[58] Accordingly, it cannot sue or be sued in its own name. When a person executes a contract as trustee he does so as principal for the benefit of the beneficiary.[59] Any liability incurred will be assumed by the trustee personally.[60] It follows that Mr Fowler’s contention that he cannot be sued on the Contract must be rejected.
[58] See G. E. Dal Pont and D.R. Chalmers, Equity and Trusts in Australia, 3rd ed Law Book Co 2004 at [15.05].
[59] Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd (1984-5) 155 CLR 541 at 546 (FC).
[60] See also R.P.Austin and I.M.Ramsay, Ford’s Principles of Corporations Law, 15th ed. 2013 LexisNexis Butterworths at [12.250].
Mr Fowler’s argument that the claim should have been instituted by KDBC and not WCK must be rejected as well. KDBC was not a legal person but a business name registered pursuant to s 7 of the Business Names Act 1996 (SA) under which WCK traded.[61] (At the time of the relevant events, s 7 provided that a company trading under a business name (different from the company’s name) must register it.)
[61] WCK held the name KDBC from 26 November 2003 until 27 January 2010; see ASIC Current and Historical Business Name Extract (Exhibit P12).
Furthermore, it was not incumbent on Mr Goodwin to expressly mention, as Mr Fowler suggests, that he was acting as an agent for WCK. As Lord Diplock explained in Teheran-Europe Co Ltd v ST Belton (Tractors) Ltd:[62]
Where an agent has actual authority and enters into a contract with another party intending to do so on behalf of his principal, it matters not whether he discloses to the other party the identity of his principal, or even that he is contracting on behalf of a principal at all, if the other party is willing or leads the agent to believe that he is willing to treat as a party to the contract anyone on whose behalf the agent may have been authorised to contract. In the case of an ordinary commercial contract such willingness of the other party may be assumed by the agent …
[62] [1968] 2 QB 545 at 555.
In the present case, Mr Fowler did not suggest that he would not have entered into the Contract had he known that WCK traded as KDBC. From his perspective the ownership of KBDC was irrelevant. His primary concern was to contract with a competent licensed builder. I am in no doubt that Mr Fowler was willing to treat as a party to the contract anyone on whose behalf Mr Goodwin may have been authorised to contract. In any event, it must have been apparent to Mr Fowler that WCK was affiliated with KDBC. All of the pre-contractual written correspondence from KDBC to Mr Fowler including the quotes contained, as part of the letterhead, the following:
KEITH DANIELS BUILDING COMPANY
LIC. NO. BLD181800
WCK PTY. LTD. (ABN: 23 107 076 193)
P.O. BOX 2569, 56 ST ANDREWS TCE
PORT LINCOLN, S.A., 5606
PH: 8682 2500 FAX: 8683 3489
MOB: 0428 837 664(my underlining)
Mr Fowler’s privity argument must be rejected.
VARIATIONS ISSUE
As a matter of general principle, the mere fact that a contractor performs work or provides materials in addition to that specified in a contract does not entitle the contractor to additional recompense. In the present case, the Contract required the Owner to pay for any variations to the work originally agreed to which the owner had requested. With respect to the variations issue, the onus rests on the Builder to establish on the balance of probabilities (i) that Mr Fowler authorised the relevant variations and (ii) that the variations were properly carried out.
Case for WCK
The Contract price was $299,810.00 plus the costs of agreed variations to the original scope of works. The Builder contends that Mr Fowler authorised numerous variations costing in total $40,199.95.[63] On account of credits applied for certain works that were not undertaken, the amount allegedly owed by Mr Fowler for variations was $33,859.06.[64] There is no dispute that Mr Fowler made progress payments totalling $301,452.21[65] leaving unpaid, on the Builder’s case, a balance of $32,216.85 plus interest for variations.
[63] WCK’s pleadings erroneously assert that the total cost of the requested variations was $46,199.95; see WCK’s Reply FDN 38 [3].
[64] WCK’s Statement of Claim [6].
[65] T 40 (K Daniels); Exhibit P8 (Schedule of payments).
The variations which the Builder contends remain unpaid maybe categorised according to invoices forwarded to Mr Fowler.
On 8 September 2006 (Invoice No 1125) Mr Fowler was billed for the following alleged variations:
(i)Upgrading of power from single phase to three phase ($1818.18).
(ii)Provision of ‘Oliveri’ kitchen accessory pack ($83.65)
(iii)Upgrading of electrical specifications ($8709.82)
(iv)Installation of three Linea mixers instead of standard taps ($158.91)
(v)Upgrading of kitchen hot water service from a 25 litre unit to a 50 litre unit ($448.81)
(vi)Relocating the water meter ($689.00)
The total amount payable for these variations inclusive of GST was $13,099.20 reduced to $11,908.36 on account of credits given to Mr Fowler. The Builder contends that Mr Fowler authorised each of the variations itemised in Invoice No 1125 by signing an ‘Authority for Variation to Contract’ (‘variation form’) counter signed by Mr Goodwin.[66] (Each variation form had written upon it a variation order number (VO) and details of the work to be carried out).
[66] Exhibit P2 (Authorities for Variation to Contract VO-01, VO-02, VO-03 and VO-04).
On 1 November 2006 (Invoice No 1216) Mr Fowler was billed for the following alleged variations:
(i)Additional hot mix (bitumen) for carpark ($471.64)
(ii)Additional costs for excavation and site preparation ($9,656.68)
(iii)Additional costs with respect to kerbing and fence plinths ($10,388.32)
The total amount payable for these variations inclusive of GST was $19,068.30.
On 5 December 2006 (Invoice No 1260) Mr Fowler was billed for the following alleged variations:
(i)Installation of Rheem hot water unit under counter ($450.86)
(ii)Plumbing for above hot water unit ($163.64)
(iii)Fee for variation (ii) pursuant to Contract ($90.91)
(iv)Additional cost due to change in paint colour ($257.18)
(v)Fee for variation (iv) pursuant to Contract ($90.91)
(vi)Costs incurred in repainting walls marked by tiler contracted by Mr Fowler ($218.18)
(vii)Fee for above variation (vi) pursuant to Contract ($90.91)
The total amount payable for these variations inclusive of GST was $1,498.85.
It should be observed that the Builder has not tendered any evidence which shows that Mr Fowler signed variation forms relating to the items referred to in Invoices 1216 and 1260. It should also be noted that the Builder initially claimed as a variation a ‘cabinetry upgrade’ in the amount of $684.40. However, in the course of his examination-in-chief, Mr Daniels conceded that Mr Fowler may have paid for this variation as asserted by Mr Fowler in his pleadings.[67] This aspect of the Builder’s claim must therefore be rejected.
[67] T 126-127 (K Daniels).
Case for Mr Fowler
Before turning to consider the evidence relating to the variations that remain in dispute issue, it is appropriate to refer to Mr Fowler’s pleadings on this topic.
In Mr Fowler’s Fifth Amended Defence and Cross Action Counter Claim (WCK’s claim – Action No 599 of 2014) he denied owing money for any variations (para. [4]).[68] Later, in his Statement of Claim (Action No 2010 of 2008), he admitted requesting the variations referred to in Invoice No 1125 (i)‑(v) but made no admissions with respect to the variations referred to in Invoices 1216 and 1260.
[68] 5th Amended Defence and Cross Action Counter Claim FDN 45 at [4].
The Statement of Claim states:
5. The 1st Defendant forwarded variation invoices for $33,859.06 and the Plaintiff states in respect of:-
5.1VO-01 Upgrade service to phase 3 power; The Plaintiff states that the variation related only to the digging and excavation of a further two (2) metres of ditch for the cable to be laid to connect to the relocated powerbox as per the oral agreement made between the parties. Further the Plaintiff disputes the quantum claimed by the 1st Defendant for that work and states that the 1st Defendant would be unjustly enriched;
5.2VO-02 Oliveri accessory pack for kitchen sink; The Plaintiff states that the accessory pack was not installed or provided and states that the 1st Defendant would be unjustly enriched;
5.3VO-02 Variations to the electrical in the contract specifications; The Plaintiff states that the variation to the electrical connections were included in the contractual upgrade from standard to luxury specifications as per the agreement made between the parties. Further the Plaintiff states that the 1st Defendant would be unjustly enriched;
5.4VO-03 Upgrade to Linea mixers x 3; The Plaintiff states the upgrade was completed and paid by the Plaintiff;
5.5VO-03 Dux 50 litre. P1 Hot Water Unit; The Plaintiff states that the 50 litre hot water unit was not installed as per the variation but rather the 1st Defendant installed the standard 25L Hot water unit and the Plaintiff states that the 1st Defendant would be unjustly enriched;
5.6VO-04 Cabinetry Upgrade; The Plaintiff states that cabinetry upgrade was completed and paid by the Plaintiff.
It is to be observed, that while Mr Fowler acknowledged in [5] that he had received variation invoices totalling $33,859.06, he proceeded to address only six of those variations [5.1]-[5.6]). They constituted only about one half of the total variation costs claimed by the Builder. The first five ([5.1]-[5.5]) were the subject of Invoice No 1125. As mentioned, the sixth ([5.6]) is now irrelevant by reason of Mr Daniel’s concession that Mr Fowler may have paid for this variation.
Consideration of evidence
The invoices (together with a schedule of payments made by Mr Fowler)[69] and the variation forms[70] were tendered by Mr Daniels as business records pursuant to s 45A of the Evidence Act 1929.[71] Mr Daniels was unable to comment on the circumstances of the variations because the relevant negotiations were conducted with Mr Fowler by Mr Goodwin.
[69] Exhibit P8.
[70] Exhibit P2 (Authorities for Variation to Contract VO-01, VO-02,VO-03 and VO-04).
[71] T 27-28, 38-40 (K Daniels).
Mr Goodwin was examined by Mr Daniels about the variations Invoice No 1125 (i)-(v). Mr Goodwin vouched for the accuracy of the variation forms, identified Mr Fowler’s signatures on the forms and explained the nature and circumstances of the variations. However, he was not examined, or cross-examined, about the alleged variations referred to in Invoices 1216 and 1260, except in relation to item (iv) (change of paint colour - $294) Invoice 1260. Mr Daniels also limited his cross-examination of Mr Fowler to variations (i)-(v) Invoice No 1125.
It is not apparent as to why Mr Daniels limited his examination of Mr Goodwin, and his cross-examination of Mr Fowler, in the manner outlined above. It is possible that he erroneously construed Mr Fowler’s pleadings as indicating that the variations canvassed in paras. [5.1]-[5.5] of Mr Fowler’s Statement of Claim were the only variations in dispute.
If this is the case, then Mr Daniel’s misunderstanding has possibly resulted in the Builder failing to tender evidence in support of tits claim for variations referred to in Invoices 1216 and 1260. Other than the mere existence of those invoices, there is no evidence that the upgrades to which they refer were performed or that Mr Fowler authorised any variations that were performed. I do not regard the mere existence of the invoices as sufficient proof of these essential elements of WCK’s claim. Accordingly, the claim with respect to the variations listed in Invoices 1216 and 1260 must be rejected.
I turn to the evidence relating the disputed variations (i)-(v) referred to in Invoice No 1125.
Variation (i): Upgrading power to three phase
Mr Goodwin testified that the upgrades referred to in Invoice 1125 were variations to the Contract. In relation to the power upgrade, Mr Goodwin said that Mr Fowler arranged for a separate contractor to install an air conditioning unit which required the building’s power supply to be upgraded single phase to three phase.[72] On 2 May 2006, almost two months after the execution of the Contract, Mr Fowler signed a variation form authorising the upgrade for a cost not exceeding $2,000[73] and was subsequently billed $1818.18 excluding GST.[74]
[72] T 170-172, 202, 289 (W Goodwin).
[73] Exhibit P2 (Authority for Variation to Contract V0-O1).
[74] Exhibit P8 (Invoice No 1125).
Mr Fowler did not dispute these facts. However, he testified that after he received the first quote he negotiated upgrades totalling $44,810.00 (the difference between the first quote and the final quote) which Mr Goodwin agreed would be covered by the contract price as ‘Luxury Specifications’. The upgrades included the change to three phase power.[75]
[75] T 663-664, 692.
Before I turn to consider Mr Fowler’s allegations, it should be noted that they were not expressly pleaded by Mr Fowler and were not clearly put to Mr Goodwin in cross-examination. He merely asked Mr Goodwin to confirm that the second quote and the final quote, unlike the first, referred to ‘Luxury Specifications’.[76] I had explained to Mr Fowler the general principle that a cross-examiner should put to an opponent’s witness the matters in respect of which it is intended to contradict the witness.[77]
[76] T 270-271.
[77] Browne v Dunn (1893) 6 R 67.
In an appropriate case, failure to adhere to the general rule may be held to imply acceptance of the evidence-in-chief.[78] I do not consider this to be such a case. Mr Fowler is an unrepresented litigant. Despite my efforts, he may not have appreciated the potential consequences for failing to adhere to the general principle. It should also be observed that to afford the Builder procedural fairness, I indicated to Mr Daniels, at the close of Mr Fowler’s case, that I would entertain an application for Mr Goodwin to be re-called so that the relevant allegations could be put.[79] Mr Daniels declined to make the application.
[78] Bulstrode v Newton [1970] VR 840 at 846.
[79] See MWJ v The Queen (2005) ALJR 329 at 339 (Gummow, Kirby and Callinan JJ).
In the circumstances, I am left to determine this issue without having heard from Mr Goodwin in relation to these particular allegations. It is reasonable to infer from the reference to ‘Luxury Specifications’ in the second and final quotes, and the increased prices stipulated in those quotes, that after Mr Fowler received the first quote he negotiated certain upgrades or Luxury Specifications totalling $44,810.00.
However, I do not accept that the upgrades included the change to three phase power, or any other change, which the Builder now claims were variations to the Contract. The upgrade to phase three power is not referred to in the specifications (The Traditional Project Specifications and the Master Builders Specifications) signed by Mr Fowler on 14 March 2006. The necessary implication of Mr Goodwin’s evidence, which I accept, is that any agreed upgrades included in the final quote/Contract price must have been included, perhaps inappropriately, in the ‘Traditional Project Specifications’.
Mr Fowler’s evidence was unconvincing in several respects. First, he said that when he signed the Traditional Project Specifications, Mr Goodwin expressly stated that the requested upgrades would be covered by the contract price.[80] He said he believed that Mr Goodwin made notes of those upgrades but he was never provided with, and never requested, a copy of the notes. Nor did he create his own.[81] On the basis of an oral assurance, he signed the specifications though, on his case, he was aware that they failed to refer to upgrades that would cost over $40,000. I regard his evidence as inherently implausible.
[80] T 663-666 (G Fowler).
[81] T 691-692 (G Fowler).
Secondly, there is no dispute that Mr Fowler signed variation forms post execution of the Contract for the three phase power upgrade and certain other upgrades the Builder claims were genuine variations to the Contract. Mr Fowler agreed that the variation forms, on their face, authorised payments to the Builder in addition to the Contract price. However, he asserted that he signed the relevant variation forms because there was an understanding between the parties that it was necessary to record, in the course of the works, the costs of Luxury Specifications to ensure they did not exceed the amount allocated for them i.e. $44,810.00.[82]
[82] See for e.g. T 668-670, 855 (G Fowler).
I regard that explanation as improbable. There is no sensible explanation, on his case, for his failure to insist upon documentation which accurately recorded the true nature of the agreement. The improbability of Mr Fowler’s evidence on this topic is heightened by his concession that some of the items for which he signed variation forms were in fact genuine variations (for example the Oliveri kitchen accessory pack). In other words, on his case, he signed variation forms which drew no distinction between variations which were genuine and that those which he claims were included in the contract price.[83]
[83] T 849 (G Fowler).
Also, Mr Fowler gave conflicting explanation for signing the phase three power variation form. He said that the variation required a meter box to be moved. Mr Goodwin initially refused to move the meter box because the power cables had already been laid.[84] Mr Fowler claimed that in order to relocate the meter box he signed the variation form ‘because it was the only way that the building was going to go forward. Mr Goodwin was not moving’.[85]
[84] T 663-664 (G Fowler).
[85] T 666 (G Fowler).
This allegation lacks cogency. The relevant variation form was signed on 2 May 2006 some 28 days prior to the grant of Development Approval. While there is no evidence as to precisely when the works began, there is no suggestion that they commenced before the grant of Development Approval. Indeed, the Act provides that no development may be undertaken without development approval (s 32) and that such a breach constitutes an offence (s 44). The evidence indicates that at the time of these events WCK was an established and experienced builder aware of their obligations under the Act. The point of all this is that it is improbable Mr Fowler signed the variation form to get Mr Goodwin ‘moving’ because there was really nothing for him to have got moving on.
Variation (ii): ‘Oliveri’ kitchen accessory pack
On 29 June 2006 Mr Fowler signed a variation form authorising the provision of an Oliveri kitchen accessory pack in the amount of $92.00[86] and was subsequently billed for $83.64 (excluding GST).[87] The pack comprised a chopping board and colander that fitted into the kitchen sink. Mr Fowler did not dispute that this was a legitimate variation which he authorised by signing the variation form but claimed that the accessory pack was never supplied.[88]
[86] Exhibit P2 (Authority for Variation to Contract V0-O2).
[87] Exhibit P8 (Invoice No 1125).
[88] T 667 (G Fowler).
This was disputed by WCK. Mr Daniels tendered a copy delivery docket from ‘Plumbtec (Bathroom Kitchen and Plumbing Supplies)’ indicating that the accessory pack had been the supplied by that firm to the Builder on 28 August 2006.[89] Mr Goodwin said that he delivered the accessory pack and other items to the building site which the plumber was required to install.[90] He last saw the accessory pack in the kitchen shortly before Mr Fowler took possession of the property.[91]
[89] Exhibit P20.
[90] T 183-185, 326-227 (W Goodwin).
[91] T 173 Note: Mr Daniels testified that he actually saw an accessory pack on site when he attended the property in 2012 to meet Korda Mentha in relation to the sale of the property. However, Mr Daniels observations are not inconsistent with Mr Fowler’s suggestion that he purchased an accessory because the Builder had failed to supply it (T122).
I prefer Mr Goodwin’s evidence. His evidence receives support from a concession contained in the letter from Mr Coates to the Builder dated 23 November 2006 viz that Mr Fowler agreed that he was required to pay $92.00 for the accessory pack as a variation.[92] That concession is difficult to reconcile with Mr Fowler’s assertion that the accessory pack was never provided. I find that the item was inside the building when Mr Fowler took possession on 25 November 2006 and that Mr Fowler is liable to pay the Builder the princely sum of $92.00.
[92] Copy letter dated 23 November 2006 Exhibit P4.
Variation (iii): Upgrading of electrical specifications
On 11 July 2006 Mr Fowler signed a variation form authorising ‘variations to the electrical contract’ in the amount of $11,491.75[93] for which he was billed on 8 September 2006.[94] However, as I understand the Builder’s case the claim is reduced to $8709.82 on account of credits and the like.
[93] Exhibit P2 (Authority for Variation to Contract V0-O2).
[94] Exhibit P8 (Invoice No 1125).
The Contract provided for standard electrical fittings. Mr Goodwin said that at the time the Contract was executed Mr Fowler advised that he would vary the electrical specifications but had yet to determine the fittings he required. He selected those fittings after the works commenced and was billed for the variations.[95]
[95] T 173-174 (W Goodwin).
Mr Fowler, on the other hand, contended that the electrical variations were among the Luxury Specifications included in the contract price and that he signed the variation form on 11 July 2006 so that Mr Goodwin could keep a running tally of Luxury Specifications to ensure they did not exceed the allowance of $44,810.00.[96]
[96] T 667-670 (G Fowler).
For the reasons previously expressed, I do not accept that Mr Fowler would have signed the Contract, the specifications and, subsequently, the variation form if there was a common understanding between the parties that electrical upgrades were to be included in the contract price. I find that he is liable for the amount of $8,709.82 less $299.00 on account of the Builder’s failure to install a master switch for which he was charged, as discussed in Mr Fowler’s action against the Builder.
Variation (iv): Installation of three Linea mixers instead of standard taps ($158.91)
On 11 July 2006 Mr Fowler signed a variation form authorising the installation of three ‘Linea mixers’ instead of standard taps for an additional cost of $174.80[97] for which he was billed on 8 September 2006 in the amount of $158.91 (excluding GST).[98] Mr Goodwin was not questioned about this variation and Mr Daniels conceded that it was possible that Mr Fowler may have paid for the item.[99] In the circumstances, this aspect of WCK’s claim must be rejected.
[97] Exhibit P2 (Authority for Variation to Contract V0-O3).
[98] Exhibit P8 (Invoice No 1125).
[99] T 124-125 (K Daniels).
Variation (v): Kitchen hot water service
On 11 August 2006 Mr Fowler signed a variation form authorising the purchase and installation of a Rheem 50 litre hot water unit at a cost of $493.70, inclusive of GST, to be installed in a kitchen cupboard. He was billed for the hot water unit on 8 September 2006.[100] During construction it was discovered that the hot water unit was too large for the cupboard and that it was necessary to replace it with a Rheem 25 litre unit.
[100] Exhibit P8 (Invoice No 1125).
The Builder contends that Mr Fowler agreed to the installation of the smaller unit and was later given a credit for the cost of the larger unit.[101] The Builder now claims the price of the smaller unit but tendered no evidence as to its cost, a point to which I will return in a moment. Mr Fowler, however, testified that the 50 litre unit was not a genuine variation but a Luxury Specifications included in the contract price.[102] He also said, at least initially, that he was not given a credit for the replacement 25 litre unit.[103]
[101] T 177-178 (W Goodwin).
[102] T 670-671 (G Fowler).
[103] T 672-673 (G Fowler).
I reject Mr Fowler’s evidence. For the reasons previously expressed, I do not accept his ‘Luxury Specification’ defence. I further reject his claim he was not given a credit for the 50 litre unit. Indeed, in the course of Mr Fowler’s cross‑examination, Mr Daniels tendered correspondence and an Invoice dated 5 December 2012[104] which indicated that Mr Fowler had been credited an amount of $493.70 (the cost of the 50 litre unit inclusive of GST). Mr Fowler then conceded that credit had been given.[105]
[104] Exhibit P65.
[105] T 674-675 (G Fowler).
In the circumstances, I am satisfied that Mr Fowler owes the Builder the cost of the 25 litre unit. As mentioned, no evidence was tendered by the Builder as to its cost. However, Ms Kunze stated in her report dated 8 October 2008[106] that ‘current trade prices’ are ‘$490.00 inc. GST’ for the 50 litre unit and ‘$460.00 inc. GST’ for the 25 litre unit. I note that the trade price for the 50 litre unit in 2008 was about the same as the amount for which Mr Fowler was billed by WCK. Accordingly, it is reasonable assume that the trade price for the 25 litre unit in 2006 was about the same as in 2008. However, I will err on the side of caution and assume a cost price of $440.00 inclusive of GST. Mr Fowler is liable for this amount.
[106] Exhibit D48 P11 [4.5.5]).
Summary
I find that Mr Fowler owes the Builder the following amounts, inclusive of GST (plus interest):
·Power upgrade to three phase: 1818.18
·Oliveri kitchen accessory pack 92.00
·Electrical fittings upgrade: 8709.82
·Kitchen hot water service 440.00
Total $11,060.00
FOWLER’S CLAIM: ANALYSIS
Mr Fowler’s claim is against Mr Daniels and WCK, in the alternative. Mr Fowler has failed to establish any basis for instituting proceedings against Mr Daniels personally or in his capacity as director of WCK. For all relevant purposes, Mr Fowler’s dealings with WCK were conducted exclusively through Mr Goodwin. No representations were made by Mr Daniels to Mr Fowler that could attract any form of liability on grounds of breach of contract or negligence. The claim against Mr Daniels must be immediately dismissed.
COMPLETION DATE ISSUE
As earlier explained, the Contract executed on 14 March 2006, stipulated that the works were to begin on a date agreed by the parties. However, the Contract failed to specify the commencement date. The Contract further stipulated that the works were to be finished by the date agreed by the parties but did not nominate a date for Practical Completion or a Period for Completion of the Work (Schedule Items B.1 and B.2). It is well established that if a contract does not specify a time for completion it will be implied that the work is to be executed within a reasonable time.[107] Once that reasonable time has expired the owner may sue the builder for breach of the implied term.
[107] Gold Coast Oil Co Pty Ltd v Lee Properties Pty Ltd (1894) 1 BCL 63 at 66; Canning v Temby (1905) 3 CLR 419 at 424; Electronic Industries Ltd v David Jones Ltd (1954) 91 CLR 288.
Mr Fowler, however, contends that the Contract did not constitute the entirety of the agreement between the parties on this issue. He testified that subsequent to the execution of the Contract, Mr Goodwin provided him with a Schedule of Works (Exhibit D38) which indicated that preparatory excavation would commence on 26 April 2006 with ‘handover’ to occur on 1 September 2006.[108] Mr Fowler contends that it follows that the Builder was contractually bound to complete the works by 1 September 2006.[109]
[108] T 696 (G Fowler).
[109] Fifth Amended Defence and Cross Action (Counterclaim) - FDN 45- [1]-[2].
Was appropriate sound rated insulation installed to prevent the transmission of sound through the ceiling?
Mr Goodwin was not examined or cross-examined on whether Bradford Partition batts or an effective equivalent were installed by the Builder. Indeed, no witness gave satisfactory evidence as to the nature of the ceiling insulation and its sound attenuation qualities.
Ms Kunze, upon whom Mr Fowler relied, effectively conceded that it was not possible to say whether the ceiling insulation was unsuitable without further investigation.[295] However, I note that certain remedial work carried out by Dr McLeay sometime after he acquired ownership of the building in 2013 included the installation of batts. The limited evidence he gave on the topic (in‑chief) was as follows:[296]
Q. Have you performed any remedial work?
A.No. Nothing. Well, I put in some acoustic batt but-and adjusted the air conditioning but that’s about it.
[295] T 1034-1035 (SA Kunze).
[296] T 83 (Dr R McLeay).
Dr McLeay was not further examined or cross-examined on this topic.
I accept Dr McLeay’s evidence. I infer that at the time he acquired the building there was some issue with sound attenuation. But there is no evidence as to where the problem existed or what the nature of the problem was. He may have considered that further sound attenuation was required for example in the waiting area because of noise generated by the air conditioning unit which Mr Fowler was responsible for installing.
Having regard to the unsatisfactory nature of the evidence put before me, I am not satisfied that Mr Fowler has established the Builder failed to install a sound attenuation system suitable for preventing room to room transmission of ‘normal conversations’.
Even, if there had been a failure on the part of the Builder in that regard there is no evidence that Mr Fowler has suffered any form of compensable damages. He did not perform any remedial work and there is no evidence that any sound attenuation difficulty resulted in a reduction of the building’s real market value.
Changes without consent [3.47]
Mr Fowler pleaded that the Builder ‘breached an implied term of the contract by not seeking consent for changes or amendments made to the plans and specifications without [his] consent’. Mr Fowler explained in evidence that this was a general complaint that was directed at several alleged changes to the building plans each of which is the subject of a discrete complaint (for example, the conversion of a cupboard into a laundry).[297] There is no need to dwell on this general complaint because I have already canvassed the discrete complaints upon which it is founded.
Failure to produce adequately detailed building specifications and schedules [3.48]
[297] See T 933-936, 952-957 (G Fowler).
Mr Fowler pleaded that the Builder ‘failed to produce building specification and schedules with adequate detail to be suitable for use with South Australian Commercial Building Contract SA BC1 2004 and ensure construction as per [his] requirements’. This general complaint can also be bypassed for the reasons expressed in the paragraph above.
Site levels [3.49]
Mr Fowler pleaded that the Builder failed to ensure that the site levels and termite management complied with Part 3.1.3 of the BCA and with AS 3660.1-200 as required under the Contract (see general note 14 – certified building plan).
AS 3660.1 relevantly provides:
3.6 BRIDGING AND BREACHING
Barriers shall not be bridged by structures, fixtures or fittings attached to the main building (e.g) hot-water systems, steps, verandas, access ramps, claddings, carports, trellises or similar structures), nor shall they be breached by the installation of service entry its downpipes, an additional slab, pathways, landscaping, gardening, or similar, unless additional barriers are used to deter concealed access by termites to the structure.
4.4 SLAB EDGE EXPOSURE
Where slab edge exposure is used as part of a termite barrier system, the exposed face of the perimeter shall be off-the-form and shall not exhibit areas of rough surface, honeycombing or ripples. It shall be exposed to a minimum of 75mm above finished ground, landscaping or paving level to permit ready detection of termite entry and shall not be rendered, tiled, clad, or concealed by flashings, adjoining structures, paving or soil …
Where the slab does not provide a minimum 75mm of slab edge exposure as specified in this Clause, then a suitable perimeter physical or chemical barrier shall be installed.
The Builder sub-contracted Eyre Peninsula Pest and Weed Control which installed a ‘Liquid Barrier Treatment’ integrated with the concrete slab poured by the Builder. The termite barrier was carried out on 21 June 2006. A Certificate of Installation, in accordance with AS 3660.1-2000, was issued by the installer dated 6 July 2006.[298] No other perimeter protection was provided.
[298] Exhibit P49 (Report of C Short) Certificate of Installation dated 6 July 2006, annexed thereto.
Based on Ms Kunze’s findings,[299] Mr Fowler contends that the Builder failed to comply with the 75mm slab edge exposure requirements in the following respects:
·the gravel mulch bed adjacent to the southern wall of the building finished 0-20mm below the damp proof course or membrane;
·the concrete bridges that extended from the kerbing in carpark spaces 5-9 adjoined the southern wall of the building, as previously discussed, and according to Ms Kunze, finished approximately 70mm above the walls’ damp proof membrane;
·pavers on the western side of the building had been installed up to the level of the damp proof membrane;
·at the entry to the building (south west corner) the pavers had been installed to a level above the damp proof membrane.
[299] Exhibit D48 (Report of SA Kunze) p.39.
Ms Kunze expressed the view that both the waterproofing of the southern and western walls and the prevention of terminate infiltration had been compromised by the abovementioned defects. She considered that the site surfaces on the western side of the building and the southern side in the vicinity of the front entrance needed to be brought down by a minimum of 75mm and that a gap of about 25cm was required between the southern wall and the kerbing in carparks 5‑9.
Mr Fowler’s contention that fault for the abovementioned defects should be attributed to the builder is without foundation. Under the contract the paving and landscaping (including gardens) were to be carried out by Mr Fowler’s contractors. They were responsible for ensuring that the pavers on the southern end and western sides of the building and the garden bed on the southern side did not breach the 75mm slab exposure requirement.[300]
[300] T 258-260 (W Goodwin).
With respect to the inappropriate concrete bridges on the southern side of the building, they were installed by the builder. As I have previously determined, they were installed pursuant to instructions from Mr Fowler that he had been advised by Mr Goodwin that it was not good practice. In the circumstances, no fault can be attributed to the builder for this deficiency.
With respect to the plinths, Mr Fowler further relied upon a complaint (not pleaded) set out in Ms Kunze’s report:[301]
All along the south side of the building, the gravel mulch garden bed finished surface is 0-20mm below the damp proof course or membrane. In 6 locations, the concrete kerbing at the intersections of the angled parks projects approximately 70mm above the damp proof membrane and touches the wall brickwork (concrete abutments are approx. 400mm wide). Both the waterproofing of the walls, and termite management, is compromised by the concrete kerb ‘bridges’ and insufficient termite inspection gap left for compliance with AS 3660.1.
[301] Exhibit D48 (Report of SA Kunze) p.40.
No evidence was tendered as to the cost of such an installation. In any event, Mr Fowler is not entitled to rectification costs because he never carried out any such remedial work.
As I have said, I reject Mr Fowler’s complaint. It should also be noted that there is no evidence that this aspect of the work has caused any moisture problems. Mr Short testified that he conducted tests which indicated that no unacceptable level of moisture had permeated the masonry above the damp proof membrane.[302]
Projection of slab beyond brickwork [3.50]
[302] T 441 (C Short).
Mr Fowler pleaded that the Builder ‘failed to ensure that the brickwork [and underlying] concrete slab had flush edges’ contrary to AS 3700 and AS 3660.1.
This complaint is based on Ms Kunze’s report which states that ‘in a number of areas around the building the concrete slab projects beyond the face of the brickwork from 12-35mm allowing for water to pond on the concrete rebate’. Ms Kunze suggested that any perimeter wall location where the brickwork underlapped the concrete slab by more than 15mm did not comply with AS 3700 ‘masonry structures’ and should be demolished.
When called to give evidence, Ms Kunze did not elaborate on her report or challenge Ms Short’s report or his evidence on this topic.[303] Mr Short said that there were places around the building where there was a small amount of perimeter concrete footing visible at damp proof membrane level, however he emphasised that there was no structural defect with the work. He pointed out that it was raining on the day of his inspection and that there was no ponding on the strips of exposed concrete. With respect to AS 3700 he expressed the view that it was irrelevant because it applied to ‘an overhang of brickwork rather than the opposite which is being alleged here’. He expressed the view that apart from ‘a minor aesthetic one’, there was no ground for complaint.
[303] Exhibit P49 (report of C Short) p.31-32 or evidence on this topic. T 443 (C Short).
I accept Mr Short’s evidence. Mr Fowler’s complaint in relation to [3.50] is rejected.
Fastening [3.53]
Mr Fowler pleaded that the Builder ‘failed to correctly install [and provide] adequate tie downs for the roof purlins/battens, trusses and frames’. This complaint is based on Ms Kunze’s report.[304]
[304] Exhibit D48 (report of SA Kunze) pp.41-42 which she expanded upon in her evidence. T 999-1001, 1012-1016, 1067-1091.
It is neither desirable nor necessary to canvass in detail Ms Kunze’s views about this aspect of the builder’s work. Broadly speaking, Ms Kunze expressed three concerns. First, she suggested that the horizontal top and bottom plates of the perimeter wall timberwork had been fastened to vertical studs with single sided tie downs. As I understood the evidence, single sided tie downs are used to fasten the external faces of adjoining pieces of timber that share the same plane. Double sided tie downs which provide greater structural stability loop over and under top and bottom plates, respectively, and are fastened to both the internal and external sides of vertical stud work.
Ms Kunze’s conclusion that single sided tie downs had been used was based on photographs taken by Mr Fowler during construction and shortly after the timber framework had been erected.[305] The photographs which were taken at night depicted a limited section of the exterior of the framework illuminated from a distance by possibly the headlights of a car. The upper surface of the top plate and the lower surface of the bottom plate, which obviously sat on the concrete slab, and the internal surfaces of the plates cannot be seen in the photographs.
[305] Exhibit D48 (report of SA Kunze) Annexure 13, photographs PO 46-49.
Despite these limitations, Ms Kunze maintained that the tie downs depicted in the photographs were single sided, primarily because they appeared to have a manufactured twist or kink at the end facing the photographer. Apparently a manufactured kink in tie downs is a characteristic of single sided tie downs. Ms Kunze was subjected to a search in cross-examination by Mr Daniels on this topic. In the course of the cross-examination he tendered a double sided tie down looped over and fastened to each side of a piece of timber with a loose end bent upwards.[306] Upon being shown the exhibit, Ms Kunze conceded that it was possible that the tie downs in the photographs (PO 46-49) were double sided tie downs with upturned ends which gave a false impression of being manufactured kinks. Having carefully examined the photographs in Exhibit P78, I am satisfied that that is likely to be the case. Mr Short, who viewed the photographs before compiling his report, was satisfied that they did not disclose any evidence of defective strapping.[307]
[306] Exhibit P78.
[307] Exhibit P49 (Report of C Short) p.32.
Ms Kunze’s second complaint was that there were trusses in the roof capacity which appeared to have been loosely nailed together, leaving gaps about the width of a finger or more. The gaps were photographed.[308] Ms Kunze said that this indicated that the trusses had been joined with nails only rather than with appropriate metal fastenings.[309] Mr Short expressed the view that it was not clear from the photographs that the subject pieces of timber were roof trusses. He further said that even if they were roof trusses, it did not follow from the presence of the nail gaps depicted in the photographs, that the trusses had been inadequately fastened. He said it was possible that they were loosely nailed to each other to keep them together, or possibly apart, while the carpenter proceeded to another stage of the construction. He stressed that in his opinion the photographs failed to indicate any form of defective work.[310] In his report, he stated that he inspected the inside of the roof space on 6 March 2010 and found that the work had been generally neatly executed. He did not observe any defective work as asserted by Ms Kunze.[311] I accept Mr Short’s evidence.
[308] Exhibit D48 (Report of SA Kunze) Annexure 13, photographs PO 50, 51.
[309] Exhibit D48 (Report of SA Kunze) p.42.
[310] T 495-496 (C Short).
[311] Exhibit P49 (Report of C Short) p.32.
The third complaint of Ms Kunze concerned a single piece of ‘speed brace’ in the roof cavity which she photographed and considered to have been inadequately fixed.[312] Mr Short explained that speed brace is an elongated strip of metal that fastens to the upper surface of truss cords to stabilise them. Ms Kunze expressed the view (as I understood her evidence) that although the speed brace had been fastened to the upper surface of the truss cord, the balance of it had been bent away from the surface of the cord compromising its stability.[313]
[312] Exhibit D48 (Report of SA Kunze) (Annexure 13, photograph PA 57): T 1000 (SA Kunze).
[313] T 1000 (SA Kunze).
I reject this criticism. The photograph depicts only one speed brace, of which there would be many connecting the trusses. In any event, I accept Mr Short’s explanation that what can be seen in the photograph is a surplus piece of speed brace that was folded out of the way, presumably so as not to cause harm to anyone moving through the roof cavity.[314]
[314] T 493 (C Short).
The final complaint made by Ms Kunze under this heading concerned the adequacy of metal straps used to connect top plates where they intersected, as depicted in several photographs taken by her.[315] As I understood Ms Kunze, in order to comply with AS 1684.2, the builder should have used metal plates or longer straps, no less than 19mm in length.[316] I was not impressed by Ms Kunze’s evidence on this topic. When pressed in cross examination, she was unable to point to a section in the AS applicable to the top plate junctions depicted in the photographs.[317] For his part, Mr Short said there was ‘no need to interconnect the top plates of wall frames, in the manner asserted by Ms Kunze’. He described her methodology as ‘an old-fashioned carpentry technique, no longer required by the building rules’.[318]
[315] Exhibit D48 (Report of SA Kunze) (Annexure 13, photographs PA 52-56).
[316] T 999 (SA Kunze).
[317] T 1067-1069, 1114.
[318] Exhibit P49 (Report of C Short) p.32.
I am not satisfied that Mr Fowler has substantiated any of the complaints in relation to [3.53].
Driveway construction [3.54]
Mr Fowler pleaded that the Builder ‘failed to correctly install kerbing and concrete plinths along the driveway’. This complaint is based on photographs taken by Mr Fowler of the kerbing which bordered the driveway, which extended from the rear of the building to the exit in Quiberon Street.[319] The photographs show several fine cracks at different locations along the length of the kerbing. Ms Kunze relied on these photographs to assert in her report that ‘control joint installation and spacing was obviously inadequate to prevent cracking’. She further suggested that:
Kerbs are meant to have a footing component founded in the ground (eg. 200mm) and are often specified with a reinforcing rod top and bottom, to help prevent cracking. They also require tooled or cut joints at regular intervals (maximum spacing believed to be 2.0m, but to be confirmed by an engineer).
[319] Exhibit D48 (Report of SA Kunze) (Annexure 13, photographs PA 59-67).
Mr Short disagreed with Ms Kunze’s opinions. He said that in his experience, as a builder and building inspector, kerbs are not generally specified with a footing component unless there is some special engineering requirement. Ordinarily, the carpark base is the platform upon which kerbing is constructed, followed by the installation of hot bitumen. He pointed out that tool joint intervals at 2.0m is a specification that varies between civil engineers and many kerbs are specified without steel rod reinforcements. He said that he considered the kerbing to be satisfactory when he inspected the property in 2010.[320] In light of Mr Short’s evidence, I am not satisfied that there was any material defect with the kerbing.
[320] T 450-451 (C Short).
There is a further problem for Mr Fowler. There is no evidence as to when the relevant photographs were taken. They are entirely consistent with having been taken before the builder attended to various remedial works prior to Mr Fowler assuming possession of the property on or about 27 November 2006. Mr Fowler agreed that certain remedial works were undertaken by the builder, including work pertaining to the kerbing.[321] There is no evidence from Mr Fowler whether the cracking depicted in the photographs remained or occurred after remedial works were carried out.
[321] T 761 (G Fowler).
There is a further complaint in Ms Kunze’s report concerning features of a concrete plinth retaining wall that lines the southern edge of the driveway leading into Quiberon Street and a timber retaining wall upon which the fence was erected. However there is, as far as I can determine, no evidence that these retaining walls were the builder’s responsibility. The very limited evidence pertaining to these retaining walls suggest that they may have been the responsibility of Mr Fowler’s fencing contractor, Mr A Polomka.[322]
Driveway drainage [3.55]
[322] T 761 (G Fowler). T 299-300 (W Goodwin).
Mr Fowler pleaded that the Builder ‘failed to bituminise the carpark allowing for adequate and correct fall to allow run-off into spoon drains’.
Mr Fowler gave no evidence on this topic other than to say that he would rely upon Ms Kunze’s evidence.[323] Ms Kunze did not address the matter in her evidence. However, in her report she stated:[324]
Ponding to bitumised (sic) car parking areas is evident in some owner’s photographs. [Refer to photographs PO 73 and 74 in Annexure for carpark ponding]. The bitumen in the car parking bays should have enough fall to allow water to run off into the spoon drains and the bitumen adjacent to a concrete spoon drain should be level with the edge of the concrete drain ... Ponding could be eliminated by the installation of additional bitumen topping; or. by the re-surfacing of the car parking area at the south of the building…
[323] T 156 (G Fowler).
[324] Exhibit D48 (Report of SA Kunze) p.44.
It is apparent from Ms Kunze’s report that she did not inspect the building while ponding was evident. However, PO 73 and 74 clearly show ponding in the southern carpark near the edge of a concrete spoon drain.
The difficulty with this aspect of Mr Fowler’s case is that there is no evidence as to when these photographs were taken by him. And, there is no dispute that the Builder laid additional bitumen in the carpark after Mr Goodwin received the list of defects from him on 1 November 2006.[325] In other words, it is possible on the evidence before me that the pooling evident in PO 73 and 74 pre‑dates the remedial work carried out.
[325] T 761 (C. Fowler).
The point was further addressed by Mr Short in his report.[326] He pointed out that it was raining at the time of his inspection of the property (post remedial work). He observed ‘minor ponding of water at carpark 9 in the southern elevation carpark’. He recommended, consistent with Ms Kunze’s first recommendation, that ‘the Builder should apply a small amount of hot mix bitumen to the low area to eliminate ponding’.
[326] Exhibit D49 (Report of C Short) p.30.
Regardless of the extent of the defective surface, I accept that it is a defect attributable to the Builder. However, on any version of events it was of a minor nature. More significantly, the Mr Fowler is not entitled to rectification costs because no remedial works with respect to the carpark surface were carried out by him.
Doorway swelling [3.56]
Mr Fowler pleaded that the Builder ‘had undertaken some part of the works, yet to be determined in a manner which has resulted in swelling damage above the doorway into room 2’.
Mr Fowler gave no evidence and failed to adduce evidence from any other witness to support of this complaint. Mr Daniels conceded that there was swelling of the subject doorway architraves but contended that the swelling had been caused by the air conditioning unit in the roof cavity for which Mr Fowler was responsible.[327] This contention was supported by Mr Short’s findings. His report states:[328]
The swelling in the medium density fibreboard (MDF) architraves at the mitred joint outside the door to Consulting room 2 is due to moisture damage. We checked the inside of the roof space immediately above this area, and found water marks on the particleboard platform under the air conditioning plant. On the Builder’s advice, all air conditioning plant and equipment was installed by the Owner’s contractor. The location of the marks correspond exactly with that of the moisture damaged architraves on the wall below.
[327] T 156 (K Daniels).
[328] Exhibit P49 (Report of C Short) p. 935.
I find that the swelling of the architraves was caused by moisture emanating from the air conditioning plant. As mentioned, there is no dispute that the supply and installation of the air conditioning not was not the responsibility of the Builder. This aspect of Mr Fowler’s claim is rejected.
No Economic Loss
In the course of analysing the Defective Work Issue I have identified several defects in the work attributable to the Builder. However, no remedial works were carried out by the Builder (subject to one exception) with respect to those defects and so Mr Fowler is not entitled to any rectification costs. The exception is the fire extinguishers which Mr Fowler installed and for he must be reimbursed $300 and which I have offset against the damages to which the Builder is entitled. Indeed, no rectification work was carried out with respect to any of the other alleged defects.
Mr Fowler’s claim for damages in relation to the alleged defective building work is reduced to the assertion that he suffered a loss of rental income and diminution in the property’s market value by reason of the defects. No cogent evidence has been put before that Mr Fowler has suffered any such financial losses due to the state of the building.
His claim for economic loss as set out in [11] of his pleadings, and which he effectively adopted in his evidence, is that he suffered economic loss as follows:
11.1 cost of rent for office from 10 September 2012 (as of 20 May 2013=$34,263.90) to date of trial;
11.2cost of loans, interest, penalties and fees (as of 20 May 2013+ $1,379,470.02) to date of trial;
11.3loss of tenants income at $5,833.33 per month (92 months) $577,499.67 to date of trial;
11.4cost of remedial works, structural improvements and additions yet to be determined [which I have already dealt with]
11.5loss of profit by sale of premises (as of July 2008=$397,551.50) in an amount to be determined;
11.6loss of profit by sale of private land, mortgaged for security of loan, on 14 December 2012 at $120,000;
11.7 cost of legal expenses (as of 5 April 2013=$24,889.02) to date of trial.
In support of those assertions, Mr Fowler tendered a document prepared by him which merely set out how he had calculated the itemised amounts.[329] He also tendered a copy ledger of his businesses expenditures for the years 2006-2012 and of his rental income during 2007.[330] No evidence from any independent source was proffered to support the assertions in the documents. But more significantly, the documents and Mr Fowler’s evidence[331] fail to explain how any or all of the alleged defects diminished his ability to lease the premises or diminished the market value of the property. No evidence was adduced from a licensed valuer, or any other suitable expert, on this issue.
[329] D 74.
[330] Exhibit D75.
[331] See in particular T 764-772, 820-827, 882-888 (G Fowler).
Mr Fowler’s claim of economic loss due to alleged defective work on the part of the Builder must be rejected.
CERTIFICATION ISSUE
Mr Fowler pleaded that the Builder failed to issue a certificate with respect to the essential safety provisions and a Statement of Compliance pursuant to regs. 76(3) and 83(2)(a) of the Development Regulations in consequence of which Mr Fowler was unable to obtain from the Council a Certificate of Occupancy under s 67 of the Development Act.
Pursuant to s 67(1) of the Development Act, a person must not occupy a building on which building work is carried out unless an appropriate Certificate of Occupancy has been issued by the relevant council (s 67(2)). An application for a Certificate of Occupancy must include inter alia ‘such certificates, reports or other documentation as the regulations may require’ (s 67(3b)). Regulation 76 (3a) provides that the owner of a building in which essential safety provisions must be installed is required within a reasonable time after installation of those provisions to provide to the council a Certificate of Compliance for each essential safety provision in the form stipulated in Schedule 16, signed by the installer of the safety provision, or if the installer is a company, signed by the manager for the installation work.
Regulation 83(2) provides that the certification required under s 67(3b) includes a copy of the Statement of Compliance duly completed in accordance with the requirement of Schedule 19A that relates to the building work (reg. 83(2a)) and unless already provided, a copy of the Certificate of Compliance for essential safety provisions (reg. 83(2b)). As earlier mentioned, in February 2007, Mr Fowler lodged with the council an urgent application for a temporary Certificate of Occupancy pursuant to reg. 83(4) on the grounds that the builder had failed to provide him with a Statement of Compliance and an essential safety provisions compliance certificate. For that reason he was granted a series of temporary certificates of occupancy.
Mr Fowler contends that the builder’s failure to provide the relevant certification prevented him from obtaining the Certificate of Occupancy. Mr Daniels however testified that Mr Fowler never requested the Builder to provide the relevant certificates and, as far as he was concerned, it was not the builder’s obligation to chase after him. Mr Fowler on the other hand claimed that he instructed his solicitors at the time (Coates PL) to write to the Builder and request the relevant certificates. When Mr Daniels called for production of the letter, Mr Fowler claimed that he had been informed by Coates PL that they no longer had any record of it. Mr Fowler subsequently called Mr Coates who produced copies of all correspondence between his firm and the Builder.[332] There was no letter from Coates PL requesting the builder to provide the relevant certificates, nor was there any suggestion that Coates PL had been unable to locate all relevant correspondence. I reject Mr Fowler’s evidence. In accordance with Mr Daniels’ evidence, I find that no request was made by Mr Fowler either directly or through his solicitors for the builder to supply either a Statement of Compliance or an Essential Safety Provision Certificate. In the circumstances, Mr Fowler cannot legitimately assert that the Builder’s conduct prevented him from obtaining a Certificate of Occupancy. The regulations imply that if requested, certificates should be provided, but they do not impose upon a builder an obligation to be proactive in that regard.
[332] Exhibit D77.
Economic loss
Even if Mr Fowler was correct on this point, I am not satisfied that he has suffered any form of economic loss on these grounds. In essence, he contended that because he occupied the property under a series of temporary certificates of occupancy, each for 12 months, he was unable to secure tenants wanting long term leases.
Mr Fowler suggested that his difficulties were compounded by s 20B(1) of the Retail and Commercial Leases Act 1995 which provides that ‘the term for which a retail shop lease is entered into must be at least five years. (The purposes for which Mr Fowler purportedly sought to lease the premises would satisfy the definition of satisfy definition of ‘retail shop lease’ contained in s 3 of that Act.) The five year minimum requirement is subject to various exceptions including where the lease is ‘a short term lease entered into for a fixed term of 6 months or less’ (s 20B(3)(a)).
Apart from Mr Fowler’s bare assertion he failed to produce any convincing evidence that he had been forced to reject tenants because they had insisted upon long term leases. He suggested that Mr Kemp was aware of his difficulties in that regard.[333] Mr Kemp provided no such support. He said that he could not recall having any discussions with prospective tenants or Mr Fowler on this topic. And despite the minimum term requirement, SA Heart Centres leased part of the premises for 12 months. I should also mention that Mr Kemp said that no prospective tenants commented adversely on the aesthetics of the building.[334]
[333] T 821 (G Fowler).
[334] T 461-463 (S Kemp).
As I have said I would have rejected Mr Fowler’s economic loss argument even if he had succeed in establishing his allegations on the Certification Issue.
CONCLUSION
I have determined that the Builder in its action against Mr Fowler is owed $11,060.00, for unpaid variations (plus interest). I have found in Mr Fowler’s action against the Builder that he should be compensated in the amount of $299.00 for the master switch that the Builder failed to install, and for which Mr Fowler probably paid for and should be further compensated $300.00 for the fire extinguishers that he installed. I will offset those amounts from what the Builder is owed. This payable to Mr Fowler from the total amount owed to the Builder. This results in an amount of $10,461.00 payable to the Builder.
The Builder is entitled to prejudgment interest on the judgment (see s 39 of the District Court Act). The calculation should be from the date upon which Mr Fowler should have paid the judgment sum to the Builder (say November 2006). The rate of interest should be at the commercial rate which can conveniently be found in the Third Schedule to the Supreme Court Rules. The average rate over a period is approximately 5%. On that basis I allow interest in the sum of $5,230.50 (ie. $10,461.00 x 5% per annum x 10 years). This results in a total amount of $15,691.50.
ORDERS
The formal orders of the court are as follows:
1Action No. 2010 of 2008: judgment for WCK Pty Ltd in the amount of $15,691.50 inclusive of interest.
2Action No. 599 of 2014: action against Mr K Daniels dismissed.
3Action No. 599 of 2014: judgment for Mr Fowler against WCK Pty Ltd in the amount of $599.00 which has been included as an off-set in the amount awarded to WCK Pty Ltd in Action No. 2010 of 2008.
4I will hear the parties as to costs.
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