Williams v Queensland Building Services Authority
[2013] QCAT 589
•23 October 2013
| CITATION: | Williams v Queensland Building Services Authority [2013] QCAT 589 |
| PARTIES: | Barry Williams (Applicant) |
| v | |
| Queensland Building Services Authority (Respondent) |
| APPLICATION NUMBER: | OCR269-11 |
| MATTER TYPE: | Occupational Regulation matter General administrative review matters Building matters |
| HEARING DATE: | 19 - 20 November 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Andrew McLean Williams, Member David Paratz, Member |
| DELIVERED ON: | 23 October 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the QBSA made on 26 October 2011 that the Contract entered into between Mr Williams and Natasha and Israel Hayes on 26 May 2010 had been validly terminated by Natasha and Israel Hayes on 3 June 2011 is confirmed. 2. No order as to costs. |
| CATCHWORDS: | Residential building dispute – termination of contract – whether properly terminated – entitlement of homeowner to terminate for failure to remedy breaches and for breach of statutory warranties – adjustment of completion date due to actions of homeowner, wet weather, and delays – whether work conducted to the standard reasonably expected of a licensed contractor – scope of works Queensland Civil and Administrative Tribunal Act 2009 ss 17, 20 Drake v Minister for Education (1979) 46 FLR 409, 24 ALR 577 |
APPEARANCES and REPRESENTATION (If any):
| APPLICANT: | Mr Allan Lonergan, of Counsel, instructed by Lenz Moreton Lawyers |
| RESPONDENT: | Mr Simon Formby, QBSA in-house Counsel |
REASONS FOR DECISION
Preliminary
Mr Isaac Hayes and Ms Natasha Hayes are the owners of a residence at Brighton in Queensland, which they wished to renovate and extend. In May 2010 they engaged the Applicant Mr Williams, who was a registered builder, to be involved in the project.
This matter comes before QCAT as an Application to Review a decision, made on 26 October 2011, by the Authority.
A Hearing was conducted on 19 and 20 November 2012 before us. This is our joint decision.
On 26 October 2011, the QBSA determined that a Building Services Authority ‘Major Works’ Contract (the contract) entered into between Mr Williams and Natasha and Israel Hayes (the Homeowners) on 26 May 2010 had been validly terminated, by the Homeowners, on 3 June 2011. This decision had the effect that the Homeowners were thereby able to access the insurance scheme applicable to the contract, as is administered by the respondent authority. There are implications for Mr Williams, as a consequence of that insurance claim having been accepted, as the Authority may seek to recover monies paid from him.
Section 86(1) of the Queensland Building Services Authority Act 1991 has the effect that the aforementioned decision by the respondent authority is a ‘reviewable decision’, for the purposes of section 17 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). On this review Mr Williams contends that the Homeowners did not validly terminate the contract, such that QCAT should now substitute its own decision, to that effect, in lieu of the Authority’s decision.
The decision by the Homeowners to terminate the contract was ostensibly pursuant to clause 26 of the general conditions. In the alternate, termination is said to have been effectuated pursuant to section 90 of the Domestic Building Contracts Act 2000 (DBCA), by reason of the Homeowners’ assertion that Mr Williams had failed to attain practical completion within 1.5 times the completion period required by the contract. During the hearing of this matter, the QBSA contends that Mr Williams was also in breach of statutory warranties, created by sections 43 and 44 of the DBCA, notwithstanding that these matters were not specified in the original notice of termination; such that these provisions provide another basis upon which the contract could be terminated.
As part of this Application for Review, Mr Williams asserts, in part, that the question of termination should be treated as academic, because the contract was void, ab initio, for reasons of uncertainty relating to essential terms. Alternatively, Mr Williams contends that there was not, in any event, any default on his part that was ever sufficient to justify the delivery of a termination notice by the Homeowners. Finally, in response to the Homeowners alternate basis for termination (pursuant to s 90 of the DBCA), Mr Williams seeks to avail himself of section 18(6)(b) of the DBCA, to apply to QCAT to extend the building period, by a further 90 business days, for inclement weather, and as a consequence of delays caused by a number of variations to the scope of works requested by the Homeowners. In the event that the Tribunal accedes to this request, the completion period under the contract would be extended; such that the Homeowners would not be entitled to terminate the contract, pursuant to section 90 of the DBCA.
Scope of this Review
This hearing is conducted by way of a fresh hearing, on the merits. The Tribunal is required to ‘step into the shoes’[1] of the original decision-maker, and must now produce the correct and preferable decision (QCAT Act s 20).
[1]Drake v Minister for Education (1979) FLR 577; Shi v Immigration Agency Registration Authority (2008) 235 CLR 286.
The Tribunal is entitled to consider the situation on its merits, and is not limited to the reasons set out in the Notice to Remedy Breach sent by the Homeowners to Mr Williams on 12 May 2011, when ascertaining whether the contract has been validly terminated, by the Homeowners.
Matters for Determination
Ultimately, when hearing this Application for Review it becomes necessary for QCAT to determine:
a) whether the contract was an enforceable contract;
b) whether valid grounds existed for the purported termination by the Homeowners on 3 June 2011 pursuant to clause 26;
c) whether the Homeowners were entitled to terminate because of a breach of the statutory warranties implied into the contract by s 41 of the DBCA;
d) whether s 18(6) of the DBCA should be invoked to adjust the effective completion date in favour of the builder, with the effect that the right to terminate the contract pursuant to s 90(1)(b) of the DBCA is withdrawn from the homeowner; and
e) in the event that s 18(6) is not available to the builder, whether grounds existed for termination pursuant to s 90(1)(b) of the DBCA.
Factual Background
The Homeowners, Natasha and Israel Hayes, own a house at 27 Seaview Street, at Brighton. Various reports and photographs put into evidence reveal that home to have once been a modest, low-set weatherboard and fibro cottage. That house has since undergone a very significant transformation. It has been raised, and built-in underneath. Rooms and decks have been added, and all of the major appurtenances, (such as, for example, the kitchen and bathroom), have been up-dated. These improvements were substantially (although by no means exclusively) undertaken by Mr Williams, a registered builder, who trades under the name of ‘Williams Brothers, Builders’.
At this juncture, it is noteworthy to record that there is a dispute between Mr Williams and the Homeowners as regards the true extent to which Mr Williams undertook the works. Mr Williams contends that he was only ever a sub-contractor, and that the Homeowners were in reality owner-builders who either did (or at least organised), much of the works themselves. Mr Williams suggests that in these circumstances, he was retained merely as a “front-man” so that the Homeowners could obtain finance, which would not have been possible had they revealed their true position as effectively owner-builders, to their financier. The Homeowners do not agree with that categorisation. They say that Mr Williams was employed as a builder in the usual way.
Notwithstanding these differences of characterisation, it seems quite clear from the evidence that very many of the tasks in the renovation were the responsibility of the Homeowners. In that sense, at least, this was by no means a conventional building contract where all responsibility for the works was put onto the builder.
The evidence of each of Natasha Hayes and Israel Hayes was to the effect that, in early 2010, they had commenced the renovation and extension of their property at Seaview Street, at Brighton. During the first half of that year, they obtained architectural plans and engineering drawings, as well as numerous quotes in relation to various aspects of the renovation. These included quotes for plumbing, the installation and supply of windows, shower screens and flyscreens; as well as quotes for raising and restumping the house, the installation of a new roof, a new kitchen, and extensive plastering and external rendering.
As part of that preparatory activity, the Homeowners had a full scope of works prepared by Queensland All Trades (the QAT Scope of Works), in the course of obtaining a quote from that company, which purports to break down many of the components of the renovation into a series of discrete tasks. In the QAT Scope of Works, there was a column for works described as: “by owners”. Very many of the various renovation tasks are described in that column as “by owners”. Discussion will necessarily return to the QAT scope of works, and its relevance to the disputed contract, later in these reasons.
In May 2010, the Homeowners made contact with Mr Williams to discuss the possibility of engaging him as the builder. According to the evidence of Mrs Hayes, the Homeowners provided Mr Williams with copies of their plans and engineering drawings, as well as all the various quotes that they had collated. These were all handed to Mr Williams during a meeting, on 15 May 2010. At that time the Homeowners also informed Mr Williams about a large volume of building materials they had accumulated on site at Seaview Street, and told him that he could make use of these materials as a further means to exact cost savings. Included among the documents provided by the Homeowners to Mr Williams on 15 May 2010 was the QAT scope of works.
Mr and Mrs Hayes both told the Tribunal that Mr Williams informed them that he would use the QAT scope of works as a kind of “template” for his own quoting on the job, and that they provided the QAT scope of works to Mr Williams expressly for that purpose. They also said that at no time did they understand Mr Williams to mean that the QAT scope of works would become the scope of works for the quote, and they claimed that was not their intention. Subsequently, all the various documents discussed with Mr Williams on 15 May 2010 were also sent by e-mail by Mrs Hayes to Mr Williams. This occurred on 20 May 2010.
On 24 May 2010 at 6.35pm, Mr Williams sent what he termed to be a “preliminary price review” to Mrs Hayes, in the form of another e-mail.[2] This indicated a price for the job of $160,457 (Inclusive of GST), yet specifically excluded the following Items:
[2] Annexure “NH-4” to the affidavit of Natasha Hayes, sworn on 26 June 2012.
· installation of wire balustrade (yet still providing the materials);
· painting, internal and external;
· tiling to all areas;
· machine hire (yet an allowance was still made for any necessary crane hire);
· asbestos removal and disposal;
· sediment control;
· temporary fencing;
· landscaping,
· fencing
· engineers certified drawings
· Council relaxations, if required.
The so-called preliminary price was expressed to be one that was given on the following basis:
I’ve Included in this price, all the quoted items that you had supplied. I have made allowances for the electrician, scaffolding, internal stairs, typical fees and charges, QBSA Insurance, QBears report, and QLeave…
Within this price I’ve made allowances for Williams Brothers to project manage the entire project, to lock up, including oversee each critical point, certification, and third party contractors.
Williams Brothers will install all structural framing, including foundation posts, flooring, wall frames, stairs (excluding internal stairs, fitted by others) and decks, structural steel posts, windows, external doors and soffits.
In that same e-mail, Mr Williams also indicated that he required the completion of a QBSA major works contract and adherence to the payment schedule in order to proceed to contract. Mr Williams also advised that he would ‘provide a schedule of inclusions, and a scope of works’. Ultimately, however, these further documents were never provided.
Later that same evening, and again by means of an e-mail to Mrs Hayes, (this one sent at 9.04pm), Mr Williams sent a quote[3] in the same sum as that nominated in the preliminary price review ($160,457), describing the task as ‘proposed lift and build under’. The quote was expressed to be:
to the complete task as per the scope of works and drawings provided, from the Architect Robert Eccles, job # 09.011, for I & N Hayes 29/09/09.
[3] “NH-5”.
On 26 May 2010, Mr Williams met with the Homeowners at their home at Seaview Street, to conclude their contract negotiations. Mr Williams brought a BSA major works contract with him, and the parties completed it together. Mrs Hayes acted as scribe, and inserted the various words, which were indicated to her by Mr Williams, into the pro forma contract.[4] According to the contract between the parties made in this manner, the key items in the schedule indicate:
[4] “NH-6”.
The description of works: Raise existing, extend and renovate.
Site address: 27 Seaview Street Brighton Q 4017
Starting date: 26 May 2010
Total construction period: 240 days
Date for practical completion: 31/12/2010
Total Price: $160,457 (Inclusive of GST)
Progress payments: Stage 1: $48,270.81
Stage 2: $48,270.81
Stage 3: $48.270.81
Final: $7,621.70
In relation to the foregoing, it is immediately apparent that the date specified in Item 6 for practical completion is only 219 days after the date of commencement, this despite Item 4 in the contract specifying a construction period of 240 days. On the evidence before the Tribunal, the date set for practical completion in Item 6 appears to have been inserted in error, and should have been set at 240 days after the starting date, consistent with the intent expressed in item 4. The proper date for practical completion should therefore have been around 22 January 2011. It is further apparent that the four stages for progress payments have not been well defined in the written contract.
Mrs Hayes told the Tribunal that, upon signing the contract on 26 May 2010, she and her husband were provided with a copy of the document that they had just signed; a copy of the contract information statement; and a copy of the general terms and conditions; but that they were not provided with a scope of works, or a list of the various responsibilities of the parties. It is not factually disputed that the builder did not provide these documents. That oversight is most unfortunate. Indeed, the very lack of any clearly recognised and undisputed scope of works is now the very essence of this dispute.
It was the homeowner’s case during the hearing of this matter that, when signing the contract, they relied on the list of inclusions and exclusions that had been listed in Mr Williams’ e-mail[5] of 24 March 2010, as well as what was indicated on the plans and engineering drawings as the basis for their understanding of what constituted the scope of works obliged to be undertaken by the builder.
[5] “NH-4”.
On the other hand, Mr Williams contends that the scope of works agreed to by him was far more limited than that. Mr Williams told the Tribunal that, so far as he was concerned, the actual terms of the agreement were comprised by:
· the plans and engineering drawings;
· the QAT Scope of Works (complete with its demarcation of tasks as between owner and builder);
· his e-mail of further inclusions and exclusions, sent to Mrs Hayes on 24 May 2010;
· the “owner input” list and “owner supply” list;
· the written contract; and
· the standard terms and conditions.
Works on the project commenced almost immediately, given that the Homeowners had, by this stage, already booked a firm to raise the house and move it slightly on the block. The actual restumping was supposed to be undertaken by the owner, yet Mr Williams did not think that appropriate, and he also did the re-stumping, at no extra cost to the Homeowners.
On 24 June 2010, Mrs Hayes received an invoice[6] from Mr Williams seeking $56,293 as a progress claim. This amount was paid. On 8 November 2010, Mr Williams again e-mailed Mrs Hayes attaching another invoice[7] dated 7 November 2010 for a further “partial stage” claim, this time for $40,000. This claim was also paid.
[6] “NH-7”.
[7] “NH-12”.
By late December 2010 and with Christmas looming, Mrs Hayes began to become concerned that the project did not appear to be anywhere close to lock-up. On 24 December Mrs Hayes received a third “partial stage claim” invoice[8] from the builder, again in the amount of $40,000, and was requested by Mr Williams to pay that claim the very same day. Mrs Hayes told the Tribunal that after receiving the third invoice, she queried Mr Williams about his request for another payment. She said that Mr Williams told her that, if the invoice were not paid, he would not return to the site. Because of this, Mrs Hayes says that she paid the third invoice, yet only under protest. In the result, only $24,163 remained to be paid to Mr Williams pursuant to the contract.
[8] “NH-15”.
Although Mr Williams performed further works in January and February 2011, progress did not appear satisfactory to the Homeowners, and the project was, to their way of thinking, still well short of practical completion.
On 22 February 2011, the Homeowners received a further e-mail from Mr Williams attaching a fourth invoice,[9] this time for an amount of $20,000. If it were to be paid then only approximately $4,000 remained to be paid to the builder pursuant to the contract. On 23 February 2011, Mrs Hayes contacted Mr Williams by telephone, advising that the recent claim represented about 97% of the contract price, but that the works completed by him on the project was not proportionate to that percentage, indicating that the bank would not release any further sums under the renovation loan without a valuation. An e-mail[10] from the homeowner’s financier was sent to Mr Williams on 23 February 2011 confirming that.
[9] “NH-18”.
[10] “NH-19”.
Work on the project continued, although it would seem that Mr Williams still kept agitating for payment. On 14 March 2011, Mrs Hayes wrote to Mr Williams[11] expressing her concern that more than $24,000 of work remained to be done under the contract, despite this being the full extent of the sum still outstanding to the builder. Mrs Hayes advised Mr Williams that his recent invoice would not be progressed to the bank until he had completed the job. In that letter, Mrs Hayes wrote:
As completion is now 2 ½ months overdue we expect this job to be finalised by end April 2011. If you are unable or unwilling to complete this job and wish to terminate the contract please advise Israel and myself via email or in writing by 31 March 2011.
[11] “NH-22”.
On 18 March 2011, the plasterer advised Mrs Hayes that he had been instructed to cease work at Seaview Street, by Mr Williams. Then, on 24 March 2011, Mrs Hayes received an e-mail[12] from Mr Williams in which he indicated that he took issue with the assertions in her e-mail of March 14, to the effect that many tasks under the contract still remained outstanding. In particular, Mr Williams contended that his quote and their contract agreement had been predicated on the information provided to him by Mrs Hayes (particularly the QAT Scope of Works). Mr Williams also indicated that he would shortly present a contract variation for all the variations that he had effectuated to date; and advised that he required this to be signed, before he would proceed any further with the job.
[12] “NH-23”.
On 31 March 2011 a registered valuer appointed by the Suncorp Bank came to the house at Seaview Street for the purposes of preparing a report for the bank. On 4 April 2011, the Homeowners were advised by Suncorp[13] that approximately $60,000 of work remained to be done on the project, and that the bank would not be releasing any more funds for the project. On 5 April 2011 the Homeowners wrote[14] to Mr Williams, indicating that the suggestion that there had been variations on the job was a “complete surprise” to them, and they required Mr Williams to complete the contracted works as a matter of urgency. A response thereto,[15] sent by Mr Williams on 7 April 2011, indicated that he would re-send the variation documents, which had apparently gone missing, yet also reiterating that Mr Williams would not continue with the project unless these variations were signed by the Homeowners.
[13] “NH-24”.
[14] “NH-25”.
[15] “NH-26”.
On 19 April 2011, the Homeowners again e-mailed[16] Mr Williams, indicating that it had now been some 2 months since Mr Williams had attended the site and there had not, to date, been any variation documents presented to them, despite Mr Williams having indicated (on 7 April) that these would be delivered. By that stage, the Homeowners had also commissioned a quantity surveyor, Mr Bruce Moore, to provide them with advice.
[16]“NH-28”.
On 22 April 2011 Mr Moore provided a report[17] to the Homeowners advising that the cost estimated by him to complete the remaining works under the contract, and to rectify defects in the works already undertaken by Mr Williams that he had detected, would be in the vicinity of $120,000. Here, it does bear observation that Mr Moore’s estimate was predicated on the Homeowner’s more expansive scope of works, given that this is what the Homeowners had instructed Mr Moore constituted the scope of works for the job. Whilst Mr Moore’s report affords some factual appreciation for the factors motivating the subsequent actions by the Homeowners, and a description of the state of the works at the time of his inspection, it does not assist us in relation to the contractual determinations which we are now required to make, and we attach no significant weight to the evidence of Mr Moore.
[17]“NH-29”.
On 27 April 2011, Mr Williams sent to the Homeowners the following documents,[18] this time by registered post:
a) an extension of time claim (Form 1) dated 14 March 2011 seeking an extension of time by 90 business days;
b) a progress claim (Form 2) dated 14 March 2011 seeking $26,247.10;
c) a variation document (Form 5) specifying $26,247.10 for extra plant, materials and labour costs not allowed for in the original contract; and
d) details of rain delays between 11 August 2011 and 30 March 2011.
[18]“NH-30”.
On 12 May 2011, the Homeowners, this time through a firm of solicitors, sent to Mr Williams a notice to remedy breach dated 11 May 2011.[19] The notice stipulated that Mr Williams was then in breach of clause 3[20] of the general conditions of the contract, and providing particulars of those breaches, and required that these be remedied by Mr Williams within 7 business days after receipt of the notice. A response[21] sent by Mr Williams, although expressing an intention to complete the project in a professional manner, does not address the breaches alleged in the Notice to Remedy Breach that had been sent on 12 May 2011.
[19]“NH-31”.
[20]Clause 3 of the standard conditions requires the builder to undertake the building works in an appropriate and skilful way, with reasonable care and skill; and in accordance with all relevant laws and legal requirements.
[21]“NH-32”.
On 3 June 2011, the Homeowners (again through their lawyers) sent Mr Williams a Notice of Termination,[22] specifying both a failure by Mr Williams to respond to the Notice to Remedy Breach and a failure to complete the contract within 1.5 times the completion period, in breach of s 90 of the DBCA.
[22]“NH-33”.
To now attempt to neatly encapsulate all of Mr Williams voluminous submissions before the Tribunal is no easy exercise. In essence, Mr Williams contends that the contract was not validly terminated by the Homeowners on 3 June 2011, by reason that the Notice to Remedy Breach was “inaccurate”, for including within it various Items as either omissions, or defects, matters that were, variously:
a) not ever part of the agreed scope of works;
b) not defective;
c) merely incomplete as a result of delays caused by the Homeowners;
d) defective as the result of works performed by the homeowner, or as a consequence of inappropriate materials provided by the homeowner;
e) matters required to be done “by owner” as per the scope of works;
f) not required to be rectified, due to changes in the building code;
g) not able to be rectified, as the original structure (by the owners) was defective, and/or the Homeowner had supplied materials that were inadequate.[23]
[23]Applicant’s statement of evidence at 6 - 7.
We do not propose to deal with the builder’s contentions ad seriatim. It is sufficient that these now be bundled into meta-questions, going to an identification of the actual scope of works and the overall question of the validity of the termination.
Was the contract always void, because of uncertainty?
Mr Williams has submitted that it is potentially open for the Tribunal to conclude that the parties were at such cross-purposes regarding what they thought they had agreed that there was never any agreement, such that the agreement was always void. Without any agreement there could then be nothing to terminate, such that the question of termination (valid or otherwise) becomes only academic.[24] Ultimately that submission is one that is only faintly pressed, for Mr Williams also submits,[25] that on the evidence before it, the Tribunal could just as easily be satisfied that the scope of the agreement is discernible from the documents that the parties had exchanged and considered, prior to their entering into the contract.
[24]Applicant’s Initial submissions (dated 24 January 2013), at [15.5], [15.16], [16.4].
[25]Applicant’s Initial submissions at [17.6] – [17.9].
The Respondent Authority similarly submits that the agreed works are sufficiently certain that the contract is not one that is void, ab initio, yet the Authority says that the scope of works should be found to be the works indicated in the plans, then confined only to the extent of those exclusions nominated by the builder in his e-mail to Mrs Hayes on 24 May 2010. It falls, of course, to the Tribunal to now make sense of this disparity.
The exercise is one that has a philosophical starting point. For, it is the role of Courts - and of this Tribunal - wheresoever possible, to act as the upholder of bargains, and not to become the destroyer of peoples’ agreements. In this regard, consider QCoal P/L & Anor v Cliffs Coal P/L & Anor [2010] QSC 479 at [40], per Ann Lyons J; and Velvet Glove Holdings Pty Ltd v Mount Isa Mines Limited [2011] QSC 95 (at [16], per Wilson J), and the various authorities referred to by their Honours therein.
In the final analysis, we are not persuaded that there is any need to conclude that the contract is one that was always void for uncertainty. By their having entered into a written agreement and then having acted in purported furtherance of that agreement, it becomes at least clear that there was always an intention by the parties to be bound by some form of agreement. The scope of that agreement needs then, if possible, to be ascertained objectively, in a commercially sensible manner, so as to ascertain what each party, by their words and conduct, would have led a reasonable person in the position of the other to believe was their position: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, at 352. This is an exercise that must occur in light of the surrounding circumstances, as known by the parties; and in light of the purposes of their intended transaction.
In our view, it appears clear that Mr Williams received the various documents given to him by the Homeowners with a clear understanding, - also conveyed to him by the Homeowners - that they wished to achieve the end result shown in the plans drawn for them by Robert Eccles, yet in a context where they also wished to do that as cheaply as possible, by doing much of the work themselves.
In this context, the QAT scope of works was given to Mr Williams by the Homeowners as an advanced planning document indicating the works that the owners always intended doing themselves. For the Homeowners to now seek to assert that the QAT scope of works was provided by them to Mr Williams as no more than a “template” to assist Mr Williams when formulating his own quote, does not sufficiently escape the fact that the document also very clearly identifies very many tasks that were not to be performed by the builder.
If that document was never intended to convey the plain meaning that it appears to have upon reading it, then one might have expected that when given over to the builder, it would have also been accompanied by a careful caveat to Mr Williams: to ignore all reference to the commentary column. The document obviously expresses that many of the tasks in relation to the construction were to be performed “by owner”. The document was not accompanied by any qualification that these references were now to be fastidiously ignored.
In an overall sense, it also seems clear to us that Mr Williams was trying to keep the price for the job as low as possible for the benefit of the Homeowners. In order then to bring in a low price, Mr Williams also excluded certain further works, not already identified within the QAT scope of works. These further works also withdrawn from the scope of works are, of course, those now identified by Mr Williams in his “preliminary price review” e-mail of 24 May 2010. This is no doubt the very reason why this e-mail was sent by Mr Williams to the Homeowners for their review, before the formal quote (in the same sum) was sent later that evening by him, in a subsequent e-mail. At that time Mr Williams stated that his price was “to the complete task as per the scope of works and drawings provided”. We determine that this was a reference to the drawings and the scope of works provided to him for quotation purposes by the Homeowners.
We do not accept as credible the evidence of either Mrs Hayes or Mr Hayes when they attempted to assert that the only exclusions from the scope of works portrayed in the architectural plans were those matters listed by Mr Williams in his e-mail of 24 May 2010. As we have indicated, we find that these were merely further exclusions nominated by the builder in order to get the price for the project down to a manageable figure for the Homeowners.
We therefore find that the scope of works for the contract was as alleged by Mr Williams in these proceedings, such that the terms of the contract are comprised by the following documents:
· the plans and engineering drawings;
· the QAT Scope of Works (complete with its demarcation of tasks as between owner and builder);
· Mr William’s e-mail of further exclusions, sent to Mrs Hayes on 24 May 2010;
· the “owner input” list and “owner supply” list;
· the written contract; and
· the standard terms and conditions.
The only remaining uncertainty in the contract then relates to the stages at which the first three stage payments were to be paid by the Homeowners to Mr Williams. Of itself, this is insufficient to render the agreement uncertain as a whole.
Whether grounds existed for the purported termination by the Homeowners pursuant to clause 26 of the contract
Clause 26 of the General Conditions of the BSA Major Works Contract provides that a Notice to Remedy Breach may be issued to a party in substantial breach of the contract, requiring them to remedy that breach, within 7 days. In the event that the party receiving the notice does not remedy the breach, then the party giving the notice will be entitled to issue a further notice, terminating the contract. Substantial breaches for the purposes of clause 26 are defined. In the case of the builder, these include:
· failing to perform the work under this contract competently;
· failing to provide materials which comply with this Contract;
· unreasonably failing to replace or remedy defective work or materials;
· unreasonably failing to perform the work diligently or unreasonably delaying, suspending or failing to maintain reasonable progress; and
· failing to effect or maintain any insurance required by this contract.
It is uncontentious that the Homeowners have delivered a Notice to Remedy Breach, on 12 May 2011,[26] pursuant to clause 26 of the general conditions, and that Mr Williams did not take steps to remedy the alleged breach within the required 7 days. That notice alleges multiple defects in breach of clause 3 of the contract (which requires the builder to complete the works in an appropriate and skilful way and with reasonable care and skill), as well as a failure to conduct the works in accordance with the plans and specifications.
[26] Annexure “NH-31” to the Affidavit of Natasha Hayes.
There is a considerable factual contest as to whether Mr Williams has constructed the works in accordance with the plans and specifications, given the dispute regarding the scope of works. Ultimately, we have determined that the scope of works is as Mr Williams contends it to be.
A question remains however as to whether the works, which were performed by Mr Williams in conformity with the scope of works found by us, accord with the requirements imposed on the builder by clause 3 of the standard conditions of the contract, which requires that the works be undertaken exercising reasonable skill and for the work to be conducted diligently. These are matters that are to be ascertained objectively, and with reference to industry standards.
The Tribunal heard evidence from QBSA Inspector Michael Hulme, and from Mr Peter Wright, a consulting engineer, retained by the Authority. Both witnesses gave evidence in relation to the quality of the work undertaken by Mr Williams, and indicated that many elements of the works that they had inspected were of a sub-standard quality.
Mr Williams contends, by means of his Counsel’s submissions, that little weight should attach to the evidence of either of Mr Hulme, or Mr Wright, because each of them did not inspect the house at Seaview Street until as late as 17 October 2011 (in the case of Mr Wright), and 15 August 2011 (in the case of Mr Hulme); such that there is a possibility of intervening defective works, by others, other than Mr Williams.
Mr Williams also contends, again by his counsel’s submissions, that the evidential value of the opinions expressed by each of Mr Wright and Mr Hulme is undermined by reason of their not having any true understanding of the contracted scope of works, nor any ability to determine whether specific items of poor workmanship identified by them had been performed by Mr Williams, or by some other person.
We do not find merit in those arguments. Although we accept that some aspects of the identified defective works should not be attributed to Mr Williams, (for example the lack of sisalation under the roof sheets, penetration holes in the blue board, and the noted absence of tie downs in some parts of the structure, because of the failure by the homeowners to first remove asbestos sheeting in a timely manner). The fact remains however, that there are still many other items of poor workmanship that Mr Williams did agree in his oral evidence before the Tribunal were works that were performed by him. An example of the poor workmanship which we accept was conducted by Mr Williams are the joist hangers used to support the upper floor which are very clearly much too large for the joists they are intended to support, and the absence of nail fixings securing the SmartJoists into the joist hangers.
Mr Wright in his report of 14 August 2012 concludes that:
4.1 The standard of the building work surrounding the construction of the sixteen building components set out in Section 3 above, in our view falls below the standard reasonably expected of a licensed contractor. The defects surrounding the bearers at the rear of the dwelling, items 3.1.4 and 3.1.7 fall well below the standard reasonably expected of a licensed contractor.
4.2 In our view a person with the required technical knowledge and experience to obtain a licence would not have produced work of the poor standard highlighted in the sixteen listed defects in Section 3 above.
We accept the evidence of both Mr Wright and Mr Hulme in relation to these matters, and find that their evidence confirms that there was sufficient basis to issue a Notice to Remedy Breach pursuant to clause 26 of the contract, specifying particular breaches of the obligation in clause 3 to complete the works in an appropriate and skilful way and with reasonable care and skill.
The fact that the Notice to Remedy Breach included some items that have ultimately been determined by this Tribunal to fall outside the remit of the agreed scope of works does not detract from the fact that other items within the Notice to Remedy Breach were still within Mr William’s scope of works.
We therefore conclude that the fact that Mr Williams did not remedy these matters within seven days, then gave the Homeowners sufficient grounds to terminate the contract, pursuant to clause 26.
Whether the Homeowners were entitled to terminate because of a breach of the statutory warranties?
Section 41 of the DBCA provides that each of the warranties mentioned In Division 2 of Part 4 of the DBCA are part of every regulated contract. The contract between Mr Williams and the Homeowners is a regulated contract. Section 44 of DBCA is a direct analogue of clause 3 of the general conditions, and the finding by the Tribunal in relation to workmanship by Mr Williams not meeting the requirements of clause 3 is then sufficient to also prove, as an alternative, a breach by Mr Williams of the statutory warranty created by section 44.
Whether s.18(6) of the DBCA should be invoked to adjust the effective completion date?
Very late in the piece, on 27 April 2011, [27] Mr Williams sent an extension of time claim (Form 1) and a variation document (Form 5) to the Homeowners, although it is to be noted that each of these documents is dated 14 March 2011.
[27] Annexure “NH-30” to the Affidavit of Natasha Hayes.
The total time claimed by Mr Williams by these documents is for 90 business days, claimed to be due to “client contractor (non) availability, client input, inclement weather, incalculable delays (and) contractor availability”. It is not clear how the 90 days is calculated, given that the 45 days are claimed for variations and 55 days for wet weather, which would make for 100 extra days, rather than 90. In all events, if 90 business days are allowed as an extension to the date for practical completion, then this would allow Mr Williams up until 12 May 2011 to complete the project. As will be recalled, the Homeowners delivered their Termination Notice to Mr Williams on 3 June 2011.
It is the Authority’s submission that the extension of time documents are an artifice, created by Mr Williams in a rear-guard manner, so as to justify his position in the face of a (by then) looming contractual dispute.
On the face of things, Mr William’s extension of time claim does not comply with clause 13 of the general conditions, and the variation document (Form 5) does not properly comply with Division 4 of Part 7 of the DBCA, either. Moreover, the claimed variations do not all appear to be for matters that are true variations in the conventional sense of that term. At least to the extent of the 15 days extra claimed for labour, this appears to relate to matters that were already squarely within the builder’s original scope of works, and do not appear to be extra days occasioned by any change in the scope of works.
Mr Williams seeks to rely upon s 18(6)(b) of the DBCA to have his claims for an extension of time allowed by the Tribunal. Although that discretion is conferred in the Tribunal, it is not a “discretion at large”, and is one that is circumscribed by the requirements of s 18(10) of the DBCA, which requires the Tribunal to be satisfied that:
(a)either of the following applies –
(i)there are exceptional circumstances to warrant an allowance being made for the additional days
(ii)the building contractor would suffer unreasonable hardship if an allowance for the additional days were not made; and
(b)it would not be unfair to the building owner to make an allowance for additional days.
In Merhtens v Stega [2012] QCAT 176 the Presiding Member in this matter held that unreasonable hardship would be suffered by the Applicant, and it would not unfair to the Respondent to make the allowance, pointing out that the respondent in that matter did sign five separate acknowledgements that it was likely that extra time would be required because of her requested variations.[28]
[28] Paragraph 42.
That case is distinguishable from this case on the facts.
We found Mr William’s evidence to be unpersuasive regarding his explanation of the delays alleged to have arisen as a consequence of either the Homeowners and/or their contractors, yet it is for him to show that grounds exist as to why the discretion conferred by s 18(10) ought be exercised in his favour. He has not managed to do that.
As a matter of evidence we are not confident that there are exceptional circumstances to warrant an allowance being made for the additional delays, or that it would not now be unfair to the Homeowners to make an additional allowance for these additionally claimed days. We are therefore not prepared to allow the claim for an extra 45 days claimed for variations.
In relation to the parallel wet weather claim, although expressed in the document that accompanied the Form 5 sent by Mr Williams to the Homeowners on 27 April 2011 to be a claim for 55 days, we take it to be an actual claim for only 45 days, by reason that the Form 5 claims a total of 90 days, and 45 of those are expressed to relate to delays attributed to matters other than weather.
Although there is now some evidence of legitimate delays caused for Mr Williams by wet weather, (such that he should reasonably be entitled to an extension of time for these), ultimately it matters little to the end result. Even if Mr Williams were awarded an additional 55 business days, this would only extend the date for practical completion until 21 March 2011, (or until 7 March 2011 if the allowance is for 45 days, as actually claimed). The Notice of Termination was not delivered until after both those dates, and at that time the project had not attained practical completion.
Whether grounds existed for termination pursuant to s.90(1)(b) of the DBCA
As has been indicated in preceding paragraphs, Mr Williams is unable to use s 18(6) of the DBCA to overcome s 90(1)(b) of the DBCA, which provides that a building owner may end the contract if the subject work is still not finished within a period that is 1.5 times the period starting on the starting date for the contract and ending on the effective completion date.
This contract was given a starting date of 26 May 2010 and a practical completion period of 240 days. 360 days after 26 May 2010 takes matters up to 21 May 2011. The contracted works were not complete by that date. The Notice of Termination was not sent until 3 June 2011. In our view, it complies with the requirements of ss 90(3) & 90(4) of the DBCA, meaning that it was sufficient to then bring the contract to an end.
Costs
Both parties have applied for costs. The basic premise of the QCAT Act is that each party must bear their own costs.[29] The Tribunal may however award costs if it considers the interests of justice require the making of an order.[30]
[29] QCAT Act s 100.
[30] QCAT Act s 102.
This matter has been strongly contested by both parties. Each has been represented by Counsel. Extensive written submissions were provided by both Counsel, extending for about six months after the hearing until the end of May in the following year. The costs incurred by both parties would be substantial.
In considering whether to award costs, a primary consideration is how successful a party has been in their contentions. In this matter we have to come to the view that the Authority was correct in its decision that the Contract was validly terminated by the Homeowners on 3 June 2011. That is a significant validation of the original position taken by the Authority.
However, that is tempered by our finding that the Scope of Works required to be performed by Mr Williams was as he had contended, and is much more confined than that claimed by the Homeowners and, by extension, the Authority. This is an issue of significant importance in assessing how much Mr Williams may be liable to compensate on an appropriate claim, if one is brought.
Consequently, we find that each of the parties has succeeded in a significant manner in their respective contentions before the Tribunal. Accordingly, the balancing exercise required by
s.120(3)s 102(3) [31] of the QCAT Act does not ultimately in our view fall substantially either way between the parties, such that the conventional rule: that as required by s 100 of the QCAT Act, is not displaced.[31] Decision amended by order of the Tribunal dated 4 November 2013.
In short, we do not consider that an award of costs should be made in favour of either party.
Conclusion
The decision of the QBSA made on 26 October 2011 that the Contract entered into between Mr Williams and Natasha and Israel Hayes on 26 May 2010 had been validly terminated by Natasha and Israel Hayes on 3 June 2011 is confirmed.
No order is made as to costs.
2
6
3