Your Local Plumbing Group Pty Ltd Trading as Canberra Blocked Drain Services v Capital Management Group Pty Ltd Trading as LJ Hooker Manuka

[2022] ACAT 50

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

YOUR LOCAL PLUMBING GROUP PTY LTD TRADING AS CANBERRA BLOCKED DRAIN SERVICES v CAPITAL MANAGEMENT GROUP PTY LTD TRADING AS LJ HOOKER MANUKA & ANOR (Civil Dispute) [2022] ACAT 50

XD 1139/2020

Catchwords:               CIVIL DISPUTE – debt application – contract for services for work performed on blocked drains – misdiagnosis of blockage and location of stormwater line – work performed on disused line – dispute as to entitlement to payment – failure to perform work with proper care and skill

Tribunal:Senior Member K Katavic

Date of Orders:  15 June 2022

Date of Reasons for Decision:      15 June 2022

AUSTRALIAN CAPITAL TERRITORY          )

CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 1139/2020

BETWEEN:

YOUR LOCAL PLUMBING GROUP PTY LTD TRADING AS CANBERRA BLOCKED DRAIN SERVICES
Applicant

AND:

CAPITAL MANAGEMENT GROUP PTY LTD TRADING AS LJ HOOKER MANUKA

First Respondent

STEPHEN THOMPSON

Second Respondent

TRIBUNAL:Senior Member K Katavic

DATE:15 June 2022

ORDER

The Tribunal orders that:

1. The first respondent is to pay to the applicant the sum of $3,047 comprising:

   (a)$86.90 (initial assessment fee);

   (b)$1,789.70 (20% of Tax Invoice 9638);

   (c)$1,170.40 (20% of Tax Invoice 9691);

2. The application against the second respondent is dismissed.

………………………………..

Senior Member K Katavic

REASONS FOR DECISION

Introduction

1. The first respondent operates a real estate business from premises in Manuka in the ACT. The second respondent is the principal of that business. The premises are located in an older part of Manuka. In January 2019, the first respondent experienced some stormwater drainage issues which created flooding on the premises. After some urgent work was done by Duncan’s Plumbing, the issue was covered by the first respondent’s insurer and the applicant was retained to address the stormwater issues.

2. The applicant commenced work on site according to a scope of works and quote. This involved digging up the driveway to the first respondent’s premises and restricting access to the site. Soon after, the applicant advised the first respondent there were complications and issued a second quote and scope of works. The applicant’s plumber had encountered a pipe which had been incorrectly connected. The applicant issued a third quote and scope of work to clear the blockage.

3. The first respondent had grown unhappy with the applicant’s handling of the work and the ongoing disruption to its business. This escalated when the ACT Government, responsible for stormwater mains, became involved and it was apparent the applicant had been digging in the wrong place to a stormwater connection which had been decommissioned and disconnected from the main line. The respondent requested the applicant cease all work. Ultimately, a different contractor was engaged by the respondent to complete the necessary rectification work.

4. The applicant commenced debt recovery proceedings against the two respondents for the outstanding amounts under the first two quotes provided. The third quote was redundant as the applicant would have been working on the decommissioned line. The respondent denies the debt on the basis that the applicant did not complete all the work the subject of the quote and failed to perform the work with proper care and skill.

The claim and the evidence

1. The applicant has pursued its claim against both the corporate entity operating the business trading as LJ Hooker Manuka and Mr Stephen Thompson personally who is the principal and sole director of that business. The question of which respondent may be liable is to be resolved. For convenience I will refer to the respondents jointly.

2. The applicant’s claim against the respondents comprises $14,800.50 for the outstanding debt, plus interest, and various other fees.

3. The principal sum is made up of two invoices issued to the respondents for work in relation to the stormwater issue. The first, invoice 9638 dated 22 March 2019 totalled $8,948.50 was issued to the respondents based on a quote dated 6 February 2019 known as Job No. 14443. The second, invoice 9691 dated 29 March 2019 was issued to the respondents based on a quote dated 29 March 2019 known as Job No. 15458. Each invoice and corresponding quote contains a scope of works and contract terms and conditions. The significance of these is discussed in further detail later in these reasons. I will refer to the invoice reference numbers in these reasons.

4. The applicant’s position in relation to its claim is that the whole amount is owing despite the applicant conceding that it only completed 80% of the work. In the alternative, the applicant claims it is owed 80% of the total amount plus interest and other fees.

5. The respondents deny the debt, but accept the applicant completed some work. They disagree 80% was completed and say the applicant did not exercise proper care and skill. They claim the applicant also carried out some non-compliant work. The respondents purported to make a counter claim for damages, however this was not properly lodged with the tribunal and a filing fee was not paid. It was not pursued.

6. The applicant relied upon the following evidence:

   (a)Witness Statement of Heather Buffy dated 1 March 2021.[1]

   (b)Witness Statement of Heather Buffy dated 6 April 2021.[2]

   (c)Witness Statement of Shameer Khan dated 6 April 2021.[3]

   (d)Attachments 1 – 8 of the Civil Dispute Application dated 30 October 2020.[4]

   (e)Bundle of Photos.[5]

   (f)Witness Statement of Perri McDonald dated 29 September 2020.[6]

   (g)Applicant’s Timeline.[7]

   [1] Exhibit A1

   [2] Exhibit A2

   [3] Exhibit A3

   [4] Exhibit A4

   [5] Exhibit A5

   [6] Exhibit A6

   [7] Exhibit A7

7. The respondents jointly relied upon the following:

   (a)Attachments to the Response dated 6 January 2021.[8]

   (b)Attachments 1 – 10 filed 16 April 2021.[9]

   (c)Witness Statement of Jason Sloane dated 19 March 2021.[10]

   (d)Witness Statement of Rochelle Smyth dated 19 March 2021.[11]

   (e)Timeline of Rochelle Smyth.[12]

   [8] Exhibit R1

   [9] Exhibit R2 (note number 9 omitted)

   [10] Exhibit R3

   [11] Exhibit R4A

   [12] Exhibit R4B

8. Mr David Chen, the applicant’s complaints manager, appeared as its authorised representative. Ms Rochelle Smyth appeared on behalf of the first respondent as an authorised representative. She is the first respondent’s bookkeeper. Mr Thompson represented himself and deferred to Ms Smyth much of the time.

What was the applicant engaged to do?

1. On or about 10 January 2019, the first respondent’s business premises in Manuka became flooded. Duncan’s Plumbing initially attended the site and was unable to clear the blocked drains. Ms Smyth contacted the first respondent’s insurer in relation to the repairs and was instructed to obtain three quotes.

2. On or about 5 February 2019, the applicant provided one such quote. Mr Peri McDonald attended and assessed what work was required. Tax invoice 9334 comprised $79 plus GST for the applicant’s attendance on site and assessment.[13] This invoice was not paid. Ms Smyth conceded it was an oversight and unintentional.

   [13] Exhibit R4A attachment 11

3. According to Tax Invoice 9334, Mr McDonald made the following diagnosis:

   Arrived on site to find stormwater line running from a sump that has not been connected correctly. The main line will need to be excavated and the line running from the sump connected into it. Client would like to have the issue of flooding rectified and fixed correctly. After inspection, my professional recommendation would be to excavate the stormwater main line. Make a new connection running from the sump. This should stop all the issues of flooding in heavy down pours.

4. A quote for the proposed scope of works was also included in Tax Invoice 9334. On 6 February 2019, the applicant issued quote for Job No. 14443 totalling $8,948.50 (inclusive of GST) which Ms Smyth accepted on 22 March 2019. On 22 March 2019, the applicant issued Tax Invoice 9638 for $8,948,50 to Ms Smyth. The tax invoice was later reissued in Mr Thompson’s name as the owner of the business. The scope of works included the following:[14]

   [14] I have listed the items for ease of reference in the order in which they appear on the invoice

   (a)Excavation.

   (b)Cutting of some concrete is necessary to allow access for digging.

   (c)Locate existing stormwater main line.

   (d)Excavate down to a depth of approx. 1.3m.

   (e)Expose the stormwater main line.

   (f)Install new connection to the stormwater main line.

   (g)Connect onto existing line running from the sump.

   (h)Connect the line running from the sump to the new connection in the mains.

   (i)Provide access point to ground level with metal plate.

   (j)Access point is installed for future access and cleaning of the stormwater line.

   (k)Job will need to be certified by local government authority.

   (l)Certificate of compliance will be issued.

   (m)Pipe will need to be covered with aggregate to stop from crushing during backfill.

   (n)Area will need to be compacted to stop from sinking in future.

   (o)Backfill the rest of the hole with leftover dirt.

   (p)Clean and tidy work area.

   (q)This quote does not allow for re-concreting or re-paving.

5. Arrangements were made to commence work on 29 March 2019. A deposit of 30% was required in advance with a 40% staged payment to be made by the afternoon of 29 March 2019. Neither payment was made, nonetheless work commenced as arranged.

6. Ms Buffy gave evidence that work commenced and after excavating to a depth of 1.3m the applicant’s plumbers discovered a pipe which had been incorrectly connected. A pipe 150mm in diameter was running from the sump into a connected line only 100mm in diameter blocking flow. The line was also full of tree roots and a crack was found. She said at this point because of what the plumbers had found further different work was required. This caused the applicant to issue the second quote.

7. On 29 March 2019, the applicant issued Quote for Job No. 15458 for $5,852 (including GST) with the following assessment:

   Arrived on site to find a blocked stormwater line that we have excavated. Once the hole had been opened up and the pipes exposed we have found a 150mm line that was reduced to a 100mm causing the flow to block. The line was also full of tree roots. Client would like to have the issue repaired. After inspection, my professional recommendation would be to replace the sump with a new plastic sump. The 150mm PVC line needs to be reduced to 100mm to match the main line. The main line also needs to be excavated further back to allow us to make the new mains connection.

8. The scope of works included:[15]

   [15] I have listed the items for ease of reference in the order in which they appear on the invoice

   (a)Excavation

   (b)Cutting of concrete will be necessary

   (c)Remove sump pit

   (d)Installation of a new sump pit

   (e)Installation of a new 100mm line running from the sump pit

   (f)Installation of pipework in the main line

   (g)Installation of shaft riser point for future access and clearing

   (h)Dig back the main line another meter to allow us to connect onto it

   (i)Install all pipework

   (j)Test and inspect make sure running correctly

   (k)This quote does not allow for re concreting or re paving.

9. The quote was accepted on behalf of the respondents and Tax Invoice 9691 was issued. This was not paid.

10. On 30 March 2019, the applicant’s plumbers returned to the site and continued excavation and commenced installation of new pipes. The work was delayed due to rain and continued on 1 April 2019. At this point, the applicant continued with the new pipe work, but after running a CCTV camera down the line it was still blocked. The applicant contacted Access Canberra. A representative from Access Canberra, known as Adam, attended the site. Due to the unusual nature of the configuration of pipes and continued blockages, it was agreed that the applicant would continue the work to replace the sump and Access Canberra would conduct further investigation to ascertain the status of the pipe including using a jet truck to clear the line.

11. At this point due to the significant blockages found, the applicant issued a third quote. Quote for Job No. 15487 was issued to the respondents on 1 April 2019 for $30,668 inclusive of GST. While this quote is not the subject of the applicant’s claim, it is relevant for context.

12. According to Ms Smyth, she had a conversation with Adam from Access Canberra on 4 April 2019. He informed her that the line the applicant had been working on was blocked, but the applicant had not dug to the main line and was working 1.5m away from it. He advised the reduction to the 100mm fitting was not compliant. She told the Tribunal later on the same day she had a conversation with Mr McDonald who informed her that it was not the applicant’s fault they had been working on the wrong line as the previous company had installed the sump to that line.

13. On 4 April 2019, Ms Buffy sent an email to Ms Smyth as follows:

    As per the current status of the job Access Canberra have gotten involved as the drainage is currently non-compliant. We have completed our current work up to the point we can and are now in their hands until they decide how to act from here. We will follow up often and keep you updated as well.

14. The respondents did not accept the third quote and by 5 April 2019 had requested the applicant cease all work.

Did the applicant complete the work under the quote?

1. The two tax invoices the subject of the applicant’s claim, intersected such that the work under the first reached a certain point and required the work under the second to be carried out before the work on the first could be completed.

2. Ms Buffy gave evidence regarding the work completed by the applicant by reference to Tax Invoices 9638 and 9691.

3. In relation to Tax Invoice 9638 (Job No. 14443), the first quote, Ms Buffy said the applicant had completed work up to item 8[16], connection of the line to the sump, which was the point in the job where further problems were encountered and the second quote took over. She said the work within the scope of the second quote needed to be carried out before completing the first. However, she conceded the connection carried out in response to item 8 was to the decommissioned line and not the main line. This became apparent later after the applicant had issued the second quote to replace the sump.

   [16] (h) above

4. In relation to Tax Invoice 9691 (Job No. 15458), the second quote, Ms Buffy said the applicant had completed all the items however, the installation of pipework was to the decommissioned line. She conceded that the applicant did not eventually connect anything to the correct stormwater mains. The work was not completed due to the respondents requesting the applicant cease all work.

5. The respondents’ position is that the applicant did not even complete work to item 3 of the first quote because the applicant had failed to correctly locate the existing stormwater main line. The applicant was digging to and performing work on a disused line and because of that failure the applicant was not entitled to be paid for any work performed.

6. Ms Buffy outlined for the Tribunal the usual practice employed by the applicant in relation to a job such as this one. She told the Tribunal it was a process of elimination using various diagnostic methods. Usually the applicant attempts to clear the line using machinery, either an electric eel or a high pressure jet line. If unsuccessful, a CCTV camera is inserted in the drain to locate and determine what the blockage is. She explained that if the blockage is not cleared with machinery it is necessary to excavate the pipework and replace it followed by another CCTV camera investigation to check for any further blockages down the line. She told the Tribunal this involves a staged quotation process depending on what the further investigations reveal.

7. She accepted that in this case the process had not been followed. Ms Smyth questioned Ms Buffy about the applicant’s usual practice and the location of the stormwater main line. In relation to Tax Invoice 9638 and item 3 “locate existing stormwater main line”, Ms Buffy said the applicant located the problem with the incorrect piping which was further away from the stormwater main line itself and were under the impression that this line was already connected to the main line. She conceded that when the applicant issued the second quote being Tax Invoice 9691 to replace the sump and pipework that the applicant believed it was working on connecting to the stormwater main line however, the applicant realised later, from Access Canberra, after completing that work that it was a decommissioned line and not the stormwater main line. Ms Smyth’s point, which Ms Buffy accepted, was that the applicant failed to locate the stormwater main line in accordance with the Tax Invoice and instead were doing work on a decommissioned line approximately 1.5-2m from the actual stormwater main line. Ms Buffy explained that the reference in the quote should be to “locate existing stormwater line” as only the ACT Government can work on the main line.

8. What the Tribunal understood Ms Buffy to mean was that the applicant was working on a section of stormwater line which it believed tied into the main stormwater line, however it later discovered the work had been done and connected to a decommissioned line and was not the stormwater main line.

9. The respondents engaged LFX Group to complete the work. In his witness statement, Mr Sloan, a project manager with LFX Group, said the stormwater line was excavated to remove and replace the recently installed PVC piping back to the 150mm connection needed to connect to the stormwater drain and divert the water to the main line. The first respondent paid $7,081.50 for this work. Mr Sloan was not available to give oral evidence before the Tribunal and was not cross-examined. There are limited conclusions the Tribunal can make from Mr Sloan’s evidence.

10. Likewise, Mr McDonald was not available to give evidence before the Tribunal and was not cross-examined. In his witness statement he stated after removing and replacing the non-compliant pipework the applicant found, using the CCTV camera, the main line to still be completely blocked. He stated that after involving Access Canberra and investigating some more, he ended up running the CCTV camera down the mainline from the pit out at the front and found that the mainline was approximately 1.5m over from where they had been working. He explained this was the main line that needed to be tapped into correctly but previous work had connected the wrong line and there was no way for the applicant to know this line was void when making this connection.

11. What is unclear, is why the exercise Mr McDonald outlined in his statement, namely running the CCTV camera down the line from the pit out the front was not done at the outset.

12. Ultimately, the applicant completed some work, but it was not in the right location and not consistent with the terms of the two tax invoices.

13. Each of the tax invoices is accompanied by contract terms and conditions. Clause 18 of those terms and conditions states:

    Canberra Blocked Drains Services shall do all work in a competent, workmanlike manner in compliance with all relevant Australian Standards and to the requirements of all statutory authorities relating to the work. All materials and components shall be of good quality, suitable for the purpose intended and unless otherwise specified, new.

14. I am not satisfied, based on the above evidence and findings that what occurred was competent. I accept the circumstances were unusual, but the applicant did not complete the work in accordance with the items as stated in the Tax Invoices and failing to locate the existing stormwater main line before performing the work under the second Tax Invoice, falls foul of clause 18 of the terms and conditions.

What is the applicant owed and by whom?

1. The applicant did not complete item 3 of the first Tax Invoice and proceeded to complete the work under the second Tax Invoice which ultimately revealed its incompetency as the work was not necessary and the initial problem remained. I accept some work was done for which the applicant is entitled to be paid.

2. The applicant argued that it was entitled to recover the entire invoiced amounts despite conceding it had not completed all the work. I disagree the applicant is entitled to 80% of the invoiced amounts. Even though some work was done, if it was not completed competently or was surplus to requirements because of the initial error made as to the location of the stormwater main line, the respondents should not have to pay for that work. 

3. None of the items within the scope of works in each tax invoice has a unit price from which the specific value for that item can be determined. An itemised report was prepared for the first respondent’s insurer,[17] however, this does not align with the items to enable me to calculate a figure. Instead, and in the circumstances I assess the applicant as being entitled to 20% of each invoice.

   [17] Exhibit A1, attachment HB15

4. The applicant is entitled to the $86.90 for the initial assessment and the first four items of the first Tax Invoice. In the absence of any unit pricing, I have estimated this to be approximately 20% of the total amount invoiced, being $1,789.70.

5. I am not satisfied the applicant is entitled to recover the whole amount of the second Tax Invoice as some of this work was later replaced by LFX Group which the respondents had to pay. I accept the new sump and riser were installed. I estimate this to be 20% of the total invoice, being $1,170.40.

6. The applicant also seeks the ACAT filing fee and various other fees and interest on the outstanding debt. On 12 April 2019 and later on 19 August 2019, Ms Smyth requested the applicant provide an itemised invoice for actual work completed. The applicant did not. Instead the applicant elected to seek recovery of the whole amounts. Had the applicant provided the itemised invoice to Ms Smyth there may not have been a need to commence these proceedings. Further, the applicant is only partially successful. For these reasons I decline to award interest and the other fees.

7. Despite the invoices being addressed to Mr Thompson, I am not satisfied that Mr Thompson personally engaged the applicant to do the work. I am satisfied that the first respondent is the proper entity with which the applicant contracted. Mr Thompson was merely identified as the correct nominee on behalf of the first respondent as he is the sole director. Each of the quotes were issued to LJ Hooker Manuka and Mr Thompson never had any direct involvement in retaining or dealing with the applicant. The proceedings against him are dismissed. The applicant is entitled to recover against the first respondent only.

Conclusion

1. The first respondent is to pay to the applicant the sum of $3,047 comprising:

   (a)$86.90 (initial assessment fee);

   (b)$1,789.70 (20% of Tax Invoice 9638);

   (c)$1.170.40 (20% of Tax Invoice 9691).

2. The application against the second respondent is dismissed.

   ………………………………..

   Senior Member K Katavic

Dates of hearing:	27 April 2021 and 22 October 2021
Applicant:	Mr David Chen, authorised representative
First Respondent:	Ms Rochelle Smyth, authorised representative
Second Respondent:	In Person