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  • Unreported Judgment

Hitchman v Prime Building & Pest Consultants Pty Ltd

 

[2016] QCAT 261

CITATION:

Hitchman v Prime Building & Pest Consultants Pty Ltd [2016] QCAT 261

PARTIES:

Rory Hitchman

Janine Hitchman

(Applicant)

v

Prime Building & Pest Consultants Pty Ltd

(Respondent)

APPLICATION NUMBER:

BDL150-15

MATTER TYPE:

Building matters

HEARING DATE:

28 July 2016

HEARD AT:

Brisbane

DECISION OF:

Member Hughes

DELIVERED ON:

4 August 2016

DELIVERED AT:

Brisbane 

ORDERS MADE:

  1. Prime Building & Pest Consultants Pty Ltd pay to Rory Hitchman and Janine Hitchman the sum of $750.00 by 15 August 2016. 
  1. Rory Hitchman and Janine Hitchman is to file with the Tribunal and serve on Prime Building & Pest Consultants Pty Ltd any submissions on costs by 4.00pm on 22 August 2016.
  1. Prime Building & Pest Consultants Pty Ltd is to file with the Tribunal and serve upon Rory Hitchman and Janine Hitchman any submissions on costs by 4.00pm on 5 September 2016.
  1. The costs of the proceedings will be determined on the papers and without an oral hearing not before 6 September 2016.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF - BUILDING INSPECTION – STRUCTURAL SCAN REPORT – where agreement to conduct non-invasive inspection to report on concealed structural damage caused by termites - whether breach of Agreement – where written terms and conditions emailed after payment – where offer accepted upon payment – where Agreement concluded at that point –– where implied term to conduct inspection with due care - whether report failed to identify concealed structural damage caused by termites – where report failed to identify damage to ceiling rafters and wall framing rafters in breach of Agreement - whether failure to identify damage caused loss – where report clear that it is to be read in conjunction with building and pest reports – where buyer obtained previous building and pest reports – where previous reports already had sufficient details to raise significant concerns – where any opportunity to terminate or negotiate reduction in purchase price already provided in earlier reports – where structural scan report did not prevent buyer from terminating Contract of Sale – where no evidence of any loss – where inspector did not promise termite free dwelling but merely would use reasonable care to report and investigate on concealed termite damage – where $18,122.69 cost of repairs small portion of purchase price – where buyer already negotiated discount in purchase price of $20,000.00 – where property already had termite damage when buyer negotiated discount – where no evidence that property worth less than price paid - where no evidence of decrease in value because of damage – where no valuation evidence – where loss of chance to negotiate reduction in purchase price minimal

Australian Consumer Law (Cth), s 60

Queensland Building and Construction Commission Act 1991, section 77

Queensland Civil and Administrative Tribunal Act 2009, sections 100, 102

Aldridge v. JHA 09 Pty Ltd [2012] QCAT 440

Castlemaine Tooheys Ltd v. Carlton & United Breweries Ltd (1987) 10 NSWLR 468

Lewis v. Jeffrey Hills & Associates Pty Ltd [2011] QCATA 241

Liverpool City Council v. Irwin & Anor [1976] 2 All ER 39

Miller v. Hancock [1893] 2 QB 177

Rentokil Pty Ltd v. Channon (1990) 19 NSWLR 417

Robinson v. Harman [1848] EngR 135

Spargo v. Katz [2010] QCATA 94

APPEARANCES and REPRESENTATION (if any):

 

APPLICANT:

Mr Rory Hitchman and Mrs Janine Hitchman appeared in person

RESPONDENT:

Mr Mark Rentoul, Director for Prime Building & Pest Consultants Pty Ltd

REASONS FOR DECISION

What is this Application about?

  1. [1]
    Instead of arranging an invasive termite inspection of a home they had purchased as recommended by their building and pest inspectors, Mr Rory Hitchman and Mrs Janine Hitchman engaged Prime Building & Pest Consultants Pty Ltd to conduct a Structural Scan report using thermal imaging.
  2. [2]
    The report concluded no termite structural damage. 
  3. [3]
    Mr and Mrs Hitchman then completed their purchase of the property. Around four weeks later, they discovered termite damage to two ceiling rafters in the lounge room, two wall framing rafters in the lounge room and two external rafters in the roof frame. 
  4. [4]
    Mr and Mrs Hitchman claimed that they would not have proceeded with their purchase if Prime had identified these issues. They want Prime to pay them $18,122.69 to repair the damage plus $540.00 for later exploratory work and their costs of the proceedings.
  5. [5]
    The Tribunal may award damages, interest, restitution and costs.[1]

Background

  1. [6]
    On 4 March 2015, Mr Hitchman emailed Prime requesting “a structural scan of the main bedroom cupboard area, stud walls and downstairs next to the fire place.”[2] However on 5 March 2015, Mr Hitchman broadened the scope of his request in another email to Prime:

I was wondering when the scan gets done… tomorrow, whether we can change our minds and get the whole house done – just in case. If not we’ll just get what we can as time allows but for peace of mind it would be better. Let us know if this is possible and the costs involved. Please ring Rory tomorrow if there are any issues.[3]

  1. [7]
    Mrs Hitchman then said she paid Prime’s fees at around 8.30am on 6 March 2015 by credit card over the telephone. At around 9.48am on 6 March 2015, Prime emailed Mr and Mrs Hitchman to confirm the appointment at 12.00pm, stating that it will supply a formal Tax invoice after payment, providing for methods of payment and attaching Terms & Conditions.
  2. [8]
    Mr and Mrs Hitchman paid Prime’s fee and entered the Agreement in reliance upon the following extract from Prime’s website:

Structuralscan is thermal imaging of walls, ceilings and other structural components within a building. Known as Non Destructive testing. We are able to detect concealed damage caused by termites, rot and other pests… The analysis of such thermograms enable us report on the structural integrity of buildings as seen in the infrared spectrum.

Structural issues located in concealed areas:

  • Integrity of structural members
  • Dimension of structural members
  • Structural tie downs
  • Bracing walls and nailing
  • Penetrating moisture points

What did Prime agree to do?

  1. [9]
    It was not disputed that Prime agreed to conduct a non-invasive inspection to report on concealed structural damage caused by termites. Consistent with this, the Prime report begins with the heading “STRUCTURAL SCAN INSPECTION (Reporting on structural damage caused by termites)” and noted that (my emphasis) “structural investigation of the wall framing was detected by thermographic radiometric analysis”.
  2. [10]
    I am not satisfied that the terms and conditions emailed by Prime to Mr and Mrs Hitchman at 9.48am on 6 March 2015 form part of their agreement.[4] This is because Mrs Hitchman’s unrefuted evidence was that she paid Prime’s fees of $750.00 at around 8.30am on 6 March 2015 by credit card over the telephone.[5] Mrs Hitchman accepted Prime’s offer to inspect and prepare a report when she paid its fee. The Agreement was concluded at that point.
  3. [11]
    Both Prime’s report and Mr and Mrs Hitchman’s expert, Mr Martin Helisma, Building Consultant also referred to the Building Code of Australia and Australian Standards. However, neither the Code nor any Standards was produced as evidence at the hearing. I am unable to determine whether the Prime report complies with the Code or the Standard, without them in evidence.
  4. [12]
    It was, however, an implied term that Prime would conduct the inspection with due care and skill.[6] 

Did Prime breach the Agreement by failing to identify concealed structural damage caused by termites?

  1. [13]
    Mr and Mrs Hitchman claimed that the Prime Report failed to identify structural damage to two exposed ceiling rafters in the lounge room, two wall framing rafters in the lounge room and two rafters on the front porch. 
  2. [14]
    Prime queried whether the damage could have been there at all at the time of its inspection by the time it was identified, some four weeks after its inspection. However, I accept the otherwise uncontested independent expert evidence of Mr Paul Ciantar, Pest Inspector who inspected the property on 9 April 2015 and said that the extent of the damage was greater than four weeks.[7] I therefore find the termite damage would have been evident at the time of Prime’s inspection.

Should Prime have identified the two exposed ceiling rafters in the lounge room?

  1. [15]
    Prime said that it did not report on visible timbers, including the exposed rafters in the lounge room. The Prime report referred to “Areas of framing with damage beyond 20% of the structural capacity (Referenced from Building Code of Australia 2009 Vol 2)” and noted “no damage that requires structural repairs” and that “no framing to this area is depleted by more than 20% and up to 100%”.
  2. [16]
    Mr Helisma identified “substantial damage” to the rafters requiring replacement.[8]  He identified that “approximately 300mm of the rafter is likely to have concealed damage”[9] and “it is highly likely that some damage is concealed on the barge side of the rafter”.[10] Mr Helisma considered that “the two rafters will require replacement in their entirety”.[11] Mr Helisma also considered the damage was structural in nature.
  3. [17]
    Based on Mr Helisma’s independent expert evidence that at least some of the damage to the rafters was concealed and was structural, I am satisfied that Prime’s failure to report this item breached its Agreement to report on concealed structural damage. During the hearing, Mr Helisma expressed the view that the damage exceeded 20 percent. Regardless, there was no evidence of any term limiting the reporting to damage of more than 20 percent.
  4. [18]
    I therefore find that Prime should have identified the damage to the two exposed ceiling rafters in the lounge room.

Should Prime have identified the two wall framing rafters in the lounge room?

  1. [19]
    The Prime report again report referred to “Areas of framing with damage beyond 20% of the structural capacity (Referenced from Building Code of Australia 2009 Vol 2)” and noted “no damage that requires structural repairs” and that “no framing to this area is depleted by more than 20% and up to 100%”.
  2. [20]
    Mr Helisma observed a “varying degree and an unacceptable level of damage” to the hardwood timber wall framing requiring replacement or at least 50 percent of the stud framing.[12]  Mr Helisma reported that it was not possible to determine the full extent of damage without removing the plasterboard,[13] suggesting the presence of concealed damage.
  3. [21]
    Based on Mr Helisma’s report, I am satisfied the damage is structural in nature because the wall framing is load bearing.[14] I am also satisfied that Prime’s failure to report the damage to the wall framing rafters to the extent the damage was concealed, or at least alert Mr and Mrs Hitchman to the likelihood of concealed damage, breached its Agreement. During the hearing, Mr Helisma again confirmed damage beyond 20 percent. Regardless, there was no evidence of any term limiting the reporting to damage of more than 20 percent.
  4. [22]
    I therefore find that Prime should have identified the damage to the two wall framing rafters in the lounge room. 

Should Prime have identified the veranda rafters?

  1. [23]
    Prime said that it only agreed to inspect as much as time allowed and did not inspect or report on the veranda rafters. The Prime report noted that it was reporting on specific areas for termite damage and expressly nominated living areas, dining room, garage, bedrooms, kitchen, halls, laundry, bathrooms, toilets and raked ceilings. The nominated areas did not include the porch or veranda.
  2. [24]
    Without the Building Code or Australian Standard in evidence, I am unable to determine whether either prescribed identifying the veranda rafters.
  3. [25]
    I am therefore not satisfied that the Prime report extended to the veranda rafters.
  4. [26]
    I therefore find that Prime was not required to identify the damage to the veranda rafters. 

Did Prime’s breach of the Agreement cause Mr and Mrs Hitchman any loss?

  1. [27]
    Mr and Mrs Hitchman say they would not have purchased the property if they had known of the structural damage. However, Prime’s report is clear that “it is to be read in conjunction with a Building and Pest Report and any defects or termite management noted in these reports should be relied upon”.[15]
  2. [28]
    Mr and Mrs Hitchman had earlier obtained a “Residential Building Report” from BDS Inspections[16] and a “Visual Timber Pest Inspection & Report in accordance with AS 4349.3-2010” from The White Ant Man.[17] The reports raised these issues:
  • Possible termite / borer damage. Termite mudding at the front left had side corner of the master bedroom at the top corner. Termite damage to structural members can leave the structure in unsound condition. These matters need to be properly investigated and repairs must be carried out on an as required basis. It needs to be established if there is any damage. To prevent unnecessary damage to the structure we firstly recommend an invasive inspection;[18]
  • Visual evidence of termite damage. Further inspections recommended. If live termites or any evidence of termite workings or damage was reported above within the building or in the ground and fences then it must be assumed that there may be concealed termite activity and / or timber damage. This concealed activity or damage may only be found when alterations are carried out such as when wall linings, cladding or insulation are removed or if you arrange an invasive inspection. Shields appear to be inadequate. Degree of risk of subterranean termite damage infestation to the overall property was considered extremely high.[19]
  1. [29]
    Mr and Mrs Hitchman were sufficiently concerned by these reports to attempt to arrange more invasive inspections. However, the selling agent Mr John Abercrombie told them that the owner did not wish to have holes cut in her walls.[20]
  2. [30]
    At this point, Mr and Mrs Hitchman could have considered whether to terminate or attempted to negotiate a reduction in the purchase price.[21] The Pest Inspector had already recommended a termite treatment plan at a cost of $3,041.00. However, the expert warnings, owner’s refusal to allow an invasive inspection and termite management costs were not enough to deter Mr and Mrs Hitchman from proceeding or attempting to negotiate a reduction in price. Instead, they chose to proceed without an invasive inspection. Consequently, they cannot now say they would not have purchased the property had they known of the structural damage. The earlier building and pest reports already had sufficient details to raise significant concerns for Mr and Mrs Hitchman.
  3. [31]
    I therefore do not accept that it was reasonable for Mr and Mrs Hitchman to rely upon the Prime report to proceed to completion. Any basis to terminate or negotiate a reduction in the purchase price was already provided in the earlier reports. Prime’s report did not deny them the opportunity to not proceed with the purchase or negotiate a reduction in purchase price. The earlier reports had already provided them with that opportunity - if any.
  4. [32]
    I am therefore not satisfied that Mr and Mrs Hitchman suffered loss because of Prime’s failure to identify the structural damage. Prime’s report did not prevent them from terminating the Contract of Sale. Rather, Mr and Mrs Hitchman accepted the risk of structural damage by electing to proceed with the purchase without an invasive inspection and despite the earlier reports warning them of the significant risk.   
  5. [33]
    Regardless, there is no evidence that Mr and Mrs Hitchman suffered any loss. Mr and Mrs Hitchman wanted Prime to pay the cost of repairs estimated at $18,122.69 plus $540.00 for later exploratory work. However, Mr and Mrs Hitchman’s loss is not the cost to rectify the issues that Prime should have identified.[22] This is because Prime did not promise that Mr and Mrs Hitchman would obtain a termite free dwelling, but merely that it would use reasonable care to investigate and report on any concealed termite damage.[23]
  6. [34]
    The purpose of damages is to restore Mr and Mrs Hitchman to the position they would have been in had the wrongful act not occurred.[24] This means assessing the true measure of loss flowing from Prime’s negligence or breach of contract.[25] There is no evidence to support what Mr and Mrs Hitchman would have done had Prime reported the damage.
  7. [35]
    Whether Mr and Mrs Hitchman could have terminated the Contract of Sale for damage to two ceiling rafters and two wall frame rafters is speculative at best. A buyer must act reasonably.[26] The cost of rectifying these items represented a small portion of the purchase price.[27]  I do not consider a buyer acting reasonably would have terminated on this basis.
  8. [36]
    At most, Mr and Mrs Hitchman lost a chance to negotiate a reduction in the purchase price for the damage. Whether Mr and Mrs Hitchman could have negotiated a reduction of the purchase price is again speculative. Mr and Mrs Hitchman had already negotiated a discount in the vicinity of $20,000.00. The property already had the termite damage - albeit unknown to them - when they negotiated this discount.
  9. [37]
    There is no assumption that Mr and Mrs Hitchman obtained less than what they paid for merely because the property required repairs. There was no evidence that the property was worth less than the price they paid. There was no evidence to make any findings of any decrease in value because of the damage. No valuation evidence was tendered. It is speculative that the property would be valued less than what Mr and Mrs Hitchman paid for it because of the cost of repairs. There was no evidence of any loss in value because of Prime’s failure to identify the damage.
  10. [38]
    Certainly, Mr and Mrs Hitchman’s purchase was subject to finance, suggesting that the property was appropriately valued and unlikely to be discounted.[28] Mr Hitchman also gave evidence during the hearing that he and Mrs Hitchman would not have negotiated further because they had already negotiated the lowest price they could. This also suggests that they suffered no loss, because the property was appropriately valued and any loss of a chance to negotiate caused by Prime’s breach of the Agreement was minimal.
  11. [39]
    I therefore do not accept the Prime report is causative of any loss apart from the cost of the report itself. Mr and Mrs Hitchman engaged Prime to prepare a report on concealed structural damage. The Prime report did not identify that damage. Mr and Mrs Hitchman are therefore entitled to a refund for the cost of the report of $750.00.
  12. [40]
    Mr and Mrs Hitchman also claimed their costs of the proceedings. In view of the Tribunal’s findings and to ensure procedural fairness, the Tribunal will allow the parties to make submissions on costs.

What are the appropriate orders?

  1. [41]
    The appropriate orders are that:
    1. Prime Building & Pest Consultants Pty Ltd pay to Rory Hitchman and Janine Hitchman the sum of $750.00 by 15 August 2016;
  1. Rory Hitchman and Janine Hitchman is to file with the Tribunal and serve on Prime Building & pest Consultants Pty Ltd any submissions on costs by 4.00pm on 22 August 2016;
  1. Prime Building & Pest Consultants Pty Ltd is to file with the Tribunal and serve upon Rory Hitchman and Janine Hitchman any submissions on costs by 4.00pm on 5 September 2016; and
  1. The costs of the proceedings will be determined on the papers and without an oral hearing not before 6 September 2016

Footnotes

[1] Queensland Building and Construction Commission Act 1991 (Qld) s 77.

[2] Email Rory Hitchman to PBC dated 4 March at 7.36am.

[3] Email Rory Hitchman to PBC dated 4 March at 6.28pm.

[4] Email PBC to jrhitchman dated 6 March 2015 at 9.48am.

[5] The electronic transfer statement is dated 6 March 2015 but did not record a time of transfer. However, no evidence was adduced to refute Mrs Hitchman’s evidence of the time she paid.

[6] Australian Consumer Law (Cth), s 60; Spargo v. Katz [2010] QCATA 94 at [13], per Wilson J applying Castlemaine Tooheys Ltd v. Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 487-489, Codelfa Construction Pty Ltd v. State Rail Authority of NSW (1982) 149 CLR 337 at 345-346 (per Mason J), Liverpool City Council v. Irwin & Anor [1976] 2 All ER 39 and Miller v. Hancock [1893] 2 QB 177 at 180-181 (per Bowen LJ).

[7] Statement of Paul Ciantar dated 24 June 2016.

[8] Expert Building Report of BICQ dated 15 March 2016 at paragraphs 56 to 58.

[9] Expert Building Report of BICQ dated 15 March 2016 at paragraph 57.

[10] Expert Building Report of BICQ dated 15 March 2016 at paragraph 57.

[11] Expert Building Report of BICQ dated 15 March 2016 at paragraph 58.

[12] Expert Building Report of BICQ dated 15 March 2016 at paragraphs 47 to 49.

[13] Expert Building Report of BICQ dated 15 March 2016 at paragraph 48.

[14] Expert Building Report of BICQ dated 15 March 2016 at paragraphs 44 and 109.

[15] Prime report dated 6 March 2015.

[16] Report dated 25 February 2015.

[17] Report dated 26 February 2015.

[18] BDS report dated 25 February 2015, page 2.

[19] The White Ant Man report dated 26 February 2016, pages 2, 4 and 8.

[20] Joint Statement for Rory and Janine Hitchman witnessed on 7 November 2015 at paragraph 3.

[21] Lewis v. Jeffrey Hills & Associates Pty Ltd [2011] QCATA 241 at paragraphs [21] and [22].

[22] Lewis v. Jeffrey Hills & Associates Pty Ltd [2011] QCAT 241 at [20] to [22]; Aldridge v. JHA 09 Pty Ltd [2012] QCAT 440 at [41].

[23] Rentokil Pty Ltd v. Channon (1990) 19 NSWLR 417 at 423-424, per Samuels JA. It should be noted that His Honour’s judgement did not dissent on this point.

[24] Robinson v. Harman [1848] EngR 135.

[25] Lewis v. Jeffrey Hills & Associates Pty Ltd [2011] QCATA 241 at [20].

[26] Contract of Sale dated 13 October 2012, Condition 4.2(a).

[27] A maximum cost of $18,122.69 compared with a purchase price of $580,000.00.

[28] Aldridge v. JHA 09 Pty Ltd [2012] QCAT 440 at paragraph [40].

Close

Editorial Notes

  • Published Case Name:

    Hitchman v Prime Building & Pest Consultants Pty Ltd

  • Shortened Case Name:

    Hitchman v Prime Building & Pest Consultants Pty Ltd

  • MNC:

    [2016] QCAT 261

  • Court:

    QCAT

  • Judge(s):

    Member Hughes

  • Date:

    04 Aug 2016

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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