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Thallon Mole Group Pty Ltd v Morton[2023] QCA 250

Thallon Mole Group Pty Ltd v Morton[2023] QCA 250

SUPREME COURT OF QUEENSLAND

CITATION:

Thallon Mole Group Pty Ltd v Morton; Morton v Thallon Mole Group Pty Ltd [2023] QCA 250

PARTIES:

In Appeal No 14740 of 2022:

THALLON MOLE GROUP PTY LTD

ACN 104 671 801

(applicant)

v

LOUISE MORTON

(respondent)

In Appeal No 14793 of 2022:

LOUISE MORTON

(applicant)

v

THALLON MOLE GROUP PTY LTD

ACN 104 671 801

(respondent)

FILE NO/S:

Appeal No 14740 of 2022

Appeal No 14793 of 2022

DC No 2695 of 2019

DIVISION:

Court of Appeal

PROCEEDING:

Application for Leave s 118 DCA (Civil)

ORIGINATING COURT:

District Court at Brisbane – [2022] QDC 224 (Muir DCJ)

DELIVERED ON:

8 December 2023

DELIVERED AT:

Brisbane

HEARING DATE:

2 June 2023

JUDGES:

Bond and Boddice JJA and Kelly J

ORDERS:

In Appeal No 14740 of 2022:

  1. Leave to appeal be refused.
  1. The parties file written submissions in respect of costs limited to three pages within 14 days.

In Appeal No 14793 of 2022:

  1. Leave to appeal be refused.
  1. Leave to file the notice of contention be refused.
  2. The parties file written submissions in respect of costs limited to three pages within 14 days.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – where the parties entered into a residential construction contract – where, during the course of the construction, the homeowner terminated the contract for various breaches – where the construction company commenced proceedings for the recovery of outstanding progress claims under the contract, the return of retention monies and restitution on the basis of a quantum meruit – where the homeowner counter-claimed, seeking liquidated damages for delay and costs incurred for completing rectification of allegedly defective and omitted works – where, at trial, both parties succeeded on some of their claims and counter-claims respectively – where judgment was given in favour of the homeowner in the sum of $12,502.25 – where both parties seek leave to appeal the decision of the primary judge – where, before this Court, the parties advanced ten grounds of appeal across the two appeals – where those grounds of appeal relate to the primary judge’s findings with respect to the award of damages, residual labour costs and interest for certain rectification works, the construction company’s quantum meruit claim for variations to an agreed scope of works and deductions from the contract price for specified items – whether the primary judge erred in assessing the sum payable to the homeowner by reason of any of the challenged findings

Queensland Building and Construction Commission Act 1991 (Qld), s 40, s 108D

Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419, cited

Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36, applied

Cerutti v Crestside Pty Ltd & Anor [2016] 1 Qd R 89; [2014] QCA 33, cited

Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85, cited

Grincelis v House (2000) 201 CLR 321; [2000] HCA 42, cited

MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; [1991] HCA 3, cited

Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; [2016] HCA 22, cited

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8, applied

COUNSEL:

C C Heyworth-Smith KC, with N J Derrington, for the applicant in Appeal No 14740 of 2022 and the respondent in Appeal No 14793 of 2022

A C Stumer and B O'Brien for the respondent in Appeal No 14740 of 2022 and the applicant in Appeal No 14793 of 2022

SOLICITORS:

Robinson Locke Litigation Lawyers for the appellant in Appeal No 14740 of 2022 and the respondent in Appeal No 14793 of 2022

Thomson Geer for the respondent in Appeal No 14740 of 2022 and the applicant in Appeal No 14793 of 2022

  1. [1]
    THE COURT:  By contract dated 20 December 2016, Louise Morton (“Mrs Morton”) and Thallon Mole Group Pty Ltd (“TMG”) agreed on the terms and conditions for the construction of a residence for Mrs Morton at Holland Park (“the contract”).  It was a substantial building with the contract price in excess of $4.5 million.
  2. [2]
    The written contract for the construction of the house was for a lump sum, with works commencing under the contract in early 2017.  The contract progressed reasonably well until September 2017, when issues arose in relation to the unavailability of two large “Schucco” sliding glass doors that were to be installed at the house.[1]
  3. [3]
    The relationship with the parties disintegrated thereafter.  In early 2019, Mrs Morton refused to pay TMG’s outstanding progress claims, expressing concerns about an incorrect reduction of the contract price arising from the sliding doors and other defective work.
  4. [4]
    On 3 April 2019, TMG gave written notice of an anticipated achievement of practical completion on 8 April 2019 and issued its final progress claim.  Mrs Morton terminated the contract on 10 April 2019.  Other builders were subsequently engaged to complete the work and to rectify defects.
  5. [5]
    TMG commenced proceedings in the District Court of Queensland against Mrs Morton, advancing three claims for monies owing under the contract.  First, the sum of $638,634.35 as monies owing for unpaid works carried out pursuant to the contract.  Second, the sum of $21,770.65 (excluding GST) on a quantum meruit basis.  Third, the sum of $17,300 for delay and disruption costs.[2]
  6. [6]
    Mrs Morton denied liability to pay any of those amounts, claimed as liquidated damages in the sum of $16,100 and counter-claimed for damages in the sum of $540,428.52 (including GST) for the costs of completing the defective and incomplete works at the house.
  7. [7]
    After a lengthy trial, the primary judge delivered reasons on 7 October 2022.  The primary judge found that, viewed as a whole, the majority of the items listed in the various defect reports were minor defects and omissions that did not prevent practical completion being achieved by 8 April 2019.  However, there were a number of items that could not be considered as minor defects or omissions, which made the house unsuitable for occupation on 8 April 2019.  Accordingly, TMG had not achieved practical completion by 8 April 2019, and Mrs Morton’s termination of the contract on 10 April 2019 was valid.
  8. [8]
    Orders, giving effect to those reasons, were made on 28 October 2022.  In summary, the effect of those orders was that TMG succeeded on some of its claims and Mrs Morton succeeded on some of her counter-claims.  Judgment was given in favour of Mrs Morton in the sum of $12,502.25.  Her Honour made separate orders in respect of interest and costs.
  9. [9]
    Both TMG and Mrs Morton apply for leave to appeal the primary judge’s decision.  Leave is required pursuant to s 118 of the District Court of Queensland Act 1967 (Qld) because of the comparatively small quantum involved in each appeal.  A separate appeal has been lodged in respect of costs, but that appeal has been stayed pending the outcome of the present applications.

Proposed grounds of appeal

  1. [10]
    TMG relies on three grounds, should leave be given.  First, the primary judge erred in finding that the timber floor installation was defective, and in awarding damages in respect of rectification work.  Second, the primary judge erred in finding Mrs Morton was entitled to interest on the entire sum assessed for rectification works.  Third, the primary judge erred in finding there was no direction or approval by Mrs Morton or her authorised agent for TMG to carry out work, the subject of a variation, and in thereby dismissing TMG’s claim for quantum meruit (“the TMG appeal”).
  2. [11]
    Mrs Morton relies on seven grounds of appeal, should leave be given.  First, the primary judge erred in finding the proper amount to be deducted from the contract price for specified doors.  Second, the primary judge erred in finding that Mrs Morton was entitled to only five per cent of the overall amount claimed for residual labour costs.  Third, the primary judge erred in finding that a notional unpaid balance of the contract price must be deducted from the amount awarded on her counter-claim.  Fourth, the primary judge erred in finding that no damages should be awarded for rectification of the pool balustrade.[3]  Fifth, the primary judge erred in finding that no damages should be awarded for rectifying a leaking box gutter.  Sixth, the primary judge erred in finding that only half of the costs for rectification of the internal ceiling should be awarded as damages.  Seventh, the primary judge erred in finding that no damages should be awarded for rectifying copper cladding (“Mrs Morton’s appeal”).
  3. [12]
    It is convenient to address the proposed grounds of appeal raised by the two applications in the order identified above.

TMG proposed ground 1: timber floors

Findings made by the primary judge

  1. [13]
    The primary judge found that the contract specified the supply and installation of 130 by 19 millimetre solid spotted gum “tongue and groove timber board flooring” on the upper-level bedrooms, hallway, stairs and in the ground floor guest bedroom.[4]  Whilst the contract did not specify the method by which the timber flooring was to be fixed in place, condition 3.1 of the contract incorporated the statutory warranties, and additional condition 2 provided for TMG’s workmanship to be of a high standard of finish, consistent with best industry standards for work of a nature similar to the works and which were at least fit for purpose.  Accordingly, TMG warranted that the timber flooring installed would be suitable for its intended purpose, having regard to best industry standards or practices, or the recommendations of the manufacturer as to the method of installation.
  2. [14]
    The primary judge found that an analysis of all of the relevant evidence supported a finding, on the balance of probabilities, that only beaded adhesive had been applied by TMG in conjunction with “secret nailing”.[5]  Further, TMG’s assertion that the installation method was entirely orthodox and common in the building industry, was to be rejected because it found no support in either the manufacturer’s recommendations or the expert evidence.  The primary judge found the method of installation used by TMG, for the timber floor, was defective.  It did not meet the manufacturer’s requirements and was not in accordance with best industry standards and manufacturer’s recommended practice.
  3. [15]
    The primary judge found that in the upstairs area, there was significant gapping and cupping within the short period that the floor had been in situ, in circumstances where the life of the house is at least 50 years, such that it was unsatisfactory and created ongoing and unacceptable risks for the manifestation of further defects in the flooring.  The primary judge rejected a submission by TMG that the defective installation method did not warrant the floor being entirely removed, noting that it was impractical to remove individual boards.  Further, in order to repair the defective timber flooring on the upper level, it was necessary to not only remove the floorboards, but also prepare the sub-floor sheeting surface before installation of the new floorboards.  The limited repair proposed by TMG would not overcome the defective installation of the entire floor in the first place.
  4. [16]
    The primary judge was satisfied the rectification work carried out by Mrs Morton to the upstairs timber flooring was both necessary and reasonable, and allowed $60,281.99 (including GST) as the reasonable cost of that rectification.

Consideration of submissions before this Court

  1. [17]
    TMG does not challenge the primary judge’s findings concerning the way in which the floor was laid, nor the recommendations about how the floor should be laid.  TMG submits that the primary judge erred by allowing the amount for the reinstallation of the timber flooring in the upstairs area of the house as the floor, as laid, was not defective.  Although there was some gapping between floorboards, the expert evidence at trial was that it was inevitable that even a properly laid timber flooring would have some degree of gapping.  TMG submits the primary judge was in error in focusing on whether the method of installation was defective, rather than on whether the result was defective.
  2. [18]
    TMG further submits that a consideration of the evidence as a whole supports a conclusion that the primary judge was erroneous when she accepted that the gapping and cupping alleged to exist was significant.  The expert evidence was that, save in one room, the gapping exhibited was within the Queensland Building and Construction Commission’s standard.  Further, there was no evidence given by the expert, Mr Hilston, of having observed any significant cupping or any other defects in the floor.
  3. [19]
    TMG submits the primary judge ought to have found, on a consideration of the evidence as a whole, that the method of construction adopted had resulted in an acceptable floor, free from defect in the contractual sense in all but one location.  TMG submits that once that is accepted, the primary judge’s consequential finding of liability for the cost of repairing walls that were damaged as a result of removing the floor, could not be supported on the evidence.
  4. [20]
    There is no substance in TMG’s submissions in respect of this ground.
  5. [21]
    The contract provided for the installation of timber flooring, having regard to the best industry standards or practices or recommendations of the manufacturer as to the method of installation.  The finding of the primary judge was that floorboards of the specified dimension were recommended to be installed by use of a full bed of flooring adhesive, whereas, TMG had used beaded adhesive with secret nailing.  That finding was consistent with the expert evidence of Hilston, who did not resile from his opinion that the floor was not fixed in accordance with industry standards.
  6. [22]
    Once it is accepted that the flooring was not laid in accordance with the contractual requirements, Mrs Morton was entitled to have the upstairs flooring replaced and installed in accordance with the contractual requirements.
  7. [23]
    Further, TMG’s focus on the gapping is misplaced.  TMG warranted that the timber flooring would be suitable for its intended purpose.  The expert evidence was that there was a material risk that over time the floor would be subject to gapping and cupping, rendering it unsuitable for its intended purpose.  To that extent, the consequence of the method of installation was relevant.
  8. [24]
    Importantly, the expert evidence was that the indications with the floor as laid were that there would be ongoing problems, as there were already observed variations and inconsistencies, notwithstanding the relevantly recent laying of the floor.  That expert opinion did not change under cross-examination.
  9. [25]
    Against that background, the primary judge’s finding that the defective installation methods created ongoing and unacceptable risks, with a manifestation of further defects in the flooring into the future, was in accordance with the evidence.
  10. [26]
    Once that conclusion is reached, it was appropriate for the primary judge to make the allowance she did for the cost of repairing walls damaged as a result of removing the floor.
  11. [27]
    This ground fails.

TMG proposed ground 2: interest

Findings made by the primary judge

  1. [28]
    The primary judge deducted an amount of $220,997.66 from the damages to be awarded to Mrs Morton on account of what was described as the “notional unpaid balance of the contract price”, being the value of the unpaid balance of the contract price, less an undisputed progress claim due and owing to TMG.[6]
  2. [29]
    The primary judge found the measure of damages in the contract was to put Mrs Morton in the position as if the contract was performed, so far as money could do so.  If the contract was performed, TMG would have completed the house and Mrs Morton would have paid the contract price.  If Mrs Morton had both the reduction in the contract price and TMG pay for the work she had completed or rectified by someone else, it would be “effectively double dipping”.[7]
  3. [30]
    The primary judge found Mrs Morton was entitled to interest on the damages for the incomplete and defective work, from the date of payment of the various invoices comprising this figure, becoming due and payable until the date of the final orders.

Consideration of submissions before this Court

  1. [31]
    TMG submits that whilst the primary judge correctly found that Mrs Morton was entitled to only the difference between what she ultimately had to pay to complete the house and the price which she had contracted to pay TMG, the primary judge erroneously awarded interest on the whole sum, Mrs Morton ultimately had to pay to complete the house, rather than the difference.
  2. [32]
    However, a consideration of the basis upon which the primary judge determined that interest ought to be payable on the whole sum, supports a conclusion that the award of interest was within a sound exercise of the available discretion.
  3. [33]
    Mrs Morton had paid the invoices comprising that figure, when they became due and payable and was out of pocket until the date of final orders.  As the house had not reached practical completion without that work having been undertaken, the monies were payable by Mrs Morton at a time earlier than she would otherwise have had to pay the balance of the contract price.
  4. [34]
    Having regard to the primary judge’s finding as to practical completion (which is not the subject of an appeal), the primary judge’s determination of interest was warranted with her findings as a whole.  Further, the exercise of that discretion was consistent with the principal purpose of an award of interest on damages, namely, to compensate a person for being held out of money to which they were otherwise entitled.[8]
  5. [35]
    Whilst the primary judge may, in the exercise of that wide discretion, have awarded interest on a different basis, there is no basis to conclude that the awarding of interest in that manner was erroneous.
  6. [36]
    This ground also fails.

TMG proposed ground 3: quantum meruit

Findings made by the primary judge

  1. [37]
    TMG claimed $21,770.65 (excluding GST) as a quantum meruit in relation to two variations said to have arisen from agreed changes to the scope of cabinetry work.  It was uncontroversial that TMG did not obtain prior written approval for that work.  The primary judge was not satisfied on the evidence that there had been any direction or approval by Mrs Morton or her authorised agent to carry out the work in the first of those variations, but that Mrs Morton, by her conduct, had directed and authorised the second variation, such that TMG’s claim for $2,390.85 (including GST) for that variation was a valid claim.

Consideration of submissions before this Court

  1. [38]
    TMG submits that the primary judge erred in dismissing its claims for restitution on the basis of quantum meruit in respect of the first variation for the cabinetry.  Whilst TMG submits that the primary judge ought to have found that the relevant approval was given at the meeting in May 2018 between the cabinet maker, the architect and Mrs Morton.
  2. [39]
    However, a consideration of the evidence as a whole supports a conclusion that it was open to the primary judge not to be satisfied that approval was given at that meeting.
  3. [40]
    First, the evidence of the cabinet maker was that although Mrs Morton stated clearly that she did not like the colour of the relevant robes and wanted them changed, it was the architect, not Mrs Morton, who directed a change in the colour of the robes.[9]  There was, however, no evidence from the cabinet maker as to how or when that direction was said to have been given by the architect.
  4. [41]
    Second, Mr Mole, a director of TMG, gave evidence that the architect advised that new drawings were to be completed and that the cabinet maker “would need to price the new drawings”.[10]  Nothing in Mr Mole’s evidence supported a conclusion that there had been an instruction by the architect that the work be performed; that evidence supported a conclusion that a price first needed to be approved before any such direction.
  5. [42]
    Third, the pleaded case was that the relevant change in the cabinetry scope of work occurred on or soon before 28 May 2018; that the relevant quote was provided to Mrs Morton at the site on 29 May 2018; and that the work thereafter was performed at her request via a direction from her architect.  Nothing in the evidence of the cabinet maker or Mr Mole supported that pleaded case.  There was no evidence the relevant quote was ever provided to Mrs Morton and it was not suggested to her that she had received the relevant quote.
  6. [43]
    Fourth, the minutes of site meetings dated 29 June 2018 and 3 July 2018 both recorded that a variation had been provided but that the architect and Mrs Morton were still considering that variation.  Those minutes were inconsistent with a finding that Mrs Morton had directed cabinetry variations in May 2018.
  7. [44]
    This ground also fails.

Mrs Morton’s proposed ground 1: Schucco doors

Findings made by the primary judge

  1. [45]
    Relevantly, the primary judge found:
    1. The starting point in determining the adjusted contract price was to determine how much the contract must be reduced on account of the two bespoke sliding Schucco doors and related issues.  TMG contended that $48,000 (excluding GST) quoted to perform work under the contract was attributable to those two doors.  Mrs Morton claimed there was no specific component of the final quote that could be attributed to those doors, and the accurate reduction to be made was one based on a determination of market prices for large glass doors generally, resulting in an appropriate reduction of $140,013 (excluding GST) for the doors, plus further reductions related to work associated with the doors, totalling $190,032 (excluding GST) or $209,035 (including GST);
    2. The doors as designed by Mrs Morton’s architect contained specifications for a four and five-leaf sliding door system, with the five-leaf door facing the pool and the four-leaf door facing the backyard;
    3. Prior to the closing of the tender price for the contract on 31 October 2016, those architects had communicated with Schucco Australia to obtain pricing for the two doors, with the estimate in return being $140,013 (excluding GST) and “excluding the drainage system, low E and tinted glass, cranage, as well as fly, barrier and security screens”;[11]
    4. The contract included a specification for two Schucco branded doors of four and five-leaf panels;
    5. On 5 October 2016, the contracts administrator of TMG emailed Schucco Australia about the supply of the Schucco doors and, thereafter, on 6 October 2016, requested a quote for the Schucco doors, as specified, together with an allowance for onsite glazing, cranage, flashings and delivery;
    6. Thereafter, TMG obtained various revised quotes for the supply of the Schucco doors, with TMG not aware of any potential issues with the two Schucco doors.  There was no evidence that any of the quotes were provided to Mrs Morton or her architect by TMG during the tender process, and TMG did not become aware of any potential issues with the doors until early September 2017;
    7. On 15 November 2017, Mrs Morton directed her architects to direct TMG to proceed with the installation of alternate doors at no additional cost, on the basis they were not a “like-for-like” solution;
    8. Notwithstanding that direction, on 19 December 2017, TMG sent a variation for the installation of those alternate doors, with a claimed variation in price of $140,793.65 (excluding GST).  That variation allowed a $55,200 (excluding GST) credit for the Schucco doors, comprising the updated quoted amount of $48,000 (excluding GST) and a 15 per cent mark-up.  Costs were also given for cranage of $1,500 and for 3M tinting of $16,330 (excluding GST);
    9. On 21 December 2017, Mrs Morton disputed the costs of that variation, advising that if TMG were unable to appropriately substantiate its variation claim, she would use condition 21.13 of the contract to engage a quantity surveyor to make a binding determination on the value of the Schucco doors;
    10. On 6 April 2018, Mrs Morton exercised that right.  The determination was that the value of the Schucco doors should be treated as $140,013 (excluding GST).  This sum did not take into account tinting or lifting and cranage, as they were dealt with as separate items;
    11. On 13 April 2018, TMG declined to perform the work in accordance with the determination;
    12. On 16 April 2018, Mrs Morton deleted the scope of work from the contract.
  2. [46]
    The primary judge found that the parties, having utilised condition 21.13 in the contract, entitled TMG to opt out of the performance of the variation, the subject of the determination.  Mrs Morton was also entitled to engage a third party to perform the variation.
  3. [47]
    The primary judge further found that TMG’s submission that the applicable rate or price in the contract for the Schucco doors was $48,000 plus its 15 per cent margin, was not supported by the evidence.  A costing of $48,000 for the Schucco doors was not itemised in any pre-contract quote or in the contract; there was no evidence that a specific cost allowance for the Schucco doors of $48,000 was made by TMG during the tender process; and the figure of $48,000 first emerged after the contract was signed when the updated quote was provided in October 2017.
  4. [48]
    The primary judge found that the updated quote for $48,000 was a retrospective reconstruction and was not the applicable rate or price in the contract for the Schucco doors; and that there was no individual or identifiable amount as to the applicable rate or price in the contract for the purposes of condition 21.12.
  5. [49]
    The primary judge then considered three other quotes.  The first quote, dated 2 November 2017, was in relation to six and seven-leaf Schucco doors for $85,082 (excluding GST) and $89,755 (excluding GST) respectively, excluding cranage and tinting to meet the energy requirements.  The second quote, dated 16 November 2017, was for $115,740 (excluding GST) for six and seven-leaf Schucco doors, with increased height measurements, but comfort-plus glass which was not the 12 millimetre toughened glass necessary for the four and five-leaf doors, and which did not meet the energy efficiency requirements.  This quote expressly excluded cranage and engineering.  The third quote, dated 30 October 2017, was for $140,013 (excluding GST) for five and six-leaf doors containing 10 millimetre standard clear glass not meeting energy requirements.  The quote did not include cranage.
  6. [50]
    The primary judge found the main difference between the quotes for $140,013 and $115,740, apart from their dates, appeared to be that the former was for doors with one less leaf on each door, but observed that that quote did not use 12 millimetre glass.  Accordingly, the primary judge found there appeared to be no discernible difference in the quotes, apart from their point in time.
  7. [51]
    The primary judge found that $115,740 (excluding GST) was a reasonable rate or price for the Schucco doors, in terms of a negative variation, but that Mrs Morton was not entitled to further deductions for window tinting, as had the Schucco system been used, no tinting to the windows was required, because the Schucco doors with the specified glass met the energy efficiency requirements of the contract.  The primary judge also rejected a claim for $1,500 on account of cranage costs, finding that the final version of that quote included any necessary cranage costs.
  8. [52]
    The primary judge found in respect of three other claims relevant to the installation of the doors, namely, for safety decals, waterproofing and integrated drainage modules, that a reasonable price for the reduction of the decal was $432 and $985 for the waterproofing, with a margin of 12 per cent in accordance with the contract.  It was agreed by the parties that $8,500 should be allowed for the drainage module.
  9. [53]
    Allowing for those sums, the primary judge found that the proper amount to deduct from the contract price, pursuant to condition 21.12 in relation to the Schucco doors variation, was $140,735.84 (excluding GST).

Consideration of submissions before this Court

  1. [54]
    Mrs Morton submits that the primary judge erred in reducing the “notional unpaid balance of the contract price” by only $140,735.84 on account of the Schucco doors and associated costs.  Mrs Morton submits that the primary judge ought to have assessed the value of that work at $190,032.64.
  2. [55]
    Mrs Morton accepts that the primary judge correctly concluded that as there was no prior agreement of the parties in respect of the value of the Schucco doors and there were no applicable rates or prices in the contract; clause 21.12 of the contract required the relevant variation to be valued using reasonable rates and prices for the Schucco doors and its associated expenses.
  3. [56]
    Central to Mrs Morton’s claim in respect of this ground is an assertion that the $115,740 accepted by the primary judge as being a reasonable rate or price for the relevant doors was erroneous as it derived from a quote which was expressed to be for six or seven-leaf doors not four or five-leaf doors as required by the contract.  The requirement for fewer panels necessitated thicker glass being required, thereby increasing the relevant price.  Further, the primary judge erroneously dismissed the evidence of the relevant experts.
  4. [57]
    A consideration of the relevant evidence does not support either contention.
  5. [58]
    First, the primary judge correctly observed that a reasonable rate is to be assessed by having regard to what “a party would have had to pay under a normal commercial arrangement and to the cost of the work actually performed”.[12]  Having regard to that test, there was substance in the primary judge’s conclusions that the approaches of both expert witnesses were unsatisfactory as they looked at benchmark prices without giving any weight to the range of quotations in fact received by the parties and without the range of pricing being specific to a particular leaf size.
  6. [59]
    Second, whilst Mrs Morton’s architects had received quotes on 30 October 2015 and 31 October 2016 for figures of around $140,000 for Schucco doors in a four and five-leaf configuration and the quantity surveyor who prepared a determination of value pursuant to clause 21.13 of the contract had concluded that due to the bespoke nature of the doors, a value of $140,013 was reasonable,[13] there was evidence before the primary judge of a quotation for a six and seven-leaf set of Schucco doors for $115,740 (excluding GST), which was consistent with benchmarks identified by Mrs Morton’s expert.
  7. [60]
    Third, the price ultimately accepted as reasonable by that expert was for five and six-leaf doors not four and five-leaf doors, where those doors had 10 millimetre standard clear glass, not the 12 millimetre glass necessary for four and five-leaf doors.
  8. [61]
    These factors provided a sound basis for the primary judge to conclude that the main difference between the quote for $115,740 and the quote for $140,013, accepted by Mrs Morton’s expert, was that the former was a quote for doors with one less leaf on each door but that there was no difference in the dimensions of the glass to be used, which was said to be an explanation for the price differentials in different numbered leaf doors.
  9. [62]
    Once that conclusion was open, there was a sound evidentiary basis for rejecting the evidence of the experts and for accepting the quotation for $115,740 (excluding GST) as a reasonable rate or price for the Schucco doors.  Those conclusions were consistent with the preponderance of evidence accepted at trial.  They were not glaringly improbable.[14]  That being so, there is no proper basis for this Court to overturn a trial judge’s findings.

Tinting

  1. [63]
    Once that conclusion is reached, there is no basis to set aside the primary judge’s finding as to the rejection of any reduction for window tinting.  The quotation which it was open to the primary judge to accept, was for Schucco doors which met the energy efficiency requirements of the contract, and tinting was only envisaged to be necessary should the glass not comply with the energy efficiency requirements.

Cranage

  1. [64]
    The primary judge’s conclusion that the relevant reasonable price included any necessary cranage costs is inconsistent with the express terms of the written quote.  However, the expert evidence was that the benchmark rates and costs included cranage.[15]  The primary judge considered that evidence significant, when not accepting that there was a proper basis to reject that quote as it was near the benchmarks which included cranage.  That being so, there was an evidential basis to disallow a separate sum for cranage.  Absent success on other grounds of appeal, we would not grant leave to appeal in respect of this item as it would not be in the interests of justice and there would be no substantial injustice afforded to Mrs Morton by its refusal.

Safety decals

  1. [65]
    Finally, there is no basis to set aside the primary judge’s finding as to the amount to be deducted for safety decals.  The value contended for by Mrs Morton was solely based on the evidence given by the expert engaged by Mrs Morton.  The primary judge rejected that expert’s evidence as to a reasonable price for the decals.  Further, there was an alternate quotation for the relevant work which it was open to the primary judge to accept and prefer over the evidence of that expert.  Such a conclusion is neither glaringly improbable nor contrary to the evidence.

Waterproofing

  1. [66]
    For similar reasons, it was open to the primary judge to allow waterproofing based on the actual cost of waterproofing.  The only evidence as to higher value was that of the relevant expert.  It is neither glaring improbable or contrary to the evidence for the primary judge to prefer the actual cost of the waterproofing over the evidence of what was said to be a reasonable price for that waterproofing.

Other

  1. [67]
    Mrs Morton contended that if her various contentions aimed at increasing the amount of the deduction were accepted, the amount deducted in respect of the accepted contract margin should also increase.  As Mrs Morton has failed to establish relevant error in the deductions made by the primary judge, including the assessment of the associated costs, there is no basis to alter the figure to be included in any reduction to the contract price.
  2. [68]
    This ground fails.

Mrs Morton’s proposed ground 2: residual labour costs

Findings made by the primary judge

  1. [69]
    The primary judge found that although Mrs Morton made an ambit claim for residual labour not allocated to a particular claim, in the sum of $73,229.30 (excluding GST), the calculation of that claim was premised on an estimate of the time spent by labourers on site, together with reference to the invoices that were issued, and a calculation of a value for the labour that could not be allocated to a particular task.  The primary judge accepted that the necessity and justification for such an approach arose as detailed records had not been kept regarding the number of labourers who worked on what defects; it could not be shown with certainty the costs of each defect in terms of direct labour and hire labour; and because a “time and motion” administrator was not engaged for any of the work.
  2. [70]
    The primary judge accepted that any exercise to calculate the cost would be imperfect, but that there was an unreliability in the broad-brush approach taken, as not all of the time in the invoices could be accounted for.  Even allowing for the allocation of some of the work, only 50 per cent of the labour invoiced on seven out of 58 invoices could be accounted for, and, in total, half of the labour costs incurred by one of the builders could not be accounted for.  The primary judge concluded that doing the best that could be done and adopting a broad-brush approach, five per cent of the overall amount claimed should be allowed for the residual labour claim, namely $4,027.62 (including GST).

Consideration of submissions before this Court

  1. [71]
    Mrs Morton submits that the primary judge erred in the allocation of residual labour costs as an allowance of only 5 per cent of these costs significantly underestimated the loss.  Mrs Morton submits that as she was successful on approximately 60 per cent of her claim for defective work, at least 60 per cent of the residual labour costs ought to have been allowed by the primary judge with that figure to be increased if Mrs Morton succeeds on her other grounds of appeal.
  2. [72]
    The primary judge allowed only 5 per cent of the residual labour costs on the basis that it was necessary to adopt a “broad brush approach” as detailed records were not kept regarding the number of labourers who worked on what defect or as to the costs of each defect in terms of direct labour and hire labour, and a lack of a “time and motion” administrator to ensure the necessary records were kept.
  3. [73]
    Whilst Mrs Morton asserts that she was successful in respect of approximately 60 per cent of her damages claims, that methodology does not meet the fundamental difficulty, identified by the trial judge, in calculating the quantum properly to be attributed to Mrs Morton’s successful claims.  There was evidence that the value of the labour required varied substantially between each category of defective work.  Further, due to the lack of records and other supporting evidence, more than 50 per cent of all of the labour costs could not be accounted for.
  4. [74]
    Those two factors amply support a conclusion that it would be erroneous to allow the residual labour costs on the basis of a relationship between the appellant’s success and the total residual labour costs claims.  Once that conclusion is reached, the assessment was one for the trial judge having regard to the difficulties presented by the lack of evidence.
  5. [75]
    The assessment undertaken was in accordance with the evidence and it cannot be said the judgment formed by the primary judge produced a glaring improbable outcome.  That being so, there is no basis for an appellate court to interfere with that finding.
  6. [76]
    This ground fails.

Mrs Morton’s proposed ground 3: notional unpaid balance

  1. [77]
    At the hearing of the appeal, Mrs Morton did not press her contention that the trial judge erred in deducting the notional unpaid balance, but contended the correct amount to be deducted was to be adjusted reflecting the amounts, the subject of her other grounds of appeal, in the event that they succeed.

Mrs Morton’s proposed ground 4: pool balustrade

Findings made by the primary judge

  1. [78]
    Relevantly, the primary judge found:
    1. The design of the pool balustrade specified in the contract required a cantilevered glass balustrade, whereas the pool balustrade installed by TMG was on spigots and not in accordance with that design;
    2. When Mrs Morton directed TMG to rectify the pool balustrade so it was built in accordance with the contract requirements, TMG declined to do so;
    3. TMG conceded it did not provide Mrs Morton with any written variation documentation or shop drawings, as required under the contract, before proceeding with the change in design of the pool balustrade;
    4. TMG maintained it was verbally directed to install the pool balustrade on spigots by Mrs Morton’s architect, and Mrs Morton was estopped from denying that TMG was authorised to do so or from relying on a breach of the contract.
  2. [79]
    The primary judge found that whilst TMG pleaded that a direction had been given, there was no evidence of any direction about the pool balustrade being given at a site meeting on 9 May 2017.[16]  However, it was the general understanding or expectation of all those attending the May 2017 meeting, which did not include Mrs Morton, that the fall of water towards the pool, as raised by Mrs Morton’s father, was a valid issue, as the water would get stuck up against the balustrade or its flow would be blocked.  Raising the pool balustrade on spigots was a practical and inexpensive solution.
  3. [80]
    The primary judge further found that whilst Mrs Morton’s father had raised a legitimate concern, she was not satisfied on the evidence that he was Mrs Morton’s authorised agent, or that he had authority to give a direction in relation to the construction of the pool balustrade on spigots.
  4. [81]
    The primary judge further found that at a site meeting conducted on 13 November 2018, Mrs Morton’s architect either verbally confirmed or authorised the variation of the pool balustrade, so that it was to be built on spigots.  However, the primary judge accepted Mrs Morton’s evidence that her architect did not expressly tell her that fact and she did not know or appreciate that the pool fence would be raised on spigots and not recessed.
  5. [82]
    Notwithstanding that finding, the primary judge was satisfied that TMG relied on Mrs Morton’s architect’s representation that the change to the balustrade was an acceptable variation under the contract by installing the balustrade as directed, and that TMG was induced to do so by this representation and would suffer detriment if Mrs Morton was permitted to resile from the representation.  However, TMG was required under the contract to obtain the written approval from Mrs Morton, before proceeding with the work, and did not do so.
  6. [83]
    The primary judge found that an estoppel would effectively exclude, change or restrict Mrs Morton’s statutory rights to have a variation in writing, nullifying the effect of express statutory provisions contained in both s 40 and s 108D of the Queensland Building and Construction Commission Act 1991 (Qld).  Accordingly, TMG’s estoppel argument failed as a matter of law.
  7. [84]
    The primary judge further found that absent a written variation, TMG’s obligation under the contract was to construct the cantilevered pool balustrade.  To construct a balustrade raised on spigots was a breach of the contract.  However, the primary judge accepted TMG’s submission that it would be unreasonable to award any damages to Mrs Morton for the costs of having the pool fence rebuilt on spigots.

Consideration of submissions before this Court

  1. [85]
    Mrs Morton submits that the primary judge erred in dismissing her claim for the costs of rectification of the pool balustrade as the evidence established that the balustrade was not constructed in accordance with the contract and, given TMG did not provide Mrs Morton with a written variation, it could not rely upon an estoppel.  That being so, it was not unreasonable to award damages to Mrs Morton for the costs of that rectification.
  2. [86]
    Mrs Morton submits that the general rule is that where a party sustains loss by reason of the construction of a building other than in accordance with its contractual specifications, that party is prima facie entitled to the amount required to rectify the defects so as to give an equivalent building substantially in accordance with the contract.[17]  Whilst that prima facie position is subject to the qualification that the reinstatement “must be a reasonable course to adopt”,[18] the test of “unreasonableness” is only to be satisfied by “fairly exceptional circumstances”.[19]
  3. [87]
    Mrs Morton submits that test was not met as the evidence demonstrated that she had chosen the design for its aesthetic impact, was upset when the balustrade was constructed on spigots, and there was no evidence she did not intend to carry out the rectification work.
  4. [88]
    The primary judge having concluded that the contractual design of the pool balustrade required a cantilevered glass balustrade and the balustrade installed by TMG on spigots was not in accordance with that design nor in accordance with any written variation, Mrs Morton was entitled to the damages for rectification of the pool balustrade provided the reinstatement was “a reasonable course to adopt”.[20]
  5. [89]
    Whilst the test of unreasonableness is only to be satisfied by “fairly exceptional circumstances”,[21] the primary judge’s findings that Mrs Morton’s architect had specifically directed the change and that the change had an engineering purpose in improving water flow fell within the description of “fairly exceptional circumstances”.  In any event, rectification would not be a reasonable course to adopt because, as a matter of fact, it would likely cause the very drainage issue.
  6. [90]
    The fact that Mrs Morton did not herself authorise that change; was obviously upset by the balustrade having been constructed on spigots; and the contract required variations to be writing were relevant factors for consideration by the primary judge as was the consequences of a failure to obtain a written variation.  However, the claim being considered by the primary judge was not a claim by TMG for payment of the cost of the work undertaken by it without the benefit of a written variation.  It was a claim by Mrs Morton for damages to rectify work specifically authorised by her authorised representative.
  7. [91]
    There was no error in the primary judge concluding that in those circumstances, reinstatement was not a reasonable course to adopt and its cost should be disallowed.
  8. [92]
    This ground also fails.

Mrs Morton’s proposed ground 5: box gutter

Findings made by the primary judge

  1. [93]
    The primary judge found that whilst work had been undertaken to rectify the box gutter in the north-west corner of the house, the evidence did not establish there was any outstanding defect or need for further rectification work.  Accordingly, the primary judge was not satisfied Mrs Morton’s claim for $9,850 (excluding GST) for a box gutter replacement in the north-west corner was either reasonable or necessary.

Consideration of submissions before this Court

  1. [94]
    Mrs Morton submits that the primary judge erred in dismissing this claim for rectification when the trial judge accepted that there was a leak in the box gutter and the leaking gutter had caused water damage to the internal kitchen ceiling.
  2. [95]
    The primary judge’s conclusion that no amount ought to be allowed in respect of this item was consistent with the evidence, as found by the primary judge, that there had been work undertaken to prevent the leak from continuing to occur and there was no evidence of any continuing leak at the time of the trial.
  3. [96]
    The acceptance of the evidence meant there was no factual basis for the bald assertion of Dean White, the site manager of the other construction company engaged by Mrs Morton, that further rectification work was required to be undertaken.  There was, accordingly, a failure of proof.
  4. [97]
    No error is shown in the primary judge’s conclusion.  Without a factual basis for Mr White’s assertion, it was not the obligation of the primary judge to accept that evidence.[22]
  5. [98]
    This ground also fails.

Mrs Morton’s proposed ground 6: internal ceiling rectification

Findings made by the primary judge

  1. [99]
    Mrs Morton had claimed the sum of $7,072.50 (excluding GST) for water damage to the internal timber kitchen ceiling caused by a leaking box gutter in the north-eastern corner of the house.  The primary judge found that the leaks in the box gutter caused some damage to the timber cladding in the kitchen ceiling and that rectification works were not yet complete.  However, the primary judge was not convinced that the evidence justified a conclusion that the amount claimed represented the reasonable cost of rectification and allowed only half of the amount claimed.

Consideration of submissions before this Court

  1. [100]
    Mrs Morton submits that the primary judge erred in awarding only half of the amount of damages claimed for rectification of the internal ceiling, in circumstances where the primary judge accepted there was damage that required rectification.
  2. [101]
    Whilst at first blush an allowance of only half of the cost of the rectification seems contrary to an acceptance of there being damage requiring rectification, a closer consideration of the evidence supports a conclusion that no error is demonstrated in the primary judge’s ultimate conclusion.
  3. [102]
    Dean White’s evidence again involved a bald assertion that repair work was still required to the ceiling in circumstances where the proof of the value of that work involved reliance on a quote that provided for first assessing what work would be required and then for undertaking that work.  As there was no evidence the assessment had been undertaken in accordance with that quote, and as to the extent of any further work and its value, it was open to the primary judge to adopt an evaluative approach and no error is shown in the assessment of allowing half of the claimed amount.
  4. [103]
    This ground also fails.

Mrs Morton’s proposed ground 7: copper cladding

Findings made by the primary judge

  1. [104]
    The primary judge found that whilst Mrs Morton claimed broadly that copper cladding installed in the main entry ceiling and fireplace flues was not installed correctly and had marks and blemishes on it, there was no cogent evidence of any ongoing defect that required rectification.  The primary judge was not satisfied Mrs Morton had established the reasonableness or need for that rectification work.

Consideration of submissions before this Court

  1. [105]
    Mrs Morton submits the primary judge erred in rejecting a claim for the rectification of copper cladding, installed with marks and blemishes on its surface.
  2. [106]
    The evidence in respect of the copper cladding was to the effect that having regard to the type of copper finish specifically requested by Mrs Morton, handprints were likely and would fade over time.  Mrs Morton’s complaint was as to aesthetics, not defects.  Against that background, the primary judge was not in error to conclude it would not be reasonable to require rectification.
  3. [107]
    This ground also fails.

Disposition of the two applications

  1. [108]
    Neither TMG nor Mrs Morton have succeeded in establishing any ground warranting a grant of leave to appeal.
  2. [109]
    In those circumstances, it is unnecessary to consider TMG’s Notice of Contention, in respect of Mrs Morton’s appeal.

Orders

  1. [110]
    In CA 14793/22, we would order:
  1. Leave to appeal be refused.
  2. Leave to file the notice of contention be refused.
  3. The parties file written submissions in respect of costs limited to three pages within 14 days.
  1. [111]
    In CA 14740/22, we would order:
  1. Leave to appeal be refused.
  1. The parties file written submissions in respect of costs limited to three pages within 14 days.

Footnotes

[1]The spelling of these doors varies throughout the evidence and submissions from “Schucco”, “schueco”, “Schüco” (the spelling of the company name) and “schuco”.  Like the primary judge, we have used the former – capitalised for convenience.

[2]Although the third claim was not reflected in the prayer for relief in the further amended Statement of Claim, there was no issue as to its advancement at trial.

[3]TMG relies on a Notice of Contention to otherwise support the primary judge’s finding that no damages should be awarded for rectification of the pool balustrade.

[4]Thallon Mole Group Pty Ltd v Morton [2022] QDC 224, [628] (“Reasons”).

[5]A footnote in the primary judge’s decision records that “secret nailing” is an approach by which the nail is driven at a 45-degree angle through the tongue so the head of the nail was not visible.

[6]Reasons, [775].

[7]Reasons, [777(b)].

[8]M.B.P. (SA) Pty Ltd v Gogic (1991) 171 CLR 657, 663; Grincelis v House (2000) CLR 321, 328 [16]; Cerutti v Crestside Pty Ltd [2016] 1 Qd R 89, [91].

[9]Affidavit of Kenneth James Brooks affirmed 12 May 2021 at [10]–[11].

[10]T2–57/23–28.

[11]Reasons, [24].

[12]Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85, [226].

[13]A similar conclusion was reached by the expert engaged by Mrs Morton: Exhibit 281.

[14]Robinson Helicopter Co Inc v McDermott [2016] HCA 22, [43].

[15]AB 4754, [95]; AB 7609/14-28; AB 7617/8-16.

[16]TMG’s pleadings referred to a “site meeting on 9 May 2018”.  The primary judge inferred that, given the dates of surrounding events, the pleaded date was wrong and the reference was in fact to a meeting on 9 May 2017.

[17]Bellgrove v Eldridge (1954) 90 CLR 613, 617; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, 287.

[18]Bellgrove v Eldridge (1954) 90 CLR 613, 618; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, 288.

[19]Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, 288.

[20]Bellgrove v Eldridge (1954) 90 CLR 613, 618; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, 288.

[21]Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, 288.

[22]Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419, [503].

Close

Editorial Notes

  • Published Case Name:

    Thallon Mole Group Pty Ltd v Morton; Morton v Thallon Mole Group Pty Ltd

  • Shortened Case Name:

    Thallon Mole Group Pty Ltd v Morton

  • MNC:

    [2023] QCA 250

  • Court:

    QCA

  • Judge(s):

    Bond JA, Boddice JA, Kelly J

  • Date:

    08 Dec 2023

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2022] QDC 22407 Oct 2022Trial of claims concerning residential construction contract; plaintiff and defendant each succeeded on some of their claims; judgment for defendant for $12,502.25: Muir DCJ.
Appeal Determined (QCA)[2023] QCA 25008 Dec 2023Plaintiff and defendant's respective applications for leave to appeal (District Court of Queensland Act 1967 (Qld) s 118), and leave for plaintiff to file notice of contention, refused: Bond and Boddice JJA and Kelly J.

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419
2 citations
Jump To
Cite 1 - [2002] NSWCA 419
Cite 2 - [2002] NSWCA 419
Bellgrove v Eldridge (1954) 90 CLR 613
4 citations
Jump To
Cite 1 - (1954) 90 CLR 613
Cite 2 - (1954) 90 CLR 613
Cite 3 - (1954) 90 CLR 613
Cite 4 - (1954) 90 CLR 613
Bellgrove v Eldridge [1954] HCA 36
1 citation
Jump To
Cite 1 - [1954] HCA 36
Cerutti v Crestside Pty Ltd[2016] 1 Qd R 89; [2014] QCA 33
3 citations
Jump To
Cite 1 - [2014] QCA 33
Cite 2 - [2016] 1 Qd R 89
Cite 3 - [2016] 1 Qd R 89
Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85
2 citations
Jump To
Cite 1 - [2017] QSC 85
Cite 2 - [2017] QSC 85
Grincelis v House (2000) 201 CLR 321
1 citation
Jump To
Cite 1 - (2000) 201 CLR 321
Grincelis v House [2000] HCA 42
1 citation
Jump To
Cite 1 - [2000] HCA 42
MBP (SA) Pty Limited v Gogic [1991] HCA 3
1 citation
Jump To
Cite 1 - [1991] HCA 3
MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657
2 citations
Jump To
Cite 1 - (1991) 171 CLR 657
Cite 2 - (1991) 171 CLR 657
Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679
1 citation
Jump To
Cite 1 - (2016) 90 ALJR 679
Robinson Helicopter Company Incorporated v McDermott & Ors [2016] HCA 22
2 citations
Jump To
Cite 1 - [2016] HCA 22
Cite 2 - [2016] HCA 22
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272
6 citations
Jump To
Cite 1 - (2009) 236 CLR 272
Cite 2 - (2009) 236 CLR 272
Cite 3 - (2009) 236 CLR 272
Cite 4 - (2009) 236 CLR 272
Cite 5 - (2009) 236 CLR 272
Cite 6 - (2009) 236 CLR 272
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8
1 citation
Jump To
Cite 1 - [2009] HCA 8
Thallon Mole Group Pty Ltd v Morton [2022] QDC 224
2 citations
Jump To
Cite 1 - [2022] QDC 224
Cite 2 - [2022] QDC 224

Cases Citing

Case NameFull CitationFrequency
Boys v Imperial Homes (Qld) Pty Ltd [2024] QCATA 353 citations
Number One Quality Homes Pty Ltd v Murphy [2024] QCAT 6052 citations
1

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