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Sun Building Services Pty Ltd v Minh[2015] QCAT 134

Sun Building Services Pty Ltd v Minh[2015] QCAT 134

CITATION:

Sun Building Services Pty Ltd v Minh & Anor [2015] QCAT 134

PARTIES:

Sun Building Services Pty Ltd

(Applicant)

 

v

 

Tran Tuan Minh

Pham Hoa Thi

(Respondents)

APPLICATION NUMBER:

BDL166-13

MATTER TYPE:

Building matters

HEARING DATE:

16, 17, 18 and 30 July 2014

Written Submissions filed 14 August 2014 and 22 October 2014

HEARD AT:

Brisbane

DECISION OF:

Member Deane

DELIVERED ON:

28 April 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. Sun Building Services Pty Ltd is to pay Tran Tuan Minh and Pham Hoa Thi the sum of $76,982.34 (incl GST) by 4:00pm on 29 May 2015.
  2. Tran Tuan Minh and Pham Hoa Thi are to file in the Tribunal two (2) copies and provide to Sun Building Services Pty Ltd one (1) copy of any submissions and evidence as to costs by 4:00pm on 29 May 2015.
  3. Sun Building Services Pty Ltd is to file in the Tribunal two (2) copies and provide to Tran Tuan Minh and Pham Hoa Thi one (1) copy of any submissions and evidence as to costs by 4:00pm on 15 June 2015.
  4. Tran Tuan Minh and Pham Hoa Thi are to file in the Tribunal two (2) copies and provide to Sun Building Services Pty Ltd one (1) copy of any submissions in reply by 4:00pm on 26 June 2015.
  5. Any application for costs will be heard and determined on the papers, unless a party requests an oral hearing, not before 4:00pm on 26 June 2015.

CATCHWORDS:

DOMESTIC BUILDING DISPUTE – claim for variations not in writing – whether exceptional circumstances – whether the builder will suffer unreasonable hardship – whether it is not unfair to home owners to allow builder to recover an amount – whether homeowner liable to reimburse QLeave payments – whether interest is payable under the contract or statute

DOMESTIC BUILDING DISPUTE – whether homeowners entitled to recover damages for costs of rectification where they refused builder access to rectify – whether general conditions form part of the contract terms – whether failure to allow access disentitles claim for rectification costs – whether failure to mitigate – whether breach entitling damages to partially offset costs of rectification – allegations of fraud

Building and Construction Industry (Portable Long Service Leave) Act 1991 (Qld), s 74

Domestic Building Contracts Act 2000 (Qld), s 3, s 26, s 27, s 40, s 79, s 80, s 81, s 82, s 84, s 92

Queensland Building and Construction Commission Act 1991 (Qld), s 67P

Allaro Homes Cairns Pty Ltd v O'Reilly & Anor [2012] QCA 286

Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 037

Briginshaw v Briginshaw (1938) 60 CLR 336

Brittania Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302

Campbell v Telford & Heida [2013] QCAT 423

Darbishire v Warren [1963] 1 W.L.R. 1067

Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 22

Turner Corporations Ltd v Austotel, unreported NSW, BC9402557

Woodlands Oak Limited v Conwell and Anor [2011] EWCA Civ 254

APPEARANCES:

 

APPLICANT:

Sun Building Services Pty Ltd

RESPONDENTS:

Tran Tuan Minh

Pham Hoa Thi

REPRESENTATIVES:

 

APPLICANT:

Sun Building Services Pty Ltd represented by Mr Michael Panayi of Industry Lawyers

RESPONDENTS:

Tran Tuan Minh and Pham Hoa Thi represented by Mr Steven Hogg of Counsel instructed by Piccardi Legal, Solicitors

REASONS FOR DECISION

  1. [1]
    Sun Building Services entered into a contract to build a new house for Mr Tran and Mrs Pham, which on its face was for $510,000. The contract Schedule is signed and dated 20 April 2012.[1]
  2. [2]
    Sun Building Services commenced these proceedings seeking payment of the amount of $37,831.35 and costs in the amount of $5,000 together with interest either pursuant to the contract or s 67P of the Queensland Building and Construction Commission Act 1991(Qld) (QBCC Act).[2]
  3. [3]
    There are two parts to the claim. Most of the claim, $35,154.35, is in respect of claims for variations. The parties did not sign written variations before Sun Building Services performed this work. In the Application, the claim was made pursuant to the contract or under section 84 of the Domestic Building Contracts Act 2000 (Qld) (DBC Act). During the hearing Sun Building Services conceded that the claim in contract could not be sustained however in the final written submissions Sun Building Services claims ‘costs plus a reasonable profit pursuant to the Contract, at general law and otherwise pursuant to section 84(4) and (84(5) (sic) of the Act’.[3]
  4. [4]
    An amount of $2,677.00 is also claimed by way of reimbursement of amounts paid for QLeave.
  5. [5]
    Mr Tran and Mrs Pham dispute liability to pay these amounts and claim damages for defective work. Sun Building Services disputes liability on the general grounds that the homeowners’ refusal to allow access disentitles them from recovering damages and in the alternative in respect of some items on specific grounds set out below.

Claim for Variations

  1. [6]
    It is not disputed that all of the variations claimed were not reduced to writing, agreed and signed as required by the DBC Act.[4]

Claim in contract

  1. [7]
    I find that no amount is payable to Sun Building Services for variations under the contract.[5]
  2. [8]
    The provisions of the DBC Act are clear that where the variation has not been reduced to writing prior to the work being performed the builder’s remedy is only that provided by s 84 of the DBC Act. To the extent that the General Conditions form part of the contract (an issue explored in more detail below) there is no evidence to support a claim that the procedure for claiming variations set out was followed. No claim is therefore available under the contract.
  3. [9]
    Item 13 of the Contract schedule and General Condition 20 provides that interest is payable by the owner at the rate of 10% on overdue payments. If no amount is overdue under the contract then it follows that no amount for interest under the terms of the contract is allowable because no amount is payable under the contract upon which interest might accrue.

Claim in quantum meruit

  1. [10]
    I find that no amount is payable to Sun Building Services for variations ‘at general law’ by relying upon a quantum meruit.
  2. [11]
    The provisions of the DBC Act are clear that where the variation has not been reduced to writing prior to the work being performed the builder’s remedy is only that provided by s 84 of the DBC Act.

Claim under DBC Act

  1. [12]
    Sun Building Services’ claim for variations is therefore dependent upon establishing an entitlement under s 84(4) of the DBC Act. The contract was a fixed price contract. Where there is no signed variation document, if a builder is entitled to recover an amount for a variation under the DBC Act the amount is the cost of carrying out the variation plus a reasonable profit.[6]
  2. [13]
    In the Application, it was claimed that in respect of certain of the work[7] it was not reasonably practicable to produce a variation document. Of these claims only variation 11 was pursued at the hearing. At the hearing Mr Yang conceded that variation 11 could have been reduced to writing. It follows that it was not required to be carried out so urgently so as to justify that it was not reasonably practicable to produce a variation document before carrying out the work.[8]
  3. [14]
    It is necessary for Sun Building Services to establish:
    1. either:
    1. there are exceptional circumstances that warrant recovery of an amount; or
    2. the builder would suffer unreasonable hardship by the section being applied; and
    1. it would not be unfair to the owner to allow the builder to recover an amount.
  4. [15]
    The Appeal Tribunal has previously found that it would be inconsistent with the purpose of the DBC Act to find unreasonable hardship just because a builder incurred and cannot recover the costs of a non-compliant variation.[9] The Appeal Tribunal in that case also considered that the test requires an assessment of the impact of the inability to recover both subjectively i.e. the hardship caused to the particular builder and objectively i.e. the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs. The Court of Appeal endorsed these findings.[10]
  5. [16]
    Sun Building Services submits that the Tribunal should have regard to the principles in Pavey & Matthews Pty Ltd v Paul[11] when considering whether to allow an amount, where the owner requested the work and accepted the benefit of the work and in particular refers to the purpose of the DBC Act which is ‘to achieve a reasonable balance between the interests of building contractors and building owners’.[12]
  6. [17]
    Holmes J in Allaro[13] noted that circumstances giving rise to a quantum meruit claim were irrelevant to the tests of exceptional circumstances and unreasonable hardship.
  7. [18]
    Sun Building Services in the Application claimed exceptional circumstances in respect of some of the variations[14] in that:
    1. the homeowners visited the site unannounced and directed works be immediately carried out;[15]
    2. the homeowners gave directions directly to subcontractors in respect of some of the works;[16]
    3. the parties do not read or speak fluent English and had difficulty communicating with each other;
    4. the director and licensed nominee of Sun Building Services, Mr Jason Yang, primarily speaks Mandarin and Taiwanese and some English. Mr Tran and Mrs Pham primarily speak Vietnamese and some English.
  8. [19]
    In its final oral submissions, Sun Building Services only relied upon the language barrier between the parties as constituting exceptional circumstances and contended that putting the variation in writing may not have helped. In its final written submissions, it only relied upon unreasonable hardship together with the second limb of the test, that it would not be unfair and not upon the exceptional circumstances limb.

Exceptional circumstances

  1. [20]
    Given the different formulations of the applicant’s case, I have considered whether there were exceptional circumstances.
  2. [21]
    I am not satisfied that any of the matters raised by Sun Building Services constitute exceptional circumstances.
  3. [22]
    During the hearing, I observed that Mrs Pham’s English is better than Mr Tran’s English and that Mrs Pham’s English was about the same as Mr Yang’s English. Mr Yang gave evidence that his written English is not very good and that he relied upon Mr Lin, an employee to prepare documents until he left his employment in mid December 2012 and thereafter relied upon his wife to assist with paper work. I accept that the language barrier may have contributed to some of the issues, which arose. However, if the variations had been reduced to writing by Sun Building Services, as required by the DBC Act, the homeowners would have been afforded an opportunity to consider the proposal and an opportunity to obtain assistance in understanding the proposal. By failing to reduce the variations to writing, they were denied this opportunity.
  4. [23]
    The Court of Appeal has considered the term ‘exceptional circumstances’ and recognised that an appropriate inquiry ‘will be indicated by the particular way in which the Act was not complied with and the circumstances particular to the dispute’.[17]
  1. [24]
    Mr Yang did not give evidence that the reason he did not put the variations in writing was because of the language issues nor did he give evidence that there wasn’t time. In fact, he conceded in cross-examination that the variations could have been put in writing.
  2. [25]
    There was evidence that the homeowners attended the site and spoke directly to subcontractors. Mr Yang’s evidence was that he told subcontractors to do what the homeowners asked. Mr Luo, the electrician, confirmed that Mr Yang told him to do what the homeowners asked. In these circumstances, to the extent that this is relied upon in respect of any of the variations pursued at the hearing, I am not satisfied the giving of direct instructions to subcontractors by the homeowners constitutes exceptional circumstances because Mr Yang authorised it.

Unreasonable hardship

  1. [26]
    A factor in determining unreasonable hardship is the builder’s annual turnover. It will be more difficult to establish unreasonable hardship where the amount claimed for a variation is quite small for a builder with a large turnover than for a builder with a low turnover.
  2. [27]
    Another factor, which may be relevant to determining unreasonable hardship, is the relative size of variations claimed compared to the original contract sum.[18]
  3. [28]
    There was evidence before the Tribunal as to Sun Building Services financial position. As at 30 June 2013, net assets were just $2,297.22.[19] As at 30 June 2014, net assets were $2,741.32; net profit for the financial year ending 30 June 2014 was $444.10 and total income for the year was $396,191.18.[20] I accept that Sun Building Services has a low turnover.
  4. [29]
    A matter that is relevant to quantifying the amount payable[21] and to a finding as to whether the inability to recover for a non-compliant variation might constitute unreasonable hardship is the actual costs incurred by the builder in carrying out the variation.[22] Some evidence of the cost of the work performed has been provided. This is set out in relation to each variation claim pursued.
  5. [30]
    In respect of each variation claim I have considered these factors and make the findings set out below.

Not unfair to the homeowner

  1. [31]
    I accept that circumstances which would, but for the provisions of the DBC Act, give rise to a quantum meruit claim are relevant factors when considering whether it is ‘not unfair’ to the homeowner.
  2. [32]
    Mr Yang conceded that he had promised Mr Tran and Mrs Pham that he would do minor additional work at no cost but denied that this included significant variations. Even if this promise is not enforceable as a collateral contract, it is a factor, which is relevant to my consideration of whether paying an amount for a variation would be ‘not unfair’ to the homeowners.
  3. [33]
    Sun Building Services originally claimed 12 variations.[23] Some of its claims were not pursued.[24] The final oral submissions included references to claims for variation 2, wall materials in the sum of $900.00 and variation 9, bulkheads in the sum of $5,500.00. Those claims were not pursued in the final written submissions.[25] I rely upon the final written submissions as to which claims were pursued and which ones were abandoned.
  4. [34]
    In addition to the amounts for direct costs, Sun Building Services claims 15% for profit margin and 10% for GST. It submits the margin provided for under the contract was 15%. It relies upon item 19 of the schedule and clause 19.
  5. [35]
    Having regard to exhibits 13 and 25, I can find no item 19 in the schedule[26] and clause 19 of the general conditions relates to liquidated damages and not to margin. None of the other items in the schedule indicates a margin. Clause 16 of the general conditions refers to a Contractor’s margin set out in the Prime Costs Items Schedule and the Provisional Sums Schedule. No such schedules are in evidence.[27]
  6. [36]
    Mr Costanzo gave evidence of the costs of rectification.[28] He applied a margin of 30% for a subsequent builder to perform the rectification works. In those circumstances, I accept that a 15% margin is reasonable for the original builder.

Item 1 - Window Glass – $3,920.00

  1. [37]
    I find that no amount is payable for this item.
  2. [38]
    Sun Building Services claims that it was directed to change the already delivered and partly installed windows from standard clear glass to tinted glass.
  3. [39]
    There is evidence that the window contractor charged the amount claimed for an amendment to the colour.[29]
  4. [40]
    Mr Tran and Mrs Pham deny that any amount is owing as they contend that the windows were always to have been tinted so that the request to change the windows was simply to receive what they had originally requested.
  5. [41]
    Mr Yang and Mr Jo-Hsiang Lin, Sun Building Services’ project manager until mid-December 2012, gave evidence that Mr Tran discussed the homeowners’ requirements as to windows directly with the window contractor as both spoke Vietnamese.
  6. [42]
    As neither Mr Yang nor Mr Lin speak Vietnamese they were unable to understand what was said between Mr Tran and the window contractor. Mr Lin gave evidence that after all the tinted glass was installed he took a document seeking amounts for various changes including the glass to Mr Tran to ask him to sign for the changes. Mr Tran refused to agree to the proposed charge. Sun Building Services produced a document dated 11 November 2012 claiming $3,900.00 for this item and claiming amounts for a number of other items.[30] The item for window tint is struck through. This document appears to be the document to which Mr Lin referred. This evidence is inconsistent with the claim that this ‘additional work’ was requested in February 2013.[31]
  7. [43]
    Mr Yang gave evidence that the window contractor told him that Mr Tran did not request tinted windows originally. It is not clear when this conversation between Mr Yang and the window contractor took place.
  8. [44]
    Sun Building Services did not call the window contractor to give evidence of the conversation with Mr Tran and so was not available to be tested by the homeowners or the Tribunal. In these circumstances, I place little weight upon this hearsay evidence. Mr Tran’s evidence is that he originally requested tinted glass. It is not clear when this request took place and whether such a request was made before the contract was entered into as well as a request to the window contractor after the contract was signed.
  9. [45]
    The specification[32] does not set out details of window glass.
  10. [46]
    Sun Building Services is the claimant. It bears the onus of proving that on the balance of probabilities that this constituted additional work. There is no clear evidence of what window glass was agreed to be supplied upon the signing of the contract e.g. there is no documentary evidence or clear evidence of discussions, which took place before the contract was signed, as to the window glass to be supplied. I am not satisfied that this was additional work.
  11. [47]
    If it did constitute additional work, having regard to the financial position of Sun Building Services and the amount of the direct costs incurred I would be inclined to the view that receiving no payment for this amount would cause unreasonable hardship.
  12. [48]
    However, I am not satisfied that it would not be unfair to the homeowners. Mr Yang conceded that he had assured the homeowners that he would not charge for minor variations. In those circumstances, he ought to have made it clear before undertaking any additional work, which was not in his view ‘minor’, that such work would constitute a variation for which he would charge and was not a minor variation, which he had agreed he would absorb.

Item 3 – Stone Column – $619.00

  1. [49]
    I find that no amount is payable for this item.
  2. [50]
    Sun Building Services claim the homeowners requested an additional column at the front of the house in early January 2013. In the Application, Sun Building Services contends that the works were performed after it gave to the homeowners a written document specifying the work and the actual or anticipated cost.
  3. [51]
    The amount claimed is calculated:
    1. Labour and materials (concrete blocks, concrete, steel reinforcing, scaffolding) in the sum of $2,200.00.
    2. Supply of stone tiles in the sum of $1,010.10.
    3. Subcontractor labour in the laying of the stone tiles in the sum of $3,909.23.
    4. Less $6,500 paid leaving a balance of $619.43.[33]
  4. [52]
    There is evidence that the tiling contractor charged $7,260.00 (incl GST) for two columns[34] and that stone material was purchased for two columns for $1876.09 (incl GST). There is no documentary evidence to support the labour and materials part of the claim set out in sub paragraph (a) above.
  5. [53]
    Mrs Pham gave evidence that the homeowners had agreed to pay $6,000.00 for the columns. The homeowners contend that no further amount should be allowed as this item has been compromised by the parties. Exhibit 33, which is dated 11 November 2012, sets out a claim for $7,200.00. That figure is struck through and ‘$3000’ has been inserted and initialled and next to it appears to be ‘2 for $6,000’.
  6. [54]
    Sun Building Services concedes the sum of $15,000.00 was paid by the homeowners for variations set out in that document.
  7. [55]
    Sun Building Services is the claimant. I find that it has not discharged its onus of proving that on the balance of probabilities that this item had not been the subject of an earlier compromise. The documentary evidence is consistent with such a compromise.
  8. [56]
    In any event, the amount of direct costs established on the evidence is $4,919.33 and it is conceded $6,500.00 has been paid. I am not satisfied that Sun Building Services has established an entitlement to an amount greater than the amount already paid.

Item 4 – Double Entry Door – $2,500.00

  1. [57]
    I find that no amount is payable for this item.
  2. [58]
    Sun Building Services in the Application contends that the works were performed after it gave to the homeowners a written document specifying the work and the actual or anticipated cost.
  3. [59]
    There is evidence that the door supplier charged $6,500.00 (inc GST) for the entry door and that same supplier provided a quote for two standard entry doors dated 21 May 2013, the more expensive of which was $3,500.20 (incl GST).
  4. [60]
    It is common ground that Mrs Pham provided to Sun Building Services a copy of a picture of the entry door she wished to be installed.
  5. [61]
    Mr Tran and Mrs Pham deny that they were told how much the door was to cost prior to its supply and deny that they agreed to pay any additional amount for the door.
  6. [62]
    Even if Mr Yang showed the homeowners the supplier’s quote[35] there is no evidence that Mr Yang told the homeowners that this exceeded the cost that had been allowed in the contract price for an entry door. Mr Yang conceded in cross-examination that prior to ordering the door he did not expressly say to the homeowners that they would need to pay extra for the door.
  7. [63]
    Having regard to the financial position of Sun Building Services and the amount of the direct costs incurred, I would be inclined to the view that receiving no payment for this amount would cause unreasonable hardship.
  8. [64]
    However, I am not satisfied that it would not be unfair to the homeowners. As previously noted in these reasons Mr Yang conceded that he had assured the homeowners that he would not charge for minor variations. In those circumstances, he ought to have made it clear before ordering the door and undertaking the work that this would constitute a variation for which he would charge and was not a minor variation, which he would absorb. Another factor, which supports this finding, is that Mr Dixon’s undisputed evidence is that the door is the wrong size[36] and does not comply with the contract plans.

Item 5 – Entry Ceiling – $4,386.00

  1. [65]
    I find that $2,512.29 (inclusive of 15% contractor’s margin and GST) is payable in respect of this item.
  2. [66]
    Sun Building Services in its Application claims that on or about 15 January 2013 Mr Tran directed a change to the ceiling above the entrance and balcony of the first floor from painted cement board to timber and that Mr Yang gave an indicative extra cost of $5,000.00 and was directed to proceed.
  3. [67]
    The claim comprises $1,986.00 for materials and $2,050.00 in labour. There is evidence that the timber supplier charged $1,692.90 (+GST)[37] and a further amount of $124.15 (incl GST)[38] for materials.
  4. [68]
    An invoice for labour dated 22 November 2012 is in evidence for this and other work. There is no clear evidence as to how the amount for labour for this work was derived and no explanation as to how labour invoiced apparently on 22 November 2012 relates to the additional work alleged to have been requested in January 2013.
  5. [69]
    Sun Building Services is the applicant and bears the onus of proving its claim on the balance of probabilities. On the evidence I am not satisfied that it has established the direct labour cost it incurred in respect of this item and therefore the amount found to be payable relates only to the materials of which the direct cost was $1,986.00.
  6. [70]
    Mr Tran’s evidence is that Mr Yang offered to perform this work to offset a mistake of having installed aluminium sliding doors instead of wooden framed doors. The homeowners contend it would be unfair to require them to pay an amount for this work as it came about as a result of a mistake by Sun Building Services.
  7. [71]
    Mr Yang denies that such a conversation took place.
  8. [72]
    The specification[39] at page 2 ‘Exterior’ provides for ‘aluminium sliding door’. There is no documentary evidence which supports the contention that the door was to be wooden framed and therefore that there was an error.
  9. [73]
    Having regard to the financial position of Sun Building Services and the amount of the direct materials costs incurred I find that receiving no payment for this amount would cause unreasonable hardship.
  10. [74]
    I am also satisfied that it would not be unfair to the homeowners.
  11. [75]
    I accept that if the work arose as a consequence of the builder’s error it would be unfair to award an amount. However, there is insufficient evidence for me to be satisfied that there was an error. On the balance of probabilities I find that Mr Tran requested the work, Mr Yang gave an oral quote indicating an extra cost of $5,000.00, was directed to proceed and the homeowners have the benefit of the varied work.

Item 8 – Wall Recesses – $600.00

  1. [76]
    I find that no amount is payable in respect of this item.
  2. [77]
    The Application claims that on or about 27 January 2013 Mr Tran directed that completed plaster walls be demolished and recessed walls be inserted. Mr Tran’s evidence is that the plans provided for recesses in the walls so that the request was simply for the work to conform to the agreed plans.
  3. [78]
    There is little evidence about this claim. Sun Building Services bears the onus of establishing its claim. There is no evidence as to the direct costs incurred in the performance of this work. In these circumstances and having regard to the small amount of this claim I am not satisfied that receiving no payment for this amount would cause unreasonable hardship.
  4. [79]
    I am also not satisfied that it would not be unfair to the homeowners given Mr Yang’s concession about not charging for minor variations for the reasons previously given.

Item 11 – Electrical – $7,225.00

  1. [80]
    I find that $9,139.63 (inclusive of contractor’s margin of 15% and GST) is payable in respect of this item.
  2. [81]
    Sun Building Services in its Application contends that it was not reasonably practicable to produce a variation document before carrying out this work. As previously referred to in these reasons, Mr Yang conceded under cross-examination that it was possible to reduce the variations to writing.
  3. [82]
    The claim comprises $6,760.00 on account of sub-contractor’s labour and $495.00 for materials.
  4. [83]
    Mr Tran’s evidence was that he went around the house and indicated where he wanted power points and light fixtures and that at no time was he told that there would be an extra charge. He gave evidence[40] that he clearly remembered that they did not ask for ‘these much electrical work on that day’. However, no details have been provided as to what electrical work was requested as compared to the work set out in the specification.
  5. [84]
    Mr Luo, the electrician, gave evidence that:
    1. he did not provide a quote to Sun Building Services for the light fittings and power points originally required because he had worked with Sun Building Services before and they had an agreed schedule of rates for work to be performed.
    2. Sun Building Services provided drawings showing where to place light fittings and power points.
    3. Mr Yang told him to perform additional works requested by the homeowners.
    4. he told Mr Yang that he would have to pay more for this work.
    5. he didn’t speak to the homeowners about payment for the works.
    6. he prepared his invoice by going around the house and charged the agreed rate multiplied by the actual numbers of light fittings and power points.
  6. [85]
    The document referred to as the specification lists electrical work, which formed part of the contract works. It sets out the electrical work included in the contract price and sets out e.g. number of power points and lights.
  7. [86]
    There is evidence that the electrical contractor provided an invoice dated 6 April 2013 in the sum of $17,790.00 for all of the work performed by him and provided a break down dated 15 June 2013, which purports to distinguish between what was originally required and the extras requested by Mr Tran. There is also an invoice for the purchase of 90 recessed down lights at a unit price of $13.75 each (incl GST).[41]
  8. [87]
    Having regard to the electrical contractor’s tax invoice and the specification I am satisfied that the reconciliation sets out the work performed in addition to that required under the contract. Mr Tran and Mrs Pham have not specifically drawn my attention to discrepancies.
  9. [88]
    The evidence is that 36 more down lights were installed than provided for in the specification, which substantiates the materials claim given the established unit price.
  10. [89]
    I am satisfied that having regard to the contract sum, Sun Building Services’ financial position and the amount of direct costs incurred that not receiving any amount for the additional work requested by the homeowner would cause unreasonable hardship.
  11. [90]
    I find that it is not unfair to the homeowners to require payment, having regard to:
    1. the extent of the work performed, which is additional to the work set out on the specification;[42]
    2. Mr Tran’s request that work be performed; and
    3. the homeowners having the benefit of the additional work performed.
  12. [91]
    I find that the additional works were so significant that they could not be regarded as minor and therefore fall within ‘the promise’ that minor variations would be absorbed.

Interest

  1. [92]
    I find that there is no entitlement to interest on amounts payable for variations as at the date of this decision.
  2. [93]
    Under the QBCC Act[43] the Tribunal has power to award interest on moneys owing under a progress payment. The entitlement under the DBC Act to any sum only arises upon the making of this decision and is not moneys owing under a progress payment. In any event, no entitlement to interest arises for any period prior to the making of this decision because there was no amount owing prior to the making of the decision.

QLeave

  1. [94]
    I find that no amount is payable in respect of this claim.
  2. [95]
    Sun Building Services seeks reimbursement for the $2,677.00 paid in respect of QLeave. It also seeks interest from 30 April 2013 to the date of this decision at the rate of 10% pursuant to Item 10 and clause 20 of the General Conditions.
  3. [96]
    It is common ground that the contract did not expressly provide who was to pay this statutory levy and that Sun Building Services did not raise this issue until it submitted invoice #0010 dated 13 May 2013 at about the time of the practical completion claim.
  4. [97]
    I find that, as the amount is not claimed under the terms of the contract, no amount for interest under the contract could accrue for the same reasons as set out earlier in these reasons.
  5. [98]
    Mr Yang gave evidence that:
    1. the contract price did not include any amount for QLeave.
    2. his employee, Mr Lin, filled out the paper work and arranged an initial payment in the sum of $1,102.00 on or about 9 July 2012.
    3. towards the end of the contract he became aware that the correct fee had not been paid and made an additional payment of $1,575.00 on or about 30 April 2013.
  6. [99]
    The levy is payable ‘by the person for whom the work is to be done’.[44] Sun Building Services contend that this is Mr Tran and Mrs Pham. Mr Tran and Mrs Pham contend that this is the builder, who is engaging subcontractors for whose benefit the fee is paid. There is little guidance from the legislation or case law.
  7. [100]
    In my experience, contracts usually make it clear that the builder pays the fee and it forms part of the contract price.
  8. [101]
    If the legislation imposes the liability on the homeowners then the relevant authorities would have the right to pursue the homeowners if it was unpaid. It has been paid. The authorities’ right is not an issue and resolving that question does not, in my view of itself, entitle Sun Building Services to claim reimbursement.
  9. [102]
    Sun Building Services took it upon itself to pay the fees without informing Mr Tran and Mrs Pham that the amount was not part of the contract price, was payable by them and seeking their agreement that if it was paid by Sun Building Services they would reimburse it.
  10. [103]
    It is clear there was no collateral contract because Sun Building Services did not raise this matter with the homeowners until after the amounts had been paid. As stated earlier the contract did not contemplate which party was to pay this fee. Sun Building Services is effectively claiming a variation to the contract, which was not reduced to writing before the work[45] was undertaken.
  11. [104]
    Given the direct costs incurred and Sun Building Services financial position not receiving any amount for this item would likely cause hardship.
  12. [105]
    However, I am not satisfied that it would cause unreasonable hardship because I am not satisfied that the nature and extent of the hardship is unreasonable in the circumstances in which it occurs. Factors relevant to such a finding are that there is no evidence before me:
    1. that Sun Building Services could not have reasonably foreseen that such a levy was required to be paid in respect of the work to be undertaken by it and discussed it with the homeowners prior to entering into the contract;
    2. if the amount was not included in the contract price, as to why Sun Building Services did not discuss with the homeowners that the levy was required to be paid before paying the first amount in July 2012;
    3. if the amount was not included in the contract price, as to why Sun Building Services did not seek reimbursement when the first amount was paid in July 2012;
    4. if the amount was not included in the contract price, as to why Sun Building Services did not discuss with the homeowners that the levy was required to be paid before paying the second amount in April 2013.
  13. [106]
    I accept that if the legislation imposes the liability on the homeowners then that is a factor, which would weigh in favour of a finding that it would not be unfair to the homeowners to require them to pay an amount for this item. In view of my finding in respect of the first limb of the test it is not necessary to make a finding on the second limb.

Summary of Sun Building Services’ Successful Claims[46]

  1. [107]
    I find that Mr Tran and Mrs Pham are to pay Sun Building Services $11,651.92 (inclusive of margin and GST).
  2. [108]
    It is now necessary to consider Mr Tran’s and Mrs Pham’s claims of defective work. They claim the costs of fixing the defects, costs and interest.

Defective Work – Refusal to allow access to rectify

  1. [109]
    Sun Building Services contends that clause 21 of the General Conditions of the contract is a code as to the homeowners’ rights in relation to rectification of defects and excludes a common law right to damages. It contends that as the homeowners have refused Sun Building Services access to rectify defects, as required by clause 21, they have repudiated the contract and they are not entitled to be awarded damages.

Were the General Conditions part of the contract?

  1. [110]
    Mr Tran and Mrs Pham deny that the General Conditions form part of the contract between the parties because they never received a copy at the time the contract was entered into or within five days business days nor did they receive the BSA Consumer Guide/Contract Information Statement. Their evidence was that they only received the schedule, the document referred to as the specification and plans.
  2. [111]
    They submit this is a breach of the DBC Act[47] and Sun Building Services is not able to rely upon the General Conditions not provided.
  3. [112]
    The DBC Act provides that failure to provide such documents is a breach and imposes penalties. It also provides that a breach of the DBC Act does not render a contract illegal, void or unenforceable unless the contrary intention appears.[48] I have been unable to identify where any such contrary intention appears in relation to these breaches.
  4. [113]
    Mr Yang gave evidence that these documents were provided to Mr Tran and Mrs Pham prior to signing the contract. Mrs Pham gave evidence that they obtained a copy from the then Queensland Building Services Authority (QBSA)[49] when difficulties started to arise under the contract and not before.
  5. [114]
    In response to a direction prior to the hearing that a copy of the General Conditions be produced, Sun Building Services downloaded a copy from the QBCC’s website.[50] Mr Tran and Mrs Pham’s counsel conceded that there were no relevant differences between the General Conditions, which were published at the time of the contract being entered into and the conditions downloaded and produced to the Tribunal.
  6. [115]
    Sun Building Services submits that even if the documents were not provided at or about the time the contract was signed the terms were incorporated by reference. There are numerous references to conditions ‘of the General Conditions’ or ‘conditions’ in the Schedule and at the top of the first page it states:

NOTE TO OWNER: To better understand your contractual rights and obligations, please read the accompanying BSA Consumer Guide and General Conditions, both dated August 2011

  1. [116]
    Mr Tran and Mrs Pham contend that as the guide and conditions did not ‘accompany’ the schedule they ought not to be incorporated. There was evidence that prior to signing the schedule Mr Tran and Mrs Pham sought legal advice from T Lawyers. Subsequent correspondence from T Lawyers, the homeowners’ original lawyers, to Sun Building Services’ former lawyers, was produced to the Tribunal. This correspondence accepted that the general conditions formed part of the contract and sought to rely upon them to allege contractual breaches by Sun Building Services.[51] There was no evidence before the Tribunal that T Lawyers acted without instructions in sending that correspondence.
  2. [117]
    In the circumstances, I find that even if the General Conditions were not provided in breach of the DBC Act they were incorporated by the many references in the schedule.

Consequence of refusal to allow access

  1. [118]
    Clause 21 provides:

21.1 The Contractor must make good defects or omissions in the work under this Contract which becomes apparent within 6 months of the Date of Practical Completion.

21.2 If there are any such defects or omissions, the Owner must give the Contractor written notice to make good such defects or omissions not later than 1 month after that 6 months period and must give the Contractor reasonable access to the Site for that purpose.

21.3 The Contractor must make good such defects or omissions promptly. The Contractor must correct the agreed minor defects or minor omissions listed in the BSA Form 6 – Defects Document or similar document by the date or within the time stated in that document. This Condition does not exclude the Contractor from any liability otherwise arising under this Contract or under the Queensland Building Services Authority Act 1991 or the Domestic Building Contracts Act 2000.

  1. [119]
    The evidence is that the Form 6[52] was given to Sun Building Services on 31 May 2013 setting out claims for defective work together with an inspection report dated 24 May 2013.[53] Sun Building Services contends that despite numerous requests it has been denied access to the site to make good the defects and omissions.[54]
  2. [120]
    This submission is inconsistent with the evidence of Mr Yang[55] who stated that he and his ‘subcontractors have already been to the site and rectified all issues raised’ except ‘the render required for the gap between the owner’s fence and neighbour’s fence’, in respect of which access was refused on 6 August, 2013. The evidence shows that Mr Yang denied that many of the items raised by the homeowners constituted defects.
  3. [121]
    Additional items of defective work have been raised in the expert evidence in this proceeding. There is evidence that Sun Building Services sought access to rectify defects acknowledged by Mr Dyer[56] and that access was refused.[57] The correspondence produced between the lawyers commences on 6 August 2013 through to March 2014. This application was commenced on 28 June 2013. All of these requests for access were made after the proceedings were on foot.
  4. [122]
    Consequently it says that Mr Tran and Mrs Pham must follow the steps in clause 21 before they can, at Sun Building Services’ cost, engage others to complete the works or rectify the defects because not only does clause 21 impose an obligation it also confers a right. It contends that many of the defects can be addressed by its subcontractors, at no cost to it and that it is not a fair outcome to award damages to the homeowners, when they have breached their obligation to allow access, and to require Sun Building Services to recover amounts from each relevant subcontractor.
  5. [123]
    A difficulty with this submission is that at least one subcontractor[58] gave evidence that he did not consider his work was defective and would not return if he would not be paid.
  6. [124]
    Kevin Willetts from Stepahead Carpentry gave evidence that if there was a defect, in respect of which they were at fault, then they would go back to fix regardless of whether they were to be paid. He gave evidence that they had returned and performed some rectification work. It is not a function of this proceeding to determine whether a subcontractor is ‘at fault’.
  7. [125]
    Mr Yang gave evidence that if there is defective or incomplete work he wants an opportunity to inspect and rectify.[59]
  8. [126]
    Clause 21 provides that the owner ‘must give reasonable access’. Sun Building Services relies upon Turner Corporations Ltd v Austotel.[60] Cole J found that the JCCA standard form contract removed a principal’s common law rights to sue for damages for breach of contract for the costs to rectify where the principal had failed to give the builder required notices and the opportunity to remedy defective work even though express words were not used. He accepted that clear words were necessary to contractually remove a party’s common law rights.
  9. [127]
    This case and a case, which followed it, Brittania Pty Ltd v Parkline Constructions Pty Ltd[61] are decisions of the New South Wales Supreme Court. The Brittania decision involved another of the JCC standard form contracts[62] and it was acknowledged that both contracts contained ‘clauses the same, or materially the same’.[63] In particular, both contained clauses concerning the employment of other contractors, where the builder was in default and set out a right to recover the costs as a debt or to deduct a sum from moneys payable upon the following of the process outlined. Cole J observed the detailed allocation of rights and obligations under the JCCA form of contract and found that they were inconsistent with common law rights to damages remaining in place.
  10. [128]
    Neither of these decisions considered a contract in the same terms as clause 21, which does not set out in the same way the detailed allocation of rights to employ other contractors and recover those costs.
  11. [129]
    A factor in the Austotel case appears to have been that the form of contract under consideration contemplated that

work may be performed by sub contractors. If there was incomplete or defective work, the companion sub contract would permit the Builder to require the sub contractor to complete or rectify the incomplete or defective work or materials at no cost to the Builder.[64]

  1. [130]
    There is no evidence before me that ‘companion subcontracts’ were used by Sun Building Services.
  2. [131]
    I find that the words of clause 21 do not clearly exclude the homeowners’ a right to claim common law damages. Clause 21.3 expressly states that the condition does not exclude the Contractor’s liability otherwise arising under this Contract or under statute. I therefore find that it is not ‘a code’.
  3. [132]
    In the alternative Sun Building Services submits that the Tribunal ought to disallow the 30% profit and margin allowed in Mr Costanzo’s costings. The written submissions do not expand upon the reasons for this submission. Mr Tran and Mrs Pham’s written submissions do not deal with this alternative submission.
  4. [133]
    In its final oral submissions, Sun Building Services’ lawyer contended that by refusing access to allow rectification work to be undertaken, Mr Tran and Mrs Pham have failed to mitigate their loss so it was not reasonable to allow the 30% margin.
  5. [134]
    The ‘duty to mitigate’ has been explained as:

The true meaning is that the claimant is not entitled to charge the defendant by way of damages with any greater sum than that which he reasonably needs to expend for the purpose of making good the loss. In short, he is fully entitled to be as extravagant as he pleases but not at the expense of the defendant. [65]

  1. [135]
    The Court of Appeal of England and Wales in Woodlands Oak Limited v Conwell and Anor[66] held that

where the employer fails to give the contractor an opportunity to rectify defects in the work that may amount to a failure to mitigate the losses.[67]

there may well be circumstances in which it is entirely reasonable not to give the contractor that opportunity.[68]

  1. [136]
    The Court of Appeal in that case indicated that this might be satisfied where an owner, through past experience, was not satisfied that a particular sub-contractor would satisfactorily rectify the defect.[69]
  2. [137]
    The homeowners raised over 100 defects. The experts reached agreement on some items. Mr Costanzo’s costing to rectify all of the defects contained in the updated Scott Schedule[70] is $133,536.80 and for the items agreed, between Mr Dixon and Mr Dyer as requiring rectification, $12,066.10. There were a number of other items, which were not costed in the updated Scott Schedule because the experts formed the view that the item was ‘a contractual issue’ as distinct from defective or incomplete work. Having regard to the contract price of $510,000.00, the defects claimed are quite significant, although some in isolation are for relatively small amounts. There is evidence that the homeowners permitted some rectification work to be performed and at least one claimed defect has already been the subject of attempts at rectification and remains an issue.
  3. [138]
    I accept that Mr Tran and Mrs Pham have lost confidence in Sun Building Services’ and its subcontractors’ ability to satisfactorily rectify the defects such that a refusal to give them an opportunity to rectify substantiated defects is not unreasonable.
  4. [139]
    There is no express contention by either party that the homeowners' have terminated the contract for Sun Building Services’ failure to perform work to the required standard by their conduct e.g. in bringing the counter-application. I do not embark upon a consideration as to whether the homeowners’ conduct constitutes a valid termination or a wrongful repudiation as those issues were not raised by the parties.
  5. [140]
    Sun Building Services in their oral submissions contended that the homeowners have repudiated the contract and that if they have lost faith then they ought to have terminated the contract so they could have the works rectified by others.
  6. [141]
    I have found that clause 21 does not exclude a common law claim in damages. However, failure to give access is a breach of clause 21. It is not necessary to decide whether Sun Building Services has a right to terminate the contract for that breach, because on any view it has affirmed the contract by stating that it wants the opportunity to rectify or complete the works.
  7. [142]
    I am satisfied that in assessing common law damages for Sun Building Services’ breach I should take into account the homeowners’ breach of clause 21. I accept that disallowing the 30% margin is reasonable. Sun Building Services’ damages for such a breach is, at least the 30% margin on the cost of performing the work because but for the breach it would not be obliged to incur such an amount.
  8. [143]
    In these proceedings, Mr Tran and Mrs Pham rely upon the expert evidence of Donald Dixon,[71] a builder and of Flavio Costanzo,[72] a quantity surveyor. Sun Building Services relies upon the expert evidence of Wayne Dyer.[73] The expert evidence is also contained in a Joint Report[74] and an updated Scott Schedule.[75] The Joint Report and the updated Scott Schedule use the same numbering. I adopt that numbering in these reasons. In addition to the written expert evidence, each of the experts gave oral evidence.
  9. [144]
    Mr Dixon and Mr Dyer in the Joint Report agreed that a number of claimed defects required no further action.[76] The parties were directed[77] to file an updated Scott Schedule including the cost of rectification.[78] That document forms the basis of Mr Tran and Mrs Pham’s claims, requiring determination. I therefore do not consider other items in the Joint Report.[79]
  10. [145]
    Mr Tran and Mrs Pham did not pursue some items contained in the updated Scott Schedule.[80]
  11. [146]
    Mr Dixon and Mr Dyer agreed that a number of claimed defects required rectification.[81] I accept their evidence.
  12. [147]
    Mr Costanzo gave evidence as to the costs of rectification and in his written report[82] included a 30% overheads, profit and risk margin. Mr Dyer accepted Mr Costanzo’s costings in all but a few instances. These exceptions are set out below in respect of the relevant item for those items for which Sun Building Services did not concede quantum during the hearing.
  13. [148]
    For the reasons set out earlier, I have disallowed the 30% margin where it was applied and then added 10% GST to the subtotal to arrive at the amount allowed.

Item 5 – Timber stain on walls – $150.15 (incl GST)

  1. [149]
    I find $115.50 (incl GST) is payable by Sun Building Services.
  2. [150]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 6[83] – Dislodged shower screens – $3,844.12 (incl GST)

  1. [151]
    I find $2,957.01 (incl GST) is payable by Sun Building Services.
  2. [152]
    Mr Dixon and Mr Dyer agree rectification work is required. They disagree as to the work required. Mr Dyer contends that repair rather than replacement is appropriate. The evidence before me is that previous attempts to repair the doors have failed. Having regard to this evidence, I prefer Mr Dixon’s evidence that replacement is required. I accept the evidence as to quantum for this method of rectification except for the 30% margin.

Item 8[84] – Gaps between skirting and floor – $689.60 (incl GST)

  1. [153]
    I find $530.46 (incl GST) is payable by Sun Building Services.
  2. [154]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 9[85] – Robe Shelving – $56.49 (incl GST)

  1. [155]
    I find $43.45 (incl GST) is payable by Sun Building Services.
  2. [156]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.
  3. [157]
    Part of this complaint is that the robe shelves are not adjustable.[86] The specification provides ‘wardrobe 3 to 4 adjustable shelf’. There is some evidence that the homeowners requested Mr Yang to install fixed shelving. There is no written evidence to support this contention.
  4. [158]
    Even if I found that this aspect is defective work, which requires rectification, there is no evidence of the reasonable cost of rectification to support a finding that an additional amount is payable.

Item 10 – Rear balcony articulation joint – $46.48 (incl GST)

  1. [159]
    I find $35.75 (incl GST) is payable by Sun Building Services.
  2. [160]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 17 – Incomplete paint to walls in downstairs water closet – $171.60 (incl GST)

  1. [161]
    I find $132.00 (incl GST) is payable by Sun Building Services.
  2. [162]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 18 – Holes in balcony bulkhead – $176.00 (incl GST)

  1. [163]
    I find $135.39 (incl GST) is payable by Sun Building Services.
  2. [164]
    During the hearing:
    1. the experts agreed that if the installation of lights was within scope the cost of rectifying the incomplete work was $80.00 per light or $160.00 (excl GST);
    2. Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 26 – Entry column alignment and finish at top – $243.10 (incl GST)

  1. [165]
    I find $187.00 (incl GST) is payable by Sun Building Services.
  2. [166]
    Both Mr Dixon and Mr Dyer agree that rectification is required. During the hearing, Sun Building Services accepted Mr Dixon’s evidence as to the means of rectification and accepted the evidence as to quantum.
  3. [167]
    I accept the evidence as to liability and quantum except as to the 30% margin.

Item 27 – Entry column – $235.95 (incl GST)

  1. [168]
    I find $181.50 (incl GST) is payable by Sun Building Services.
  2. [169]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 30 – Light fitting not installed in en suite – $40.00

  1. [170]
    I find no amount is payable by Sun Building Services.
  2. [171]
    The evidence is that there is a hole in bedroom one en suite over the vanity in readiness for a light. The issue is whether the installation of a light in this location formed part of the original scope of work. During the hearing, the experts agreed that if the installation of a light was within scope the cost of rectifying the incomplete work was $40.00. This evidence as to quantum was conceded but liability was denied. There was no evidence as to the cost of rectification if the installation of a light at this location was not part of the scope of works.
  3. [172]
    There is little evidence on this point. There is some evidence[87] that the work was incomplete because Mr Tran and Mrs Pham needed to supply the light because the number of lights installed had exceeded the number of lights required by the specification. There is no direct evidence to the contrary other than evidence by Mrs Pham that she believed the agreement was a fixed price contract and that any work requested would be performed at no additional cost. Mr Yang conceded that he agreed to undertake minor variations at no additional cost. I find it implausible that there was a binding agreement to perform any work requested at no additional cost.
  4. [173]
    Mr Tran and Mrs Pham’s written submissions contend that it is reasonable to assume that they intended to have a light fitting in their en suite. I accept that is reasonable, however, I have been unable to locate any evidence[88] that there is no other light in the en suite.
  5. [174]
    Mr Tran and Mrs Pham bear the onus of proving that the installation of a light at this location was within scope. Earlier in these reasons, I accepted that significantly more lights were installed than provided for in the specification. I am not satisfied that this work was within scope.

Item 31 – Mortar stains on balcony tiles – $155.74 (incl GST)

  1. [175]
    I find $119.80 (incl GST) is payable by Sun Building Services.
  2. [176]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 33 – Paint grade joinery used not suitable for staining

  1. [177]
    I find no amount is payable by Sun Building Services.
  2. [178]
    There is no dispute that paint grade timber has been used and that is not suitable for staining. The issue is whether the contract required a varnished finish.
  3. [179]
    There is evidence that the homeowners requested a varnished finish before the contract was signed. However the contract, as signed, in the specification provides ‘3 coat (sic) of paint and 3 types of colour’ and does not refer to the use of varnish. The evidence is that the specification was the subject of some negotiation prior to the contract being signed and was the subject of review and amendment by the homeowners’ then lawyers. Each version of the specification in evidence contains the same wording as to the use of paint. I am not satisfied that the contract required a varnished finish.
  4. [180]
    There is also evidence that after the work had commenced Mr Tran requested a varnished finish, was informed by Mr Yang and Mr Deng Ming Yang, the painter, that the timber was not suitable for such a finish, was shown a section with such a finish and nonetheless requested a varnished finish.[89] Despite this variation not being documented, I am satisfied that Mr Tran requested this work to be performed despite being informed that the timber is not suitable for a varnished finish. This request does not relieve Sun Building Services of its obligation to use reasonable care and skill in the performance of the varied work.
  5. [181]
    Mr Dixon gave evidence that about a third of the timber has visible pencil marks, which were not removed before applying the stain. I accept that this is poor workmanship so that this constitutes defective work because it has not been carried out with reasonable care and skill. I also accept the evidence that it would be difficult to achieve an overall satisfactory finish by simply sanding back the locations with the pencil marks and re-staining those areas.
  6. [182]
    There is no evidence of the cost of rectification nor diminution of value of the property. Mr Tran and Mrs Pham’s written submissions seek nominal damages in the sum of $500.00. I am not inclined to award nominal damages. Nominal damages are generally awarded when breach has been established but no real loss has been suffered. In this case, Mr Tran and Mrs Pham had legal assistance to prepare and present evidence as to both liability and quantum and simply did not provide evidence of quantum in respect of this item.

Item 35(b) – Non compliant stair riser height – $19,232.74 (incl GST); Alternatively Item 35 – Different colour to timber stairs – Handrail $880.00 (incl GST) – Landing $620.00 (incl GST)

  1. [183]
    I find that $14,794.42 (incl GST) is payable by Sun Building Services.
  2. [184]
    Mr Dixon’s evidence is that risers to the staircase are inconsistent, the top risers do not comply with the minimum height requirement in the Building Code of Australia (BCA) and creates a trip hazard. His evidence is that the only reasonable means of rectification is to demolish and reconstruct.
  3. [185]
    Mr Dyer concedes that the top risers are less than the minimum height but sought to rely upon allowed tolerances to accommodate floor finishes to contend that it complied with the BCA.
  4. [186]
    I am not satisfied that the tolerance referred to is applicable because the finish at the top of the staircase was always to be timber. There was no need to take into account unspecified floor covering such as carpet, which may have added to the overall height. The document Mr Dyer sought to rely upon also expressly states:

the tolerances were not intended to provide a means to accommodate poor workmanship or construction

  1. [187]
    Mr Dyer also sought to explain the inconsistency in height away by asserting that the staircase ought to be regarded as constituting separate flights below and above the landing. Even if this is a reasonable interpretation, it does not overcome the deficiency in the minimum riser height given this is not an appropriate application of the tolerance.
  2. [188]
    During the hearing, it was suggested that a bevelled edge at the top of the staircase could be constructed to increase the height of the riser. Mr Dixon’s evidence was that increasing the height of the riser in this way had implications for the whole staircase and was not, in his view, an acceptable means of rectification.
  3. [189]
    On balance, I prefer the evidence of Mr Dixon in respect of this item. I find that the staircase is defective work requiring rectification. It does not comply with the BCA as the top risers are 10mm less than the minimum height required.
  4. [190]
    I am not satisfied, on the evidence before me, that there is any means of rectifying the safety issue created by this defect short of demolition and reconstruction. I find, in the circumstances, such rectification is reasonable. It addresses the safety issue. The timber staircase is a prominent feature of the house. Mr Costanzo’s evidence of the costs of rectification are not challenged. The costs of rectification are not so disproportionate to the contract price of $510,000.00 as to be unreasonable.
  5. [191]
    In view of these findings, it is not necessary to consider the alternative claims for rectification of the handrails and the landing.

Item 39 – Gap between gutter and cladding – $171.60 (incl GST)

  1. [192]
    I find $132.00 (incl GST) is payable by Sun Building Services.
  2. [193]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 40 – Pantry door handle and missing doorstop – $112.82 (incl GST)

  1. [194]
    I find $86.78 (incl GST) is payable by Sun Building Services.
  2. [195]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 41– Path along eastern side of dwelling – Item 47 – Height of path and water ingress – $228.80 (incl GST)

  1. [196]
    I find $176.00 (incl GST) is payable by Sun Building Services.
  2. [197]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 42 – Water ponding on alfresco area – $15,430.85

  1. [198]
    I find $7,406.08 (incl GST) is payable by Sun Building Services.
  2. [199]
    It is not disputed that the terrace has been flooded. The adjoining blocks slope toward Mr Tran and Mrs Pham’s property so that when it rains there is runoff towards the house.
  3. [200]
    The experts do not agree as to the cause of the flooding/ponding of the terrace. Mr Dyer attributes the issue to landscaping, which was not part of Sun Building Service’s contract and was carried out by another contractor at the homeowners’ request. He says that the landscaping falls toward the terrace so that the landscaper should have installed additional drainage. Mr Dyer conceded in cross-examination that this was an assumption. He recommends the homeowners engage a hydraulic engineer to design and install appropriate earthworks and external stormwater.
  4. [201]
    Mr Dixon’s evidence is that:
    1. Sun Building Services should have factored in to its work the pre-existing retaining walls and the expected runoff from adjoining properties;
    2. he carried out tests as a result of which, he considers that landscaping is not the primary cause of the flooding of the terrace and that there are a number of causes as to why the area is flooding and the terrace is ponding. They include that the fall of the terrace is incorrect, there is inadequate dispersion of roof water caused by too few downpipes, rain tank overflow and inadequate subterranean stormwater drainage;
    3. there is a deterioration of the kickboard to the terrace cabinet due to water penetration;
    4. contrary to the BCA the cabinet is made from materials, which are not fit for outdoor use;
    5. the fall is toward the cabinet rather than to the outside edge of the terrace;
    6. water ponds outside of the sliding glass door to the house demonstrating an inadequate fall away from that wall of the house to the outside edge of the slab;
    7. according to the BCA at least three (possibly four) more downpipes are required to adequately disburse rain from the northern roof to prevent the water overflowing onto the ground surface;
    8. he had performed this calculation after Mr Costanzo had prepared his costings, which provides for one additional downpipe;
    9. the site surface drainage around the eastern and northern sides of the house is inadequate;
    10. the turf laid against the edge of the terrace is higher than the tiled surface;
    11. water is not able to flow away from the terrace because of the combination of the roof overflow onto the ground, through inadequate numbers of downpipes, rain directly falling and the height of the adjacent turf.
  5. [202]
    I accept that landscaping did not form part of the contract works and that the homeowners engaged another contractor to perform ‘soft’ landscaping such as laying turf and pebbles and that this has contributed to the flooding of the terrace.
  6. [203]
    Mr Rossell’s[90] evidence is that he observed ponding of water before the landscaping work was undertaken.
  7. [204]
    Sun Building Services has not produced detailed hydraulic expert evidence to dispute Mr Dixon’s testing and calculations. Mr Dyer relies upon the building surveyor’s approval of the design and states that no issues were raised in relation to drainage to his knowledge.
  8. [205]
    On balance, I accept Mr Dixon’s evidence. I am not satisfied that the landscaping is the primary cause as distinct from a contributing factor.
  9. [206]
    During the hearing, Mr Dyer gave evidence that he had measured the terrace and found that it had an adequate fall from front to rear. Given Mr Dixon’s evidence that water was ponding near the sliding door this seems implausible. During the hearing, it was conceded that there was a minor fall toward the terrace cabinet and it was suggested that the fall toward the cabinet was explainable because the fall was created before the variation to install the cabinet. It is not disputed that a wall of the house sits behind the cabinet. As a matter of logic, if the cabinet had not been installed the fall would have been towards, as opposed to away from, a wall of the house. The experts agree that under the BCA a fall away from the house is required.
  10. [207]
    Mr Yang’s evidence is that the outdoor cabinet was a variation and the homeowners nominated the materials.[91] The homeowners’ ‘nomination’ does not relieve Sun Building Services of its obligations to use reasonable care and skill and to use materials which are suitable for the purpose for which they are used.[92] There is no evidence that Mr Yang informed the homeowners as to the inadequacy of the materials for the purpose and that despite this advice the homeowners instructed him to proceed.
  11. [208]
    I am satisfied that the fall toward the cabinet is defective building work and that defective work has caused or contributed to causing damage to the kickboard.
  12. [209]
    Mr Costanzo gave evidence that the cost to remove and replace the cabinet with a stainless steel cupboard unit was $5,812.95 (incl GST and 30% margin). During the hearing, expert evidence was given as to the cost of replacing the kickboard with a durable material in the sum of $582.00 (incl GST but no margin). There is no evidence before me as to the amount Sun Building Services charged the homeowners for this variation. It is reasonable to assume that if it had supplied a durable unit that the variation would have cost more. In the circumstances I find that the reasonable costs of rectification of the cabinet is the cost to replace the kickboard. I accept the evidence as to quantum.
  13. [210]
    Mr Costanzo gave evidence that the cost to remove and relay the tiles to achieve an adequate fall is $4,837.69. I accept this evidence except as to the 30% margin, being $3,721.30 (incl GST).
  14. [211]
    In relation to the dispersion of roof water, the plans did not show where the downpipes were to be located and the specification did not nominate the required number but did include ‘strom (sic) water’ and ‘downpipe’. I accept that the contract required Sun Building Services to perform such work and comply with the BCA in doing so. Mr Rossell, who installed the downpipes, gave evidence that he was not aware of the BCA requirements. In the absence of contrary evidence, I accept Mr Dixon’s calculation that at least three additional downpipes ought to have been installed.
  15. [212]
    Mr Costanzo has provided costings for a single downpipe at $293.35 (including 30% margin and GST). During the hearing, Mr Costanzo gave evidence that if fewer than four extra downpipes are installed that the cost of the extra downpipes, being $40.14 (excl GST) each should be added to this cost and no additional amount for labour allowed. I accept this evidence except as to the 30% margin. I calculate the amount as $313.96 (incl GST).[93]
  16. [213]
    I accept that the water collected through downpipes needs to be discharged through an appropriate system. Mr Dixon’s evidence is that both installed downpipes discharge into the tank, when the tank is full there is a single overflow outlet, which is capable of only draining half the volume of water entering the tank so that surplus water runs down the face of the tank and onto the ground, which adds to the surface water, which flows onto the terrace and into the garage.
  17. [214]
    I also accept that if the BCA requires a minimum number of downpipes then they need to be connected to a stormwater system. Mr Dixon recommends an additional tank overflow be installed and the downpipes connected to a suitably sized stormwater drainage system.
  18. [215]
    I accept Mr Dixon’s evidence and Mr Costanzo’s evidence as to the costs except as to the 30% margin. I calculate the amount as $2,788.82 (incl GST).

Item 44 – Unpainted downpipe – $53.63 (incl GST)

  1. [216]
    I find $41.25 (incl GST) is payable by Sun Building Services.
  2. [217]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 48 – Hole in slab at line of garage window – $39.33 (incl GST)

  1. [218]
    I find $30.25 (incl GST) is payable by Sun Building Services.
  2. [219]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 51 – Fish tank at entry

  1. [220]
    I find that no amount is payable by Sun Building Services.
  2. [221]
    The contract plans show there is to be a fish tank. The specification does not expressly provide for its supply. The evidence is that an alcove has been constructed to allow a tank to slide in.
  3. [222]
    The issue is whether the scope of work obliged the supply and installation such that it is incomplete work.
  4. [223]
    Mr Tran gave evidence that:
    1. he and Mr Yang went to Aquarium Warehouse;
    2. he placed an order for a tank and paid $300.00 as a deposit;
    3. Mr Yang agreed to pick up the tank when it was ready and to install it;
    4. Mr Yang did not pick it up and he lost his deposit.
  5. [224]
    Mr Yang’s evidence was that he agreed to install the fish tank but was never told it was ready for collection.
  6. [225]
    Mr Tran’s and Mrs Pham’s written submissions claim the ‘nominal amount of $300’ and contend that it is more likely

that Mr Yang either forgot to pick it up or decided not to save on costs

  1. [226]
    There is little evidence on this point. I am not satisfied that the original scope of work obliged Sun Building Services to supply and install a fish tank as distinct from construct an alcove for such a tank. I am also not satisfied that there was any collateral contract or agreed variation.
  2. [227]
    Mr Tran’s evidence that he paid a $300.00 deposit for the tank is inconsistent with an obligation upon Sun Building Services to supply and install such a fish tank as part of the contract scope. The specification does not clearly impose an obligation to supply and install a fish tank. A fish tank is a chattel. Where there is an obligation to supply and install a chattel it is usually set out in the specification.
  3. [228]
    There is no evidence as to who was to pay the balance owing to the supplier and no evidence as to the efforts the homeowners made to protect themselves from the loss of the deposit by following up either Mr Yang or the supplier. I am not satisfied that Mr Tran and Mrs Pham have discharged the onus on them to show that an amount is payable.

Item 52[94] – change in wall cladding – no eaves overhang – $25,954.10

  1. [229]
    I find no amount is payable by Sun Building Services.

Brick to CSR

  1. [230]
    Mr Tran and Mrs Pham contend that they wanted a brick home and that Mr Yang changed the specification from brick to CSR without their knowledge or consent. The evidence raises allegations of fraudulent behaviour.
  2. [231]
    I am not satisfied that the contract documents were changed from brick to CSR without the homeowners’ knowledge or consent. An allegation of fraud is a serious matter requiring appropriately compelling evidence.[95]
  3. [232]
    Mr Yang’s evidence is that when he was with Mr Tran and Mrs Pham at their shop he reviewed the updated plans and made amendments to the specification to reflect the plans in their presence. Mr Tran and Mrs Pham contend that Mr Yang’s amendments to the specification were made after the contract was signed. This appears to arise from an inference drawn because certain changes to the specification are initialled by Mr Yang and not by the homeowners.
  4. [233]
    In cross-examination, Mrs Pham conceded that prior to entering into the contract she noticed the horizontal lines on the plan elevations.[96] The plans, which show the horizontal lines, clearly state that the exterior is to be CSR. The ‘CSR’ notation appears a number of times on these plans.
  5. [234]
    During the hearing Mr Tran conceded that the initials ‘TMT’ on the copies of the contract plans[97] and the contract specification[98] were his and that he put his initials on the plans at the time when the contract was being signed. I am satisfied that he was provided with copies of those plans before entering into the contract. Those plans clearly showed that the exterior was to be CSR.
  6. [235]
    Given that both homeowners were provided with the plans showing a CSR exterior prior to signing the contract I am not satisfied that Mr Tran and Mrs Pham have established to the required standard that Mr Yang changed the specification after the contract was signed.
  7. [236]
    There is conflicting evidence as to which party engaged the architect to draw the plans and make the design changes so that the GJ Gardner plans would not be infringed and to incorporate changes requested by the homeowners. There is also conflicting evidence as to the input the homeowners had with the architect in that process. Mr Yang relies upon conversations with the architect. I place little weight on this hearsay evidence. Mr Tran and Mrs Pham deny they spoke to the architect.
  8. [237]
    Neither party produced any written evidence from the architect nor gave any evidence of any attempt to do so nor did any party seek to compel the architect to attend to give evidence or produce documents under the processes available in the Tribunal. This failure reflects poorly on both parties. However, Mr Tran and Mrs Pham are the parties alleging the ‘fraudulent’ behaviour and in that regard bear the onus.
  9. [238]
    I am not satisfied that the failure to use brick is a defect requiring rectification.
  10. [239]
    There is also some evidence that the homeowners did not sign the ‘variation’ documenting the change from CSR to Koolwall cladding. During the hearing, the homeowners conceded that they signed the documentation. The form used was, strictly speaking, not the correct form to record a variation but the variation was recorded in writing and signed by the parties. I do not consider this issue further.

No eaves overhang

  1. [240]
    Mr Tran and Mrs Pham claim that the house as constructed does not comply with the plans, which show eaves overhanging much further. The experts agree that the drawings provide limited information in regards to the size of the eaves and disagree as to the impact of the design change.
  2. [241]
    Mr Dixon raises an issue as to whether the Private Certifier has approved the design change. The costing provided is to create eaves overhang including removing roof sheeting and gutters, extending roof trusses, installing longer roof sheeting and ridge capping, reinstalling fascia and gutters.
  3. [242]
    Mr Dixon’s evidence is that:
    1. the lack of eaves affects the capacity of the roof to deal with water back charge and drainage and can cause water ingress;
    2. there is non-compliance with the BCA as there are an insufficient number of downpipes for the northern roof catchment but otherwise appears to accept that the eaves in themselves are not in breach of the BCA;
    3. a minimum of five downpipes are required to comply with the BCA so that at least three more downpipes should be installed and connected to the stormwater system.[99]
  4. [243]
    Mr Dyer’s evidence is that:
    1. the design was approved and to his knowledge there was no recommendations to increase the size of gutters or downpipes;
    2. the eaves comply with the BCA;
    3. the change is a contractual matter;
    4. the plans do not provide dimensions so the costings for work ‘as per plan’ cannot be accurately determined.
  5. [244]
    Mr Dixon also raises an issue about whether this affects the energy rating. Mr Dyer’s evidence is that Koolwall achieves better energy efficiency than CSR and that due to the size of the windows the eaves depicted in the plans would not have provided much shade. Mr Dixon’s evidence was that it was for an energy efficiency expert to determine the impact of this design change. There is no evidence from such an expert.
  6. [245]
    The plans do not provide dimensions for the eaves. The relevant plan is not a ‘for construction’ plan. There is evidence that the thickness of CSR is 8mm whereas Koolwall is 70 – 75mm. Mr Yang conceded that he could not specifically recall whether he told the homeowners that if they changed to Koolwall that the eaves would not overhang as far as the plans depict but he provided samples so the homeowners were able to see the difference in thickness.
  7. [246]
    There is evidence that the frames and trusses were constructed from the floor plan prior to the change in cladding and that because Koolwall is thicker this reduces the eave overhang. There is limited evidence as to the discussions leading up to the change from CSR to Koolwall. Most of the evidence surrounds the homeowners’ desire for a brick exterior and the difficulties created because the footings had been designed and constructed for CSR cladding rather than brick. There is evidence that Sun Building Services provided quotes to change the cladding from CSR to Koolwall ($3,000.00) and Hebel ($9,000.00), that the homeowners considered their options over a period of time and that due to financial constraints they chose Koolwall.
  8. [247]
    There is no evidence before me upon which I can rely to find that the design change was not approved, if required, by the private certifier.
  9. [248]
    Given that the plans showing the eaves show no dimensions, the stage of construction at the time this variation arose[100] and the self-evident thickness of the agreed replacement cladding, I am not satisfied that the failure to construct eaves in accordance with the indicative design is a defect requiring rectification by extending the eaves.
  10. [249]
    I have previously allowed the costs of three additional downpipes.[101]

Item 57 – Paint stains on lower metal roof – $150.00 (incl GST)

  1. [250]
    I find $150.00 (incl GST) is payable by Sun Building Services.
  2. [251]
    In view of my findings in relation to Item 52, which does not include the replacement of the patio roof, it is necessary to consider this item.
  3. [252]
    The experts agree that rectification is required. During the hearing, the experts agreed that the costs of rectification is $150.00 (incl GST).
  4. [253]
    I accept the experts’ evidence as to liability and quantum. I have no record that this amount included a 30% margin and so I have allowed it in full.

Item 58 – Back blocking not undertaken to plasterboard ceiling – $238.56 (incl GST)

  1. [254]
    I find $332.00 (incl GST) is payable by Sun Building Services.
  2. [255]
    During the hearing, Sun Building Services conceded liability and quantum, except as to the 30% margin.
  3. [256]
    Mr Costanzo’s evidence[102] is that he had allowed for the removal and replacement of roof sheeting for access in respect of Item 53. The claim for Item 53 was not pursued. In these circumstances, I allow Mr Costanzo’s costing for labour to remove and re-instate roof sheeting in the sum of $135.00 (excl GST)[103] in addition to the costing for Item 58, except as to the 30% margin.

Item 60 – Doors not installed to media room - $1,889.73 (incl GST)

  1. [257]
    I find $1,453.89 (incl GST) is payable by Sun Building Services.
  2. [258]
    It is not disputed that the contract plans[104] show bi-fold doors to the media room and the specification does not expressly mention ‘bi-fold door’. Mr Yang claimed that the specification overrides the plans.
  3. [259]
    I am not satisfied that the specification takes priority over the plans. The contract does not contain an order of priority clause unlike some other construction contracts. Clause 3.2(d) provides that ‘the Contractor must build the Works in accordance with the plans and specifications ...’. Clause 29.1(w) relevantly provides that ‘work under this Contract’ means ‘all that work necessary to build the Works in accordance with the plans and specifications and this Contract’.
  4. [260]
    I find that the supply and installation of bi-fold doors was ‘work under this Contract’ and the failure to perform is incomplete work requiring rectification.
  5. [261]
    During the hearing, Sun Building Services conceded quantum except as to the 30% margin.

Item 64 – Oven not same size as cook top – $3,000

  1. [262]
    I find no amount is payable by Sun Building Services.
  2. [263]
    The specification provides ‘Bosch or owner’s choice same price’ for the oven and the cook top. The specification does not specify the width for either appliance. Mr Yang gave evidence that standard sized appliances are 600mm.
  3. [264]
    Mrs Pham’s evidence is that she gave instructions as to the oven she requested, which was 900 mm wide, but it was not installed. In cross-examination, Mrs Pham could not remember when she gave the instruction and whether this was before the kitchen was installed.
  4. [265]
    I accept that changing the size of the oven has consequential impacts upon the surrounding joinery so that it would be difficult, if not impossible, to accommodate a change if the kitchen had been installed or was substantially constructed prior to the instruction.
  5. [266]
    I find that Mr Tran and Mrs Pham have not established that the instruction was given in sufficient time for the kitchen joinery to be fabricated to accommodate the instruction. I am not satisfied that this is defective work requiring rectification.
  6. [267]
    Even if I found that this is defective work, which requires rectification, there is no evidence of the reasonable cost of rectification or diminution of value of the property to support a finding that an amount is payable. Mr Tran’s and Mrs Pham’s written submissions claims that a nominal amount of $3,000.00 ought to be awarded. I would not be inclined to award nominal damages. Mr Tran and Mrs Pham had legal assistance to prepare and present evidence as to both liability and quantum and simply did not provide evidence of quantum in respect of this item.

Item 65[105] – Water penetration through lower level formal lounge windows – $24,736.57 (incl GST)

  1. [268]
    I find $19,028.13 (incl GST) is payable by Sun Building Services.
  2. [269]
    There is evidence that the windows leak during a thunderstorm and during testing by Mr Dixon, which simulated rain. Mr Dixon recommends the entire window system including frames for all lounge room windows be replaced.
  3. [270]
    Mr Dyer’s evidence is that windows, which comply with the BCA and AS2047, are not 100% waterproof in extreme conditions and that the leak only occurs under extreme conditions such as a storm or placing a hose directly on the glass or frame for a prolonged period such that the track will be overwhelmed and water can enter the frame. He relies upon labels to the sides of windows, which indicate they have been manufactured in accordance with AS2047. He also relies upon the Form 15 Certificate regarding glass compliance. His evidence is that the reasonable method of rectification is to remove and re-seal the lower level bay window glass.
  4. [271]
    Mr Dixon’s evidence is that:
    1. the lounge room windows leaked after allowing water to flow down the front of the house for 11 seconds;
    2. another test showed that water originating from the roof gutter also penetrated;
    3. those windows and sliding doors without performance labels leak and those with labels did not;
    4. windows and sliding doors without performance labels ought to be replaced;
    5. his tests of the upper level living room windows did not result in leaks although the homeowners’ video evidence shows there was water penetration during a heavy storm;
    6. in view of his testing Mr Dixon’s view was not changed by the fact that a Form 15 certificate had been issued;
    7. the water penetration first appears in the corner indicating that the stop ends are not sealed properly;
    8. Mr Dyer’s suggested means of rectification will not rectify the stop ends issue.
  5. [272]
    On balance, I accept Mr Dixon’s evidence. I accept that storm events may be exceptional but am not satisfied that 11 seconds is a prolonged period of time. The video evidence shows that the water applied by the hose was not at a very high pressure. Water penetration is defective building work, which requires rectification. I accept Mr Costanzo’s evidence as to quantum except as to the 30% margin.

Item 67 – Balustrade railing is loose – $85.80

  1. [273]
    I find $66.00 (incl GST) is payable by Sun Building Services.
  2. [274]
    I accept the experts’ evidence as to liability and quantum except as to the 30% margin.

Item 69 – Position and leaning of water tank – $1,185.04

  1. [275]
    I find $911.57 (incl GST) is payable by Sun Building Services.
  2. [276]
    It is not disputed that the water tank is not level and is leaning. It also appears common ground that the water tank was relocated from the position on the plans to its current location at the homeowners’ request.
  3. [277]
    Mr Dixon’s evidence is that the tank has not been installed correctly because it is not level, the base overhangs the path and its capacity will be marginally reduced. There is some evidence that some concrete has been placed under the unsupported edge of the tank.
  4. [278]
    The experts do not agree that rectification is required. Mr Dyer’s evidence is that the path is required to slope away from the house and to alter the path or support under the tank will interfere with water flow away from the house. Mr Dyer contends that the integrity of the tank has not been affected by its installation and there is no evidence of movement or subsidence in the 12 months since installation.
  5. [279]
    On balance, I prefer the evidence of Mr Dixon. The homeowners’ request to relocate the tank does not relieve Sun Building Services of its obligations to use reasonable care and skill in situating the tank on a suitably constructed level surface.
  6. [280]
    I accept the evidence of quantum except as to the 30% margin.

Item 72 – Bulkheads to lounge and living room not installed – $8,500.00

  1. [281]
    I find $5,500.00 (incl GST) is payable by Sun Building Services.
  2. [282]
    The contract plans show bulkheads in these rooms. It is not disputed that they were not installed.
  3. [283]
    Mr Yang gave evidence that he saw them on the plans but did not allow for them in the contract price. He stated that because of the floor to ceiling windows it was difficult to construct the bulkheads. Mr Dyer’s evidence supports this statement. Mr Dixon gave evidence that it would be possible to create bulkheads by creating a recess to accommodate window height. Mr Yang conceded that he did not inform the homeowners that the bulkheads on the plans had not been included in the contract price until after the construction work had commenced.
  4. [284]
    As noted earlier in these reasons, Clause 29.1 (w) relevantly provides that ‘work under this Contract’ means all that work necessary to build the Works in accordance with the plans and specifications and this Contract.
  5. [285]
    I find that construction of bulkheads as shown on the plans was work under this Contract and the failure to perform is incomplete work requiring rectification.
  6. [286]
    There is no expert evidence as to the costs of rectification. However, there is some evidence that Sun Building Services offered to construct bulkheads in the media room, kitchen, living room and family room for $8,500.00[106] and in the media room, kitchen but not the living room and family room for $5,500.00 (incl GST).[107] Having regard to the contract plans, I observe that the living room and the formal lounge and their bulkheads are each depicted to be of similar dimensions and are at least as large in dimension as the combined bulkheads in the media room and kitchen.

Item 73 – Hinged doors installed to robe doors and not sliding – $740.00

  1. [287]
    I find no amount is payable by Sun Building Services.
  2. [288]
    The experts agree that that hinged doors have been installed whereas the contract plans[108] show sliding doors for the robes.
  3. [289]
    Mr Yang’s evidence is that Mr Tran and Mrs Pham requested this change.[109] There is no written evidence of this request but there is also no evidence from Mr Tran or Mrs Pham denying that they requested this change. In these circumstances, I accept Mr Yang’s evidence.

Item 74 – Removal and replacement of windows – Item 95 – Varying size of windows – $894.11 (incl GST)

  1. [290]
    I find $687.78 (incl GST) is payable by Sun Building Services.
  2. [291]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 75 – Entry door not as per size on drawing – $6,500.00

  1. [292]
    I find $6,500.00 (incl GST) is payable by Sun Building Services.
  2. [293]
    Mr Dixon’s undisputed evidence is that the entry door as installed is 2100mm high but the contract plans[110] show the entry door is to be 2400mm. Mr Dyer’s evidence is that it is a contractual matter for the Tribunal’s determination.
  3. [294]
    Mrs Pham provided a photo of the style of door she requested.[111] The document she provided does not specify dimensions. There is no evidence that the homeowners requested the size of the door to be altered from that provided by the contract plans. Mr Yang’s evidence was that he didn’t give the door supplier the measurements for the entry door but that the supplier went to site to look at the frame. The supplier’s quote[112] sets out measurements including the proposed height and expressly states:

This Quotation is our interpretation of your request. We intend to manufacture to these specifications. Please check & confirm ALL details.

  1. [295]
    Mr Dixon’s evidence is that changing the size of the door is likely to negatively affect the house’s energy efficiency rating.
  2. [296]
    I find that supply and installation of a door of the size required by the plans was ‘work under this Contract’ and the failure to perform this work is defective work requiring rectification.
  3. [297]
    During the hearing, the experts discussed methods of rectification, which included increasing the height of the opening, the installation of a steel beam to provide support and the possible demolition of the front wall to do so. It will also require the fabrication of another door.
  4. [298]
    There is no expert evidence as to the costs of rectification. I accept that the evidence of the cost of the door as supplied will approximate the cost to have another door fabricated.

Item 78 – Ceiling fans not installed

  1. [299]
    I find that no amount is payable by Sun Building Services.
  2. [300]
    The specification provides for six ceiling fans. Mr Yang’s evidence is that two fans were installed and that it was agreed to install additional air conditioning ducts instead of the other fans. There is no written evidence that this was agreed but there is also no evidence from Mr Tran or Mrs Pham denying that they requested or agreed to this change. In these circumstances, I accept Mr Yang’s evidence.

Item 83 – Water penetration through entry doors – Item 85[113] – Water penetration through front balcony – $21,271.14

  1. [301]
    I find $16,362.41 (incl GST) is payable by Sun Building Services.
  2. [302]
    The experts disagree that the work is defective and as to the method and extent of rectification, if I find that the work is defective.
  3. [303]
    Mr Dixon’s evidence is that:
    1. subsequent to the experts’ conclave he undertook invasive inspections and further testing;
    2. water coming through the entry door is penetrating from the front tiled balcony above the entry door;
    3. water penetrated at the junction of the wall and floor of the front balcony after a few minutes of testing;
    4. the water proofing membrane on the front balcony has failed;
    5. the water proofing membrane on the front balcony was not extended to turn up the vertical surface contrary to manufacturers recommendations, Master Builders guide sheets and AS4564.2-2009;
    6. tests reveal that the rear balcony water proofing membrane was not extended to turn up the vertical surface and does not extend downward and over the vertical outer edge to seal the substrate;
    7. the change in the floor level from the front and rear balconies to the interior of the house is insufficient to allow the minimum vertical upturn of 50mm at the doors to the balconies except possibly to the master bedroom;
    8. the vertical upturn at the doors of the rear balcony is as little as 25mm;
    9. he recommends the installation of grated drains to prevent water ingress at the doorways;
    10. the only other way to achieve the required upturn is to demolish and rebuild the balconies at a lower level;
    11. he has considered whether the notching on the top edge of the joists required to install the drains would be detrimental to structural integrity and concludes it would not be detrimental as the notching does not occur mid span; it is over the end of the joist, which is supported on the timber frame;
    12. the tiled surfaces to both balconies need to be removed, new membrane applied and re-tiled.
  4. [304]
    Mr Dyer’s evidence was that he had undertaken tests and no water penetration had occurred. He also gave evidence that he had been advised by Mr Yang, that a metal angle was installed to secure the floor sheeting of the balconies prior to the Koolwall cladding being installed and the floors being tiled. The angle performs the same function as extending the membrane up the vertical surface. His evidence is that the installation of the drains are unnecessary, because there is no evidence of water ingress at these locations, and inappropriate.
  5. [305]
    On balance, I prefer Mr Dixon’s evidence, both as to the work being defective and as to the method of rectification. His opinion was informed by more extensive testing than that conducted by Mr Dyer. If the metal angle was installed it is not fulfilling its purpose as water penetrated at the junction of the wall and floor on the front balcony within a few moments. Having regard to AS4651.2 Figure 2.8 I accept that the change in level between the rear balcony and the interior of the house is such that the upturn is half the minimum required height, so that there is a high risk of water ingress. I find that it is reasonable to install drains rather than to demolish and rebuild the balconies.
  6. [306]
    I accept Mr Costanzo’s evidence of quantum except as to the 30% margin.
  7. [307]
    In view of my findings in relation to the need to retile the front balcony, it is not necessary makes separate findings in respect of Item 11.

Item 84 – Differing height between entry tiles and path – $289.58 (incl GST)

  1. [308]
    I find $222.75 (incl GST) is payable by Sun Building Services.
  2. [309]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 86 – Water penetration through bulkhead over main bedroom on balcony – $393.25

  1. [310]
    I find $302.50 (incl GST) is payable by Sun Building Services.
  2. [311]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 88 – Dislodged plasterboard at step down in garage – $313.31 (incl GST)

  1. [312]
    I find $241.01 (incl GST) is payable by Sun Building Services.
  2. [313]
    Both experts agreed this was defective work. I accept this evidence. During the hearing, Sun Building Services conceded quantum except as to the 30% margin.

Item 92 – No motif or decoration strips across sliding doors – $120.00

  1. [314]
    It is not necessary to consider this item in view of my findings in relation to Item 65.

Item 93 – Top and bottom edges of doors not coated – $879.45 (incl GST)

  1. [315]
    I find $676.50 (incl GST) is payable by Sun Building Services.
  2. [316]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 94 – Living room door to balcony – $105.88 (incl GST)

  1. [317]
    It is not necessary to consider this item in view of my findings in relation to Item 65.

Item 97 – Damaged bathroom doorjamb – $359.27 (incl GST)

  1. [318]
    I find $276.36 (incl GST) is payable by Sun Building Services.
  2. [319]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 99 – Change in laundry design – $657.80

  1. [320]
    I find $506.00 (incl GST) is payable by Sun Building Services.
  2. [321]
    Mr Dixon’s evidence is that this is an installation defect resulting in a safety issue. Mr Dyer’s evidence is that the issue arises due to a design change so that this is a contractual matter for the Tribunal’s determination.
  3. [322]
    There is evidence that the homeowners’ requested a change in design from a hinged door to a sliding door, which altered the location of the washing machine. Sun Building Services did not relocate the power point, resulting in the washing machine’s electrical cord passing over the laundry tub to the power point. Mr Dixon’s evidence is that this variation ought to have been documented and the power point moved to a safe location.
  4. [323]
    The experts did not agree as to the method of rectification. Mr Dyer’s evidence was that the safety issue could be overcome by installing conduit at an estimated cost of $121.00 (incl GST not including margin). Mr Dixon’s evidence was that in a new house the installation of conduit was not reasonable.
  5. [324]
    The homeowners’ request to change the door and relocate the washing machine does not relieve Sun Building Services of its obligations to use reasonable care and skill in situating the power point to service the washing machine. I accept Mr Dixon’s evidence that this is defective work, requiring rectification. On balance, I prefer Mr Dixon’s evidence as to the appropriate method of rectification.
  6. [325]
    Mr Dyer challenged Mr Costanzo’s costings for Mr Dixon’s proposed method of rectification. He gave evidence that it would cost $370.00 (excl GST). Mr Costanzo considered Mr Dyer’s view and confirmed his view of the time required to perform the work. On balance, I prefer Mr Costanzo’s evidence except as to 30% margin.

Item 100[114] – Lippage at corner of splashback and gap under kitchen sink – $55.42 (incl GST)

  1. [326]
    I find $42.63 (incl GST) is payable by Sun Building Services.
  2. [327]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 102 – Grout missing between floor tiles in family room – $293.15 (incl GST)

  1. [328]
    I find $225.50 (incl GST) is payable by Sun Building Services.
  2. [329]
    During the hearing, Sun Building Services conceded liability and quantum except as to the 30% margin.

Item 103(d) – Cracked floor tiles inside shower recess

  1. [330]
    I find no amount is payable by Sun Building Services.
  2. [331]
    The experts agree that there are two cracked tiles inside a shower recess but they are unable to establish the cause. The evidence is that the cracks were not present at their inspections on and prior to 17 December 2013. Mr Dixon’s evidence is that the tiles need to be replaced. There is no evidence as to the costs of rectification.
  3. [332]
    In view of the state of the evidence, I am not satisfied that this is defective work for which Sun Building Services is responsible.

Claim for Preliminaries

  1. [333]
    I find $8,044.59 (incl GST) is payable by Sun Building Services.
  2. [334]
    Mr Costanzo’s report also sets out costings for preliminaries for the work to be performed. In respect of the items, which the experts agreed required rectification, Mr Costanzo’s costing for preliminaries is $3,182.84 (incl GST and 30% margin). In respect of the items not agreed between Mr Dyer and Mr Dixon, Mr Costanzo’s costing for preliminaries is $10,457.96 (incl GST and 30% margin).
  3. [335]
    I have allowed amounts for most but not all items claimed. At least some of the preliminaries are derived by the value of the work to be performed. I am not satisfied that the sum of the amounts for preliminaries is payable because not all items claimed have been allowed or allowed in full. In the circumstances, I adopt the larger sum less 30% margin and add 10% GST.

Interest

  1. [336]
    The counter-application seeks interest. The basis for the claim is not specified. I am not satisfied that any interest is owing as at the date of this decision because there is no evidence that amounts have been expended to rectify the defects claimed.

Summary of Successful Claims

  1. [337]
    I find that Sun Building Services is to pay Mr Tran and Mrs Pham the sum of $76,982.34 (incl GST) calculated as follows:

Item

Amount

Item 5

$ 115.50

Item 6

$ 2,957.01

Item 8

$ 530.46

Item 9

$ 43.45

Item 10

$ 35.75

Item 17

$ 132.00

Item 18

$ 135.39

Item 26

$ 187.00

Item 27

$ 181.50

Item 31

$ 119.80

Item 35b

$14,794.42

Item 39

$ 132.00

Item 40

$ 86.78

Item 41

$ 176.00

Item 42

$ 7,406.08

Item 44

$ 41.25

Item 48

$ 30.25

Item 57

$ 150.00

Item 58

$ 332.00

Item 60

$ 1,453.89

Item 65

$19,028.13

Item 67

$ 66.00

Item 69

$ 911.57

Item 72

$ 5,500.00

Item 74

$ 687.78

Item 75

$ 6,500.00

Item 84

$ 222.75

Item 83 and 85

$16,362.41

Item 86

$ 302.50

Item 88

$ 241.01

Item 93

$ 676.50

Item 97

$ 276.36

Item 99

$ 506.00

Item 98 and 100

$ 42.63

Item 102

$ 225.50

Preliminaries

$ 8,044.59

Sub-total

$88,634.26

Less Variations

$11,651.92

Amount payable

$76,982.34

  1. [338]
    The counter-application seeks costs. It is appropriate to make directions for submissions as to cost orders.

Footnotes

[1]Exhibit 13. There is an allegation that the contract was signed on or about 30 May 2012. This appears more likely as there is evidence that the deposit, which would ordinarily be payable upon signing, was deposited on 31 May 2012. There does not appear to be any issue, which arises from the date of the contract.

[2]Application filed 28 June 2013.

[3]Applicant’s Submissions filed 14 August 2014.

[4]DBC Act s 79, s 80, s 81, s 82.

[5]As the final written submission claims under the contract I make findings, despite the concession during the hearing.

[6]DBC Act s 84(6).

[7]Variations 6, 7, 11 and 12.

[8]DBC Act s 79(2); I note that in both the oral and written final submissions, this contention was not pursued.

[9]Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37.

[10]Allaro Homes Cairns Pty Ltd v O'Reilly & Anor [2012] QCA 286.

[11](1987) 162 CLR 22.

[12]DBC Act s 3(a).

[13][2012] QCA 286 at [2].

[14]Variations 5, 6, 7, 8, 10, 11 and 12; Of these only Variations 5, 8 and 11 were pursued at the hearing.

[15]Variations 5, 6, 7, 8, 10 and 11; Of these only Variations 5, 8 and 11 were pursued at the hearing.

[16]Variations 6, 7 and 12; None of these were pursued at the hearing.

[17]Allaro Homes Cairns Pty Ltd v O'Reilly & Anor [2012] QCA 286 at [15].

[18]Campbell v Telford & Heida [2013] QCAT 423 at [12].

[19]Exhibit 12 attachment JY3.

[20]Exhibit 16.

[21]DBC Act s 84(6)(b).

[22]Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37.

[23]Application Schedule 2.

[24]Variations 2, 6, 7, 9, 10, 12.

[25]Applicant’s Submissions filed 14 August 2014, Part A at [40].

[26]The last item is 18, which are the signatures.

[27]Exhibit 26 is a Prime Cost Items schedule form dated 9 November 2012 completed at the time of a variation. It does not contain any amount for Contractor’s margin.

[28]Exhibit 7.

[29]Brightside Windows & Doors Pty Ltd Invoice 1935 dated 15 March 2013 attachment to Application.

[30]Attachment to Application also Exhibit 33, dated 11 November 2012.

[31]Application Schedule 2.

[32]Forms part of Exhibit 13.

[33]On my calculation the balance is actually $619.33.

[34]Brisbane Tiling Service Quotation dated 11 January 2013, attachment to Application and evidence of payment also attached.

[35]Exhibit 32, Brisbane Timber doors & windows quote dated 15 November 2012.

[36]See Counter-application item 75.

[37]Sealey & Son invoice dated 17 January 2013, attached to Application.

[38]Sealey & Son invoice dated 12 February 2013, attached to Application.

[39]Part of Exhibit 13.

[40]Exhibit 23.

[41]Invoice D & Fortune Trading Pty Ltd dated 15 January 2013, attached to Application.

[42]The original work invoiced by the electrical contractor came to $11,030 and the additional work came to $6,760.00, being more than half as much again as the original work.

[43]QBCC Act s 67P.

[44]Building and Construction Industry (Portable Long Service Leave) Act 1991 (Qld) s 74(e).

[45]Filling out the form and attending to payment.

[46]Items 5 and 11.

[47]DBC Act s 26, s 27 – written contract setting out in full all the terms; s 40 – requirements for information statement.

[48]DBC Act s 92.

[49]As the Queensland Building and Construction Commission (QBCC) was then known.

[50]Exhibit 25.

[51]Exhibits 21 and 22.

[52]Exhibit JY5 to Exhibit 14.

[53]Attachment 2 to Response and counter-application filed 22 July 2013.

[54]Applicant’s submissions filed 14 August 2014 , Part C at [4].

[55]Exhibit 12 at [21].

[56]Expert retained by Sun Building Services.

[57]Exhibit 34.

[58]Shaun Rossell, plumber.

[59]Exhibit 12 at [21].

[60]Unreported Judgements NSW, BC9402557.

[61][2009] NSWSC 1302.

[62]JCC-D 1994.

[63][2009] NSWSC 1302 at [73].

[64]BC9402557 at [21].

[65]Darbishire v Warren [1963] 1 W.L.R. 1067 at 1075.

[66][2011] EWCA Civ 254.

[67]Ibid [20].

[68]Ibid [22].

[69]Ibid [21] – [22].

[70]Exhibit 10.

[71]Exhibits 4 and 5.

[72]Exhibit 7.

[73]Exhibits 8 and 9.

[74]Exhibit 6.

[75]Exhibit 10.

[76]Items 1, 2, 3, 4, 7, 12, 13, 15, 16, 19, 22, 25, 28, 29, 32, 34, 37, 38, 43, 45, 46, 50, 54, 55, 59, 61, 62, 63, 66, 68, 70, 71, 79, 80, 81, 82, 87, 89, 90, 103(a), 103(c).

[77]Direction dated 2 April 2014.

[78]Exhibit 10.

[79]E.g. Items 49, 56.

[80]Items 36, 53.

[81]Items 5, 8, 10, 17, 27, 31, 39, 44, 48, 57, 58, 67, 84, 88, 91, 92, 93, 94, 97, 98, 102.

[82]Exhibit 7.

[83]Includes Items 14, 20, 21, 103 (b).

[84]Includes Items 23, 77, 101.

[85]Includes Items 24, 76.

[86]Item 76.

[87]Exhibit 14.

[88]As distinct from the inference in the final written submission.

[89]Exhibit 12; Attachment to Application, part of Item 7, note from Yang Deng Ming dated 26.

[90]Plumber.

[91]Exhibit 14, Attachment JY1.

[92]Contract, Clause 3.2.

[93][$205.14 + ($40.14 x 2)] + 10% GST.

[94]Includes Item 96.

[95]Briginshaw v Briginshaw (1938) 60 CLR 336.

[96]Exhibit 14, attachment JY4.

[97]Ibid.

[98]Exhibit 14, attachment JY5.

[99]This issue has been raised in relation to Item 42.

[100]After the frames and trusses were constructed; when Sun Building Services was preparing to do the external cladding – Exhibit 14 at [25].

[101]Item 42.

[102]Exhibit 7.

[103]Exhibit 7 p 18.

[104]Drawing A201.

[105]Includes Item 91, water ingress through dining room sliding door.

[106]Schedule 2 to Application and Exhibit 33.

[107]Schedule 2 to Application and Attachment Item 9 – Additional renovation B&F Interiors quote dated 19 December 2012.

[108]Drawing A202.

[109]Exhibit 14, attachment JY1.

[110]Drawing A201.

[111]Attached to Exhibit 1.

[112]Exhibit 32.

[113]Includes Item 11.

[114]Includes Item 98.

Close

Editorial Notes

  • Published Case Name:

    Sun Building Services Pty Ltd v Tran Tuan Minh and Pham Hoa Thi

  • Shortened Case Name:

    Sun Building Services Pty Ltd v Minh

  • MNC:

    [2015] QCAT 134

  • Court:

    QCAT

  • Judge(s):

    Member Deane

  • Date:

    28 Apr 2015

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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