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Worthington v Ryan QCAT 12
Worthington t/as Worthington Simmons Builders v Ryan  QCAT 12
Steven Bryan Worthington t/as Worthington Simmons Builders
Andrew William Ryan
On the papers
Member Ann Fitzpatrick
17 January 2017
Termination of domestic building contract – liquidated damages – notice of extension of time – meaning of reasonable time in cl 15.1 and effect of cl 15.2,cl 15.3 and cl 15.4 Master Builders Residential Building Contract – s 18 Domestic Building Contracts Act 2000 Qld – variations – calculation of damages.
Civil Proceedings Act 2011 (Qld), s 58
Domestic Building Contracts Act 2000 (Qld), s 3, s 18 and s 93
Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)
Queensland Building and Construction Commission Regulation 2003 (Qld), s 34B
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 28
Bellgrove v Eldridge (1954) 90 CLR 613;
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64;
Dunlop Pneumatic Tyre Co Limited v New Garage & Motor Co Limited  AC 79;
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457;
Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd  NSWCA 211;
Power v Catton Constructions Pty Ltd CAN 087539571  QCAT 595;
Qline Interiors Pty Ltd v Jezer Construction Group Pty Ltd and Ors  QSC 88;
Robinson v Harman  ENG R 135;
Ryan v Worthington  QCA 201;
Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No2) (2012) 287 ALR 360;
Tabcorp Holdings Limited v Browne Investments Pty Ltd (2009) 236 CLR;
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 457;
Winrobe Pty Ltd v Sundin’s Building Co Pty Ltd (unreported) CA (NSW) BC 9201811.
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
represented by Mr D Gardiner of Counsel, instructed by Ms Sgorlon, Solicitor, Eaton Lawyers
represented by Mr M Dillman of Macpherson Kelley.
REASONS FOR DECISION
- Dr Ryan entered into a standard form Master Builders Residential Building Contract with Steven Bryan Simmons t/as Worthington Simmons Builders on 13 January, 2010. The contract was to relocate, extend and add to Dr Ryan’s house at Red Hill. The works started on 10 January, 2010. The date for practical completion was 24 December, 2010.
- Dr Ryan purported to terminate the contract on 12 August, 2011. Worthington Simmons also purported to terminate the contract, on 29 August, 2011. Worthington Simmons commenced proceedings to recover money outstanding from its final payment claim. Dr Ryan counter-claimed for liquidated and other damages.
- On 14, 15 and 16 November, 2012 a hearing of this matter took place. A decision was published on 3 April, 2013 which called for further submissions in relation to the application of GST to any award of damages. The decision recorded findings that:
- (a)Dr Ryan did not validly terminate his contract with Worthington Simmons;
- (b)Worthington Simmons validly terminated the contract by notice on 29 August, 2011;
- (c)Worthington Simmons suffered loss and damage in an amount of $82,190.85 excluding GST;
- (d)Dr Ryan has no entitlement to liquidated damages.
- Dr Ryan sought leave to appeal. The Appeal Tribunal made a number of findings and ordered that the matter be remitted to me for determination according to law. In summary, the Appeal Tribunal found that:
- (a)I made an error of law by awarding damages on a basis not claimed or pleaded;
- (b)I calculated the damages awarded incorrectly and but for the decision to remit, would have reduced the damages figure by $17,844.38;
- (c)I did not err with respect to the construction of clauses 15.1 and 21.1 of the contract, as contended by Dr Ryan. The Appeal Tribunal considered that construction of the clauses is a question of fact.
- Dr Ryan sought leave to appeal from that decision, to the Court of Appeal. Leave was granted. The Court of Appeal found that:
- (a)Construction of a contract is a question of law not a question of fact.
- (b)Clauses 15.1 (Builder’s entitlement to extensions of time), 21.1 (Owner’s right to terminate the Contract under Section 90 of the Act) and 11.12 (Owner not to interfere with the carrying out of the Works) of the contract, should not be construed in the manner contended for by Dr Ryan.
- (c)In relation to the construction of clause 15.1 of the Contract, Worthington Simmons claim for an extension of time must be made, within a reasonable time after the forward progress of the works is delayed, even if that delay, or the event which causes it, is not over. It is not a proper construction to take the view that the claim was within a reasonable time, if it was within a reasonable time after the end of the overall delay.
It was not appropriate for the Court of Appeal to descend into the details of delays caused by rain and variations and that it was a matter for me on remittal, to apply the evidence in light of the correct construction of the contract.
- (d)It was open to the Appeal Tribunal to remit the matter.
- (e)Dr Ryan’s purported termination of the contract did not take into account the unforeseeable period of extensive delay due to the construction of a swimming pool by another contractor. Without taking that into account his termination was ineffective, as found at first instance.
- (f)Notwithstanding complaints by Dr Ryan that Worthington Simmons had no properly formulated claim for damages before the Tribunal, the matter is best dealt with by the Tribunal especially given the nature of its jurisdiction to deal with claims with less formality than a court normally requires.
- (g)The matter should be remitted for determination according to law and in the light of the Court of Appeal’s reasons.
- In an effort to limit the costs of this matter the parties agreed and Directions dated 22 February, 2016 were made, inter alia, that:
- (a)Worthington Simmons file an amended Statement of Claim and Dr Ryan file an amended Response and Counter-Application.
- (b)Dr Ryan file a further report from Mr Cosker. Dr Ryan indicated a desire to have his expert Mr Paul Cosker, address the matters referred to at paragraphs  to  of the decision of the Appeals Tribunal in relation to calculation of damages.
- (c)The parties file written submissions addressing the matters remitted to the Tribunal by the Court of Appeal; the calculation of the amount claimed by Worthington Simmons, calculation of the amount counter-claimed by Dr Ryan; and the amended Statement of Claim, Response and Counter-Application.
- (d)The transcript of the previous hearing in BDL274-11 is admitted into evidence in the re-hearing.
- The parties did not require an oral hearing. Accordingly, this matter will be determined on the papers.
- In my first decision, I set out the facts that emerged from the evidence given at the first hearing. I made findings where necessary.
- In making this decision, I rely upon the same evidence and make the same findings, which are set out below. Dr Ryan’s objections to parts of the evidence have been dealt with in the same way as in the first hearing.
- The contract was signed on 13 January, 2010.
- The contract provided for a construction period of 349 days with the date for practical completion specified as 24 December, 2010.
- Apart from some demolition work in December, 2009, work commenced in late January, 2010. Contract works were performed and progress payments were submitted after that.
- Construction of a swimming pool was excised from the contract and Dr Ryan signed a contract for construction of a swimming pool with Stuart Bevan in May, 2010.
- The contract works did not proceed with the speed anticipated by the contract.
- Mr Worthington and Mr Simmons explain the delay to completion of the works by reason of the following matters:
- (1)Pool construction started on 21 July, 2010 and concluded in August, 2011. I accept the evidence of Mr Simmons that access to the site was limited whilst pool construction was being undertaken and that the programme of works was held up by delays in construction of the pool. I have placed reliance on the fact that Mr Simmons kept a contemporaneous diary record of events on site, including delays, which supports his evidence. The diary is extracted and forms part of his affidavit filed 5 April, 2012.
Further, I accept the evidence of Mr Bevan, that rain and late payment of progress payments caused delays in completion of the swimming pool and affected the balance of construction on site. In particular, I accept his evidence that water channelled to that point in the land where the pool was to be constructed and that it took a long time to dry out, so that it was difficult to get machinery in. I accept his evidence that he left site to undertake other work, which delayed progress. I accept his evidence that work by Worthington Simmons on retaining walls, the tennis court and water tanks would have been particularly affected by the time taken to construct the swimming pool. Work continued on the swimming pool until August, 2011.
I also accept the uncontested evidence of Mr Loff that between 23 April, 2010 and 5 May, 2011 he was unable to do any major block walls until the pool shell had been poured and form work stripped.
Based on this evidence I find that pool construction did delay completion of the contact works.
- (2)Worthington Simmons claimed 37 variations to the contract. The 37 variations record a total of 107 additional days required as a result of variations to the contract works, including changes to the Plans forming part of the contract.
I accept the evidence of Mr Worthington and Mr Simmons that delay of that order was caused by the variations. During cross-examination, Dr Ryan and Mrs Ryan agreed that as a result of their building expertise Mr Worthington and Mr Simmons were best placed to determine delay to works caused by variations.
I accept the uncontested evidence of Mr Murray architect, that during the period of his involvement there were changes made by the client that incurred increases in the time frame. I do not rely on the further speculation by Mr Murray as to delays after his involvement.
I reject Dr Ryan’s submissions that someone amended the variation documents after signature by him to include a time estimate for delay to the contract works. I find that Mr Worthington and Mr Simmons were robust in cross- examination on this point and that the suggested “strangeness” in certain of the variation documents was satisfactorily explained in terms of the vagaries of handwriting and use of carbon sheets.
Based on this evidence I find that Practical Completion Stage was delayed by up to 107 days, related to variations. This number is refined later in the decision when I discuss issues related to an extension of time.
- (3)A number of delays were caused by the conduct of Dr and Mrs Ryan. I find, based on Mr Simmons evidence that delays occurred as set out in his diary. By way of example, but without being exhaustive such delays included no final decision on floor plans. Mr Simmons’ evidence is also that no timely decisions on joinery necessitated putting off carpenters programmed to work and caused a delay of 30 days to the job.
- (4)Between 1 January, 2010 to 31 May, 2011 there were a total of 100 wet days. I accept the evidence of Mr Worthington set out in his affidavit, filed 5 April, to this effect. I also accept the evidence of Mr Simmons as to the extent of rain caused delays, during the course of the contract which are recorded in his diary entries extracted and attached to his affidavit filed 5 April, 2012. Mr Simmons’ diary notes the type of delays caused to work as a result of rain and I accept that 98 days of rain delays listed by him occurred.
Based on this evidence I find that Practical Completion Stage was delayed by at least the 98 days referred to by Mr Simmons.
- This evidence and these findings meet the later submission by Dr Ryan that there is no evidence the critical path of the construction was delayed. This point is again discussed later in the decision. I have found, and upon review of the evidence as part of the remittal process find that the progress of the work as determined by Worthington Simmons was delayed by rain, variations and the actions of Dr Ryan and Mrs Ryan delaying their decision making and changing their requirements.
- I acknowledge the expertise of the expert called by Worthington Simmons, Mr Fritz. The late Mr Fritz was a very senior and experienced Master Builder and Building Consultant, well placed to judge the type of delays that affect the progress of construction work. Without accepting that he is qualified to speak to the truth of the contents of Mr Simmons diary, I accept his evidence that delays to completion of the contract were explicable by reference to the events set out in Mr Simmons diary. I accept his conclusion that a total of 208 days delay for variations and rain, plus delays estimated to be caused by the owner’s input easily exceed the delay of 230 days calculated by Napier & Blakely as attributable to the builder. I do not think small variations in the number of days delay calculated by the witnesses or found by me affects the ultimate outcome of this matter.
- I reject the evidence of Dr Ryan and Mrs Ryan that these matters were not causative of delay to the contract works. They rigidly repeated in cross-examination that they were unaware of any delays to the contract works as a result of the issues with pool construction, variations and wet days. With respect these propositions fly in the face of common sense and are unreasonable.
- Mr Worthington and Mr Simmons each admitted in evidence that they made no formal claim to extend the date for Practical Completion Stage, other than relying on the estimated additional time to complete the contract recorded on the variation documents; conversations with Dr Ryan and Mrs Ryan about delays to the project; and a letter from their solicitors, Eaton Lawyers to Dr Ryan’s solicitors, Macpherson & Kelly, dated 16 August, 2011. The letter submits a claim for extension of the construction period of 185 working days, based on an additional 115 days resulting from variations and 100 inclement weather days, 70 of which exceed the allowance in the contract. Dr Ryan made no response to the claim. A finding as to whether this conduct constitutes a claim for extension of the date for Practical Completion Stage within the terms of the contract will be addressed later in this Decision.
- Worthington Simmons submit that on 7 October, 2010, Dr Ryan orally agreed with Mr Simmons to vary the contract to delete Item 18 of the contract with respect to liquidated damages of $200.00 per day for each day of delay in achieving Practical Completion Stage as a result of the delays caused by the pool builder. Mr Simmons diary extract records the request and Dr Ryan’s agreement. I find that there is no enforceable variation of the contract as there appears to be no consideration for the variation, sufficient to create a varied contract. Neither does there appear to be any reliance upon Dr Ryan’s alleged representation by Worthington Simmons to its detriment, so that Dr Ryan might be estopped from denying the representation. In any event, such a claim has not been promulgated.
- On 23 June, 2011, Mrs Ryan delivered a Defects List to Mr Simmons, signed by both parties.
- On 24 June, 2011, Mrs Ryan and Mr Simmons signed a letter confirming furniture could be moved into the house, but that would not constitute Possession under the contract nor would Practical Completion be deemed to be achieved.
- After purported termination of the contract on 12 August, 2011, Dr Ryan took possession of the dwelling and excluded access to Worthington Simmons by engaging security guards.
Amended Statement of Claim
- Worthington Simmons have amended their Statement of Claim to additionally seek:
- (a)an order that the building period be adjusted pursuant to s 18 of the Domestic Building Contracts Act 2000 (Qld) (DBCA) to take account of delays due to wet weather, variations to the scope of work and actions of the respondent over which the applicant had no control; and
- (b)damages for breach of contract together with interest thereon at the rate of 15% pursuant to item 19 and clause 11.9 of the Contract or alternatively, pursuant to s 34B of the Queensland Building and Construction Commission Regulation 2003 at the rate of 10%.
- At a Directions Hearing held on 8 September, 2016, leave was given to Worthington Simmons to amend its Statement of Claim to claim relief under s 18 DBCA and to seek damages.
- The Statement of Claim has also been amended to allege at paragraph 9A that “During the course of construction, delays due to protracted wet weather in excess of the estimate in Part C of the Contract, variations to the scope of work and delays due to input or actions of the Respondent, which were not foreseeable at the time of execution of the Contract, increased the construction period by 185 days.”
- At paragraph 15A of the Amended Statement of Claim, Worthington Simmons set out a calculation of its loss and damage in the sum of $93,696.83 including GST, being:
Contract sum (including GST) $2,154,874.00
Less payments made $1,926,155.00
Less credits due to variations $135,022.17
Balance due (including variations 31, 33-37) $93,696.83
- At paragraph 15B of the Amended Statement of Claim, by reason of the matters described in paragraph 9A, Worthington Simmons seek an order pursuant to s 18 of the DBCA, adjusting the building period by 185 days.
Submissions by Worthington Simmons
- S 18 DBCA
- Worthington Simmons submit that pursuant to s 18 of the DBCA, the building period should be adjusted to take account of 185 additional days to the construction period as a result of delays which were unforeseeable, namely, wet weather, variations requested by Dr Ryan and delays caused by Dr Ryan.
- It is submitted that the requirements of s 18 (3) and (7) of the DBCA are met, in that the wet weather affecting the contract works, could not reasonably be foreseen by Worthington Simmons when the contract was entered into.
- Reference is made to findings by this Tribunal at first instance. At paragraph 12 of the decision made 3 April, 2013 I found that the Practical Completion Stage was delayed by at least 98 days as a result of rain. I found at paragraph 17 of the decision that the extent of rain experienced in the relevant period was not foreseeable at the date the contract was entered. I referred to evidence that the 30 days allowance made in the contract was reasonable.
- Worthington Simmons submit that the requirements of s 18(5), (9) and (11) of the DBCA are met.
- Worthington Simmons refer in its submissions to findings made by the Tribunal at first instance and by the Court of Appeal that the variations were not reasonably foreseeable. At paragraph 12(f) of the Tribunal’s decision at first instance I found that Practical Completion was delayed by 107 days related to variations In particular, the Court of Appeal found at paragraph  that there was no basis for concluding that the delays caused by the excision of the pool contract were in any way reasonably foreseeable at the time the contract was entered into.
- In its submissions Worthington Simmons does not refer to the variations which were not in writing or signed so as not to comply with the variation provisions in the DBCA, being ss 79, 80, 82 and 83. It does not isolate the period of time practical completion was delayed as a result of those variations.
- However, Worthington Simmons submit pursuant to s 18(6) and (10) of the DBCA that exceptional circumstances existed with respect to those variations. The exceptional circumstances are said to be that excision of pool construction from Worthington Simmons contract and construction of the pool by another contractor was outside their control and resulted in delay of the entire construction. Further, Dr Ryan’s refusal to sign a variation of contract excising the owner’s right to liquidated damages is said to be an exceptional circumstance. Worthington Simmons submit that I should accept the evidence of Mr Simmons that there was an oral agreement to excise the liquidated damages clause. With respect, it is not clear how any agreement or not to excise the liquidated damages clause from the contract can be an exceptional circumstance relating to work done pursuant to a variation which is not signed or in writing, which would justify an adjustment to the completion date.
- Worthington Simmons submit that the liquidated damages clause exposed them to hardship given the extent of delay in construction and the risk that any award for loss and damage would be reduced as a result of liquidated damages. It is said Dr Ryan was advised regarding the extent and significance of delay in construction.
- It is submitted that having regard to s 3 of the Queensland Civil and Administrative Tribunal Act 2009, it would not be just or fair to determine this matter in such a way as to allow Dr Ryan to benefit when most of the delay to the contract work was attributable to his actions.
- For these reasons Worthington Simmons submit the building period should be adjusted to take account of185 additional days.
- Calculation of loss and damage
- Worthington Simmons submissions in relation to calculation of loss and damage are that the formula used by me in the decision at first instance was correct.
- In relation to the sum of $17,844.38 included in the award made, but which the QCAT Appeal Tribunal indicated ought to be deducted from the award, it is submitted that the sum relates to work performed as described in Variations 31 and 33-37, recorded in Mr Worthington’s affidavit sworn 27 September, 2012 at attachment SBW 2 - as completed works. On this basis it is submitted that the work is not “forecast and pending” as described by Mr Cosker in his expert report, and should not be excluded from Worthington Simmons’ loss and damage. A letter from Mr Cosker to the solicitors for Dr Ryan has been filed pursuant to Directions made 22 February, 2016. Mr Cosker does not dispute that the Variations were not incomplete works.
- Variations 31 and 33-35 are recorded in documents which were not signed by Dr Ryan. No application pursuant to s 84 of the DBCA is made to this Tribunal. Variations 36 and 37 were approved and signed by the owner.
- Interest and Costs
- Worthington Simmons submit that their loss and damage amounts to $93,696.83. Interest is claimed pursuant to s 34B of the Queensland Building and Construction Commission Regulation 2003 at the rate specified in the contract or at the rate of 10% from the day the amount became payable until the day the amount is paid. Under the contract interest is payable at the rate of 15%. Section 3(b) of the QCAT Act and Glamoren Pty Ltd v Andrew Lee & Carey Lee  are relied upon in relation to the Tribunal’s power to award interest.
- Worthington Simmons seek an award of costs on the District Court scale.
- The claim for liquidated damages
- Worthington Simmons submit that if the Tribunal extends the date for completion pursuant to s 18 of the DBCA, any claim for liquidated damages will be extinguished.
- It does not abandon its argument that the claim for an extension of time, made on 16 August, 2011 was made within a reasonable time. Worthington Simmons refer to the reasons of the Court of Appeal that: “The claim for an extension must be made within a reasonable time after the forward progress of the works is delayed, even if that delay, or the event which causes it, is not over”.
- It is submitted that, with respect to delays due to construction of the pool, the claim for an extension of 16 August, 2011 was made before that event of delay was over. Completion of the pool occurred sometime after August, 2011. Similarly, the claim for an extension due to delay caused by the variation signed on 2 August, 2011 was made before that event of delay was over.
- In either case, the claim for an extension was made within a reasonable time, particularly where the delays attributable to the pool construction were due to matters entirely outside Worthington Simmons’ control and foreseeability. Consequently, the period of delay could not be accurately ascertained until the construction of the pool was virtually complete.
- It is said that for these reasons the claim for an extension of time was made within time which had the effect of extending the date for practical completion so as to preclude a claim for liquidated damages.
Dr Ryan’s Amended Response
- Dr Ryan has amended his response to meet the amended Statement of Claim. In relation to paragraph 9A of the Amended Statement of Claim, Dr Ryan denies that the construction period increased by 185 days, that wet weather in excess of the estimate in Part C of the Contract increased the construction period or that variations to the scope of work and delays due to the input or actions of Dr Ryan increased the construction period. Dr Ryan says that had the protracted wet weather and/or variations to the scope of work and delays due to his input or actions increased the construction period in the manner alleged, Worthington Simmons would have in the ordinary course submitted claims for extensions of time in the manner prescribed in the contract.
- In relation to the matters pleaded in paragraph 15A of the Amended Statement of Claim, Dr Ryan denies that he breached the contract and denies that Worthington Simmons has suffered loss and damage as claimed. He says that variations 31 and 33-37 were not requested or approved by him and did not form part of the works under the contract. Dr Ryan submits that he has paid for all of the work performed under the contract. Dr Ryan submits that if Worthington Simmons is entitled to recover damages, which is denied, those damages should be discounted by a sum equivalent to the costs associated with rectification of the defects identified in Dr Ryan’s Further Amended Counter-Application.
- In relation to paragraph 15B of the Amended Statement of Claim, Dr Ryan says that Worthington Simmons is not entitled to an order pursuant to s 18 DBCA, because of the matters pleaded in response to paragraph 9A of the amended Statement of Claim (that is the construction period) was not increased by 185 days.
Second Amended Counter-Application
- Dr Ryan, pleads in his Second Amended Counter-Application that Worthington Simmons have failed to perform the contract works with reasonable care and skill and in accordance with laws and legal requirements including the Building Act 1975; and that rectification of defective work will be required. The cost of rectification is said to be $97,939.96. He also asserts that he has paid $1,357.76 for electricity charges metered against the property and incurred by Worthington Simmons before the termination date.
- Dr Ryan claims:
- (a)$3,265 (including GST) being an amount overpaid;
- (b)liquidated damages in the sum of $46,000.00;
- (c)$1,357.76 for electricity charges metered against the property and incurred by Worthington Simmons before the termination date;
- (d)damages in the sum of $97,939.96 for breach of contract, being the cost of rectification work. The sum claimed includes the sum of $73,474.96 for the costs of rectifying the failure of waterproofing membranes in 2 bathrooms;
- (e)interest at a rate of 15% in accordance with the Contract; and
- (f)reasonable legal costs.
- At the Directions Hearing on 8 September, 2016, Dr Ryan was given leave to amend his Counter-Application to include extra claims for rectification of the bathrooms, not previously sought.
- The Directions made on 8 September, 2016 required Dr Ryan to file and serve any affidavits of evidence with respect to the extra costs. Dr Ryan has not filed any such evidence. Consequently, Worthington Simmons have not been able to comply with the other Directions made, including to inspect the alleged bathroom defects, file and serve an amended response to the Further Amended Counter-Application and file and serve any affidavits or to require any witness for cross-examination.
Dr Ryan’s submissions
Worthington Simmons’ damages claim
- Dr Ryan addresses Worthington Simmons claim for damages by asserting that the contract works were not completed so it is an incorrect approach to adopt the formula used by it. Dr Ryan says that it cannot maintain its claim which includes $37,577.98 (excluding GST) worth of contractual work not performed. Dr Ryan says that sum has been assessed by Dr Ryan’s expert Mr Cosker. Worthington Simmons expert Mr Fritz assessed the incomplete work at $20,025.00 (excluding GST). Dr Ryan submits that at best, Worthington Simmons would be entitled to its profit margin on $37,577.98, however there is no evidence before the Tribunal as to that amount.
- In relation to the claim for $17,844 relating to variations 31 and 35-37, Dr Ryan submits that the variation documents were not signed by him and the work was therefore not authorised. He says that if the work was performed as asserted by Worthington Simmons, then it was performed outside the contract and at best it has a quantum meruit claim. No such claim has been pleaded. Dr Ryan does not address s 84 of the DBCA.
- Dr Ryan says that Worthington Simmons’ best case is that it has suffered damages in the sum of $34,516.67 (including GST) calculated as follows:
Adjusted Contract Sum on the applicant’s case
Less amount paid by respondent
Less value of incomplete works
Less value of unapproved variations
- In relation to the claim for an extension of time under s 18 DBCA, Dr Ryan submits that it should be disallowed because s 18 was not raised at the first hearing and during the hearing Dr Ryan focused on his assertion that extensions of time were not claimed as prescribed by the contract.
- As to the number of wet days that caused delay, Dr Ryan says that there is no evidence before the Tribunal other than diary entries nominating rain on certain days. In particular, there is no evidence that Worthington Simmons was actually delayed by wet weather. There is no evidence that enables the Tribunal to calculate with any real certainty, the extent of the delays, if any, that were in fact encountered as a result of wet weather.
- Dr Ryan submits that the claim under s 18(3) should fail and that s 18(6) is not intended to give parties an opportunity to avoid their contractual obligations. It is said that Worthington Simmons did not comply with clause 15.1 of the contract to secure extensions of time for work required by variations.
- Dr Ryan challenges the estimates of time given in variations 7, 14, 15, 22 and 27 on the basis that the critical path was not affected by the variations and further says that some of the variations do not suggest there should be any consequent delay. Dr Ryan submits that Worthington Simmons led no evidence as to how the delays arose and how they impacted on the critical construction path.
- In relation to the application of s 18(6)(b) of the DBCA, Dr Ryan submits that the builder has not established that it has suffered delays, there are no exceptional circumstances within the meaning of section 18(10)(a)(i) of the DBCA because the contract provided a mechanism for claiming extensions of time and there was nothing preventing the Applicant from claiming those extensions of time, if they were valid claims, in the manner stipulated in the contract. Worthington Simmons will not suffer any hardship because Dr Ryan has not disputed the value of those variations.
- It would be unfair to Dr Ryan to make allowances for additional days claimed in circumstances where the applicant has not discharged its onus in establishing that it actually did experience the delays alleged. The respondent in the alternative will lose the right to recover liquidated damages for unreasonable delays to be offset against costs he incurred while waiting to move into his home.
- Worthington Simmons reply to these submissions by saying that in contrast to the amended cross-claim, there is evidence adduced at the original hearing to which s 18 of the DBCA applies. I am not referred specifically to that evidence. Further, it is said that it is within the remit of the Tribunal in any event to adjust the building period.
Extension of time under cl 15.1 of the contract
- Dr Ryan submits in relation to the extension of time claim made on 16 August, 2011 that taking into account the Court of Appeal decision, the single claim for an extension of time was not made within a reasonable time of the multiple alleged delays to which it relates, within the meaning of clause 15.1 of the contract. He says that much was conceded by Mr Worthington when he agreed in cross-examination that the claims were not made within a reasonable time.
- As a result, Dr Ryan says that the claims for extensions of time are not valid and should not be allowed.
Dr Ryan’s Counter-Application
- In relation to the expansion of Dr Ryan’s cross claim for the cost of rectification work, that claim has been expanded twice. The first expansion was set out in his Second Amended Counter-Application, dated 4 March, 2016. At that time he claimed an extra sum of $13,215 plus GST. Dr Ryan says that Worthington Simmons had notice of the claims as the work was referred to in the Navan Report and the claim relating to failure to provide Certificates in relation to the work, was dealt with by the experts in their joint report.
- Dr Ryan relies on the joint expert’s report or the evidence of Mr Greg Millsopp of Navan’s as evidence of the cost.
- The second expansion is made in the Second Further Amended Counter-Application, dated 29 September, 2016. The claim adds a further sum of $73,474.96 for the costs of rectifying the failure of waterproofing membranes in 2 bathrooms.
- In relation to a claim based on a failure to provide Certificates, Dr Ryan refers to s 39(2) of the DBCA which obliges any party who receives a Certificate of Inspection, to give a copy to the building owner as soon as practicable after receiving the document. Dr Ryan notes that the various Certificates have now been delivered to him, but they were produced to Worthington Simmons in 2010 or 2011. The Certificates are required to secure a Certificate of Classification from the Brisbane City Council which can only be done during the currency of the Building Approval. The Building Approval expired before receipt by Dr Ryan of the Certificates. He is now put to the cost of reapplying for Building Approval and a Certificate of Classification.
- An affidavit of Christian Dreyer, solicitor employed by the lawyers for Dr Ryan swears to a conversation with Mr Daniel Devrain of Steve Watson & Partners, Building Surveyors and Carpenters, to the effect that the cost of re-applying for a building approval will be $3,000.00 excluding GST.
- Despite referring to adjustments made by the joint experts report, dated 21 May, 2012, reducing Dr Ryan’s claim by $3,500.00 (excluding GST), the adjustment is not reflected in Dr Ryan’s claim.
- On Dr Ryan’s reasoning as set out in his written submissions, adjusted to take account of the increased claim for rectification costs, he seeks recovery of $110,781.05 from Worthington Simmons calculated as follows:
Worthington Simmons adjusted claim
Less amounts awarded to the respondent at the original hearing
Less value of defect rectification work
Less liquidated damages
- Interest calculated by reference to the rates prescribed in section 58 of the Civil Proceedings Act 2011 is claimed together with costs. Depending on the outcome of this matter, Dr Ryan has reserved a right to make submissions on costs.
- In relation to Dr Ryan’s claim for rectification costs, I had earlier found that Dr Ryan’s breach of contract led to a lawful termination of the contract by Worthington Simmons, thereby preventing rectification of work which would otherwise been performed during the defects liability period. Dr Ryan’s first claim for rectification costs was denied for that reason. The finding attracted no adverse comment from the appeal tribunal or the Court of Appeal. Dr Ryan has since expanded his claim. At the directions hearing on 8 September, 2016, I asked Dr Ryan’s solicitors to provide me with submissions as to why, in the light of that finding, his claim should be considered.
- Dr Ryan submits that Worthington Simmons is entitled to be placed in the same situation as if the contract had been performed. It is not entitled to be placed in a better position, by way of damages, than would have been occupied had the contract been performed.
- Dr Ryan submits that had the contract in question not been terminated and Worthington Simmons was obliged to fully perform the works under the contract, Worthington Simmons would have been put to the expense of rectifying the defects in question. It is said to follow that in order to put Worthington Simmons in the position it would have been in had the contract been fully performed, the costs associated with the rectification of the various defects raised by Dr Ryan in his Amended cross claim should be taken into account in the assessment of those damages. If they are not, then Worthington Simmons will end up in a significantly better position than it would have been in had the contract been fully performed.
Worthington Simmons Reply to the Counter-Application
- In reply, Worthington Simmons submit that Dr Ryan expressly limited his claim at the first hearing. It says there should be finality of litigation and that it will suffer prejudice if the Tribunal permits further claims to stand due to Worthington Simmons expert, Mr Fritz being deceased. In this regard,Dr Ryan filed an application for leave to amend his counter-application. Leave was granted for the amendment on 8 September, 2016. In the interests of ensuring each party had a full opportunity to ventilate their case, both the applicant and the respondent were given leave to make amendments as sought by them after I heard submissions from each of them on the issue.
- Worthington Simmons say there is no evidence that any of the alleged defects have been rectified since the contract was terminated in August, 2011 over 5 years ago. I agree this is the case. Further there is no evidence as to the extra costs filed by Dr Ryan, in accordance with the Directions made on 8 September, 2016. As a consequence there has been no inspection of the alleged defects and no evidence from Worthington Simmons.
- Worthington Simmons say the original finding that the claims for costs of rectification would ordinarily be attended to within the six months defects liability period should stand.
- It says that the Tribunal should conduct itself in accordance with ss 3(b) and 28 of the QCAT Act.
- In relation to the claim by Dr Ryan for the costs of re-application to the Brisbane City Council for a building approval, Worthington Simmons say that its obligation to deliver certificates was discharged as a consequence of the breach of contract by Dr Ryan. The time for delivery of the certificates had not been reached, pursuant to clause 17.10 of the building contract, when Dr Ryan breached the contract. Further Dr Ryan failed to mitigate any loss by applying for an extension of the building approval or alternatively obtaining the requisite certification prior to the building approval lapsing.
- With respect to the submissions made by Dr Ryan in relation to the calculation of Worthington Simmons’ damages, it says that the submissions are misconceived and that Dr Ryan is liable for loss and damage pursuant to clause 17.9 of the building contract, for breaching the contract by taking possession of the works when not entitled to do so.
Issues to be determined
- The issues to be determined are:
- (a)Which party lawfully terminated the contract?
- (b)What are the entitlements of each party upon termination?
- How are damages to be calculated?
- (c)Is Dr Ryan entitled to liquidated damages?
- Has the Date of Practical Completion been extended under clause 15 of the contract?
- Do the circumstances exist for an extension of the Date of Practical Completion under s 18 of the DBCA?
Termination of the contract
- At the first hearing I found that the contract was not validly terminated by Dr Ryan on 12 August, 2011 because the reasons for the increase in time affecting the date for Practical Completion were not reasonably foreseeable at the time the contract was entered. Accordingly it was not open to Dr Ryan to seek to terminate the contract under clause 21.1 of the contract.
- The Court of Appeal concluded that: “Since Dr Ryan purported to terminate the contract a month or so after 1.5 times the initial contract period, his purported termination did not take into account the unforeseeable period of extensive delay due to the pool contract. Without taking that into account his termination was ineffective, as the Member found.”
- In light of the Court of Appeal’s decision, my finding on remittal is that Dr Ryan did not lawfully terminate the contract.
- No objection was made on appeal by Dr Ryan, to the finding made at the first hearing, that Worthington Simmons validly terminated the contract under clause under clause 22 of the contract. I repeat my original findings that:
- (a)Worthington Simmons was not in substantial breach of the contract through failure to reach practical completion;
- (b)the notice of suspension of works and the notice of intention to terminate were validly given on 16 August, 2011;
- (c)Dr Ryan made no objection to the Notices, other than to say they were of no consequence. Dr Ryan did not remedy the alleged breaches and as a consequence the contract was terminated. The breaches alleged were:
- failure to provide free and uninterrupted access to the land;
- failure to make payment in full of progress claim 17 issued 4 July, 2011 and progress claim 18 issued 29 July, 2011;
- taking possession of the works on 15 August, 2011, without the prior written consent of the builder prior to paying the final progress payment.
- As a consequence, the contract was validly terminated by notice on 29 August, 2011. In addition, Worthington Simmons exercised their rights at common law to accept Dr Ryan’s repudiation of the contract, resulting in a valid termination of the contract.
What are the entitlements of each party upon termination?
- The effect of a lawful termination of the contract by Worthington Simmons is that it is entitled under clause 22.4 of the contract to recover from Dr Ryan, all loss, costs, expenses and damages in connection with Dr Ryan’s breach and the termination, as if Dr Ryan had wrongfully repudiated the contract.
- That calculation is set out below.
- There has been no challenge to the finding from the first decision that Worthington Simmons is entitled to the sum of $4,189.66 being interest on late payments, calculated at the rate of 15% as set out in the spread sheet forming part of SBW10 to Mr Worthington’s affidavit filed 5 April, 2012. I find that the entitlement to that sum had accrued at the date of termination and was part of the benefit Worthington Simmons could have expected under the contract, but for the breach by Dr Ryan resulting in termination of the contract. Although Dr Ryan contended that the claim was not proved by records as to payment date, I am satisfied that the spread sheet sets out the appropriate dates. None of the dates were challenged in cross-examination.
- Worthington Simmons also claims interest on the amount of damages awarded to it. Dr Ryan makes no submissions in relation to the calculation of interest.
- Worthington Simmons have claimed interest on its award of damages. This Tribunal is empowered to award interest on damages pursuant to s 77(3) of the Queensland Building and Construction Commission Act 1991. By s 34B of the Queensland Building and Construction Commission Regulation 2003, the rate is either the rate specified in the contract or 10% payable on and from the day after the day that the amount became payable until and including the day the amount is paid. The only rate specified in the contract relates to the payment of interest on overdue payments. No rate is specified with respect to any award of damages. Accordingly, I intend to award a sum for interest at the rate of 10%.
- The calculation of interest is set out below.
- Despite mounting a claim for recovery of the alleged cost of rectification of defective work, Dr Ryan has not provided any evidence of the further significant claim for rectification of bathrooms. The other items are dealt with in Dr Ryan’s experts’ report and the joint expert report and are analysed later in this decision.
- Further, in his final submissions Dr Ryan does not advance a case as to why he is entitled to recover the cost of rectification work, given the findings as to his breach of the contract and repudiatory conduct. Dr Ryan’s only submissions are that had the contract not been terminated, Worthington Simmons would have been put to the expense of rectifying the defects in question and the costs associated with the rectification should be taken into account in the assessment of Worthington Simmons’ damages.
- I find that Dr Ryan is not entitled to recover his claims for the cost of rectification of defective work. That is work which would ordinarily be attended to during the defects liability period, however, his conduct in breaching the contract which lead to termination of the contract, meant that he effectively prevented Worthington Simmons from attending to any rectification. He should not benefit from his own breach. As at the date of termination of the contract, Dr Ryan had no accrued cause of action for breach of contract arising out of defective work, which would enable him to sustain his claim.
- I also find that Dr Ryan is not entitled to recover the costs associated with re-applying to the Brisbane City Council for a building approval which he claims in the sum of $3,000.00. I accept the submissions of Worthington Simmons, that it was discharged from any obligation to deliver those certificates upon termination. Further, it was a matter for Dr Ryan to mitigate his loss, which he does not appear to have done.
- On the basis of the reasoning set out in the first decision, Dr Ryan is entitled to recover the cost of electricity charges in an amount of $1,357.76 as a debt which accrued prior to the date of termination.
How is Worthington Simmons’ damages and interest to be calculated ?
- Worthington Simmons submit that the formula for assessment of damages utilized in the first decision is correct. That is the difference between the contract price less the cost of executing incomplete work and less any part payment. Dr Ryan does not challenge the formula, but submits that cost of completing incomplete work should include the cost of undertaking rectification work. The formula has not been criticized by the Appeal Tribunal.
- However, the treatment of variations 31-37 has caused difficulty in determining the adjusted contract price.
- Both parties use calculations inclusive of GST. Accordingly I will proceed on that basis.
- I accept the submissions of Dr Ryan that with respect to incomplete work, Worthington Simmons is entitled to recover his profit on that work. I reject the submission that there is no evidence of that sum. The contract price, adjusted to take account of approved variations, contains the profit margin on the job.
- I accept the submissions of Dr Ryan that the saved cost of executing incomplete work, must be taken into account. In this regard, I prefer the evidence of Mr Cosker recorded in the joint expert’s report, dated 26 April, 2012 (Exhibit 23), that the cost of incomplete work is $37,577.98 ($41,335.77 inclusive of GST). I prefer Mr Cosker’s evidence because of his qualifications as a quantity surveyor, compared to Mr Fritz as a builder.
- I accept the submissions of Dr Ryan that when determining the saved cost of incomplete work, it is necessary to consider the saved cost of undertaking defect rectification work. The evidence of the cost of defect rectification work appears in the Navan Building Consultancy Report, dated 10 May, 2012 (Exhibit 25) and in the joint expert report dated 21 May, 2012 (Exhibit 24). To the extent that the experts were unable to agree, I prefer the evidence of Mr Millsopp, the author of the Navan Building Consultancy Report on the basis that the joint expert report reveals Mr Fritz was to provide further information but has not done so.
- The joint expert report and the Navan Building Consultancy Report deal with all but two of the claims for defective work set out in the Second Further Amended Counter-Application. I accept that the cost of rectification of the items addressed by the experts is as follows:
- (a)Item 1 Navan Report – as assessed by Mr Millsopp – rectifying staining on stainless steel glazing brackets on pool fence adjacent to tennis court - $4,650.00 excl. GST ($5,115.00 incl. GST);
- (b)Item 7 Navan Report – as agreed by experts – install timber skirting in mud room - $250.00 excl. GST ($275.00 incl GST);
- (c)Item 8 Navan Report – as agreed by experts – external paving, replace 6 cracked pavers - $1,000.00 excl, GST ($1,100.00 incl. GST);
- (d)Item 9 Navan Report – as agreed by experts – in relation to rectification of faulty lighting downstairs bedroom, further investigation is required by Electrical Contractors Association to recommend independent person to review and recommend repair options with costs. Cost of investigation to be split 50/50 between the parties. No further evidence supplied. Amount disregarded for lack of evidence;
- (e)Item 13 Navan Report – as agreed by experts – fill screw holes and paint chamfer board in area from which air-conditioner was relocated - $450.00 excl. GST ($495 incl. GST);
- (f)Item 14 Navan Report – agreed by experts no defect related to removal of rust staining from localised steel brackets. Amount disregarded.
- (g)Item 16 Navan Report – as agreed by experts – move gas meter to meter box in fence, cost unknown. Amount disregarded for lack of evidence.
- (h)Item 17 – Navan Report – as assessed by Mr Millsopp – investigate, replace and/or correct fall on overflow pipes in ground level bathroom - $3,000 excl. GST ($3,300.00 incl. GST);
- (i)Item 2 – Navan Report – as agreed by experts – rectify tiling in pool area where water is pooling - $1,500.00 excl. GST ($1,650.00 incl. GST);
- (j)Item 4 – Navan Report – as assessed by Mr Millsopp – kitchen bulkhead leak - $2,000.00 excl. GST ($2,200.00 incl. GST);
Total: $14,135.00 incl. GST.
- The Navan Report does not deal with alleged defective electrical work throughout the house and to the pool area. Dr Ryan asserts the cost of rectification is $3,200.00. That cost emerges from the evidence of David Gilmore and his affidavit filed 1 June, 2012 (Exhibit 29). In cross-examination it was revealed that many problems with lighting related to the temporary power pole left in place upon termination of the contract and that problems were solved once it was removed. The evidence is that the pole is normally removed upon completion. Mr Gilmore’s evidence was unsatisfactory as to the costs attributable to the temporary power pole and other issues he investigated and attended to. I find that any electrical problems encountered by Dr Ryan were not caused by Worthington Simmons negligent work, but rather by his breach of contract including denying Worthington Simmons access to the site to attend to the temporary power pole. Mr Cosker classed no electrical work as incomplete work. Apart from suggesting a need for further investigation Mr Millsopp did not class any electrical work as defective. For these reasons the amount claimed by Dr Ryan is disregarded.
- The Navan Report does not deal with the alleged cost of rectifying the failure of waterproofing membranes in 2 bathrooms. Dr Ryan asserts the cost is $73,474.96. Dr Ryan has not filed supporting evidence as directed. The amount is disregarded.
- In relation to the value of the adjusted contract sum, I note that the parties are agreed the contract sum including GST is $2,154,874.00.
- Worthington Simmons calculate the credit due to variations as $135,022.17. That sum includes variations 31 and 33-37. The decision of the appeal tribunal notes that Mr Worthington accepts that variation 32 was a pending variation and that no amount was in fact claimed for that item and that the amount of damages should be reduced by this amount.
- I accept the evidence of Mr Simmons that the work the subject of variations 31 and 33-37 has all been completed. I note Mr Cosker does not say that the work is incomplete.
- I accept the submission of Dr Ryan that unapproved variations do not form part of the contract works. I have previously noted that Worthington Simmons have not made application pursuant to s 84 of the DBCA for an order for payment of the sum the subject of the unapproved variation. Nor is a claim for restitution based on a quantum meruit made. Unapproved variations include variations 31, 33, 34 and 35 totalling $19,839.85 inclusive of GST.
- The total value of approved variations 36 and 37 is $17,343.00 inclusive of GST. In relation to variation 37, Worthington Simmons is entitled to be paid for this work and it should properly form part of their loss and damage. I note from Dr Ryan’s submissions that the certificate of classification has been delivered.
- I calculate the total value of approved variations 1-30 to be $129,567.00 inclusive of GST, which must be deducted from the contract sum. Because Variations 31-35 were not approved, I do not take them into account. However, variations 36 and 37 were approved. Variation 36 was a credit for a garage door to be removed. Variation 37 was for pool and other fencing. The work was completed. Accordingly the sum for which a deduction from the contract price must be made is reduced to $112,224.36 inclusive of GST.
- On the basis of these findings I calculate the damages of Worthington Simmons to be:
Credit for variations
Less payments made
Less cost of incomplete work
Less cost of rectification
Plus interest on late payments
- A period of well over 5 years has elapsed since Dr Ryan became liable to Worthington Simmons for damages for breach of contract on 29 August, 2011. During that time a hearing, two appeals and a further hearing on the papers have taken place. Dr Ryan has met with some success in each appeal. On this basis, I do not consider it appropriate that he be required to pay interest for the full period from the date of termination to the date he is ordered to pay damages. In the absence of submissions from either party and doing the best I can, I calculate interest on the sum of $65,213.48 from the day after the date of termination of the contract by Worthington Simmons to a date when he might ordinarily have been ordered to pay damages after the first hearing. That is for a period 30 August, 2011 to 30 May, 2013. The amount of interest is $11,416.83.
- Worthington Simmons’ damages for breach of contract are $65,213.48, inclusive of GST. Interest on that amount is $11,416.83.
- I will offset the award in favour of Dr Ryan of $1,357.76 against Worthington Simmons’ damages resulting in an award of damages of $63,855.72 inclusive of GST. I award interest in the sum of $11,416.83 on the original damages sum.
Is Dr Ryan entitled to liquidated damages?
- In the first decision I found that a notice given by the lawyers for Worthington Simmons on 16 August, 2011 was a valid claim for extension of time made under clause 15 of the contract in relation to delays caused by variations and wet weather. I found that the notice had been lodged within a reasonable time because it was given 10 days after a variation signed on 2 August 2011 and two and a half months after a rainy day on 31 May, 2011 prevented machines entering the site. I found that Dr Ryan did not exercise his contractual right to dispute the claimed period of delay. I found that the date for practical completion is deemed to be automatically extended by the period stated in the claim. That is a period of 185 working days, which exceeds the date on which Dr Ryan took possession of the site on 12 August 2011.
- The Appeal Tribunal concluded my interpretation of the clause and my finding that the claim was made within a reasonable time was open on the evidence.
- The Court of Appeal disagreed. It noted that Worthington Simmons first purported to make an extension of time claim under clause 15.1 on 16 August 2011. That was 8 months after the date for practical completion (24 December 2010) and after Dr Ryan purported to terminate on 12 August 2011.
- The Court of Appeal found that a builder cannot stand back and wait until the delay event comes to an end, or the delay is finalised. When the forward progress of the works is delayed, that starts the time running. The claim for an extension must be made within a reasonable time after the forward progress of the works is delayed, even if that delay, or the event which causes it, is not over.
- The Court of Appeal said that on remittal I will have to apply the evidence in light of the correct construction of the contract.
- Dr Ryan claims the sum of $46,000.00 by way of liquidated damages, being 230 days from the date of completion until the date he took possession, multiplied by $200.00 per day, as provided for in the contract.
- I find that:
- (a)despite termination of the contract, Dr Ryan is entitled to claim liquidated damages as a debt;
- (b)$200.00 per day is not a penalty;
- (c)the prevention principle does not apply in circumstances where there is a contractual mechanism for obtaining an extension of time, which is intended to overcome the prejudice a party may suffer in being exposed to liquidated damages when all or part of the delay is caused by the other party.
- In light of the conclusion reached by the Court of Appeal, I accept the submissions of Dr Ryan that the single claim for an extension of time was not made within a reasonable time of the multiple alleged delays to which it relates, within the meaning of clause 15.1 of the contract.
- Even though the Notice was given within a reasonable time of the last incidents of delay, I do not think it was given within a reasonable time of the forward progress of the job being delayed from time to time during the course of the contract. For example, I note from Mr Simmons diary entries that on 25 November 2011 he told Sally Ryan: “…won’t be in house until March if Stuart Bevan does what he said he will.” That would have been an opportune time to deliver a notice. Likewise on 31 January, 2011 Mr Simmons records: “Ryan discussed again when they could move in. Told them it depended on Stuart Bevan Pools. April at the very earliest”. Again that would have been an appropriate time to deliver a notice of extension of time, in view of delays caused by the pool contract.
- However, I do not think that is an end of the analysis. The contract is in evidence before me. I cannot ignore its terms. The Court of Appeal did not refer to the effect of clauses 15.3 and 15.4.
- The contract is structured to recognise the reality that the progress of Works will often be delayed for a large variety of reasons beyond the reasonable control of the builder. The contract terms are intended to ensure an accommodation is reached to take account of delays beyond the control of the builder.
- By clause 15.1, the builder must give a notice, within a reasonable time, claiming a reasonable extension. There is no prescribed time frame for the giving of the notice. What is “reasonable” will always be a matter of judgment. In some cases it will be clear what is a reasonable time, and in others it will not. To overcome that problem, the contract casts an obligation on the owner to reject or dispute the claim within 7 days after receipt. By clause 15.2, the owner must reject or dispute the claim, otherwise the practical Completion Stage will be deemed to be automatically extended by the period stated in the claim. That is a clear and unequivocal consequence of failure by the owner to address the question of delay by rejecting or disputing the notice and the claim for extension.
- I find that on the facts of this case the deemed extension provided for in clause 15.2 is triggered. On this basis I find that the Practical Completion Stage is extended by the claimed 185 working days.
- Dr Ryan may complain that is an unfair outcome for him given the lateness of the Notice. He had an opportunity to raise that complaint at the time the Notice was given. On the Court of Appeal’s analysis he would have had good grounds to reject the Notice. He did not.
- If Dr Ryan had rejected or disputed the claim, he may not, in any event, have been relieved of some period of extension of time. Clause 15.4 provides that in the event the owner does dispute or reject the claim, the builder is “still entitled to a fair and reasonable extension of time of the Date of Practical Completion Stage”.
- The contract plainly intends that even if the builder has not given his notice within a reasonable time or that he has not claimed a reasonable extension, an extension will nevertheless be a result if that is “fair and reasonable”.
- The contract is structured to ensure that conclusion can be reached. Clause 28 provides a mechanism for resolution of disputes. First by “without prejudice conference” and then by mandatory reference to this Tribunal for resolution. I note this particular contract still refers to this Tribunal’s predecessor, the Commercial and Consumer Tribunal. For business efficacy that must be read as a reference to the Queensland Civil and Administrative Tribunal, the successor Tribunal having jurisdiction over building disputes.
- Under the contract entered into between the parties, the builder does not fall at the first hurdle if he has not delivered a notice within a reasonable time as required by clause 15.1. Provided a notice has been delivered the contract will either deem an extension to the date of Practical Completion Stage or result in an extension which is fair and reasonable in the circumstances.
- That is a sensible regime for managing domestic building works, where the parties to the contract are lay people and tradesmen.
- For these reasons I find that the Date of Practical Completion Stage is deemed to be extended by a period of 185 working days which reaches beyond the date when Dr Ryan took possession of the Works on 12 August 2011. By my calculations the relevant date, 185 working days from 24 December 2010, is 22 September 2011.
- On this basis, Dr Ryan has no entitlement to liquidated damages.
S 18 of the DBCA
- Although I have found Dr Ryan has no entitlement to liquidated damages, for completeness and as an alternative, I will consider the further ground raised by Worthington Simmons as extinguishing Dr Ryan’s claim for liquidated damages.
- The contract entered into by the parties provides at clause 29.6 that the contract is to be governed by and construed in accordance with the laws of Queensland. The DBCA has now been repealed. However the version current at the material dates is applicable to this contract and the parties. A purpose of the DBCA is to “achieve a reasonable balance between the interests of building contractors and building owners”.
- The contract does not purport to contract out of the rights and entitlements conferred by the DBCA. Nor does s 18 of the DBCA provide that it only operates subject to the terms of any contract entered into between the parties. S93 of the DBCA gives primacy to the Act. For these reasons, Worthington Simmons is entitled to the benefit of s 18 of the DBCA.
- Dr Ryan submits the claim for an extension of time under s 18 of the DBCA should be disallowed because it was not raised at the first hearing and he was focussed on his assertion that extensions of time were not claimed as prescribed by the contract. I reject that submission. I am determining this matter afresh on remittal. For the convenience of the parties evidence given at the first hearing forms part of this hearing. Dr Ryan has had notice of the claim since service of the Amended Statement of Claim dated 29 February 2016. It was open to him at any time thereafter to request attendance of witnesses and an oral hearing if he thought it was necessary to meet the new claim. He has not done so.
- On the facts as found by me, it is not the case as submitted by Dr Ryan that s 18 will have the effect of excusing Worthington Simmons of its contractual obligation under clause 15.1 of the contract. I have found that Worthington Simmons did deliver a notice under clause 15.1 of the contract, albeit not within a reasonable time. It is Dr Ryan who chose not to respond to that notice.
- In all, if Worthington Simmons can bring itself within the terms of s 18 of the DBCA, then it is entitled to the benefit of the section.
- S 18 of the DBCA contemplates 5 circumstances relevant to this matter, when the stated completion date in a contract must be adjusted to take account of additional days. I note the use of the mandatory term - “must”. The circumstances are:
- (a)inclement weather which could not reasonably have been foreseen when the contract was entered into (s 18(3);s 18(7) and s 33);
- (b)other delays which could not reasonably have been foreseen when the contract was entered into (s 18(4);s 18(8)) ;
- (c)delays caused by variations to the contract sought by the building owner, where the record of the variation is written and signed by the parties (s 18(5));
- (d)delays caused by variations to the contract sought by the builder, only if the circumstances causing the variation could not have been reasonably foreseen by the builder when the contract was entered into; and the record of the variation is written and signed by the parties. (s 18(5);s 18(9);s 18(11)).
- (e)delays caused by variations to the contract, which are not in writing or signed:
- if QCAT approves the adjustment on application by the builder and either:
- there are exceptional circumstances to warrant an allowance; or
- the builder would suffer unreasonable hardship if an allowance is not made; and it would not be unfair to the owner to make an allowance for additional days. (s 18(6); s 18(10) ).
- I have found that there were 98 days of delay caused by rain. I have found that the extent of rain experienced at the time of the contract could not have reasonably been foreseen. I reject the submission of Dr Ryan that Worthington Simmons have not demonstrated that the critical path of the Works was affected by rain. I rely on the contemporaneous diary of Mr Simmons recording rain days and consequent delays. I rely upon the expert evidence of Mr Fritz that delayed progress of the works is explained by the rain days and types of delays described by Mr Simmons. I rely on the evidence of Dr Ryan that Mr Simmons would be well placed to observe the effect that rain would have upon the progress of the construction.
- Accordingly, the stated completion date in the contract must be adjusted by the additional 68 working days beyond that allowed for in the contract.
- Worthington Simmons do not attempt a calculation of the number of days the contract was delayed as a result of construction of the swimming pool. It does not expressly seek an adjustment under s 18(4) of the DBCA.
- I have found the submissions of Worthington Simmons rather confused in relation to the interplay between s 18(5) and s 18(6) of the DBCA.
- In the case of delays caused by variations which are recorded in writing and signed; and sought by the building owner, no other conditions must be met before an adjustment must be made to the time for completion. By reference to the particulars of the variations set out in the Amended Statement of Claim, I calculate that the number of additional days caused by written and signed variations, requested by Dr Ryan, to be 93 days.
- Dr Ryan submits that it would be unfair to make allowances for additional days claimed in circumstances where Worthington Simmons has not discharged its onus in establishing that it actually did experience the delays alleged and he will lose the right to recover liquidated damages for unreasonable delays to be offset against costs he incurred while waiting to move into his home.
- In particular Dr Ryan challenges the estimates of time given in variations 7, 14, 15, 22 and 27 on the basis that the critical path was not affected by the variations and some of the variations do not suggest there should be any consequent delay. I reject that submission. Mr Worthington and Mr Simmons made a judgment at the time as to the effect of the variation on the time for completion. It is a matter of common experience that there are a myriad of factors which go into steering a complex building project to completion, such as the order of work, the labour available and the time taken for ordering and deliveries.
- I accept Mr Worthington and Mr Simmons as witnesses of credit. I accept the evidence of Mr Worthington and Mr Simmons that the additional time required to complete the contract, estimated as a result of the variation, in fact occurred. I accept the evidence of Mr Worthington that it was often necessary to undertake the work the subject of the variation before the signed variation document was returned, in order to progress the works. I accept the evidence of Mr Fritz that the variations were causative of delay to the Works. I also rely on Dr Ryan’s concession in cross-examination that Mr Worthington and Mr Simmons were well placed to assess the increase in time that any variations would produce. He also agreed that Mr Worthington and Mr Simmons were well placed to determine the order in which construction ought to take place.
- The stated completion date in the contract should be adjusted by a further 93 working days.
- The effect of these two adjustments is to take the Date of Practical Completion past the date on which Dr Ryan took possession of the Works on 12 August 2011.
- Accordingly, I find that as a result of adjustments to the Date of Practical Completion made in accordance with s 18 of the DBCA, Dr Ryan has no entitlement to liquidated damages.
- Because of these findings it is not necessary to go further and consider whether an adjustment would be available on the other grounds available under s 18 of the DBCA.
- Each party seeks costs of the proceeding. It is appropriate that the parties make submissions in relation to costs in view of this Decision.
- I order that:
- The respondent Dr Andrew William Ryan pay the applicant Steven Bryan Worthington t/as Worthington Simmons Builders $63,855.72 for damages, and $11,416.83 for interest by 7 February 2017.
- The applicant and the respondent file and serve any submissions in relation to costs by 27 January 2017 and they file and serve any submissions in reply by 10 February 2017.
Exhibit 28, Affidavit of Andrew Ryan, affirmed 1 June, 2012 – attachment AWR 9 at p.59.
 QCATA 176 at .
Ibid at .
Power v Catton Constructions Pty Ltd ACN 087539571  QCAT 595.
Ryan v Worthington  QCA 201 at paras 42 and 49.
Robinson v Harman  ENG R 135, Bellgrove v Eldridge (1954) 90 CLR 613, Tabcorp Holdings Limited v Bowne Investments Pty Ltd (2009) 236 CLR; Commonwealth v Amann Aviation Pty Ltd(1991) 174 CLR 64; Winrobe Pty Ltd v Sundin’s Building Co Pty Ltd (unreported) CA(NSW) BC 9201811.
Ryan v Worthington  QCA 201 at .
McDonald v Dennys Lascelles Ltd  48 CLR 457 at 476-477.
Qline Interiors Pty Ltd v Jezer Construction Group Pty Ltd and Ors (2002) QSC 88 at .
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361 at 380.
Dunlop Pneumatic Tyre Co Limited v New Garage & Motor Co Limited  AC 79.
Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No2) (2012) 287 ALR 360; Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd  NSWCA 211.
Transcript , 15 November, 2012, p100 at lines 4-30.
Transcript 15 November, 2012, p.97 at lines 6-9; 22-25;27-30.
- Published Case Name:
Steven Bryan Worthington t/as Worthington Simmons Builders v Andrew William Ryan
- Shortened Case Name:
Worthington v Ryan
 QCAT 12
17 Jan 2017