Lawrence v Stroudbuilt Pty Ltd
[2018] QCAT 266
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- Unreported Judgment
- Lawrence v Stroudbuilt Pty Ltd[2018] QCAT 266
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Lawrence v Stroudbuilt Pty Ltd[2018] QCAT 266
Lawrence v Stroudbuilt Pty Ltd[2018] QCAT 266
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Lawrence & Anor v Stroudbuilt Pty Ltd trading as Stroud Homes [2018] QCAT 266 |
PARTIES: | MARTIN STEWART LAWRENCE (first applicant) SUSAN RUTH LAWRENCE (second applicant) v STROUDBUILT PTY LTD TRADING AS STROUD HOMES (respondent) |
APPLICATION NO/S: | BDL211-17 |
MATTER TYPE: | Building matters |
DELIVERED ON: | 8 August 2018 |
HEARING DATE: | 5 March 2018 |
HEARD AT: | Brisbane |
DECISION OF: | Member Holzberger |
ORDERS: |
|
CATCHWORDS: | CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – where failure of respondent to install gas hot water system as described in quotation – whether standard system was to supplement the gas hot water system CONTRACTS – CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – where rocks encountered in excavation – whether notice given to applicants of the variation claim for rock excavation – whether applicants’ decision for handover made under duress or commercial decision CONTRACTS – CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – where $550 of liquidated damages given for late variation – where applicants allege incorrect calculation of liquidated damages – whether decision to accept made under duress or commercial decision CONTRACTS – CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – OTHER MATTERS – where respondent builder makes counter claim – whether $4,400 of ‘bushfire allowance’ was credited twice Queensland Building and Construction Commission Act 1991 (Qld), Schedule 1B Mt Cotton Constructions Pty Ltd v Greer [2017] QCAT 11 |
APPEARANCES & REPRESENTATION: |
|
First Applicant: | Self-represented |
Second Applicant: | Self-represented |
Respondent: | Self-represented by T Eldridge |
REASONS FOR DECISION
- [1]Martin Stewart Lawrence and Susan Ruth Lawrence (‘the Lawrences’) entered into a contract with Stroudbuilt Pty Ltd trading as Stroud Homes (‘Stroud’) for construction of a new home on their property at 92-94 Riemore Circuit, Tambourine on or about 24 February 2016 (‘the contract’).
- [2]
- [3]The Lawrences had conducted ‘lengthy investigations’[2] into the construction. Negotiations with Stroud for the contract had commenced in early December 2015. Throughout those negotiations Stroud was represented by its consultant Brian Canavan.
- [4]A detailed written quotation was prepared by Stroud on or about 12 January 2016.[3] After further discussions a document titled ‘authority for variation – pre-contract’ dated 23 February 2016 was produced and executed by the parties. That document listed a number of additions and deletions reducing the original contract price contained in the quotation from $374,158.33 to $356,992.36.[4] That lesser amount is the contract price contained in the contract.
- [5]The Lawrences took possession of the constructed home in August 2016. There are four areas of dispute between the parties, three raised by the Lawrences and one by way of counter-claim by Stroud. Those disputes are:
- (a)The failure by Stroud to install a gas hot water system, the Lawrences say should have been installed valued at $1,888.10;
- (b)A refund of an overpaid amount of $7,181.99 claimed by Stroud for rock removal;
- (c)Additional liquidated damages the Lawrences say are owed to them in the sum of $350.00; and
- (d)Refund to Stroud in the sum of $4,400.00 which it says was an allowance made in the quotation for bushfire mitigation which was unnecessary but had been set off against the contract price twice.
- (a)
Hot water system
- [6]The quotation specified in the section headed ‘Structural – external’ as follows, ‘Hot water system (instant gas 26lt/m C/Flow)’.[5]
- [7]Later that document provides as follows:[6]
Line | Qty | Description | Unit Price (inc GST) | Unit | Price (inc GST) |
Variation 16 | |||||
98 | 1 | Upgrade to Solarhart Split Electric Boost 342lt | $2,579.38 | ea | $2579.38 |
- [8]The complete specification has not been filed in the Tribunal by either party, but the Lawrences have filed an extract[7] which the Lawrences relevantly say provides:
26. PLUMBING AND GAS
…
b) Gas bayonet and regulator is included for the gas hot water system.
…
e) Water heater shall be a Solarhart Split Electric Booster 342lt.
- [9]It is not in dispute that the gas hot water system or the bayonet and regulator were not installed. The Lawrences say that the Solarhart system installed is not as described in the quotation.
- [10]Mr Thomas Eldridge who gave evidence for Stroud said in evidence that the Solarhart system was incorrectly described in the quotation and that the system installed is appropriate, and not inferior or less expensive than that described erroneously in the quotation. The Lawrences provide no evidence that it is an inadequate or inferior product.
- [11]Mr Eldridge says that the reference to ‘upgrade’ clearly contemplates the replacement of the gas hot water system with a more expensive alternative, and that in pricing the upgrade, the value of the gas hot water system has been taken into account. The reference in the specification to installation of a bayonet and regulator is an error. It should have been omitted.
- [12]Both Mr and Mrs Lawrence gave evidence that their discussions with Mr Canavan were to the effect that the standard system was to supplement the gas hot water system to ‘negate the use of gas in the summer months’.[8]
- [13]Neither of those interpretations is unreasonable. Use of the words ‘upgrade to’ rather than ‘replace with’ results in an ambiguity which allows me to take into account the discussions between the parties in determining the correct interpretation.
- [14]No evidence to rebut the evidence of the Lawrences’ evidence of their discussions with Mr Canavan was called from Mr Canavan or any other witness. I accept the Lawrences’ evidence on that point. In those circumstances, use of the term ‘upgrade’ is consistent with the supplementing with the gas system with the solar panel.
- [15]The Lawrences’ claim for $1,888.10 is supported by a quotation by Solarhart to install a gas system dated 11 August 2017,[9] and I find for them in that amount.
Rock removal
- [16]Paragraphs four and five of the specification provide:[10]
4. EXCAVATION
a) The Home Owner acknowledges that if, after breaking the surface of the ground:
- variations to additional works are required due to rock or other obstacles or,
- variations to additional works are required due to the nature of site access or,
- variations to additional works are required due to the requirements of local, state or other authority or,
- variations to additional works are required due to any latent conditions encountered,
Then the builder will:
- verbally notify the home owner of the additional work immediately and,
- forward a variation to the contract to cover the cost of the work required.
The home owner will:
- be required to sign and return any variation as soon as possible to help minimise delay costs.
5. SITE WORKS
Rock
Please note: Any excavation works with any part of the construction of your new home and its services and amenities only allows for bucket removable soil material.
In any case where rock is encountered a rock hammer will be required at extra cost to the owner.
It is especially important that the owner or the owner’s representative be available during the excavation part of the work. If rock is encountered the owner or the owner’s representative will be contacted for authorisation. If the owner or the owner’s representatives is not contactable works will be suspended until contact can be made, resulting in extra costs of floating the machine back to the site.
- [17]It is acknowledged by Mr Eldridge that this procedure was not followed.[11]
- [18]Mr Lawrence’s evidence is:[12]
…I received a phone call from the Stroud Homes supervisor, Stewart Byron, he sent me a picture of three small digging machines and notifying me there was rock in the ground at our building site. I did in fact take comfort from this, in appreciation that rock would make for stronger footings. I have no recollection of any extra cost being pointed out. This was the last I heard of it and no contact on this subject was ever made until the tax invoice was produced.
- [19]The tax invoice referred to was dated 2 August 2016 and was received by email on 11 August 2016, the day before possession was due to be given and taken, claiming an amount of $7,181.99 for ‘rock encountered in tank excavation’.
- [20]It is not disputed that Mr Lawrence was notified by telephone that the rock had been encountered but no alternative solutions were presented to the Lawrence’s and no estimate of the extent of the works or costs were given.
- [21]On any view of the evidence, Stroud is in breach of section 20 of the Contract and sections 40 and 41 of Schedule 1B of the Queensland Building and Construction Act 1991 (Qld) (‘QBCC Act’).
- [22]Neither the contract nor the QBCC Act mandate that a breach disqualifies the builder in breach from receiving monetary consideration for variations undertaken or, more relevantly in this case, the right to retain monies voluntarily paid for those variations.
- [23]Stroud’s claim for the excavation variation is calculated by applying its contract builder’s margin to its subcontractor’s invoice cost of carrying out the works.[13]
- [24]In cross-examination, the Lawrences sought to attack the accuracy of the invoice, specifically the equipment used in the works as opposed to that claimed, but did not establish any miscalculation. They did not adduce any evidence that the works were unnecessary or excessive, or that the costs charged were unreasonable.
- [25]I accept that the Lawrences did not have notice of the variation claim for rock excavation until the day before handover. Mr Lawrence stated:[14]
This added payment was unexpected and without any explanation or authorisation. This payment caused us considerable difficulty and duress and we had insufficient funds in the security account and no means of questioning it because we were about to be homeless. Under unfair compulsion we paid the full amount.
- [26]Mrs Lawrence’s evidence is that payment was made because:
Thomas Eldridge of Stroud Homes South Brisbane said we would only receive the keys to the house when he had confirmation the monies had been paid to Stroud Homes.[15]
- [27]
- [28]In Mt Cotton Constructions Pty Ltd v Greer,[18] the Tribunal found that owners were not entitled to recover monies paid by them for variation work done by a builder in breach of s 84 of the Domestic Building Contract Act 2000 (Qld).
- [29]The Domestic Building Contracts Act 2000 (Qld) disentitled a builder from receiving remuneration for unauthorised variations without the Tribunal’s approval. The QBCC Act does not contain an equivalent position.
- [30]
Here there is no claim made either in the pleadings or at the hearing that payment for the variations was made other than voluntarily. There was no evidence that payment for variations was made on a mistaken view that there was a legal obligation to pay the amounts claim. Rather payment seems to have been pursuant to a course of compromise and conciliation adopted with the builder, based in part to avoid conflict and in part to achieve earliest possible completion of the job.
- [31]While I acknowledge that the Lawrences were placed in a stressful position and that the decision was made under ‘duress’, not achieving handover the next day was nonetheless a commercial decision to achieve what they considered to be the best outcome in the circumstances. There was no reservation of their rights under the contract.
- [32]By giving and taking possession, both parties irretrievably altered their respective positions and in those circumstances the Lawrences cannot now seek to reopen the matter.
Liquidated damages
- [33]For the same reason, I disallow the Lawrences’ claim for $350.00 for additional liquidated damages.
- [34]The Lawrences’ claim that the liquidated damages correctly calculated totalled $900.00, being 18 days at $50.00 per day.[20]
- [35]Mr Lawrence’s evidence is:[21]
As stated possession was taken on 12 August 2016 and at handover, the ‘build’ supervisor Stewart Byron profferred (sic) a cheque for $5,930, which he explained included among other things, $550 for late liquidated damages. I had already been in contact via email with Thomas Eldridge who stated that 7 days had been deducted from the late completion time due to a late variation.
- [36]The Lawrences dispute the late variation, however nonetheless accepted the sum of $550 and took possession of the premises. While it may be a decision made under stress, it is nonetheless a decision made with knowledge of the amount of liquidated damages made and the method of its calculation.
Counter-claim
- [37]By way of counter-claim Stroud seeks an order that Lawrences pay the sum of $4,400 ‘for bushfire allowance double credit’.[22]
- [38]A bushfire mitigation allowance of $4,400 was allowed in the original quotation as a provisional sum allowance.[23]
- [39]The parties agree that no such allowance was necessary. Stroud says that the full amount was credited and the contract price adjusted accordingly by virtue of its authority for variation – pre-contract document,[24] executed by the parties on or about 24 February 2016 which reduced the original contract price from $374,158.33 to the contract price of $356,992.36.
- [40]Stroud says further that the full amount of $4,400 was again credited pursuant to an unsigned variation dated 12 August 2016.[25]
- [41]The evidence, and in particular the authority for variation – pre-contract document, and the contract document, establish that the bushfire mitigation allowance of $4,400 which was originally quoted had been deducted from the contract price. It appears that, in error, the provisional sum allowance for that amount contained in Schedule 3 of the contract has not been adjusted. Clearly it should have been, but the Lawrences are not claiming for reimbursement of unexpended provisional sum allowances in any event.
- [42]In respect of the second credit, supported by an unsigned variation dated 12 August 2016 the Lawrences say it is ‘an unsigned document with no evidential value which could have been produced at any time’.[26]
- [43]The only breakdown of claims and payments in evidence is a document titled ‘Stroudbuilt PL job contract’.[27] The last entry on that document provides ‘5/09/17 v36 already credited in bushfire allowance $4,400.’
- [44]The document concludes that the Lawrences have paid $372,816.09 of the $377,216.09 which Stroud claims leaving a balance owing to Stroud of $4,400. It does not disclose the amount or timing of instalments paid by the Lawrences.
- [45]Mr Lawrence’s evidence is that on 12 August 2016, he paid a ‘final payment of $39,603.34’.[28]
- [46]He says that at the same time he received from Stroud a cheque for $5,930.00 which included liquated damages for $550 ‘among other things’.[29]
- [47]The onus of proof in respect of the counter-claim is on Stroud. I am not satisfied on the basis of Stroud’s reconciliation alone that an error has occurred and in those circumstances the counter-claim is dismissed.
Orders
- [48]I order:
- (a)Stroudbuilt Pty Ltd trading as Stroud Homes must pay to Martin Stewart Lawrence and Susan Ruth Lawrence the sum of $1,888.10 by 4:00pm on 30 September 2018.
- (b)The application is otherwise dismissed.
- (c)The counter-application is dismissed.
- (a)
Footnotes
[1] Full copy of the contract is contained at Attachment E in the bundle of documents and statements filed in the Tribunal by the Lawrences on 4 December 2017.
[2] Statement of Martin Stewart Lawrence dated 30 November 2017.
[3] Attachment A to the bundle of documents filed in the Tribunal by the Lawrences on 4 December 2017.
[4] All figures are inclusive of GST unless otherwise noted.
[5] Quotation, page 5.
[6] Quotation, page 9.
[7] Attachment B to bundle of documents and statements filed by the Lawrences on 4 December 2017.
[8] Statement of Martin Stewart Lawrence dated 30 November 2017, paragraph [3] p 2; Statement of Susan Ruth Lawrence dated 30 November 2017, paragraph [6] p 2.
[9] Attachment C to the application.
[10] Attachment 1.4 Response to Statement of Susan Ruth Lawrence filed 2 February 2018.
[11] Response, paragraph [11].
[12] Witness statement of Martin Stewart Lawrence dated 30 November 2017.
[13] Statement of Thomas Eldridge dated 2 January 2018, Attachment 2.2.
[14] Statement of Martin Stewart Lawrence dated 30 November 2017, paragraph [8].
[15] Statement of Susan Ruth Lawrence dated 30 November 2017, paragraph [13].
[16] Statement of Thomas Eldridge filed 2 January 2018, paragraph [13].
[17] Statement of Thomas Eldridge filed 2 January 2018, paragraph [18].
[18] [2017] QCAT 11.
[19] Mount Cotton Constructions Pty Ltd v Greer [2017] QCAT 11, [89].
[20] Statement of Susan Ruth Lawrence dated 30 November 2017, paragraph [15].
[21] Statement of Martin Stewart Lawrence filed 30 November 2017, paragraph [14].
[22] Response, Part D, paragraph [1].
[23] Annexure A to application, line 35 page 4.
[24] Attachment E to the response.
[25] Attachment F to the response; Statement of Thomas Eldridge filed 12 August 2016 attachment 3.4.
[26] Response to counter-claim filed 9 January 2018.
[27] Attachment D to the response.
[28] Statement of Martin Stewart Lawrence filed 30 November 2017, paragraph [13].
[29] Statement of Martin Stewart Lawrence filed 30 November 2017, paragraph [14].