Singh v AusHomes Pty Ltd[2018] QCAT 312

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

Introduction

1. [1]
   The main issue in dispute arises out of the location of an electric pillar box outside the applicants’ house. The location of the pillar box was not taken into account at the time the respondents (AusHomes) designed the applicants’ house. It was not until some months into construction that the problem with the location of the pillar box relative to the driveway was raised and discussed by the parties.
2. [2]
   AusHomes argue that the problem was not one about location of the pillar box but of who bore responsibility for the cost of moving it. Eventually, the parties agreed to a variation which involved Energex relocating the pillar box and AusHomes widening the driveway and performing other associated extra work (‘the variation works’). The parties also agreed to each pay half of the cost of the variation works. The respondent maintained that it paid for the cost of extra plants, fill, drop edge beam, supervision costs and waived the builder’s margin.^[1]
3. [3]
   The applicants argue more generally that AusHomes did not design the house with reasonable care, in particular, by failing to design it in accordance with the ‘original development plan’ and by failing to take into account the Council’s bio basin and the Contour Survey Plan.
4. [4]
   The applicants have brought a claim in the Tribunal seeking damages in the sum of $62,116.00 arising from the need to undertake extra works following discovery of the pillar box issue. They seek the following orders:

Please Order Builder to pay for the following:

1. To pay for late completion of work as per the contract.
2. To pay damages for poor and impractical design of the house.
3. To pay for money we have lost in paying rent and mortgage during the extra time taken by the builder for completion.
4. To refund the money they have charged illegally and forcefully to relocate the pillar box.
5. To complete the pending works.
6. To pay for the damages for the mental harassment.
7. To pay for the QCAT fees for this case.^[2]

3. [3]
   The ‘pending works’ have since been completed so it is not necessary to consider this ground. 
4. [4]
   AusHomes counter claimed for damages for defamation in the sum of $30,628.00 and sought an order from the Tribunal that ‘the applicant remove false and defaming remarks from various web pages and facebook (sic) pages by JS Singh’. The Tribunal however, does not have jurisdiction to decide defamation claims. Accordingly, the counter application is dismissed.

Background

4. [4]
   The parties entered into a contract for the design and construction of a home at Eight Mile Plains on 15 December 2015. The contract was to reach practical completion within 200 days after commencement, subject to clause 17.^[3] ‘Commencement’ is defined to mean when the builder commences physical work on the site. The builder commenced construction on site on 22 June 2016. A commencement letter mistakenly dated 24 May 2016 instead of 24 June 2016, was sent by Melissa Farrow, contracts administrator for AusHomes, advising the applicants that the commencement date was 22 June 2016. Practical completion was reached on 16 February 2017 and final payment was made by the applicants on 22 February 2017.

5. [5]
   By at least mid-September 2016 AusHomes became aware of a ‘site issue’ relating to the relative positions of the driveway as designed and the pillar box. The pillar box was owned by Energex and was located outside the boundary of the applicants’ property and in line with the driveway as designed as at the contract date.
6. [6]
   AusHomes claimed it knew the pillar box was there but that the responsibility and cost of re-locating it lay with the applicants as land owners. Moreover, that the pillar box could only be moved by Energex. The applicants, on the other hand, argued that prior to signing the contract, AusHomes assured them that the pillar box would be removed or relocated and that ‘everything would be perfect’.
7. [7]
   On 19 September 2016 an email was sent from AusHomes’ Assistant Manager, Josh Donaghey, to Mr Singh. It said:

As you may be aware there is an Energex pillar box located in the middle of your proposed driveway. Efforts to have the pillar box relocated have been unsuccessful. As a result we propose a solution which allows us to keep the Pillar Box in its current location and adds a terrific design aesthetic to your driveway. We propose to add a feature garden to the middle of your driveway (see drawing attached) which will conceal the pillar box and make for an aesthetically pleasing entrance on the drive into your new home. We will add the garden bed and additional driveway costs at no charge.

8. [8]
   This proposal was later withdrawn by AusHomes because it involved construction over the Council bio-pod which was not permitted.
9. [9]
   The parties discussed other possible options to resolve the issue over the following weeks. Ultimately, on 13 December 2016 the parties met on site and reached agreement. The agreement was that the pillar box would be relocated and the driveway re-designed. It was also agreed that AusHomes would perform the extra works and that the cost of the extra works would be split 50/50 between the parties, subject to AusHomes signing a variation to that effect.
10. [10]
    The agreed extra works were to include extra concrete, arranging for the relocation of the pillar box by Energex, installation of a reversing bay, installation of extra plants, changing the front fence and widening the proposed driveway by around 600-800mm once the pillar box was moved by Energex (‘the variation works’).
11. [11]
    The cost of the variation works were calculated as follows:

TOTAL $17,233.26

12. [12]
    The additional concrete charge covered the cost of the reversing bay, the extra swing in the driveway and the widening of the final driveway.
13. [13]
    A copy of the proposed variation was sent to the applicants on 13 December 2016. The variation outlined the agreed extra works and provided that the applicants would pay 50% of the total cost of $17,233.36, being $8,616.63 (including GST). An amended signed revised driveway plan was attached to the variation.
14. [14]
    AusHomes received the signed variation from the applicants some five weeks later, on 18 January 2018, and thereupon transferred the payment of $13,453.26 to Energex to move the pillar box. The applicants paid their share of the variation costs as well as the final payment due under the contract on 22 February 2017.
15. [15]
    The applicants argued, in effect, that they signed the variation under duress, being under pressure to move out of their rented accommodation and having substantial monthly mortgage re-payments at the time. The build, they argue, was also nearly 90% complete at that stage which meant they effectively had no choice but to proceed.
16. [16]
    It was suggested by Mr Singh at the Hearing that the trigger for making the application before the Tribunal was the receipt of a copy of the signed contract sometime after the variation payment was made. The applicants believed that the builder had, on appreciating the problem with the pillar box, unilaterally varied the contract by providing that the builder would not be responsible for any ‘build over sewer’ costs should they arise.^[4] The applicant also argues that this clause is the basis upon which the builder has charged the applicants extra to relocate the pillar box. The applicants believe the clause was blank when the contract was signed and point to the fact that Mr Singh’s initials are not at the bottom of this clause (in contrast to other clauses). They believe the handwritten part of the clause excluding the builder’s liability for costs associated with building over the sewer was added after the contract was signed. This belief incensed the applicants and led to them making the claim the subject of these proceedings.
17. [17]
    The builder denied it had unilaterally varied the contract and argued that the clause, in any event, was not relied upon in completing the construction of the driveway or in charging for the variation works.
18. [18]
    The applicants also argue that construction was delayed due to the location of the pillar box which should have been dealt with prior to the commencement of construction. The applicants argue the builder ceased construction in October 2016 and that any delays associated with the relocation of the pillar box were due to the builder, not Energex. This was because the conduit installed under the driveway by the builder in the course of re-locating the pillar box did not comply with AS/NZS 3.11.3.4 and had to be redone.^[5]

Consideration

19. [19]
    While the dispute arose out of the location of the pillar box, the parties subsequently agreed to a variation which addressed its re-location. The effect of the variation becomes a central issue in the case.

The variation relating to the pillar box

20. [20]
    The variation was in the nature of a compromise of the parties’ respective rights and obligations which dealt with the issues arising from the location of the pillar box.
21. [21]
    The applicants claim they signed the variation under duress. They referred to the rent they were paying while their home was under construction, to their mortgage payments and that the house was 90% built and argued that in those circumstances, in effect, they had ‘no choice’ but to accept the proposed variation.
22. [22]
    The law does not readily set aside contracts on the basis of economic duress. Whether duress exists depends upon the effect of a particular type of pressure on the person seeking to set aside the transaction.^[6] It is not necessary that the person’s will be overborne.^[7] A person acting under duress may know full well what they are doing but he or she chooses to submit to the pressure rather than take an alternative course of action.^[8]
23. [23]
    The proper approach is ‘to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate’. Pressure is illegitimate if it consists of unlawful threats or amounts to unconscionable conduct.^[9] Overwhelming pressure which does not fall within either of these categories will not necessarily amount to duress.^[10]
24. [24]
    The variation was, in effect, a compromise of a dispute between the parties concerning responsibility for the re-location of the pillar box. The compromise of a disputed claim will not amount to duress merely because it is entered into to close off the matter and bring the dispute to an end without any need to do so or any real challenge to the validity of the demand. Equally it does not matter that the claimant is doubtful of its validity as there may be a desire to put an end to disputation to avoid litigation.^[11] A genuine compromise was described in these terms in Maskell v Horner:^[12]

If a person with knowledge of the facts pays money, which he is not in law bound to pay, and in circumstances implying that he is paying it voluntarily to close the transaction, he cannot recover it. … Such payment is not made to keep alive the right to recover it, inasmuch as the opportunity is thus afforded of contesting the demand, and payment in such circumstances is a payment to close the transaction and not to keep it open. Even if the money is paid in the action accompanied by a declaration that it is paid without prejudice to the payer's right to recover it, the payment is a voluntary payment, and the transaction is closed.^[13]

25. [25]
    The applicants and AusHomes had been in discussions since October 2016 to try to resolve the pillar box issue. Eventually a meeting specifically to discuss the pillar box issue was held on 13 December 2016 between the applicants, the managing director of AusHomes and Mr Gary Wilson. During that meeting Mr Singh said words to the following effect:

I do not want this matter to become a “legal” matter and we should work out a compromise.

26. [26]
    It was then agreed that AusHomes would perform the extra works and that the cost of doing those works, including the cost associated with re-locating the pillar box, would be split 50/50 between the applicants and AusHomes. Mr Singh and the managing director then shook hands in an exchange witnessed by Mr Gary Wilson.
27. [27]
    AusHomes then prepared a variation document reflecting that agreement. The applicants did not sign the variation document for 4-5 weeks. This indicates that they were considering their position, not that they had no other option. It may be that they came to the view that agreeing to the variation was the preferable course to take, but that does not constitute duress unless they made that decision due to illegitimate pressure applied by AusHomes.
28. [28]
    I accept that the applicants had rent and mortgage payments and this was a motivation to sign the variation and have the house completed. I find that, at the time the variation was issued, 65% of the progress payments had been made. The fixing stage, practical completion stage and variations were yet to be paid. The applicants were not first home buyers. They were experienced purchasers who owned multiple properties and had built at least two other homes which meant that the construction process was not new to them.
29. [29]
    While I accept the applicants were under pressure to sign the variation to get their house completed, I am not satisfied on the evidence that the applicants were subjected to illegitimate pressure from AusHomes. There were no unlawful threats made and I am not satisfied on the evidence that the conduct of AusHomes was unconscionable. Further, the applicants paid for the variation on 22 February 2017 and did not raise any issues regarding duress at that time. Moreover, in these circumstances where the work envisaged by the variation has been completed, it would be difficult to restore the parties to the status quo were the contract to be declared void. 
30. [30]
    It follows that the applicants are not entitled to a refund of the amount paid by them pursuant to that agreement.
31. [31]
    The applicants did not seek to overturn the variation other than on the basis of duress. I have found that there was insufficient evidence to establish duress. Accordingly, the applicants are bound by their agreement to pay $8,616.63 towards the cost of the variation works and are therefore not entitled to a refund.
32. [32]
    I turn now to consider the applicants’ other claims.  

Damages for late completion 

33. [33]
    The applicants claim $7,500.00 by way of ‘late charges’. They say:

We signed the contract on 15 Dec 2015, final plan and drawings approved on 2nd March 2016 and the house was handed over on 16 Feb 2017. Pending work completed on 13 April 2017. Contract completion date was approx. 150 days delay and the contractor should pay us accordingly as per the contract conditions number 15 (@ $50 per day). Driveway is still incomplete.

34. [34]
    AusHomes refutes the claim on the basis it was not late in completing the work once approved extensions of time are taken into account and the building period is properly calculated in accordance with the terms of the contract.
35. [35]
    The commencement date was 22 June 2016, in accordance with clause 2.7 of the contract. Clause 2.7 provides that the building period starts on the actual day of commencement and “commencement” is defined to mean when the builder commences physical work on the site. AusHomes commenced physical work on the site on 22 June 2016, as confirmed in writing by a letter from the builder’s contract administrator to the applicants.^[14] The building time is therefore 200 days (schedule 13) from 22 June 2016. Accordingly, practical completion should have been achieved by 8 January 2017.
36. [36]
    There were two relevant extensions of time: one for 15 days due to late payment of the frame stage claim and one for 64 days for the time taken to sign the variation (calculated from 15 November 2016 to 18 January 2017). This was a total of 79 days which meant practical completion was extended to 28 March 2017.
37. [37]
    AusHomes claim the contract was performed within time because, although work to the driveway was not completed until 28 October 2017,^[15] final payment was made on 22 February 2017.  Under clause 24.8 the owner’s payment of the final claim is conclusive evidence of the builder’s satisfaction, and discharge, of the builder’s obligations in connection with the contract except for matters in clause 24.8(a), (b) or (c). ‘Practical completion’ is defined, relevantly, as the day the work is completed in compliance with the contract, including all plans and specifications for the work other than defects or omissions that will not unreasonably affect occupation.^[16]
38. [38]
    The Practical Completion Final Inspection Form dated 16 February 2017 lists a number of items that remained outstanding including ‘Energex green pillar box to be relocated and driveway to be finished’. By the variation, the relocation of the pillar box and related work had become part of the contracted works. In my view this work was an ‘omission’ but it probably did not unreasonably affect occupation. Accordingly, I find that practical completion occurred on 22 February 2017 and that therefore, no claimable delay occurred. If I am wrong about that, claimable delay of approximately seven months occurred from 28 March 2017 to 28 October 2017 when the work was completed.
39. [39]
    I turn now to consider whether the work required by the variation caused delays and, if so, whether the builder is responsible for those delays. A letter dated 23 November 2016 was sent to the applicants advising them of an extension of time claim commencing 15 November 2016 until receipt of written instructions on how to proceed with the driveway design. This does not cover the time taken for the work itself. Energex relocated the pillar box on 12 October 2017, approximately ten months after the variation was signed.
40. [40]
    It appears that the delay in relocating the pillar box was due to a number of factors: the incorrect type of conduit used by the builder under the driveway; the difficulty Energex crews had locating the conduit and a shortage of Energex staff due to the effects of Cyclone Debbie.
41. [41]
    However, even if I assume that AusHomes was responsible for the delays, which it denies, the applicants are taken to have effectively waived that delay by making final payment on 22 February 2017. It follows that the applicants’ claim for delays caused by the variation works is refused.

Payment taken forcefully for relocation of the Energex pillar box

42. [42]
    The applicants claim $8,616.00 by way of refund of the money they paid to the builder for the variation works. They claim, in effect, that they were forced to sign the variation and should not have paid it at all or should only have paid $6,727.00, being half the cost imposed by Energex for relocating the pillar box.
43. [43]
    I have previously dealt with this argument. There was no basis for finding the variation was agreed to under duress and no other argument was raised as to why it was not otherwise a valid agreement. The builder was entitled to charge $8,616.63, in accordance with the variation document signed by the applicants on 18 January 2017.
44. [44]
    I find, accordingly, that the applicants are not entitled to a refund of $8,616.00.

Unauthorised alteration of the contract

45. [45]
    Alternatively, the applicants argue that they are entitled to a refund of $8,616.00 because the builder relied on clause 22 to charge it and that the builder had unilaterally altered that clause after the contract was signed.
46. [46]
    Clause 22 provides:

The owner must, on demand, pay as an addition to the contract price the amount of any cost increase due to a statutory or other authority introducing or increasing any tax, charge, levy or regulation after the date of this contract.

47. [47]
    Under Schedule 4 is a section headed ‘Excluded items (clause 22)’. Under that it is handwritten:

• No retaining wall has been included in this contract.
• No Build over Sewer costs have been included – Any engineering costs, additional building costs and council fees and charges are at owners expense.

48. [48]
    The applicants were strongly of the view that the ‘build over sewer costs’ part of the clause had been inserted by the builder after the contract was signed. They argued, in effect, that it was inserted because AusHomes realised it would incur extra fees and charges associated with relocating the pillar box and that this clause permitted them to charge these to the applicants. AusHomes denied altering the contract other than in the presence of the applicants and before it was signed by the applicants. Further, and in any event, that it had not relied on the ‘build over sewer costs’ part of the clause which only allows the builder to charge the owner for extra costs, fees and charges incurred if the builder builds over the sewer, which was not the case here. 
49. [49]
    I accept that the applicants held a genuine belief that the contract had been altered without their knowledge. However, to allege the clause was inserted to protect the builder after the contract was signed is a serious allegation which must be proved by the applicants.
50. [50]
    The applicants maintained they had not received a copy of the contract until well into construction and after the issue with the pillar box arose. However, a letter to the applicants signed by Ms Farrow and dated 16 December 2016 provides:

Please find enclosed copies of your Contract, Specifications, preliminary Plans and New Home Warranty for your records.

51. [51]
    An email from Mr Singh dated 26 February 2016, which advises he has paid the deposit in full, also states that that his bank has called to say that the contract needs to have his wife’s name and signature on it. The email attaches ‘signed contract – 15.12.2015.pdf’. It is not clear whether the entire contract or just the cover page was attached. That said, I find it unlikely Mr Singh would not, in circumstances where the bank emailed him about the contract, have seen the contract or received a copy. In the usual course, it would be the applicant for finance that would provide the contract to the bank.
52. [52]
    Even if I accept that the applicants did not have a copy of the contract at this time, I am not satisfied that the contract was altered after it was signed. The person responsible for the contract documents, Ms Farrow, gave evidence under oath that she did not alter the contract after it was signed, but made the handwritten insertions to Schedule 4 in the presence of the applicants and prior to it being signed. There was insufficient evidence to find otherwise. Further, I find that, in any event, clause 22 was not relied upon by AusHomes in charging the applicants half the Energex fee. The builder relied on HIA contract specification, item (e) which states that ‘Any bonds, DA fees, MCU fees or other non related BA fees requested by any local or other authority or statutory body are to be arranged and paid for by the owner.’
53. [53]
    Accordingly, I find that the applicants are not entitled to a refund of $8,616.63 on that basis.

Design Failure

54. [54]
    The applicants claim $10,000 for ‘design failure’ by AusHomes. They argue AusHomes failed to design and build the house in accordance with the approved development plans and drawings. They say the driveway is difficult to use and that this will have a negative impact on the re-sale value of their home.
55. [55]
    AusHomes maintain that the house was built in accordance with the contract documents approved by the applicants after months of client initiated changes and that its construction complies with all relevant laws and Standards. Further, that the driveway was constructed after a variation was signed and paid for by the applicants.
56. [56]
    Even if I was to re-formulate the claim as one for damages for negligent design, there are a number of obstacles to the claim. First, there was no evidence as to how the driveway might otherwise have been designed, given the issues with the block, in particular the location of the bio basin and sewer. Further, the evidence as to the effect of the damage on value was inadequate.
57. [57]
    The applicants sought to tender at the Hearing a Marketing Report and one page email from Mr Andy Huang of All Properties Group dated 8 May 2018. I accepted that material. The valuation report gives an estimated range of value for the applicants property from $700,000 to $750,000. Mr Huang states in his email that he believes the value of the applicants property is less than other similar blocks in the area due to the driveway ‘as it is difficult for 2 cars access to the garage due to the limit utility of the lot’, ‘car reverse is inconvenience and unsafe’ due to drop off and ‘large easement’ at the front of the house will pose ‘safety concern for family with little kids’. Mr Huang estimates that a 5 Bed/3 Bed (sic)/2 cars on 500 m2 with two storeys to be low to mid $800,000.
58. [58]
    It is clear from Mr Huang’s brief letter that there are a number of reasons why the block might be valued lower than other similar blocks in the area. The block has a number of limitations. These limitations existed at the time of purchase and were not the fault of the builder. The design options for the driveway were affected due to the inherent issues with the block. Putting that aside, the evidence was insufficient to prove that any diminution in value had occurred and that the diminution was caused by the design of the driveway.
59. [59]
    Even if I was to accept that this was the case, I would still need to be satisfied that there were other design options for the driveway. There was no evidence that this was the case.
60. [60]
    I note that AusHomes has provided a letter from Ms Apelt of LJ Hooker Browns Plains who states that the ‘minimal curve in the driveway would not have a detrimental effect on the sale price’.^[17]
61. [61]
    Accordingly, I find that there has been no negligence in design by the builder and that the applicants are not, therefore, entitled to damages on this basis.

Loss of interest on mortgage

62. [62]
    The applicants have claimed $12,500.00 for their loss incurred in having to pay an extra 5 months of interest on their mortgage. No details are provided regarding this claim.
63. [63]
    There is no entitlement under the contract for an owner to receive compensation for mortgage payments due to delays in the building works. It is not clear in any event, how the delays led to extra mortgage payments or more interest being incurred.
64. [64]
    This claim is refused.

Loss of rent

65. [65]
    The applicants have claimed $9,200 for rent they paid from September 2016 to February 2017. This claim is premised on the assumption that the house should have been completed by September 2017. For reasons above I have found this not to be the case. This claim is also, therefore, refused.

Mental harassment

66. [66]
    The applicants have claimed $10,000 for mental harassment they say they have suffered due to the conduct of AusHomes over approximately 18 months. The Tribunal has no jurisdiction for such a claim. This claim is accordingly dismissed.

Laminate instead of carpet

67. [67]
    The applicants have claimed $2,500 for the cost of laminated flooring in lieu of carpet. I assume the applicants believed that the cost of the laminate was $2,500 less than the cost of carpet otherwise would have been and that therefore they are entitled to a refund.
68. [68]
    AusHomes argues that the cost of the laminate flooring selected by the applicants exceeded the allowance in the contract and that the applicants signed and paid for a variation for that additional cost.
69. [69]
    The HIA contract specifications under the heading ‘Floor coverings’ state that the balance of the internal house coverings are to be carpet.^[18] A variation was signed by the applicants on 2 June 2016 which provides: ‘Upgrade laminate timber flooring to upper bedrooms and study ILO standard $1,587.00.’
70. [70]
    I find no basis for a refund of $2,500.

Fence

71. [71]
    The applicants claim they are entitled to $1,800 because they ended up having a 1.8m high fence instead of the 2.4m they believed they were entitled to under the contract.
72. [72]
    AusHomes argue that the applicants agreed to vary the height of the fence on site at a meeting between the applicants, fencing contractor and building supervisor. The contract provides for a 2m fence.^[19] The applicants’ claim is based on pre-contract negotiation documentation which did not form part of the final contract. The applicants signed a variation (Variation No 22) dated 20 February 2017 which indicated that the applicants were entitled to a refund for the 200cm change in height.
73. [73]
    I find that the contract provided for a 2m fence and that the variation properly reflected the applicants’ entitlement. Accordingly, this claim is refused. 

Conclusion

74. [74]
    Accordingly, while I have some sympathy for the applicants in that the issue of the pillar box should have been resolved at the initial design stage and not during construction, it was subsequently resolved by agreement between the parties. There was no basis for finding that the agreement was void for duress and no other basis argued as to why it should otherwise be overturned or money paid under it be refunded.
75. [75]
    The applicants were not entitled to any further damages as claimed.
76. [76]
    Accordingly, the application is dismissed.