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Foley v Steve Bagnall Homes Pty Ltd[2018] QCAT 458

Foley v Steve Bagnall Homes Pty Ltd[2018] QCAT 458

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458

PARTIES:

IAN FOLEY and BERNADETTE FOLEY

(applicants)

v

STEVE BAGNALL HOMES PTY LTD

(respondent)

APPLICATION NO/S:

BDL090-15

MATTER TYPE:

Building matters

DELIVERED ON:

31 October 2018

HEARING DATE:

24, 25, 26, 27 October 2016; 1 December 2016; and
On the papers August 2018

HEARD AT:

Brisbane

DECISION OF:

Member Burke

ORDERS:

  1. The Respondent is to make payment to the Applicants in the sum of $167,232.89 in satisfaction of the Applicants’ claim for restitution and damages for breach of contract and/or negligence and in satisfaction of the Respondent’s counterclaim.
  2. The parties are to provide submissions to the Tribunal in writing within 21 days in relation to:
  1. (a)
    the interest, if any, to be imposed; and
  2. (b)
    costs of the proceedings.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – domestic building dispute – whether premature issue of progress claim for Practical Completion stage – where owner terminates contract for builder’s failure to complete works by Date for Practical Completion – damages for breach of contract for defective and incomplete work – restitution for PC and PS items under contract - assessment of whether rectification work necessary and reasonable course to adopt

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – whether variations compliant with Domestic Building Contracts Act 2000 (Qld) – right of building contractor to recover amount for variation

Domestic Building Contracts Act 2000 (Qld), s 67, s 69, s 79, s 80, s 82, s 84

Queensland Building and Construction Commission Act 1991 (Qld)

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 168(1)

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

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99

Bellgrove v Eldridge (1954) 90 CLR 613

Cardona v Brown (2011) 27 BCL 194

CMF Projects P/L v Rigall & Anor [2014] QDC 90

Codelfa Construction Pty Ltd v State Railway Authority of NSW (1982) 149 CLR 337

D Galambos & Son Pty Ltd v McIntyre (1974) 5 ACTR 10

Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457

Radford v De Froberville [1977] 1 WLR 1262

Robinson v Harman (1848) 1 Exch 850; [1848] EngR 135

Ruxley Electronics & Construction Co Ltd v Forsyth [1996] AC 344

Tabcorp Holdings Pty Ltd v Bowen Investments Pty Ltd [2009] HCA 8

Thompson Residential Pty Ltd v Tran [2014] QDC 156

Tranquility Pools & Spas Pty  Limited v Huntsman Chemical Co Pty Limited [2011] NSWSC 75

Willshee v Westcourt Ltd [2009] WASCA 87

APPEARANCES & REPRESENTATION:

 

Applicant:

S Kelly, instructed by Paul J Hick Special Counsel at Active Law, Solicitors

Respondent:

M Panayi, Principal Solicitor of Industry Lawyers

REASONS FOR DECISION

  1. [1]
    This application is to be determined by me as directed by the President of the Queensland Civil and Administrative Tribunal pursuant to s 168(1) of the Queensland Civil and Administrative Tribunal Act 2009 (‘the QCAT Act’) having regard to the decisions and records of proceedings of the Tribunal as previously constituted.
  2. [2]
    These proceedings involve a domestic building dispute as defined in Schedule 2 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘the QBCC Act’) between the Applicants, as homeowners, and the Respondent, a building contractor.
  3. [3]
    The dispute arises out of a regulated contract as defined in the Domestic Building Contracts Act 2000 (Qld) (‘the DBC Act’) in force at the time the parties entered into the contract.[1]
  4. [4]
    The Applicants’ original application filed 11 May 2015 sought the following relief:
  1. The Respondent pay the Applicants the sum of $40,061.74 in restitution for unjust enrichment.
  1. Interest on the amount at paragraph 1.
  1. The Respondent pay the Applicants the sum of $128,644.72 for damages for breach of contract.
  1. [5]
    By Response and/or Counterclaim filed 26 June 2015, the Respondent denied the Applicants’ claim and made a counter-claim for the sum of $4,720.83 for unpaid payment claims on the following grounds:
    1. (a)
      pursuant to the contract;
    2. (b)
      further or in the alternative, in restitution on a ‘quantum meruit’;
    3. (c)
      further or in the alternative as a debt arising from the fully executed agreement; and
    4. (d)
      further or in the alternative, pursuant to section 84 of the DBC Act.
  2. [6]
    At the hearing, the Applicants’ claim had been amended to the sum of $420,106.33 on the following bases:
    1. (a)
      restitution in the sum of $45,865.90 being $15,865.90 for payment in excess of the adjusted contract price for prime cost and provisional sum items and other credits and $30,000.00 refund for the Practical Completion Stage payment which was paid but not due; and
    2. (b)
      damages for breach of contract and negligence in the sum of $374,240.43 for defective and incomplete work.
  3. [7]
    The Respondent’s counterclaim was revised marginally to the sum of $4,258.03.

Factual Background

  1. [8]
    The Applicants, Mr and Mrs Foley (‘the Foleys’), are the owners of a property at 44 Moreton Street, Toogoom, Queensland (‘the site’). Toogoom is a small seaside settlement located 20km from Hervey Bay. The site is on the shoreline as indicated in attachment ‘FS2’ to Mr Foley’s second statement dated 7 March 2016.[2]
  2. [9]
    Between May and July 2010, the Foleys engaged a building contractor, Mr Steven Bagnall, on behalf of the Respondent (‘SBH’) to provide a quotation for the construction of a two storey brick and cladded house on their property in accordance with plans and engineering drawings provided by the Foleys to SBH.
  3. [10]
    Four quotations were provided by SBH during the period May to July 2010 with the last quotation dated 30 July 2010. After the first quotation in May 2010, the final plans for construction including engineering plans were prepared.
  4. [11]
    The final plans were prepared by Payten Rodger being drawing file number 080629, pages BA 1 to 3. Structural drawings were prepared by Cardno (Qld) Pty Ltd consisting of 12 drawings for job no. 29270575. The plans and drawings were lodged with the building certifier in June 2010 and the stamped plans were received from the Fraser Coast Regional Council (‘FCR Council’) in July 2010.
  5. [12]
    There was some confusion during the evidence of Mr Foley and Mr Bagnall regarding the plans relied upon by Mr Bagnall in providing his final quotation. Exhibit 2 comprises the Payten Rodger plans and Cardno structural plans which Mr Foley states were the contract plans relied upon by Mr Bagnall in preparing his final quotation. Mr Bagnall gave evidence that the Cardno structural plans relied upon by him are the same as those in Exhibit 2 but disputes that the Payten Rodger plans relied upon by him consisted of 3 pages. Mr Bagnall asserts that he prepared his quotation on a set of plans containing only 2 pages.[3]
  6. [13]
    Mr Bagnall provided a final quotation on 30 July 2010.[4] In evidence, Mr Bagnall accepted that it was possible that he had relied upon the Payten Rodger 3 page plans as some of the items on which he provided his quotation were not relevant to the 2 page plans. The quotation formed part of the contract as the Specifications identifying details of the works to be carried out.
  7. [14]
    A standard form Queensland Master Builders’ Residential Construction Contract (RBC 07/10) was signed by the Foleys and SBH on 4 August 2010.[5] The contract sum for the works was $614,200.00.
  8. [15]
    SBH commenced work on the site on 3 August 2010. Progress claims for the deposit and the base stage were issued to the Foleys on 4 August 2010 and 2 September 2010 respectively.[6]
  9. [16]
    Further progress claims were issued by SBH in relation to the Frame Stage on 6 October 2010, the Enclosed Stage on 1 November 2010 and the Fixing Stage on 19 November 2010.[7] The amounts of $109,385.00 for the Frame Stage, $189,498.28 for the Enclosed Stage and $157,478.05 for the Fixing Stage as claimed were duly paid by the Foleys.
  10. [17]
    On or about 22 December 2010, by agreement between the parties, SBH allowed the Foleys access to the house for occupation although there were outstanding works to be performed.
  11. [18]
    Further, on 22 December 2010, SBH issued invoice 760 for the Practical Completion Stage of the works with the amount of $34,710.41 being due and payable.
  12. [19]
    On 23 December 2010, the Foleys paid the amount of $30,000.00 as the works were not complete and a reconciliation of prime cost items and provisional sums and variations to the original scope of works had to be undertaken by the Foleys.
  13. [20]
    The following table sets out the payment claims made by SBH and the amounts paid by the Foleys:

Date of Payment Claim

Payment Claim Stage

Amount Claimed

Amount Paid

4 August 2010

Deposit

$30,710.00

$30,710.00

3 August 2010

Base Stage

$76,775.00

$76,775.00

6 October 2010

Frame Stage

$109,382.00

$109,385.00

1 November 2010

Enclosed Stage

$189,498.28

$189,498.28

19 November 2010

Fixing Stage

$157,478.05

$157,478.05

22 December 2010

Practical Completion

$34,170.41

$30,000.00

  1. [21]
    SBH returned to the site between January 2011 and March 2011 to complete the contract works.
  2. [22]
    By letter dated 23 March 2011, the Foleys wrote to SBH regarding final adjustments and concerns in relation to a number of invoices and ancillary items.
  3. [23]
    On 30 March 2011, SBH replied to the Foleys complaints and attached a new statement with all outstanding invoices requesting payment in full within 7 days. The amount claimed was $4,270.83.
  4. [24]
    The Foleys replied on 7 April 2011. By this stage the parties were in dispute regarding monies owing and whether the works were defective and incomplete.
  5. [25]
    By letter dated 10 June 2011, the solicitors for the Foleys provided extensive details of its position regarding the amounts claimed by SBH and other concerns including items for which the Foleys claimed adjustments were to be made. The solicitors requested a response from SBH within a reasonable time in order to resolve the dispute between the parties.
  6. [26]
    On 16 June 2011, the solicitors for SBH responded addressing some of the issues and repeating the demand for full payment.
  7. [27]
    On 9 September 2011, the Foleys lodged a complaint with the Queensland Building Services Authority (‘the QBSA’) (now the Queensland Building and Construction Commission). An inspection was carried out by QBSA inspector Danny Stephenson on 25 October 2011 and a report prepared dated 28 October 2011. Mr Bagnall attended the inspection on behalf of SBH.
  8. [28]
    Of the 14 items identified in the complaint, five were considered to be contractual issues, five were considered to be either rectified or not a defect and four were considered to be category 1 defects.
  9. [29]
    By letter dated 31 October 2011, the QBSA advised the Foleys that it would not be issuing a Direction to Rectify pursuant to s 72 of the Queensland Building Services Authority Act 1991 (Qld) (‘QBSA Act’) as the items listed in the complaint were considered to be contractual issues and therefore not determined by the QBSA to be defective building work.
  10. [30]
    During the inspection on 25 October 2011, Mr Bagnall stated that he would return to rectify the works which were defective. No further rectification work was carried out.
  11. [31]
    On or about 16 April 2014, the FCR Council issued a Form 61 – Non-compliance Certificate.
  12. [32]
    On 20 May 2014, the Foleys instructed their solicitor to issue to SBH a notice of intention to terminate the contract pursuant to clause 20.1 of the general conditions of contract.
  13. [33]
    On 6 June 2014, the solicitors for SBH responded regarding the issues raised in the Form 61 – Non-compliance Certificate.
  14. [34]
    On 11 July 2014, the parties attended a mediation in an attempt to resolve the issues in dispute between them.
  15. [35]
    On 6 May 2015, the Foleys purported to terminate the contract by letter of that date.

Applicants’ Claim

  1. [36]
    The Foleys’ claim is divided into two parts:
    1. (a)
      Restitution for amounts paid by the Foleys in excess of the amount owed under the contract in the sum of $45,865.90:
      1. in relation to non-compliant variations;
      2. in relation to PC and PS items and credits; and
      3. in relation to overpayment of the Practical Completion Stage on the basis that Practical Completion has not been reached.
    2. (b)
      Damages for defective and incomplete work in the sum of $374,240.43.

Non-Compliant Variations

  1. [37]
    The first part of the Foleys’ claim relates to the repayment of monies paid for variations which it is alleged do not comply with the terms of the contract or the requirements of s 80 of the DBC Act.
  2. [38]
    The Foleys’ claim is based on the following argument:
    1. (a)
      none of the variations comply with either the DBC Act or the general terms of the contract and thus SBH is prohibited from recovering any sum for those variations; and
    2. (b)
      as a result, SBH has been unjustly enriched at the expense of the Foleys and is obliged to repay the amounts for the non-compliant variations.
  3. [39]
    The Foleys assert that the variation claims are non-compliant for the following reasons:
    1. (a)
      there was no written request by either the Foleys or Mr Bagnall in breach of clause 12.1 of the contract;
    2. (b)
      the variation documents issued do not state the change to the contract price or any other details in breach of clause 12.4(d) of the contract;
    3. (c)
      the variation documents were not signed by the Foleys in breach of clause 12.4(e) of the contract and s 80(2)(g) of the DBC Act; and
    4. (d)
      in circumstances where the variation was requested by SBH, the reason for the variation has not been detailed as required by clause 12.4(b) of the contract and s 80(2)(c) of the DBC Act.
  4. [40]
    Before embarking on an assessment of each variation, it is essential to set out the clauses in the contract and those sections of the DBC Act relevant to the allegation of non-compliant variations.

Relevant Clauses of the Contract

  1. [41]
    The definition for ‘Practical Completion’ is provided in the definition section of the general conditions of contract as follows:

Practical Completion Stage – means that stage of the Works when the Works are completed in accordance with the Contract and all relevant statutory requirements, apart from minor omissions or defects, and the Works are reasonably suitable for habitation. Where the Owner has engaged consultants including the Building Certifier, then Practical Completion under the Contract means the stage of the Works when the Works are completed, are reasonably suitable for habitation, with minor omissions and minor defects and the Contractor only being required to provide support documents to the Owner to allow a Certificate of Completion to issue.

  1. [42]
    The Date for Practical Completion is set out in Item 10 of the contract as 2 March 2011.
  2. [43]
    The contractor’s obligations and owner’s obligations under the contract are set out in clauses 10 and 11 of the general conditions of contract.
  3. [44]
    The contractual requirements in relation to the carrying out of variations to the contract are provided in clause 12 of the general conditions of contract.
  4. [45]
    The obligations of both parties upon Practical Completion Stage are set out in clause 17 of the general conditions of contract. For present purposes, I have set out the salient sections:

17.1 Submission of Practical Completion Stage claim and a Practical Completion Stage Notice by Contractor

On reaching Practical Completion Stage, the Contractor must give to the Owner:

(a) the Practical Completion Stage claim; and

(b) Practical Completion Stage Notice:

(i) stating the date the Works reached Practical Completion Stage;

(ii) providing for a final inspection of the Works with the Owner or the Owner’s Agent at a date and time specified in the certificate; and

(iii) attaching any necessary certificates and approval required from any statutory authority in connection with the Works which the Contractor is to obtain under this Contract.

17.5 Contractor to provide signed defects document to Owner in certain circumstances.

If at the final inspection of the Works the Owner claims defects exist, or the Works are incomplete, the Contractor must give to the Owner a defects document that:

(a) lists the minor defects or omissions that the Contractor and Owner agree exist;

(b) lists the minor defects or omissions that the Owner claims exist, but that are not agreed by the Contractor; and

(c) states the time by when the Contractor is to correct the listed agreed defects and omissions.

The Contractor must make all reasonable efforts to have the Owner sign the defects document. Both the Owner and Contractor are to retain a cop of the defects document.

17.6 The Contractor must complete the agreed works on the defects document.

The Contractor must rectify or complete any agreed items listed in the defects document within the time stated in the defects document or if necessary materials are unavailable, within a reasonable period.

17.7 Practical Completion Stage claim payable by Owner upon achieving Practical Completion Stage.

On giving the defects document to the Owner, and notwithstanding that Practical Completion Stage may have been reached with minor omissions or defects, the Owner must pay the Practical Completion Stage claim to the Contractor in accordance with the Contract.

If the Owner wishes to take Possession of the Works but disputes the amount payable to the Contractor and the Contractor is a member of the Master Builders Queensland, the Owner may pay the disputed amount into the Master Builders’ Queensland Trust Account.

17.8 Owner’s entitlement to keys and possession of the Works.

The Owner must not take Possession of the Works, nor is it entitled to the keys to the Works prior to payment to the Contractor of the final progress claim unless the Owner has obtained the Contractor’s written consent.

17.9 If Owner takes possession of the Works when not entitled to do so.

If the Owner takes possession of the Works, or any part of the Works, when not entitled to do so under the Contract, the Works are deemed to have reached Practical Completion Stage on the date of Possession and the Owner is liable to the Contractor for any loss or damage arising as a result.

  1. [46]
    The Owner’s rights to terminate the contract are set out in clause 20 of the general conditions of contract:

20.1 Owner’s right to serve notice of intention to terminate contract if the Contractor:

(a) fails to proceed with the Works with due diligence or in a competent manner;

(b) unlawfully suspends the carrying out of the Works;

(c) refuses or persistently neglects to remove or remedy defective work or improper materials, so that the Works are adversely affected;

(d) is unable or unwilling to complete the Works or abandons the Contract;

(e) is in Substantial Breach of this Contract; or

(f) fails to effect or maintain any insurance policy required by this Contract;

the Owner may give a written notice to the Contractor:

(i) describing the alleged breach or breaches of the Contract by the Contractor; and

(ii) stating the Owner’s intention to terminate the Contract unless the Contractor remedies the alleged breach or breaches within a ten (10) Business Days after receiving the Owner’s notice.

Relevant sections of the Domestic Building Contracts Act 2000 (Qld)

  1. [47]
    The objectives of the DBC Act are set out in section 3 of the Act:

3 Purpose of the Act

The purpose of this Act, in regulating domestic building contracts, is –

(a) to achieve a reasonable balance between the interests of building contractors and building owners; and

(b) to maintain appropriate standards of conduct in the building industry.

  1. [48]
    Sections 42 and 45 set out the implied warranties regarding suitability of materials and adherence to plans and specifications.
  2. [49]
    For the purpose of regulating payments under the contract, the DBC Act relevantly provides:

67 Completion Payments

(1) This section only applies to a regulated contract for which the subject work consists of –

(a) the erection or construction of a detached dwelling to a stage suitable for occupation;

(b) the renovation, alteration, extension, improvement or repair of a home to a stage suitable for occupation.

(2) The building contractor under a regulated contract must not demand all or part of the completion payment unless the practical completion stage has been reached.

Maximum penalty – 100 penalty points

(3) The building contractor under a regulated contract must not receive all or part of the completion payment unless –

(a) the practical completion stage has been reached; and

(b) if the building owner claims the stage has been reached with minor defects or omissions – the first and second requirements stated in subsections (4) and (5) have been complied with.

Maximum penalty – 100 penalty points

  1. [50]
    The consequences of contravening requirements relating to payments is contained in section 69 of the DBC Act:

69 Order to refund overpaid amounts

  1. (1)
    This section applies if –
  1. (a)
    a court finds a charge against a building contractor for an offence against a payment section proven; and
  2. (b)
    the offence involves the receipt of an amount by the building contractor.
  1. (2)
    The court may order the building contractor –
  1. (a)
    to refund to the building owner –
  1. (i)
    the amount paid to the building contractor that the building contractor was not, under the payment sections, entitled to receive; or
  1. (ii)
    a part of the amount mentioned in paragraph (a);
  1. (b)
    if the building contractor contravenes the order - to pay the building owner interest on the amount to which the contravention relates, calculated at the rate, and on the basis, the court considers appropriate.
  1. (3)
    The power of the court under subsection (2) is additional to any other power the court has to impose a penalty.
  1. (4)
    The refund of an amount by the building contractor to the building owner under an order mentioned in subsection (2) does not stop the building contractor from later demanding and receiving payment of the amount under the contract as part of –
  1. (a)
    for a fixed price contract – the contract price; or
  1. (b)
    for a cost plus contract – the total amount the building contractor is entitled to receive.
  1. [51]
    Relevantly, Part 7 of the DBC Act provides:

79 Variations must be in writing

  1. (1)
    The building contractor under a regulated contract must ensure any variation of the contract agreed to between the building contractor and the building owner is put in written form –
  1. (a)
    within the shortest practicable time; and
  1. (b)
    for a variation consisting of an addition to the subject work – before any domestic building work the subject of the variation is carried out.

Maximum penalty – 20 penalty units.

  1. (2)
    Subsection (1) does not apply to a building contractor for a variation of a contract if –
  1. (a)
    the variation is for domestic building work that is required to be carried out urgently; and
  1. (b)
    it is not reasonably practicable, in the particular circumstances, to produce a variation document before carrying out the work.

…

  1. (5)
    When the variation document is signed, the following provisions for not apply for the variation –

(a) subsections (1) and (2);

(b) section 82;

(c) section 83(1)(b);

(d) section 84(2)(a) and (3) (a)(i), to the extent the provisions concern sections 82 and 83(1)(b).

  1. [52]
    The requirements for a variation document are set out in section 80 of the DBC Act including the following:
    1. (a)
      description of the variation (s 80(2)(b));
    2. (b)
      if the variation was sought by the building contractor – states the reason for the variation (s 80(2)(c));
    3. (c)
      for a fixed price contract – states the change of the contract price because of the variation, or how the change of the contract price is to be worked out (s 80(2)(e)); and
    4. (d)
      if the contract provides for progress payments – makes appropriate provision for payments under the contract to reflect any change of the contract price caused by the variation (s 80(2)(g)).
  2. [53]
    Section 81 outlines the general contents of the variation document and the appropriate provision for payments to reflect the contract price changes.
  3. [54]
    Section 82 provides that the building contractor must sign the document and take all reasonable steps to try to ensure the document is signed by the building owner. A maximum penalty of 20 penalty unit for non-compliance applies.
  4. [55]
    Most importantly for the present case asserted by SBH in its counterclaim, section 84 provides:

84 Right of building contractor to recover amount for variation

(1) This section applies if –

(a) the building contractor under a regulated contract gives effect to a variation of the contract; and

(b) the variation consists of –

(i) an addition to the subject work; or

(ii) an omission from the subject work that results in the building contractor incurring additional costs.

  1. (2)
    If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation –
  1. (a)
    only if the building contractor has complied with sections 79, 80, 82 and 83; or
  1. (b)
    only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
  1. (3)
    If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation –
  1. (a)
    only if -
  1. (i)
    the building contractor has complied with sections 79, 80, 82 and 83; and
  1. (ii)
    the ground of unforeseen circumstances applies; or
  1. (b)
    only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
  1. (4)
    The tribunal may approve the recovery of an amount by a building contractor for a variation only if the tribunal is satisfied that –
  1. (a)
    either of the following applies –
  1. (i)
    there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation;
  1. (ii)
    the building contractor would suffer unreasonable hardship by the operation of subsection (2)(a) or (3)(a); and
  1. (b)
    it would not be unfair to the building owner for the building contractor to recover an amount.
  1. (5)
    For subsection (3)(2)(ii), the ground of unforeseen circumstances applies if the variation became necessary because of circumstances that could not have been reasonably foreseen by the building contractor when the contract was entered into.
  1. (6)
    If the building contractor is entitled to recover an amount for the variation of a fixed price contract, the amount is –
  1. (a)
    the increase in the contract price stated, or worked out in the way stated, in the appropriate variation document for the variation; or
  1. (b)
    if paragraph (a) does not apply – the cost of carrying out the variation plus a reasonable profit.

Expert Evidence

  1. [56]
    Expert evidence was provided on behalf of the Foleys by Mr Garry Carpenter, a building inspector, and Mr Gary Thompson, a quantity surveyor, both from Mitchell Brandtman.
  2. [57]
    On 27 November 2015, Mr Carpenter, in his capacity as a defects and quality expert[8], provided an expert building condition report having been instructed by Paul J Hick of Nexus Law Group, on behalf of the Foleys, to:[9]
    1. (a)
      identify the original scope of works under the contract;
    2. (b)
      identify those parts of the original scope of work which have not been wholly completed by the builder and estimate the cost of completing such incomplete work (excluding all statutory approvals required);
    3. (c)
      identify what defects exist in those parts of the original scope of works that were complete or partially complete by the builder. Also identify the scope of work required to rectify such defects and propose a method for rectification along with an estimate of cost;
    4. (d)
      identify which work outside the original scope of works, claimed by the builder in the alleged variations, has been completed or partially competed and to estimate the value of the additional work as at late 2010;
    5. (e)
      identify what defects exist in additional work. To identify the scope of work required to rectify such defects and propose a method along with an estimate of the cost; and
    6. (f)
      assess and itemize the ‘contract price’ as adjusted in accordance with the contract and Division 2 of Part 5 and Part 7 of the DBC Act.
  3. [58]
    On 30 November 2015, Mr Gary Thompson of Mitchell Brandtman provided a report assessing the costs associated with following:[10]
    1. (a)
      defective work as detailed in Schedule 1;
    2. (b)
      incomplete work as detailed in Schedule 1;
    3. (c)
      adjustment to PC and PS items as detailed in Schedule 2;
    4. (d)
      alleged variations as detailed in Schedule 3; and
    5. (e)
      an overall assessment of the adjusted contract value as a result of the above estimates.
  4. [59]
    On 4 March 2016, Mr Gary Thompson produced a further report updating his earlier report and providing revised figures in relation to the same issues.[11]
  5. [60]
    Mr John Browning, a building expert, gave evidence on behalf of SBH both orally and by way of a report dated 17 April 2016.[12]
  6. [61]
    Further, Mr Browning participated in the experts conclave directed by the tribunal resulting in the joint report which took the form of a Scott Schedule dated 17 October 2016 as Exhibit 1.

Variation Claims

  1. [62]
    The variations the subject of this part of the Foleys’ claim are set out in Part 2 of Schedule B attached to Mr Bagnall’s statement dated 30 March 2016.[13]
  2. [63]
    Mr Foley gave evidence that the following variations have been accepted by him as compliant and valid variations on the basis that they were requested by Mr Foley:
    1. (a)
      V020 – supply and fit a Dux hot water reticulating pump – $1,087.90;
    2. (b)
      V027 – extra water tank and slab – $1,700.00;
    3. (c)
      V026(b) – supply and install wardrobe cabinet – $1,082.40; and
    4. (d)
      V024 – supply of 100mm stormwater pipe – $189.68.
  3. [64]
    In submissions dated 3 February 2017, the Foleys conceded that Variations 32 and 35 are also allowable, with the former amounting to $280.50 and the latter a credit of $490.53.
  4. [65]
    The Foleys therefore dispute that SBH is entitled to recover payment for the following variations:
    1. (a)
      V001, V002, V005, V006, V007, V008, V009, V010, V021, V023, V025(b), V029, V033, V034 and V036.
  5. [66]
    Of the variations set out above, SBH asserts that:
    1. (a)
      the following variations have been signed and paid in the sum of $9,958.59:
      1. V001, V002, V005, V006, V007, V008, V009, V010 and V020;
    2. (b)
      the following variations have not been signed or paid and form part of SBH’s counterclaim:
      1. V025b, V026(b), V029, V032, V034 and V035;
    3. (c)
      the following variations have been signed but not paid and form part of SBH’s counterclaim:
      1. V021, V023, V024 and V027; and
    4. (d)
      of the total of 31 variations, 21 have been signed and paid in full.
  6. [67]
    The Foleys seek restitution for all non-compliant variations.
  7. [68]
    I shall deal with each of the variations disputed by the Foleys and consider separately those the subject of SBH’s counterclaim relating to unsigned and unpaid variation claims.[14]

Variation V001

  1. [69]
    Variation V001 is dated 10 August 2010, signed by the Foleys on 10 September 2010 and converted to Invoice 739 dated 19 November 2010.
  2. [70]
    The work the subject of the variation is identified as ‘joinery over allowance’.[15] The variation document is signed by Mr Foley and Mr Bagnall and states that the increase in cost for the variation is $2,574.00.
  3. [71]
    In support of the variation, SBH has produced a document headed ‘Changes to Quote 3287 from Quote 3234’ and stated to be ‘on customer’s advice’ however it does not appear to be a variation document signed by the parties. This document outlines the increase and decrease in works for the kitchen, bar area, bedroom and main bathroom vanities and price difference between quotations based upon a meeting with the Foleys on 29 July 2010.
  4. [72]
    The Foleys allege that the description of the variation is not meaningful and that it does not comply with s 80(2)(b) of the DBC Act or clause 12.4(a) of the contract. On that basis, the Foleys assert that SBH is not entitled to payment for the alleged variation work unless there is an entitlement to recovery pursuant to s 84 of the DBC Act.
  5. [73]
    Further, the variation was one requested by SBH and thus was required to comply with s 80(2)(c) of the DBC Act.
  6. [74]
    There is no evidence that the works were not carried out or that there was in fact no increase in the cost.
  7. [75]
    I am satisfied that whilst the variation document did not provide the detail which was evident from the attached documents, Mr Foley signed the documents knowing full well the details having been directly involved in the changes to the joinery.
  8. [76]
    Thus I am satisfied that SBH is entitled to payment for the variation and the Foleys’ claim for reimbursement for Variation V001 fails.

Variation V002

  1. [77]
    Variation V002 is dated 10 August 2010 and is signed by both Mr Foley and Mr Bagnall. The amount of the variation is $316.15.
  2. [78]
    The variation was converted to invoice 740 dated 19 November 2010 and is described as ‘plumbing items over allowance’.
  3. [79]
    The Foleys assert that the description of the variation is sparse and there is no reason given for the variation. It is submitted that the variation does not comply with s 80(2)(b) of the DBC Act.
  4. [80]
    The variation was sought by SBH and appears to be as a result of a change in selection by the Foleys on 6 August 2010 when they attended Tradelink.[16]
  5. [81]
    I am satisfied that the Foleys were aware of the changes made and agreed to the increase in plumbing allowance. Mr Foley accepted the description in the variation document at the time of signing the documents as he was fully aware of the changes in selection made by him at Tradelink.
  6. [82]
    Variation V002 is confirmed.

Variation V005

  1. [83]
    Variation V005 is dated 23 August 2010 and was converted to invoice 713 dated 1 November 2010.
  2. [84]
    The variation is signed by Mr Foley and Mr Bagnall and described as ‘upgrade (2) external hinged doors to aluminium less allowance’ and is for the sum of $1,224.60.
  3. [85]
    Mr Bagnall gave evidence that the variation was requested by the Foleys. Mr Foley denies that he requested the variation.
  4. [86]
    Mr Bagnall’s diary entry for 17 August 2010 refers to ‘price for hinged doors for Foley from G. James’. This would support the notion that there was an issue regarding a change in the hinges.[17]
  5. [87]
    I accept the evidence of Mr Bagnall that there was a variation in the type of hinge to be installed.
  6. [88]
    Variation V005 is allowed.

Variation V006

  1. [89]
    Variation V006 is dated 26 August 2010 and was converted to invoice 714 dated 1 November 2010.
  2. [90]
    The variation is signed by Mr Foley and Mr Bagnall and described as ‘Change viewing deck louvres to 6 blade; plus upgrade screens to viewing deck to security to satisfy fall protection requirements’. The original variation is costed at $1,213.20.
  3. [91]
    Mr Bagnall gave evidence that the upgrade to the screens was not carried out and a credit for this work is the subject of V036. The credit amount is $366.20. The outstanding amount for this variation was amended to $846.00 for the change of the louvres to six blades.
  4. [92]
    Mr Foley signed the original variation which included the change of viewing deck louvres to six blades.
  5. [93]
    Mr Bagnall gave evidence that the plans detailed the installation of three louvres and thus the Foleys’ requirement for six louvres was a variation.
  6. [94]
    Elevation 2 of the plans in Exhibit 2 depicts three louvres although it does not specify that number.
  7. [95]
    Whilst the Foleys submit that the size of the window did not change, it is obvious that the number of blades was varied and this was a change in the scope of works. Any increase in cost is a variation to the contract.
  8. [96]
    Variation V006 is accepted.

Variation V007

  1. [97]
    Variation V007 is dated 1 September 2010 and is described as ‘Change to garage door from 2100 to 2400 high’. The variation was signed by Mr Foley and converted to invoice 715 dated 1 November 2010.
  2. [98]
    Mr Foley denies that he gave an instruction to increase the height of the garage door so that he could store his caravan in the garage. It is submitted on behalf of the Foleys that the plans in Exhibit 2 show the height of the garage as 2700mm and thus there was no need for Mr Foley to request a variation.
  3. [99]
    I accept the evidence of Mr Bagnall that there was a variation to the works and that Mr Foley accepted that variation upon signing the variation document.
  4. [100]
    Variation V007 is allowed in the sum of $198.00.

Variation V008

  1. [101]
    Variation V008 is dated 8 September 2010 and was converted to invoice 667 dated 6 October 2010. The variation was signed by Mr Foley and described as ‘Change BR11 steel beams to 360UB 57’. The amount of the variation is $930.00.
  2. [102]
    The Foleys submit that the Cardno structural drawings depict that the viewing platform is to be constructed with two lengths of BR11 steel beams. At page eight described as ‘Floor Framing layout plan’ of the structural drawings forming part of Exhibit 2, under the section Member Schedule, it is stated:

BR11 – 360UB57 Steel Beam. Fix @ Columns ‘C2’, ‘C3’ and Pertal Frame with 2/M16 (8.8/s) bolts thru 10mm cap/cleat Plate.

  1. [103]
    Mr Bagnall gave evidence, supported by documentation[18] that there was an error in the beams which were ordered and those which were specified in the Member Schedule. It seems that BR – 3600UB51 members were ordered instead of 360UB57 members. Mr Bagnall gave evidence that the BR-360UB51 is a lighter grade beam.
  2. [104]
    Mr Bagnall conceded that the higher grade beam, being the BR – 360UB57, should have been ordered by him first and that any change was as a result of an error in the original order.
  3. [105]
    I am satisfied that there was no change in the scope of works and that there was no variation to the contract. Any extra costs incurred by the building contractor resulted from an error on the part of SBH.
  4. [106]
    Variation V008 is not allowed.

Variation V009

  1. [107]
    Variation V009 is dated 8 September 2010 and was converted to invoice 668 dated 6 October 2010.
  2. [108]
    The variation was signed by Mr Foley for an amount of $970.00.
  3. [109]
    The authority for variation document describes the variation work as:

Simplify viewing platform

Make viewing platform bigger

Extra cranked beam

Steel joists

Less allowance for steel & timber joists not required.

  1. [110]
    Mr Bagnall gave evidence that he raised the issues the subject of this variation with Mr Foley in order to improve the construction of the deck area.
  2. [111]
    Whilst the description in the authority for variation to contract documents is not comprehensive, Mr Foley was aware of the work to which the document relates.
  3. [112]
    I am satisfied that the description of the variation is adequate and that the document complies with the requirements of s 80(2)(b) of the DBC Act.
  4. [113]
    The amount of $970.00 is allowed for variation V009.

Variation V010

  1. [114]
    Variation VO10 is dated 8 September 2010 and was converted to invoice 716 dated 1 November 2010.
  2. [115]
    The variation is signed by Mr Foley and relates to the following work:

Extra costs to comply with development approval

60 bags of 20kg cement

38 bags of 20kg lime

1 tin of epoxy paint

Labour to paint

  1. [116]
    No evidence was provided by Mr Bagnall to support the change in scope of works for the costs relevant to this variation.
  2. [117]
    Mr Bagnall’s explanation that an agreement was reached with Mr Foley that the actual cost to comply with the development approval would be worked out at a later date is inconsistent with the fixed price term of the contract.
  3. [118]
    I do not accept Mr Bagnall’s oral evidence that an agreement was reached between the parties for the payment of extra costs relating to compliance with the development approval. Mr Foley was not given an opportunity to concede that an agreement was reached between the parties.
  4. [119]
    There is no evidence that the work claimed in this variation was an addition to the scope of works.
  5. [120]
    Variation V010 is not allowed.

Variation V013

  1. [121]
    Variation V013 is dated 15 September 2010 and was converted to invoice 719 dated 1 November 2010.
  2. [122]
    The variation was signed by Mr Foley and relates to a credit for the supply and fit of air-conditioning.
  3. [123]
    The amount of the variation is not in dispute and therefore does not form part of the Foleys’ claim.

Variation V020

  1. [124]
    Variation V020 is dated 20 October 2010 and was converted to invoice 741 dated 19 November 2010.
  2. [125]
    The authority for variation was signed by Mr Foley and relates to the supply and fit of a Dux hot water recirculating pump. The cost of the variation is $1,087.00.
  3. [126]
    The Foleys do not dispute Variation V020.

Variation V021

  1. [127]
    Variation V021 is dated 10 November 2010 and was converted to invoice 752 dated 22 December 2010.
  2. [128]
    The amended authority for variation to contract document claims the sum of $71.73 for the supply of smart tiles to the upper ensuite. The variation is signed by Mr Foley but according to Mr Bagnall has not been paid.
  3. [129]
    Smart tiles are a configuration for a floor drain consisting of a stainless steel square with a central recessed part where a matching tile is cut and placed.
  4. [130]
    Mr Foley gave evidence that he had a conversation regarding the installation of a smart tile but he was confused as to whether one or two smart tiles were provided for in the contract. He agreed that as a compromise he accepted the variation for one smart tile.
  5. [131]
    Mr Panayi, solicitor on behalf of Mr Bagnall, submits that the variation should be allowed on the following bases:
    1. (a)
      the addition is recorded in V021 and signed by Mr Foley;
    2. (b)
      the amount is recorded in Mr Foley’s handwriting;
    3. (c)
      the plans and specifications do not specify a smart tile;
    4. (d)
      proof of the additional cost incurred is in evidence; and
    5. (e)
      the issues were discussed between Mr Foley and Mr Bagnall.
  6. [132]
    Mr Kelly, Counsel on behalf of the Foleys, submits that the item claimed is not a variation, particularly as it is Mr Bagnall’s evidence that a floor waste would always be required even though it is not shown on the plans or in the Specifications.
  7. [133]
    I accept the evidence of Mr Bagnall that the supply of the smart tile is a variation to the works.
  8. [134]
    Variation V021 forms part of SBH’s counterclaim as a variation which has been signed but not paid.
  9. [135]
    Accordingly, whether SBH is entitled to recover the cost of the variation will be dealt with as part of SBH’s counterclaim given that it does not form part of the Foleys’ reimbursement claim.

Variation V023

  1. [136]
    Variation V023 is dated 23 November 2010 and was converted to invoice 754 dated 22 December 2010.
  2. [137]
    The authority for variation to contract document was signed by Mr Foley and relates to the item described as:

Make glass splashback 700mm high

Plus extra power point cut out.

  1. [138]
    The variation cost is $245.00.
  2. [139]
    Mr Bagnall gave evidence that the standard height for a splashback is 600mm and that he explained this to Mr Foley on site. It is Mr Bagnall’s recollection that Mr Foley accepted this fact subject to being corrected with evidence from the Specifications. Mr Bagnall’s diary entry refers to a request that the kitchen splashback be higher.
  3. [140]
    I accept the evidence of Mr Bagnall that there was a change in the height of the kitchen cabinetry after the initial quotation provided by him and that accordingly there was a necessary change in height of the kitchen splashback.
  4. [141]
    With regard to the additional power point, there is no evidence to contradict this alleged fact. I accept therefore that this was a variation to the works as documented in the signed variation.
  5. [142]
    Mr Kelly, Counsel on behalf of the Foleys, submits that the variation description is unclear and lacking in detail regarding the position of the power point. In this regard, it is submitted that the variation document does not comply with s 80(2)(b) of the DBC Act and clause 12.4(a) of the contract.
  6. [143]
    Variation V023 forms part of SBH’s counterclaim as a variation which has been signed but not paid.
  7. [144]
    Accordingly, whether SBH is entitled to recover the cost of the variation will be dealt with as part of SBH’s counterclaim given that it does not form part of the Foleys’ reimbursement claim.

Variation V024

  1. [145]
    Variation V024 is dated 29 November 2010 and was converted to invoice 755 dated 22 December 2010.
  2. [146]
    The authority for variation to contract document has been signed by Mr Foley and relates to the variation work describes as ‘Supply 100mm stormwater pipe’.
  3. [147]
    The cost of the variation is $189.68 and is claimed by SBH as a variation which has been signed but not paid.
  4. [148]
    In submissions on behalf of the Foleys this variation and the amount claimed have been accepted.
  5. [149]
    Variation V024 forms part of SBH’s counterclaim as a variation which has been signed but not paid and will be taken into account in consideration of the counterclaim.

Variation V025b

  1. [150]
    Variation V025b is dated 20 December 2010 and was converted to invoice 788 dated 22 December 2010.
  2. [151]
    The authority for variation to contract has not been signed by Mr Foley. The document describes the variation work as:

Extra plumbing items Re: Sandy Straits Plumbing

Supply & install 1 extra hose tap to viewing deck (6 installed)

Supply & install valves for lift

  1. [152]
    The amount of the variation is $171.60.
  2. [153]
    SBH relies upon invoices from Sandy Straits Plumbing Pty Ltd and Personal Home Elevators to support the claim for the variation works.[19] The problem with this evidence is that it does not support the Foleys’ contention that six taps in total were always required by the Specifications and that any extra costs were incurred because SBH had not ordered the correct parts.
  3. [154]
    I accept the Foleys’ submission that the works were not a variation to the contract.
  4. [155]
    This variation forms part of SBH’s counterclaim regarding variations which have not been signed nor paid and will be dealt with separately as part of the counterclaim.

Variation V026b

  1. [156]
    Variation V026b is dated 20 December 2010 and was converted to invoice 787 dated 22 December 2010.
  2. [157]
    The authority for variation to the contract document was not signed by the Foleys and relates to the following works: ‘Supply & Install Wardrobe cabinet’.
  3. [158]
    The cost of the variation is detailed as $1082.40.
  4. [159]
    Mr Foley accepts that he requested the provision of a cabinet for security hardware in the vicinity of the laundry chute. Thus, in submissions it is conceded that there is no dispute that the works are a variation to the contract but rather that the works are defective.
  5. [160]
    This variation forms part of SBH’s counterclaim regarding variations which have not been signed nor paid and will be dealt with separately as part of the counterclaim. Issues such as whether the variation was compliant with s 80 of the DBC Act will be dealt with separately as part of SBH’s counterclaim.[20]

Variation V027

  1. [161]
    Variation V027 is dated 20 December 2010 and was converted to invoice 758 dated 22 December 2010.
  2. [162]
    The authority for variation to contract document is signed by Mr Foley and describes the variation work as ‘extra water tank & slab’. The cost of the variation is $1,700.00.
  3. [163]
    This variation has been accepted by Mr Foley in cross-examination as a variation to the scope of work and as an extra amount payable.
  4. [164]
    This variation forms part of SBH’s counterclaim and will be considered separately as it does not form part of the Foleys’ claim for restitution.

Variation V029

  1. [165]
    Variation V029 is dated 14 January 2011 and was converted to invoice 783 dated 23 February 2011.
  2. [166]
    The authority for variation to contract was not signed by Mr Foley and describes the variation work as ‘shelving over allowance’.
  3. [167]
    The amount of the variation is $744.00.
  4. [168]
    It is submitted on behalf of SBH that Mr Foley met with Mr Glen Harney from Good Look Garage Doors and discussed extra shelving for the shelving in bedrooms 1 and 2. This is supported by an undated letter to that effect in attachment ‘SB-49’ to Exhibit 11 from Good Look Garage Doors.
  5. [169]
    No other evidence was provided by Mr Bagnall to support the calculation of the variation and the documents reflecting an addition to the shelving provide little assistance.
  6. [170]
    Mr Kelly, Counsel on behalf of the Foleys, submits that the description in the variation document is meaningless and thus the variation does not comply with clause 12.4(a) of the contract or with s 80(2)(b) of the DBC Act. Further, it is submitted that:
    1. (a)
      the tribunal should not rely upon the letter as it is hearsay;
    2. (b)
      there was no evidence adduced from Mr Foley regarding the conversation about extra shelving;
    3. (c)
      it is not possible to calculate the amount claimed from any documentation or from the evidence provided by Mr Bagnall; and
    4. (d)
      SBH has failed to prove the variation claim.
  7. [171]
    I accept that the evidence in relation to this variation was confusing from both witnesses. I accept the evidence of Mr Kelly that SBH has failed to provide evidence supporting the claim for $744.00 in the variation document although I accept that Mr Foley requested the variation to the works.
  8. [172]
    This variation forms part of SBH’s counterclaim and will be dealt with separately as it does not form part of the Foleys’ claim for restitution.

Variation V032

  1. [173]
    Variation V032 is dated 1 February 2011 and was converted to invoice 785 dated 23 February 2011.
  2. [174]
    The authority for variation to contract document was not signed by Mr Foley and describes the work as ‘electrical installation over allowance’.
  3. [175]
    The cost of the variation is $1490.28.
  4. [176]
    The first criticism of the variation by the Foleys is that the description of the variation is not meaningful and that this contravenes clause 12.4(a) of the contract and s 80(2)(b) of the DBC Act.
  5. [177]
    Further, Mr Kelly, on behalf of the Foleys, submits that the Foleys accept that there is an amount of $280.50 owing for the following works:
    1. (a)
      Lighting to jetty - $90.00 excl GST;
    2. (b)
      2 x exhaust fans - $100.00 excl GST; and
    3. (c)
      quartz reserve time clock to gate light - $65.00 excl GST.
  6. [178]
    Mr Bagnall supplied support for the extra work from D&S Pendrick Electrical Pty Ltd as outlined in attachment ‘SB-50’ to Exhibit 11. This document included both extras to the quotation for the electrical work and also credits for items not supplied.
  7. [179]
    I accept the documentary evidence in preference to that of Mr Foley on the basis that Mr Foley was unsure whether the works were extra or whether the works had been included.
  8. [180]
    This variation forms part of SBH’s counterclaim regarding variations which are not compliant with s 80 of the DBC Act and thus the quantum will be dealt with separately as part of a consideration of the counterclaim.

Variation V033

  1. [181]
    Variation V033 is dated 29 March 2011 and was converted to invoice 789 dated 29 March 2011.
  2. [182]
    The authority for variation to contract document describes the variation as a credit for an electric striker not installed for the sum of $213.52.
  3. [183]
    The authority for variation to contract document is not signed by the Foleys.
  4. [184]
    There is no dispute that the Foleys are entitled to a credit for the work not carried out. The only issue in dispute is the amount of the credit.
  5. [185]
    The Foleys submit that the credit amount should be $378.10 as agreed by the joint experts report (Exhibit 1) in the proceedings.
  6. [186]
    I accept the Foleys’ submission and agree that the credit amount should be $378.10.
  7. [187]
    The amount assessed by the joint expert report is accepted by SBH in its submissions dated 12 January 2017.[21]
  8. [188]
    This variation forms part of SBH’s counterclaim is dealt with in the category of P and other items as part of the counterclaim.

Variation V034

  1. [189]
    Variation V034 is dated 29 March 2011 and was converted to invoice 790 dated 29 March 2011.
  2. [190]
    The authority for variation to contract document describes the variation work as follows:

Extra plumbing PC items supplied above our allowance as per Tradelink and Sandy Strait invoices:

Credit 2 x shower heads (returned)

Debit 2 x shower heads

Debit 1 x grab rail

Debit 1 x set of spa taps

  1. [191]
    The authority for variation to contract document is not signed by the Foleys and relates to an amount of $253.49.
  2. [192]
    This variation forms part of SBH’s counterclaim regarding variations which are not compliant with s 80 of the DBC Act and will be dealt with separately.

Variation V035

  1. [193]
    Variation V035 is dated 29 March 2011 and was converted to invoice 791 dated 29 March 2011.
  2. [194]
    The variation work is described as ‘credit on light fittings and exhaust fan’ in the sum of $490.53.
  3. [195]
    The Foleys accept the amount of the credit.
  4. [196]
    This variation forms part of SBH’s counterclaim and thus the credit amount will be dealt with separately as part of the counterclaim.

Variation V036

  1. [197]
    Variation V036 is dated 29 March 2011 and was converted to invoice 793 dated 29 March 2011.
  2. [198]
    The authority for variation to contract document describes the variation as ‘credit security screens on viewing deck not required’.
  3. [199]
    This item has been referred to in the assessment of V006. The credit for $366.20 is accepted by the Foleys.
  4. [200]
    This variation is no longer in dispute and a credit of $366.20 is allowed.
  5. [201]
    SBH has conceded a credit in favour of the Foleys as part of its counterclaim.

Provisional Sum and Prime Cost Item Adjustments

  1. [202]
    The second part of the Foleys’ restitution claim relates to adjustments for provisional sums and prime cost items which were included in the contract.
  2. [203]
    Appendix Part A to the contract sets out the allowances for prime cost items (‘PC items’) agreed between the parties:[22]

Front Door Hume XS 2020 x 1200 with clear glass

1 item

$490.00

$490.00

Front Door Furniture

1 item

$463.00

$463.00

Light Fittings

1 House lot

$2,402.00

$2,402.00

Wall & Floor tiles (supply only) (Wet areas only)

1 m2

$35.00

$35.00

Wall tiles Ensuite Upper Floor (supply only)

1 m2

$45.00

$45.00

  1. [204]
    Appendix Part B to the contract sets out the allowances for provisional sums (‘PS items’) agreed between the parties:[23]

Site Cut & Fill

$924.00

Air-conditioning

$14,610.00

Bosch Solution Alarm System with 3 Bosch Professional Detectors

$988.90

Home network with Cat 5 points to Lounge, Study, Rumpus, Bedroom 1 & Bedroom 2

$858.00

Vacuum system

$2,932.08

CCTV Equipment

$5,478.00

Alphone JF Video Intercom without memory

$1,591.70

Surround Sound Setup

$528.00

  1. [205]
    The Foleys claim there are 16 adjustments to the contract price as a result of changes in the PC and PS items. The items are set out in Part 1 of Schedule B to Mr Bagnall’s statement.[24]
  2. [206]
    Many of the items have been agreed between the parties with the Foleys submitting that the following items remain in dispute as set out below:[25]

Description

Agreement on Item

Amount

Credit for electronic striker plate not being installed (Item 2)

Agreed

Disagreed

Site cut and fill (Item 5)

Disagreed

Disagreed

Concreting to front and rear patios and concrete slab outside laundry (Item 14)

Disagreed

Disagreed

Credit for reduced number of electrical points and light points (Item 14b)

Disagreed

Disagreed

Change from Mowbray to Hendra clay bricks (Item 15)

Disagreed

Disagreed

  1. [207]
    A concession is made in SBH’s submissions dated 12 January 2017 in relation to the change in the installation of the door furniture. The joint expert report,[26] agreed by the parties, addresses this item and SBH accepts that the issue is no longer in dispute. The amount of $378.10 is accepted by both parties as the allowance for the change in scope of work.
  2. [208]
    In relation to item 5 regarding the cut and fill, in their submissions dated 3 February 2017, the Foleys accept that there should be an adjustment of $20.96 for this item.
  3. [209]
    There remains therefore only three outstanding items to be considered.
  4. [210]
    The items have been considered under the premise that they relate to PC or PS items. I am unsure why the parties and the experts have approached the items under this heading as none of the items are listed as PC or PS items in the contract.
  5. [211]
    The items are claimed by the Foleys as part of their restitution claim and are more appropriately dealt with as variations to the scope of works.

PC - Item 14

  1. [212]
    In relation to Item 14, the Foleys seek an adjustment to the contract price of $5,049.58 for the concrete work including a slab outside the laundry which it is alleged should have been carried out by SBH under the contract.
  2. [213]
    It is the position of SBH that no adjustment to the contract price should be allowed as the scope of works only included a concrete pad for the water tank and path to the clothesline.[27]
  3. [214]
    In cross-examination, Mr Bagnall explained that the plans and Specifications did not allow for the concrete slab works claimed. His evidence was that the dotted lines on the plans depicted the roof line and were not relevant to any slab or concrete structure. Accordingly, Mr Bagnall confirmed that neither his quotation nor the plans allowed for the item claimed by the Foleys.
  4. [215]
    The quotation provided by SBH (Exhibit 3) specifically states:

Driveway/Porches – No allowance has been made for the driveway

Paths & tank pad Allowance has been made for a plain concrete pad for the water tank and path to the clothesline.

  1. [216]
    Curiously, the Foleys accept that the plans do not indicate a concrete slab outside the laundry and yet the claim is made on the basis that there is not an express exclusion of this item from the scope of works.
  2. [217]
    In support of this contention, the Foleys rely upon the exclusion in the Specifications of the driveway from the scope of works.
  3. [218]
    Mr Foley gave evidence that no agreement was reached to exclude this item from the contract works and that he had the works carried out in January 2011 at the same time the driveway was installed as the works had not been completed by SBH.
  4. [219]
    I accept the evidence of Mr Bagnall that this item was not included in his quotation and that it was not an item included in the scope of works.

PC Item 14b

  1. [220]
    In relation to Item 14b, the Foleys seek a credit of $1,791.90 for electrical work relying upon the evidence of their quantity surveyor who made an assessment of the number of electrical points and lighting points provided under the contract compared with the number installed.
  2. [221]
    It was submitted on behalf of SBH that this issue is dealt with as part of Variation V032. An amount of $280.30 has been admitted by the Foleys and the remainder of variation V032 considered in SBH’s counterclaim.
  3. [222]
    I do not accept that this issue is the same as the items addressed in V032.
  4. [223]
    I accept the evidence of Mr Browning that the Foleys are entitled to a credit for the power points which were not installed.
  5. [224]
    The amount of $1,791.90 is allowed for an adjustment to the PC item in the contract as fewer power points were installed.

PC Item 15

  1. [225]
    In relation to item 15, the Foleys seek a credit in the sum of $2,912.09 for the change in the type of bricks used in the construction. The contract specifies Mowbray bricks and by agreement the bricks were changed to Hendra clay bricks.
  2. [226]
    SBH concedes that the credit for the change in type of brick should be $1,042.72.
  3. [227]
    The fact that the type of brick was changed is not an issue between the parties.
  4. [228]
    Mr Bagnall gave evidence that the change in scope of works resulted in the cost of the works being $49.00 per thousand bricks less that the cost of laying the Mowbray bricks.
  5. [229]
    The Foleys submit that the cost of the Hendra bricks was in fact $122.55 per thousand bricks cheaper than the Mowbray bricks. The Foleys relied upon the evidence of their quantity surveyor, Mr Thompson, in assessing the credit due to the Foleys.
  6. [230]
    Mr Bagnall provided evidence of the number of bricks delivered to site, being 21,280 bricks. No evidence was provided by either party regarding the actual cost of each type of brick.
  7. [231]
    Given the failure of the Foleys to provide any support for the rate relied upon in their calculations, I accept the evidence of SBH and allow the sum of $1,042.72.
  8. [232]
    This item is dealt with in the SBH counterclaim and a credit is accepted in favour of the Foleys in the sum of $1,042.72.

Summary of Compliant and Non-compliant variations

  1. [233]
    The Foleys claim that they are entitled to restitution for variation claims which it alleges are not compliant with the general conditions of contract or sections 80 and 82 of the DBC Act.
  2. [234]
    The Foleys submit that Variations V001, V002, V005, V006, V007, V008, V009, V010, V013, V021, V021, V023, V024 and V027 are not compliant with s 82 of the DBC because they were not signed by both Mr Foley and Mrs Foley but rather only by Mr Foley. I do not accept this to be a factor on which non-compliance can be relied given the likelihood that Mr Foley had authority to sign on behalf of both parties to the contract.
  3. [235]
    In relation to all the variations for which restitution is claimed, the Foleys allege the following non-compliance:
    1. (a)
      there is no written request by either the applicant or the respondent in breach of clause 12.1 of the contract;
    2. (b)
      the variation document did not state any change in the Contract Price as a result of the variation, or how that change was worked out in breach of clause 12.4(d) of the contract and s 80(2)(d) of the DBC Act;
    3. (c)
      the variation document did not state when any adjustment to the Contract Price is to be claimed or allowed by the Contractor in breach of clause 12.4(e) of the contract and s 81(1), (2), (4) and (5) of the DBC Act;
    4. (d)
      with respect to variations requested by the Contractor no reason for the variation was stated in the variation document as required by s 80(2)(c) of the DBC Act; and
    5. (e)
      a number of the variations do not describe the variation in any meaningful way in breach of clause 12.4(a) of the contract and s 80(2) of the DBC Act.
  4. [236]
    The Foleys submit that SBH is statutorily prohibited from recovering any amount for any variations, by reason of the prohibitions contained in sections 84(2) and (3) of the DBC Act.
  5. [237]
    Sections 84(2) and (3) of the DBC Act provide:
  1. (2)
    If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation –
  1. (a)
    only is the building contractor has complied with sections 79, 80, 82 and 83; or
  1. (b)
    only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
  1. (3)
    If the variation is not a variation that was originally sought by the building owner, the building contractor may recover an amount for the variation –
  1. (a)
    only if -
  1. (i)
    the building contractor has complied with sections 79, 80, 82 and 83; and
  1. (ii)
    the ground of unforeseen circumstances applies; or
  1. (b)
    only with the tribunal’s approval given on an application made, as provided under the QCAT Act, to the tribunal by the building contractor.
  1. [238]
    The statute is clear that the builder is only able to recover an amount for a variation in circumstances where there has been compliance with the requirements for a proper variation or on a successful application to the tribunal by the building contractor, taking into account the matters to be determined by the tribunal on an application as set out in s 84(4) of the DBC Act. The application then triggers an assessment to be made by the tribunal pursuant to section 84(6)-(7) of the DBC Act.
  2. [239]
    The Foleys submit that all rights a builder may have in relation to the payment for variations are abrogated by s 84(2)(a) in the event of non-compliance with sections 79 to 83 and then a statutory right to payment only arises upon an application pursuant to s 82(2)(b).
  3. [240]
    The legislative intention is clear:
    1. (a)
      a building contractor must comply with the requirements of sections 79–83 of the DBC Act;
    2. (b)
      if the building contractor does comply with sections 79–83, there is an automatic entitlement to recovery of an amount for the variation;[28]
    3. (c)
      if the building contractor fails to comply with sections 79–83, the building contractor may only recover an amount for the variation through an application to the tribunal and upon approval of the tribunal;
    4. (d)
      once an application is made, the tribunal must be satisfied with the matters in s 84(4)(a)-(b) before approval for recovery of an amount for the variation; and
    5. (e)
      if the building contractor is entitled to recover an amount for the variation (either by compliance or upon approval by the tribunal), the amount is valued (for a fixed price contract) in accordance with the valuation process set out in s 84(6)(a) or (b) of the DBC Act.
  4. [241]
    McGill DCJ in Thompson Residential Pty Ltd v Tran[29] formed the view that the Court of Appeal in Allaro Homes Cairns Pty Ltd v O'Reilly[30] rejected the idea that an applicant could have a restitutionary remedy outside s 84(4), a remedy which, had it existed, the applicant ought to have been able to pursue before the tribunal. His Honour further noted that it is surprising that the Court of Appeal did not confirm that a restitutionary remedy was available. His Honour concluded that s 84(2):

excludes any restitutionary remedy as well as any contractual remedy, and, in circumstances where it is accepted that the section applied and ss 79-81 have not been complied with, the plaintiff may not recover in this court any amount in restitution for any of these variations.

  1. [242]
    His Honour approved the decision of Andrews DCJ in CMF Projects P/L v Riggall & Anor[31] referring to the following passage from Andrews DCJ:

[23] In my opinion, s 84(2) excludes a builder’s capacity to recover an amount on account of a variation on any basis other than by satisfying one of the subparagraphs in s 84(2)(a) or s 84(2)(b). This is for two reasons. The first is that that is the natural meaning of the words used in s 84(2). The second is that there would be little point in the legislature creating a specific, and quite restricted right at s 84(4) to, in effect, a restitutionary remedy in certain circumstances if the legislature did not intend otherwise to exclude any right to recover, including in restitution… Section 84(4) is an instance of the legislature creating a specific and restricted right to a restitutionary remedy for builders who failed to obtain properly documented variation agreements, a remedy available only from the tribunal and to the exclusion of other rights of recovery.

  1. [243]
    I have formed the view that on a proper interpretation of s 84:
    1. (a)
      section 84(2)(a) abrogates any entitlement to payment for non-compliant variations. The use of the word ‘only’ in s 84(2)(a) limits the circumstances initially when recovery for payment may be enlivened. Therefore, entitlement only arises upon compliance with sections 79 to 83;
    2. (b)
      section 84(2)(b) ameliorates the restriction in s 84(2)(a) by allowing the building contractor to seek the approval of the tribunal for payment for a non-compliant variation. Such an application then triggers a consideration of the matters set out in s 84(4); and
    3. (c)
      a valuation of a variation is to be carried out under s 84(6) once an entitlement is established. That entitlement only arises under s 84(2)(a) or s 84(2)(b) in conjunction with s 84(4).
  2. [244]
    The prohibition through the word ‘only’ in s 84(2)(a) limits entitlement to payment for non-compliant variations until there is an approval by the tribunal. Section 84(2)(a) ‘sterilises’ a claim for payment for variation work which does not comply with Part 7 of the DBC Act whilst s 84(2)(b) provides a conduit for a claim for payment subject to the considerations in s 84(4). Without s 84(2)(b) in conjunction with s 84(4), a claim for payment for variation work which was non-compliant with the Act would be defeated by s 84(2)(a).
  3. [245]
    Those variations alleged to be non-compliant variations on the basis of non-compliance with the general conditions of contract or the DBC Act are Variations V001, V002, V005, V006, V007, V008, V009, V010, V020 and V036.[32] Of those variations, I have formed the view above that Variations V08 and V010 do not relate to variation work and thus need not be considered in this category. In addition, Variation V020 has been conceded by the Foleys as valid as the variation was requested by Mr Foley and Variation V036 is the subject of a credit which has been agreed.
  4. [246]
    Thus, for the purpose of assessing whether the Foleys are entitled to restitution for the alleged non-compliant variations this assessment relates to Variations V001, V002, V005, V006, V007 and V009.
  5. [247]
    All of these variation documents were signed by Mr Foley. I have dealt with these issues in relation to each individually above and formed the view that all the items should be allowed.
    1. (a)
      V001 – signed and description sufficient;
    2. (b)
      V002 – Foleys were aware of change per Tradelink and description sufficient;
    3. (c)
      V005 – requested by Foleys and describes details of work;
    4. (d)
      V006 – signed by Foleys and describes details of work;
    5. (e)
      V007 – signed by Foleys and describes details of work; and
    6. (f)
      V009 – signed by Foleys and describes details of work.
  6. [248]
    Accordingly, I have formed the view that each of the variation claims above should be allowed. It is not necessary to consider the matter further, nor is it necessary to consider the relevant matters which would have to be considered in the event of an application being made by SBH pursuant to s 84(4) of the DBC Act.
  7. [249]
    As part of the Foleys’ claim in restitution, I have not considered the variations which are the subject of the application brought by SBH as part of its counterclaim pursuant to s 84 of the DBC Act. Those variations will be dealt with in the SBH counterclaim.[33]

Defective and Incomplete Work

  1. [250]
    Exhibit 1 is a Scott Schedule issued on 17 October 2016 compiled by the expert witnesses as a result of a conclave as directed by the Tribunal.
  2. [251]
    Mr Garry Carpenter, a building consultant, and Mr Gary Thompson, a quantity surveyor, were engaged by the Foleys and gave both documentary and oral evidence. Mr John Browning, a builder, was engaged by SBH.
  3. [252]
    The Scott Schedule is designed to outline all the defects and incomplete work the subject of the Foleys’ damages claim and sets out all items on which the experts agree and disagree in relation to both liability and quantum. It is noted that the agreed amounts for each item are exclusive of both GST and any builder’s margin.
  4. [253]
    For the most part, the Foleys agree with the items in the Scott Schedule on which the experts agree. SBH, on the other hand, has taken issue with a number of items although they have been agreed by the experts. Those items will be addressed below.
  5. [254]
    The Foleys claim in relation to the defects is based on SBH’s breach of its obligations under clause 10 of the contract and/or the implied terms referred to above. The Foleys also submit that the defective work is evidence of a breach of sections 44 and 45 of the DBC Act.
  6. [255]
    I shall deal with each item of defective and incomplete work, using the item numbers contained in the Scott Schedule Exhibit 1.

Item 1 – Failure to fix electronic striker plate

  1. [256]
    SBH has conceded that the experts have agreed to this item and concedes that the Foleys’ claim should be allowed, subject to an adjustment on account of the applicable builder’s margin and GST.
  2. [257]
    SBH submits that any amount derived by Mr Thompson would be reduced by 10% given that a builder’s margin has been allowed in Mr Thompson’s assessments. Further, SBH submits that if a builder is required the amounts derived by Mr Browning should be increased by 10% to allow for the builder’s margin and further increased 10% for GST.
  3. [258]
    I accept the evidence of the experts in relation to this item and allow the sum of $378.10 as agreed between the experts.

Item 2 – Breach of termite barrier through the floor waste

  1. [259]
    SBH has conceded that the experts agree that the defect does not exist.
  2. [260]
    The experts agree that in order to determine whether there was a defect extensive destructive investigation would be required.
  3. [261]
    The Foleys do not pursue this claim and thus no adjustment to the contract price is claimed.

Item 3 – Insufficient Fall to bedroom 2 ensuite shower recess

  1. [262]
    The experts agree that there was an issue with the flow of water from the shower recess and a problem with the fall to the ensuite floor. This was supported by photographs 101, 102, 103, 104, and 106 attached to Mr Carpenter’s report dated 27 November 2015.[34]
  2. [263]
    Mr Browning recommended the installation of a 10mm x 10mm aluminium bund to the shower entry in line with the fixed panel shower screen. The cost of rectification would be in the vicinity of $24.00. SBH submits that this solution is the most cost-effective and less likely to cause further problems.
  3. [264]
    Mr Carpenter recommended the removal of approximately 3m2 of the floor tiles outside the shower and bedroom and replacing them in order to achieve a fall to the waste in the shower.[35]
  4. [265]
    Mr Browning conceded in his comments in the joint report that if it is the case that a floor waste is needed then he accepted the evidence of Mr Carpenter that the amount of $976.52 excl GST would be the cost of the installation of a floor waste.
  5. [266]
    I accept the evidence of Mr Carpenter as set out in Exhibit 1 that the floor tiling has insufficient fall to the shower floor waste as installed. In this regard, the Building Code of Australia requires that the floor be constructed so that water flows to the waste point without ponding.[36]
  6. [267]
    The amount of $976.52 is allowed for this claim.

Item 4.1 – Stainless steel wires not fitted with grommets at posts

  1. [268]
    The experts agree on the method of rectification of this defect.
  2. [269]
    The rectification work results from missing grommets to the stainless steel balustrade wires at the galvanised corner posts.
  3. [270]
    SBH accepted that grommets were required but says that it was denied access to install the grommets.
  4. [271]
    Mr Browning estimates that the cost of removal of the wires, refit of the grommets and reinstatement of the wires, including re-tensioning of the wires, is about $335.00.
  5. [272]
    Mr Thompson estimates that the cost of the rectification would be $855.10.
  6. [273]
    I accept the evidence of Mr Thompson based on his experience as a quantity surveyor in assessing this type of work.
  7. [274]
    The amount of $855.10 is allowed for this defect.

Item 4.2 –Fixing screws corroded

  1. [275]
    This defect is alleged to have arisen as a result of stainless steel handrail brackets being fixed to steel posts with an assortment of screws.
  2. [276]
    Both Mr Carpenter and Mr Browning agree that the rusting screws need to be replaced.
  3. [277]
    Mr Carpenter estimates the cost of this rectification work is $230.20. Mr Browning estimates the cost to be $55.75.
  4. [278]
    For the sake of expediency, SBH has agreed to the amount of $230.20 to rectify this defect.

Item 4.3 – Corrosion on handrail support posts

  1. [279]
    The Foleys allege through Mr Carpenter that the handrail support posts are rusting and need to be replaced.
  2. [280]
    Mr Browning formed the view that the handrail support posts are not in fact rusting but there is evidence of tea staining. Accordingly, Mr Browning is of the view that no rectification work is required.
  3. [281]
    In the joint report, Mr Carpenter asserts that the handrails should be replaced and at the same time the waterproofing membrane should be rectified. Mr Carpenter states that the membrane should be replaced rather than patched.
  4. [282]
    Mr Carpenter’s evidence that the handrails are rusting is supported by the photograph at page 6 of Exhibit 1 in relation to this item. It was Mr Carpenter’s evidence that all the posts exhibit this rusting.
  5. [283]
    Mr Thompson has estimated the cost of rectifying the posts and replacing the waterproof membrane at $20,500.00. No breakdown of this amount was provided.
  6. [284]
    No evidence was provided by Mr Browning regarding the estimate provided as Mr Browning had formed the view that there was no rust at all. He relied upon his involvement with other buildings exhibiting the same condition and gave evidence that all that was required is some cleaning.
  7. [285]
    Mr Carpenter conceded that he had not tested the posts for corrosion nor had he tried to remove the surface stain with a brush. He used a fingernail to try and remove the rust stain. Mr Carpenter conceded that the staining may be surface rust. Further, in cross-examination, Mr Foley conceded that the method of installation of the membrane may have caused or contributed to any rust evident on the steel posts.
  8. [286]
    The experts agree that the posts as installed do not exhibit any structural defect and there is no evidence that the posts are failing.
  9. [287]
    I do not accept that there is sufficient evidence to support the Foleys contention that all the steel posts need to be removed. Nor do I accept that the rust as shown on the photograph equates to corrosion of the steel posts.
  10. [288]
    The amount claimed is not allowed.

Item 4.4 - Chain Anchor points show corrosion and have failed

  1. [289]
    The experts agree that there is a defect in the chain anchor points and that rectification is required. The experts agree on the method of rectification.
  2. [290]
    The experts do not agree on the cost of rectification. Mr Thompson estimates the cost of rectification is $2,091.80. Mr Browing estimates the rectification cost to be $131.90.
  3. [291]
    Given Mr Thompson’s evidence that his estimate was too high, the Foleys conceded that the claim should be $131.90.
  4. [292]
    The amount of $131.90 is allowed for this defect.

Item 4.5 – Fixing of stainless steel posts and membrane installation

  1. [293]
    This item relates to the fixing of the stainless posts to the balcony area. The defect is alleged to have resulted from the fixing of screws without an appropriate sealant during installation.
  2. [294]
    Mr Carpenter comments in Exhibit 1:

Carefully remove the fixing screws to the bottom post caps to all posts to the membrane areas.

Lift the bottom post caps up and seal the existing screw holes and around the base of the post caps.

Slide the post caps back down and refit new fixing screws.

  1. [295]
    Mr Carpenter advised that membrane rectification should not consist of patching and commented as follows:

I am advised that the membrane on the decks was initially installed prior to the stainless steel posts and that the screw fixings through the post baseplates penetrate through the membrane. I am advised that membrane was subsequently added over the post brackets as a temporary measure to exclude water from penetrating the deck construction. This has caused conditions where the bottom of the post cannot drain water and the possibility that water trapped in the post can deteriorate the base of the post and leak into the deck construction through the unsealed fixing screw holes.

  1. [296]
    Mr Carpenter carried out extensive investigation in relation to this defect as shown in photograph 114.
  2. [297]
    Mr Browning gave evidence that the contract and the quotation excludes external balcony membrane works and that the Foleys engaged a membrane contractor for installation of the membrane. The membrane was installed prior to the installation of the balustrade posts. The base plates of the posts and the fixing screws were sealed with a sealant during installation. The bottom post caps were then installed over the base plates to the posts. The membrane contractor applied a further sealing coat of membrane over the bottoms caps stopping drainage from the area and inside the bottom post caps which includes drainage from the balustrade posts. Mr Browning formed the view that the membrane was starting to break up in areas to both first floor balconies and he did not observe any evidence of leaks coming from the balustrade post fixing points.
  3. [298]
    Mr Thompson has assessed the cost of rectification at $591.80.
  4. [299]
    SBH submits that given that the stainless steel posts do not require replacing the claim for replacing the membrane should not be allowed.
  5. [300]
    I accept that the responsibility of the membrane was not that of the building contractor. For this reason alone, the claim is not allowed.
  6. [301]
    Further, given my determination that the posts do not need replacing, there is no necessity to replace the waterproof membrane as part of this claim. The alleged defects with the waterproof membrane, conceded by Mr Carpenter and Mr Browning, will be considered as part of Defect Item 15.

Item 4.6 – Fascia and beam deterioration to north elevation

  1. [302]
    This defect is shown in photograph 20.
  2. [303]
    Mr Carpenter describes the defect in the joint report as one required to ‘refix securely all loose trim boards to the balcony areas of the house at first and ground levels’.
  3. [304]
    Mr Carpenter states that the following works are required:

prepare, fill all gaps and repaint all fascia boards and beams to the deck areas at first and ground floor areas.

  1. [305]
    Mr Thompson assessed the cost of rectification at $4,648.60.
  2. [306]
    Mr Browning gave evidence that any defect in this regard was very minor and considered the condition of the fascia boards and beams as consistent with normal weathering over time. He conceded that the cost would be in the vicinity of $100.00 for the repainting and re-fixing of the fascia board. During cross-examination, Mr Browning reconsidered whether he would apply the same fix as he suggested in the joint report.
  3. [307]
    I accept the evidence of Mr Carpenter that the fascia boards require re-fixing and repainting and the rectification cost would be  $4,648.60.

Items 5.1 and 5.2 – Membrane patching around penetrations and fixing screws to the chain brackets

  1. [308]
    Item 5 relates to the defects to 75 x 75 SHS steel posts (C1) to the lower level floor.
  2. [309]
    The Foleys’ position is as follows:
    1. (a)
      the corroded screws need to be replaced;
    2. (b)
      the rectification work involves:
      1. removing the membrane patching from over the screws;
      2. replacing the screws with compatible stainless steel screws fixed with appropriate sealant;
      3. replacing the balcony membrane in its entirety because patching is undesirable; and
      4. patching over the top of the new screws.
  3. [310]
    Mr Thompson estimates the cost of the patching rectification works as $1,295.60 and the cost of for replacing the fixing screws to the chain brackets as $1,226.00.
  4. [311]
    Both Mr Browning and Mr Carpenter gave evidence that the membrane around the steel posts has been installed defectively by the membrane contractors.
  5. [312]
    I accept the evidence of Mr Browning that the steel posts are structurally sound and that there is no evidence of a leak in the verandah.
  6. [313]
    I have formed the view that the membrane has not been properly installed and, as it was not part of SBH’s scope of works, the Foleys have taken on the responsibility of any rectification costs required as a result of its faulty installation.
  7. [314]
    Accordingly, the Foleys’ claim in relation to item 5.1 is not allowed.
  8. [315]
    In relation to item 5.2 which relates to the fixing of screws to the chain brackets, it is agreed between the experts that the fixing screws need replacing.
  9. [316]
    Mr Thompson values the cost of rectification at $1,226.00. Mr Browning asserts the cost would be in the vicinity of $87.85.
  10. [317]
    It is asserted by SBH, through Mr Browning’s evidence, that Mr Thompson’s estimate included the cost of replacing the membrane. This accounts for the disparity in the two estimates.
  11. [318]
    I accept the evidence of Mr Browning that given there is no evidence of water ingress through the membrane, the removal and replacement of the steel fixing screws with stainless steel is sufficient. The amount of $87.85 is allowed.

Item 5.3 – Wire termination screw not sealed to roof

  1. [319]
    SBH has conceded this item in the sum of $132.60.

Item 6 – Exterior Cladding substandard and unfinished

  1. [320]
    All three experts agree that this item is a defect and that the allowance of $694.32 to remedy the defect is accepted.

Item 7 – All locks to be keyed alike

  1. [321]
    The Scott Schedule correctly states in the joint comments that there were no defects evident in relation to this item.
  2. [322]
    The issue concerns a contractual issue arising from an interpretation of the Specifications.[37]
  3. [323]
    Mr Foley gave evidence that he was advised by Mr Bagnall that this item could not be carried out because of the different manufacturer of the various door cylinders.
  4. [324]
    Subsequently, Mr Foley had the locks for the door keyed alike at a cost of $269.00.[38]
  5. [325]
    For expediency, SBH does not dispute the amount claimed.

Item 8 – Garage Door remote controls and instructions manual not provided

  1. [326]
    The experts agree that there was no defect in relation to this item and that the issue was a contractual one.
  2. [327]
    Mr Foley gave evidence that he has never received the remote control for the garage nor any instruction manuals.
  3. [328]
    Mr Bagnall disputes Mr Foleys’ recollection and gave evidence that he had given Mr Foley two  sets of remote controls and manuals.
  4. [329]
    For expediency, SBH does not dispute the amount of $250.00 claimed.

Item 9 – Substandard paint finish to eaves, patio ceilings, downpipes and the like

  1. [330]
    The experts agree that the painting required rectification and agree upon the method of rectification including treatment of the staining and recoating the soffits to comply with manufacturer’s instructions and specifications.
  2. [331]
    The amount of $869.58 is claimed by the Foleys for this item of rectification work.
  3. [332]
    Mr Browning formed the view that a nil amount should be allowed for this item given that the home is due for a painting as none has been done since construction.
  4. [333]
    SBH submits that the Foleys should bear some responsibility for the defective paint finish and submits that the costs should be borne by both parties.
  5. [334]
    There is no evidence that the condition of the paint has resulted from lack of maintenance or any non-action by the Foleys. The evidence is that the paint work was substandard.
  6. [335]
    I accept that the rectification work is required and in the absence of contrary evidence allow the sum of $869.58.

Item 10 – Incorrectly installed gutter and downpipes causing overflow in heavy rain

  1. [336]
    All the defects in Item 10 were considered individually by the experts.
  2. [337]
    The alleged defects arise out of non-compliance with the approved plans for rainwater design prepared by Enviro Water Design.
  3. [338]
    The approved plan requires the stormwater from the western side of the house to terminate at the road drain. Mr Bagnall accepted this requirement.
  4. [339]
    Mr Bagnall’s evidence was that there was no road drain as there was no kerb or channelling.
  5. [340]
    Mr Browning gave evidence that whilst there was no kerb or channelling there was a road drain which he was able to inspect and thus compliance with the approved rainwater design could possibly have been carried out.
  6. [341]
    The parties have considered this defect under four separate items below and the Foleys claim the cost of all items as $14,720.00 to ensure that the works comply with the approved plans.
  7. [342]
    SBH submits that there is no evidence of stormwater build-up or water inundation to the site and the current stormwater layout is functioning properly.
  8. [343]
    SBH concedes that there is a defect in the downpipe adjacent to the garage. It is conceded that it has been installed too close to the façade causing weathering of the adjacent façade and soffit. This defect can be remedied with the installation of an elongated spreader.
  9. [344]
    A major concern raised by the Foleys was the lack of certification of the works as a result of the non-compliance of the works with the approved plans. There is no evidence that certification has been sought or that there has been a rejection of certification. This item was not referred to in the FCR Council’s Form 61 Non-Compliance notice.
  10. [345]
    Further, Mr Bagnall concedes that there was a necessary change in the works because of the fact that there was no kerb or channelling at the front of the street. As a consequence, the works could never be compliant with the approved plans and drawings because of this missing feature.

Item 10.1 – Street stormwater outlet position

  1. [346]
    Mr Carpenter gave evidence that there are no outlets from rainwater drainpipes which discharge at the street, contrary to the approved plans. Mr Carpenter formed the view that the works were incomplete and thus there was no certification of the works by a building certifier.
  2. [347]
    Mr Browning provided photographic evidence of the bubbler which discharges onto the ground in the front nature strip. Further, he states that the east side stormwater system discharges to an outlet on the boat ramp on the north east corner of the home.
  3. [348]
    I accept the evidence of Mr Browning that there has been compliance with the rainwater design for this item in that a road drain has been installed.

Item 10.2 – River stormwater outlet position

  1. [349]
    Mr Bagnall accepted in cross-examination that the approved plans require the stormwater from the eastern side of the house to discharge into the street.
  2. [350]
    Mr Bagnall also conceded that the stormwater outlet as constructed and the air- conditioning condenser do not discharge into the street but rather discharge into Beelbi Creek. In this respect, Mr Bagnall accepted that the construction was non-compliant with the approved plans.
  3. [351]
    Mr Bagnall stated that there was a change from the approved plans because Mr Foley pointed out to him that the existing connection went to the rock wall and that it was agreed that the works would be constructed in the same manner.
  4. [352]
    Mr Carpenter gave evidence based on a test carried out by him which involved running water from a hose into the gutter and downpipe nearest to the street adjacent to the door at the northern end of the boat store roof. Mr Carpenter stated that he observed water pouring out of an open pipe protruding from a concrete boat ramp. Mr Carpenter commented that this is an illegal point of stormwater discharge and is contrary to local authority and building application requirements.
  5. [353]
    Mr Browning, on the other hand, was of the opinion that there was no evidence to show that the stormwater outlet and pipework has adversely affected the use of the house and property by the Foleys.
  6. [354]
    Rectification works for this issue is said by Mr Carpenter to involve taking up sections of the footpath and driveway to redirect all existing drains away from the boat ramp, providing new sub surface drains piped to the street in accordance with the approved drawings and reinstating the driveway to match existing driveway.

Items 10.3 and 10.4 – East side downpipes not in correct position and east upper roof discharge flooding lower roof gutter at front door area

  1. [355]
    Mr Browning has accepted that the Enviro Water Design plans indicate the installation of four downpipes to the east side of the house. Four downpipes have been installed but two have been relocated with the south garage downpipe relocated to the north end and the boat store downpipe relocated to the south end of the main garage.
  2. [356]
    Mr Browning suggested that there was no evidence that the relocation of the downpipes had affected removal of stormwater from the roof except in relation to the east upper roof which causes flooding of the lower roof gutter at the front door area as outlined in item 10.4.
  3. [357]
    Mr Browning gave evidence that the problem with the flooding of the roof gutter could easily be rectified by fitting a new spreader with discharge holes starting 500mm from the wall and with a further spreader length a further 500mm. Thus the repair costs would be in the vicinity of $80.70.
  4. [358]
    Mr Carpenter noted that the catchment area of the upper level roof of the house is piped down to the eastern slope of the garage roof where a manifold disperses water. The position of the manifold directs water down into the eaves gutter above the garage door. This means that water has to travel the gutter length across the garage door to the downpipe at the opposite end of the roof.
  5. [359]
    Mr Foley gave evidence that in periods of rain, water overshoots the eaves gutter above the garage and inundates the flashing, fascia and soffits.
  6. [360]
    Mr Carpenter formed the view that to rectify the problem using Mr Browning’s method would be cosmetically unacceptable, practically unstable and unsafe in high winds. He was not convinced that it would remedy the problem.
  7. [361]
    The experts were divided on the methodology of rectification.
  8. [362]
    Mr Thompson’s estimate of the cost of rectification for items 10.1, 10.2, 10.3 and 10.4 was not challenged. No alternative estimate to the sum of $14,720.00 was provided.
  9. [363]
    It rests to be considered whether the proposed rectification works are both reasonable and necessary as provided in the often-cited principles in Bellgrove v Eldridge (1954) 90 CLR 163.
  10. [364]
    I have formed the view that given the on-going problems resulting from non-compliance with the approved plans that rectification is necessary. I have also formed the view that a defect such as this type is one which could be the catalyst for further problems and that it is therefore both reasonable and necessary that the rectification works proposed by Mr Carpenter be carried out rather than the patch-up job proposed by Mr Browning.
  11. [365]
    In the circumstances, the claim for $14,720.00 to rectify the stormwater issues to ensure compliance with the approved plans is allowed.

Item 11 – Defective pump for water tank rectified by Applicants

  1. [366]
    This item is agreed between the experts to be rectified by the owner and thus no claim is made.

Item 12 – Defective and incomplete fence and gate to spa deck

  1. [367]
    The Foleys submit that the termination of the contract was valid based on the fact that SBH had failed to install the gate to the spa deck. This item is referred to in the FCR Council Form 61 - Non-Compliance notice relied upon by the Foleys.
  2. [368]
    Mr Bagnall gave evidence that the gate was not installed because there was no spa on the deck. The spa was subsequently installed by the Foleys. SBH asserts therefore that the necessity for a fence did not arise until the spa was installed and as the Foleys were responsible for the installation of the spa they were also responsible to install the gate.
  3. [369]
    The experts agree that the entire balustrade and handrail system requires replacement and that rectification works include resealing around any new penetrations in the membrane system to the viewing deck.
  4. [370]
    The main point of contention is the cost of rectification.
  5. [371]
    The Foleys rely upon the estimate from Mr Thompson in the sum of $42,722.00 which is based upon a quotation obtained by the Foleys from Bradman’s Windows and Doors dated 21 July 2015.[39] The quotation refers to the supply and installation of a ‘Baluster design 1’ system. Mr Thompson has also taken into account the cost of scaffolding, removal of the old system and waterproofing.
  6. [372]
    Mr Browning estimates that the cost to replace the balustrade system is likely to be in the vicinity of $7,948.00. His estimate is based on a quotation from DC Fencing dated 20 October 2016[40] which is a proposal for a fence similar to the one presently installed.
  7. [373]
    Mr Browning comments in the joint expert report that the balustrade system is powder coated and constructed from aluminium tubing with vertical aluminium balusters welded into holes in the underside of the handrail. He considered the pool fence to be a typical budget pool fence as per the plans which state at sheet BA2 ‘selected balustrading’.
  8. [374]
    The quotation for the house which forms part of the contract merely refers to the ‘pool fence to side steps and viewing platform’ and provides no assistance as to the type or quality of fence.
  9. [375]
    In cross-examination, Mr Browning agreed that the Bradman quotation obtained for the replacement of the fence was an upgrade from the type of fence which was installed and alleged to be defective. That is, that a Baluster Design 1 fence was a superior fence to the one installed. Mr Browning conceded that the DC Fencing quotation did not allow for a pool gate.
  10. [376]
    Mr Browning’s reasoning for the failure of the fence was not the quality of the fence being unable to withstand wind loads but rather the inadequate welding at the top of the balusters where they are welded into the underside.
  11. [377]
    It is noted also that the Baluster Design 1 is a heavier design and the quotation from Bradman refers to a fence length of 38.7 metres compared with the 26 metres which is the length of the present fence.
  12. [378]
    I accept the evidence of Mr Browning that the cost estimates provided by the Bradman quotation are for a fence which is of a much higher quality than the one installed. For this reason, I am of the opinion that the estimate of $42,722.00 is excessive for the replacement of the as-constructed fence.
  13. [379]
    Should the Foleys wish to upgrade the pool fence such an upgrade expense should be borne by the Foleys.
  14. [380]
    In cross-examination, Mr Thompson was asked to provide an estimate per lineal metre for balustrade fencing. Mr Thompson gave evidence that the price range would be from $250.00 for basic fencing to $350.00 per lineal metre for a more superior fence.
  15. [381]
    Given that I do not accept that the Bradman quotation is a proper estimate for the replacement of the pool fence in the same quality as constructed, I have taken into account the submissions on behalf of SBH that consideration should be given to Mr Thompson’s evidence regarding the range of pricing for pool fences.
  16. [382]
    Based on a lineal meterage of 32 metres (which will in some way take into account the installation of a gate) at a rate of $350.00 per lineal metre, I allow the Foleys the sum of $11,200.00 as the reasonable cost to replace the defective pool fence.

Item 13 – Various issues with Upstairs timber floor

  1. [383]
    The experts agree on all aspects of this defect including the scope of works in Mr Carpenter’s report.
  2. [384]
    The amount allowed for this item of defect is $4,756.00.

Item 14 – Builder failed to clean concrete floor downstairs

  1. [385]
    This item has been deleted from the Foleys’ claim on the basis that it was not regarded as a construction defect.

Item 15 – Replacement of membrane to the north and south patios as a result of the handrail installation penetrating the membrane

  1. [386]
    This item has not been adequately considered by the experts in the Scott Schedule (Exhibit 1) for a number of reasons.
  2. [387]
    Mr Carpenter states:

I am advised by the owners that the original waterproofing contractor who laid the membrane to the deck would not issue a Form 16 Certificate due to the builder’s methodology in fixing the balustrade posts and other fixings through the membrane. The waterproofing contractor subsequently applied a patch to the membrane over the fittings and posts however in view of the patching and penetrations would not certify the membrane installation work. In the absence of a Form 16 for deck waterproofing the building certifier will not issue a final inspection certificate of the building.

  1. [388]
    The waterproofing was originally carried out by Australian Waterproofing Company at the request of the Foleys.
  2. [389]
    The waterproofing works were carried out at a cost of $27,284.00 to the Foleys.[41]
  3. [390]
    The waterproofing required re-waterproofing in February 2011 again at the Foleys’ expense in the sum of $22,001.00.
  4. [391]
    Mr Foley gave evidence that the necessity for the re-waterproofing was because SBH had penetrated the membrane when installing the balustrade system.
  5. [392]
    SBH asserts that this claim is not tenable on a number of grounds:
    1. (a)
      there is no evidence that the necessity for the re-waterproofing resulted from work carried out by the builder; and
    2. (b)
      this item has been considered as part of item 4.3 and 5.1 and disallowed.
  6. [393]
    I accept that any problem with the membrane is an issue to be dealt with by the Foleys with the membrane contractor.
  7. [394]
    I am not satisfied that the failure of the membrane was caused by any works undertaken by SBH.
  8. [395]
    This claim is not allowed.

Item 16 – Horizontal balustrade wires have damaged the brickwork at the north-east corner of bedroom 3

  1. [396]
    The experts agree that this item requires rectification.
  2. [397]
    The defect has arisen as a result of fixing the horizontal balustrade wires directly to the brickwork causing it to be pulled out of plumb.
  3. [398]
    Mr Thompson estimates the cost of rectification as $2,307.00. Mr Browning estimates the rectification cost at $735.80.
  4. [399]
    The main issue therefore is the method of rectification.
  5. [400]
    Mr Browning states that rectification requires the replacement of the existing chain link spacers. Mr Carpenter recommends that the system be changed to a spacer bar system. Mr Browning does not agree that a bar spacer system as a replacement for the existing chain link spacers is needed as the existing chain links provide the required support.
  6. [401]
    Objection was taken to Mr Browning providing evidence of a discussion he had with Mr Carpenter during the conclave regarding the installation of a spacer bar system.
  7. [402]
    Nothing turns on this issue as the agreed rectification estimates have been based on the replacement of the existing chain link spacers with the same system. The issue in dispute is not the method of rectification but rather the cost.
  8. [403]
    The agreed rectification method set out in the joint report provides:

Remove existing stainless steel balustrade wires.

Move the brickwork column back into place using a hydraulic jack.

Fit s/s plate to the columns of size 10 x 30 x 1000 predrilled and threaded to take SS wire mounting eyelets. Plate is to be bolted thru to the steel column.

Rectify the chain link spacers as needed.

Make good any damage to brickwork and point up all damaged mortar.

Refit the stainless steel balustrade wires using threaded eyelets to connect to the SS plate.

  1. [404]
    Mr Thompson gave evidence that he based his estimate on the method agreed upon between the parties. I accept Mr Thompson’s estimate.
  2. [405]
    The amount of $2,307.00 is allowed.

Item 17 – Plaster defects to various locations

  1. [406]
    The experts agree on all aspects of this item.
  2. [407]
    An allowance of $860.00 is made in relation to this item.

Item 18 – Defective and incorrectly installed internet cupboard

  1. [408]
    This item relates to variation work requested by Mr Foley.[42]
  2. [409]
    Mr Bagnall denies that he had a discussion with Mr Foley about the dimensions of the cupboard and says that he was not aware of the variation until he received an invoice from the cabinet maker. Mr Foley’s evidence is contrary to Mr Bagnall’s recollection.
  3. [410]
    Mr Bagnall issued a variation document for the works. I accept the evidence of Mr Foley that Mr Bagnall was aware of Mr Foley’s requirements.
  4. [411]
    The experts agreed that the works are defective in that the cupboards are the wrong size for the housing of the security equipment.
  5. [412]
    The experts agree that the rectification cost for this item is $993.00.
  6. [413]
    The amount of $993.00 is allowed for this item.

Item 19 – Claybrick Letterbox to be installed

  1. [414]
    The Specifications allow for the provision of a brick letterbox.
  2. [415]
    The experts agree that a letter box has not been supplied and also agree that the cost of a brick letter box would be $1,500.00.
  3. [416]
    Mr Foley gave evidence that he purchased a metal letter box. He stated that at the end of construction he was aware that there were only about twenty or thirty bricks left and he decided it was not sensible to order a complete pallet of bricks for the small job of a letter box. Accordingly, Mr Foley made the decision to install a metal letter box instead of a brick letter box. For this variation, he expected a credit.
  4. [417]
    Mr Bagnall concedes that there was a variation in the type of letter box. The metal type purchased by SBH cost $95.70.
  5. [418]
    Mr Bagnall gave evidence that the cost to build a clay brick letter box would be in the vicinity of $308.00. Accordingly, SBH concedes that the Foleys are entitled to a credit of $212.30.
  6. [419]
    I accept the evidence of Mr Bagnall on the basis that the expert opinion has not taken into account the agreement between the parties nor have the experts assessed the cost to the builder.
  7. [420]
    An amount of $212.30 is allowed as a credit to the Foleys.

Item 20 – Water supply to pool not installed

  1. [421]
    This item is no longer in issue as the item was supplied by the Foleys.

Item 21 – Overhead cupboard and bulkhead to downstairs bar not installed

  1. [422]
    The joinery work the subject of Item 21 has been considered as part of Variation V01.
  2. [423]
    The Foleys claim that the approved plans indicate the supply and fit of new overhead cupboards and bulkhead to the Bar area as indicated.
  3. [424]
    The experts agree that the approved plans provide for the installation of overhead cupboards to 2.3m. The disagreement between the experts concerns the cost to supply and fit in accordance with the plans with Mr Thompson assessing the cost at $2,255.83 and Mr Browning assessing the cost at $1,460.00.
  4. [425]
    Mr Foley gave evidence that there was no variation agreed to remove this item of work from the scope of works.
  5. [426]
    Mr Bagnall gave evidence of quotations from the cabinet maker, Choice Kitchen. The first, dated 25 June 2010, includes the overhead cupboards and bulkhead. The second quotation dated 10 August 2010 does not contain a reference to overhead cupboards and bulkhead.
  6. [427]
    Mr Bagnall gave evidence that Mr Foley liaised directly with the cabinet maker Choice Kitchens and that the item in dispute was deleted on Mr Foley’s instructions.
  7. [428]
    It is noted that this issue was not raised by Mr Foley when a complaint was made to the QBSA.
  8. [429]
    I accept the evidence of Mr Bagnall that Mr Foley did liaise directly with the cabinet maker and I accept that the work was deleted from the scope of works as a result of that process and a credit was given to the Foleys as part of variation V001.

Item 22 – Access door to lift shaft not installed

  1. [430]
    This item has been agreed between the experts both in relation to the defect and cost of rectification.
  2. [431]
    The agreed cost for rectification is $450.00.

Item 23 – Sliding door to garage not installed

  1. [432]
    The experts agree that this item has not been installed and the cost is agreed as $327.63.

Item 24 – Cleaning to remove mortar splashing to various areas

  1. [433]
    This item has been agreed by the experts both in relation to the scope of work and the cost. The amount agreed is $215.20.

Item 25 – Builder’s rubbish removed by owner on completion

  1. [434]
    This item has not been pursued by the Foleys.

Item 26 – Ducting to the rangehood not undertaken

  1. [435]
    This item refers to the ducting to the rangehood which the Foleys allege was not installed.
  2. [436]
    The experts agree that if this item were to be included in the scope of works then it has not been carried out by SBH. The experts also agree that the cost of this work would be $450.15.
  3. [437]
    SBH submits that the approved plans do not show ducting to the overhead rangehood in the kitchen and that the Specifications state that the rangehood is to be ‘owner supplied’.
  4. [438]
    I accept that the Specifications depict that the appliances were to be supplied by the owner. I do not accept that this indicates that the owner took responsibility for the ducting involved in the installation.
  5. [439]
    I accept the evidence of the experts that this item is incomplete and allow the sum of $450.15 as agreed.

Item 27 – Power supply to pool and winch for boat ramp was within builder’s scope of works

  1. [440]
    It is agreed that this item of work had been included in the building contractor’s scope of works.
  2. [441]
    The Foleys paid the electrician directly and for this reason the Foleys claim an entitlement to a credit for this item.
  3. [442]
    The experts agree on both the scope of works and the credit due.
  4. [443]
    I allow the sum of $327.27 as a credit to the Foleys.

Item 28 – Supply and install insect screen to spa deck access door

  1. [444]
    The experts agree that this item was not included in the scope of works and thus no allowance is to be made.

Item 29 – Additional certification costs resulting from builder not obtaining certification.

  1. [445]
    Mr Foley gave evidence that he incurred the cost of $385.00 for certification of the works by the FCR Council. The works were inspected and a Notice of Non-Compliance was given to Mr Foley on or about 16 April 2014.
  2. [446]
    The Foleys claim the sum of $350.00 and SBH concedes that this amount is owing to the Foleys.

Item 30 – Supply and install security screen to garage not undertaken.

  1. [447]
    The Specifications provide: ‘Allowance has been made for the garage doors to be Double hang with security screens.’
  2. [448]
    The Foleys claim the sum of $10,854.55 on the basis that the screens to the garage doors have not been installed.
  3. [449]
    There is no dispute that the screens have not been installed.
  4. [450]
    Mr Foley gave evidence that prior to entering into the contract he had investigated a security screen which folded up inside the garage door when the door was up. If the door was open it was possible to pull down the screens so that it was a full frame of the garage.
  5. [451]
    The Foleys reject the assertion that the reference in the Specifications to the garage doors being screened is an error. The Foleys submit that if there is an error in the Specifications identifying the screens to be installed in the garage then the Specifications should read: ‘Allowance has been made for the garage doors to be hung with security screens’.
  6. [452]
    It is observed that Mr Foley admitted that the windows installed in the garage are double hung.
  7. [453]
    SBH submits that there is an error in the description of the work in the Specifications in that the Specifications should read: ‘Allowance has been made for the garage windows to be hung with security screens’.
  8. [454]
    Mr Bagnall gave evidence that the reference to screens to a garage door in the Specifications was an error and that the reference definitely should have been to the garage windows. He said that this was consistent with the fact that the plans depicted double hung windows in the garage.
  9. [455]
    The Specifications describe the type of doors for the garage as: ‘2/3000 x 5200 & 1/2100 x 5200 Panelift Doors (selection of colours) with (2) auto door operators’.
  10. [456]
    In support of its claim, the Foleys provided a quotation provided from Freedom Retractable Screens dated March 2015 which refers to the cost of various options of motorized screens for garage door openings ranging from $1,158.00 to $8,800.00. The quotations provided are of little relevance given Mr Foley admitted that he was not expecting motorised screens at the time of entering the contract or at all.
  11. [457]
    The Foleys moved into the home in December 2010. There was no complaint regarding this obvious omission of work in their complaint to the QBSA or at any stage until the proceedings began.
  12. [458]
    It is also submitted on behalf of SBH that there was no mention of this item in the Foleys’ brief to SBH prior to entering into the contract, even though that document was not a contractual document.[43] Nor was there any complaint by the Foleys about the omission of this item of work between 2011 and 2016.
  13. [459]
    The issue in dispute is one concerning the proper interpretation of the contract.
  14. [460]
    In interpreting the construction of a contract, the usual course is to give the words their plain meaning.
  15. [461]
    It has often been described as ‘trite law’ that in construing a contract a court endeavours to discover the intention of the parties from the words of the instrument in which the contract is embodied.[44] The test of interpretation is the ascertainment of the meaning which a document would convey to a reasonable person having all the background knowledge which would have been available to the parties in the situation in which they were at the time of contract.[45]
  16. [462]
    The subjective intentions of the parties are irrelevant. Other clauses in the documents may be taken into consideration in a case where there appears to be a conflict or ambiguity. Also, if the language of the document is open to two constructions, the courts will prefer that which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust even though the construction adopted is not the most obvious or the most grammatically correct.[46]
  17. [463]
    The words in the contract document ‘double hung doors’ do not make sense. Therefore it is necessary to find assistance from surrounding circumstances or the factual matrix to cure any ambiguity or to make sense of the express words.[47]
  18. [464]
    I have formed the view that there is an error and/or ambiguity in the Specifications and that the parties intended the document to read: ‘Allowance has been made for the garage windows to be double hung with security screens’.
  19. [465]
    This construction is supported by the following:
    1. (a)
      Mr Bagnall’s certainty in his evidence that there was an error in the wording;
    2. (b)
      the item regarding screens is next from ‘glazing’ and follows on logically from that item;
    3. (c)
      the garage doors are described in the Specifications as panelift and not double hung doors;
    4. (d)
      there is no evidence that double hung garage doors of the dimensions described in the Specifications are available; and
    5. (e)
      the windows in the garage are double hung windows which required screens.
  20. [466]
    Accordingly, I have formed the view that the scope of works did not include screens to the garage doors. Therefore the works were not incomplete as a result of the omission of this item of work.
  21. [467]
    In any event, the quotation provided by the Foleys and relied upon for this claim is irrelevant. The claim of $10,854.55 has no substance given that it relates to the provision of motorised screens.
  22. [468]
    No evidence was provided regarding the cost of the works alleged to be included in the scope of works. The justification for this is that Mr Bagnall had not included the item in the scope of works and it would appear that there was no product presently available similar to the screens proposed by Mr Foley.
  23. [469]
    On any level, the Foleys were not entitled to claim a more expensive product just because that is all that is now available. The Foleys would only be entitled to reimbursement for the cost of the item which had been allowed in the scope of works and not provided.
  24. [470]
    This item is not allowed as part of the Foleys’ claim.

Item 31 – Supply and install security screen to the front entrance door not undertaken by the builder

  1. [471]
    The Foleys claim that the security screen for the front entrance door was not provided by SBH. The Foleys claim reimbursement of $1,052.73 for this item.
  2. [472]
    The experts did not reach consensus on this item as they referred to it as a contractual item.
  3. [473]
    The Specifications provide: ‘Ground floor screens to be security screens with locks’.
  4. [474]
    The Foleys submit that the contract should be interpreted as allowing screens to all windows and the front door.
  5. [475]
    Mr Bagnall gave evidence that the front door screen was not installed because Mr Foley changed the style of front door to one with a deep handle which prevented a screen from being able to fit.
  6. [476]
    Mr Browning confirmed that the door was a pivot door as opposed to a hinged door which meant that it was not suitable to be screened.
  7. [477]
    It is not the case that Mr Bagnall denied that the front door was to be screened but rather that the screen was deleted because of the change in door style.
  8. [478]
    I accept the evidence of Mr Foley that a screen door was required.
  9. [479]
    The cost estimate from Mr Thompson does not seem unreasonable. In the absence of substantiated evidence to the contrary, I allow the sum of $1,052.73.

Item 32 – Severe structural crack to brick wall on north-east corner of building

  1. [480]
    This item has been considered by the experts in item 16.

Item 33 – Dux water pump not correctly installed, switch left in drawer rather than through the bench

  1. [481]
    The experts agree that this defect was apparent and the cost to rectify would be $305.00.
  2. [482]
    The amount of $305.00 is allowed as part of the Foleys’ claim.

Item 34 – None of the windows are fitted with grey glass as specified and should be tinted to remedy the omission

  1. [483]
    The experts agree that there is no defect in relation to the complaint by the Foleys regarding the installation of the windows and that it is a contractual issue to be resolved regarding the required tint to the glass.
  2. [484]
    The Foleys initially claimed the sum of $35,242.00 to replace the clear glass in all the windows and doors with a grey tint on the basis that the scope of works included tinted glass.
  3. [485]
    The Foleys rely upon three  aspects:
    1. (a)
      the Specifications provide ‘Glazing – Grey/Obscure (WC)’;
    2. (b)
      it is not in dispute that the glass installed is clear glass; and
    3. (c)
      no variation has been issued to change the glass from grey to clear.
  4. [486]
    Mr Browning on behalf of SBH refers to the document ‘SB7’ attached to Mr Bagnall’s first statement dated 30 March 2016. It refers to ‘windows clear glass/with Midge Mesh’.
  5. [487]
    This document is not a contractual document but a briefing document provided to the Foleys prior to entering into the contract.
  6. [488]
    Mr Bagnall gave evidence that the description of the glazing in the quotation, which formed part of the contract, was an error and that it was a description referencing another job.
  7. [489]
    Mr Foley gave evidence that he specifically requested tinted glass for the glazing.
  8. [490]
    The Specifications provide the following description for the glazing: ‘Glazing – grey/obscure (WC)’.
  9. [491]
    No evidence was given regarding the reference to ‘WC’. On a proper and plain reading of the Specifications, it would seem that the glazing was to be grey and that the WC was to be obscure. There is nothing in the Specifications or any other documents to assist in the proper interpretation of this entry.
  10. [492]
    It is noted, however, that the approved plans which form part of the contract include a drawing Number 080629 at page BA3 described as Slab & Footings to Engineering Details which includes a section described as 3.12.2 External Glazing. For both the lower and upper floors it provides: ‘Glass description (alum. frame) – tinted single’.
  11. [493]
    The Foleys accept that the reduced amount quoted by G. James Glass & Aluminium to remove and replace the existing glass with grey tinted glass in the sum of $14,522.2 is acceptable.[48]
  12. [494]
    It is noted that no complaint was made by the Foleys about this seemingly major defect in the construction when a complaint was lodged with the QBSA in 2011. Surprisingly, it took the Foleys almost five years to realise that the glazing was not as required by the contract, if that is the case.
  13. [495]
    For some reason, for a substantial period Mr Foley was of the opinion that the windows were in fact tinted.
  14. [496]
    Whilst these circumstances may seem at odds with the present position taken by the Foleys, it does not detract from the Foleys’ entitlement to receive what they had bargained to receive as part of their contract.
  15. [497]
    The question must arise therefore whether the rectification work proposed by the Foleys is both necessary and reasonable in accordance with the principles enunciated in Bellgrove v Eldridge.[49]
  16. [498]
    Damages for defective work are generally the amount necessary to make the work conform with what the contractor was required to provide under the contract and thus in accordance with the plans and specifications which formed part of it.[50] The basic purpose of an award of damages is to restore the aggrieved party to the position which would have been obtained had the wrongful act not occurred. In the case of incomplete and defective work the usual remedy will be the cost of completing the building works in accordance with the building contract.
  17. [499]
    The qualification outlined by the High Court in Bellgrove v Eldridge is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt. The example which the Court gave of unreasonableness was where a contract called for the erection of a house with second hand bricks when the contractor had constructed the house of new bricks of first quality. In those circumstances, the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks.
  18. [500]
    In Tabcorp Holdings Pty Ltd v Bowen Investments Pty Ltd [2009] HCA 8, the High Court stated that the example provided by the High Court in Bellgrove v Eldridge indicated that the test of ‘unreasonableness’ is only to be satisfied by fairly exceptional circumstances and said further:

The example given by the Court aligns closely with what Oliver J said in Radford v De Froberville, that is, that the diminution in value measure of damages will only apply where the innocent party is “merely using a technical breach to secure an uncovenanted profit.”

  1. [501]
    In Radford v De Froberville [1977] 1 WLR 1262 at 1270, Oliver J stated:

Now, it may be that viewed objectively, it is not to the plaintiff’s financial advantage to be supplied with the article or service which he stipulated. It may be that another person might that what the plaintiff has stipulated for will not serve his commercial interests as well as some other scheme or course of action. And that may be quite right. But that, surely must be for the plaintiff to judge. Pacta sunt servanda. If he contracts for the supply of that which he thinks serves his interests – be they commercial, aesthetic or merely eccentric – then if that which is contracted is not supplied by the other contracting party I do not see why, in principle, he should not be compensated by being provided with the cost of supplying it through someone else or in a different way, subject to the proviso, of course, that he is seeking compensation for a genuine loss and not merely using a technical breach to secure an uncovenanted profit.

  1. [502]
    In the case of Willshee v Westcourt Ltd [2009] WASCA 87, the court considered a breach of contract by the contractor whereby the contractor used inferior quality limestone in the external cladding of a house construction. Due to the inferior quality of the limestone, the exterior of the house began to deteriorate however this did not affect the structural integrity of the house. The court considered the appropriate measure of damages, assessing whether the aggrieved owner should be entitled to damages for rectification or based on the diminution in value of the house. The court followed the High Court decision in Tabcorp stating that the owner would not be entitled to rectification costs if it was ‘unreasonable’ to award them to him. The court held that the test of ‘unreasonableness’ would only be satisfied if evidence was available that established that the owner was relying on a ‘technical breach of contract to secure an uncovenanted profit’. No such evidence was provided by the contractor and the owner was awarded the amount of money that was required to put him in the position he would have been had the house been constructed using limestone of high quality, being the cost of replacing the limestone.
  2. [503]
    Following the decision in Willshee, it seems that the test of ‘unreasonableness’ may be so narrow that it will only be satisfied if the innocent party is using a technical contractual breach to secure an uncovenanted profit.
  3. [504]
    Mention should be made of the House of Lords decision in Ruxley Electronics & Construction Ltd v Forsyth [1995] 3 All ER 268. The brief facts of the case involved the construction of a swimming pool which according to the plans was to have a deep end of 7 foot 6 inches. The as-constructed pool had a depth of 6 foot 9 inches. The court focused on the reasonableness of the rectification work and found in the circumstances that the cost of rebuilding the pool was out of proportion to the benefit which would be obtained. Thus the court determined that the cost of rebuilding would not be the damages to be awarded but rather the correct measure of damages would be the difference in value (even if the difference in value were determined to be nil). The court held that the cost of rebuilding was wholly disproportionate with the benefit that would be obtained and as the difference in value was nil, awarded a nominal amount of damages for general inconvenience and disturbance.
  4. [505]
    In Tranquility Pools & Spas Pty Limited v Huntsman Chemical Co Pty Limited [2011] NSWSC 75, the court accepted the principles from Willshee and the High Court’s decision in Tabcorp that the test of ‘unreasonableness’ is only to be satisfied in ‘fairly exceptional circumstances’. It went on to consider the decision of Wheeler & Anor v Ecroplot Pty Ltd [2010] NSWCA 61 in which the court whilst following Tabcorp also stated that another example of ‘unreasonableness’ is a situation where the cost of the proposed rectification is out of all proportion to the benefit to be obtained.[51]
  5. [506]
    In Tranquility Pools & Spas the court was to consider whether a product supplied by Huntsman was defective and thus the cause of problems affecting all pools manufactured using the product. On the facts before the court it was held that the replacement of the pools was the only practicable (albeit expensive) way to appropriately compensate the pool owners. The court stated that what was reasonable could only be determined in light of the particular facts.
  6. [507]
    Therefore, although the Ruxley test of ‘unreasonableness’ will be satisfied if the rectification costs are out of proportion to the benefit obtained, the decisions in Tabcorp Holdings, Willshee, Wheeler and Tranquility Pools indicate that to the extent that such a test still applies, it will only be satisfied in fairly exceptional circumstances.
  7. [508]
    Defects which are purely aesthetic or which to not give rise to any lack of functionality in the building or structure are difficult to assess. In Hudson’s Building and Engineering Contracts,[52] it is suggested that if it is disproportionate to require the builder to pay for the cost of curing the defect, then there may be little effect on the value of the building.
  8. [509]
    In Tranquility Pools, the court in referring to the Court of Appeal decision in Willshee considered the question of aesthetics and stated:

[594] The Court of Appeal observed inter alia as follows:

…

[67] In the present case, part of the reasoning relied upon by the trial judge was the proposition that Mr Willshee’s concern was primarily aesthetic, but it could not be said that his view of aesthetic desirability would necessarily be shared by others, and there was no term of the contract requiring a particular aesthetic standard to be achieved, nor any objective measure by which Mr Willshee’s views could be assessed.

[68] The decision in Tabcorp establishes that this process of reasoning is erroneous. Although in the present case there was no express term of the contract relating to the aesthetic standard to be achieved by the limestone cladding, there was a term of the contract which required the limestone cladding to be of high quality. It was breach of that term which resulted in accelerated deterioration of the limestone surfaces which Mr Willshee did not regard as aesthetically pleasing. As the High Court points out in Tabcorp, the question of whether or not Mr Willshee’s views in this respect are idiosyncratic, or would be shared by others, is not to the point [16]. Mr Willshee entered into a contract which he considered served his interests, and he is entitled to the performance of that contract quite irrespective of the views which other people might form in relation to the advancement of those interests, such as views relating to the aesthetic appearance of the house.

[69] In Tabcorp, the High Court also elucidated and explained the qualification of ‘unreasonableness’ established by the earlier decision Bellgrove. It established that this qualification is only to apply in ‘fairly exceptional circumstances … only … where the innocent party is ”merely using a technical breach to secure an uncovenanted profit”…’ [17] (quoting from Radford v De Froberville [1977] 1 WLR 1262 (Oliver J)).

[70] Applying that test to the circumstances of the present case, it could not be said that WestCourt’s breach of contract was, in any sense ‘technical’. It was a serious and significant breach, which had a significant impact upon the rate at which the external cladding of the house weathered and deteriorated, and which has had a significant impact upon the appearance of the house.

[71] Nor could it be reasonably concluded that Mr Willshee is pursuing his claim in order to secure a profit to which he has no entitlement under the building contract. Mr Willshee gave evidence in the strongest terms of his displeasure upon discovering that a significant part of the limestone used for the external cladding of his house was of inferior quality. That evidence was entirely plausible and reasonable, and was not rejected by the trial judge. WestCourt submits that the evidence does not sustain the conclusion that Mr Willshee will in fact use the damages awarded to undertake the relevant remedial work (appeal ts 47). However, there are passages in the evidence of Mr Willshee (see, for example, ts 272) which suggest that it is his intention to undertake the reconstruction work in the event that damages are awarded. In any event, the question of whether or not the work will in fact be undertaken is ‘quite immaterial’: Bellgrove (620).

  1. [510]
    I have formed the view that the installation of clear glass for the glazing throughout the house does not conform with the requirements of the contract as provided in the Specifications.[53] Thus, the Foleys have a valid claim in damages to put them in the position to which they are entitled under the contract.
  2. [511]
    Following the principles outlined in the cases above, I have formed the view that replacement of the clear glazing with tinted glazing is not only necessary but a reasonable course to adopt.
  3. [512]
    As the Foleys have accepted that a reasonable sum for the replacement work would be $14,522.20, the claimed sum of $14,552.20 is allowed to remedy the defect.

Item 35 – Power to front boundary gate not provided

  1. [513]
    The experts agree on all aspects of this claim on the basis that the works had been completed correctly.
  2. [514]
    Accordingly, this claim must be withdrawn by the Foleys.

Item 36 – Drain for lift not installed as designed

  1. [515]
    The experts have agreed on the need for this rectification work to be carried out. The cost involved is accepted as $1,452.80.
  2. [516]
    The rectification work involves removal of a section of the concrete path; excavate and locate the end of the pipe front lift well floor drain; extend the drain and trench it to an approved dispersal position; and reinstate the concrete paving and yard areas.
  3. [517]
    SBH asserts that this item should not have been agreed by the experts as it is based purely on a test carried out by Mr Carpenter which indicated a blocked drain at the base of the lift.
  4. [518]
    Mr Browning did not inspect the drain and thus was unable to comment in cross-examination other than to suggest that a plumber should be engaged initially to determine the extent of the blockage. He was not prepared however to depart from his agreement that the rectification work proposed would need to be carried out by a licensed plumber.
  5. [519]
    There is no evidence regarding the cause of the blockage. I accept however the evidence of the experts that there is a need for rectification work to resolve the problem.
  6. [520]
    The amount accepted by the experts in the sum of $1,452.80 is allowed.

Item 37 – Gaps above windows to be filled with suitable flexible filler

  1. [521]
    The experts agree on all aspects of this claim. The costs assessed have also been accepted by Mr Browning.
  2. [522]
    Accordingly, the claim of $434.16 is allowed.

Item 38 – Replace timber treads to the staircase leading to the viewing platform

  1. [523]
    The experts agree on the cost of rectification of this defect although Mr Bagnall and Mr Foley do not agree in relation to the existence of this defect.
  2. [524]
    I accept the evidence of the experts that there is a defect and that the cost of rectification would be $730.40.

Item 39 – Adjust trim to suit the A/C plant condensation drain pipes

  1. [525]
    The experts agree that this work has not been carried out and agree that if the works were part of SBH’s scope of works then the cost of rectification would be $364.70.
  2. [526]
    In submissions, the Foleys claim the sum of $730.40 as agreed between the experts. There is no evidence of this increase in cost.
  3. [527]
    The issue is whether the works from part of SBH’s scope of works.
  4. [528]
    Mr Bagnall asserts that the air-conditioning part of the works was deleted from the scope of works. This is confirmed by variation V06 and agreed by Mr Foley.
  5. [529]
    I accept that the installation of the air-conditioning was deleted from SBH’s scope of works but that did not relieve the building contractor from attending to works surrounding the air-conditioning unit once installed.
  6. [530]
    I allow the sum of $364.70.

Item 40 – Replace external light fitting to soffit

  1. [531]
    The external light fittings depict heavy corrosion. The experts agree on this fact.
  2. [532]
    Mr Thompson initially estimated the cost of replacement as $4,837.83. Under cross-examination this estimate was revised to $2,974.25.
  3. [533]
    The light fittings are a PC item and were selected by the Foleys.
  4. [534]
    It is submitted on behalf of the Foleys that even though the Foleys selected the type of light fitting, SBH should have advised them, once the light fittings were on site and before installation, that the light fittings were not suitable for installation near a marine environment.
  5. [535]
    The issue is whether SBH had a duty to advise the Foleys that the lights were unsuitable.
  6. [536]
    Section 42 of the DBC Act provides:

Suitability of materials

  1. (1)
    The building contractor warrants that all materials to be supplied for use in the subject work –

(a) will be good and, having regard to the relevant criteria, suitable for the purpose for which they are to be used; and

(b) unless otherwise stated in the contract, will be new.

  1. (2)
    Subsection (1) applies to the building contractor for materials only if the materials are supplied by the responsible person for the contract.

…

  1. (3)
    Also, despite subsection (2), subsection (1) does not apply to the building contractor for materials if –

(a) the building owner is responsible for nominating the materials for use in the subject work; and

(b) either:

(i) there are no reasonable grounds for not using the materials; or

(ii) if there are reasonable grounds for not using the materials – the building owner insists on the materials being used despite written advice to the contrary given to the building owner by the building contractor.

  1. [537]
    No evidence was given that it was reasonably obvious that the lights would not be suitable for a marine environment. No evidence was provided regarding the Foleys’ process of choice of the light fittings at Hayman’s Electrical except that Mr Foley gave evidence that they ‘looked at a whole heap of lights’ and ‘with the girl’s help’ selected lights and fans.
  2. [538]
    No evidence was given that Mr Bagnall knew or ought to have known that the light fittings would show signs of corrosion within a five year period except the Foleys assertion that Mr Bagnall was an experienced building contractor.
  3. [539]
    I do not accept that it was the responsibility of the building contractor to advise that the light fittings were unsuitable unless that fact was obvious prior to installation.
  4. [540]
    No evidence was provided supporting the contention that there were reasonable grounds evident for not using the materials and that SBH knew this fact and failed to outline those grounds.
  5. [541]
    I am of the view that the Foleys had the responsibility to purchase items which were suitable for the area in which they were going to be installed. It was incumbent on the Foleys to advise Hayman’s Electrical where the light fittings were to be installed if there were factors which should have been taken into account in the selection process.
  6. [542]
    This claim is not allowed as the Foleys took responsibility for the choice of light fittings.

Item 41 – Internal doors require painting and replace cavity sliding doors

  1. [543]
    The experts agree that the cavity sliding doors had not been painted on the top and bottom. The experts agreed to the scope of rectification at a cost of $445.00.
  2. [544]
    This item is allowed.

Item 42 – Water saving device

  1. [545]
    This item has been included as part of Item 33. Accordingly, the Foleys do not pursue this part of the claim.

Item 43 – Roofing material

  1. [546]
    The roofing at the property as installed is Colorbond, as provided in the quotation which formed part of the contract and thus part of the Specifications. No grade of Colorbond roofing is nominated in the contract.
  2. [547]
    The Foleys claim that the Colorbond roofing installed is defective because the type of roof installed is inappropriate for a marine environment.
  3. [548]
    The Foleys claim is based on the premise that the roofing should be either Colorbond Ultra or Colorbond Ultra Steel as opposed to the standard Colorbond as installed.
  4. [549]
    The Foleys claim that the roofing installed should be replaced with a superior material, either Ultra Colorbond or Stainless Steel in order to comply with:
    1. (a)
      the Building Code of Australia (‘the BCA’);[54] and
    2. (b)
      the BlueScope Technical bulletin.[55]
  5. [550]
    The following facts are not in dispute:
    1. (a)
      the roof sheeting installed is standard Colorbond;
    2. (b)
      the property is situated within 50 metres of a salt marine environment;
    3. (c)
      standard sheeting has an aluminium/zinc coating thickness of AZ150;
    4. (d)
      Colorbond Ultra has an aluminium zinc coating of Z200;
    5. (e)
      no complaint has been made about the roof until the proceedings in 2016; and
    6. (f)
      there does not appear to be any defect in the roofing except Mr Foley says that in 2016 he thought rust marks may have become evident.
  6. [551]
    At the time of the experts’ conclave, the experts agreed that there was no evidence of any defect in the roof nor was there evidence of leaks or deterioration of the roof sheeting or ancillary flashings and fixings as viewed by the experts from an inspection at ground level.
  7. [552]
    The main complaint by the Foleys is that the roof installed does not comply with the BCA and for that reason alone the roof should be replaced.
  8. [553]
    A number of photographs and maps were produced to identify the location of the Foleys’ property.
  9. [554]
    The Foleys rely upon the following:
    1. (a)
      Pages 15 and 16 of attachment ‘FS2’ to Exhibit 7 being Mr Foley’s statement dated 7 March 2016;
    2. (b)
      Photos 55, 56, 57, 62, 67, 82-84, 92, 93 and 107;
    3. (c)
      Google map indicating location of the property in item 43 of the joint experts report being Exhibit 1; and
    4. (d)
      the Google map aerial photographs forming Exhibit 34.
  10. [555]
    Attachment ‘FS2’ to Exhibit 7 indicates that the property is located on the shoreline and that in time of high tide the water comes over the northern boundary of the property.
  11. [556]
    SBH relies upon the terms of the contract requiring Colorbond standard as agreed between the parties. Mr Bagnall gave evidence that he had obtained a number of quotations prior to signing of the contract, which included both standard and Ultra Colorbond finishes. He gave evidence that Mr Foley requested a downgrade from Ultra Colorbond to the standard Colorbond because of the price variation which was significant. In cross-examination, Mr Foley denies that he insisted on the standard roof sheeting and says that the grades of steel were not discussed rather that any discussions concentrated on the colour of the roof.
  12. [557]
    Counsel for the Foleys submits that whether Mr Foley requested the lower grade steel roofing or not is irrelevant as it is incumbent on the building contractor to build within the requirements of the BCA.
  13. [558]
    Therefore, it is necessary firstly to turn to the terms of the BCA. Clause 3.5.1.3 of the BCA provides:
  1. (a)
    The design and installation of metal sheet roofing must comply with the relevant provisions of this Part.
  1. (b)
    Metal sheet roofing must be protected from corrosion in accordance with Table 3.5.1.1a.
  1. [559]
    Table 3.5.1.1a provides as follows:

Acceptable Corrosion Protection for Sheet Roofing

ENVIRONMENT

LOCATION

MINIMUM METAL COATING IN ACCORDANCE WITH AS 1397

 

 

Metallic coated steel

Metallic and organic coated steel

Low

(Mild steel corrosion rate 1.3 to 25 um/y)

Typically remote inland areas.

Z450 galvanised

or

 

AZ150

aluminium/zinc

Z275 galvanised

or

 

AZ150

aluminium/zinc

Typically more than 1 km from sheltered bays

Medium

(Mild steel corrosion rate 25 to 50 um/y)

Typically more than 1 km from breaking surf or aggressive industrial areas

Z450 galvanised

 

or

 

AZ150

aluminium/zinc

Z275 galvanised

 

or

 

AZ150

aluminium/zinc

Typically more than 50 m from sheltered bays

High

(Mild steel corrosion rate 50 to 80 um/y)

Typically more than 200m from breaking surf or aggressive industrial areas

AZ150

aluminium/zinc

AZ150

aluminium/zinc

Typically within 50 m from sheltered bays

AZ200

aluminium/zinc

AZ200

aluminium/zinc

Very High

(Mild steel corrosion rate 80 to 200 um/y)

Typically extends from 100 m inland from breaking surf to 200 m inland from breaking surf, or within 200 m of aggressive industrial areas

Not suitable

AZ200

aluminium/zinc

Typically within 100 m of breaking surf

Not suitable

Not suitable

Notes:

  1.  

 

Low – remote inland includes dry rural areas remote from the coast or sources of pollution. Many areas of Australia beyond at least 50 km from the sea are in this category, including most cities and towns such as Canberra, Ballarat, Toowoomba, Alice Springs and some suburbs of cities on sheltered bays such as Melbourne, Hobart, Brisbane and Adelaide that are more than 1 km from the sea. However each of these have many exceptions which are in more corrosive categories.

  1.  

Medium – urban inland, coastal or industrial typically coastal areas with low salinity around sheltered bays, such as Port Phillip Bay. This extends from about 50 m from the shoreline to a distance of about 1 km inland but seasonally or in semi-sheltered bays extends 3 to 6 km inland. Along ocean front areas with breaking surf and significant salt spray, it extends from 1 km inland to about 10 to 50 km depending on wind direction and topography. Much of the metropolitan areas of Wollongong, Sydney, Newcastle, Perth and the Gold Coast are in this category. This also includes urban and industrial areas with low pollution and for several kilometres around large industries such as steel works and smelters.

  1.  

 

 

 

 

High typically occurs on the coast around sheltered bays. Category high extends up to 50 m inland from the shoreline. In areas of rough seas and surf it extends from several hundred metres to about 1 km inland. As with other categories the extent depends on wind, wave action and topography. The category will also be found inside industrial plants and can influence a distance of 1.5 km down wind of the plant.

  1.  

Very high is typical of offshore conditions and is found on the beachfront in regions of rough seas and surf beaches. It can extend inland for several hundred metres. It is also found in aggressive industrial areas with a pH of less than 5.

  1.  

All locations described in the table contain variations of greater corrosion severity. If significant, this must be addressed by designing for the most severe environment.

  1.  

In locations where metallic coatings are not a suitable form of corrosion protection, the roof sheeting must be of a type which has been designed and manufactured for such environments.

 

  1. [560]
    From the table, one can conclude that:
    1. (a)
      if a house is located typically more than 50m from a sheltered bay the category of AZ150 aluminium/zinc coating for a metallic coated steel is suitable;
    2. (b)
      if a house is typically within 50m from a sheltered bay the location is described as a high rate of corrosion and the requirement is for AZ200 aluminium/zinc coating; and
    3. (c)
      if a house is typically more than 200m from breaking surf or aggressive industrial areas the location is described as high however the acceptable steel coating is AZ150 aluminium/zinc.
  2. [561]
    No definition is given of the meaning ‘typically’ but Counsel for the Foleys conveniently provides the definition in Collins English Dictionary of ‘typical’ as:

adj1 being or serving as a representative example of a particular type; characteristic…of or relating to a representative specimen or type…conforming to type…typically adv.

  1. [562]
    The main issue to consider therefore is whether the Foleys’ property is located more than 50metres from a sheltered bay for the purpose of the type of metal roofing considered acceptable.
  2. [563]
    The Notes to Table 3.5.1.1a assist in determining whether the property may be considered to be in the medium or high risk for corrosion environment. For completeness I set out the Notes for the medium and high environment categories contained in Table 3.5.1.1a:

Medium - urban inland, coastal or industrial typically coastal areas with low salinity around sheltered bays, such as Port Phillip Bay. This extends from about 50m from the shoreline to a distance of about 1km inland but seasonally or in semi-sheltered bays extends 3km to 6km inland. Along ocean front areas with breaking surd and significant salt spray, it extends from 1km inland to about 10 to 50km depending on wind direction and topography. Much of the metropolitan areas of Wollongong, Sydney, Newcastle, Perth and the Gold Coast are in this category. This can extend to 30 to 70km inland in South Australia while on some evidence, other Australian coastal zones are in this, or a more severe category. This also includes urban and industrial areas with low pollution and for several kilometres around large industries such as steel works and smelters.

High – typically occurs on the coast around sheltered bays. Category high extends up to 50m inland from the shoreline. In areas of rough seas and surf it extends from several hundred metres to about 1km inland. As with other categories the extent depends on wind, wave action and topography. The category will also be found inside industrial plants and can influence a distance of 1.5km downwind of the plant.

  1. [564]
    SBH submits that the property is located more than 50m from a sheltered bay on the basis that the sheltered bay is further out from the mouth of Beelbi Creek.
  2. [565]
    I accept the evidence of the Foleys that SBH’s version of where the sheltered bay is located ignores the fact that the Foleys property is located on the shoreline of a body of water directly in front of the property. This is evident from the photos attached to Mr Foleys second statement dated.
  3. [566]
    Based on the Foleys’ estimate of the 50m distance from the sheltered bay, it is submitted that the logical environment for the property for the purpose of categorizing it under Table 3.5.1.1a is that it is in the ‘high’ environment category. That being the case, the Foleys submit that the minimum coating required for the roof sheeting is AZ200, namely Ultra.
  4. [567]
    On this analysis, the Foleys submit that the installation of standard Colorbond is non-compliant with the BCA.
  5. [568]
    Mr Carpenter gave evidence which confirmed that the installation of the present roof definitely did not comply with the requirements of the BCA.
  6. [569]
    On behalf of SBH, Mr Browning gave evidence that the environment of the Foleys’ property for the purpose of the BCA was medium. This analysis was based on his view that the sheltered bay, for the purpose of the BCA, would be taken to be the sheltered bay out to sea.
  7. [570]
    In cross-examination, Mr Bagnall agreed that the property fell within the high environment for the purpose of the BCA and that the property was within 50m of the sheltered bay.
  8. [571]
    Mr Bagnall’s only justification for the installation of a roof other than Ultra is that Mr Foley specifically requested this type of roof.
  9. [572]
    Further in support of the non-compliance of the roofing material, Counsel for the Foleys directed me to the technical bulletin published by BlueScope Steel. It is commonly held that the manufacturer’s recommendations are merely a guide and are not regarded as binding in any contractual sense. They are however a guide which can be relied upon in determining whether an installation has been carried out in accordance with the manufacturer’s recommendations.
  10. [573]
    Mr Carpenter and Mr Browning both agreed that the manufacturer’s recommendations in the BlueScope bulletin had not been complied with. Mr Bagnall also agreed with this proposition but said that the bulletin was different from the details published on the BlueScope website.
  11. [574]
    Mr Bagnall was oblivious to the fact that compliance with the BCA was paramount and seemed to have little concern with compliance if the client had recommended a particular product.
  12. [575]
    SBH submits that the difficulty with the expert evidence relied upon by the Foleys was that none of it took into account the other factors relevant to the definition of the ‘high’ environment for the purpose of assessing the corrosion rate.
  13. [576]
    Upon a proper reading of the BCA and the definition of ‘high’ in the notes to Table 3.5.1.1a, SBH submits that it is necessary not only to take into account the location of the property within the 50m restriction from the shoreline but also factors such as wind, wave action and topography.
  14. [577]
    Both Mr Carpenter and Mr Browning concentrated on the distance of the property from the ‘sheltered bay’ only as this is the description under the heading ‘Location’ in Table 3.5.1.1a. The Notes however refer to the distance from the shoreline.
  15. [578]
    No other relevant category, for example wind or topography, other than distance from the shoreline was considered in the evidence.
  16. [579]
    I am satisfied that once the tribunal is capable of determining the distance of the property from the shoreline, it is not necessarily the case that other factors need be addressed. Thus, I do not agree with SBH that there is insufficient evidence for the tribunal to take into account in determining the location of the property.
  17. [580]
    On a proper interpretation of the BCA, I have formed the view that as the property is within 50m of the shoreline it falls within the high category for the purpose of assessing the acceptable corrosion protection for sheet roofing.
  18. [581]
    The photographs and maps relied upon by the Foleys alone demonstrate the distance of the property from the shoreline. I do not think that a marine environment specialist would add any further assistance to the tribunal in reaching that conclusion.
  19. [582]
    Having reached the conclusion that the BCA called for AZ200 aluminium/zinc roof sheeting, it is incumbent on the tribunal to consider whether there is an acceptable reason why the steel roofing of AZ200 was not installed.
  20. [583]
    Mr Bagnall gave evidence that Mr Foley requested the standard Colorbond. He relies upon different quotations prior to entering into the contract and Mr Foley’s choice in the product.
  21. [584]
    It is noted that the contract refers to standard colour not standard steel in the Colorbond range.
  22. [585]
    I have formed the view that there may have been discussions prior to the contract being signed regarding different quotations for the roof. Whether the choice of roof was for cost-savings or any other reason, it was incumbent on the building contractor to comply with the BCA and to advise the homeowner if a product was not suitable. In those circumstances, the risk shifts to the homeowner if the homeowner insists on a particular product having been warned of the risk. Otherwise, the building contractor is obliged to comply with the BCA and owes a duty to the homeowner to advise if a product is not suitable.
  23. [586]
    Having determined that the roof sheeting installed is not compliant with the BCA, this non-compliance is the defect which must be considered in determining whether the Foleys are entitled to damages for the cost to rectify the defect.
  24. [587]
    The fact that the roof is not exhibiting defects, in that it has not failed or exhibited rust for the last four or more years is not the defect which I am requested to consider in determining whether the Foleys are entitled to claim damages. The defect is the non-compliance with the BCA.
  25. [588]
    The measure of damages recoverable by a homeowner for a breach by a building contractor is prima facie the difference between the contract price of the work and the cost of making the work conform to the contract. The well-known principle is that the party who has sustained loss by reason of another party’s breach is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed.[56]
  26. [589]
    This general rule is subject to the qualification that the undertaking of the work necessary to produce conformity must be a reasonable course to adopt. This is the principle well established (and referred to previously) in Bellgrove v Eldridge.[57] Whether the rectification work required to produce conformity is both ‘necessary’ and ‘reasonable’ in any particular case is a question of fact.
  27. [590]
    There are four possible bases of assessing damages as set out in Hudson’s Building and Engineering Contracts (13th ed):[58]
    1. (a)
      the cost of reinstatement ‘cost of cure’;
    2. (b)
      the difference in cost to the builder of the actual work done and the work specified;
    3. (c)
      the diminution in value of the completed work or building due to the breach of contract; and
    4. (d)
      loss of amenity.
  28. [591]
    The starting point for a claim for damages arising from defective work performed by a builder is that the appropriate measure of damages is the cost of cure. As already outlined above, in determining whether the rectification work proposed by the homeowner is a reasonable course to adopt, the courts have not identified any exact circumstances in which a court will find unreasonableness. Hudson’s Building and Engineering Contracts sets out the factors which either individually or in combination may be relevant, although as stated therein not to be of equal importance:[59]
    1. (a)
      whether the work actually carried out is reasonably satisfactory for its purpose;
    2. (b)
      whether the building owner has carried out or in fact intends to carry out the work of reinstatement;
    3. (c)
      whether the defect or omission has substantially affected either the market value or amenity value to the building owner of the works; and
    4. (d)
      whether the cost of reinstatement is wholly disproportionate to the advantages of reinstatement.
  29. [592]
    In circumstances where a future failure of the works is being considered the degree of probability of that failure may be taken into account.[60]
  30. [593]
    Most of the cases concentrate on a choice between demolition or repair costs in determining whether the cost of reinstatement is necessary and reasonable.[61] In the present circumstance, this is not an issue.
  31. [594]
    In D Galambos & Son Pty Ltd v McIntyre,[62] Woodward J stated the position as follows:

Where it would be reasonable to perform remedial work in order to mend defects or otherwise to produce conformity with the plans and specifications which were part of the contract, the measure of damages is the fair cost of that remedial work. Where the defect is such that repair work would not be a reasonable method for dealing with the situation (usually because the cost of such work would be out of proportion to the nature of the defect), then the measure of the damages is any diminution in value of the structure produced by the departure from the plans and specifications or by defective workmanship.

  1. [595]
    In the case of D Galambos & Son Pty Ltd, the court awarded damages to compensate for a diminution in the enjoyment of the house because of the non-conforming work performed which did not result in any loss in the value of the building but which prevented the owner from using part of it as he intended.
  2. [596]
    I have set out in detail the principles to be applied in assessing whether the rectification works claimed by an aggrieved party are necessary and reasonable in my assessment above of Variation V034.
  3. [597]
    The same principles apply to the present defect. Further, the facts relevant to the present defect are even clearer given that non-compliance with the contract also results in non-compliance with the BCA.
  4. [598]
    In assessing the two factors which must be considered in assessing the measure of damages, namely whether the works proposed are ‘necessary’ and ‘reasonable’, SBH submits that I should take into account the following
    1. (i)
      the replacement works are not necessary given the following factors:
      1. the roof installed is performing and is reasonably satisfactory for its purpose;
      2. there is no evidence that there is any defect in the performance of the roof for the last 6 years;
      3. any suggestion that the roof is starting to fail has not been proved;
      4. the Foleys have not carried out any rectification works to the roof and given that the Foleys have engaged contractors to install solar panels on the roof as-installed the likelihood of replacing the roof could be considered remote;
      5. there is no evidence that the non-compliant roof has substantially affected the market value or amenity of value to the Foleys of the works;
      6. the cost of reinstatement of the roof, 6 years on from the time of installation, is wholly disproportionate to the advantages of reinstatement.
    2. (ii)
      the rectification works are not necessary as there is no departure from the plans and specifications;
    3. (iii)
      the only issue is a question of amenity and in the absence of a defect, the Foleys’ claim is unsubstantiated.
  5. [599]
    I have formed the view that the replacement of the roofing material is necessary as the roof as presently installed is contrary to the requirements of clause 10.1(a)(iv) of the general conditions of contract and s 43 of the DBC Act which require that the works be compliant with the BCA.
  6. [600]
    Based on the factors to be considered in accordance with Tabcorp Holdings and the other cases I have referred to above, I find that the rectification work proposed to replace the non-compliant roofing material is not unreasonable.
  7. [601]
    The Foleys claim the sum of $123,000 for the removal and replacement of the roof.
  8. [602]
    Mr Thompson calculated the cost to replace the roof with a proper product would be in the vicinity of $135,916.14 (incl GST) on the basis of stainless steel being installed in accordance with the manufacturer’s recommendations. In his report dated 4 March 2016,[63] Mr Thompson provided an estimate of $66,726.66 (incl GST) for replacement of the roof with Colorbond Ultra.[64]
  9. [603]
    The only evidence regarding the cost of reinstatement provided on behalf of SBH is a quotation in the sum of $41,114.00 (excl GST) from Steeline Roofing dated 24 June 2016 which provides a quotation for the installation of Ultra.[65] The quotation does not account for the removal of the existing roof and other relates works which would need to be taken into account.
  10. [604]
    In submissions, the Foleys accept that the cost to replace the roof with Colorbond Ultra would be $60,660.60 which is the adjusted figure for the cost excluding GST.
  11. [605]
    The amount of $60,660.60 is allowed for rectification of the roofing material defect.

Practical Completion of the Contract

  1. [606]
    Before addressing the counterclaim sought by SBH, it is necessary to address whether the works had reached the stage of Practical Completion. One of the reasons for this is that part of the counterclaim relates to payment of the outstanding amounts not paid for the Practical Completion Stage and a small amount for the Fixing Stage.
  2. [607]
    In addition, the Foleys contend that not only are they not required to pay the balance of the Practical Completion stage but they are entitled to a refund or restitution for the amount of $30,000.00 which was paid at a time when Practical Completion had not been reached on the basis that SBH was not entitled to issue a Practical Completion progress payment claim.
  3. [608]
    The Foleys rely upon s 67(3) of the DBC Act to recover a refund for the amount paid for the Practical Completion stage which it submits has not been reached.
  4. [609]
    At the time of taking possession of the site, by agreement, the Foleys assert that the works had not reached the Practical Completion stage as defined in the contract.
  5. [610]
    Practical Completion is defined in the contract as:

Means that stage of the Works when the Works are completed in accordance with the Contract and all relevant statutory requirements, apart from minor omissions or minor defects, and the Works are reasonably suitable for habitation. Where the Owner has engaged building consultants including the Building Certifier, then Practical Completion under the Contract means the stage of the Works when the Works are completed, are reasonably suitable for habitation, with minor omissions and minor defects, and the Contractor only being required to provide support documents to the Owner to allow a Certificate of Completion to be issued.

  1. [611]
    SBH submits that Practical Completion was reached on 22 December 2010 when the Foleys took possession of the property. On this basis, SBH submits that it was entitled to issue the progress payment claim for Practical Completion and the invoice became payable in accordance with the contract by 30 December 2010.
  2. [612]
    The amount claimed for the Practical Completion stage was $34,710.41.
  3. [613]
    The Foleys paid the Practical Completion Stage, less a sum of $4,710.41 on the basis that there were outstanding defects and works to be completed.
  4. [614]
    Mr Bagnall, in cross-examination, conceded that the works had not reached Practical Completion by 22 December 2010.
  5. [615]
    Accepting those facts alone, it is argued that as at 22 December 2010, SBH was in breach of contract issuing a payment claim when the stage of works had not been reached. The issue of the progress payment claim and the receipt of part of the completion payment prior to reaching the Practical Completion stage is also a breach of sections 67(2) and (3) of the DBC Act.
  6. [616]
    The Foleys submit that the fact that many of the defects were not minor defects, at the time of possession, substantiates its assertion that Practical Completion had not been reached by 22 December 2010. Further, the Foleys contend that the issue of the Form 61 – Non-compliance Notice from the FCR Council on 16 April 2014 supports the conclusion that Practical Completion could not have been reached as early as 22 December 2010.
  7. [617]
    The Foleys also rely upon the following defects, which it alleges are not minor defects or omissions, to support the conclusion that the stage for Practical Completion was never reached:
    1. (a)
      Item 3 – insufficient fall to the ensuite floor;
    2. (b)
      Item 10 – incorrectly installed gutters and downpipes causing overflow;
    3. (c)
      Item 12 – failure to install gate to spa deck;
    4. (d)
      Item 13 – upstairs timber floor has excessive movement causing plasterboard ceiling to crack;
    5. (e)
      Item 21 – overhead cupboard and bulkhead to downstairs bar not installed;
    6. (f)
      Item 34 – windows not fitted with grey glass; and
    7. (g)
      Item 43 – installation of standard Colorbond roofing in breach of the Building Code of Australia.
  8. [618]
    At the time of possession, the Foleys did not take any steps to terminate the contract but rather both parties continued on the basis that they were both willing and able to perform their obligations under the contract.
  9. [619]
    I am satisfied however that the stage of Practical Completion had not been reached by 22 December 2010 and that the claim for payment for Practical Completion on 22 December 2010 was premature.
  10. [620]
    Discerning if, or when, the stage of Practical Completion was reached prior to the Foleys purporting to terminate the contract is difficult.
  11. [621]
    The Foleys submit that the stage of Practical Completion had not been reached when they purported to terminate the contract on 6 May 2015.
  12. [622]
    Neither party has relied upon  the possibility that Practical Completion may have been reached sometime between 22 December 2010 and June 2015, for example when SBH had carried out the majority of the works the subject of the Form 61- Non-compliance Notice thus providing SBH with the legitimacy to make another demand for payment, which it did on 30 March 2011 and 16 June 2011.
  13. [623]
    As neither party has sought a consideration of this issue, which could possibly have impacted on the validity of the Foleys’ purported termination of the contract, I do not intend to consider these factors.
  14. [624]
    In any event, given the major defects which subsequently have become apparent, there is justification for a determination that the stage for Practical Completion had not been reached as at the date of termination on 6 May 2015.
  15. [625]
    For present purposes, the only determination I will make is that the works had not reached Practical Completion on 22 December 2010.

Termination of the Contract

  1. [626]
    Clause 20 of the general conditions of contract sets out the Owner’s rights to terminate the contract as follows:

20.1 Owner’s right to serve notice of intention to terminate contract

If the Contractor –

  1. fails to proceed with the Works with due diligence or in a competent manner;
  2. unlawfully suspends the carrying out of the Works;
  3. refuses or persistently neglects to remove or remedy defective work or improper materials, so that the Works are adversely affected;
  4. is unable or unwilling to complete the Works or abandons the Contract;
  5. is in Substantial breach of this Contract; or
  6. fails to effect or maintain any insurance policy required by this Contract;

the Owner may give a written notice to the Contractor:

(i) describing the alleged breach or breaches of the Contract by the Contractor; and

(ii) stating the Owner’s intention to terminate the Contract unless the Contractor remedies the alleged breach or breaches within a ten (10) Business Days after receiving the Owner’s notice.

20.2 If Contractor fails to remedy breach, Owner may terminate Contract

If the Contractor fails to remedy the breach or breaches stated in any notice served by the Owner under Clause 20.1, the Owner may, without prejudice to any other rights or remedies, terminate the Contract by further written notice to the Contractor, provided that such notice of termination shall not be given unreasonably or vexatiously and, if so given then any such notice of termination shall be null and void and of no effect.

20.3 Owner may not terminate Contract in certain circumstances

The Owner may not terminate the Contract if the Owner is in substantial breach of this Contract.

20.4 Owner’s right to engage another Contractor to complete the Works

If the Owner terminates this Contract in accordance with this Clause, the Owner may engage another Contractor to complete the Works.

20.5 Contractor is entitled to reasonable price if Contract ended

If the Contract is ended under this Clause the Contractor is entitled to a reasonable amount for the value of the Works carried out under the Contract to the date the Contract is ended.

  1. [627]
    On 22 December 2010, the Foleys took possession of the site despite the fact that Practical Completion had not been reached. This occurred by arrangement with SBH and there is no issue that the Foleys were in breach of the contract by taking possession.
  2. [628]
    SBH has accepted that possession was provided by agreement. SBH has not argued that the Foleys were not entitled to take possession and thus Practical Completion was deemed to have been reached at the date of possession as provided in clause 17.9 of the general conditions of contract.
  3. [629]
    At the same time, SBH issued a payment claim for the Practical Completion Stage in the sum of $34,710.40.
  4. [630]
    The Foleys dispute that SBH was entitled to issue the progress payment claim at that time as Practical Completion had not been reached.
  5. [631]
    SBH submits that Practical Completion had been reached and that the Foleys were in breach in not paying the full amount for the Practical Completion Stage.
  6. [632]
    SBH’s submission is not consistent with Mr Bagnall’s concession that Practical Completion had not been reached.
  7. [633]
    During January 2011, SBH returned to the site and carried out further works but it soon became apparent that SBH was not going to complete the works under the contract.
  8. [634]
    By letter dated 23 March 2011, the Foleys wrote to SBH stating:

Well hear (sic) we are the final adjustments. With the only outstanding being the electric strike and the sealing of one hand basin, and a few queries on those variations.

  1. [635]
    The variations disputed related to the following:
    1. (a)
      Variations V022 and 26 to be cancelled – laundry chute;
    2. (b)
      Variations V025 and V031 to be cancelled – hot and cold taps for spar, valves for lift, installation of water tank;
    3. (c)
      Variation V029 to be cancelled – additional shelving;
    4. (d)
      Variation V032 to be cancelled – power points and fans; and
    5. (e)
      Variation V006 to be credited – upgrade of screens to viewing deck.
  2. [636]
    Other items disputed related to the following:
    1. (a)
      concreting of the porch and laundry areas;
    2. (b)
      resealing of decks;
    3. (c)
      auto door strike to be installed;
    4. (d)
      keys;
    5. (e)
      cleaning of floors;
    6. (f)
      site clean; and
    7. (g)
      plumbing credits.
  3. [637]
    By letter dated 30 March 2011, SBH responded to the Foleys agreeing to some credits and addressing the issues raised in the Foleys’ letter dated 23 March 2011. Credits were provided for the electric striker on the front door and light fittings, exhaust fan and the security screens on the viewing deck. The main outstanding matters at this stage included the concreting, resealing of the decks, keys and cleaning. SBH pointed out that the Foleys had been given access 11 weeks before the Date for Practical Completion in the contract and requested payment of all outstanding invoices within seven days.
  4. [638]
    By letter dated 7 April 2011, the Foleys responded indicating that they did not agree with the position taken by SBH.
  5. [639]
    The parties fell into dispute regarding payment of the Practical Completion Stage and works which were outstanding. SBH did not return to site once relations between the parties fell apart.
  6. [640]
    By letters dated 7 and 10 June 2011, the solicitors for the Foleys (Boulton Cleary and Kern Lawyers) wrote to SBH outlining the matters still in dispute between the parties. A request was made for SBH to provide documentation regarding the actual costs incurred for PC items and PS items. Further, the solicitors for the Foleys set out variations which it is alleged did not comply with the general conditions of the contract or the DBC Act requesting any overpayment for variations be refunded to the Foleys. A table outlining all the variation claims submitted by SBH and the Foley’s position in relation to each was forwarded as part of the letter.
  7. [641]
    In addition to the items already raised by the Foleys in their letter dated 23 March 2011 (set out above), the solicitors for the Foleys reiterated that the Foleys incurred a cost of $24,201.10 for the re-waterproofing of the balconies as a result of the negligence of SBH employees/subcontractors with a request that this issue be taken into account upon a reconciliation of outstanding payments.
  8. [642]
    By letter dated 16 June 2011, the solicitors for SBH (Lewis & McNamara solicitors) responded to each of the 14 items of concern set out in the letter dated 7 June 2011 from the solicitors for the Foleys and repeated that SBH demanded payment for the outstanding amount under the contract.
  9. [643]
    On 9 September 2011, the Foleys lodged a complaint with the QBSA. An inspection was carried out by the QBSA inspector Danny Stephenson on 25 October 2011 and a report prepared dated 28 October 2011.
  10. [644]
    Of the 14 items identified in the complaint, five were considered to be contractual issues, five were considered to be either rectified or not a defect and four were considered to be category 1 defects.
  11. [645]
    By letter dated 31 October 2011, the QBSA advised the Foleys that it would not be issuing a Direction to rectify pursuant to s 72 of the Queensland Building Services Authority Act 1991 (Qld) as the items listed in the complaint were considered to be contractual issues and therefore not determined to be defective building work.
  12. [646]
    During the inspection on 25 October 2011, SBH stated that it would return to rectify the works which were defective. No further rectification work was carried out.
  13. [647]
    On 16 April 2014, the Foleys received a Form 61 – Non-compliance Notice from the FCR Council. The notice set out the following reasons for non-compliance:

1. Verandah posts to be sealed where wire passes through and at top.

2. Spa deck balustrading cracked and broken.

3. Seal over all windows (vermin proof).

4. Requires pool gate between dwelling and spa.

5. BR14 x 2 deleted from spa deck (new Form 15 from Engineer required).

6. Stringers to external stairs must be treated and protected in accordance with Table 3.4.4.2 of BCA (severe, external).

7. Form 16s required for:

  • Lift
  • Glazing
  • Waterproofing
  • Termite
  • Smoke alarms
  • Footings/slabs
  • Frame
  1. [648]
    By letter dated 20 May 2014, the Foleys gave notice to SBH pursuant to clause 20.1 of the general conditions of contract relying upon the content of the Form 61 -  Non-compliance Notice from the FCR Council.
  2. [649]
    The letter, attaching a copy of the Form 61 - Non-compliance Notice from the FCR Council, stated that the Foleys intended to terminate the contract unless SBH remedied the breaches of contract alleged in the notice as follows:
    1. (a)
      SBH has failed to proceed with the Works with due diligence or in a competent manner;
    2. (b)
      SBH has unlawfully suspended the carrying out of the Works;
    3. (c)
      SBH has refused or persistently neglected to remedy defective work or improper materials so that the Works are adversely affected;
    4. (d)
      SBH is unable or unwilling to complete the Works and/or has abandoned the Contract; and
    5. (e)
      SBH is in substantial breach of the contract, together with a number of sections of the DBC Act, including breaches of the statutory duties, incorporated into the Contract and referred to above.
  3. [650]
    SBH responded to the Form 61 – Non-compliance Notice through its solicitors by letter dated 2 June 2014, providing information to the FCR Council and advising that certain items would be attended to and providing responses in relation to items which SBH alleges were not its responsibility.
  4. [651]
    By letter dated 3 June 2014, the solicitors for SBH replied to the 20 May 2014 notice:
    1. (a)
      agreeing to rectify items 1, 3 and 4;
    2. (b)
      denying responsibility for item 2 as the balustrading was outside its warranty period;
    3. (c)
      providing the Form 15 required;
    4. (d)
      disputing the accuracy of the Form 61 in regards to the stringers to the external stairs;
    5. (e)
      providing all the relevant Form 16 forms except for the lift and the waterproofing which were items not the responsibility of SBH under the contract; and
    6. (f)
      maintaining its position regarding alleged defects in Schedules 1, 2 and 3.
  5. [652]
    Further, the solicitors for SBH stated:

We note your assertion that should our client fail to remedy the alleged defects then your client will terminate the contract. It would appear that your client considered they were not bound by the terms of the contract some time ago. Your client took possession of the property with full knowledge of the alleged defects (the majority of which our client denies). Your client attended to rectifying alleged defects without advising or liaising with our client. Your client raises additional alleged defects, the majority of which were not previously raised with the BSA, or our client, and are well outside any warranty periods.

Despite the above and as foreshadowed in earlier discussions, our client is willing to attempt to resolve this matter and remains open to mediation…

  1. [653]
    By letter dated 16 June 2014, the solicitors for SBH forwarded a letter to the solicitors for the Foleys attaching the letter of 4 June 2014 from the FCR Council identifying works which had been carried out by SBH and works still outstanding. The solicitors for SBH stated that SBH was still open to mediation of the outstanding matters.
  2. [654]
    At this stage, the following matters the subject of the Form 61- Non-compliance Notice remained outstanding:
    1. (a)
      verandah posts to be sealed whether wire passes through at the top of the post;
    2. (b)
      spa deck balustrading is cracked and broken;
    3. (c)
      seals over windows;
    4. (d)
      the requirement for a pool safe gate; and
    5. (e)
      forms 15 and 16 for the lift installation.
  3. [655]
    An unsuccessful mediation was held on 11 July 2014. No work was carried out by SBH after that date and the works the subject of the FCR Council remained outstanding.
  4. [656]
    On 2 March 2015, the solicitors for the Foleys sent a letter to the solicitors for SBH setting out the lack of progress since the mediation in July 2014. It seemed at this stage, SBH had indicated that it was willing to carry out rectification work to the handrails but no other details were provided. Clarification was sought by the solicitors for the Foleys as to the scope of works to be carried out by SBH.
  5. [657]
    By letter dated 6 May 2015, the Foleys served a notice pursuant to clause 20.1 terminating the contract in the following terms:

Our clients acknowledge that your client is now prepared to attend to items 6, 14, 18, 35 and 38 in Schedule Part 1 to the draft expert witness brief we provided to your client at the mediation on 11 July 2014. However, our clients also not that your client refuses to take responsibility for any damage to the waterproofing which may occur in the course of rectifying item 14.

We are instructed to reject your client’s proposal. Your client has only expressed a willingness to address a few of the many items which remain in issue and even with that, they have refused to take responsibility for damage to the waterproofing which is bound to occur during the rectification of the pool fence on the upper deck. Despite all this time that has passed since your client’s breaches of the Contract were raised and despite our clients’ efforts to get your client to even respond to their concerns, including during the QMBA mediation, it is clear that your client continues to pay little regard to the matters in dispute and has no intention of remedying their breaches of Contract.

On 20 May 2014 our clients, by their solicitor Paul J Hick – Solicitor, delivered to you on behalf of your client, a notice pursuant to clause 20.1 of the Contract stating out client’s intention to terminate the Contract. Despite our client granting a substantial amount of time, your client has not remedied the breaches of Contract set out in that notice and in consequence thereof our clients hereby terminate the Contract pursuant to clause 20.2 of the Contract.

  1. [658]
    The Foleys therefore terminated the contract on the basis that Practical Completion had still not been reached and SBH had failed to proceed with the works with due diligence.[66] Further, Counsel for the Foleys submits that the items in the experts’ joint report are not minor defects or omissions and thus support the conclusion that Practical Completion had not been reached.[67]
  2. [659]
    It is accepted that the purported termination by the Foleys terminated the future performance of the contract, not the contract itself. The classic statement of principle on the consequences of termination is found in McDonald v Dennys Lascelles Ltd where Dixon J stated:

When a party to a simple contact, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected…But when a contract…is dissolved at the elections of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executor only and the party in default is liable for damages for its breach.[68]

  1. [660]
    There is no dispute that the Foleys have adhered to the procedure in the general conditions of contract in relation to the termination of the contract. The clause 20.1 notice was served almost 3.5 years after SBH submits it reached Practical Completion and the termination notice 4.5 years since the alleged Date of Practical Completion.
  2. [661]
    Despite the submissions of SBH to the contrary, I am satisfied on the evidence that the Foleys did not deny reasonable access to SBH to carry out any rectification work at any time. The only issue with access was when the Foleys were absent from the premises. I accept that, on reasonable notice, the Foleys were prepared to provide access to SBH.
  3. [662]
    I do not consider that the Foleys repudiated the contract by refusing to pay the whole amount claimed for the Practical Completion Stage in December 2010 and nor do I accept that the Foleys were in default in limiting the builder’s access for particular works.
  4. [663]
    Accordingly, SBH issued the Practical Completion Stage payment claim before it was due. SBH continued to act upon its erroneous interpretation of the contract that the Practical Completion stage had been reached and payment was due.
  5. [664]
    SBH submits that the termination by the Foleys was a repudiation of the contract in that the grounds on which the termination was based were not valid.
  6. [665]
    SBH relies upon a number of grounds:
    1. (a)
      the items in the Form 16 - Non-compliance Notice had been rectified;
    2. (b)
      the reliance upon the failure of SBH to rectify the membrane works was not valid given the works had been carried out by others; and
    3. (c)
      the Foleys had denied SBH access to complete the works and to remedy the defects.
  7. [666]
    I accept the submission of SBH that neither the defects nor complaints regarding the lift or the waterproofing were the responsibility of SBH and the Foleys could not rely upon these two grounds. Putting those two matters to one side, the Foleys still had legitimate grounds on which to terminate the contract.
  8. [667]
    I am satisfied that the facts sets out above support the conclusion that the contract was validly terminated by the Foleys and the reasons provided by them were substantiated.[69]

Claim for Restitution and/or Damages

  1. [668]
    The Foleys have divided their claim into two parts:
    1. (a)
      a claim in restitution; and
    2. (b)
      a claim for damages for breach of contract or negligence in respect of defective and incomplete work.
  2. [669]
    From the outset, it is obvious that the Foleys cannot claim both restitution for the payment of the Practical Completion Stage and the cost of completing the incomplete works. To do so, is what can only be termed as ‘doubling up’.
  3. [670]
    The Foleys are either entitled to repayment of the payment for the Practical Completion Stage on the basis that SBH was not entitled to make the claim for Practical Completion and/or SBH had not carried out the works the subject of the progress claim or claim damages for breach of contract which would take into account the costs incurred by the Foleys in completing the contract works.
  4. [671]
    I have determined that the contract was properly terminated by the Foleys and thus the Foleys are entitled to damages on the usual basis. That is, the Foleys are entitled to claim the difference between the cost incurred to carry out the works the subject of the contract (including variations) less what it would have cost the Foleys had the works been carried out under the contract.
  5. [672]
    Pursuant to clause 20.5 of the general conditions of contract, the contractor is entitled to a reasonable price if the contract is ended under clause 20. The contractor is entitled to a reasonable amount for the value of the works carried out under the contract to the date the contract is ended.
  6. [673]
    In carrying out this exercise, I have taken into account an assessment of the variations for which SBH is entitled to payment (except for those the subject of the SBH counterclaim) and an assessment of an adjustment to the contract works in relation to PC and PS items.
  7. [674]
    The amounts allowed are set out in the summary below.

Respondent’s Counterclaim

  1. [675]
    The counterclaim by SBH is pleaded as monies owing under the contract or alternatively in quantum meruit.
  2. [676]
    To the extent that the counterclaim relates to unpaid variations, the claim is made pursuant to s 84 of the DBC Act.
  3. [677]
    The revised counterclaim by SBH in the sum of $4,258.03 relates to the following claims:
    1. (a)
      Payment for variations not signed by the Foleys and not paid by the Foleys. This claim relates to Variations V025b, V026b, V029, V032, V0034 and V035. This category amounts to $3,079.64. This claim is made pursuant to an application under s 84 of the DBC Act.
    2. (b)
      Payment for variations which have been signed by the Foleys but not paid in the sum of $2,206.41. This category applies to variations V021, V023, V024 and V027.
    3. (c)
      Payment for errors in the stage payments processed by SBH under the original contract. The amounts claimed relate to an unpaid amount under the Practical Completion Stage in the sum of $710.00 and an amount of $50 unpaid for the Fixing Stage.
    4. (d)
      Credits to the Foleys in the sum of $1,788.02 for three miscellaneous items (two items have been abandoned):
    1. Electric door striker (dealt with in Item 1 of the Defects list) in the sum of ($378.10);
    2. PC Item front door – abandoned;
    3. Extra site cut and sill – abandoned;
    4. Security screens on viewing deck not required (V036) in the sum of ($367.20); and
    5. Change bricks from ‘Mowbray’ to ‘Hendra’ in the sum of ($1,042.72).
  4. [678]
    The starting point for a consideration of SBH’s entitlement to payment of the first two categories is whether there is an entitlement under the DBC Act.

Statutory Framework of s 84 of the DBC Act

  1. [679]
    I have already set out in full the relevant provisions of the DBC Act regulating a building contractor’s entitlement to payment for variations.
  2. [680]
    Variations are regulated by Part 7 of the DBC Act.
  3. [681]
    The following steps are to be determined in addressing whether the building contractor is able to recover payment for variation work:
    1. (a)
      Is the work a variation to the agreed scope of works?
    2. (b)
      Whether the variation work was ordered by the building owner or the building contractor, is there compliance with the requirements of sections 79 to 83 of the DBC Act, by reference to the following:
      1. Is the variation in writing? – s 79;
      2. Is there compliance with the formal requirements for a variation document? – s 80(2) and 81;
      3. Is the variation document signed by the building contractor and have steps been taken to ensure the variation document is signed by the building owner? – s 82;
      4. Has a signed copy of the variation document been provided to the building owner? – s 83.
    3. (c)
      If the building contractor has not complied with sections 79, 80, 82 and 83 with respect to variations sought by the building owner, has the building contractor made an application pursuant to s 84(2)(b) for recovery of the variation amount?
    4. (d)
      In circumstances where the building contractor has sought the variation, in addition to compliance with sections 79, 80, 82 and 83 were there unforeseen circumstances relevant to the variation work?
    5. (e)
      If the building contractor has not complied with sections 79, 80, 82 and 83 with respect to variations sought by the building contractor, has the building contractor made an application pursuant to s 84(3)(b) for recovery of the variation amount?
    6. (f)
      In the event of non-compliance with sections 79, 80, 82 and 83:
      1. Are there exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation?; or
      2. Would the building contractor suffer unreasonable hardship if recovery was only possible if sections 79, 80, 82 and 83 were complied with?
  4. [682]
    These factors will be considered in relation to each variation claimed by SBH.

Variations not signed nor paid

  1. [683]
    In this category of variations, SBH says that the following variation claims are owing even though they have not been signed.
  2. [684]
    There has been obvious non-compliance with sections 79 to 83 of the DBC Act. Accordingly, whether SBH is entitled to recover for the amount of the variation will require an assessment of:
    1. (a)
      whether the work is variation work;
    2. (b)
      whether SBH is entitled to recovery pursuant to s 84(2) or s 82(3) in conjunction with s 84(4).
  3. [685]
    For the purpose of addressing the requirements of s 84(4), I will deal with that matter in relation to all in this category of variations as opposed to each variation individually.

VO25b

  1. [686]
    I have formed the view under an assessment of this variation previously that the work the subject of V025b is not variation work.
  2. [687]
    Accordingly, the claim for V025b in the sum of $171.60 is not allowed.

VO26b

  1. [688]
    Mr Foley concedes that the works are a variation to the scope of works and that he did request a cabinet to house his security hardware directly with the cabinet maker.
  2. [689]
    The main dispute regarding the works has been dealt with in Item 18 of the Foleys claim for defective works.
  3. [690]
    Accordingly, the Foleys must concede that payment is due for the variation, although not signed, and that SBH is entitled to the sum of $1,082.40.

V029

  1. [691]
    Variation V029 has been dealt with previously and a determination made that there was little substantiation for the valuation of the work although no alternative valuation is in evidence.
  2. [692]
    There was conflicting evidence as to whether Mr Foley sought the variation to the shelving. Mr Foley was unhelpful in his recollection as to whether he had ordered extra items including shelving for the bedrooms.
  3. [693]
    SBH provided a notation from the Good Look Garage Doors which points to a conversation between the shelving supplier and Mr Foley regarding extra shelving.
  4. [694]
    I accept that the works are a variation to the contract requested by Mr Foley.
  5. [695]
    The Foleys dispute that payment is owing because of non-compliance with sections 79 to 82 of the DBC Act.
  6. [696]
    It is obvious there has been no compliance with the requirements of s 80, 82 and 83 of the DBC Act.
  7. [697]
    The issue to be determined is whether SBH has an entitlement to recover pursuant to s 84(2)(b) of the DBC Act.
  8. [698]
    Subject to a consideration in relation to s 84(4) of the DBC Act, the amount of $744.00 will be accepted as the amount allowed for the variation work sought by Mr Foley.

V032

  1. [699]
    The claim for $1,490.28 for extra electrical installation work has been set out above.
  2. [700]
    The evidence indicates that Mr Foley had discussions with the electrician on site regarding extra electrical work. Mr Foley’s main concern was whether he would receive a credit for the power points and lights which were not installed.
  3. [701]
    Mr Bagnall’s evidence is that the credits have been taken into account in his assessment of the variation.
  4. [702]
    There is no dispute that the variation was not signed by Mr Foley. The main criticism is that the variation document does not fully describe the variation work and identify the change to the contract sum in contravention of s 80(2)(b) of the DBC Act.
  5. [703]
    Mr Bagnall accepted in cross-examination that it was not possible to identify the work to which the variation document relates.
  6. [704]
    Reliance was placed by SBH on the tax invoice from the electrical contractor D & S Pendrick Electrical Pty Ltd dated 15 January 2011.
  7. [705]
    Mr Foley addressed each of the items in the attachments to Invoice 1007 from which it is alleged by SBH there is substantiation of the extra work. It included the following works:
    1. (a)
      Wall oven and hotplates wiring to downstairs - $200.00;
    2. (b)
      Hayman’s invoices for extra lights - $734.22;
    3. (c)
      Light to jetty - $90.00;
    4. (d)
      Provision for lights in eleven  fans - $220.00;
    5. (e)
      Future light wiring to the garage - $40.00;
    6. (f)
      2 x exhaust fans - $100.00;
    7. (g)
      3 x 2-way switches - $150.00;
    8. (h)
      3 x ceiling fans - $210.00;
    9. (i)
      circulating pump to the kitchen - $80.00;
    10. (j)
      door switch to pantry - $90.00;
    11. (k)
      quartz reserve time clock to gate light - $65.00; and
    12. (l)
      credits for one  exhaust fan/light, ten  light points, five power points and two weatherproof power points in the sum of $850.00.
  8. [706]
    The Foleys concede payment for items (c), (f) and (k) in the sum of $285.00.
  9. [707]
    On the evidence before the tribunal, I do not accept that the works contained in items (a) and (d) were not included in the original scope of works.
  10. [708]
    I have formed the view that Mr Foley was unsure whether the remaining works formed part of the contract and at times was unsure whether the works had been installed as alleged.
  11. [709]
    Given Mr Foley’s confusion regarding many of the items, I accept the documentary evidence provided by SBH and its subcontractor.
  12. [710]
    Accordingly, I accept that the works claimed in items (b), (c), (d), (f), (g), (h), (i), (j) and (k) amount to a variation to the scope of works.
  13. [711]
    Subject to an assessment whether SBH is entitled to recovery pursuant to sections  84(3) and (4) below, I accept the evidence of SBH that the electrical works itemized were variation works and that the sum of $889.22 is the cost of that variation work.

V034

  1. [712]
    Variation V034 relates to extra plumbing work which included a credit for two shower heads and payment for other items including two showerheads, a grab rail and a set of spa taps in accordance with invoices from Tradelink and Sandy Straits relied upon by SBH.
  2. [713]
    The Specifications allow for the supply of two showerheads. There is no evidence that there has been a change in the scope of works.
  3. [714]
    Further the specifications provide for ‘hand shower rail’ and ‘sundeck to have hot and cold taps for spa’.
  4. [715]
    I have formed the view that the items claimed are not variations to the scope of works and therefore no payment is allowed.

V035

  1. [716]
    An amount of $490.53 as a credit to the Foleys for light fittings and an exhaust fan has been agreed by the Foleys.

Variations signed but not paid

  1. [717]
    In this category of variations, SBH claims that the variations have been signed by the Foleys but have not been paid.

V021

  1. [718]
    I have accepted that the work the subject of variation V021 is variation work which has been accepted and signed by the Foleys.
  2. [719]
    Accordingly, SBH is entitled to an amount of $71.73 for the supply of a smart tile to the upper ensuite.

V023

  1. [720]
    I have accepted that the work the subject of Variation V023 in relation to a change in scope of the glass splash back and an extra power point are items which were a change to the scope of work. The valuation of the variation work is accepted to be $245.00.
  2. [721]
    The objection from the Foleys relates to non-compliance with s 80(2)(b) of the DBC Act in that the variation document is lacking in detail in the description of the variation work.
  3. [722]
    I accept the Foleys’ submission that the variation document is not clear.
  4. [723]
    Accordingly, this variation will be considered by reference to s 84(4) below as to whether recovery should be allowed by the tribunal.

V024

  1. [724]
    Variation V024 in the sum of $189.68 has been accepted by the Foleys in relation to both issues as to whether the works are a variation and whether a proper valuation of the variation has been claimed.

V027

  1. [725]
    Variation V027 was accepted by Mr Foley as a variation to the scope of works. Mr Foley also conceded that the amount of $1,700.00 claimed should be allowed.

Recovery for non-compliant variations under s 84(4) of the DBC Act

  1. [726]
    A consideration of entitlement to recovery pursuant to s 84(4) is required for the variations above which I have determined to be variation work or which have not been conceded by the Foleys albeit not compliant with the requirements of Part 7 of the DBC Act.
  2. [727]
    The Foleys concede that SBH is entitled to payment for variations V026(b) and V035 which involves a credit to the Foleys.
  3. [728]
    The Foleys submit that SBH has no entitlement to recover any amount for non-compliant variations pursuant to an application under s 84(4) on the basis that there are no exceptional circumstances warranting the recovery and no evidence was lead in this respect. The Foleys further submit that SBH would not suffer any unreasonable hardship if the sum for the non-compliant variations claimed was not recovered.
  4. [729]
    Accordingly, in considering the non-compliant variations which I have accepted as variation work, it is only necessary to consider an entitlement under s 84(4) in relation to variations V021, V023, V029 and V032.
  5. [730]
    The four variations fall into two categories:
    1. (a)
      Variations V021 and VO23 have been signed but not paid; and
    2. (b)
      Variations V029 and V032 have not been signed or paid.
  6. [731]
    The matters to consider are:
    1. (a)
      are there exceptional circumstances to warrant recovery of the amount of the variation?; or
    2. (b)
      will the building contractor suffer unreasonable hardship by the operation of strict compliance with sections 84(2)(a) or 84(3)(a), whichever is relevant?;
    3. (c)
      would it be unfair to the building owner for the building contractor to recover an amount?
  7. [732]
    As I have determined that the variations were sought by Mr Foley, sections 84(2)(b) and 84(4)(a) and (b) apply and it is therefore necessary to first consider whether there are exceptional circumstances to warrant recovery or whether SBH would suffer unreasonable hardship by the operation of s 84(2)(a).
  8. [733]
    The term ‘exceptional circumstances’ is not defined in the DBC Act.
  9. [734]
    In Allaro Homes Cairns Pty Ltd v O'Reilly,[70] the Queensland Court of Appeal considered the expression ‘exceptional circumstances’:

The phrase ‘exceptional circumstances’ is not defined. It is found in an Act whose purpose or object is to achieve a reasonable balance between the interests of building contractors and building owners and to maintain appropriate standards of conduct in the industry. It may be vague but that matters that might be considered relevant to such an inquiry will be indicated by the particular way in which the Act was not complied with and the circumstances particular to the dispute. In this Act, it directs attention to those circumstances which are exceptional warrant a conferring upon the building contractor an entitlement to recovery for the variation which its conduct, by failing to meet the obligations imposed by the statute, deprived it. It would therefore suggest, in the context of this dispute, attention might be directed to the circumstances that applied that prevented compliance or explained non-compliance with s 80(2)(e), which required the building contractor to state the change of the contract price because of the variation or how the change in price might be worked out. Circumstances such as an unanticipated event requiring work to be done urgently might, for example, afford an explanation and constitute an ‘exceptional circumstance’. But this comment should not be regarded as exhaustive, the term is broad and it is not desirable to attempt an exhaustive statement of what might be in any given dispute an exceptional circumstance.

  1. [735]
    SBH submits that there are exceptional circumstances in this case which justify recovery under the DBC Act and justify why the requirements for variations to be signed and contain full details were not met. SBH says that the fact that the Foleys were living in a caravan on site during construction meant that the Foleys often gave instructions directly to the subcontractors without advising Mr Bagnall. SBH submits that this meant that it did not enjoy full autonomy and use of the site and variation works were carried out without SBH’s initial input.
  2. [736]
    The term ‘unreasonable hardship’ is also not defined in the DBC Act.
  3. [737]
    In Allaro Homes,[71] the Court of appeal considered further the term ‘unreasonable hardship’. Her Honour Holmes JA (as she then was) stated:

[3] Thirdly, it was suggested that the appeal tribunal had wrongly taken the view that the magnitude of the unpaid variation in a particular case could never support a finding of unreasonable hardship. To the contrary: the Deputy President, having observed that the mere fact of inability to recover cost of variation could not, without more, constitute unreasonable hardship, went on to say, correctly, in my respectful view:

“The test of unreasonable hardship requires an assessment of the impact of that sanction on the builder in the circumstances in which the non-compliance occurred. That is both a subjective and an objective enquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs.”

The magnitude of the sum that cannot be recovered is a relevant consideration in both respects. Subjectively, the inability to recover an amount may or may not cause hardship to a builder, depending on its financial circumstances. A small sum for a sole operator whose margins are slim might have a greater financial impact on that builder than a much larger sum would have on an enterprise with a large turnover and a good profit margin.

  1. [738]
    As to whether SBH will suffer unreasonable hardship, it is not a question of assessing whether the hardship will arise just from the non-payment but whether the hardship will arise in all the circumstances.
  2. [739]
    Counsel for the Foleys submits that the financial situation, as evidenced in Exhibit 12 (being the second statement provided by Mr Bagnall), does not depict a sole operator whose margins are slim.
  3. [740]
    SBH submits that the submission on behalf of the Foleys, which relies entirely on the income from properties owned by SBH, ignores the expenses from the properties including the mortgage encumbrances shown in the account liabilities for the company. Further, the submission on behalf of the Foleys has not taken into account the deficits for the company for both 2015 and 2016, the overdraft on three properties owned by the company, other bank overdrafts and secured and unsecured loans.
  4. [741]
    In addition to the position of SBH, it is also necessary to consider the position of the Foleys.
  5. [742]
    Section 84(4)(b) stipulates that the tribunal must be satisfied that it would not be unfair to the building owner for the building contractor to recover an amount.
  6. [743]
    In determining whether it is unfair to the Foleys for SBH to recover payment, consideration is given to the Foleys’ ability to pay and also whether they have retained a benefit from the varied work.
  7. [744]
    In relation to those variations which have been signed by the Foleys, I do not accept the evidence that Mr Foley was confused about the document he was signing and thus I do not think that it is unfair to the Foleys that they pay for those variations.
  8. [745]
    In relation to the variations which have not been signed, I am satisfied that Mr Foley directly dealt with the subcontractors in relation to variations V029 and V032 and thus it would not be unfair for the Foleys to make payment for the variation works even though they are not compliant with the DBC Act.
  9. [746]
    I have weighed up the considerations necessary to be satisfied by the tribunal under s 84(4)(a)(i) and (ii) and also s 84(4)(b) and have formed the view that SBH would suffer unreasonable hardship by the operation of subsection (2)(a) and that it would not be unfair for the Foleys to pay for the non-compliant variations.
  10. [747]
    Accordingly, I have formed the view that the tribunal should approve the recovery of the amount claimed by SBH for the variations which the tribunal has allowed even though there has been non-compliance with the requirements of Part 7 of the DBC Act.

Adjustment to Payment Claims

  1. [748]
    SBH claims that the Foleys have failed to pay the amount of $710.00 owing in relation to the Practical Completion Stage of the works and $50.00 in relation to the Fixing Stage.
  2. [749]
    Pursuant to Part D of the Appendix to the contract the Practical Completion Stage of the works was nominated to be 5% of the Contract Price and valued as $30,710.00 inclusive of GST.
  3. [750]
    There is no dispute that the amount of $710.00 remains unpaid for works the subject of the Practical Completion Stage of the contract.
  4. [751]
    The Foleys submit that SBH is not entitled to any sum the subject of the Practical Completion Stage because Practical Completion was never reached.
  5. [752]
    The Foleys rely upon s 67(2) of the DBC Act which provides that the building contractor under a regulated contract must not demand all or part of the completion payment unless the practical completion stage has been reached. For this contravention there is a maximum penalty of 100 penalty points.
  6. [753]
    Section 67(3) further states that the building contractor under a regulated contract must not receive all or part of the completion payment unless:
    1. (a)
      the practical completion stage has been reached; and
    2. (b)
      if the building owner claims the stage has been reached with minor defects or omissions – the first and second requirements stated in subsections (4) and (5) have been complied with.
  7. [754]
    The consequence of a breach of s 67(2) of the DBC Act is that the building contractor may be required to repay any monies paid in contravention of the Act. Therefore, SBH may be required to refund the monies paid in relation to the Practical Completion Stage which had not been reached.
  8. [755]
    This relates specifically to the sum of $30,000.00 paid by the Foleys as part payment of the sum of $30,710.00.
  9. [756]
    The DBC Act however does provide some relief for SBH.
  10. [757]
    Pursuant to s 69(4) of the DBC Act, the builder has a right to make a demand for payment of the amounts refunded to the building owner as part of the contract price.
  11. [758]
    Section 69 of the DBC relevantly provides:

69 Order to refund overpaid amounts

(1) This section applies if –

(a) a court finds a charge against a building contractor for an offence against a payment section proven; and

(b) the offence involves the receipt of an amount by the building contractor.

(2) The court may order the building contractor –

(a) to refund to the building owner –

(i) the amount paid to the building contractor that the building contractor was not, under the payment section, entitled to receive; or

(ii) a part of the amount mentioned in paragraph (a);

…

(4) The refund of an amount by the building contractor to the building owner under an order mentioned in subsection (2) does not stop the building contractor from later demanding and receiving payment of the amount under the contract as part of –

  1. (a)
    for a fixed price contract – the contract price.
  1. [759]
    It follows therefore, that it would not be unreasonable that, in ascertaining the contract price, this tribunal may take into account the sum of $710.00 which has not been paid for the contract works and also re-adjustment of the contract price to include the amount of $30,000.00 in the event that the Foleys are successful in claiming that amount pursuant to s 67(2) of the DBC Act.
  2. [760]
    Further, as the Foleys damages claim relates to both defective and incomplete works it is necessary to take into account the amount claimed as owing pursuant to the contract, otherwise there is the possibility that the Foleys will have the advantage of not only having not paid for a part of the contract price but claiming the cost of the incomplete work.
  3. [761]
    No evidence was provided that the works the subject of the claim had not been carried out.
  4. [762]
    For this reason, I have allowed the balance of the Practical Completion Stage, so that this amount may be included in a proper assessment of the Foleys’ entitlement to damages as claimed.

Further Adjustments

  1. [763]
    The Foleys accept that an amount of $105.66 is owing in relation to PC item 1 and an amount of $20.96 is owing in relation to PC item 5.
  2. [764]
    In relation to the amount of $50.00 outstanding for the Fixing Stage of the works, the Foleys deny that SBH is entitled to the underpayment on the basis that there is no explanation of the claim nor has it been proved.
  3. [765]
    Appendix D of the contract provides that the Fixing Stage payment is $153,500.00. SBH only claimed $153,450.00. The amount claimed was paid by the Foleys.
  4. [766]
    The error in the amount paid was not as a result of an underpayment by the Foleys but rather as a result of an error by SBH in claiming the correct amount.
  5. [767]
    I am not satisfied that SBH has substantiated its entitlement to an extra $50.00.

Credits to Applicants

  1. [768]
    SBH concedes that the following items should be a credit to the Foleys in determining the amount owed to SBH:
    1. (a)
      Electric door striker - $378.10;
    2. (b)
      Security screens on viewing deck - $367.20; and
    3. (c)
      Change of brick from ‘Mowbray’ to ‘Hendra’ - $1,042.72.
  2. [769]
    The Foleys accept the credit amounts proposed and have dealt with these items in their claim for damages and variations in the following items, namely Defect item 1, variation V036 and PC item 15.

Summary of Amounts Owing By the Respondent to the Applicants

  1. [770]
    In order to assess the amount owing by SBH to the Foleys, if any, as a result of my assessment of the alleged defective and incomplete work forming part of the Foleys’ claim in damages for breach of contract and/or negligence and the Foley’s claim in restitution, it is necessary first to assess the contract price: that is, the price which the Foleys would have paid had the contract been performed.
  2. [771]
    The next step is to assess the costs which the Foleys have incurred, or will incur, in bringing the works to completion and in conformity with the contract. This exercise necessarily includes the following:
    1. (a)
      an assessment of amounts paid to SBH; and
    2. (b)
      an assessment of additional amounts paid or to be paid to rectify the works or to complete the incomplete works.
  3. [772]
    The original Contract Price is $614,200 (including GST). To be deducted from this amount is the sum of $33,170.01 (including GST) for PC and PS Item adjustments and credits, as determined above and set out below:[72]

Item No.

Description

Amount allowed by the tribunal

1

Front door

$105.66

2

Credit for electronic striker plate not being installed (Variation V033)

($378.10)

3

Light fittings (Variation V035)

($490.53)

4

Wall and floor tiles to wet areas and upper ensuite floor

($1,290.58)

5

Site cut and fill

($20.96)

6

Air-conditioning (Variation V013)

($14,610.00)

7

Bosch alarm system

($988.90)

8

Home network

($858.00)

9

Vacuum system

($2,932.00)

10

CCTV

($5,478.00)

11

Intercom

($1,591.70)

12

Surround sound

($528.00)

13

Water system, Aqua Nova to Fuji

($1,275.00)

14

Concreting to front and rear patios and concrete slab outside laundry

Nil

14b

Credit for reduced number of electrical points and light points

($1,791.90)

15

Change from Mowbray to Hendra clay bricks

($1,042.00)

 

Total (include GST)

$33,170.01

  1. [773]
    To be added to the Contract Price is the sum of $3,849.05 (including GST) for the allowable variation claims admitted by the Foleys.

Variation No.

Description

Amount submitted by the Applicants

V020

Supply and fit Dux hot water reticulating pump

$1,087.90

V024

Supply 100 mm stormwater pipe

$189.68

V026b

Supply and install wardrobe cabinet (security equipment)

$1,082.40

V027

Extra water tank and slab

$1,700.00

V032

Electrical installation over allowance

$280.50

V035

Credit on light fittings and exhaust fan

($490.53)

 

Total (incl GST)

$3,849.95

  1. [774]
    To be added to this sum is the Variations which have been disputed by the Foleys but which the tribunal has allowed in the analysis above.[73]

Variation No.

Description

Amount allowed by the tribunal

V01

Joinery over allowance

$2,574.00

V02

Supply 100 mm stormwater pipe

$316.15

V05

Upgrade external hinged doors to aluminium

$1,224.60

V06

Change viewing deck louvres and upgrade screens to viewing deck to security to satisfy all protection requirements

$846.00

V07

Change garage door

$198.00

V08

Change BR11 steel beams to 360VB 57

Nil

V09

Simplify viewing platform; enlarge viewing platform; extra cranked beam, steel joists less allowance for steel and timber joists not required

$970.00

V010

Extra cost to comply with Development Approval

Nil

V036

Security screens on viewing deck not required

($366.20)

 

Total (incl GST)

$5,762.55

  1. [775]
    The remaining variations, namely V021, V023, V024, V025b, V029, part of V032 ($1490.28 minus $280.50) and V034 will be considered as the subject of SBH’s counterclaim as to date none of the variations have been paid.
  2. [776]
    Accordingly, the adjusted Contract Price is calculated as follows:

Original Contract Price

$614,200.00

Less PC, PS and credit adjustments

$33,170.01

Plus allowable variations

$9,612.50

Adjusted Contract Price

$590,642.49

  1. [777]
    The Foleys have paid SBH the sum of $593,846.33.
  2. [778]
    For the reasons set out above, and given the re-adjustment of the contract price, there is no substance to the Foley’s restitution claim for either an amount overpaid in relation to the Practical Completion stage, particularly if the refund for the Practical Completion stage is claimed in addition to the claim for damages for breach of contract.
  3. [779]
    My assessment of the Foleys’ entitlement to damages for breach of contract being the cost of rectification works and the cost to complete incomplete works is set out below:

Item No. (as per joint report)

Description

Amount as allowed by the tribunal

1

Electric striker to front door

Dealt with as a PC item - $0.00

2

Breach to termite barrier through the floor waste

$0.00

3

Insufficient fall to bedroom 2 ensuite shower recess

$972.52

4.1

Stainless steel wires not fitted with grommets at posts

$855.10

4.2

Fixing screws corroded

$230.20

4.3

Corrosion on handrail support posts

$0.00

4.4

Chain anchor pints show corrosion and have failed

$131.90

4.5

Fixing of stainless steel posts and membrane installation

$0.00

4.6

Fascia and beam deterioration to north elevation

$4,648.60

5.1

Membrane patching around penetrations

$0.00

5.2

Fixing screws to the chain brackets

$87.85

5.3

Wire termination screw not sealed to roof

$132.60

6

Exterior cladding substandard and unfinished

$694.32

7

All locks to be keyed alike

$269.00

8

Garage door remote controls and instruction manuals not provided

$250.00

9

Substandard paint finishes to eaves, patio ceilings, downpipes and the like

$869.58

10.1

Street stormwater outlet position

Included in item 10.2

10.2

River stormwater outlet position

$14,720

10.3

East side downpipes not in correct position

Included in item 10.2

10.4

East upper roof discharge flooding lower roof gutter at front door area

Included in item 10.2

11

Defective pump- for water tank rectified by applicants

$0.00

12

Defective and incomplete fence and gate to spa deck

$11,200.00

13 (incl items 13.1 to 13.3)

Various issues with upstairs timber floors

$4,758.00

14

Building failed to clean concrete floors downstairs

$0.00

15

Replacement of membrane to the north and south patios as a result of handrail installation penetrating membrane

$0.00

16

Horizontal balustrade wires have damaged brickwork at the northeast corner of bedroom 3

$2,307.00

17

Plaster defects to various locations

$860.00

18

Defective internet cupboard

$993.00

19

Clay brick letterbox to be installed

$212.30

20

Water supply to the pool not installed

$0.00

21

Overhead cupboard and bulkhead to downstairs bar not installed

$0.00

22

Access door to lift shaft not installed

$450.00

23

Sliding door to garage not installed

$327.63

24

Cleaning to remove mortar splashing to various locations

$215.20

25

Builder’s rubbish removed by owner on completion

$0.00

26

Ducting to the range hood not undertaken

$450.15

27

Power supply to pool and winch for boat ramp paid for by owner

$327.27

28

Supply and install insect screen to spa deck access door

$0.00

29

Additional certification costs

$350.00

30

Supply and install security screen to garage not undertaken

$0.00

31

Supply and install security screen to front entrance door

$1,052.73

32

Severe structural crack to brick wall on north east corner of building

Included in item 16

33

Dux water pump not correctly installed

$305.00

34

Clear windows to have grey tint

$14,522.20

35

Power to front boundary gate

$0.00

36

Drain for lift not installed as designed

$1,452.80

37

Gaps above windows to be filled

$434.16

38

Replace timber treads to the stair case to the viewing platform

$730.40

39

Adjust trim to suit A/C plant condensation drain pipes

$364.44

40

Replace existing external light fittings to soffit

$0.00

41

Internal doors require painting and replace cavity sliding doors

$445.00

42

Water saving device

Included in item 33

43

Roofing material

$60,660.60

Subtotal

 

$126,279.55

Plus GST

 

$12,627.95

Subtotal

 

$138,907.50

Plus margin @ 20%

 

$27,781.50

 

Total (including GST)

$166,689.00

  1. [780]
    Therefore, in assessing the Foley’s entitlement to damages the following calculations must be carried out:
    1. (a)
      cost incurred by the Foleys being the sum of $593,846.33 as the amount paid to SBH under the contract;
    2. (b)
      plus the sum of $166,689.00 for the defective and incomplete work;
    3. (c)
      resulting in the total cost incurred by the Foleys being $760,535.33
  2. [781]
    To be deducted from this sum is the amount which the Foleys would have paid had the contract been performed. That sum has been calculated above as $590,642.49.
  3. [782]
    The cost incurred by the Foleys over and above the contract price is $169,892.84.
  4. [783]
    With respect to SBH’s counterclaim, the table below sets out the amounts which have been allowed by the tribunal:

Item Claimed in Counterclaim

Description

Amount allowed by tribunal

V026b

Supply and install wardrobe cabinet

Included in calculations for variations in contract price as agreed by Foleys

V029

Shelving over-allowance

$744.00

V032

Electrical installation over allowance

$889.22

V034

Extra plumbing PC items

$0.00

V035

Credit for light fittings

Included in calculations for contract price

V021

Supply smart tiles to upper ensuite

$71.73

V023

Make glass splash back higher

$245.00

V024

Supply 10mm stormwater pipe

Included in calculations for contract price

V027

Extra tank and slab

Included in calculations for contract price

Practical Completion Stage

Underpayment of Practical Completion stage

$710.00

Fixing stage

Underpayment of Fixing stage

$0.00

  1. [784]
    As I have set out above, a number of items which would have been allowed in the counterclaim, namely payment for variations V024, V026b, 27 and 35 have been conceded by the Foleys and included in the assessment of the contract price. The credits claimed by SBH have also been included in an assessment of the Foleys’ claim for damages and restitution.[74]
  2. [785]
    Given that many of the items the subject of the counterclaim have been taken into account in the assessment of the Foleys claim, the amount to be deducted from the damages allowed for the Foleys’ claim above is the sum of $2,659.95.

Orders

  1. [786]
    As set out above, in the assessment of the Foley’s claim for restitution and/or damages for breach of contract (and/or negligence) the tribunal has considered some of the items claimed in the counterclaim by SBH and reached a determination of a sum of $169,892.84 as the amount owed by SBH to the Foleys.
  2. [787]
    In considering the amount assessed as owing under the counterclaim for amounts not already considered in the Foleys’ claim, the tribunal has allowed the sum of $2,659.95.
  3. [788]
    Accordingly, the order of the tribunal will be that the amount of $167,232.89 is payable by SBH to the Foleys in satisfaction of both the Foleys’ claim and SBH’s counterclaim.
  4. [789]
    Written submissions will be considered in relation to interest and costs.

Footnotes

[1] The DBC Act reprint current as at 18 December 2009.

[2] Mr Foley’s second statement dated 7 March 2016 – Exhibit 7.

[3] Exhibit 21 – 2 pages of plans.

[4] Exhibit 3.

[5] Exhibit 4.

[6] Annexures “F5” and “F6” to Exhibit 6, the first statement of Mr Foley dated 30 November 2015.

[7] Annexures “F9” to “F11” to Exhibit 6.

[8] Datum Building Consultancy Pty Ltd.

[9] Exhibit 5.

[10] Exhibit 9.

[11] Exhibit 10.

[12] Exhibit 14.

[13] Part 2 Schedule B to Exhibit 11.

[14] The variations the subject of the counterclaim include V021, V023, V024, V025b, V026b, V027, V029, V032, V034, V035.

[15] Annexure ‘SB33’ to Exhibit 11 – Statement of Steve Bagnall dated 30 March 2016.

[16] Email dated 9 August 2010 from Tradelink to Robyn Bagnall as part of Annexure ‘SB-34’ to Exhibit 11.

[17] Attachment ‘SB-35’ to Exhibit 11.

[18] Attachments ‘SB-38’, to Exhibit 11.

[19] Annexure ‘SB-46’ to Exhibit 11.

[20] Variation V026b has been accepted by the Foleys as payable although the variation document was not signed in paragraph 531 of the Foleys’ submissions dated 3 February 2017.

[21] SBH admits the amount of $378.10 less GST.

[22] Exhibit 4.

[23] Exhibit 4.

[24] Exhibit 11.

[25] Foleys’ submissions dated 3 February 2017 at page 79; SBH’s submissions dated 12 January 2017, paragraph 184.

[26] Exhibit 1.

[27] Evidence of Mr Steve Bagnall Exhibit 11, page 42.

[28] The valuation of that entitlement is to be determined in accordance with s 84(6).

[29] [2014] QDC 156.

[30] [2012] QCA 286, [2] (Holmes JA).

[31] [2014] QDC 90. On appeal, this point was not argued.

[32] In the Applicants’ submissions, reference is also made to Variations V021, V023, V025b, V029, V032 and V034. These form part of the counterclaim by SBH and thus will be dealt with as part of that application.

[33] Variations V021, V023, V025b, V029, V032 and V034.

[34] Exhibit 5.

[35] See sketch by Mr Carpenter, Exhibit 23.

[36] See section 3.8.1.10 Wet Area Floors – Exhibit 36.

[37] Exhibit 3.

[38] See invoice from Souter (Wide Bay) Locksmiths and Security Agents dated 17 April 2013 – Exhibit 7.

[39] Exhibit 7.

[40] Exhibit 24.

[41] Australian Waterproofing Company invoice 4509 dated 21 October 2010.

[42] Variation 026b.

[43] Annexure ‘SB-7’ to Exhibit 11 – Statement of Steve Bagnall dated 30 March 2016.

[44] Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109 (Gibbs J).

[45] Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98, 114.

[46] Australian Broadcasting Commission v Australasian  Performing Right Association Ltd (1973) 129 CLR 99, 109.

[47] Codelfa Construction Pty Ltd v State Railway Authority of NSW (1982) 149 CLR 337, 352 (Mason J); Royal Botanic Gardens and Domain Trust v South Sydney Council (2002) 186 ALR 289; Manufacturers Mutual Insurance Ltd v Withers (1988) 5 ANZ Ins Cases 75,336, 75,340-1 (Hope JA).

[48] Exhibit 25 – quotation from G. James Glass & Aluminium dated 21 October 2016.

[49] (1954) 90 CLR 613.

[50] Robinson v Harmon [1848] EngR 135.

[51] In Wheeler the court did not find that there was a radical disproportion nor any other factor which would lead to the conclusion that awarding rectification costs was unreasonable. An application for special leave to the High Court by Ecroplot Pty Ltd by was subsequently refused.

[52] Alfred A Hudson, Hudson’s Building and Engineering Contracts (Sweet & Maxwell, 13th ed, 2015).

[53] Exhibit 3.

[54] Exhibit 33.

[55] Exhibit 28.

[56] Robinson v Harman (1848) 1 Ex. 850, 855.

[57] [1954] 90 CLR 613.

[58] Alfred A Hudson, Hudson’s Building and Engineering Contracts (Sweet & Maxwell, 13th ed, 2015), 7-008.

[59] Ibid 7-009.

[60] Robit Jones (363 Adelaide Street) v First Abbott Corporation (1998) 14 BCL 282, 324.

[61] See Alfred A Hudson, Hudson’s Building and Engineering Contracts (Sweet & Maxwell, 13th ed, 2015), 7-008, 7-009.

[62] (1974) 5 ACTR 10, 11.

[63] Exhibit 10.

[64] The estimate would be $60,660.60 excl GST.

[65] Exhibits 26 and 38.

[66] The Date for Practical Completion pursuant to the contract was 2 March 2011.

[67] In particular, the Foleys refer to items 3, 10, 12, 13, 21, 34, and 43 of the experts’ joint report in Exhibit 1.

[68] McDonald v Dennys Lascelles Ltd (1993) 48 CLR 475, 476-477.

[69] Cardona v Brown (2011) 27 BCL 194.

[70] [2012] QCA 286, [15] (North J).

[71] [2012] QCA 286, [3].

[72] Contrary to the submission by SBH that the adjustment for PC and PS items should exclude GST, I have included GST as the amounts set out in the contract for PC and PS items were inclusive of GST.

[73] V01, V02, V05, V07, V08, V09, V010 and V020 were signed and paid by the Foleys.

[74] Credits for the front door, electric door striker, security screens and the change in type of bricks.

Close

Editorial Notes

  • Published Case Name:

    Ian Foley and Bernadette Foley v Steve Bagnall Homes Pty Ltd

  • Shortened Case Name:

    Foley v Steve Bagnall Homes Pty Ltd

  • MNC:

    [2018] QCAT 458

  • Court:

    QCAT

  • Judge(s):

    Member Burke

  • Date:

    31 Oct 2018

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

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Allaro Homes Cairns Pty Ltd v O'Reilly [2012] QCA 286
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Cite 1 - [2012] QCA 286
Cite 2 - [2012] QCA 286
Cite 3 - [2012] QCA 286
Cite 4 - [2012] QCA 286
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
3 citations
Jump To
Cite 1 - (1973) 129 CLR 99
Cite 2 - (1973) 129 CLR 99
Cite 3 - (1973) 129 CLR 99
Bellgrove v Eldridge (1954) 90 CLR 613
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Cite 2 - (1954) 90 CLR 613
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Bellgrove v Eldridge (1954) 90 CLR 163
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CMF Projects Pty Ltd v Riggall [2014] QDC 90
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Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 C.L R. 337
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Cite 1 - (1982) 149 C.L R. 337
Cite 2 - (1982) 149 C.L R. 337
Galambos v McIntyre (1974) 5 ACTR 10
2 citations
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Cite 1 - (1974) 5 ACTR 10
Cite 2 - (1974) 5 ACTR 10
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98
2 citations
Jump To
Cite 1 - [1998] 1 All ER 98
Cite 2 - [1998] 1 All ER 98
Mansouri v Aquamist P/L (2011) 27 BCL 194
2 citations
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Cite 1 - (2011) 27 BCL 194
Cite 2 - (2011) 27 BCL 194
Manufacturers Mutual Insurance Ltd v Withers (1988) 5 ANZ Ins Cases 75
1 citation
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Cite 1 - (1988) 5 ANZ Ins Cases 75
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
1 citation
Jump To
Cite 1 - (1933) 48 CLR 457
McDonald v Dennys Lascelles Ltd (1993) 48 CLR 475
1 citation
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Cite 1 - (1993) 48 CLR 475
Radford v De Froberville (1977) 1 W.L.R., 1262
3 citations
Jump To
Cite 1 - (1977) 1 W.L.R., 1262
Cite 2 - (1977) 1 W.L.R., 1262
Cite 3 - (1977) 1 W.L.R., 1262
Robinson v Harman (1848) 1 Ex 850
1 citation
Jump To
Cite 1 - (1848) 1 Ex 850
Robinson v Harman [1848] Eng R 135
2 citations
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Cite 1 - [1848] Eng R 135
Cite 2 - [1848] Eng R 135
Robinson v Harman (1848) 1 Ex Ch 850
1 citation
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Cite 1 - (1848) 1 Ex Ch 850
Robit Jones (363 Adelaide Street) v First Abbott Corporation (1998) 14 BCL 282
1 citation
Jump To
Cite 1 - (1998) 14 BCL 282
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289
1 citation
Jump To
Cite 1 - (2002) 186 ALR 289
Ruxledge Electronics and Construction Ltd v Forsyth [1995] 3 All ER 268
1 citation
Jump To
Cite 1 - [1995] 3 All ER 268
Ruxley Electronics Ltd v Forsyth (1996) AC 344
1 citation
Jump To
Cite 1 - (1996) AC 344
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8
2 citations
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Cite 1 - [2009] HCA 8
Cite 2 - [2009] HCA 8
Thompson Residential Pty. Ltd. v Tran [2014] QDC 156
2 citations
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Cite 1 - [2014] QDC 156
Cite 2 - [2014] QDC 156
Tranquility Pools & Spas Pty Limited v Huntsman Chemical Co Pty Limited [2011] NSWSC 75
2 citations
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Cite 1 - [2011] NSWSC 75
Cite 2 - [2011] NSWSC 75
Wheeler & Anor v Ecroplot Pty Ltd [2010] NSWCA 61
1 citation
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Cite 1 - [2010] NSWCA 61
Willshee v Westcourt Ltd [2009] WASCA 87
2 citations
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Cite 1 - [2009] WASCA 87
Cite 2 - [2009] WASCA 87

Cases Citing

Case NameFull CitationFrequency
Steve Bagnall Homes Pty Ltd v Foley [2019] QCATA 455 citations
Steve Bagnall Homes Pty Ltd v Foley [2021] QCATA 1235 citations
1

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