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Klaproth v Master Lifts Pty Ltd QCAT 137
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Klaproth v Master Lifts Pty Ltd  QCAT 137
CHRISTIAN CHARLES KLAPROTH
MASTER LIFTS PTY LTD
15 May 2019
3 September 2018
Christian Charles Klaproth’s application for a building dispute is dismissed in accordance with s 47 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – where lift was not able to travel at the speed specified in the contract – where respondent claimed it was not the proper respondent as it was not a contracting party – where respondent claimed not bound by the contract specifications as it was not a contracting party – where respondent claimed application stature barred – whether respondent bound by contract – whether limitation date ran from date of breach or date applicant became aware that the respondent would not be able to rectify the defect – whether application lacked substance
Limitation of Action Act 1974 (Qld), s 10
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 47
Bryan v Maloney (1995) 182 CLR 609
APPEARANCES & REPRESENTATION:
REASONS FOR DECISION
- Mr Klaproth contracted with Master Lifts Pty Ltd ABN 26112048343 for the design, fabrication and installation of a hydraulic (water) lift at the residence which he was constructing as an owner builder at Manly. I note that the applicant named in
Mr Klaproth’s application was Master Lifts Pty Ltd ABN 29 147 473 854. The contract was signed on 9 December 2010 with an original contract amount of $27,950 excluding GST. As a result of a variation the contract price was increased to $32,450, excluding GST, and an amount of $840 was owing as at the date of the application being 15 February 2018. Mr Klaproth is claiming an amount of $20,010.20 in costs to repair the lift and for incidental accommodation and meals while the work is being done less the amount of the outstanding payment.
- According to Mr Klaproth the contract specified that the lift speed would be 0.1m/sec (approx.). This was reflected in the advertising sheet he received when making enquiries which stated the speed would be 0.10 m/sec (approx.), that the rated load of the lift was 250kg, and there was no indication in the contract or the advertising sheet that the lift speed was load dependent at loads below the rated capacity.
- All payments were made in respect of the lift as set out in the contract except for the final payment. Mr Klaproth states that on the day of commissioning, it became apparent that there was major problem with the speed of the lift and the final payment was not invoiced by Master Lifts.
- Mr Klaproth states that on the day that commissioning was scheduled the lift was taking in excess of 80 seconds to travel from the ground floor to the first floor and that this equates to an average speed of less than 0.045 m/sec, or less than half the specified speed. He states that Master Lifts’ installation personnel acknowledged that this was a problem they could not fix on the day and agreed to return and modify the lift to meet the specification.
- Master Lifts are said to have proposed and implemented a solution to replace the hydraulic rams to reduce the friction between the seals and the uPVC pipe used as rams and hence reduce the load or head required. Mr Klaproth states that after the first replacement of rams the speed improved marginally but was still not acceptable to Master Lifts or himself. He states he advised Master Lifts that, in his opinion, the pump was at fault as it was incapable of producing a large enough flow against the prevailing head to deliver the required speed and should be replaced. Master Lifts are said to have dismissed this option and continued to remove/replace/modify the rams.
- Mr Klaproth states that it appears Master Lifts have reduced the friction between the seals and uPVC pipe used as rams to the detriment of the seal effectiveness as the seals are said to now leak and have done so for several years. He attached copies of their Service & Construction Report dated 13/4/12, indicating there was problem with the seals, and their Works Report dated 9 March 2017, indicating the seals were still leaking. He states that the approach adopted by Master Lifts has not produced a lift which can move from the ground floor to the first floor in the specified time.
- He states that after nearly 6 years, Master Lifts still has not been able to successfully commission the lift. He states that their decision not to request payment for the commissioning payment from the date of installation to the present day is effective acknowledgement that the lift is not performing satisfactorily (not commissioned). This is confirmed by their decision to modify, and or replace seals and rams numerous times since the time of installation without charge.
- Mr Klaproth states that prior to him commencing the claim, the most recent visit by Master Lifts was 9 March 2017. The Master Lifts technician took photos of the leaks and advised he was to report to his manager and Master Lifts would contact him with a proposed course of action to rectify the longstanding problems. He says he advised the Master Lifts technician that this was a response he had heard from Master Lifts many times since the installation and he needed the faults to be rectified within one (1) month or the money he paid for the lift returned. The Master Lifts technician is said to have indicated that someone would contact him to resolve the matters. No one from Master Lifts has contacted Mr Klaproth since that visit until he commenced the claim.
- Mr Klaproth states that Master Lifts provided a product which has proved to be unable to meet the contract specifications. His preferred option was and always has been to have Master Lifts rectify the obvious problems with their product. However, over a period in excess of 6 years, Master Lifts have been unwilling or unable to do that. To obtain an acceptable solution (receiving what he contracted to pay for) it is now necessary for him to have the required rectification works undertaken by others.
- Mr Klaproth states he had the lift inspected by representatives of two (2) other lift companies and only Aussie Lifts were prepared to quote on the repair required. He said he has attached their quote to his application, and he considers it reasonable based on the original contract sum, the work involved (the replacement of all control and lifting equipment) and the requirement to construct in a restricted area requiring extra care. He expects some building work touch up will be required. For him to obtain a guarantee from Aussie Lifts all works covered by their quote needs to be carried out be Aussie Lifts. The repairs are expected to take five (5) days and as his wife cannot climb stairs on a regular basis they will move into a ground level motel unit for four (4) nights.
- Mr Klaproth seeks compensation in the sum of $20,010.20 from Master Lifts to cover the costs of repairs to the existing lift in the amount of $18,992.40 to remove and replace rams, pump and control equipment, touch up paint work and other building work, $500 (which is an estimate), lodgement fees of $326.80, accommodation and meals for 4 nights of $930, less the commissioning payment of $840.
- Mr Klaproth provided copies of the following documents with his application:-
- (a)Master Lifts Service & Construction Report 13 April 2012 warranty - fault with seals – clean out cylinder, regrease cylinders reset pressure switches;
- (b)Master Lifts Works Report 9 March 2017 – warranty – ram seals leaking photos taken – customer advises he wants it fixed one month from today – not chargeable;
- (c)Master Lifts Contract variation 16 June 2011 additional $4500 for change in installation method and type of doors;
- (d)Master Builders Trade Contract schedule with the following details:
- Owner – Chris Klaproth;
- Contractor – Master Lifts Pty Ltd ABN 26112098343 BSA 1111846;
- Description of works – to supply and install an eco hydro water hydraulic lift as per the attached addendum, specification and drawings;
- Location of works - Mr Klaproth’s address;
- Contract price - $27,950 ex GST; and
- Contract date – 9 December 2010.
- (e)Contract Addendum eco Hydro Hydraulic Lift including:
- Specification – this includes Drive system – electrically controlled direct acting water hydraulic. Two water hydraulic direct acting cylinders, with one attached to each of the two long sides of the lift car. Refer to the attached drawings (not attached to application). Speed of travel 0.1 m/sec approx., lifting capacity 250kg.
- (f)Trade Contract Terms and Conditions including:
- 1. Contractors Obligations – the following warranties are incorporated into the contract under Part 4 of the Domestic Building Contracts Act 2000: The contractor will carry out the works, relevantly, in accordance with the Plans and Specifications;
- Defects Liability Period – The contractor must rectify defects and omissions in the works which become apparent and are notified during the defects liability period. This is the six month period commencing on the date for practical completion.
- A response was filed by ACN 147 473 854 Pty Ltd formerly Master Lifts Group Pty Ltd (ABN 39 147 473 854) (Master Lifts Group). A counter-applicant party is nominated as M L 112 048 343 Pty Ltd formerly Master Lifts Pty Ltd (‘Master Lifts’). The orders sought were for the application to be dismissed:
- (a)Dismiss the claim against the applicant (of the counter-application) and make no orders against the counter-party except to state that the applicant is statute (time) barred from bringing an application against the counter party; or
- (b)Alternatively, the respondent is not liable for the alleged faulty installation but if an order is made against the respondent that order is stayed pending the determination of the counter-application.
- The reason why the order for dismissal was sought was that the contract was not with the named respondent Master Lifts Group but with Master Lifts, so Master Lifts Group has no liability at law (in contract, misrepresentation, false or misleading conduct or otherwise) to the applicant. Mr Klaproth was said to be ‘out of time’ in bringing a claim or action against the respondent and the counter-application party as it is barred by the relevant Statutes of Limitations including but not limited to s 10 of the Limitation of Actions Act 1974 (Qld) – 6 years from the date the contract was breached. Part C of the Application states: ‘It became apparent that there was a major problem with the speed of the lift’ on the day of commissioning, which was on or about late July 2011. The applicant should have filed the claim by late July 2017 to be within time. The application and the complaint to the QBCC were not within time; and similar time limits apply for ACL and other legislation but the applicant has not relied on those statutory actions. In the alternative, the respondent is not liable due to alleged attempts to modify the lift.
- Master Lifts Group in its response stated that it was not its responsibility to meet any specification as the contract was not between it and Mr Klaproth. Master Lifts Group at the latest on 28 March 2013 told Mr Klaproth it did not adopt the approach of replacing the motor to produce that specification to do so would have resulted in a failure to comply with the relevant Australian Standard AS1735 and compromise safety on the lift. Master Lifts Group say that that the contract was not with them but with Master Lifts and it is not liable to meet any advertised speed or specification.
- Master Lifts Group provided a chronology which relevantly confirms that a variation of the contract was entered into by them and Mr Klaproth on 9 December 2011 for lift installation and commissioning by respondent (Master Lifts Group). Master Lifts Group also admitted that payments had been made by Mr Klaproth in accordance with the payments schedule set out in Mr Klaproth’s application.
- Master Lifts Group was invited by the Tribunal to file an application to dismiss Mr Klaproth’s application in accordance with s 47 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) which enables the Tribunal to dismiss an application if it is satisfied that the application is frivolous, vexatious or misconceived; lacks substance or is otherwise an abuse of process.
- An application to dismiss was filed on the basis that:
- (a)The initiating application has been brought against the wrong party. Any application should have been brought against Master Lifts; and
- (b)Further, in any event, the initiating application, whether brought against Master Lifts Group or Master Lifts, is statute barred by reason of s 10 of the Limitation of Actions Act 1974 (Qld).
- Master Lifts Group deny that Mr Klaproth contracted with them to design, fabricate and install a hydraulic (water lift) and say that the contract was with Master Lifts and that this is evidenced by the contract dated 9 December 2010. Master Lifts Group say that:
- (a)they acquired the lift business from Master Lifts in or about March 2011 after the contract was entered into;
- (b)they did not enter into or agree to any variations to the contract relevant to Mr Klaproth’s claim, specifications or installation, nor make any representations as to the suitability or speed of the lift to Mr Klaproth;
- (c)they accept any liability for the representations made or contractual arrangements entered into by Master Lifts prior to the acquisition; and
- (d)that any liability for damages remains squarely with Master Lifts, not Master Lifts Group.
- Master Lifts Group provided a copy of several pages of a contract for the sale of the business known as Master Lifts dated 25 January 2011 between Master Lifts Oldco Pty Ltd and Master Lifts Pty Ltd as sellers and Master Lifts Group Pty Ltd as buyer and also an addendum to that contract. I note that in accordance with the recitals the sale was to include work in progress.
- In his response to the application to dismiss, Mr Klaproth notes the history of the formation of the lift contract and the contract for the sale of the Master Lifts business. He notes that on 11 June 2011, after the acquisition date, Mr Matthew Simes, an employee of Master Lifts Group, wrote to Mr Klaproth proposing terms of variation to the contract, including provision for increased costs brought about by virtue of the variation which was agreed to by Mr Klaproth on 17 June 2011, a copy of which document was filed by each party. He states that consequently, the contract was varied by Master Lifts Group and Mr Klaproth in accordance with clause 5 of the standard conditions of the contract from the contract variation date. Mr Klaproth states that Master Lifts Group’s chronology lodged with its response and counterclaim, confirms and therefore admits (acts of part performance and/or ratification). In particular:
- (a)Master Lifts Group’s purchase of the business settled on the acquisition date;
- (b)The contract variation was formalised by Mr Klaproth and Master Lifts Group;
- (c)The lift installation and commissioning were performed by Master Lifts Group (Mr Klaproth submits that this occurred on 26 July 2011 not 9 December 2011);
- (d)Call outs to fix the lift were performed by Master Lifts Group on about various dates in 2012, 2013 , 2014, 2015, 2016 and 9 March 2017;
- (e)Payments were received by Master Lifts Group in accordance with the contract variation after the contract variation date; and
- (f)Master Lifts Group corresponded with Mr Klaproth in relation to his complaints about the representations made in the contract as varied by the Contract variation until a date on or about 9 March 2017.
- Mr Klaproth submits that therefore Master Lifts Group is the correct entity to respond to the application by virtue of its:
- (a)Acts of part performance in recognition of its obligations under the contract as varied by the contract variation; and/or
- (b)Subsequent ratification of the contract by the contract variation, in accordance with clause 5 of the standard conditions of the contract and said acts of part performance including receipt of payments from the applicant;
- (c)In the alternative, without the benefit of the entire business sale contract and given the contract variation post-dates the acquisition date, It is correct for both Master Lifts Group and Master Lifts to respond to the application, until provision of the entire business sale contract so it can be determined with reference to the terms of the entire business sale contract, what was sold by the Master Lifts to Master Lifts Group, and whether Master Lifts’ obligations under the contract formed part of the sale.
- Master Lifts Group is essentially claiming that while they performed the contract for the installation of a lift for Mr Klaproth and accepted payment for the work that was performed, they are not liable for any breach of the contract in regard to not complying with the specifications because, as they were not the original contracting party, they are not bound by the contract in regard to the specifications. They are trying to take advantage of the fact that the contract was lawfully assigned to them which would have required an agreement between all three parties. That is, Master Lifts, Master Lifts Group and Mr Klaproth. The corollary of that is that Mr Klaproth was not bound to accept performance in circumstances where the contract was not properly assigned.
- I agree with Mr Klaproth that by Master Lifts Group entering the variation of the contract with him, they have adopted the contract and must be bound by it including the specifications of the contract. They have performed the contract and must have done so in accordance with the specifications which were very detailed. It is irrelevant that the variation was not in regard to the specifications. It was a variation of the contract and by entering into it, Master Lifts Group represented to Mr Klaproth that they were the party he had contracted with for the installation of the Lift. Their entitlement to represent that was a result of them taking over the work in progress of the original contracting party Master Lifts in accordance with the sale of business contract.
- I note further that the Trade Contract terms and general conditions of contract defines contractor as – the person stated in item 2 of the schedule and includes the contractors permitted assignees and transferees. I am satisfied that having regard to the sale of business contract and the entry by Master Lifts Group into the contract variation that they have become the contractor as wither permitted assignee or transferee and is therefore substituted as the contractor.
- I note that Master Lifts Group has not filed the whole of the contract for the sale of the business and I take from that that there are no clauses in that contract which support their proposition that they are not bound by the contract with Mr Klaproth.
- There is no ground for dismissal of the application in respect of the respondent being the wrong party.
Limitation of Action
- Master Lifts Group notes that Mr Klaproth’s case is that the lift does not operate at the speed expected and/or agreed – in other words, that it is deficient. In order to be successful in any claim for damages as a result of this alleged deficiency, Mr Klaproth would need to argue that Master Lifts Group was negligent and/or in breach of a contractual arrangement. Section 10 of the Limitation of Actions Act provides that an action of contract and tort ‘shall not be brought after the expiration of 6 years from the date on which the cause of action arose’. In contract, the cause of action generally accrues as at the date of the alleged breach. In these circumstances, the date of the alleged breach would be the date the lift was delivered or installed contrary to any contractual specifications – being on or about mid July 2011. In negligence, time commences to run when the damage accrues even if the damage is not immediately obvious. Accordingly, the loss and damage to Mr Klaproth - being the cost of replacing and/or repairing the deficient lift and standard accommodation while the lift was undergoing repairs – was suffered when he received a lift of lesser standard or quality that he had contracted for. Further, Mr Klaproth specifically states in the application that it ‘became apparent that there was a major problem with the speed of lift on the day of commissioning which was on or about late July 2011’.
- Master Lifts Group concludes that as the application was filed 15 February 2018, Mr Klaproth is precluded by the Limitation of Actions Act from relying on any cause of action that may have accrued against Master Lifts Group (or any other party for that matter) prior to 15 February 2012 and as any cause of action in contract and/or tort that could arise against Master Lifts Group on the facts pleaded in the application accrued in or about July 2011, the application is statute (barred).
- Master Lifts Group filed a copy of a document titled ‘Eco Hydro Lift Installation and Final Testing (Commissioning) Report’ and ‘Checklist Client Name Chris Klaproth’ at his address. That report was signed by Mr Klaproth on 9 December 2011 and also a document titled ‘Confirmation of Receipt of Instructions to Operate’ (including warranty and keys) again signed by Mr Klaproth and dated 9 December 2011. I note from Mr Klaproth’s application at part C para 5 that the lift was delivered to site on 22 July 2011 and practical completion of the lift installation occurred on 26 July 2011.
- Mr Klaproth submitted in regard to the limitation of action issue that the date claimed by Master Lifts Group, being the date on or about 26 July 2011 (the Commission Date) is not the date when he knew or ought to have known that a cause of action arose pursuant to the contract as varied by the contract variation. In particular, that Master Lifts Group employees or agents could not fix the problem on the day of commissioning and agreed to return and modify the lift to meet the specifications in the contract and their actions after that date including attempts to fix the lift and that Master Lifts Group proposed a solution to Mr Klaproth as detailed to replace the hydraulic rams after the Commission date.
- Mr Klaproth confirmed that he had received a letter from Master Lifts Group on or about 28 March 2013, in which Master Lifts Group unequivocally confirmed it would not be able to resolve the dispute brought about by Master Lifts’ failure to meet the specifications in the contract as varied by the contract variation in relation to the speed of the lift, and at this time he became aware that he had a cause of action against Master Lifts Group. He stated that he was not in a position to know he had a cause of action against Master Lifts Group, until receipt of Master Lifts Group’s letter confirming that it would be unable to improve the speed of the lift due to the requirements of AS 1735.
- At the hearing Mr Klaproth submitted that he did not believe he had a problem until they said they weren’t going to fix it.
- Mr Klaproth notes that the Tribunal application date of 15 February 2018 is less than 6 years from the Limitation commencement date and hence the application is not statute barred under the contract as varied by the contract variation.
- In the alternative, Mr Klaproth submits that clause 7.1(b) of the standard conditions of the contract requires a written notice to be issued by Master Lifts Group upon reaching practical completion. Provision of the practical completion certificate is evidence that Master Lifts Group has formed the view they have performed the works in accordance with their obligations under the contract as varied by the contract variation. Master Lifts Group did not issue and/or has never provided the practical completion certificate to Mr Klaproth, calling for payment of the balance of the monies owing pursuant to the contract as required by clause 7.1(b). Due to Master Lifts Group’s failure to provide the practical completion certificate Mr Klaproth has not paid the balance owing pursuant to the contract. The contract between Master Lifts Group and Mr Klaproth is still on foot and therefore the application is not statute barred by virtue of s 10 of the Act.
- Section 10 of the Limitations of Actions Act 1974 (Qld) is clear in that an action founded on simple contract or on tort except where personal injuries are involved shall not be brought after the expiration of 6 years from the date of which the cause of action arose.
- In this case Master Lifts Group says that the cause of action arose when the lift was installed on or around mid-July 2011. Mr Klaproth submits that the cause of action only arose when he became aware that Master Lifts Group would not be able to fix the defect which the date that he received their correspondence of 28 March 2013, alternatively he says that the contract is still on foot as it was never practically completed and so the application is not statute barred.
- In his material Mr Klaproth states that the 3rd progress payment which was payable on practical completion of the lift installation was paid on 26 July 2011. In terms of a breach of contract I concur with Master Lifts Group that the date of breach is the date that the lift was installed. The cause of action arises at the time of the breach of contract in accordance with general contract law. The date that Mr Klaproth received the letter from Master Lifts Group was an indication that they were not going to provide a remedy the breach had occurred earlier though. Therefore in contract the limitation period of 6 years expired on 26 July 2017.
- The position is different in tort where the cause of action does not arise until damage is suffered and where the defect is latent that is not until the latent defect is discovered. In this case the defect was in regard to the speed of the lift which could not have been discovered until the date the lift was commissioned. Which is in accordance with Mr Klaproth’s application. That date is in accordance with the material filed by Master Lifts Group was 9 December 2011. Again the date of the correspondence from Master Lifts Group of 28 March 2013 is not the date the action accrued as it only represents the date that Mr Klaproth had exhausted his remedies with Master Lifts Group in regard to the defect that he became aware of on 9 December 2011.
- In that case Mr Klaproth’s application would need to have been filed on or before 9 December 2017 which is six years after the cause of action arose and it was not filed until 15 February 2018.
- Mr Klaproth is barred from bringing an application for a breach of contract and for negligence for breach of duty in accordance with s 10 of the Limitation of Actions Act 1974.
- Section 47 of the QCAT Act allows the Tribunal to dismiss an application where it is satisfied that it is without substance. Where an applicant is statute barred from bringing an application I am satisfied that the application is without substance.
- Christian Charles Klaproth’s application for a building dispute is dismissed in accordance with s 47 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
 Bryan v Maloney (1995) 182 CLR 609.
- Published Case Name:
Klaproth v Master Lifts Pty Ltd
- Shortened Case Name:
Klaproth v Master Lifts Pty Ltd
 QCAT 137
15 May 2019