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Sharma v The Dirt Guys Pty Ltd QCAT 279
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Sharma v The Dirt Guys  QCAT 279
AWADHESH KUMAR SHARMA
THE DIRT GUYS PTY LTD
17 September 2019
On the papers
Senior Member Brown
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – DAMAGES – MEASURES OF – where contract entered into for the performance of building work – assessment of damages
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – where failure by respondent to comply with tribunal directions – where applicant unnecessarily disadvantaged by respondent’s failure to comply with tribunal directions – whether applicant entitled to final decision – whether costs should be awarded in favour of applicant
Queensland Building and Construction Commission Act 1991 (Qld), sch 1B, s 42.
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48(1)(a), s 48(2)(b)(ii), s 48(3), s 100.
Bellgrove v Eldridge (1954) 90 CLR 613.
Cedar Meats Pty Ltd v Five Star Lamb Pty Ltd  VSC 164
Dunlop Pneumatic Tyre CO Ltd v New Garage and Motor Co Ltd  AC 79.
Forestry Commission of NSW v Stefanetto (1976) 133 CLR 507.
Lester v White  2 NZLR 483.
Lyons v Dreamstarter Pty Ltd  QCATA 142.
Mertens v Home Freehold Co  2 KB 526.
Ventura v Svirac  WAR 63.
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
REASONS FOR DECISION
- Mr Sharma entered into a contract with The Dirt Guys Pty Ltd (TDG) for the performance of building work. The parties fell into dispute. Mr Sharma has commenced proceedings in the Tribunal. TDG has not filed a response or played any active part in the proceedings.
- On 12 January 2018 the parties entered into a written contract (the contract) for the performance of building work by TDG (the building works). The contract was the standard QBCC Level 2 Renovation, Extension and Repair Contract. The contract included the General Conditions included in the Homeowner’s and Contractor’s Booklets dated August 2017, and any special conditions. The contract contained no special conditions.
- The contract provided that the scope of the building works was ‘as per quote 1275 and in accordance with the plans supplied.’ Quote 1275 referred to the following building works:
- (a)2 flights of stairs as per plans supplied front and back;
- (b)Concrete slab to under storey area as per plan including driveway and cross over;
- (c)141.25m2 of treated pine timber battens as per the plans designed with 2 gates to car access area.
- The contract was signed by the parties and dated 12 January 2018. The starting date for the building works was 15 January 2018. The date for completion was 30 days from 15 January 2018. The contract price was $30,910 payable by 7 instalments, including the initial deposit.
- The contract documents included the plans and specifications supplied by the owner and the foundations data supplied by the builder.
- The building works commenced on 15 January 2018.
- Mr Sharma says that the parties agreed to a variation of the building works however the agreed variation was not recorded in writing. The variation consisted of completing plumbing work for an additional amount of $6,050.
- Mr Sharma says that:
- (a)The stairs as constructed did not accord with the design requirements;
- (b)Preparatory works for the concrete slab did not follow the plan;
- (c)Preparatory works for the construction of the battens did not follow the plan.
- Mr Sharma says that the building works and the variation works were defective and the totality of the building work was required to be undertaken again. He says that he was required to engage contactors to undertake the required works and has incurred expense as a result.
Mr Sharma’s entitlement to a final decision
- The Tribunal may, where a respondent in a proceeding causes unnecessary disadvantage to an applicant by not complying with Tribunal directions or orders without reasonable excuse, make a final decision in favour of the applicant.
- I am satisfied that the Application for domestic building dispute was served on TDG. I am satisfied that TDG has, without reasonable excuse, failed to comply with Tribunal directions, and specifically has failed to file a response to Mr Sharma’s application. I am satisfied that Mr Sharma is being unnecessarily disadvantaged by TDG’s failure to file a response. The specific disadvantage is that Mr Sharma is being prevented from progressing his claim to a final determination. I have had regard to the matters set out at s 48(3) of the Queensland Civil and Administrative Tribunal Act 1991 (Qld) (QCAT Act). TDG has not engaged in the proceedings in any way which appears to be a deliberate act. I am satisfied that Mr Sharma is entitled to a final decision in the proceedings.
- I am satisfied that TDG was a building contractor and that Mr Sharma was a building owner, that the building work performed by TDG was domestic building work and that the dispute between the parties is a domestic building dispute. I am satisfied that the Tribunal has jurisdiction to hear and decide the dispute.
Mr Sharma’s entitlement to terminate the contract
- Mr Sharma terminated the contract by notice to TDG dated 14 July 2018. The contract included the General Conditions for QBCC level 2 contracts and the plans, specifications and foundations data. Clause 26 of the General Conditions provides that if a party is in substantial breach of the contract and the other party gives a notice to remedy the breach and such breach is not remedied within 10 business days of the giving of the notice, the party not in breach may give notice terminating the contract. Clause 26.4(d) of the contract provides that a substantial breach by the contractor includes unreasonably failing to perform the work diligently or unreasonably delaying, suspending or failing to maintain reasonable progress.
- The notice to remedy breach is not before the Tribunal. However the notice of termination refers to the ‘final notice’ (presumably a reference to the notice given pursuant to clause 26.1(b) of the contract) as having been given on 26 June 2018. The notice of termination refers to the failure by TDG to ‘complete the work up till now, which is a substantial breach by the contractor.’
- The date for practical completion of the building works was 14 February 2018 being 30 days after the commencement date of 15 January 2018.
- Notwithstanding that the notice given by Mr Sharma pursuant to clause 26.1(b) of the contract is not in evidence, based upon the content of the notice of termination, I find that the notice to remedy breach was given by Mr Sharma to TDG at least ten business days before the notice of termination.
- By June 2018 the completion of the works was four months overdue. There is no evidence that TDG sought an extension of time under the contract or pursuant to the Act. I find that TDG failed to perform the work diligently and failed to maintain reasonable progress with the buildings works. I find that TDG was in substantial breach of the contract entitling Mr Sharma to terminate and that Mr Sharma lawfully terminated the contract.
Consequences of termination - assessment of damages
- Where a building contractor is in breach of contract, the measure of damages recoverable by a building owner as a result of the building contractor’s breach is the difference between the contract price of the work and the cost of making the work conform to the contract. The undertaking of the work required to achieve conformity must be a reasonable course to adopt.
- The damages claimed by Mr Sharma include:
- (a)$35,269.85 to rectify and complete the concrete slab;
- (b)$18,647.45 to rectify and complete the battens and front stairs;
- (c)$8,302.80 to complete the back stairs;
- (d)$14,350.00 to complete the plumbing works;
- (e)$416.00 paid to a plumber to prepare ‘paperwork submission to QBCC’;
- (f)Liquidated damages of $50.00 per day from the agreed completion date;
The scope of works
- I am satisfied that the scope of works under the contract was as follows:
- (a)The construction of two flights of stairs at the front and rear of the premises;
- (b)The construction of a concrete slab to the under storey area including a driveway and cross over;
- (c)The supply and installation of 141.25m2 of treated pine timber battens and the construction of two gates.
- I am satisfied that the parties agreed to vary the scope of works. The agreed variation comprised the completion of plumbing works for an additional amount of $6,050.
- The total contract price, as varied, was $36,960. Mr Sharma has paid $16,285 to TDG. There remains a balance owing under the contract of $20,675.
- Mr Sharma claims an amount of $35,269.85 in respect of the construction of a concrete slab, driveway and cross over. There is before the Tribunal a copy of the contract entered into by Mr Sharma in respect of this work. I am satisfied that Mr Sharma was required to expend this sum to have the concreting works performed. This is the work TDG should have performed and did not complete. I am satisfied that the amount claimed is reasonable and I allow the amount in full.
Battens and front and rear stairs
- Mr Sharma claims an amount of $26,950.25 for the cost of completing the supply and installation of the timber battens, the construction of the stairs and the construction of the gates. The amount claimed comprises the costs paid by Mr Sharma for the completion of the front stairs and supply and installation of battens of $18,647.45 and the costs (yet to be incurred) to construct the rear stairs of $8,302.80.
- In evidence is a copy of a contract entered into by Mr Sharma with MW Construct in relation to the following works: enclose underneath to lockup, build laundry and sheet internal, linen cupboard, handrails and balustrade, two timber drive through gates and one walk through gate, general carpentry and maintenance. The contract price is $19,874.65 inclusive of GST.
- I am unable to reconcile the amount claimed by Mr Sharma said to have been paid to MW Construct and the contract price. The amount paid by Mr Sharma to MW Construct appears to be less than the contract price.
- The contract with TDG identifies the scope of works as being ‘as per quote 1275 in accordance with the plans supplied’. The contract should be given its plain meaning. It is the quote that sets out the scope of works. The contract provides that the works within scope are to be carried out in accordance with the plans.
- There is no reference in quote 1275 supplied by TDG or the contract between Mr Sharma and TDG to the construction of a laundry or linen cupboard. Nor is there any mention of a ‘one walk through gate’. I am not satisfied that these works were within the original scope of works. I therefore make no allowance for rectification or completion costs associated with these works.
- Doing the best I can, and noting that the work actually performed by MW Construct appears to have included works not within the original scope, I allow $15,000 in this regard.
- In evidence is a quote for the rectification and completion of the back stairs. The quote is in the amount of $8,302.80. The amount is reasonable and I allow it in full.
- Mr Sharma claims an amount of $14,766 in respect of plumbing works which were the subject of the agreed variation.
- The agreed variation works included: digging out and connecting sewerage and running all pipes to the downstairs laundry; establishing and connecting stormwater; providing water connection to the property.
- In support of his claim, Mr Sharma relies upon a quote for various plumbing works. I will address each item in the quote:
- (a)Downstairs – supply and install hot and cold water pipework for the proposed bathroom and laundry; supply and install pipework to suit 2 x hose taps (located front and rear of property). I am satisfied that these works are within the agreed variation works.
- (b)Upstairs – supply and install hot and cold water pipe work for proposed kitchen and bathroom; supply and install new elevated drainage to bathroom and kitchen. I am satisfied that the supply and installation of pipe work is within the agreed variation works. I am not satisfied that the ‘elevated drainage’ is within the agreed variation works.
- (c)Supply and install natural gas hot water system; supply and install all valves and lagging to meet plumbing regulations; supply and install new gas pipework throughout the house to proposed cook top and hot water location; connect down pipes to existing storm water and connect existing pipework to street. I am not satisfied that the installation of the hot water system and installation of gas pipework is within the agreed variation works. I am satisfied that the other plumbing work referred to in the quote is within the agreed variation works.
- Doing the best I can, and applying a 20% discount to the amount claimed, I allow $11,480.00 for the completion of the agreed plumbing works.
- Mr Sharma also claims an amount of $416 being the cost he incurred for the certification of the sewerage works. I accept that this is within the scope of the agreed variation works and that the amount claimed is reasonable and I allow the claim in full.
- Mr Sharma claims liquidated damages in the amount of $6,850 calculated at $50 per day for 137 days being from the scheduled date of completion to the date of termination. The period is in fact 150 days.
- By clause 24.1 of the contract, if the contractor failed to achieve practical completion by the date for practical completion, the contractor was required to pay to the owner liquidated damages in the amount of $50 per day.
- A liquidated damages provision in a contract must be a genuine pre-estimate of loss or damage, otherwise it runs the risk of being a penalty. Whether a sum stipulated is a penalty or liquidated damages is a question of construction to be decided upon the terms and the inherent circumstances of the contract, judged at the time of the making of the contract and not at the time of breach.
- In Cedar Meats Pty Ltd v Five Star Lamb Pty Ltd it was held:
The critical question is whether the burden imposed by the clause is ‘extravagant and unconscionable’. The factors to consider include the circumstances of the parties at the date of the contract, their perceptions at that time regarding their respective positions should breach of contact occur at a later and perhaps distant time, and their understanding of the likely imposition generated by the clause.
- In the absence of any evidence to the contrary, I am satisfied that the liquidated damages amount of $50 per day is not a penalty. Mr Sharma claims liquidated damages from the date of practical completion to the date of termination. As I have observed this is a period of 150 days. The total amount of liquidated damages I allow is $7,500.
- I assess Mr Sharma’s entitlement to damages as follows:
Supply and installation of timber batten
and construction of stairs$23,302.80
Total rectification and completion costs $77,968.65
- There will be a final decision for Mr Sharma in the amount of $57,293.65.
- Mr Sharma claims his costs. In proceedings in the Tribunal, other than as provided under the QCAT Act or an enabling Act, each party must bear their own costs. The relevant enabling Act is the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act). By s 77(3)(h) of the QBCC Act, the tribunal may, in exercising its powers to resolve a building dispute, award costs.
- The tribunal may make a costs order in a building dispute that is justified in the circumstances. The discretion to award costs is a broad, general one and must be exercised judicially, not upon irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation.
- Mr Sharma has been successful in these proceedings. He is entitled to recover his costs. I award costs in the amount of $409.40 being the filing fees on the application, company search fees incurred and registered postage costs.
 QBCC Level 2 Renovation, Extension and Repair Contract, dated 12 January 2019.
 Statement of Awadhesh Kumar Sharma, filed 2 March 2019, 1 [f].
 Ibid, 1 [g].
 Ibid, 1 [h].
 Ibid, 2 [i].
 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48(1)(a), s 48(2)(b)(ii).
 Affidavit of service, filed 28 August 2018.
 Although not in evidence, the General Conditions are available on the QBCC website. The General Conditions, like the Schedule which is in evidence, are dated August 2017. I have reference to General Conditions pursuant to s 28(3)(c) of the QCAT Act.
 Queensland Building and Construction Commission Act 1991 (Qld), sch 1B, s 42.
 Mertens v Home Freehold Co  2 KB 526.
 Bellgrove v Eldridge (1954) 90 CLR 613.
 Lester v White  2 NZLR 483.
 Ventura v Svirac  WAR 63.
 Statement of Awadhesh Kumar Sharma, filed 2 March 2019, 3 [k].
 Tax invoice dated 6 July 2018 rendered by TDG
 Statement of Awadhesh Kumar Sharma, filed 2 March 2019, 3 [k].
 QBCC Level 1 Renovation, Extension and Repair Contract, dated 9 October 2018.
 Tax invoice 1205, dated 6 June 2018.
 Quote from SJK Collective, dated 24 October 2018.
 QBCC Level 2 Renovation, Extension and Repair Contract, dated 12 January 2019, Item 10..
 Forestry Commission of NSW v Stefanetto (1976) 133 CLR 507.
 Dunlop Pneumatic Tyre CO Ltd v New Garage and Motor Co Ltd  AC 79.
  VSC 164
 QCAT Act, s 100.
 Lyons v Dreamstarter Pty Ltd  QCATA 142.
- Published Case Name:
Awadhesh Kumar Sharma v The Dirt Guys Pty Ltd
- Shortened Case Name:
Sharma v The Dirt Guys Pty Ltd
 QCAT 279
Senior Member Brown
17 Sep 2019