Rowan v Betnale Pty Ltd[2020] QCAT 400

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   Mr Rowan owned six separate house properties. He engaged the respondent (“Betnale”) to build self-contained units behind each principal dwelling already constructed on each property.
2. [2]
   On 6 February 2018 he entered into separate but identical Master Builders written contracts in respect of the various properties save for technical drawings particular to each lot. The price for each build was the same, $104,750.
3. [3]
   It is not clear when the construction work first started and at which property. Mr Rowan has complaints about four of them. However the most significant complaint concerns a property at Pamela Crescent (‘Pamela Crescent’).
4. [4]
   With respect to Pamela Crescent, it appears construction started there on 27 September 2018. Betnale claims completion occurred on 16 December 2018, which is challenged by Mr Rowan. Mr Rowan points to the final inspection certificate only being issued on 1 May 2020.
5. [5]
   Prior to 1 May 2020 Mr Rowan commenced proceedings in the Tribunal by way of domestic building dispute filed on 24 January 2020. In his claim he sought rectification of defective work at four properties to a value of $5,533.05, an award of damages of $150 and a claim for $18,250 liquidated damages in respect of Pamela Crescent.
6. [6]
   Betnale has filed a response and counterclaim denying defective or incomplete work and denying Mr Rowan’s claim for liquidated damages. Betnale maintains it achieved practical completion in accordance with the contract. Betnale counterclaims $12,000 for the cost of additional foundation work inadvertently omitted from its progress claims to date, together with a claim for $1,600 for site cleaning at Pamela Crescent and $902 for a BAL report (Bushfire Attack Level Assessment).

Mr Rowan’s claim

7. [7]
   As stated, Mr Rowan claims $5,533.05 for the cost of rectifying defective work, $18,250 liquidated damages and general damages of $150.

Defective building work

8. [8]
   Mr Rowan offers no evidence in support of his claim for the costs to rectify alleged defective building work across four properties.
9. [9]
   In respect of Pamela Crescent he claims that the water meter has been incorrectly located, a garden tap has not been provided, the services access entrance misplaced, rubbish and debris not removed, non-compliant step treads, exposed supply pipes, screens not bushfire resistant and a defective access door.
10. [10]
    He makes similar claims, though more limited, in respect of the other three properties.
11. [11]
    A number of the complaints concerning Pamela Crescent, namely non-compliant treads, exposed supply pipes and bushfire resistant screens have already been addressed by Betnale after commencement of these proceedings but before hearing.
12. [12]
    He offers no expert evidence in support of his claims that work was defective or incomplete nor provides any evidence of the reasonable cost to complete or rectify the work, save for one report concerning repair of a TV antenna system at one of the other properties, Joyal Street, and a plumber’s invoices for the cost of moving and reinstalling mains water meters at all four properties totalling $1,230.35.
13. [13]
    With respect to the claim for payment of the plumbing costs for removal of the water meters there is a letter in evidence from Mr Rowan’s solicitors to Betnale dated 10 June 2019 where those solicitors refer to an agreement made after the contract was signed that Betnale would consult with Mr Rowan about placement of garden taps and water meters. It seems there is nothing but a suggested obligation to consult between the parties that Mr Rowan relies on to make his claim.
14. [14]
    Mr Bray for Betnale gave evidence that Mr Rowan asked about changing the siting of water meters, the position of access doors and the provision of extra power points, but only post-contract and after what he claims was practical completion reached and handover of the units.^[1] He said those works were quoted on but rejected by Mr Rowan. Mr Rowan then engaged third parties to perform the work.
15. [15]
    It appears the contracts did not specify a particular position to place garden taps or water meters. Insofar as Mr Rowan complains about the positioning of access service doors beneath the units, Mr Bray gave evidence that all access service doors were located in accordance with the construction drawings. Mr Rowan did not challenge those claims at hearing. Accordingly I accept the service doors were located as required pursuant to the construction drawings.
16. [16]
    In respect of the garden taps and water meters, Mr Rowan fails to identify any contractual or tortious basis upon which Betnale was required to site the subject items in accordance with a particular plan or instruction and accordingly Mr Rowan’s claims for the costs he incurred re-siting water meters or moving taps cannot succeed.
17. [17]
    In respect of rectification and completion of other items of claimed defective or incomplete work, most have been rectified by the builder prior to hearing and they do not call for any further award.
18. [18]
    With respect to the claim for repair of a television antenna at Joyal Street, at hearing Mr Bray conceded this item of claim. The amount of the invoice from the repairer is for $250. That sum is allowed Mr Rowan. I allow no other claims for rectification or completion.

Liquidated damages claim

19. [19]
    Mr Rowan’s most significant claim is for liquidated damages for late completion of the Pamela Crescent build.
20. [20]
    Under the contract for Pamela Crescent, the construction period was 60 working days and an additional 24 non-working days.
21. [21]
    The statements of evidence filed by the parties lack any form of chronology, however in a statement of evidence by Mr Bray^[2] he says construction of Pamela Crescent started on 27 September 2018 and it completed on 16 December 2018. He supports that claim to commencement with an invoice for stump hole siteworks from No Spark Electrical Pty Ltd. By clause 8.2 of the general conditions of contract Betnale was obliged to give a commencement notice within 10 days of starting work. There is no reference to that notice being given, however I shall proceed on the basis that construction started on 27 September 2018 given Mr Rowan takes no issue with that assertion.
22. [22]
    In Betnale’s response it claims:

all contract works completed, practicle (sic) completion, keys handed to Peter and tenants installed within agreed timeframe. All defect (sic) works completed. Out of contract works requested by Peter and refused.^[3]

23. [23]
    In a statement of evidence by Mr Bray he states:

1. 2.
    Electrical upgrade on existing house, power connection and separate for new unit was organised by Peter Rowan and connected on 18.2.19, email attached.

1. 3.
    Practicle (sic) completion was reached in mid-December, keys supplied to Peter Rowan for estate agent to take photos and lease unit, which was not possible until power connection.

1. 4.
    Unit was tenanted as evidenced by attached email from Peter Rowan advising same.

1. 5.
    Practical completion was reached inside contracted times.^[4]

24. [24]
    The emails concerning a tenant at Pamela Crescent referred to are from Mr Rowan and estate agents dated from 4 June 2019 mentioning a tenant being in place at the property. There is no specific reference to Pamela Crescent, however the assertion that the emails referred to Pamela Crescent was not challenged by Mr Rowan and I accept that at least from 4 June 2019 Pamela Crescent was tenanted.
25. [25]
    Emails also make clear however that handover of Pamela Crescent did not occur on 16 December 2018 as claimed by Mr Bray.
26. [26]
    There is also an email from Betnale to Mr Rowan on 25 January 2019^[5] forwarding an invoice bearing the notation “please note final invoice is emailed in advance so payment arrangements can be made prior to handover of unit”.
27. [27]
    Then there is an email from Mr Bullock acting on behalf of Betnale dated 26 April 2019 to Mr Rowan, in which he notes that the keys to Pamela Crescent had still been handed over because payment of final invoices had not cleared.^[6] It is unclear whether this email referred to Pamela Crescent or other properties and there is no mention of the amount or amounts concerned.
28. [28]
    The issue to be determined is the date of practical completion under the contract. Where practical completion is delayed the builder is required to pay liquidated damages for each day until practical completion is achieved.
29. [29]
    Betnale claims practical completion occurred on 16 December 2018. That is the date of an invoice from Hammer and Chisel Carpentry charging the respondent for work described as “Fit off at Woodridge, Loganlea and Beenleigh”. The amount of the invoice is $1,155.^[7] Presumably the reference to Woodridge is a reference to Pamela Crescent.
30. [30]
    At hearing Mr Rowan tendered copies of the four Master Builders Level 2 Residential Building Contracts signed by the parties. The contracts included not only the completed schedule to the contracts but the general conditions of contract.
31. [31]
    The general conditions are important. Item 18 of the schedule to the contract provides for a liquidated damages rate of $50 per day to apply for late completion. Clause 18.1 of the general conditions provides that if the contractor fails to bring the works to practical completion by the date for practical completion, the owner may, on practical completion and within 28 days, give to the contractor a written claim for liquidated damages at the rate stated in item 18 of the schedule for each day after the date for practical completion until the date of practical completion, or the day on which the contract is terminated, whichever is earlier.
32. [32]
    Practical completion is defined in clause 1 of the general conditions as meaning:

that stage of the works when:

• the works are completed in compliance with this contract, including all plans and specifications, and all statutory requirements applying to the works, without any defects or omissions other than minor defects or minor omissions that will not unreasonably affect occupation; and
• if the owner claims there are minor defects or minor omissions, the contractor gives the owner a defects document for the minor defects or minor omissions;

33. [33]
    By clause 17, not less than five days before the day on which the builder anticipates achieving practical completion the builder is required to give the owner written notice of the anticipated date of practical completion and notice of a time of final inspection to be conducted with the owner.
34. [34]
    By clause 17.5, at the final inspection, if the owner claims there are minor defects or omissions from the work then the builder must give the owner a defects document listing the minor defects or omissions and amongst other things stating when the minor omissions and defects are to be remedied. The defects document must be signed by the builder.
35. [35]
    By clause 17.6 the builder is to remedy the minor omissions and defects in the time stated in the defects list notice.
36. [36]
    On full payment of the contract price the builder is required to hand over the keys of the property to the owner.
37. [37]
    As stated, I accept that the Pamela Crescent works commenced on 27 September 2018. Mr Rowan does not offer a different date. Completion was therefore due 84 days later on 19 December 2018.
38. [38]
    Under the general conditions, the course to achieve practical completion was set out in clause 17. There is no evidence that any of the required notices under clause 17 leading to practical completion were in fact given to Mr Rowan. There is vague mention of a walk through having occurred in an email from Mr Bullock to a solicitor Betnale considered engaging at one stage, but it is absent any meaningful particulars.^[8]
39. [39]
    Certainly, part of the obligations placed upon the builder to achieve practical completion was compliance with the statutory requirements applying to the works. A statutory requirement was to obtain all necessary certificates including a final inspection certificate in Form 21. That Form 21 was not issued by the certifier until 1 May 2020 after these proceedings were commenced.
40. [40]
    The keys were handed over well before that, because I accept the unit was occupied by a tenant from at least 4 June 2019. However simple provision of keys by agreement between builder and owner does not equate with or move forward practical completion by some form of default. At least not under the subject Master Builders contract.
41. [41]
    Certainly clause 17.10 provides that if the owner takes possession of the works when not entitled, then the works are deemed to have reached practical completion without defects or omissions. However by clause 11.7 the owner is obliged to pay a progress claim, which includes a claim for practical completion, within the period set by clause 20 of the schedule to the contract, which here was within five days of claim. Once paid however, then by clause 17.8 there is also a requirement that the builder hand over keys on full payment of the contract price. That is the situation that appears to have occurred here.
42. [42]
    Neither handing over possession nor payment of the full contract price necessarily equates with practical completion.
43. [43]
    I conclude the date of practical completion did not occur as claimed by Betnale in December 2018.
44. [44]
    Mr Rowan instituted proceedings on 24 January 2020. Practical completion had not occurred by that date because the final approval had still not been obtained by Betnale.
45. [45]
    In the email of 26 April 2019 abovementioned Mr Bullock advised a further one day access would be required at Pamela Crescent to fix “the bottom few base boards” required to be changed to hardwood to satisfy the certifier’s fire standard requirements.
46. [46]
    On 22 June 2019 Mr Rowan wrote to Betnale and noted final certificates had not been issued for any of the properties including Pamela Crescent. Mr Rowan asked for the final certificates.
47. [47]
    Mr Rowan himself followed the matter up with the certifier, who advised him on 28 November 2019 that there were six matters to be remedied before he would issue a final certificate, including provision of a final plumbing certificate.
48. [48]
    As at 14 January 2020 the certifier advised there still remained four matters outstanding, including the final plumbing certificate, which precluded issue of the final inspection certificate.
49. [49]
    Without a final inspection certificate the construction was not complete. It is consequent on and evidences a successful final mandatory inspection required under the legislation.^[9] In addition the building approval usually requires issue of a final certificate as a condition of approval. The absence of a final inspection certificate often times proves a major obstacle for owners who subsequently wish to sell. Its absence may significantly reduce both the attractiveness of the property as a commercial proposition and reduce the value of the premises. Lenders may refuse to lend in its absence. There may be problems with the insurance of the property.
50. [50]
    The final building certificate was still outstanding when Mr Rowan commenced proceedings in the Tribunal on 24 January 2020.
51. [51]
    More than a year had passed since practical completion should have been achieved and it was still outstanding as at 24 January 2020. That was more than a reasonable time to achieve practical completion and the ongoing failure to do that entitled Mr Rowan to accept the builder’s repudiation of its obligations under the contract and terminate the contract because of the builder’s breach.
52. [52]
    Mr Rowan evidenced that election by commencing proceedings.^[10] The orders sought in his application to the Tribunal support that conclusion.^[11]
53. [53]
    He had available to him both contractual and common law rights of termination and has pursued the latter. That meant he did not have to give any notice of intention to terminate that would otherwise have been required to be given under clause 21 had he relied on his contractual rights of termination.
54. [54]
    The availability of common law remedies for breach as an alternative to contractual remedies is made clear by clause 21.2.
55. [55]
    Given he was entitled to rely on a common law right to terminate he was not obliged to give the notice of claim of liquidated damages referred to in clause 18. He was entitled to damages, in this case agreed liquidated damages, which arose and accrued from the time of agreed completion to the time of termination.
56. [56]
    Mr Rowan is accordingly entitled to liquidated damages at the agreed rate of $50 per day from 19 December 2018 to 24 January 2020. That is more than a year, however he has limited his claim to 365 days. It is not clear whether that is a mathematical error or an intended reduction and abandonment of the excess. In the circumstances I shall allow his claim as made, that is for 365 days at $50 per day, which totals $18,250.

General damages

57. [57]
    Mr Rowan claims general damages of $150 for his time and effort expended in ensuring certification of Pamela Crescent. I do not allow that claim. The claim is entirely vague and there is no evidence to either particularise it or show how it was a reasonably foreseeable loss that would arise if Betnale breached the contract.

Betnale’s counter application

Provisional sum claim

58. [58]
    Betnale has made a counter application seeking recovery of four amounts of $3,000 each in respect of provisional sums claimed owing but omitted from final invoices. This is said to be for additional foundation work necessary at four of the properties where the units were built for Mr Rowan. One of the properties is Pamela Crescent.
59. [59]
    In the Appendix to the contract schedule at Part B entitled Allowances for Provisional Sums, there is a provisional sum provided for “Foundations in excess of 1200 mm”. Opposite that item under a column entitled “Total allowance for the provisional sum” there is noted an amount of $3,000.
60. [60]
    Betnale claims $12,000 for four properties because the foundations exceeded 1200 mm.
61. [61]
    Clause 9.5 of the general conditions provides that if the actual cost of a provisional sum exceeds the total amount allowed for that item or work in Part B of the Appendix then the excess amount plus the applicable contractor’s margin stated in Part B of the Appendix is to be added to the contract price.
62. [62]
    No specific provision is made for a builder’s margin in Part B of the Appendix and the Appendix therefore provides that in that case a margin of 20% should apply.
63. [63]
    Betnale offers no evidence about the actual cost of digging deeper than 1200 mm however. Instead Betnale seems to believe that after a depth of 1200 mm is attained Betnale becomes entitled to charge an extra $3,000. I do not agree. What Betnale is entitled to is the actual cost to the builder in digging foundations exceeding 1200 mm up to a maximum amount of $3,000.
64. [64]
    “Provisional sum” is defined in the general conditions as “… an estimate of the cost of carrying out particular work … under this contract for which the contractor, after having made all reasonable enquiries, could not state a definite amount at the time of the formation of this contract.”^[12]
65. [65]
    Provisional sums are not intended to be anything other than a right to recover for payments out by the builder which are unknown at the time of contract and therefore cannot be entirely allowed for and included in the cost of the work at the time of contracting.
66. [66]
    As stated by the learned authors of Brooking on Building Contracts:^[13]

…p.c. amounts, which are only estimates made for the purpose of convenience, are inherently subject to adjustment when the true cost, over which the builder has no more control than he had over estimated cost, emerges in due course.^[14]

67. [67]
    The requirement of true cost being established and the contract amount changing in result is recorded in clause 9.5 set out above.
68. [68]
    In Appendix B, I conclude that what was intended was that the cost of digging to 1200 mm was an included cost covered by the overall price of the contract. Where that depth was exceeded however, the additional cost, if any, would be recovered from the owner and added to the contract price. There does not seem to be a provision in the general conditions stating when the extra cost would be charged.
69. [69]
    Here there is no evidence from Betnale as to what extra amounts, if any, were paid out for excavation of foundations deeper than 1200 mm.
70. [70]
    Indeed Betnale sought advice from solicitors about the matter. Those solicitors asked Betnale for details of how the claim for $3,000 for foundations was made up. They asked for a detailed breakdown of costs including all supporting invoices. Betnale did not provide supporting invoices but instead, apparently, judging from an email response exhibited to the Response and Counter Application, referenced in vague general terms pro rata charges generally made for concrete and machine hire and such things, but without anything specific in respect of any of the four properties the subject of counter application here. There was no mention of any invoices being available to support the claims.
71. [71]
    I am not satisfied that there was any excessive foundation work exceeding 1200 mm in respect of any of the works done for Mr Rowan. Certainly there is no evidence of costs charged to the builder for any such additional work. That is necessary for  any such claim to succeed. Accordingly I do not allow the claim for provisional sums.

Site cleaning

72. [72]
    Betnale also claims $1,600 for site cleaning at Pamela Crescent. There is a similar problem with this claim as with the claim for provisional sums. There is no supporting evidence to show that extra cost was incurred.

73. [73]
    But in any case, if there was extra work required on the Pamela Crescent job, a variation was necessary. There is no evidence of a variation having been sought or agreed. There are strict requirements for variations, the least of which is that variations be evidenced in writing.
74. [74]
    The claim for $1,600 for additional cleaning is refused.

BAL report cost

75. [75]
    Finally Betnale claims $902 for the cost of obtaining a BAL report (Bushfire Attack Level Assessment).
76. [76]
    This arose consequent on a dispute between the builder and the certifier. Betnale claims the report showed Betnale was correct in a dispute about what outstanding fire precautions were necessary for the Form 21. That may be so although there is no evidence to support that contention.
77. [77]
    Significantly however there is no invoice to Betnale from the person giving the report. The invoice has been sought by Mr Rowan but never provided to him by Betnale. In those circumstances, where an invoice has been asked for but not produced, I am not prepared to allow the claim.
78. [78]
    I also note however, that the fire safety issues the subject of the BAL report concerned matters of issue between the builder and the certifier, not the builder and Mr Rowan or the certifier and Mr Rowan. Mr Rowan’s obligations were limited by the contract. Any variation of those obligations needed formal variation as provided by either the contract or the legislative provisions, which formal variation is lacking with respect to this claim.

Conclusion

79. [79]
    Mr Rowan is entitled to liquidated damages from Betnale in the sum of $18,250 plus $250 for the repair of the television antenna making a total of $18,500. Betnale’s counter application fails.