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Jones v McDonald & Anor Pty Ltd[2022] QCAT 219

Jones v McDonald & Anor Pty Ltd[2022] QCAT 219

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Jones v McDonald & Anor Pty Ltd [2022] QCAT 219

PARTIES:

GRAEME JONES

(applicant)

V

joel mCdonald

(respondent)

APPLICATION NO/S:

BDL158-20

MATTER TYPE:

Building matters

DELIVERED ON:

14 June 2022

HEARD AT:

Brisbane

DECISION OF:

Member Lember

ORDERS:

  1. The respondent’s name is amended to “Joel McDonald”.
  2. Within 28 days of the date of this order Joel McDonald must pay Graeme Jones the sum of $16,667.77.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – GENERALLY – where contract for a water feature – where builder sought variation for tiling costs – where applicant terminated contract – where works completed by a third party – whether applicant is entitled to payment of costs to complete building contract over the contract value – whether director of building company has personal liability to applicant

Queensland Building and Construction Commission Act 1991 (Qld), s 42, s 77, Schedule 1B, Schedule 2

Queensland Building and Construction Commission Regulation 2018 (Qld), s 54

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3

Braund v Sandrey and Marant Holdings Pty Ltd t/as SMS Projects [2021] QCAT 440

Robinson v Harman (1848) 1 Ex 850

Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228

APPEARANCES &

REPRESENTATION:

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

What is this application about?

  1. [1]
    The applicant homeowner, Mr Jones, engaged the respondent builder, Mr McDonald to convert an existing pond to a “high end” water feature under the terms of a Queensland Building and Construction Commission (“QBCC”) Level 2 Renovation, Extension and Repair contract dated 24 September 2019 (the “contract”). 
  2. [2]
    According to the contract, the anticipated completion date for the works was 6 December 2019.  However, by that date, the works were far from complete, the parties were in dispute over a variation relating to tiles and Mr Jones says the to-date works were defective.
  3. [3]
    Accordingly, Mr Jones:
    1. (a)
      issued a breach notice on 3 December 2019;
    2. (b)
      terminated the contract for failure to remedy the breach notice on 18 December 2019; and
    3. (c)
      engaged another contractor to complete the works, which were done by 2 July 2020.
  4. [4]
    By an application for a domestic building dispute filed 3 July 2020, Mr Jones sought orders that the respondent pay him $16,320.97 being his costs incurred to rectify defective building work and to complete the building work over and above the original contract price, together with $345.80 being his filing fee paid on the application.
  5. [5]
    Mr McDonald filed a response on 3 August 2020 seeking dismissal of the claim on the grounds that the contract was wrongfully terminated, that he was refused entry to the site to complete works and that Mr Jones’ subsequent building costs incurred were “self-inflicted” due to Mr Jones unreasonably refusing to work with Mr McDonald, and by attempting to change the scope of the works.
  6. [6]
    Mr McDonald did not otherwise engage in proceedings and contravened various tribunal directions to participate in a conciliation conference and to file and serve documents.
  7. [7]
    The tribunal directed that Mr Jones’ application would be decided on the papers and that decision, and the reasons for it, follow.[1] 

Identifying the correct respondent(s)

  1. [8]
    At all material times, Mr McDonald was a director and shareholder of Watmac Pty Ltd, a company formed on 12 June 2019.[2]
  2. [9]
    It is unclear whether Mr McDonald intentionally entered into the contract in his personal capacity, or whether he intended to do so on behalf of his company, and whether Mr Jones believed he was contracting with Mr McDonald or with Watmac Pty Ltd or both. The confusion arises because:
    1. (a)
      A quote for the works dated 15 July 2019 was given to Mr Jones on letterhead that identified the quoting party as “Watmac Construction and Landscapes” and provided a contact email address at a Watmac domain account and with a signature block for “Joel McDonald, Director”.
    2. (b)
      The “Contractor” identified in the contract is “Joel McDonald” holding ‘Licence number 838067” and bearing “ABN 554 454 374”.  The latter can only have been a fabrication – it does not have sufficient digits to comprise an ABN, nor is it a valid ACN.
    3. (c)
      QBCC licence number 838067 is held by Mr McDonald personally. Watmac Pty Ltd was never licensed.
    4. (d)
      The contract is signed by Mr McDonald with no designation that he was doing so as director.
    5. (e)
      Mr Jones says he made payments to Watmac Pty Ltd at the direction of McDonald but his outgoing banking records only establish that payments were made, not who they were made to.
    6. (f)
      There is no evidence that the parties ever discussed or agreed to amend the contract to identify Watmac Pty Ltd as a contracting party.
    7. (g)
      Prior to 3 December 2019, Mr McDonald communicated with Mr Jones via a Gmail account, but thereafter from a Watmac account.
    8. (h)
      Mr Jones and “Watmac Pty Ltd” were the parties identified as participating in dispute resolution with the QBCC.
    9. (i)
      The application was brought in the tribunal against “Joel McDonald trading as Watmac Pty Ltd”.
    10. (j)
      The application was served upon the registered office of the company, which is the home address of Mr McDonald’s co-director and shareholder, Mr Watson.
    11. (k)
      Mr McDonald clearly received the application because he filed a response in which he purported in Part B to update the respondent’s details to “Name: Joel McDonald”.
    12. (l)
      Nonetheless, Mr McDonald referenced throughout the response “this claim against the company”.
    13. (m)
      Mr Jones’ submissions seek orders against both Mr McDonald and Watmac Pty Ltd and describe Watmac Pty Ltd as the building contractor and Mr McDonald as the person with whom Mr Jones dealt.
  3. [10]
    Pursuant to section 42(1) of the Queensland Building and Construction Commission Act 1991 (Qld) (“QBCC Act”) Act, a person can only carry out or undertake to carry out building work if the person is appropriately licensed. Breaching section 42(1) is a pecuniary penalty offence and under section 42(3), a person who carries out unlawful/unlicensed building work is not entitled to any payment for doing so, other than for out-of-pocket costs for materials and labour (excluding the builder’s own labour) for carrying out the building work.[3]  
  4. [11]
    In Yongwoo Park v Betaland Pty Ltd[4] the builder performed unlicensed and defective building work. They had been paid $6,000 of a $12,000 price when the contract was terminated the contract for both the defective work and the failure to hold a licence.  It was held that while Betaland was unable to enforce the building contract, section 42 did not operate to deny the applicant the right to enforce it against Betaland. As Betaland had failed to make out a claim for reasonable remuneration, it was required to refund to Park the initial $6,000.00 payment, as well as damages to cover the costs to rectify Betaland’s defective building work in the sum of $17,000.00.
  5. [12]
    Given the consequences of unlicensed building work, and that Watmac Pty Ltd did not hold a licence, on balance, I find that Mr McDonald was the direct contracting party in his individual capacity, and that he did so intentionally, with the knowledge that his then newly-formed company did not hold the requisite licence (or any license in fact) that would permit it to contract to perform the building works.
  6. [13]
    The recording of his name as a contractor and his use of a false ABN when the company at the time held an ACN that could have been used, as well as the lack of designation against his signature convince me of this. 
  7. [14]
    I have considered whether Mr McDonald was acting an agent for Watmac Pty Ltd in his dealings with Mr Jones. An agency exists where one person is accepted by the law to represent another, the principal, in such a way as to be able to affect the principal’s legal position with respect to others.
  8. [15]
    In true agency, the principal gives authority to the agent to bind the principal in transactions with others, which can be implied from the conduct of the principal and the agent making it reasonable to infer that authority has been given.  
  9. [16]
    Generally, only the principal will be liable on contracts made through agents, but if the agent fails to disclose either the existence or the name of the principal then the agent may be personally liable on the contract as a direct contracting party.
  10. [17]
    Ostensible authority operates to prevent a party from reneging on an agreement instituted by someone who appeared to have authority to act for them, where it would be unconscionable to a third party to do so.
  11. [18]
    In this case the use of Watmac Pty Ltd letterhead to provide the quote, use of their domains to communicate and Mr McDonald’s designation as a director of the company would strongly imply that he had authority to bind the company in dealings with Mr Jones. A reasonable person receiving the quote and dealing with Mr McDonald would believe they were dealing with Watmac Pty Ltd in those circumstances.  Mr Jones certainly seems to have believed that he engaged Watmac Pty Ltd rather than Mr McDonald personally to undertake the work because his claim against Mr McDonald seeks to impose accessorial liability upon Mr McDonald rather suggest that he was the principal contractor. 
  12. [19]
    Whilst I would be prepared to find that Mr McDonald had ostensible authority to bind Watmac Pty Ltd in dealings with Mr Jones and that Watmac Pty Ltd is liable to Mr Jones on that basis, Watmac Pty Ltd is not a party to these proceedings.  It was not named or joined as a responding party to proceedings separate to Mr McDonald. The designation in the application to Mr McDonald “trading as Watmac Pty Ltd” would apply to business names only (which do not exist as a separate entity to sue and be sued), not to companies (which do).  Mr Jones was given an opportunity to explain the parties he was seeking orders against and he did not, having been asked to turn his mind to that issue, take any steps to join Watmac Pty Ltd or to amend his application to include two separately identified and served respondents.
  13. [20]
    I decline to make orders against Watmac Pty Ltd on that basis and I correct the name of the respondent to “Joel McDonald” as the direct contracting party.  

Does the tribunal have jurisdiction to hear the application against Mr McDonald?

  1. [21]
    Section 77 of the QBCC Act confers jurisdiction on the tribunal to hear building disputes.  It is clear from the material filed, that the water feature work is domestic building work, and that the claims relate to a contract for the performance of ‘reviewable domestic work’ within the tribunal’s “building dispute” jurisdiction.[5] 
  2. [22]
    Section 77(2) qualifies our jurisdiction by first requiring an applicant to comply “with a process established by the commission to attempt to resolve the dispute”. 
  3. [23]
    Compliance with section 77(2) purports to be evidenced by a letter from the QBCC dated 16 December 2019 confirming that the QBCC’s involvement in the matter had ended.  However, the parties to the dispute are named as Mr Jones and “Watmac Pty Ltd”.  There is no reference to Mr McDonald or any dispute or contract with him in the letter.
  4. [24]
    Nonetheless I am satisfied that there has been compliance with QBCC processes for resolution of “the dispute”, namely the dispute arising from the building works undertaken at Mr Jones’ home by Mr McDonald or at his direction, whether via the “Watmac Pty Ltd” vehicle or otherwise.  Mr Jones’ dispute with “Watmac Pty Ltd” and Mr McDonald arose from the same set of circumstances, the same works and the same contract. Mr Jones had not contact with “Watmac Pty Ltd” other than via Mr McDonald.
  5. [25]
    The tribunal’s objects require it to deal with matters in a way that is quick, accessible, fair, just, economical, and informal,[6] and I am not satisfied that a finding that section 77(2) was not met in the current circumstances would be consistent with those objectives.

Mr Jones’s case

Pre-contract discussions

  1. [26]
    Mr Jones said that, after Mr McDonald was recommended to him in May 2019, he met with Mr McDonald at his property to explain the brief, which was essentially to replicate a water feature that exists at the Canberra Airport (that he produced photographs of) and in Dubai (that he produced video of).  
  2. [27]
    Mr Jones says that Mr McDonald confirmed that he and his team could design and build the water feature, would produce a design concept, and said that his in-house team could do the tiling.
  3. [28]
    Mr Jones also says that he made it clear to Mr McDonald that it was important that the flow of water over the top of the water feature into the surrounding troughs would be a constant low-volume flow to minimise any turbidity, and that Mr McDonald confirmed “the water reticulation and layout…will be designed and constructed on site. We will carry out flow and pressure tests on site to determine what is the best ways to get even coverage on the water feature”.
  4. [29]
    A quote dated 15 July 2019 estimated the cost of the works at $57,444.75. A graphic design and a sketch design were also given to Mr Jones by Mr McDonald.   The quote allowed for tiling at $68m2, with the owner to supply tiles. No mention is made in the quote of the size of tile to be laid.
  5. [30]
    By an email to Mr McDonald on 23 July 2019, Mr Jones informed Mr McDonald of his tile selection of tiles sized 300mm x 600mm.  He also discussed increasing the scope of the work to include retiling all external tiled areas of the home as well as tiling the coping of the pool.
  6. [31]
    By September 2019, Mr Jones had to select alternate floor tiles as the tiles he had originally selected were not going to be available until the following year. Tiles in a 1200 x 600mm size were chosen and purchased. 
  7. [32]
    Mr Jones said he informed Mr McDonald that he had selected tiles measuring 1200mm x 600mm from Three Red Balls and that Mr McDonald was shown a photograph of the selected tile prior to the signing of the contract on 24 September 2019.

The contract

  1. [33]
    The contact provided as follows: 
    1. (a)
      The works were described in Schedule Item 3 as “As per attached scope and quote”;
    2. (b)
      The scope document set out a reasonably detailed schedule of works that included the pool coping design and the water feature design as well as a photograph of the reference design from the Canberra Airport that the Mr Jones wished to emulate and included the following details:

tiling to top of spa, entryway, existing paths and front balcony, mitre joints to grey tiles, sika and silicon around all edges

tiling – water feature with mitre finish to grey tiles, but joints with bullnose finish to black tiles

tiling of patio areas, upstairs balconies and pool area including coping to pool edges (as illustrated) sika and silicon around all edges, replace upstairs glass fence

water reticulation and layout, to be designed and constructed on site. Flow and pressure tests to be undertaken on site to determine even coverage of water flow over the whole water feature.

Supply and install 1* Pentair EVMX1500 pump

  1. (c)
    The construction period, including delay days, was thirty-seven days, with the date for practical completion 6 December 2019.
  2. (d)
    The fixed price component of the contract was $57,444.75 to be paid in the following initial stages:
    1. Site establishment and demolition $2,872.20
    2. Besser blocks on site $2,872.20
    3. Block work complete $2,872.20
    4. Concrete works complete $11,488.80.
  1. [34]
    The general conditions to the contract relevantly included:
    1. (a)
      In clause 3.1 that the builder warrants (as under Schedule 1B of QBCC Act) that:
      1. the work will be carried out in an appropriate and skilful way and with reasonable care and skill and reasonable diligence;
      2. all materials supplied will be good and suitable for the purpose for which they are used;
      3. the work will be carried out in accordance with all relevant laws and legal requirements including, for example, the Building Act 1975 (Qld);
      4. the work will be carried out in accordance with the plans and specifications; and
      5. any estimate of provisional sums or prime cost items have been calculated with reasonable care and skill, having regard to all the information reasonably available when the contract is entered into (including information about the nature and location of the building Site).
    2. (b)
      In clauses 4.8 and 4.9 (read together) that, if the cost of a provisional sum item is more than the estimate, the owner must pay the increase plus the builder’s margin, and if less the builder must deduct the difference, plus the margin, from the contract price. However, in clause 4.3 that a provisional sum is to be included in the contract it must be shown adjacent to the words “provisional sums” in Schedule Item 1 to the contract. No such words were shown in Schedule Item 1 although the attached scope referenced provisional allowances for trees and lighting.
    3. (c)
      In clause 12 that the builder must, at its cost, effect and maintain:
      1. all insurance required to comply with the Workers’ Compensation and Rehabilitation Act 2003 (Qld);
      2. Queensland Home Warranty Scheme cover; and
      3. contract works insurance; and
      4. public liability insurance.
    4. (d)
      In clause 14 that the builder is responsible for the care of the work from the date on which work commences until the builder hand over the works on the date of practical completion.
    5. (e)
      In clause 14.2 that the builder must promptly make good any loss or damage to the work, or to the owner’s property, occasioned by any act, neglect or default of the builder (or its employees, agents or subcontractors) and must also make good any such loss or damage which is, or which ought to have been the subject of any insurance required by the contract.
    6. (f)
      In clause 21.7 that if the builder requests a variation they are only entitled to additional payment:
      1. if the variation is necessary because it could not have been reasonably foreseen when the contract was entered into; or
      2. if the variation could have been reasonably foreseen, if the variation was necessary because of circumstances beyond the reasonable control of the contractor when the Contract was entered into.
    7. (g)
      In clause 26.1 that if a party is in substantial breach of the contract and the other party gives it a notice identifying and describing the breach and stating the intention of the party giving notice to terminate if the breach is not remedied within ten business days from the giving of the notice, and the breach is not remedied, then the party giving that notice may terminate the contract and recover from the party in breach all damages, loss, cost or expense occasioned to the party so terminating by or in connection with the breach or that termination and may set off such claim against payment otherwise due by the party so terminating.
    8. (h)
      In clause 26.4, substantial breach by the builder included (without limitation): 
      1. unreasonably failing to replace or remedy defective work or materials;
      2. unreasonably failing to perform the work diligently or unreasonably delaying, suspending, or failing to maintain reasonable progress; and
      3. failing to effect or maintain any insurance required by the contract.

Termination of the contract

  1. [35]
    Works commenced on 11 November 2019.  Mr Jones says that on that date Mr McDonald unpacked the tiles purchased by Mr Jones and made no comment about their size.
  2. [36]
    Progress was slow and Mr Jones had concerns about the workplace habits of Mr McDonald, including that he wore thongs instead of protective boots, no respiratory masks when cutting concrete and didn’t undertake any site clean-up.
  3. [37]
    Nonetheless, Mr Jones paid Mr McDonald an initial materials payment of $5,700 and the first progress payment of $10,000.
  4. [38]
    On 2 December 2019 the parties fell into dispute.  Mr McDonald did not have an in-house tiler and could only find a tiler to lay tiles at 250m2 instead of the 68m2 allowed in the original quote.  He sought a variation, the cost of which at $66,430 exceeded the entire contract price, and stopped work when Mr Jones refused to agree to the variation.
  5. [39]
    Mr Jones emailed a dispute notice on 3 December 2019 point out that (among other things):
    1. (a)
      progress was well behind, given the estimated completion date of 6 December 2019;
    2. (b)
      the work that had been performed was defective and of an unacceptable standard;
    3. (c)
      the builder had engaged sub-contractors contrary to pre-contractual promises that his in-house team could undertake the work, which lead to delays, and the request for a price variation;
    4. (d)
      the builder had wrongfully threatened to stop work; and
    5. (e)
      the builder had not tendered evidence of insurance. 
  6. [40]
    Mr Jones required Mr McDonald to produce evidence of insurances and to recommence and complete the remaining works within ten business days to an acceptable standard. 
  7. [41]
    Shane Sharpin from Inspect Your Home undertook an inspection of the “water feature under construction” on 16 December 2019 and produced a report with his findings on the same date.[7]
  8. [42]
    Among other things the report made the following findings:
    1. (a)
      In Section A – Summary:
      1. that evidence of serious safety hazards was not observed, but evidence of major and minor defects was observed; and
      2. that due to the level of accessibility for inspection including the presence of obstructions, the overall degree of risk of undetected defects including structural damage and conditions conducive to structural damage was high.
    2. (b)
      In Section B – General:
      1. that the overall standard of construction was observed as “extremely poor” and the overall quality of workmanship and materials was also “extremely poor”; and
      2. the water feature was observed as “not completed” which was defined to mean “where the original construction will and any alterations or additions to the building are not complete in the work synonymous with the construction (but does not include building services)”.
    3. (c)
      In Section C – Accessibility that the concrete block work and pipes were obstructions that may conceal defects, and pipe work was not inspected because it was inaccessible.
    4. (d)
      In Section E – Conclusion:
      1. that the incidence of major defects in the property in comparison to the average condition of similar buildings of approximately the same age that have been reasonably well maintained was above average;
      2. that the incidence of minor defects in the property in comparison to the average condition of similar buildings of approximately the same age that have been reasonably well maintained was above average; and
      3. following the inspection of accessible work, that the overall condition of the building relative to the average condition of similar buildings of approximately the same age that have been reasonably well maintained was below average;
    5. (e)
      In Section G the following additional comments were noted in bullet point format:
  • walls not straight and aligned
  • blocks not bonded by mortar – silicon used
  • no provision for drainage of water, adjacent services will not be able to be topped or tiled over without compromising termite inspection zone of main building
  • surrounding walls with 575 cm, maximum 550 cm required to allow for finishing sides off
  • no expansion joints – cracking
  • no provision for auto water flow connection
  • screed preparation mix for tiling fell apart in rain
  • concrete splatter on surrounding surfaces
  • outer wall requires demolition
  • appears to be no allowance for draining water feature
  • pipes not laid underground with no allowance for cover before laying finished floor surface.
  1. [43]
    The report included annotated photographs that evidence and noted the following further defects:

Full blocks not used at all ends of wall.

Blocks not flush, level, not mortar used for beds or perps.

Area closest front door where existing pond had been filled in flush with pavers will require grinding flush, concrete is not level with adjacent surfaces. No allowance for drainage.

Block work added to adjacent columns has been siliconed together

Bedding for capping tiles chipped, uneven and bevelled on corners

Bedding to main area of pond will require complete removal and replacement, mix is crumbly, weak and lacks adhesion to concrete below

New pipework installed too high to allow for the installation of proposed finished surfaces to adjoining tiled areas

Slurry and concrete splatter over existing surfaces

Existing pond has been filled in with no allowance for the installation of drainage

  1. [44]
    Mr. Jones also sought the advice of two hydraulic consultants and pump manufacturers on the pipes installed and asked whether the proposed 1.5hp pump would be suitable for the water feature. He was told that the 50mm diameter pipes were unsuitable for the proposed use and the 1.5hp pump was only capable of achieving a maximum flow rate of 475 litres per minute at a 12m head. This would have failed to achieve the minimum water turbidity and an even flow of water spill over all four sides of the water feature. The 50mm pipe works needed to be replaced with 150mm pipes and the 1.5hp pump needed to be replaced with a 7.2hp pump capable of achieving a minimum flow rate of 1200 litres per minute at a 12m head.

Termination

  1. [45]
    On 18 December 2019 Mr Jones terminated the contract on the grounds that:
    1. (a)
      the works had not been completed within the contract period;
    2. (b)
      the contractor and staff were not adequately skilled to complete the works to an acceptable standard;
    3. (c)
      the works were defective; and
    4. (d)
      the builder had not tendered evidence of insurance as required.

Rectification

  1. [46]
    Mr. Jones received advice that due to the poor standard of construction and uncertainty associated with structural integrity of the built structure and capacity of installed pipe work to properly function, contractors would only guarantee they work if all existing structures were demolished, and the water feature was designed by a qualified hydraulic engineer.
  2. [47]
    To avoid additional costs, delays and disruption associated with a full demolition of existing works with a qualified builder was engaged on a cost-plus basis to manage subcontractors. Mr. Jones undertook physical work to minimise costs with partial demolition works commencing in early February 2020 and the water feature being finally completed on 2 July 2020.
  3. [48]
    Mr Jones tendered spreadsheets with supporting invoices of the costs he incurred to rectify then complete the building works.[8] Although the items claimed in each spreadsheet seem to mirror, the tallies do not, mathematically, add up. Having attempted to check and reconcile each several times without success, I then separately listed and itemised each claim, cross-checked against receipt and removed duplicates where they appeared, arriving at a total cost of $59,533.75 excluding the cost of the building report ($330), legal costs ($1,237.50) and payments made to Joel McDonald ($15,700).     
  4. [49]
    The original contract price was $57,444.75.   Mr Jones seeks an order for the payment of $16,659.52 which he calculates as:
    1. (a)
      A refund of the $15,700 paid to Mr McDonald;
    2. (b)
      Reimbursement of his legal ($1,237.50), building inspection report ($330)   and QCAT costs ($345.80); and
    3. (c)
      Adjusting for the difference between the costs he incurred to rectify and complete the works and his fixed price contract ($-607.98).
  5. [50]
    On my calculations, the claim, mathematically, ought to be $19,702.30 ($15,700 + $1,237.50 + $330.00 + $345.80 + ($59533.75 - $57,444.75).

Mr McDonald’s case

  1. [51]
    There is little to add to a summary of Mr McDonald’s case beyond the contents of paragraph [5], above.  He did not make any additional submissions and did not file any evidence beyond the emails attached to the response.
  2. [52]
    To the extent that Mr McDonald says the contract was wrongfully terminated and that he was refused entry to the site to complete works, the evidence before the tribunal is to the contrary, namely:
    1. (a)
      Mr McDonald emailed Mr Jones confirmed that he was stopping work;
    2. (b)
      Mr McDonald did not obtain the insurance required under the contract or, if he did, he did not produce evidence of it to Mr Jones upon request as required under the contract;
    3. (c)
      The contract was a fixed price contract (save for trees and lighting) and there was no scope for Mr McDonald to seek a variation based the labour cost for tiling – in any event, the tile selection occurred after the quote was given, so there is no evidence that Mr McDonald quoted the job on the basis that 300mm x 600mm tiles were being laid.  In any event:
      1. he signed the contract after the being informed and shown the larger tile section; and
      2. tiles were onsite for quite some time before Mr McDonald indicated his surprise at the selection.
    4. (d)
      At the time Mr Jones issued his breach notice the works were substantially incomplete, insurance had not been obtained and Mr McDonald had stopped on the basis of Mr Jones’ refusal to agree to a variation that was both unjustified, and, importantly, that more than doubled the contract price.
  3. [53]
    There is no basis for suggesting that Mr Jones unreasonably refused to work with Mr McDonald nor that he attempted to change the scope of works after the contract was signed.  Earlier, the scope did change but the quote was increased to the eventual contract price to allow for that.
  4. [54]
    Put simply, there is no merit in Mr McDonald’s argument, as brief as it was.

Assessment of Mr Jones’ claim

  1. [55]
    I am well satisfied on the evidence before the tribunal that Mr McDonald breached his contractual and statutory warranties to Mr Jones to:
    1. (a)
      carry out the work in an appropriate and skilful and with reasonable care, skill and diligence;
    2. (b)
      carry out the work in accordance with specifications; and
    3. (c)
      supply materials that were fit for the purpose for which they were to be used.
  2. [56]
    The Inspect Your Home report itemises the extent to which the works were defective, and I am satisfied that:
    1. (a)
      the works undertaken by Mr McDonald had to be entirely removed as they were irretrievably defective (for example, the pipe work laid was an entirely unsuitable size, it was laid too high, and the bedding was crumbling and not adhering to the concrete and no allowance was made for drainage);
    2. (b)
      the site had to be remediated;
    3. (c)
      the works had to be recommenced and entirely redone; and
    4. (d)
      the receipts and invoices tendered by Mr Jones establish that he took reasonable steps to mitigate costs by undertaking as much work as he could himself, and that the costs incurred to have the work performed were reasonable.  Notably, the tiling costs amounted to $70m2 to lay the larger tiles purchased by Mr Jones, which is very near in price to the contracted price of $68m2 and vastly less than the variation price of $250m2 that Mr McDonald attempted to claim).
  3. [57]
    Further, Mr McDonald breached his obligations to obtain insurance and to provide the owner with evidence of that insurance.
  4. [58]
    The tribunal’s powers in a building dispute include, without limitation, the ability to order:
    1. (a)
      the payment of money from one party to another;
    2. (b)
      damages, and interest on the damages at the rate, and calculated in the way, prescribed under a regulation;
    3. (c)
      restitution; and
    4. (d)
      costs.[9]
  5. [59]
    Damages for breach of contract are compensatory in nature, namely, they are not intended to punish the builder in this case, but rather to compensate Mr Jones with an order that has the effect of placing him in the same situation, as far as money can do so, as if he would have been if the builder had performed the contract.[10]  But for Mr McDonald’s breach, Mr Jones would have had the benefit of the completed works at the fixed contract price. Therefore, the measure of damages recoverable from a builder by a home-owner for defective work is usually the difference between the contract price of the work and the cost of rectifying the work so it conforms with the contract.[11]

The claim

  1. [60]
    As mentioned, on my calculations, Mr Jones tendered invoices and receipts totalling a rectification/rebuild cost of $59,533.75.
  2. [61]
    I have scrutinised these costs against the original quote/scope of works and the “provisional” allowances for trees ($650) and lighting system ($3,500) and make the following adjustments to the claim:
    1. (a)
      The invoices from Plasma LED ($245.85 + $1,571.35), SALed ($1,185.68 + $124.08) appear to pertain to the lightning system and total $3,126.96. As this is less than the provisional allowance the difference of $373.04 would have been deducted from the contract price. Other claims regarding the lighting appear to pertain to electrical/conduits that were included in the builder’s scope. 
    2. (b)
      There is no reference to supplying and laying artificial turf in the original quote or the scope attached to the contract. There is nothing in the drawings that would suggest artificial turf was included in the original contract.  For that reason, the sum of $3,602.50 which represents an invoice for artificial turf must be deducted from the cost of rectification works. 
    3. (c)
      For the same reason, namely, no mention in the original quote or contract:
      1. the invoices for installing a tap in the garden shed ($236.50) and for removing toilet and wash basin to allow for tiling, then re-installing ($500.01) are deducted from the cost of rectification works; and
      2. the invoice for sliding doors in the sum $150.00 is deducted from the cost of rectification works.  Whilst it is possible that the over-spray of concrete damaged the sliding doors but is not evidenced in the building inspection report and the invoice has not been explained.
    4. (d)
      The invoice to purchase additional tiles from Three Red Ball Tiling for $7,802.96 is not explained.  Under the contract tiles were to be supplied by the owner and the parties fell into dispute in fact when the builder objected (quite belatedly) to the size of the tiles the owner had supplied.  Given that the tiles were not laid when the contract was terminated, it is not clear why tiles needed to be replaced.  If the invoice is for the replacement of damaged tiles, such damage is not in evidence.  If the purchase is for additional tiles, under the contract these would have been at the owner’s cost.  The invoice for Three Red Ball Tiling is deducted from the cost of the rectification works for those reasons.
  3. [62]
    The adjusted contract price is $57,071.71. The adjusted rectification costs are $47,241.78.  On that basis, there is no damages claim or loss to Mr Jones for the rectification costs, as least on the evidence before the tribunal. 

Refund

  1. [63]
    Given the works undertaken by Mr McDonald had to be entirely demolished and redone, and, therefore, Mr Jones received no benefit from those works whatsoever, and given that materials Mr Jones paid for were unusable and, in the case of the lighting, removed from site by the builder, it is appropriate that Mr Jones receive a full refund of the $15,700 he paid to Mr McDonald for the first progress claim and for materials on account of the failure of consideration.
  2. [64]
    Mr McDonald has not established a claim, made submissions, or filed any material that would support a finding that he retains all or part of the monies paid to him by Mr Jones.

Costs

  1. [65]
    Section 77(3)(h) of the QBCC Act empowers the tribunal to award costs in building disputes, displacing the usual position in tribunal proceedings that each party bear their own costs.  Mr Jones has established that Mr McDonald breached the contract in several respects and Mr Jones validly terminated the contract on that basis.  I am satisfied that Mr Jones’ legal costs ($1,237.50), the building inspection fee ($330.00)  and his filing fee ($348.50) are costs that fall under clause 26.3 of the contract, namely costs or expenses occasioned to Mr Jones by or in connection with Mr McDonald’s breach and Mr Jones’ termination and I award them to him.
  2. [66]
    On my calculations, the potential award to Mr Jones amounts to $17,302.00. His application – to which Mr McDonald filed a response, sought orders for the payment of $16,669.47, but his later submissions sought an adjusted sum of $16,667.77.  As natural justice would not be afforded to Mr McDonald if a payment larger than the amount claimed was ordered, I limit the order for payment to those most recently sought, being the amount of $16,667.77 including costs.

Footnotes

[1]  Directions of Senior Member Brown made 1 February 2022.

[2]  According to an ASIC Company search dated 15 July 2020.

[3]  Section 42(4) of the QBCC Act.

[4]  [2017] QCAT 228.

[5] Queensland Building and Construction Commission Act 1991 (Qld), Schedule 2.

[6]  Section 3, Queensland Civil and Administrative Tribunal Act 2009 (Qld).

[7]  Attachment “I” to the Applicant’s submissions filed 26 November 2020.

[8]  Submissions filed 30 July 2021, comprised in Schedule A and Schedule B and Table of Claim dated 16 December 2020.

[9]  Section 77(3) of the QBCC Act.

[10] Robinson v Harman (1848) 1 Ex 850.

[11] Braund v Sandrey and Marant Holdings Pty Ltd t/as SMS Projects [2021] QCAT 440.

Close

Editorial Notes

  • Published Case Name:

    Jones v McDonald & Anor Pty Ltd

  • Shortened Case Name:

    Jones v McDonald & Anor Pty Ltd

  • MNC:

    [2022] QCAT 219

  • Court:

    QCAT

  • Judge(s):

    Member Lember

  • Date:

    14 Jun 2022

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Braund v Sandrey and Marant Holdings Pty Ltd t/as SMS Projects [2021] QCAT 440
2 citations
Jump To
Cite 1 - [2021] QCAT 440
Cite 2 - [2021] QCAT 440
Robinson v Harman (1848) 1 Ex 850
2 citations
Jump To
Cite 1 - (1848) 1 Ex 850
Cite 2 - (1848) 1 Ex 850
Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228
2 citations
Jump To
Cite 1 - [2017] QCAT 228
Cite 2 - [2017] QCAT 228

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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