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Hoppen v Stoneridge Constructions Pty Ltd[2024] QDC 2
Hoppen v Stoneridge Constructions Pty Ltd[2024] QDC 2
DISTRICT COURT OF QUEENSLAND
CITATION: | Hoppen v Stoneridge Constructions Pty Ltd [2024] QDC 2 |
PARTIES: | TIMOTHY JOEL HOPPEN and ELISE GABRIELLE HOPPEN (plaintiff) v STONERIDGE CONSTRUCTIONS PTY LTD ACN 609 318 621 (defendant) |
FILE NO: | BD 2885 of 2022 |
DIVISION: | Civil |
PROCEEDING: | Trial |
ORIGINATING COURT: | Maroochydore Magistrates Court |
DELIVERED ON: | 2 February 2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 30 May 2023, 31 May 2023, 1 June 2023. |
JUDGE: | Byrne KC DCJ |
ORDER: |
|
CATCHWORDS: | CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – BUILDING CONTRACTS – CONSTRUCTION AND INTERPRETATION – where the defendant entered into a contract to construct a home for the plaintiff – where the defendant purported to terminate the contract – where the plaintiff seeks part of the deposit paid and damages for breach of the contract– where the defendant agreed under the contract that it must promptly take all reasonable steps to obtain the necessary building approval – meaning of that term in the contract – where the plaintiff made changes to the plans at various times after signing the contracts – whether those changes were of such a nature as to justify delaying the application for a building approval – whether the lodging of material for a building approval was a reasonable step that should have been taken earlier than it was. DAMAGES – MEASURE OF – where the plaintiff sought damages under a number of heads – where the plaintiff filed a schedule of damages – where limited evidence was adduced at trial under one of those heads and where no evidence was adduced under the others – where no agreement had been reached between the parties as to the quantum of any of the heads of damage in the event of liability being established – whether the lack of notified objection to the contents of the schedule of damages should be taken as a deemed admission. |
LEGISLATION: | Uniform Civil Procedure Rules 1999. |
CASES: | Burton v Police (2004) 88 SASR 152 Fairmont Group Pty Ltd v Moreton Bay Regional Council [2018] QPEC 20 Fairmont Group Pty Ltd v Moreton Bay Regional Council [2019] QCA 81 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 |
COUNSEL: | Mr. K. Pearson for the plaintiff. Mr. N.M. Cooke for the defendant. |
SOLICITORS: | Hawkes Lawyers for the plaintiff. Wheldon & Associates for the defendant. |
Introduction
- [1]On 13 July 2021, the plaintiff commenced proceedings in the Magistrates Court by way of a Claim and Statement of Claim for the refund of part of a deposit paid under a building contract and damages for breach of the same contract, together with interest and costs. On 31 October 2022 the proceedings were transferred to this Court by consent, apparently when it was appreciated that the quantum sought exceeded the jurisdiction of the Magistrates Court. The quantum had not been fully pleaded in the originating process.
- [2]The proceedings had been commenced against an entity known as Hytek Building Pty Ltd, ACN 609 318 621. That was the name of the contracting party with the plaintiff on 17 November 2020, the date the contract was signed. On 15 August 2022, it changed its name to Stoneridge Constructions Pty Ltd, but retained the same ACN.[1] On the defendant’s application, designed to ensure that proceedings were maintained against a presently recognised entity, the plaintiff agreed to amend the name of the defendant to reflect its current name. The defendant also undertook not to take any point about the defendant, as now named, not in fact being in existence at the date of the contract.[2]
- [3]The defendant has denied any relevant breach. Both liability and quantum are in issue.
Factual summary
Uncontested background – liability
- [4]The defendant conducted its business under the style of G.J. Gardiner Homes Jimboomba. The building contract was for the construction of a house on land at Kurrajong Road, Jimboomba (“the subject block”). The contract was in the form of a standard Master Builders’ Queensland Residential Building Contract – Level 2. The building specifications attached to the contract were for a large residential premises, including eight bedrooms, four bathrooms and a large kitchen/dining area and a further large rumpus room with a wet bar. The overall size of the dwelling, including various decks, patios and the like was about 620 m2. The total construction price payable under the contract was $595,868.00, with five per cent deposit ($29,793.40) payable. The deposit was paid, as well as an additional $880.00 fee for tree removal.
- [5]The subject block was the subject of a number of planning overlays which were potentially relevant for the purposes of ascertaining the need for both a development approval (“DA”) and a building approval (“BA”). In particular, there were overlays concerned with primary vegetation management as well as the bushfire risk. These were known to the plaintiff at the time they purchased the subject block.
- [6]Relevantly, the contract provided:
- The defendant must promptly take all reasonable steps, including to pay any relevant fee, to obtain the necessary BA to commence Works on the land.[3]
- The plaintiff was responsible for obtaining any applicable DA.[4]
- Either party could terminate the contract without liability if any necessary building or development approval was not obtained within 55 business days of the date of the contract. In that event, the defendant was entitled to payment for work already reasonably carried out under the contract.[5]
- The construction period was 214 days.[6] It commenced within 10 business days of the defendant receiving various things, including the BA and independent proof of finances having been secured to cover the costs.[7]
- The defendant would carry out the Works with reasonable diligence.[8]
- The term “Works” was conventionally defined to include all of the works to be carried out by the defendant, including any variations.[9]
- [7]Between 23 November 2020 and 13 April 2021, there was a large amount of email correspondence generated in relation to the completion of the contract, both between the plaintiff and defendant and the defendant and its suppliers and sub-contractors.[10]
- [8]
- [9]On 12 April 2021, the plaintiff received a letter from a private certifier, Mr Reade, who had been engaged by the defendant for the purposes of obtaining the BA. The letter, in part, noted that the property was located within a primary vegetation management area. It requested details of any existing planning approval or alternatively offered to facilitate the obtaining of such an approval.[15] As a result, Mr Hoppen communicated with Mr Reade, in effect, explaining his belief that a DA was not required. On 17 April 2021, he emailed Mr Reade requesting that the application be made. That email was not sent to the defendant.[16]
- [10]
- [11]On 20 April 2021, at an unknown time prior to 6.19 pm,[19] the defendant’s solicitors wrote to the plaintiff indicating the defendant was terminating the contract pursuant to clause 5.2. It expressly stated the basis for termination as: “Our client acting reasonably has not obtained the necessary building approvals within 55 days after the date of formation of the contract” as the basis for termination.[20]
- [12]On 29 April 2021, the plaintiff’s solicitors wrote indicating that they denied the defendant’s right to terminate the contract and that they treated the letter of 20 April 2021 as a repudiation of the contract.[21]
- [13]On 9 June 2021, the defendant refunded what it asserts is the unexpended portion of the deposit paid.[22] The plaintiff has taken issue with two items retained from the deposit totalling $3,480, namely an invoice from Hytek Framing Pty Ltd for $1,980 dated 27 April 2021 and an invoice from G.J. Gardiner for “overheads” for $1,500.
The oral evidence
Timothy Hoppen
- [14]The Hoppens decided to relocate from Victoria to Queensland and found what they believed was a suitable block of land on which to build a large, custom-built dwelling. Mr Hoppen was aware that there were planning overlays applicable to the property, but, having made his own enquiries, he considered that there was an area at the front of the property to which they did not apply. (None of the information that led him to that conclusion was admitted as proof of the fact in the course of the trial.)
- [15]They decided to use G.J. Gardiner as it was a reputable company. They first dealt with a designer named Steve Reid during the design phase. During that time, about June or July 2020, they sold a property in Victoria and moved to Queensland. They were living with Mr Hoppen’s wife’s foster parents, but the conditions were cramped and not ideal.
- [16]When the design phase was finished, they were handed over to Deborah Daly, who was the contract manager, and also dealt with Andrew Rijken. From that time there were delays. Mr Hoppen tried to keep on top of things, “making sure I was sort of a squeaky wheel”.[23]
- [17]He thought that a BA had been given prior to receipt of the certifier’s letter of 12 April 2021, based on what Andrew had previously told him would shortly be undertaken on the subject block. It was in around February or March 2021, that Andrew told him by email that they had groundworks booked and a slab was to be poured shortly. In the week that he received the letter from the certifier they had a meeting about electrical matters and made “selections”.
- [18]He rang the certifier the same day he received the letter to tell him that he had paperwork from Council, and that he did not need any approvals. He sent the certifier that paperwork. (In fact, he seems to have sent an email from a State Government Department which did not relate to Council approvals.[24])
- [19]On 16 April 2021, he again rang the certifier to see if the issue had been clarified with Council. When he was told by the certifier that it was still an issue, he said to go ahead with the DA.
- [20]The plaintiff currently lives on the subject block in a six-bedroom, three-bathroom house that was moved onto that block. He testified that he engaged a certifier who looked at the paperwork Mr Hoppen provided and issued a BA without a DA being required. (There was no independent proof of that tendered at trial.[25])
- [21]Mr Hoppen said he was frustrated when he received the certifier’s letter. When asked how he felt about being left in limbo without a house, he spoke of seeking out other builders and being told that there would be lengthy delays to even commence the project, but did not speak of any emotions or damage as a result.
- [22]In terms of the two items retained from the deposit, he takes issue because the invoice for the framing was dated 27 April 2021, and therefore was for work done after the contract had purportedly been terminated. In respect of the “overheads”, he was unable to use the plans that had been provided with other builders because they were “trademarked and logo-ed” to G.J. Gardiner.
- [23]In cross-examination, Mr Hoppen accepted that he had been a licensed tiler in Victoria and had gained registration in Queensland. He sought to reduce the contract price by doing his own tiling on the project. At various stages in the course of his evidence, he asserted an understanding of how building construction and building contracts operated.
- [24]He ultimately accepted that the change in the framing could be a legitimate charge,[26] and that he did not approach the defendant for an unrestricted copy of the plans. He also accepted that work had been done in getting building plans and contracts to the stage of lodging the materials for the BA.
- [25]Although initially maintaining that he had provided the defendant with a copy of the unconditional finance approval from the bank, he accepted that he had not done so by 15 December 2020.[27] He said he had disclosed all of the financial approval documents to his solicitor, as far as he was aware, and ultimately deferred “to the written record”. (There was no written record of any such document being provided to the defendant in evidence.)
- [26]Mr Hoppen accepted that the cut and fill of the site was undertaken at his request. He considered it would be helpful in obtaining the unconditional finance approval from the bank if some works had been commenced, even though he thought approval would be given anyway and that he was just waiting for the letter evidencing that. He accepted that the conditional approval was only valid until 21 December 2020.
- [27]Mr Hoppen accepted that there were changes made to the plans at various times after signing the contracts, although he asserted the majority of changes were selections of colours, brands and the like. He asserted they did not necessitate a change to the plans. He further asserted they were not material changes that would have affected an application for a BA, although he did accept some items referred to in the email of 15 December 2020[28] were design issues.
- [28]While accepting the plumbing approval was granted on 30 May 2021, he did not accept that the approval was delayed due to changes he made to the placement of sinks, sewerage outlets and water tanks.
- [29]Mr Hoppen explained that this project was a full custom build. When the plans were prepared, generic cupboards and cabinetry were included in the plans. Steve Reid, he said, told him they could be changed to what they wanted later. He did not accept that the amendment to the plans referred to in an email of 26 March 2021[29] would have delayed the lodging of the materials for the BA.
- [30]Mr Hoppen presented as an articulate witness, but one who believed his testimony was necessarily correct regardless of what he was confronted with. I gained the clear impression that he sought to present himself in the best possible light when objective material did not always support that. One example will suffice. He testified that he had verbally told the certifier to proceed with applying for a DA in conciliatory and polite terms,[30] whereas the written record clearly shows that it was in a brief, if not gruff, email sent at 10.10 pm at night.[31]
- [31]Further, Mr Hoppen became argumentative and, I perceived, evasive in the course of cross-examination. Some aspects of his evidence were difficult to accept. I consider there is a need to approach any aspect of his evidence which is in dispute with some care.
Steven John Ball
- [32]Mr Ball is the Development Assessment Manager for Logan City Council, the local authority in which the subject block was located. The primary purpose of his testimony was to speak to correspondence sent to the certifier from his office on 8 April 2021 which indicated that the construction of the dwelling on the subject block may require a DA.[32] He did not resile from that position, however he also gave other pertinent evidence.
- [33]In preparation for his testimony, Mr Ball had looked at point-in-time aerial images which showed that in November 2020 the block was vegetated and in April 2021 an area had been cleared. He considered that, given the primary vegetation management overlay affected the whole of the subject block,[33] any clearing of native vegetation would have required a DA from Council.[34]
- [34]Mr Ball presented as an honest and reliable witness. His testimony is not inconsistent with other reliable evidence, and I have no reason to doubt it.
John Lowry
- [35]Mr Lowry is a very experienced quantity surveyor. He provided two expert reports.[35] In summary, he opined that the cost to build the house, on the basis of the agreed plans, as at May 2022 was about $828,000. He also opined that a reasonable estimate to undertake the project at the time the fixed price contract was signed was about $678,000, or roughly $82,000 more than was provided for in the contract.
- [36]In cross-examination, he accepted that Mr Rijken’s affidavit was likely to be correct insofar as it referred to commercial arrangements with various suppliers. He had no knowledge of the extent of these arrangements when undertaking his estimates. He also accepted that he had not assessed the G.J. Gardiner system or their costings. In particular, he accepted he had not undertaken a line-by-line analysis of the costings.
- [37]While Mr Lowry presented as an honest witness, he became defensive and slightly frustrated when his opinions were forensically tested. There is no reason to doubt the honesty of his opinions but the utility of them in the circumstances of this particular matter remains in issue.
Joshua Ian Reade
- [38]Mr Reade is the certifier referred to earlier. He was engaged by the plaintiff for the purposes of issuing a BA on 1 April 2021.[36] As part of his assessment he made enquiries of the Logan City Council and was informed that the application may trigger the need for a DA due to the existence of the primary vegetation management overlay.[37] He testified that the enquiry was made because, from his desktop assessment using aerial photography, part of the area where it was proposed the dwelling would be constructed had vegetation on it.[38] This was an issue he could not assess without triggering further referrals to Council.[39] As at 12 April 2021 – the date of his letter to, in part, the plaintiff – he was of the view a Material Change of Use application to Council was necessary.[40] In other words, the need for a DA had been triggered by what he had seen.
- [39]Insofar as the bushfire overlay was concerned, ordinarily a bushfire assessor would be engaged to do a site-specific report, which would then form part of the BA process.[41]
- [40]In cross-examination, it was established that the aerial map Mr Reade accessed on 6 April 2021 showed the block had significant vegetation in the area where the house was proposed. He was unable to say what date the image he viewed was taken. When shown the image that eventually became Exhibit 10, he said:
“It looks like the site has since been prepared to – based on the footage that I have, it’s totally different. It looks like the site has been prepared or cleared for the, for the build, based on that photo.”[42]
- [41]Following that, the following exchanges occurred in cross-examination:
“Now, if there had have been a cleared area in the front of the block where the house was to go, would that change your assessment? --- Well, it depends on how that clearing has been done and whether it was done lawfully or not.”[43]
I’ll just repeat the question. If the front of the block was clear, would that have affected your determination in relations to a development approval? --- Well, like I said, it would need to be investigated to know if it’s been done lawfully or not, because if it hasn’t been done lawfully then it does affect my approval.”[44]
- [42]And shortly after:
“And further, if the location where the house was to be constructed was cleared, your determination would have been different? --- Yeah, but there would be further investigations that would normally have to be done as part of that to make sure the vegetation removal has been done lawfully.”[45]
- [43]Neither party tendered the image Mr Reade had looked at in the course of his enquiries in April 2021, and which he showed the Court over the audio-visual link. My observation of the image was that it showed a block of land that was clearly more heavily vegetated than the image in Exhibit 10.
- [44]In relation to the reference to progressing a DA in the letter he sent, Mr Reade said that the defendant was his client and so he would have needed their authority, and the owner’s consent, to have done so.
- [45]Mr Reade presented as an entirely honest witness. I have no reason to doubt his evidence.
Deborah Daly
- [46]Ms Daly’s role in the defendant’s business was to administer contracts from the time of signature to the handover of the properties to the owners. Exhibit 5 was compiled by her. It comprises 450 pages and is a copy of all correspondence received or sent by the defendant in respect of the subject contract. It does not include a record of any telephone calls or any in-person meetings.
- [47]Ms Daly testified that she received the letter of conditional finance approval on or about 21 December 2020. She did not receive a letter of unconditional approval. She maintained that position in cross-examination, initially denying she had received an unconditional letter and later saying she had no recollection of receiving it. (Notably, this document was not referred to by Mr Hoppen at any stage in his evidence as having been given by him to Ms Daly or the defendant more generally. Further, the letter was issued on the basis that it must be accepted on the date of its issue, namely 21 December 2020. There is no evidence that it was in fact so accepted.)
- [48]She recalled that there were site works undertaken in December 2020 because the plaintiff “pressured” the defendant into making a start on the site as he stated his finance would expire if work did not start by the end of December 2020.
- [49]COVID-19 affected the speed by which the contract could be progressed. The turnaround times for preliminary tests went from days to weeks, and there were similar issues around the availability of sub-contractors.
- [50]The defendant uses a process whereby it is the final plans that are sent to the certifier, and those plans are then also sent to sub-contractors. These plans must be signed off by the client prior to lodging. Changes to colours or the sort of finishes on cabinetry can be effected after lodgement with the certifier, but things like the placement of water tanks, home sewerage treatment plants, sinks and cabinets needs to be considered by the certifier.
- [51]In the present matter, there were a number of late requests for changes to plans, specifically cabinetry location and water tanks. There were six changes to the plans between signing the contract and the contract plans being settled, and then another six changes before they were lodged. All changes had been requested by the plaintiff. Adding to the delays was the fact that Mr Hoppen often questioned the provided quotes and variations as a result of the plan changes, and sought to negotiate costs.
- [52]In cross-examination she accepted that, at the time of this contract, her workload had increased rapidly. She did not accept she was “worked to the bone”, but did accept that she was busy.
- [53]She was unaware of Mr Hoppen’s email to the certifier of 17 April 2021 at the time.
- [54]Ms Daly accepted she did not enquire about unconditional finance after receiving the letter of conditional approval.
- [55]Ms Daly presented as an entirely honest and careful witness who gave her recollections in an unvarnished manner. There is no reason to doubt the accuracy of her recollections, and they are substantially supported by the contents of Exhibit 5.
Andrew James Rijken
- [56]Mr Rijken is a director of the defendant, and the holder of the relevant building licence. He was directly involved in aspects of the performance of the present contract.
- [57]Dealing with the amounts retained from the deposit which are in dispute, the framing costs were associated with structurally detailing the house frame, posts and beams. It was for work done during the contract period. The G.J. Gardiner overheads relates to staff costs incurred in attending to administrative tasks under the contract. It was calculated broadly on the number of hours expended. In cross-examination, he opined that the figures were moderate given the issues experienced with managing the present contract.
- [58]Mr Rijken confirmed that there were considerable delays experienced due to the impact of COVID-19. These delays affected the progression of contracts largely due to various government issued restrictions that were imposed.
- [59]Mr Rijken said that there was never an unconditional finance approval received from Mr Hoppen. He confirmed that the process used is to finalise the building plans before sending them to the certifier and that those plans are then used for the purposes of full construction drawings. Any need to subsequently vary the plans can be costly and will affect the profitability of the lump sum fixed price contract that the defendant has entered into.
- [60]In cross-examination, he accepted he was not a custom builder, but maintained that the computer system used by G.J. Gardiner was flexible and had no difficulty in calculating costs for any design of build.
- [61]He accepted that Queensland Building and Construction Commission records showed that there had been a large increase in projects undertaken by the defendant in 2020 as opposed to previous years. He said that those figures related to BAs granted rather than projects completed or even commenced. He accepted that the defendant’s staffing levels had not increased to accommodate the extra workload, but suggested they had been previously overstaffed and that the staffing levels were appropriate.
- [62]He testified that his expectation was that Ms Daly would tell him if an unconditional finance approval had not been received from a client once the BA was granted. That was so no work would be commenced without finance being available.
- [63]He testified that the cut and fill was done to assist the client in getting financial approval from the bank.
- [64]He denied that no reasonable steps had been taken to lodge the application for the BA until April 2021; the delay was caused by the changes to the plans instigated by the plaintiff. He denied that this contract had slipped through with the increased workload that year. After being taken to an email sent to him by the General Manager for G.J. Gardiner for Queensland and Northern Territory, the following exchange occurred:
“… And on the same day he rejected it, and within a few days, he made a complaint to Gardiners, and 24 hours after that, the contract was terminated? --- Yes. Because he – I mean, you refer to the same email it says Tim Hoppen was mouthy. Tim Hoppen was like this all the way through the contract. We couldn’t deal with him any further.
You couldn’t deal with him any further. And is that why you terminated the contract? --- It’s part of the reason.
What are the reasonable steps you made? --- We made reasonable steps all the way through trying to get the drawings done we go [sic] the working drawings done we got the solar reports done. We were locked out of the site because the gate was locked.
For one day? --- We got the HSTP design done. We got all the draw – all the engineering and everything done that we normally would do as part of our standard process … to get a BA.”[46]
- [65]He was shown a photo of a block of land. He thought it showed the subject block after the cut and fill in December 2020. That became Exhibit 10.
- [66]In re-examination, he said that the cut and fill was undertaken when there were still not sufficient funds provided to cover the cost. It was done, he said, out of sequence to assist with the finance application so they could eventually build a house. Ordinarily, no works would be undertaken unless a BA was achieved.
- [67]Mr Rijken presented as a generally honest and reliable witness who, however, became contrary and argumentative under cross-examination. He seemed to be frustrated with having to justify his conduct and that of the defendant. Nonetheless, much of his evidence is consistent with other acceptable evidence in the trial, and he can generally be regarded as a reliable witness.
Submissions on liability
The plaintiff’s submissions
- [68]The plaintiff’s submissions can be distilled into four propositions:
- The delay between the contract being signed in November 2020 and the engagement of the certifier for the purposes of a BA in April 2021 means that the defendant did not promptly take all reasonable steps to obtain the BA, as required by clause 5.1 of the contract, and is in breach of the contractual agreement. Hence the defendant cannot rely on the purported right to terminate the contract under clause 5.2 as it was already in breach of it.
- The changes to the plans instigated by Mr Hoppen did not justify delaying the application for the BA.
- The unconditional finance approval from the bank was delivered to the defendant in December 2020, and so that did not justify the delay of the application for the BA.
- The retention of the two items from the deposit was not justified.
- [69]The plaintiff did not press, in oral submissions, that the delay in payment of the balance of the deposit after the contractually agreed period of five days after termination put the defendants in breach of the contract.
The defendant’s submissions
- [70]The defendant’s submissions can be distilled into the following:
- There is no acceptable evidence of an unconditional finance approval having been given to the defendant.[47] Further, the document in evidence shows that any offer required acceptance by 21 December 2020, and there is no evidence of the offer having been accepted.
- While the defendant was capable of performing this custom build using the G.J. Gardiner system, the reasonableness of the time taken to apply for BA must be seen in the light of the plan changes and the complications arising from the nature of this particular custom-build project, as well as its other workload.
- The rights under clause 5.2 of the contract are triggered merely by the passing of the period of 55 business days without a relevant approval having been obtained. What happened around the cut and fill in December 2020 does not affect those rights. The period passed in February 2021.
- There is no doubt that a DA was required. The only person who thought otherwise was the plaintiff. The plaintiff was responsible for obtaining that DA under the contract.
- As a result, on the clear words of the contract, the defendant was entitled to terminate.
- The retention of the two sums from the deposit was justified in the circumstances.
Consideration – liability
- [71]The initial issue for determination is whether the defendant was in breach of the contract by not lodging the application for the BA until April 2021. If it was, the purported termination under clause 5.2 is of no moment for these purposes because the breach had already occurred. If the defendant was not in breach of the contract, the consequential issue is whether the termination was of effect. On that approach, the functional provision to be initially considered is clause 5.1.
- [72]Although both parties have treated the issue as being whether the failure to lodge the application for the BA until April 2021 was unreasonable, that is a shorthand approach to what must in fact be proved by the plaintiff.
- [73]Strictly, the contract imposed on the defendant the obligation to “promptly take all reasonable steps” to obtain the BA. I have not been provided with, nor located, any authority as to the meaning of that phrase, and it is not defined in the contract itself. In my view, it delineates between the concept of promptness and that of a reasonable step.
- [74]In my view, a step is reasonable once it can be objectively seen to be a step that is likely to be properly taken. For example, a step would not be a reasonable step if it was futile to take it. This focuses attention on the reasonableness of the step and not the reasonable ability to take the step. If it were otherwise, the word “promptly” may become meaningless. Once it is objectively reasonable to take that step, it must be promptly taken. Accordingly, I do not accept the defendant’s submission that the amount of other work that the defendant was contracted to undertake at the time is a relevant consideration.
- [75]The meaning of “prompt” or “promptly” was considered in Burton v Police,[48] albeit in the context of the interpretation of penal legislation. I accept that “promptly” is synonymous with “immediately”, and conveys a sense of urgency. However, given the word here is being used in the context of a commercial contract, it could not sensibly be expected to be complied with literally, as that would be commercially untenable and impossible to adhere to. In my view, the word “promptly,” as used in this contract, requires that all reasonable steps be taken quickly or with a recognition of some priority.
- [76]It was common ground that a number of steps must be taken prior to lodging the material for the BA, including obtaining soil reports, site investigation reports, plumbing approval and the preparation of site plans and building plans.
- [77]Although there was some criticism of the timing of some of the preliminary tests and reports, it was not heavily pressed and could not be reasonably maintained. I accept that COVID-19 restrictions, in their various forms and their sequalae, caused delays to usual construction business practices and processes. This was not seriously disputed by the plaintiff. A perusal of the invoices in Exhibit 2, and the reports associated with some of them in Exhibit 1, show that a number of preliminary steps were in fact completed prior to Christmas 2020. They were also undertaken at a time prior to, on any view of the evidence, the defendant having received any indication of finance approval, whether conditional or unconditional. No doubt they were undertaken on the basis of the deposit received, and which it has been shown was sufficient to cover those costs. Nonetheless, they were undertaken.
- [78]I am prepared to assume that the defendant’s business shutdown for at least two weeks from just before Christmas 2020, as is standard in that industry and is consistent with the dates of correspondence in Exhibit 5. The index of the documents in Exhibit 5 shows that attention was given to progressing the contract on and from 11 January 2021, and regularly thereafter.
- [79]There is no real basis for complaint about the delay in taking the intermediate steps, and that was properly not pressed. The step which is the focus of the plaintiff’s complaint is the lodging of the material for the BA, and they assert it was a reasonable to take that step much earlier than what in fact occurred.
- [80]On 16 December 2020, Mr Hoppen raised the issue of a sink (again) being left off the plans in the third bedroom, and the placement of the water tanks, as well as wanting a meeting with the electrician.[49] The reply from Ms Daly on the same day clearly draws a distinction between the placement of electricals and any changes to the cabinetry. This is consistent with her evidence that changes to cabinetry would affect the lodging of the plans. The meeting with the electrician occurred in the week Mr Hoppen received the certifier’s letter.
- [81]The placement of the two water tanks was rectified on the plans in the sixth edition dated 11 January 2021.[50] That is the latest edition of the plans put into evidence. The sink in the third bedroom does not appear to have been put into that edition of the plans and so it is unclear when, and if, that was ever attended to. It is not clear to me what was meant by it “again” being left off the plans.
- [82]On 11 January 2021, Ms Daly wrote to the plaintiff outlining the steps needed to be taken before lodging the material for the BA.[51] It can be accepted that the timelines she then provided were, on any view, overly optimistic. The course of correspondence following that, as evidenced in Exhibit 5, shows that much work was done in progressing the contract. Exhibit 5 as a whole shows some of the history of previous plan changes and price negotiations by the plaintiff and, in that way, provides support for the expectation of that continuing in the future.
- [83]On 11 February 2021 a plumbing evaluation report was requested. This was clearly required due to the movement of the water tanks on the plans and the existence of the home sewerage treatment plant.[52] It was supplied on 18 February 2021.[53] Various communications continued in relation to the cabinetry. The application for plumbing approval was lodged 17 March 2021,[54] and it was granted on 30 March 2021.[55]
- [84]I accept that the materials were lodged for the purposes of the BA on 1 April 2021. Although the standard form of appointment sent to both the plaintiff and the defendant referred to the date of appointment as 12 April 2021, that was the date the form was in fact sent to the parties. It was obviously wrong. The written evidence unequivocally demonstrates that the material was sent to Mr Reade on 1 April 2021, and that he then considered it and made enquiries of the Council officers before 12 April 2021. Therefore, the material was lodged with the certifier two days after the plumbing approval was granted.
- [85]The plaintiff argues that the issues concerning the cabinetry did not justify the delay in lodging the material for the BA and, by implication, that the application for the plumbing approval should have been made earlier. Put another way, it is argued that the defendant cannot reasonably rely on the changes to cabinetry to justify the late lodging of the material for the BA.
- [86]As earlier noted, the process adopted by the defendant required that the final plans be settled before they were lodged with the certifier. It was clarified in evidence that this requirement did not extend to selections or finishes. Mr Rijken explained that, in effect, adherence to this process was important because otherwise the defendant’s profit margin would be adversely affected. As understandable as the reasons for the adoption of this process are, slavish adherence to it may distract attention from the correct test, as I have found it, to only focus on the consequences to the builder.
- [87]However, I consider that in all the circumstances of the present matter, it was not reasonable to lodge the material for the BA before it was in fact lodged.
- [88]The dispute about whether the placement of cabinetry was something the certifier had to be informed of is important to the resolution of the issue. Ms Daly’s testimony that it was, is consistent with her emailed communication to Mr Hoppen on 16 December 2020.[56] That shows a consistency in her approach, and it is consistent with Mr Rijken’s position. It is not a recently invented excuse. Although Mr Hoppen has some experience in the construction industry, it was not in this State and it is not suggested his experience lies in obtaining BAs. Curiously, Mr Reade was not cross-examined about his expectation in this respect at all and so I can only assess the competing accounts from Mr Hoppen on the one hand and Ms Daly and Mr Rijken on the other. I prefer the account of Ms Daly and Mr Rijken as they have greater experience in this area, and also because of the need for caution in accepting Mr Hoppen’s account when it is in dispute.
- [89]Exhibit 5 contains many instances of correspondence dealing with, inter alia, plan changes involving cabinetry which were of more substance than merely the finishes to be applied. It was, in my view, prudent for the defendant to delay the lodging of the plans until some degree of confidence could be reached that further changes would be of no consequence for certification purposes. In other words, it was only at that point that the lodging of the material was a reasonable step.
- [90]It is no answer to say that the initial designer had told the plaintiff that the changes to cabinetry could be made after the plans were drawn and initially accepted. Clearly they could, but in the circumstances of this case these delays had the effect of delaying the point at which the lodgement of the material for the BA was a reasonable step.
- [91]It follows that I find the defendant was not in breach of clause 5.1 of the contract.
- [92]The 55 business-day period referred to in clause 5.2, on which the defendant relies to terminate the contract, expired in February 2021. The defendant relied on its own failure to obtain the BA within the stated timeframe as justification for reliance on the right given by clause 5.2. On the express wording of the contract, it was entitled to do so.
- [93]A failure to co-operate in the progression of the contract or unreasonableness in the decision to terminate may preclude that party from validly terminating a contract,[57] but here the delay past the contractually agreed period was caused by the plaintiff. To adopt the terminology of Mason J in Secured Income, the decision to terminate was not capricious or arbitrary.[58]
- [94]I do not accept that the termination was caused by a financial loss being suffered by the defendant in completing the contract or the workload being experienced at the time.
- [95]While it can be accepted that some erosion of expected profits was likely being experienced due to COVID-19 related impacts, I do not accept it was of the magnitude opined by Mr Lowry.
- [96]This was a contract entered into after the onset of COVID-19 and hence when there were already price rises and delays associated with this pandemic period. This is not a case of a builder being caught out by the magnitude of the price increases in relation to a contract signed prior to any being experienced. Mr Lowry’s figures were based on fairly extensive research, but nonetheless were broad calculations. He did not conduct a line-by-line analysis of Mr Rijken’s calculations. Mr Rijken on the other hand was calculating the contract costs for that specific construction in light of all arrangements that were in place involving his business, and suppliers and sub-contractors.
- [97]Further, the defendant showed no sign of not progressing the contract, at least until the lengthy written complaint by Mr Hoppen of 18 April 2021. One would expect the defendant to have backed away from progressing the contract if finances or workload were reasons for termination, but arrangements were still being made for its progression in the very week the contract was terminated.
- [98]On that note, I accept that the plaintiff did not provide an unconditional finance approval to the defendant. That however is of no moment, as Mr Rijken indicated that it would only be brought to his attention if a BA was issued. Contrary to Mr Rijken’s erroneous recollection in his oral testimony, the works undertaken were in fact covered by the deposit and, so, that is very unlikely to have played any role in the decision to terminate at that time.
- [99]Given the timing of the complaint on 18 April 2021, the various communications following that complaint and the fact that the purported termination was two days after the written complaint and one day after the verbal complaint, I find that those complaints were at least part of the motivation for the termination; the straw that broke the camel’s back.
- [100]The evidence establishes that from the time the contract was signed on 17 November 2020 the plaintiff was a demanding, if not problematic, client. On Mr Hoppen’s own account, he was deliberately being a “squeaky wheel”.[59] Mr Rijken, who was involved in the decision to terminate the contract, testified that, in effect, they could no longer deal with Mr Hoppen. He was not questioned as to what other motivation there was. There was nothing improper about acting on that motivation where there was otherwise a legitimate right to do so.
- [101]It follows that the issue of whether a DA was required, to which a sizeable proportion of the evidence was dedicated and which tended to mask the real issues, is irrelevant. Nonetheless, I will make some brief observations about that issue in the event that I am wrong about its relevance.
- [102]As noted earlier, there were a number of planning overlays that applied to the subject block. The evidence focused on the primary vegetation management overlay and a bushfire hazard overlay. The latter can be ignored for present purposes as Mr Reade’s uncontested evidence is that it is relevant to a BA, not a DA.[60] Mr Ball was not directly asked about that, but his evidence on the topic was broadly consistent with Mr Reade’s.
- [103]I accept that the block was relevantly vegetated prior to the clearing in December 2020. I find that exhibit 10 shows the block after it was cleared in December 2020, and that the subject block had vegetation on the area where the house was to be constructed prior to that clearing.
- [104]Mr Ball referred to changes to the point-in-time aerial imagery as between November 2020 and April 2021. He did not specifically state what date in April 2021 the updated photography was taken. Mr Reade checked the aerial photography in April 2021, but it seems likely it was prior to the date that the image was updated on the website. The Site Investigation Summary Report,[61] completed on the day of the clearing, contains photos that are consistent with the image shown by Mr Ball to the Court as the one he relied on. Further, Mr Hoppen was informed by Ms Daly by email on the morning of the clearing that there were “40 plus trees” on the site.[62] Later that same morning, he emailed that he had been told that “only about 5” of the trees “were even worth mentioning”.[63] Finally, notwithstanding his tendency to challenge additional costs, he paid the fee for the clearing of the trees.
- [105]As explained by Kefford DCJ in Fairmont Group Pty Ltd v Moreton Bay Regional Council,[64] the issue of whether a development approval is required for the clearing of vegetation can involve a difficult trek through legislation, subordinate legislation and Council Planning Schemes. Neither party elected to undertake that trek, and the issue, on which the plaintiff held the onus, was litigated on the basis of the expert opinion evidence alone. Given that no submissions were received concerning the legislative path, I will as far as possible refrain from considering those matters.
- [106]The primary vegetation management overlay obviously applied to the whole of the subject block.[65] I accept Mr Reade’s opinion that this was sufficient to trigger the need for a DA to clear the vegetation in order to construct the planned dwelling on the subject block. It appears to be consistent with the requirements under the Logan Planning Scheme 2015.[66] I also accept that any BA sought after that portion of the subject block was cleared would trigger an enquiry as to the lawfulness of the clearing before the BA could be granted. For that reason alone, the plaintiff’s submissions that a DA was not required because the land was already cleared as at April 2021 cannot be accepted.
- [107]Further, Mr Hoppen’s evidence that a DA was not required when he moved the house more recently onto the subject block can carry no weight. His own Counsel expressly recognised that he is not an expert in the area of town planning[67] and so his evidence represents no more than his understanding of the result of his endeavours. Further, I have earlier noted the evidential difficulties attached to proof of this assertion. Additionally, nothing is known about whether the later certifier was aware of the earlier clearing done without express approval.
- [108]The contract expressly imposes the obligation on the plaintiff to have obtained any necessary DAs. Had it been necessary, and on the limited basis on which this issue was litigated, I would have found that a DA was necessary. On that basis, had the defendant asserted a right to terminate due to the failure of the plaintiff to obtain the necessary DA within 55 business days, it would have been entitled to terminate the contract for that reason.
- [109]I also accept that the plaintiff indicated a willingness to apply for a DA in the email of 17 April 2021, although I also accept that this had not been communicated to the defendant. Nonetheless, the right to terminate had accrued by that time. The defendant, had it known of the email, might have elected to continue with the contract but it was not obliged to. In the circumstances, the plaintiff’s belated willingness to apply for the DA did not deprive the defendant of its right to terminate the contract.
- [110]The issue of the retention of some of the deposit, in two instances, can be shortly dealt with. The framing fee of $1,980 was adequately explained by Mr Rijken, and Mr Hoppen effectively conceded the point. I find for the defendant on this issue.
- [111]Mr Hoppen seemed to focus his complaint about the overheads fee on his stated inability to re-use the marked plans with other builders, whereas Mr Rijken testified that it was actually for staffing costs associated with progressing the contract. When one considers the wording of clause 5.2, Mr Rijken’s evidence must be accepted.
- [112]The amount of $1,500 is clearly an estimated amount which has been reached through rounding out the actual costs. When one has regard to the contents of Exhibit 5, and allows for the fact that it does not include telephone calls and face-to-face meetings, the amount claimed is justified under clause 5.2.
- [113]I also find for the defendant on this issue.
- [114]It follows that none of the plaintiff’s claims can succeed.
Consideration – quantum
- [115]Consistent with established practice, I will consider the appropriate awards should I have erred on liability.
- [116]The plaintiff filed a Schedule of Damages in the Magistrates Court, which I assume precipitated the transfer of the proceedings to this Court given the quantum claimed in total. For some reason the document however was not physically on the file before me. It was tendered and became Exhibit 13. It included the amounts sought as a refund from the deposit.
- [117]The contract did not provide a mechanism for calculation of damages in the event of a breach, and so the common law principles concerning the calculation of those damages apply. The object is to place the plaintiff in as close a position as possible to the same position if the breach had not occurred. The onus of proving the quantum lies on the plaintiff.
- [118]The plaintiff appears to have considered that because issue had not been formally taken with the contents of the Schedule, they were deemed to be admitted. That is simply not right. It was not a pleading to which Part 4, Chapter 6 of the UCPR applied. Except in one instance, the Statement of Claim did not specify the amount of damages sought, contrary to rule 155 of the UCPR, and therefore the defendant was only required to respond to the one amount specifically pleaded.
- [119]In the one instance where the quantum sought was pleaded in the Statement of Claim, the defendant made various denials as to liability, but did not specifically plead to the quantum sought. In that instance, there has therefore been a deemed admission to that allegation.[68] Evidence was required to prove the other amounts.
- [120]The amounts sought as a refund from the deposit was both specifically pleaded and is ascertainable from the evidence.
- [121]I will consider the damages and other amounts claimed under the headings in the Schedule.
Loss of enjoyment of house/general damages
- [122]The plaintiff claims $30,000 for “not being able to move into their new home including disappointment, inconvenience and loss of enjoyment”. There has been no explanation given as to how the amount was calculated. The evidence was limited to evidence of frustration and disappointment at the time of the receipt of the letter from the certifier and as to their then living arrangements not being “ideal”.
- [123]Accepting some compensation is deserved under this head of damages, but also recognising the very limited nature of the evidence going to proof of it, I would award $5,000.
Increased cost of materials
- [124]The sum of $141,399.81 is claimed based on Mr Lowry’s calculations to build the planned house. The difficulty for the plaintiff is that the evidence establishes that they moved another house onto the subject block. There is no evidence of precisely when that occurred, nor what it cost to do. Further, there is no evidence that the plaintiff considers the present residence to be unsatisfactory, or that he otherwise intends to build in accordance with the plans.
- [125]Damages have not been proven under this heading and I decline to award them.
Increased rental costs
- [126]It is this award of damages which was specifically pleaded as to the amount claimed, namely $29,640. As noted earlier, there has been a deemed admission as to this amount. On the Schedule however the sum of $16,000 is claimed for what is said to be the plaintiff’s contribution to rent from 11 August 2021 (the date it is asserted the contract would have been completed) to 16 December 2022. The significance of the latter date is not explained.
- [127]Leaving aside doubts about the accuracy of the first date and the lack of explanation of the second date in the Schedule, given the deemed admission I would have been prepared to award the amount now claimed.
Losses
- [128]The sum of $1,004.43 is claimed as the contribution to the cost of mains water and sewerage, which it is said would not have been incurred had the contract been completed because the planned house had water tanks and a home treatment sewerage system.
- [129]Again, there is simply no evidence to support the claim and I decline to award damages on this basis.
- [130]A further amount of $7,370 (or $36.85 per day) is claimed as increased costs of transportation of children to and from school. The claim asserts that increased distances were involved for this transportation, which distances are precisely alleged in the Schedule, and that four trips per day were required. However, while there is evidence that the plaintiff at the time they signed the contract was residing in Park Ridge, there is no evidence of the location of the school or schools and there is no evidence as to the distances involved, nor why there is a need for four trips per day.
- [131]Again, there is simply no evidence to support the claim and I decline to award damages on this basis.
Refund of deposit
- [132]Inexplicably, the plaintiff seeks $19,304.79 in the Schedule. The trial was conducted only on the appropriateness of the retention of the two sums totalling $3,480, which were the amounts pleaded in the Statement of Claim. No explanation has been offered as to why the higher sum should be granted. The evidence only concerns the lesser sum, and so my consideration of quantum is limited to that.
- [133]If I have erred on the liability issue concerning this aspect of the Claim, I would order payment of whatever sum was found to have been improperly retained, capped at $3,480.
- [134]Summary of damages/awards
- General damages$5,000.00
- Increased cost of materialsNil
- Increased rental costs$16,000.00
- LossesNil
- Refund of depositup to $3,480.00
TOTALup to $24,480.00
Footnotes
[1] Affidavit of Andrew Rijken filed 24 May 2023, para 12.
[2] Ts 3-7.
[3] Schedule Item 14, cl 5.1.
[4] Schedule Item 14.
[5] Clause 5.2.
[6] Schedule Item 8.
[7] Schedule Item 8, cl 8.1.
[8] Clause 10(1)(d).
[9] Clause 1.
[10] Exhibit 5.
[11] Exhibit 2, p 9.
[12] Exhibit 2, p 11.
[13] Exhibit 2, p 17.
[14] Exhibit 2, pp 4, 7, 9, 10, 13, 14, 15, 18, 19.
[15] Exhibit 1, tab 15.
[16] Exhibit 1, tab 17.
[17] Exhibit 1, tab 18.
[18] Exhibit 8.
[19] Exhibit 9.
[20] Exhibit 1, tab 3.
[21] Exhibit 1, tab 4.
[22] Amended Defence at para 12 and Ex 2, p 21. The Statement of Claim asserted that the monies were paid on 21 May 2021. Although the Reply, broadly, “denies and rejects the allegations” in the Amended Defence at para 12, no evidence was led to contradict the date of 9 June 2021.
[23] Ts 3-27, ll 38-39.
[24] Exhibit 5, p 443.
[25] Although it was said that the document at Ex. 1, tab 20 was correspondence from that certifier to that effect, the form in which it was provided makes it incomprehensible. Although Counsel said a proper form of the document would be provided (Ts 3-27, ll 30-48), it has not been.
[26] Ts 3-37, l 10.
[27] Exhibit 3.
[28] Exhibit 3.
[29] Exhibit 5, p 399.
[30] Ts 3-22, ll 8-25
[31] Exhibit 1, tab 17.
[32] Exhibit 5, p 429.
[33] See Exhibit 4, p 1.
[34] Ts 3-53, l-12.
[35] Exhibit 1, tab 21.
[36] Exhibit 5, p 423.
[37] Exhibit 5, pp 426-429.
[38] Ts 4-9, l 34.
[39] Ts 4-10, l 7.
[40] Ts 4-10, l 44.
[41] Ts 4-10, l 27.
[42] Ts 4-19, ll 25-27.
[43] Ts 4-21, ll 34-37.
[44] Ts 4-21, ll 44-48.
[45] Ts 4-31, ll 43-46.
[46] Ts 4-85, l 46 to 4-86, l 17.
[47] Exhibit 1, tab 25.
[48] (2004) 88 SASR 152, [27]-[28].
[49] Exhibit 5, p 229.
[50] Exhibit 5, p 293.
[51] Exhibit 5, p 311.
[52] Exhibit 5, p 357.
[53] Exhibit 5, p 361.
[54] Exhibit 5, p 390.
[55] Exhibit 5, p 402.
[56] Exhibit 5, p 229.
[57]Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, 607.
[58]supra at 615.
[59] Ts 3-27, ll 38-39.
[60] Ts 4-10, l 27.
[61] Exhibit 1, pages 1 and 4.
[62] Exhibit 5, p 234.
[63] Exhibit 5, p 266.
[64] [2018] QPEC 20, which reasons and decision were upheld on appeal in Fairmont Group Pty Ltd v Moreton Bay Regional Council [2019] QCA 81.
[65] Exhibit 4, p 1.
[66] Tables 5.10.2.1 and 5.10.2.1.1.
[67] TS 3-42, l 17.
[68] Rule 166 of the UCPR.