Blake v Burrows [2021] QCAT 115

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Blake v Burrows [2021] QCAT 115 PARTIES: MICHAEL BLAKE (applicant) v DAVID M BURROWS (respondent) APPLICATION NO/S: BDL070-20 MATTER TYPE: Building matters DELIVERED ON: 26 March 2021 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Brown ORDERS: David M Burrows must pay Michael Blake the amount of FORTY-FIVE THOUSAND, SIX HUNDRED AND SIXTY-SEVEN DOLLARS AND NINETY-TWO CENTS ($45,667.92) within 28 days of the date of this decision. David M Burrows must pay Michael Blake costs fixed in the amount of THREE HUNDRED AND FORTY-FIVE DOLLARS AND EIGHTY CENTS ($345.80) within 28 days of the date of this decision. CATCHWORDS: DAMAGES – ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT – PARTICULAR CONTRACTS – OTHER PARTICULAR CASES – where the applicant contracted for the respondent to undertake building work – where there was variation to the scope of works – where the applicant paid a significant portion of the contract price – where building works were either defective or incomplete – where respondent removed tools and signage from worksite – where respondent does not respond to letters or directions – where applicant had to contract with a third party to rectify or complete the works – whether the applicant repudiated the contract – whether applicant entitled to damages Queensland Building and Construction Commission Act 1991 (Qld), s 77, Sch 1B s 4, s 7, Sch 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48, s 100 -- 1 of 10 -- 2 Bellgrove v Eldridge (1954) 90 CLR 613 Concut Pty Ltd v Worrell (2000) 176 ALR 693 Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR 358 Hadley v Baxendale (1854) 9 Ex 341 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Lyons v Dreamstarter [2011] QCATA 142 Robinson v Harman (1848) 1 Ex 850 Roo Roofing Pty Ltd v Commonwealth of Australia [2019] VSC 331 Societe Anonyme Pecheries Ostendaises v Merchants’ Marine Insurance Co [1928] 1 KB 750 Ventura v Svirac [1961] WAR 63 Wilson v Kirk Contractors Pty Ltd (1991) 7 BCL 284. 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 [1] Mr Burrows undertook building work for Mr Blake. Mr Blake says that the building work is defective. Mr Blake filed an application for domestic building disputes claiming damages for breach of contract. Mr Burrows failed to file a response. Despite being directed by the tribunal on two occasions to file a response Mr Burrows did not do so. Having been satisfied that Mr Burrows had been properly served with the application and that in failing to comply with the directions to file a response Mr Burrows was unnecessarily disadvantaging Mr Blake,1 on 2 September 2020 the tribunal made a final decision in favour of Mr Blake condition upon the assessment of damages. [2] Mr Blake was directed to file a statement of evidence in support of his claim for damages. Mr Blake has complied with the direction.2 [3] Mr Blake’s claim for damages now falls to be assessed. Preliminary findings [4] I am satisfied as to the following and make findings accordingly: (a) At all relevant times Mr Blake was a building owner;3 (b) At all relevant times Mr Burrows was a building contractor;4 (c) On 8 November 2019 the parties entered into a contract for the performance of building work by Mr Burrows for Mr Blake;5 1 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48. (‘QCAT Act’) 2 Statement filed 14 September 2020 by Michael Blake. 3 Queensland Building and Construction Commission Act 1991 (Qld), Sch 1B (‘QBCC Act’). 4 Ibid. 5 Construction contract between David Burrows and Michael Blake, signed 8 November 2019. -- 2 of 10 -- 3 (d) The contract specified the following scope of works: (i) Renovation works including framing, sheeting, cladding, fix out, cabinetry and kitchen installation, fencing, other non structural, non load bearing works, cosmetic. (e) The contract price was $45,782.00; (f) The parties subsequently agreed to vary the contract price to $41,620.00;6 (g) The parties subsequently agreed to vary the scope of works to include the following works (the variation works): (i) Downstairs ceiling demolition; raising carport; raising fence height; installation of downstairs ceiling insulation; remove and replace internal staircase; laying downstairs flooring including underlay; front door frame; upstairs shower waterproofing; butler’s pantry shelving.7 (h) The agreed price of the variations was $8,537.00; (i) The contract was a level 2 regulated contract;8 (j) The work required to be performed under the contract, and in fact performed by Mr Burrows, was reviewable domestic work and therefore domestic building work;9 (k) Mr Blake paid a total of $37,537.00 of the contract price to Mr Burrows which included the price of the agreed variations;10 (l) The dispute between the parties relates to the performance of reviewable domestic work;11 (m) The dispute between the parties is a domestic building dispute;12 (n) Prior to commencing these proceedings, Mr Blake complied with the requirements of s 77(2) of the Queensland Building and Construction Commission Act 1991 (Qld). The dispute between the parties and relevant findings [5] The history of the dispute between the parties can be ascertained from the statement of Mr Blake and correspondence from Mr Blake’s solicitors to Mr Burrows. [6] I am satisfied as to the following and make findings accordingly: (a) The building works commenced on 18 November 2019; 6 Letter from David Burrows to Michael Blake dated 9 November 2019. 7 Letter from David Burrows to Michael Blake dated 18 January 2020. 8 QBCC Act, Sch 1B s 7. 9 QBCC Act, Sch 1B s 4, Sch 2. 10 Letter from David Burrows to Michael Blake dated 18 January 2020. 11 QBCC Act, Sch 2. 12 QBCC Act, Sch 1B s 4. -- 3 of 10 -- 4 (b) On 22 January 2020 Mr Blake wrote to Mr Burrows and identified 8 items of complaint relating to the building work;13 (c) On 22 January 2020 Mr Burrows returned to the site and removed his tools and signage; (d) Mr Burrows has not returned to the site; (e) Mr Blake commissioned Gowdie Management Group Pty Ltd to provide a report in relation to the building work undertaken by Mr Burrows; (f) Following a physical inspection of the works, Gowdie Management Group Pty Ltd prepared a report dated 3 March 2020 (the building report);14 (g) The building report identified: (i) The workmanship of the building works undertaken by Mr Burrows was of a very poor standard; (ii) Building approvals had not been obtained for the renovation works; (iii) Building approvals were required for the renovations; (iv) Mr Burrows should not have commenced the works unless building approvals had been provided by a private certifier; (v) Mr Blake should seek advice from a private certifier as to whether development approval is required for the works. This will require the preparation of plans by a licensed building designer; (vi) A structural engineer is required to provide design and certification for all structural modifications and is a pre-requisite to obtaining a building approval; (vii) Installation of steel lintels: the lintels have been installed incorrectly and are not structurally effective; (viii) A structural engineer is required to review the existing structure and provide design advice on proposed window locations and suitable design and installation methods to avoid structural collapse of the brickwork and other structures; (ix) Removal and reinstatement of brickwork by a qualified bricklayer; (x) Internal stairs: poorly installed and non-compliant with the Building Code of Australia. Stairs are required to be removed and replaced; (xi) Upper floor framing will be required to be modified to provide sufficient height above internal stairs; (xii) Window installation incomplete with windows installed without adequate packing and fixing to the structure. Windows installed incorrectly. Complete removal of windows required; (xiii) External cladding both incomplete and incorrectly installed. 13 Letter from Michael Blake to David Burrows dated 22 January 2020. 14 Building report by Gowdie Management Group Pty Ltd dated 3 March 2020. -- 4 of 10 -- 5 (h) On 3 March 2020 Mr Blake’s solicitors wrote to Mr Burrows enclosing a copy of the building report and requiring a response from Mr Burrows to the report and a plan to address the items of defective and incomplete building work referred to in the report. The response was required to be provided by 10 March 2020; (i) Mr Burrows did not respond to the letter of 3 March 2020; (j) On 19 March 2020 Mr Blake’s solicitors wrote to Mr Burrows giving notice of termination of the contract. Consideration [7] In the absence of Mr Burrows engaging in these proceedings, the evidence of Mr Blake is uncontested. [8] I will address firstly the issue of the termination of the contract. [9] By clause 4 of the contract, if either party wished to terminate the contract prior to completion of the works, the party was required to give 10 days written notice to the other party. By clause 9 of the contract, in the event of termination of the contract by Mr Blake before completion of the works, and provided Mr Burrows had not breached the contract, Mr Burrows was entitled to ‘pro rata payment of the Payment to the date of termination.’ The ‘Payment’ was the contract price. By clause 23 of the contract, time was of the essence. [10] The contract did not exclude resort by the parties to common law entitlements in the event of breach. Unless there is an express or implied agreement to the contrary, a contractual right to terminate for breach does not displace any right of termination arising by operation of law in respect of breaches of essential terms, sufficiently serious breaches of non-essential terms or repudiation.15 [11] In terminating the contract Mr Blake relied upon what was asserted to be repudiatory conduct by Mr Burrows. That conduct was not particularised beyond the following passage from the solicitors’ letter of 19 March 2020: You have engaged in conduct which has repudiated the contract and your statutory and legal obligations to our clients under the QBCC legislation. [12] In order for conduct to be repudiatory it must be such that it evinces an intention by a party to no longer to be bound by the terms of the contract. In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd it was stated: … repudiation turns upon objective acts and omissions, not on uncommunicated intention, and it is sufficient that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it. 16 [13] In determining whether there has been repudiation all the circumstances of the matter must be considered.17 A failure to perform may constitute repudiatory conduct even 15 Concut Pty Ltd v Worrell (2000) 176 ALR 693 at 699–700. 16 (1989) 166 CLR 623, 658. 17 Wilson v Kirk Contractors Pty Ltd (1991) 7 BCL 284. -- 5 of 10 -- 6 if not in breach of an essential term if that failure manifests unwillingness or inability to perform in circumstances where the other party is entitled to conclude that the contract will not be performed substantially according to its requirements.18 [14] I find that on 22 January 2020 Mr Burrows decamped the site, removing all of his tools and equipment and his signage. There is no evidence that Mr Burrows subsequently attempted to return to the site. There is no evidence that Mr Burrows attempted to resume the works at any time after 22 January 2020 and prior to the termination of the contract by Mr Blake. This might be explained by the evidence of Mr Blake that Mr Burrows ‘was asked to pause all activities … pending QBCC involvement and investigation into structural building defects caused by the Respondent.’19 However there is no evidence that Mr Burrows responded to the letter of 22 January 2020 from Mr Blake listing the 8 complaint items. I accept that Mr Burrows did not respond to Mr Blake’s solicitors’ letter of 3 March 2020 or attempt in any way to address the very serious matters raised in the building report provided to Mr Burrows under cover of that letter. Even if Mr Burrows was asked to ‘pause’ the build pending the investigation by the QBCC, his actions in removing all of his equipment and his signage speak of an intention not to ‘pause’ but rather to cease all building activity. All of these matters lead me to conclude that Mr Burrows abandoned the site and thereby evinced an intention to no longer be bound by the contract nor to perform his obligations under the contract. Such conduct was repudiatory and gave rise to an entitlement by Mr Blake to terminate the contract. [15] I find that Mr Blake accepted Mr Burrows’s repudiation and lawfully terminated the contract on 19 March 2020. [16] The consequence of Mr Blake’s lawful termination of the contract is that he is entitled to damages. The measure of damages recoverable by a building owner for breach of a building contract is the difference between the contract price and the cost of making the work conform to the contract.20 This is subject to the proviso that the rectification and/or completion works being both necessary and reasonable.21 It is also necessary to give credit for any unpaid part of the contract price.22 [17] Mr Blake says the following about his claim for damages: (a) He entered into a contract with another contractor to undertake rectification of the defective building works performed by Mr Burrows. The cost of these works was $33,721.92; (b) Mr Burrows was paid an amount of $37,537.00. Works to the value of $10,000.00 were not commenced and no refund of this amount was forthcoming from Mr Burrows. [18] Mr Blake claims total damages of $43,721.92. [19] Before me is a copy of the contract entered into by Mr Blake with WS Renovations. The contract is signed and dated 10 March 2020. The scope of works under the contract is identified in a quote that forms part of the contract. The contract price is $36,683.00 including GST. Doing the best I can with the evidence before me, the 18 Roo Roofing Pty Ltd v Commonwealth of Australia [2019] VSC 331. 19 Statement of Michael Blake dated 14 September 2020. 20 Robinson v Harman (1848) 1 Ex 850; Bellgrove v Eldridge (1954) 90 CLR 613. 21 Bellgrove v Eldridge (1954) 90 CLR 613. 22 Ventura v Svirac [1961] WAR 63. -- 6 of 10 -- 7 scope of works does appear to relate to the works identified in the building report as requiring rectification, subject to what I have to say below regarding the replacement of the internal staircases. [20] I am satisfied on the evidence before me that Mr Blake has paid to WS Renovations a total amount of $32,521.92 in respect of the contract works. Mr Blake says that he was also required to pay $1,200.00 for an engineer’s inspection and report prior to the building works being undertaken by WS Renovations. I am satisfied that Mr Blake paid this amount. The total paid to WS Renovations was therefore $33,721.92. I am satisfied that the work required to be undertaken by WS Renovations, including obtaining the engineer’s report, was necessary and reasonable to rectify the defective building work undertaken by Mr Burrows. [21] The claim by Mr Blake for repayment of monies for incomplete works is problematic for a number of reasons. [22] As I have said earlier in these reasons, the measure of damages in a claim by a building owner where a building contractor is in breach of contract is the cost incurred by the building owner in bringing the works into conformity with the terms of the contract. If works are defective, this will be the cost incurred in having the works rectified. If the works are incomplete, this will be the cost incurred in having the works completed. Mr Blake’s claim appears to be one in restitution on the basis of unjust enrichment. He says that Mr Burrows has been paid for works he did not undertake and that he should be required to repay to Mr Blake an amount in respect of the incomplete work. [23] In support of his claim, Mr Blake says that the claim for rectification of defective building works relates to the downstairs renovations and the variation works. He says that a number of items of building work were not commenced, these items being: (a) New fencing surrounding the property; (b) Replacing rear internal staircases; (c) Replacing rear deck balustrades and rear staircase; (d) Constructing shed under the rear deck; (e) Replacing external structural steel support beams at the front of the property; (f) Raising the existing carport by adding longer steel support posts. [24] In relation to each of these items Mr Blake says as follows: (a) New fencing around property: this was within the contractual scope of works. Mr Blake paid an additional amount of $300.00 (inclusive of GST) to Mr Burrows for the fencing works. The fencing works were completed at a cost to Mr Blake of $9,154.00; (b) Replacing internal staircases: this was within the varied scope of contractual works. The replacement of the internal stairs was undertaken by WS Renovations; (c) Replacing rear deck balustrades and rear staircase: the contractual scope of works required the removal and replacement of the rear deck and external staircase for a cost of $3,800.00 and to replace the rear deck balustrades and handrails for a cost of $2,100.00. Mr Blake says that this work remains incomplete; -- 7 of 10 -- 8 (d) Constructing shed under the rear deck: the contractual scope of works required this item to be undertaken, the cost of which was $2,980.00. This work remains incomplete; (e) Replacing external structural steel support beams at the front of the property: This was included within the contractual scope of works. Mr Blake says that this work consists of the replacement of two steel posts at the front of the property for $1,040.00. This work remains incomplete; (f) Raising the existing carport by adding longer steel support posts: This was within the original scope of works and an allowance of $3,500.00 was made in respect of the cost of the work. A variation in the amount of $650.00 was agreed and paid by Mr Blake. This work remains incomplete. [25] In relation to the items referred to above, I find as follows: (a) The fencing work was within the scope of works. The work was not completed by Mr Burrows. Mr Blake was required to engage a contractor to complete the works at a cost of $9,154.00. It was both reasonable and necessary for the works to be carried out and the amount claimed is recoverable by Mr Blake; (b) Replacing internal staircases: I have referred to this work earlier in the reasons when dealing with the works undertaken by WS Renovations. I am satisfied that this work was incomplete and that WS Renovations undertook the completion work. The amount recoverable in respect of the completion works is included in the amount allowed for the cost of rectification works paid to WS Renovations; (c) Replacing rear deck balustrades and rear staircase: the contractual scope of works required the removal and replacement of the rear deck and external staircase for a cost of $3,800.00 plus GST and to replace the rear deck balustrades and handrails for a cost of $2,100.00 plus GST. This is a total of $5,900.00 plus GST. I am satisfied that this works remains incomplete. I am satisfied that the amount paid to Mr Burrows by Mr Blake was $5,900.00 plus GST for these items of work.23 I am satisfied that it is reasonable and necessary that the works be completed and that the amount paid by Mr Blake to Mr Burrows represents an appropriate amount to allow for the cost Mr Blake is likely to incur to complete the works. The amount allowed for this item is $6,490.00 inclusive of GST; (d) Constructing shed under the rear deck: I am satisfied that the contractual scope of works required the construction by Mr Burrows of an enclosed area under the rear deck, lockable and weatherproof. I am satisfied that the amount paid to Mr Burrows by Mr Blake was $2,980.00 plus GST for this item of work.24 I am satisfied that it is reasonable and necessary that the works be completed and that the amount paid by Mr Blake to Mr Burrows represents an appropriate amount to allow for the cost Mr Blake is likely to incur to complete the works. The amount allowed for this item is $3,278.00 inclusive of GST; 23 Refer to Respondent’s tax invoice dated 15 November 2019. 24 Ibid. -- 8 of 10 -- 9 (e) Replacing external structural steel support beams at the front of the property: I am satisfied that this item of work formed part of the contractual scope of works. I am satisfied that the amount paid to Mr Burrows by Mr Blake was $1,040.00 plus GST for this item of work.25 I am satisfied that it is reasonable and necessary that the works be completed and that the amount paid by Mr Blake to Mr Burrows represents an appropriate amount to allow for the cost Mr Blake is likely to incur to complete the works. The amount allowed for this item is $1,144.00 inclusive of GST; (f) Raising the existing carport by adding longer steel support posts: I am satisfied that this item was within the original scope of work. I am satisfied that the amount paid to Mr Burrows by Mr Blake was $3,500.00 plus GST in addition to an agreed variation in the amount of $650.00 inclusive of GST for this item of work.26 I am satisfied that it is reasonable and necessary that the works be completed and that the amount paid by Mr Blake to Mr Burrows represents an appropriate amount to allow for the cost Mr Blake is likely to incur to complete the work. The amount allowed for this item is $4,500.00 inclusive of GST. [26] Accordingly, the total cost incurred by Mr Blake, or which will be incurred by Mr Blake, in having the works completed is $24,566.00. [27] I therefore calculate Mr Blake’s entitlement to damages as follows: Contract price $ 41,620.00 ADD agreed variations (+/-) $ 8,537.00 Total contract price as varied $ 50,157.00 LESS amount paid to Mr Burrows $ 37,537.00 Balance owing under the contract $ 12,620.00 Cost of rectification works $ 33,721.9227 Cost of completion works $ 24,566.00 Sub total $ 58,287.92 LESS balance owing under the contract $ 12,620.00 TOTAL $ 45,667.92 [28] In addition to the amounts claimed for rectification and completion costs, Mr Blake claims: (a) Legal costs $1,897.50 (b) Building inspection report fees $2,750.00 (c) Structural engineer report fees $1,200.00 25 Ibid. 26 Ibid. 27 Inclusive of cost of engineer’s inspection. -- 9 of 10 -- 10 [29] I have allowed the structural engineer report fees as part of the total rectification costs paid to WS Renovations. [30] In relation to the building inspection report fees there is before the Tribunal evidence of payment by Mr Blake to Gowdie Management Group Pty Ltd of an amount of $2,750.00 in respect of carrying out a site inspection of the works and to prepare a building report identifying defective works and safety issues. It is necessary to consider whether the claim by Mr Blake in respect of the cost of the Gowdie report is recoverable as damages naturally resulting from the breach by Mr Burrows or damage which might reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.28 I am not satisfied, on the evidence, that the claim is within the latter type of consequential damages. Nor am I satisfied that the cost of report is recoverable as damage naturally resulting from the breach by Mr Burrows. In my view, the latter type of damages is confined, in this case, to the claim for rectification and completion costs. I make this determination having regard to the background and circumstances of the breach and the background and circumstances giving rise to the loss claimed as referred to in these reasons. The claim for the Gowdie report fees is not allowed. [31] In relation to the legal fees claimed by Mr Blake, the long standing principle is that a successful applicant cannot recover costs of proceedings from the respondent as damages.29 Therefore it is necessary to look to the principles relevant to awarding costs in Tribunal proceedings. The starting point in Tribunal proceedings is that, subject to the QCAT Act or an enabling Act, each party must bear their own costs unless the interests of justice require a different order to be made.30 The relevant enabling Act is the QBCC Act. The QBCC Act empowers the Tribunal to make an order for costs.31 [32] In proceedings for a building dispute the Tribunal has a broad discretion to award costs which must be exercised judicially and not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation.32 [33] Pre-action costs may be recovered if the relevant test for determining recoverability is satisfied.33 I am not satisfied in the present case that the relevant test has been satisfied. Accordingly, the claim for legal costs is not allowed. Conclusion [34] Mr Burrows is ordered to pay Mr Blake the amount of $45,667.92 within 28 days of the date of this decision. [35] Mr Burrows is also ordered to pay Mr Blake’s costs fixed in the amount of $345.80 being the filing fees on the originating application. 28 Hadley v Baxendale (1854) 9 Ex 341; Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR 358. 29 Cockburn v Edwards (1881) 18 Ch D 449. 30 QCAT Act, s 100. 31 QBCC Act, s 77(3)(h). 32 Lyons v Dreamstarter [2011] QCATA 142. 33 Societe Anonyme Pecheries Ostendaises v Merchants’ Marine Insurance Co [1928] 1 KB 750. -- 10 of 10 --