D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande [2018] QCAT 112

CITATION: D A Radic Pty Ltd t/as David Radic Prestige Homes v Colagrande & Ors [2018] QCAT 112 PARTIES: D A Radic Pty Ltd t/as David Radic Prestige Homes (Applicant) v Ces Colagrande Rebecca Colagrande Anti-Ageing Australia Pty Ltd (Respondents) APPLICATION NUMBER: BDL118-16 MATTER TYPE: Building matters HEARING DATE: 29 March 2017, 20 July 2017 HEARD AT: Brisbane DECISION OF: Member Paratz DELIVERED ON: 12 March 2018 DELIVERED AT: Brisbane ORDERS MADE: 1. Ces Colagrande, Rebecca Colagrande and Anti-Ageing Australia Pty Ltd are to pay to D A Radic Pty Ltd t/as David Radic Prestige Homes the amount of $58,235.83 for claim plus $1,242.00 for interest, being a total of $59,477.83. CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY – where the parties entered into a building contract for construction of a luxury home – where disputes arose as to variations and as to the amount payable for the works – where part payment for the works was made in cash CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – where quantum of various variations in dispute -- 1 of 36 -- 2 Domestic Building Contracts Act 2000 (Qld), s 82(b), 84(3), 84(4), 84(6) Queensland Building and Construction Commission and Other Legislation Amendment Act 2014 (Qld), s 79 Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37 REPRESENTATIVES: APPLICANT: Mr J G Hitchcock of AJ and Co Lawyers RESPONDENT: Mr B Ledger of Barren and Allen Solicitors REASONS FOR DECISION [1] Dr Ces Colagrande, Rebecca Colagrande, and Anti-Ageing Australia Pty Ltd contracted with D A Radic Pty Ltd trading as David Radic Prestige Homes (‘the builder’) to build a very large prestige home at Broadbeach on the Gold Coast in Queensland. [2] A dispute arose as to final payment. [3] On 16 May 2016, the builder filed an Application for domestic building dispute in the Tribunal, naming Dr Ces Colagrande and Rebecca Colagrande as Respondents. An Amended Application was then filed on 22 September 2016. [4] The Amended Application sought payment of an amount owing of $58,927.63, together with interest and costs, and declarations as to authorising variations and to the contract term and contract completion dates. [5] Dr Colagrande and Rebecca Colagrande filed a Response and Counter- Application on 6 July 2016, and then an Amended Response and Counter- Application on 5 October 2016. [6] In the amended Response, Dr Colagrande and Rebecca Colagrande said that Anti-Ageing Australia Pty Ltd was also a co-owner of the property and should be joined as a party in the proceedings. At the start of the hearing I ordered, by consent, that Anti-Ageing Australia Pty Ltd be added as a Respondent and as a Counter-Applicant in the proceedings. I shall refer to all three respondents collectively as ‘the owners’ in these reasons. [7] The Counter-Application sought amounts as liquidated damages, negative variations, and overpayments made to the builder by the owners. [8] The matter was heard over two days, with written submissions thereafter. The first hearing day was 29 March 2017. The second scheduled hearing day of 30 March 2017 had to be abandoned, due to closure of the Tribunal -- 2 of 36 -- 3 hearing rooms because of adverse weather conditions. The second hearing day proceeded on 20 July 2017. Final submissions were received on 13 September 2017. History [9] The owners and the builder entered into a contract to construct a new multi- level home at 127 Old Burleigh Road, Broadbeach, dated the 21 May 2014 for the contract sum of $2,291,136.00. [10] The actual cost of the home was higher than the contract sum, as the owners provided some materials for the construction and had some works conducted directly by themselves. [11] At some stage in the progress of the works, a decision was made to increase the scope of works by constructing a roof deck structure. It is agreed that an amount of money was paid in cash by the owners to the builder for those additional works, but there is dispute as to the amount of the payment and the amount properly due for the roof works. [12] The initial work was described in the contract as:1 As per annexure 2 attached. Construction of three storey residential dwelling with an underground basement. [13] The completion period provided for in the contract was 420 days, described as follows:2 A. Construction days (excluding delays allowed in ‘B’) Business days needed to construct the works = 365 Plus B. Delays allowed for which can be estimated (‘calculable delays’): (i) Inclement weather allowance (business days) = 30 days (ii) Other likely delays, if any (business days) = Nil (iii) Non-working days (incl. w/ends, RDOs, public holidays, etc.) = 25 Total delay days allowed (i) + (ii) + (iii) = 55 Completion period: Construction Days (Item 4A) 1 QBCC New Home Construction Contract, Item 1. 2 QBCC New Home Construction Contract, Item 4. -- 3 of 36 -- 4 Plus Total delay days allowed above (Item 4B) = 420 [14] The contract price was comprised as follows:3 (a) Lump Sum Component $2,160,136 (incl. GST) (includes deposit in item 9) (b) Prime Cost items (if any) $81,000 (incl. GST) (c) Provisional sums (if any) $50,000 (incl. GST) Total Price: $2,291,136 [15] Liquidated damages were provided for in the contract as follows:4 $250 per day for each calendar day of delay in achieving Practical Completion [16] The Interest Rate on overdue payments was provided for in the contract as 5% per annum.5 [17] Work commenced on 28 May 2014, and the contract work was completed by 18 December 2015 when the building was handed over. [18] The builder sought payment of a final amount of $191,482.73 at the time of handover. This amount was comprised of two components - $114,556.80 being the practical completion stage payment of the contract, and $76,925.93 being a combined variation claim and contract adjustment. [19] The owners disputed the amount owing at handover, and deducted an amount of $53,047.30, paying an amount of $138,435.43. The disputed amount was comprised of $27,177.63 for Variations 9 to 14, and an amount of $25,250.00 for liquidated damages. [20] The builder’s claim in these proceedings is for the amount of $58,927.63 plus interest plus costs. This is comprised of the amount not paid at handover of $53,047.30 plus further amounts of $5,880.33. [21] The owners’ claim in these proceedings is described by them as follows: (5) At its simplest the Home Owners allege that the dispute regarding variations 9 to 14 has already been settled on the 18th December 2015, and in the alternative, the Home Owners bring a Counter-Application and make claim and seek orders and relief that: (a) The Home Owners were entitled to liquidated damages of $250 per day for 101 days pursuant to the Building Contract for delays in practical completion and were and are entitled to set this 3 QBCC New Home Construction Contract, Items 7 and 8. 4 QBCC New Home Construction Contract, Item 12. 5 QBCC New Home Construction Contract, Item 13. -- 4 of 36 -- 5 amount off against any amount found to be owing to the Applicant; and (b) Are entitled to a refund for negative variations of $13,050 for the front gate, the Landscaping, and other works not performed; and (c) Are entitled to a refund being the difference between what QCAT determines as owing or owed to the Applicant and that paid over and above to the builder by the respondents including the $165,000 paid in cash; and (d) The difference between the $165,000 paid in cash and the costs of the roof deck and other works; and (e) Costs. [22] The owners’ Counter-Application relates to the difference between the amount of $165,000 which they say they have paid to the builder for the roof deck works, and the adjusted cost of the roof deck works (being the cost price plus a reasonable builder’s margin, less a negative variation from the original design). [23] The matter concerns disputes as to variations (including the roof deck) and liquidated damages. [24] A schedule of the variations in dispute was filed at the hearing.6 The items in dispute are as follows: Number Item Radic QS V009 3 Porcelain Sheet $17,616.50 $8,439.00 4 Credit for tiling -$4,620.00 -$5,390.00 12 ZIP Tap install $330.00 $452.00 13 Insinkerator install $475.00 $753.00 V010 3 Doors Vestibule $420.00 $468.00 15 Plumbing Labour $5,880.33 $5,708.00 V011 2 Extra render $2,134.00 $2,515.00 6 Exhibit 12. -- 5 of 36 -- 6 3 15m SS Grate add $4,290.00 $3,852.00 5 Blockwork raised $252.00 6 Aluminium Louvre $1,753.00 $2,200.00 11 Tiling Play Area $2,495.00 $2,701.00 15 Stone Column TV $924.00 $1,269.00 V013 2 Plumbing $1,626.00 $2,193.00 4 Splashback $995.00 $1.070.00 5 Extend Section $4,860.00 V014 1 BBQ fabricated frame $2,805.00 $3,631.00 2 Modify benchtop frame $198.00 Inc Item 1 3 Fab counter frame $517.00 Inc Item 1 4 Door handle $1,309.00 $1,313.00 5 Robinhood iron $360.00 $375.00 6 Front gate credit -$1,425.00 -$2,239.00 7 Landscape allowance -$3,050.00 -$7,627.00 [25] The reference ‘QS’ is to Mr Richard Ray of Accurate Estimating Services (Quantity Surveyors and Construction Cost Consultants) who prepared reports for the owners and gave evidence at the hearing. Was the builder’s claim compromised? [26] The owners submit that the dispute was settled ‘in full and final satisfaction’7 at the time the discussion was held with the builder on 18 December 2015. [27] Dr Colagrande said in his statement8 as to the meeting: 15. On the date of the handover when she (Natasha Radic) and Radic attended the house I calculated an amount I considered to be more 7 Closing Argument (Respondents) filed 4 September 2017. 8 Statement Dr Colagrande filed 24 January 2017. -- 6 of 36 -- 7 than what I owed them after taking into account 101 days of delays and the liquidated damages of $25,250 owing to me, my wife and Anti- Ageing under the contract. I deducted the liquidated damages. I then offered orally to them payment of $138,435.43 on the basis that it was full and final settlement for the works performed under the building contract as varied by written agreement, and works under the undocumented variations 9 to 14, and the roof deck works, after taking into account the previous payment of cash of $165,000. Radic orally accepted and took the payment, and I believed that was the end of the dispute and they left. [28] Mr Radic has a very different recollection as to the handover meeting. He says that he prepared a final claim for variations, reconciling the contract price and sent it to Dr Colagrande on 7 December 2015. He said the work was largely finished except for the owners’ sub-trades, finishing touch-ups and a site clean. He said that he did not hear anything more from the owners at all about final variations until 17 December 2015, when Dr Colagrande advised him by telephone that he would be disputing some of the variations. He said that on 18 December, Dr Colagrande produced a spreadsheet, which he had never seen before, showing $138,435.43 as a balance and had a cheque drawn for that amount. [29] Mr Radic said that he had obtained legal advice as to his having an obligation to handover despite there being a dispute as to payment for variations, and that he did not accept the payment as full and final payment: 44. We had legal advice prior to the meeting on 18 December 2015 and had spoken to the HIA and were advised that we could not refuse handover due to a dispute or refusal to pay the unsigned variations by the owners, and had been told that we would have to make a claim to QCAT to authorise payment if there was an issue or dispute about them. We had also been advised if there was a problem, to make it clear we did not accept the payment in full and final settlement of all obligations and would be pursuing the balance. 45. We did not accept the payment of $138,435.43 on 18 December 2015 as full and final payment. Mr Collagrande did not say that and the money was not given to us on that basis. What he actually said was that he had been advised we could not refuse handover if he paid that amount. He proceeded to tell us if we have an issue with the final payment he was making, then we would have to pursue it through QCAT. We said to Mr Ces Colagrande that we would be pursuing the balance owing through QCAT. He said ‘we have lots of information about you, my father was on site all the time, he saw what went on here, we have lots of evidence, we will have a big counter-claim, my barristers will deal with you, and you won’t get a cent.’ It was a tense and heated meeting. Ces Colagrande’s father was present at the time and said to us ‘You think you’re smarter than us, but you aren’t and you will never beat us’. The last words said by us as we left the meeting were, we will see you in the tribunal. -- 7 of 36 -- 8 [30] Ms Radic had a similar recollection to her husband as to the handover meeting and noted the financial effect of the claimed deduction:9 We would never accept this a final business as we are such a small business and cannot afford to be out of pocket $59k. This has been a huge financial burden on us and caused a lot of stress for me and my family. [31] If the parties had agreed to accept the payment at handover as full and final settlement, that would have been the end of this matter. The action would have been compromised, and neither would have a further claim against the other. [32] The settlement of the matter would have been an event of major significance. Dr Colagrande had obtained legal advice prior to the handover meeting. It is curious that whilst he had a spreadsheet prepared in advance of the meeting and had a cheque already prepared, he did not have a written acceptance of the payment as final settlement also prepared in advance. If there had been a written document which was signed at the time by both parties, the question of settlement would not be in doubt. [33] Dr Colagrande’s father was at the handover meeting. No statement was filed by him, and he did not give evidence. [34] In his evidence Dr Colagrande said that he thought it was ‘the end of the dispute’ at the handover meeting and that he didn’t think Mr Radic was going to take him to QCAT. [35] Dr Colagrande said that at the handover meeting Ms Radic ‘stormed off swearing’, went up to his 74-year-old father and spat at him and ‘called him ‘the scum of the earth’, and that Mr Radic came up to him and ‘tried to stare me out, it was childish’. [36] In the absence of any written agreement, or evidence from any other witnesses, the question as to the basis upon which the payment was accepted comes down to the word of Dr Colagrande against that of Mr Radic and Ms Radic. [37] Mr Richard Stewart was a Carpenter/Supervisor contracted by the builder and worked on this house throughout the construction. He stated that he was present at the time of the handover meeting, which took place in the kitchen, and he was working near the front door at the time, not far from the kitchen. He stated as to the exchange that:10 14. The meeting became very heated and there was loud voices, and although I can’t remember the exact words, Ces Colagrande said something like ‘This is all I am going to pay you and that if you have a problem, take it up with QCAT’ and at this point things got even more heated and Natasha was visibly upset and called him a few names and 9 Statement Natasha Radic filed 4 October 2016, [9]. 10 Statement of Richard Stewart (Exhibit 5) dated 14 February 2017, [14] – [15]. -- 8 of 36 -- 9 told him he would not get away with this and that they will be taking it further. I heard Ces’s father say something like ‘We are smarter then you, you will never win’. 15. Natasha then stormed off out through the front door past all of us and before she left she turned around and said ‘see you in court asshole’. [38] Mr Mark Bridger was an electrical contractor working on the house. He was also present onsite when the handover meeting was held. He stated11 that he heard raised voices and exchanges. He described the situation as ‘very tense’ and that both Mr Radic and Ms Radic were extremely upset by what had unfolded. [39] It is clear from the evidence of the witnesses that the handover meeting was tense and acrimonious. Mr Radic and Ms Radic describe it in similar terms, as does Mr Stewart and Mr Bridger. Dr Colagrande also recounts an unpleasant meeting, and alleges that Ms Radic abused his father. [40] Simply because the meeting was unpleasant would not determine the issue. It is possible that the parties could still have come to an agreement at an unpleasant meeting, with the builder reluctantly accepting the payment that was being offered by the owners. [41] The matter is to be decided on the civil standard of the balance of probabilities, so the question becomes whether which is the more probable result – was an agreement reached, or not? [42] There is nothing in writing, either signed at the meeting or in any follow-up confirmation between the parties, to support the proposition that the payment was accepted by the builder in full and final settlement. [43] The builder has given a plausible and understandable reason as to why he accepted the cheque and handed over the house, which is that he was acting on legal and professional advice. The builder says that he made it plain at the time that he reserved his rights to pursue the balance. [44] If the handover meeting was in the true nature of a settlement meeting, one would expect there to be a recounting of back and forth negotiation between the parties on the various points and perhaps notations by the builder on the spreadsheet. The notations on the spreadsheet are all made by the owners, which suggests that the notations were made in advance and presented as a fait accompli. There is nothing about the handover meeting that suggests it was in the nature of a genuine negotiation arriving at mutual agreement. [45] I find it far more likely that events occurred as Mr Radic and Ms Radic recall, and that the cheque was accepted with a reservation of rights to pursue the 11 Statement of Mark Bridger (Exhibit 6) dated 14 February 2017. -- 9 of 36 -- 10 balance. I am not satisfied that the matter was compromised at the handover meeting. Variations [46] The builder is claiming for variations under V009, V010, V011, V013 and V014. Those variations were not signed by the owners prior to the work being conducted. They were prepared on about 7 December 2015 and the owners say they were forwarded to them on 11 December 2015. [47] There is also a dispute as to the proper payment for the roof deck, which was additional work to the original contract, and is a variation in itself. [48] The owners submit that the provisions of the Domestic Building Contracts Act 2000 (Qld), (the ‘DBC Act’) particularly sections 79 to 84 (as to variations of contract), apply.12 [49] The builder also submits that the DBC Act applies, and says that the builder has brought an application pursuant to section 84 of that Act to recover an amount for variations. [50] The DBC Act was repealed on 1 July 2015.13 Despite the repeal, the DBC Act continues to apply for a domestic building contract entered into before the repeal.14 This contract was entered into before the repeal and the DBC Act therefore applies. [51] The DBC Act provides that the building contractor must ensure any variation of the contract agreed to between the building contractor and building owner is put into written form and before any domestic building work the subject of the variation is carried out.15 The building contractor must take all reasonable steps to try to ensure the document is signed by the building owner.16 [52] The building contractor may only claim for a variation under the DBC Act, where it has not complied with the relevant sections of the Act, on an application made to the tribunal.17 The tribunal may approve the recovery of an amount by a building contractor for a variation only if the tribunal is satisfied that:18 (a) Either one of the following applies – 12 Owners’ closing argument, [17]. 13 Queensland Building and Construction Commission and Other Legislation Amendment Act 2014 (Qld), s 79. 14 Ibid, s 62(1). 15 Domestic Building Contracts Act 2000 (Qld). 16 Ibid, s 82(b). 17 Ibid, s 84(3). 18 Ibid, s 84(4). -- 10 of 36 -- 11 (i) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation; (ii) the building contractor would suffer unreasonable hardship by the operation of subsection (20(a) or (3)(a); and (b) it would not be unfair to the building owner for the building contractor to recover an amount. [53] If the building contractor is entitled to recover an amount for the variation of a fixed price contract under the DBC Act, the amount is:19 (a) The increase in the contract price stated, or worked out in the way stated, in the appropriate variation document for the variation; or (b) If paragraph (a) does not apply – the cost of carrying out the variation plus a reasonable profit [54] There is no dispute that each of the variations was requested by the owners or was a necessary part of the requested works. The dispute is as to the quantum of the variations. The owners have engaged experts to price the variations as shown in the schedule referred to earlier. [55] The total cost of the disputed variations (other than the roof deck) claimed by the builder was $40,144.83 on the builder’s calculation. That is in itself a significant amount of money. The total amount that was not paid as claimed at handover was $53,047.30. The total claim of the builder in these proceedings is $58,927.63. [56] The owners submit that the builder makes a significant profit from its operations, based on their calculations:20 He was asked whether the applicant company builds luxury homes. He confirmed it did. Based on the profit margins of between 10% and 15% and the turnover as published for the applicant on the QBCC website, the applicant had an approximate profit of between $1,400,000 and $2,100,000 for the 2017 year according to Radic and the turnover as reported by the QBCC. [57] The owners submit that as there was no financial evidence provided by the builder, that it has not been shown that the builder would suffer financial hardship by not being paid for the disputed variations. [58] Mr Radic did give evidence that the amount of $59,000.00 was ‘a huge financial burden’ on the builder. Mr Radic stated that:21 30. Because we are a small business and operate on small profit margins the $59k that we have not been paid has been a huge financial blow 19 Ibid, s 84(6). 20 Owners’ closing argument, [28]. 21 Statement of David Radic filed 4 October 2016, [30]. -- 11 of 36 -- 12 to us and burden on our family as we have 2 small children under the age of 7. [59] The test of unreasonable hardship was discussed by Judge Fleur Kingham who said:22 [29] The test of unreasonable hardship requires an assessment of the impact of the sanction on the builder in the circumstances in which the non-compliance occurred. That is both a subjective and an objective enquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs. [60] The circumstances of this construction are relevant. This was a very expensive architect designed luxury house, built for a professional person by an experienced builder of luxury homes on the Gold Coast. Both the owners and the builder are sophisticated persons, having experience in business at a high level. [61] The mere fact that the builder appears to make a high annual profit based simply on turnover and a supposed margin does not show that the builder would not suffer hardship by not being paid for variations in the amount of $40,144.83. The builder may have debt obligations, or there may be many other factors that impact upon its overall financial position. [62] I accept the evidence of Mr and Ms Radic that the builder would suffer hardship by not being paid the amount of deducted amount of the final claim for $58,927.63, of which the amount for variations of $40,144.83 is the most significant part, and consider that to be not paid for the variations would cause unreasonable hardship in the circumstances. [63] Would it be unfair to the building owner for the building contractor to recover an amount for variations? [64] The owners clearly have significant financial means and have increased the cost of the home as the works progressed (for example, by adding an entire roof deck that was not in the initial plans). There is no evidence that proper payment by the owners, for the benefit they have received from the variation works being completed at their request, would place them under financial stress, or be unfair to them. [65] The owners agreed to pay, and did pay on handover, for some variations that were not the subject of signed variations. They have selected some other variations which they have chosen to dispute, not as to their being requested or as to adequate performance, but only as to quantum. They have paid substantial moneys (either $160,000.00 or $165,000.00) for the roof deck without any written variations being signed. 22 Better Homes Queensland Pty Limited v O’Reilly & Anor [2012} QCATA 37, [29]. -- 12 of 36 -- 13 [66] The owners therefore are not arguing that all of the variations which were not signed should be disallowed – rather they have paid, and do not question, some items, but object to paying others. The owners are thereby seeking to avail themselves of the provisions of the DBC Act where it suits them, but do not seek to do so where it does not suit them, and where they in reality wish to challenge the quantum of the charge for the item, not the making of the charge for the item in itself. [67] I do not consider that there would be any unfairness to the building owners in having to pay a proper amount for variations that they have requested, that they have the benefit of, and which have been properly completed, in all the circumstances. [68] I therefore consider that the requirements of section 84 of the DBC Act are made out:- that there are exceptional circumstances to warrant the conferring of an entitlement on the builder for recovery of an amount for variations; that the builder would suffer unreasonable hardship if the variations were not paid for; and that it would not be unfair to the owners for the builder to recover for the variations. [69] I find that the Tribunal is empowered to approve the unsigned variations in this matter, and I will consider for approval the unsigned variations in appropriate amounts. [70] I will consider, and assess for approval, each of the disputed variations in turn. This is essentially an assessment of quantum, which is what the owners are seeking in reality. V009-3 Porcelain Sheet [71] This is the major disputed variation, apart from the roof deck. The builder claims $17,616.50. The owners assess this as $8,349.00. [72] The builder submits that the amount of $17,616.50 was the actual cost of the works. [73] Mr Radic stated23 that the builder was advised on 18 August 2015 by Dr Colagrande that he wanted to use large porcelain sheeting for a feature wall in the living room and in the main ensuite instead of tiles. He states that Dr Colagrande ordered the sheets on 29 October 2015 and that there was a total of 81 sq m to be laid. He described the agreement as follows:24 These sheets were a new product to the market and very delicate to handle. They are very expensive to break. Very few Gold Coast subcontractors had laid these sheets to date. We had another subcontractor provide a quote to do a comparison costing (see copy of quote attached marked DR-23 in Bundle). I advised Ces onsite the day I received this other quote which was 08 October, of the rates. The tiler was onsite also and offered to do the job 23 Statement of David Radic filed 4 October 2016, [96]. 24 Ibid, [97]. -- 13 of 36 -- 14 by hourly rate, plus cost of materials and he would be invoiced on completion of the job. Ces agreed to this. [74] Mr Radic described the sheets in evidence as being large format porcelain sheets, 3m by 1.5m each, and 6mm thick. He said they were carried by several people using suction caps in a custom jig, which had to be especially acquired. He said he had never dealt with, or seen them, before. [75] The quote from Broadwater Tiling Services dated 8 October 201525 was for ‘3 x 1.5m Maximum Sheet Panelling’ and was for 18 sheets (81 sq m) at $250/sq m, being a total of $22,275.00 including GST. Mr Radic said the final invoice from the tiler onsite (RPM Tile Solutions) was $17,616.50. [76] Dr Colagrande in his evidence said that he did not accept the hours claimed by the tiler to do the sheets. He said that he was onsite himself 6 to 7 days a week, as he owned the property next door as well. He said that he took photos of the work being done on the sheets, and that there were two people, the head tiler ‘Peter’ and another worker ‘Paul’ doing the work, and that the other people in a photo26 of the sheets being handled had nothing to do with the work. [77] Dr Colagrande said that the time claimed to do the sheets was ridiculous. He said that his father was onsite all day and was ‘my eyes’, and that they kept a diary. He said they recorded the tiles as taking 110 hours. He said he was appalled when he saw the hours being claimed. [78] Dr Colagrande described the sheets as ‘very light’. He said Mr Radic had told him that the sheets would not cost more than $7,000 to $7,500 and that if he had known that it was going to be more he never would have gone ahead with them. He said that Mr Radic wanted this to be a show-home, and that he had ‘the gift of the gab’. [79] Mr Ray in his report27 valued this item at $8,439.00. In his evidence he described the sheets as unusual, and said that Cordell do not have a rate for instalment of large porcelain sheets. He said there was a total of 35 pieces and the amount of time being charged was 230 man hours which he described as 6.75 man hours per panel, which he considered to be a lot of time to fit 35 panels. He said that he did not accept that it would take 5 people to handle each panel. [80] Mr Ray said that he did not know what each panel weighed, but compared it to a window panel of 1.5m x 5m, which he said could be carried by 2 people. He said that if the panel weighed 30kg then 2 people could lift it, but if the panel weighed 100kg then 3 to 4 people would be required. He said that he thought Mr Radic ‘did not get value for money’ for what he was charged. He thought the laying should be more efficient than normal tiling, 25 Applicant’s bundle, 410. 26 DR24, 412. 27 Report of Richard Ray dated 14 December 2016, 9. -- 14 of 36 -- 15 and had allowed $8,439.00 based on the Cordell allowance for ‘premium tiling’. [81] The difficulty with Mr Ray’s evidence on this item is that he is not familiar with this product and has not applied an industry standard. His costing is based on the cost of luxury tiling using standard tiles. [82] I accept that these sheets are expensive and that they are delicate. It would be expected that a tiler who was unfamiliar with laying them, as they are a new product, would be very cautious in handling them and would take time for installation, at least for the first few installations until they gained experience and confidence in handling them. One aspect of exercising caution would be to use more workers to handle the sheets than a comparable size panel of glass, which is a known product. [83] The variation claimed is less than the initial quote from another tiler. The owners have not produced any comparable quotes from tilers experienced in the use of this product. [84] Dr Colagrande claimed to have a diary in which he and his father had noted the hours worked by the tiler on the sheets, but he did not produce such a diary in evidence. His failure to disclose that evidence earlier in the proceedings, or to produce it at the hearing, casts doubt on the credibility of that evidence, and weight cannot be given to a claimed record that has not been produced. [85] Whilst Dr Colagrande says he, or his father, was onsite for most of the work, this does not mean that they had a clear awareness of the full activity of all the workers engaged on the porcelain sheet. [86] Whilst the result of 6.75 man hours per panel as calculated by Mr Ray does seem a high amount of time, that time may well involve all the handling of the sheets from unloading from the truck, carrying them through the house, as well as final placing and actual installation. [87] In the absence of other reliable quotes from experienced installers, or a reliable independent industry guide, and any alternate reliable count of the actual hours expended, there is no basis to formulate a reasonable assessment of the cost, other than the records of the actual installer. [88] In the circumstances of this being an early use of a new product which is not listed at all in an industry guide such as Cordell, and if there is no evidence of improper work practice or overcharging, the best indicator of a reasonable price is the actual cost. I am not satisfied that there is evidence of improper work practice or overcharging as to this item. [89] I therefore prefer the actual cost charged by the tiler to the estimated cost put by Mr Ray, and will allow the Variation in the amount of $17,616.50 as claimed. V009-4 Credit for tiling -- 15 of 36 -- 16 [90] This item is a credit. The builder used a rate charged by the tiler to calculate the credit of $4,620.00, whereas Mr Ray used a scheduled rate. [91] There is nothing unusual about this item, and I will accept the rate assessed by Mr Ray in the amount of $5,390.00. [92] I allow a credit of $5,390.00 for this item. V009-12 ZIP Tap Install [93] This item is labour to install 3 zip taps. Mr Ray’s estimate of $452.00 was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $330.00. [94] I allow a variation of $330.00 for this item. V009-13 Insinkerator install [95] This item is labour to install 5 insinkerators. Mr Ray’s estimate of $753.00 was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $475.00. [96] I allow a variation of $475.00 for this item. V010-3 Doors Vestibule [97] This item is construction of a door and wall for a bathroom. Mr Ray’s estimate of $468.00 was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $420.00. [98] I allow a variation of $420.00 for this item. V010-15 Plumbing Labour [99] This item is for plumbing to a new bathroom in the basement. Mr Ray’s estimate was $5,708.00, which was lower than the claim by the builder, but on the hearing he did not dispute the builder’s claim of $5,880.33. [100] I allow a variation of $5,880.33 for this item. V011-2 Extra Render [101] This item is for render to a concrete block boundary fence. Mr Ray’s estimate was $2,515.00.00 which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $2,134.00. [102] I allow a variation of $2,134.00 for this item. V011-3 15m SS Grate [103] This item is for 15 metres of stainless steel grates added to drain where a garden bed was originally to be installed. Mr Ray’s estimate was $3,852.00, -- 16 of 36 -- 17 which was lower than the claim by the builder, but was based on a different understanding of the area concerned. On the hearing he did not dispute the builder’s claim of $4,290.00. [104] I allow a variation of $4,290.00 for this item. V011-5 Blockwork raised [105] This item is for additional blockwork to raise the window in the Comms room on the ground floor. Mr Ray did not provide an estimate as he could not locate it on the plans at the time of his report. This item was not challenged on the hearing. The builder’s claim is for $252.00 which was the amount charged by the subcontractor. [106] I allow a variation of $252.00 for this item. V011-6 Aluminium louvre [107] This item is for aluminium privacy screens. Mr Ray’s estimate was $2,200.00, which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $1,753.00. [108] I allow a variation of $1,753.00 for this item. V011-11 Tiling Play Area [109] This item is for tiling a play area. Mr Ray’s estimate was $2,701.00, which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $2,495.00. [110] I allow a variation of $2,495.00 for this item. V011-15 Stone Column [111] This item is for placing stacked stone to 2 columns in the lounge room. Mr Ray’s estimate was $1,269.00, which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $924.00. [112] I allow a variation of $924.00 for this item. V013-2 Plumbing [113] This item is for plumbing for a kitchenette and extra down pipes to roof and grated areas not shown on the original roof deck plan. Mr Ray’s estimate was $2,193.00, which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $1,626.00. [114] I allow a variation of $1,626.00 for this item. V013-4 Splashback -- 17 of 36 -- 18 [115] This item is for supplying and installing a splashback for the kitchenette. Mr Ray’s estimate was $1,070.00.00 which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $995.00. [116] I allow a variation of $995.00 for this item. V013-5 Extend section [117] This item is for extending the roof section from the original plan and includes roof trusses, plaster render and blockwork. The builder’s claim was $4,860.00. [118] Mr Ray was unable to estimate this as he did not have the plans, and he suggested there was an overlap with the claim for the roof deck construction. [119] The builder’s submissions do not address this claim. I am not satisfied that this item has been sufficiently substantiated and am not satisfied that it is not included in the cost of the roof deck works. [120] I do not allow a variation for this item. V014-1 BBQ fabricated frame [121] This item is for supply of fabricated steel frame work for BBQ, sink and side burner for the outdoor area. Mr Ray’s estimate was $3,631.00 which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $2,805.00. [122] I allow a variation of $2,805.00 for this item. V014-2 Modify benchtop frame [123] This item is for modify benchtop sub straight frame and fabricate 2 extras. Mr Ray’s view was that this was included in V014-1. The builder’s claim was $198.00. [124] The builder’s submissions do not address this claim. I am not satisfied that this item has been sufficiently substantiated, and am not satisfied that it is not included in the cost of V014-1. [125] I do not allow a variation for this item. V014-3 Fab counter frame [126] This item is for supply fabricated alloy counter frame outdoor kitchen. Mr Ray’s view was that this was included in V014-1. The builder’s claim was $517.00. [127] The builder’s submissions do not address this claim. I am not satisfied that this item has been sufficiently substantiated, and is not included in the cost of V014-1. -- 18 of 36 -- 19 [128] I do not allow a variation for this item. V014-4 Door Handle [129] This item is for supply fabricated 316 stainless steel custom door handle, 2.4m in length. Mr Ray’s estimate was $1,313.00. The builder’s claim was $1,309.00, and on the hearing he did not dispute the builder’s claim. [130] I allow a variation of $1,309.00 for this item. V014-5 Robinhood Iron [131] This item is for supplying a Robinhood ironing centre. Mr Ray’s estimate was $375.00, which was higher than the claim by the builder, and on the hearing he did not dispute the builder’s claim of $360.00. [132] I allow a variation of $360.00 for this item. V014-6 Front gate credit [133] This item is a credit for a front gate which was provided for in the contract. Mr Ray’s estimate was $2,239.00, which was higher than the claim by the builder. [134] The builder claimed a credit of only $1,425.00. He submitted that this was based on an estimate by comparing it to another gate supplied for similar construction under the stairs at $1,200.00. [135] Both claims are estimates, and neither is based on an actual quote. I prefer the estimate of Mr Ray as it is a professional valuation. [136] I allow a credit of $2,239.00 for this item. V014-7 Landscape allowance [137] This item is a credit for the balance of landscaping allowance not used. Mr Ray’s estimate was $7,627.00, which was higher than the claim by the builder. The builder claimed a credit of only $3,050.00. [138] The builder submits that this was a provisional contract sum and a contract adjustment, not a variation. [139] The builder says that he did work that Mr Ray did not take into account:28 The builder says he negotiated access to permit him and subcontractors to attend and disturb the private land of the neighbours to the South and West. They were then able to excavate footings, pour concrete, complete block work, and render and paint the 2m high block walls. The work was done from 28 Submissions of the Applicant filed 11 Aug 2017, [11.3]. -- 19 of 36 -- 20 both sides. The agreement was that when finished they would reinstate those neighbour’s lawn gardens and paving. [140] Mr Ray said in evidence that he had not seen the break-up of the landscape costing. [141] I am satisfied that the builder did do work that Mr Ray did not take into account, and accept the builder’s estimate as to this item. [142] I allow a credit of $3,050.00 for this item. Summary of Variation findings [143] My findings as to the disputed Variations as discussed above, are summarised in the following table: Number Item Amount Allowed V009 3 Porcelain Sheet $17,616.50 4 Credit for tiling - $5,390.00 12 ZIP Tap install $ 330.00 13 Insinkerator install $ 475.00 V010 3 Doors Vestibule $ 420.00 15 Plumbing Labour $5,880.33 V011 2 Extra render $2,134.00 3 15m SS Grate add $4,290.00 5 Blockwork raised $ 252.00 6 Aluminium Louvre $1,753.00 11 Tiling Play Area $2,495.00 15 Stone Column TV $ 924.00 V013 2 Plumbing $1,626.00 -- 20 of 36 -- 21 4 Splashback $ 995.00 5 Extend Section Nil V014 1 BBQ fabricated frame $2,805.00 2 Modify benchtop frame Nil 3 Fab counter frame Nil 4 Door handle $1,309.00 5 Robinhood iron $ 360.00 6 Front gate credit - $2,239.00 7 Landscape allowance - $3,050.00 [144] The total of the allowed disputed positive and negative variations above, payable to the builder, is $32,985.83. [145] I consequently approve, and allow, variations payable to the builder in the amount of $32,985.83. The roof deck [146] The circumstances of the construction and payment for the roof deck were canvassed at length in these proceedings. The curious aspect is that no paperwork passed between the owners and the builder for what was a very substantial addition to the original building plans (effectively an additional storey) and payment was made in cash. [147] Whilst those circumstances are curious, they do not affect the basic principles of contract involved – what was the agreement made between the parties, and has it been fulfilled? [148] Mr Radic described the circumstances of the agreement and payment as to the roof deck in his statement as follows:29 54. The $160,000.00 was the agreed amount to construct the roof deck (top floor) which was added to the project after construction commenced. Refer to documents marked in bundle DR-06. A verbal estimate for the construction of the roof deck based on the preliminary plans was made between myself and Ces on site on the 12 July 2014. I advised Ces that it was only an estimate and it may vary slightly, once we received the final plans and engineering. Ces asked us if he could 29 Statement of David Radic filed 4 October 2016, [54], [55]. -- 21 of 36 -- 22 pay for the roof deck in cash. We advised that it did not matter to us which method he used to pay for additional work whether it was cash, cheque or direct transfer. It was agreed that the funds would be paid in 3 stages which was to be a deposit of $20,000, completion of structure to be $100,000 and final payment when tiling of the floors had been completed for $40,000. We received the amended plans to include the roof deck on 16 September 2014 and amended engineering for the roof deck on 10 November 2014. I assessed the plans and advised Ces that we would be able to carry out the additional work for the agreed $160,000. No variation was issued for this and Ces never requested one, but he did make all the payments to me personally and in full as agreed, paid in cash. 55. All cash payments were made to us by Ces Colagrande personally not his father. We are unsure why he is making an allegation his father made cash payments. Mr Ces Colagrande is a very particular and meticulous person who likes to control everything. He would never let his wife or father handle cash payments. We received the payments in 3 instalments as agreed and the payments were made as follows: Payment # 1 – Deposit $20,000 Both Natasha and I met with Ces Colagrande at his clinic on Tuesday 04 November 2014 and we discussed the process of the construction for the roof deck and he paid me the agreed $20,000 deposit. Ces’s father was also present at this meeting. Payment #2 – Completion of structure I met with Ces at his clinic on the 8th May 2015 and he paid the next payment as agreed in the amount of $100,000. Again, his father was present at the time. Payment #3 – Completion of fixings Once we received all the tiles after the lengthy delays, we were able to complete the top floor and then the final instalment was made. I met with Ces at his clinic on the 25 September 2015 and he made the final payment of $40,000. Again his father was present at the time. [149] This version of events was agreed to by Ms Radic who stated:30 4. I was present at the meeting with David and Ces Colagrande at his clinic on 04 November 2014 when the deposit of $20,000 cash was paid as agreed between David and Ces for construction of the roof deck. It was also discussed how and when the other 2 further payments would be made as David stated. Ces’s father was present at the meeting also, but this cash payment was made by Ces himself. He did not at any stage request for a variation for the roof deck to be signed. The total amount agreed to for the construction of the roof deck was a total of $160,000. 30 Statement of Natasha Radic filed 4 October 2016, [4], [5]. -- 22 of 36 -- 23 5. Each time a cash payment was made in relation to the roof deck, I would count the bundles of cash received and can confirm that in total we only received $160,000 not $165,000 as Ces is claiming. [150] In a further statement, Ms Radic stated as to documentation that:31 6. We had been instructed by Mr Colagrande that he wanted no paperwork in relation to the roof deck or the payments made for it. [151] She further discussed the payments that:32 4. About the cash, it was predominantly in $100 notes, with a few $50s and the deposit of $20,000 and the final payment of $40,000 was received in an envelope. The payment of $100,000 was given to us in a canvas bag. Attached to this statement is a picture of the canvas bag that the $100,000 was in. [152] She stated that she telephoned their accountant and discussed the handling of the money with him33 and described the discussion as follows: 8. When I telephoned the accountant, I told him that we had received this large sum of cash, and as we had never been paid in this manner before I didn’t know what to do. My accountant advised that it would have to be processed through MYOB as per any other contract revenue that is received. He advised that I needed enter it into the Cash receipts journal on MYOB, and then to issue a payment receipt to Mr Colagrande for this amount. I said Mr Colagrande didn’t want any paperwork, but the accountant said it didn’t matter, I had to issue a receipt for the payment. 9. Once entered into the cash journal, the money is in our MYOB, and then it is picked up in our BAS statement, and comes into our Profit and Loss. The accountant told me that the bank has a federal reporting obligation for large amounts of cash of more than $10,000. Because this was in $100 and $50 notes it would be a reported transaction. We would then have to explain who paid it to us which was no concern to us. The Accountant said it was not compulsory for us to bank it, and we could leave it in cash and pay wages and expenses with it. If it was not banked then we don’t need to pay fees to draw wages, but our overdraft remains higher. 10. As a result of that conversation I entered the $160k into the cash journal in our MYOB system. Attached to this statement is a copy of our MYOB entry. Our accountant is emailed our MYOB file each quarter to produce our BAS statements and then Accounts each year. Accordingly the money was entered into our system and was processed in the normal way like any other transaction on the date recorded on the entry. 31 Statement of Natasha Radic dated 15 March 2017, [6]. 32 Ibid, [4]. 33 Ibid, [7] - [12]. -- 23 of 36 -- 24 11. After discussion with the accountant, I understood it was not compulsory for us to bank the money, and so David and I discussed it. We decided kept it in our safe and not bank it. We have been using the money to pay wages as we go, which is also documented in our MYOB system. 12. Our bank statements do not show the banking of the money because we didn’t bank it. [153] Ms Radic stated that a written receipt for $160,000.00 for the roof deck works, dated 18 December 2015, was made out to the owners, but was not emailed to Dr Colagrande until 8 March 201634. [154] Dr Colagrande has a different version of events. He says that he did seek written documentation as to the roof deck and that he paid an amount of $165,000 in cash for the roof deck:35 5. I reiterate there was no oral, or written agreement at any point as to the cost of the roof deck. I intended to purchase materials and pay trades directly as I had done with other parts of the house so as to reduce the costs of the construction. For this reason it was impossible to agree on a price until what items of work Radic would perform and what items of work and materials I would supply from paying tradesmen and suppliers was determined. 6. In respect the roof deck I did ask for a written quotation and variation document. Radic never provided one. Plans were provided to him so he could have provided one. I suspect he did not want to provide one to me because he wanted to keep the payments of $165,000 made in cash to him and he did not want to declare them as income and pay tax on them. I asked Radic on numerous occasions to provide me with receipts of payment and he would often tell me he had forgotten or that it was ‘on its way’. In fact on the last week of handover I requested again receipts for the cash payments and in his words he stated to me “I never received any cash money from you’. 7. As to paragraph 5 of her witness statement, I reiterate that $165,000 was paid in cash to Radic. It was paid on various dates throughout the build. 8. The cash payments were made at my clinic during some of the occasions when David Radic would personally come to my clinic at Mermaid Beach and report to me as to the progress of the build and he would advise me more money was required. [155] The absence of any written documentation as to the roof deck construction has given rise to dispute as to the proper payment for the work. The builder effectively says that the roof deck constituted a variation of a fixed amount of $160,000. The owners say that the works had no agreed cost, that whilst 34 Supplementary Statement of Natasha Radic, sworn 14 February 2017, [4] 35 Statement of Ces Colagrande, filed 24 January 2017, [5] to [8] -- 24 of 36 -- 25 they paid $165,000, the proper value of the work was $148,919.00, and that they should be refunded the excess amount which they have paid. [156] The owners obtained a report from Mr Ray as to the value of the roof deck works, in which he assessed as the amount of $148,919.00. [157] In cross-examination, Dr Colagrande said that he had kept a diary of the payments made by him. Surprisingly, this document had never been disclosed before, and had not been put in evidence. When asked why it had not been produced before, Dr Colagrande said that the diary was ‘at home’. When asked why he had not brought the diary with him, he said that he did not see the relevance of it. [158] Dr Colagrande in cross-examination denied that he made a payment of $100,000 in cash, or that he made the payment in a canvas bag as alleged by Ms Radic. He said that the bag in the photograph was just onsite and was used to store building samples. [159] When asked why he did not request receipts for the cash payments as he made them, Dr Colagrande said that he thought the builder might provide receipts at the end. He said that he kept paying until the roof deck was finalised, and did not know what each payment was for. [160] Dr Colagrande said that Mr Radic had given him a quote of $80,000 to $100,000 for the roof deck works. He said that he paid $165,000 in cash not just for the roof deck, but as final payments to have the house handed over. [161] The evidence of Dr Colagrande has a strong sense of unreality, and is difficult to accept. [162] Why would Dr Colagrande agree to pay cash for the roof deck, when all other payments were apparently made in a usual way by transfer of funds? Dr Colagrande says the builder asked him to make the payments in cash, but this does not explain why he would agree to this unusual form of payment of such a large amount of money in a way that was not recorded, and was difficult to prove payment of. [163] The failure of Dr Colagrande to produce his claimed diary recording the cash payments, which he did not mention until he was in cross-examination, is notable. Such a diary is obviously an important piece of evidence as contemporaneous notes, when the question of the amount of the cash payments was in dispute throughout the proceedings. The failure to produce such an important piece of evidence, and make it available for cross-examination, casts doubt upon the evidence of Dr Colagrande. [164] The allegations and denials of Dr Colagrande as to the canvas bag were not put to Ms Radic in her cross-examination. -- 25 of 36 -- 26 [165] The requirement to put a contradictory proposition to a witness is often expressed as the rule in Browne v Dunn.36 The rule applies in a civil matter and was expressed in MWJ v The Queen37 by Gummow, Kirby and Callinan JJ as follows: The rule is essentially that a party is obliged to give appropriate notice to the other party, and any of that person’s witnesses, of any imputation that the former intends to make against either of the latter about his or her conduct relevant to the case, or a party’s or a witnesses credit. [166] A number of consequences may arise from a breach of the rule, including allowing recall of witnesses, or comment to a jury that the evidence of a witness should be treated as a ‘recent invention’ because it raises matters that counsel for the party calling that witness could have, but did not, put in cross-examination to the opponent’s witnesses.38 The tribunal is not bound by the rules of evidence,39 but may have regard to them as to matters of fairness or assessment of credibility. [167] The failure to put the contrary proposition to Ms Radic as to her evidence as to payment of $100,000 in a canvas bag, and the failure of Dr Colagrande to produce his diary, and to put the contents of his diary to the builder for comment, casts doubt on the credibility of the evidence of Dr Colagrande in that regard. [168] Dr Colagrande is a sophisticated man who operates to a high level of precision in his professional work, and was highly precise and demanding as to his specification as to the finishes of the house. However, he claims to have had no concern about the complete absence of any written documentation as to the entire roof deck structure contractual arrangements, and to have made substantial regular cash payments without having an awareness of what they were for. [169] It is peculiar that Dr Colagrande, who was so meticulous as to the specifications as to the finish and workmanship of matters as to the house, would not want the arrangements as to the roof deck to be set out in writing before the work commenced. [170] It is irrelevant as to whether the builder requested that Dr Colagrande make the payments of the roof deck in cash or whether Dr Colagrande made an offer to do so. In either case, the point is that Dr Colagrande went along with the construction of the roof deck in the absence of any written contractual record, made payments totalling either $160,000 or $165,000 without receiving any invoices or receipts, made the payments when he says he was unaware of the work he was paying for, and yet says that the 36 [1894] 6 R 67. 37 (2005) 222 ALR 436. 38 Stephen Owen-Conway QC, ‘How to Cross-Examine a Witness in an Australian Court”, http://www.gordonandjackson.com.au/resources_uploads/how_to_crossexamine_a_wit ness_in_an_australian_court__sample.pdf, [7]. 39 QCAT Act, s 28(3)(b). -- 26 of 36 -- 27 work was not being done for an agreed total price, and should now be assessed as to value. [171] The logical reason why Dr Colagrande would make the cash payments, without knowing what work they precisely represented, would be if he had agreed to a lump sum as alleged by the builder. If he was satisfied that the work was progressing, he could very conceivably have been making regular progress payments in the knowledge that it was a fixed sum with an upper limit, and did not consider that he had to make particular inquiry as to each individual payment. [172] The builder did not document the cash payments as they were made. The first payment was, on Ms Radic’s evidence, made on 4 November 2014, and then two further payments were made. [173] It is disputed when the final cash payment was made. Mr Radic says it was made at a meeting with Dr Colagrande at his clinic on 25 September 2015. Dr Colagrande does not acknowledge such a meeting on 25 September 2015 and says there were meetings at his clinic on the following dates:40 a) 21 August 2014; b) 12 September 2014; c) 9 October 2104; d) 30 October 2014; e) 29 April 2015; and f) 16 October 2015. [174] Whatever the actual date of the meeting was, it is apparent that the final cash payment was made at least by 16 October 2015. [175] Whilst the initial treatment of the cash payment by the builder may give rise to queries, Ms Radic has since given full disclosure as to the payments, which have since been properly accounted for. [176] The most likely scenario is that both the owners and the builder were completely complicit with each other in the making of the cash payments. Each party may have had their own motivations for entering into such an arrangement. [177] In terms of these proceedings, the making of the payments in cash, which have now been fully disclosed, does not alter the contractual outcome between the parties. 40 Statement of Dr Colagrande filed 24 January 2017, [2]. -- 27 of 36 -- 28 [178] The cash payments represent an increase in cost of about 7.2% ($165,000.00 on Dr Colagrande’s version, compared to the contract price of $2,291,136.00), which is a significant consideration. Even if Dr Colagrande’s version is accepted, that he was quoted an amount of $80,000, that is an increase in total cost of about 3.5%. [179] The proposition that Mr Radic would so severely underquote on the roof deck works by quoting $80,000 to $100,000, which Mr Ray subsequently assessed as having a value of almost $150,000, is difficult to accept. [180] By contrast, the evidence of Mr and Mrs Radic as to what happened at the handover is supported by witnesses, and their version of events is plausible overall. The roof deck works were performed in a generally satisfactory way, as a continuation of the broader building works for the house, having regard to the extended plans. No claim was made by the builder in respect of the roof deck works other than for the lump sum of $160,000 in cash, which was paid. [181] Overall, where the evidence of Dr Colagrande conflicts with the evidence of Mr Radic and Ms Radic, I do not place weight upon the evidence of Dr Colagrande, and I prefer the evidence of Mr Radic and Ms Radic. [182] The consequence of that finding as to acceptance of evidence is that I accept that: a) Dr Colagrande did orally agree with the builder to pay the fixed amount of $160,000 for the construction of the roof deck, and b) Dr Colagrande did make cash payments totalling $160,000 for the roof deck, by payments as described by Ms Radic. [183] I consider that the agreement to build the roof deck was a variation to the contract. That variation was not put in writing and signed by the parties before the work commenced. For the same reasons as I previously discussed in relation to the other variations, I consider that the Tribunal is empowered in the circumstances to assess for approval the unsigned variation, and will do so. [184] The owners submit that, if it is found as I have as to the cash payments, the following situation results: 51. In the alternative, if the Tribunal finds that the cash payments made by Colagrande were made for the purposes of the roof deck only, then an accounting of the payments made and a repayment of the difference between that paid and that of the cost of the roof deck needs to occur. Taking into account the experts costing of the roof deck works (which included the former design, the reductions or negative variations for the removal of works from the original design, and then add the additional works for the roof deck) the roof deck variations should be determined as a cost of $148,919 as determined by the expert Richard Ray. There is no other evidence that can be relied on regarding the cost of the roof deck because the Builder chose to not obtain expert -- 28 of 36 -- 29 evidence from a Quantity surveyor. As a result the Builder owes Colagrande pursuant to the counterapplication either: a) $11,081 if the amount paid is determined by the Tribunal as being $160,000; or b) $15,081 if the Tribunal determines that $165,000 was paid by Colagrande towards the roof deck [185] The owners rely on the report prepared by Mr Ray.41 That report assessed the variations without allowing a builder’s margin:42 6.3 Unapproved Variations have been independently valued and or costed as cost plus a 0% builders margin (consistent with variation claims and prime cost, and provisional sum adjustments) as follows, and we refer you to Appendix A for a complete breakdown of our estimates [186] The contract signed by the parties was a ‘QBCC New Home Construction Contract (November 2013)’. There was a ‘Prime Costs Items Schedule’43 and a ‘Provisional Sums Schedule’,44 attached. Each showed a builder’s margin of 0% to be allowed. [187] The owners submit as to the assessment by Mr Ray of variations without a margin that:45 14.2 He was instructed to assume (amongst other things) there would be no builders margin on the work. That instruction to him is expressly contrary to the pleading at Para 42D of the crossclaim, that the difference claimed is assessed by the ‘Cost of the roof deck works plus a margin less a negative variation’. 14.3 There is no basis for valuing the work without a margin. The QS was ready to concede no contractor would do work of that scale without a margin. The reason he did not, is that he was instructed upon a precise basis. He was proceeding upon the basis there was a builder claim for remuneration for the roof deck. 14.4 The QS acknowledged he had been asked in writing for a copy of his instructions, but that he was told by the respondents lawyer not to answer or provide a copy of those instructions. 14.5 What is significant is that by multiplying the QS assessment (on whatever basis he was instructed and regardless of any other issues) and adding in a margin of 15% we get to $160,000. In the absence of a significant difference between the reasonable value of the work and the amount paid, the cross claim fails, and indeed the entire exercise is pointless. 41 Accurate Estimating Services Pty Ltd Report, 30 March 2017, Issue 4. 42 Ibid, [6.3]. 43 Statement of David Radic filed 4 October 2016, DR-03, 36. 44 Ibid, 38. 45 Submissions of the Applicant filed 11 August 2017, [14.2], [14.3]. -- 29 of 36 -- 30 [188] Section 84(6)(b) of the DBC Act expressly provides that if the building contractor is entitled to recover an amount for the variation of a fixed price contract, the amount is the cost of carrying out the variation plus a reasonable profit. The builder is therefore entitled to a margin if the variation is approved. [189] In his evidence, Mr Ray said that he would never advise a client to not charge a margin. I note that in his report Mr Ray says that his ordinary expectations would be a margin of typically 10 – 20%:46 6.12 Consistent with the 0% builder’s margin for prime cost and provisional sum adjustments, values stated for unapproved variations have been calculated upon the estimated cost, plus 0% variation margin, which we consider to be out of our ordinary expectations (typically 10-20%). [190] The builder’s submission seeks a margin of 15%. The contract applies a margin of 0% to Prime Cost and Provisional Sums. It is not explained why no margin was agreed on those items. [191] I note that the builder did not add a builder’s margin to many of the disputed variations previously discussed, and just claimed for the actual costs by subcontractors. I have not reworked the disputed variations which I have previously allowed to include a builder’s margin either as to the charges proposed by the builder or by Mr Ray for those items, as these were not put in issue at the hearing. [192] However, the question of margin as to the roof deck works, which are substantial works and did require work by the builder directly, was put in issue at the hearing. [193] I consider that it would be usual for a margin to be charged on a variation and no reason appears as to why this usual practice should be departed from. For the purposes of discussion, I will apply the lowest of the range suggested by Mr Ray as a usual margin, of 10%. [194] The assessment of Mr Ray was made on the following bases:47 6.4.3 Our independent estimate of the full cost of constructing the roof pavilion level, in lieu of the roof over Level 2 only; and excluding works identified to us and confirmed as having been separately paid for by the Owner (ie. Cabinetry, electrical, painting, tile supply, fittings and fixtures, toilet, stone to bench, doors, handrails, engineering, additional lift cost) totals $165,789 (refer cost breakdown within Appendix A, Section 6.4.3). 6.4.4 However, we have identified crossovers with Variation 1 (window redesign); Variation 13 (plumbing to kitchen and columns – assumed to mean downpipes); requiring reconciliation and adjustment to our 46 Report of Richard Ray dated 14 December 2016, [6.11]. 47 Ibid, [6.4.3] – [6.4.5]. -- 30 of 36 -- 31 estimate of $165,789 so that the cost of the roof deck variation should be reduced to the discounted estimate below. 6.4.5 Therefore our discounted estimate (and the cost of the work that we recommend in comparison with the builder’s claim for $160,000), adjusted for works valued within other variations totals $148,919 (refer cost breakdown within Appendix A, Section 6.4.5) [195] If a builder’s margin of 10% is applied, Mr Rays assessment, (inclusive of GST) becomes the amount of $163,810.88 calculated as follows: Ray assessment inc GST $148,919.00 Assessment less GST $135,380.90 Assessment less GST + 10% Margin $148,918.99 Assessment + 10 % Margin + GST $163,810.88 [196] Once the builder’s margin is applied, the exercise does become pointless, as submitted by the builder, as Mr Ray‘s assessment then becomes greater by $3,810.88 than the amount actually claimed by the builder (on the basis that $160,000 in cash was paid as submitted by the builder). [197] Consequently, whether I accept the assessment of Mr Ray, or the claim of the builder, the result is almost identical (except for the small difference of $3,810.88). [198] As I have accepted the version of the builder (that $160,000 was agreed and paid) there is therefore no money owing to, or payable by, the builder for this item. [199] I consequently do not make any adjustment as to the roof deck works. [200] For the purposes of completeness, I approve the unsigned variation in relation to the roof deck in the amount of $160,00.00 in the exceptional circumstances, on the basis that the builder would suffer unreasonable hardship if the amount were not paid, and it would not be unfair to the owners for the builder to recover that amount. Liquidated damages [201] The builder submits that the original construction period of 420 days (60 weeks) expired on 22 July 201548 and that variations 1 to 8 were issued and signed prior to the final claim and had by agreement resulted in an additional 55 business days being added to the construction period, resulting in a revised completion date of 7 October 2015. 48 Submissions of the Applicant filed 11 August 2017, [3.1]. -- 31 of 36 -- 32 [202] The builder submits that the work was handed over on 18 December 2015, which was 52 working days outside the revised completion date. [203] The builder submits that a reasonable period of time must be allowed for the conduct of variations. It says its evidence was that ‘the time estimates for the work is reasonable, and the 5 documents claim 55 business days to perform the work ordered by the owners’.49 [204] This further period of 55 business days proposed by the builder would take the completion date outside the 52 working days by which the work exceeded the revised completion date. [205] The builder notes that Mr Ray ‘did not look at or consider how long the work identified in variation claims 9, 10, 11, 12, 13 and 14 might reasonably take to be performed’.50 [206] On the basis of the proposition by the builder, the work was not outside a further revised completion date, and no liquidated damages would be payable. [207] The owners calculate the time periods differently. They submit that the contract already provided for 55 days for delays in Item 4B of the schedule of the building contract.51 The owners note that the construction commenced on 28 May 2014, and that the completion date was initially 21 July 2015. [208] The owners submit that an extension of 55 days is allowable pursuant to variations 1 to 8, and that the revised completion date was 15 September 2015. They calculate that the builder did not reach practical completion until 18 December 2015, and practical completion was late by 94 days.52 [209] The owners had deducted liquidated damages for a period of 101 days at the time of the handover, but in the proceedings calculated that liquidated damages should be allowable for 94 days at the agreed rate of $250.00 per day, being a total of $23,500.53 [210] There are therefore differences of opinion between the builder and the owners as to: a) what the original completion date 420 days after 28 May 2014 is; b) what the date after the expiry of the original completion date is, to allow for the written variations; and 49 Ibid, [3.16]. 50 Ibid, [3.20]. 51 Owners Closing Argument filed 4 September 2017, [52]. 52 Ibid, [56]. 53 Ibid, [60]. -- 32 of 36 -- 33 c) whether extra time should be allowed for the unsigned variations, and if so, how much time. [211] The builder calculates the agreed variations by counting business days, whereas the owners count that period using just days. The agreed variations 1 to 8 are all in Form 5,54 which expressly refers to ‘business days’, therefore the period should be calculated as business days. [212] It is an arithmetical exercise as to the calculation of time of the original completion date plus 55 business days for the agreed variations: a) 28 May 2014 plus 420 days is 22 July 2015. b) 22 July 2015 plus 55 business days is 7 October 2015. [213] The period from 7 October 2015 to 18 December 2015 is 72 days or 52 business days. [214] I have allowed unsigned variations as discussed. Should those unsigned variations be given a time allowance, and is this in addition to the 55-day delay period already included in the contract? [215] The particulars of the contract provisions as to time for conduct of the works are set out earlier in these Reasons. It is notable that the days allowed to construct the work are described as 365 ‘business days’. The particulars also provide for an additional 30 business days as an inclement weather allowance. To these amounts 25 non-working days (including weekends, rostered days off, public holidays, etc) are then added. That results in a period of 420 ‘days’ for construction of the work from the commencement of work on 28 May 2014, which ends on 22 July 2015 . [216] That period of 420 days is only for the original contract works. The unsigned variations are expressed on their face to be additional, which adds a further 55 business days. The date that is 55 business days after 22 July 2015 is 7 October 2015. [217] I have allowed unsigned variations. I do not consider that the original contract delay period of 55 days referred to in Item 4 of the schedule comprehends delays caused by variations. Item 4 is clear as to its components as discussed, and these relate to calculation of overall days and wet weather days only. [218] No submissions were made as to wet weather days, one way or another, and I cannot make any assumptions as to whether any are applicable or not, and do not take these into consideration. [219] The builder is seeking a further 55 business days allowance for the unsigned variations and has given evidence that such period is a proper allowance. There is no evidence that 55 business days is an unrealistic or 54 Builder’s bundle, 321-340. -- 33 of 36 -- 34 inappropriate time. In the absence of a contrary calculation by Mr Ray, or other evidence by the owners, I accept the assessment of 55 business days and allow such further period for the unsigned variations. [220] When a further 55 business days is added to the original contract date as amended for the written variations of 7 October 2015, the resulting date is 21 December 2015, which is 3 days after the building was handed over. [221] There was considerable discussion in the course of the hearing as to delay caused by tiling works. Generally, if issues of that type were to be determined, I would again prefer the evidence of the builder to that of the owners. However, I do not consider it necessary to analyse the time taken within the construction period, as the resolution of time allowed for variations sufficiently extends the period in any event, as I have discussed. [222] I therefore do not consider, after time is allowed for the signed and unsigned variations, that there was any delay in the amended allowable construction period at all, and therefore no liquidated damages apply. [223] The owner had deducted $25,250.00 as liquidated damages from the final claim (being 101 days at $250.00 per day). I find that no liquidated damages should be deducted or set off from the final claim. Amount payable to the builder [224] I have found that the builder is entitled to payment for unsigned variations of $32,985.83, and that no deduction of $25,250.00 should have been made from the final payment. [225] The amount payable to the builder is therefore $58,235.83 calculated as follows: Variations $32,985.83 + Amount deducted from final claim as liquidated damages $25,250.00 Total $58,235.83 Interest [226] The builder has claimed interest under Item 13 of the Contract. [227] Item 13 of the contract provides for interest on overdue payments at the rate of 5% per annum, as follows: -- 34 of 36 -- 35 [228] The owners say in their Amended Response55 that interest on approved variations is not payable: There was no agreement or promise to pay interest on any amount claimed pursuant to quantum meruit, or Section 84(4) DBA or for variations not contractually agreed to. [229] The unsigned variations do not become payable until approved by the Tribunal. I therefore do not consider that interest is due on the approved variations. [230] The additional 55 days which I have allowed as time for the approved variations have only come into effect with the approval of this decision. Interest therefore should not be payable on $13,750 of the amount which was deducted by the owners as liquidated damages (being 55 x $250.00) [231] Interest is due on the balance of the amount of $11,500.00 (being 46 days x $250.00) which was wrongfully deducted as liquidated damages from the final payment on handover. [232] The amount due to the builder was due at the handover date of 18 December 2015. The period from that date to the approximate date of this decision is about 2 years and 2 months or 2.16 years. [233] I will allow interest under the contract on the amount of $11,500.00 (being the amount wrongfully deducted by the owners from the final payment as liquidated damages at the time of handover) at the rate of 5% for 2.16 years which equates to $1,242.00. Conclusion [234] I have found that: a) There is an amount owing to the builder for approved variations in the amount of $32,985.83. b) No amount is payable by either party in respect of the roof deck. c) No liquidated damages are allowed. d) The deduction made by the owner of $25,250.00 for liquidated damages from the final claim is not allowed, and that amount is due to the builder. e) The total amount payable to the builder for claim is $58,235.83. f) Interest of $1,242.00 is payable to the builder. 55 Amended Response filed 5 October 2016, para 23(b) -- 35 of 36 -- 36 [235] I order that the owners pay to the builder the amount of $58,235.83 for the claim plus $1,242.00 for interest, being a total of $59,477.83. [236] The builder has been substantially successful in the proceedings and I anticipate that it will make an application for costs. If such an application is proposed, I would urge the parties to attempt to come to an arrangement by agreement, but failing any such agreement, will make directions on such an application as to: a) the filing of submissions as to costs b) the determination of the application for costs, either by oral hearing or by hearing on the papers, as to whether costs should be allowed under the QCAT Act, and as to assessment of any such costs. -- 36 of 36 --