ACDG Pty Ltd trading as Swimin Construction v Bryant [2017] QCAT 133

CITATION: ACDG Pty Ltd trading as Swimin Construction v Bryant [2017] QCAT 133 PARTIES: ACDG Pty Ltd trading as Swimin Construction (Applicant) v Paul Bryant and Lisa Bryant (Respondents) APPLICATION NUMBER: BDL076-16 MATTER TYPE: Building matters HEARING DATES: 12 and 13 April 2017 HEARD AT: Brisbane DECISION OF: Member Kanowski DELIVERED ON: 20 April 2017 DELIVERED AT: Brisbane ORDERS MADE: 1. The applicant must pay the respondents $13,905 by 18 May 2017. 2. Master Builders Queensland must release to the respondents by 18 May 2017 the funds paid by the respondents into the holding account on 20 October 2015. 3. If a party wishes to pursue an application for costs, the party must lodge written submissions in support of the application in the QCAT registry, and give a copy to the other party, by 4.00 pm on 4 May 2017. CATCHWORDS: Building matters – whether valid termination – damages for breach of contract -- 1 of 21 -- 2 REPRESENTATIVES: APPLICANT: represented by Mr C M Hall, solicitor with Broadley Rees Hogan RESPONDENT: represented by Mr F G Forde of counsel instructed by Gadens REASONS FOR DECISION Introduction [1] This case involves disputes about a swimming pool which ACDG built at the home of the Bryants. ACDG says that the Bryants failed to pay it the last three invoices, which billed a total of over $21,000. The Bryants say there are problems with the pool which will cost over $43,000 to rectify. [2] The pool construction contract was signed on 10 June 2015. The total contract price was $89,997 comprising $46,861 for “pool works” plus $43,136 for “other works” which related to things external to the pool such as paving, landscaping and fencing. There were two concrete structures: the pool shell, which was part of the “pool works”, and the surround slab which was part of the “other works”. The “other works” also included areas paved with granite tiles laid on the surround slab to the left and right of the pool (looking from the house down the length of the pool toward the back fence) and next to the shallow end of the pool (which is nearest the house), a gazebo (a roofed timber structure) on the rear left side, a timber deck on the rear right side, garden beds including an “inset garden” in the paved area to the right of the pool, and a glass fence running along two sides of the pool area: the right side and the side closest to the house. Timber fencing was used for the other two sides which are boundary fences. The surround slab is around three sides only: the right side, the shallow end side, and the left side. [3] The contract said the date for commencement of construction was 6 July 2015, and the date for practical completion was 4 September 2015. Work commenced on schedule but had not finished by 4 September 2015. [4] There were factors which increased the price somewhat as the project progressed. For example, excavation costs exceeded the $5,000 excavation allowance which was the “provisional sum” listed in the contract. The parties also agreed on some variations such as extending the tiled area of the surround slab such that it included the floor under the pool equipment. [5] The Bryants paid a series of progress payments totalling more than $76,000. The last invoice they paid was issued by ACDG on 18 September 2015. -- 2 of 21 -- 3 [6] After that, ACDG issued three further invoices with a total value of $21,565 (after a $1,200 adjustment in the Bryants’ favour by way of an adjustment note). It is undisputed that the Bryants did not pay any of this money to ACDG, though they did deposit $20,780 into the Master Builders Queensland holding account on 20 October 2015. This was slightly more than the amount which ACDG had advised was owing as at that date. The Bryants made that payment in reliance, or purported reliance, on a term of the contract which allowed a disputed sum to be paid into the holding account pending resolution of the dispute. [7] There was much back and forth, mainly by email, between Mr Geoff Smith of ACDG and Mr Bryant in late 2015. The emails show a deteriorating relationship between ACDG and the Bryants, with each side contending that the other had breached the contract. [8] On 8 December 2015 the Bryants sent a notice of termination of contract to ACDG. On 9 December 2015 ACDG responded via a firm of solicitors. They contended that the Bryants had not been entitled to terminate and that the Bryants’ letter of 8 December 2015 was a repudiation of the contract. The solicitors said that ACDG accepted the repudiation and elected to terminate the contract. [9] After attempts at resolution failed, ACDG lodged an application with QCAT on 15 April 2016 seeking an order that the Bryants pay ACDG $21,565 for breach of contract plus interest at the rate of 15% per year. This is the rate of interest specified in the contract for late payment. [10] On 27 April 2016 the Bryants lodged a “response and/or counter- application” form with QCAT. They disputed the amount claimed by ACDG, and contended that the amount owed should be deducted from a larger amount of $43,200 which they said would be the cost to them of rectifying and completing the project. [11] ACDG accepts that some rectification work is required but it disputes the extent and cost. The hearing and the witnesses [12] The matter was heard on 12 and 13 April 2017. [13] Directions had been made by QCAT on various occasions prior to the hearing. These included a direction that a joint expert report was to be prepared by Mr Matthew Yourell (an engineer with Newport Consulting Engineers, who had been engaged by ACDG) and Mr Rodney Webb (a pool inspector who had been engaged by the Bryants). A joint expert report dated 23 February 2017 was produced as a result. QCAT subsequently directed that Mr Yourell and Mr Webb were to produce a supplementary report in the form of a table. The resulting table was lodged with QCAT on 31 March 2017. I will refer to the first report as the joint expert report and to the supplementary report as the joint expert table. -- 3 of 21 -- 4 [14] A solicitor in the firm acting for ACDG contacted QCAT’s registry on 11 April 2017 advising that it had just come to light that Mr Yourell was overseas and may not be available to give oral evidence. The solicitor explained that she had assumed that Mr Yourell was aware of the hearing date and that he was expected to attend, and she only discovered that he had gone overseas when she tried to contact him on 10 April 2017. [15] At the hearing Mr Hall for ACDG advised that his firm was attempting to contact Mr Yourell in Hawaii with a view to him giving evidence by phone. Mr Hall foreshadowed that if those attempts proved unsuccessful, he might apply later in the hearing for an adjournment so that Mr Yourell could give oral evidence on a later date. The attempts proved unsuccessful and so on the second day of the hearing Mr Hall sought an adjournment. Mr Hall submitted that Mr Yourell’s opinions about rectification in the joint expert table are ambiguous. Mr Hall submitted that oral evidence from Mr Yourell was required to clarify his views, and that only then would I be in a position to properly assess the likely cost of rectification. [16] I accept that there is some lack of clarity in the way Mr Yourell has expressed his opinions in the joint expert table. However, I consider that the opinions are sufficiently intelligible for conclusions to be safely drawn. I contemplated the option of an adjournment with a costs order against ACDG or its solicitors (on the basis that they could have sought clarification from Mr Yourell earlier as well as confirmation of his attendance) to compensate the Bryants for the costs incurred in prolonging the hearing. I also took into account the risk of injustice to ACDG in not being able to elicit evidence that might be favourable to its case. However, weighing up QCAT’s obligations to be not only fair and just, but also economical and quick,1 I do not consider that extending the hearing beyond two days would be warranted. The next available and suitable date could well be some way off, and the parties would have incurred further legal costs for what is not, in the scheme of things, a large monetary dispute. [17] I have taken into account the 28 exhibits as well as oral evidence given by a number of witnesses. These witnesses were Mr Smith (who at the time of the construction was a director of ACDG and its representative for the project), Mr Bryant, Mr Webb, Mr Chris Coulton (a builder who was doing work on the Bryants’ house in late 2015), Mr Chris Nicholls (of Queensland Family Pools which submitted quotes to the Bryants for rectification work) and Mr Drew Mathieson (of Intouch Renovations which submitted quotes to ACDG for rectification work). [18] The evidence of Mr Smith and Mr Bryant diverged in a number of respects. Where there is divergence, I prefer the evidence of Mr Bryant. He was a straightforward witness who made appropriate concessions. ACDG portrayed Mr Bryant as a stressed client who tried to micro- 1 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3. -- 4 of 21 -- 5 manage the project. It suggested that his calm demeanour in the witness box was starkly different to his manner during the construction. I accept that Mr Bryant would have been less composed during the later stages, at least, of the construction. However, that was understandable. The project ran late. Mr Smith gave a string of excuses including pneumonia, diarrhoea, and a dead phone. Even if these were all true, they would have tried the patience of anyone who had signed a contract to have an expensive pool built by a particular date. Problems started to appear including leaks and uneven tiles. Later invoices incorporated several sums that should not have been charged. When Mr Bryant pointed out the invoice problems, few concessions were made in response. It was more a case of an increasingly frustrated owner trying to ensure action and accountability than “micro-management”. It was also suggested that Mr Bryant had chosen to leave out documents in his QCAT material that did not suit his case. Having regard to the nature of the documents and Mr Bryant’s explanations, I do not accept that suggestion. [19] Mr Smith was a less impressive witness. He tended to be defensive and argumentative in cross-examination. He also displayed a tendency to give poor excuses, and this detracts from his credibility. Two examples warrant mention. One was attributing delay to a refusal by two tilers to work on the project on the basis of Mr Bryant’s “oppressive treatment of them”. Cross- examination revealed that there was scant if any opportunity for the tilers to have formed that opinion, and one of them had provided an email to Mr Bryant giving a different reason. Even if the tilers in fact gave that excuse to Mr Smith, he should not have embraced it as if it were a legitimate reason. The second example is Mr Smith’s assertion, said to have been based on a conversation he overheard, that damage to the tiles must have been caused by Mr Coulton’s workers driving an excavator over the paved area. Mr Smith clung to this assertion even in the face of evidence that the glass fence was erected at the time, advancing the improbable notion that the excavator must have been driven through the opening where the glass gate was yet to be fitted. Did the Bryants validly terminate the contract? [20] The contract permits the owner to terminate in a number of situations. The owner must give a notice to the builder setting out alleged breaches, and if the builder does not remedy them within ten business days the owner may terminate the contract. However, the relevant clause says that the owner may not terminate if the owner is in substantial breach of the contract. [21] On 20 November 2015 Mr Bryant emailed a notice from himself and his wife to ACDG giving notice of their intention to terminate on a number of grounds. It is sufficient for present purposes to focus on just one: unwillingness to complete the works. The contract gave the description of the works as “29 Lineal Swimming Pool as per quote dated 8th June 2015”. The quote included as part of the pool exterior four stepping stones and, as part of the gazebo, a frosted glass screen to hide the pool -- 5 of 21 -- 6 equipment. Accordingly, ACDG was contractually bound to install those items. [22] Mr Smith’s evidence was that ACDG purchased the stepping stones but did not install them because Mr Coulton said that he would. Even if that is the case, I am not satisfied that the Bryants ever agreed to that change. In a series of emails to Mr Smith between 23 September 2015 and 4 November 2015, Mr Bryant made it clear that the Bryants expected ACDG to install the stepping stones. For there to have been an enforceable variation of the contract, a variation document signed by both parties was required under the contract. It is not suggested that there was any such variation document in relation to the stepping stones. Accordingly, I find that ACDG refused to install the stepping stones, contrary to its contractual obligation. [23] It is undisputed that ACDG never installed the gazebo screen. It is true that Mr Bryant wavered during the course of the project about whether he might prefer a different type of screen to the frosted glass one stipulated in the quote. However, I am satisfied that Mr Bryant did not ever agree to a screen being deleted from the scope of the project. Again the emails between 23 September 2015 and 4 November 2015 indicate that the Bryants wanted the screen installed. Meanwhile, Mr Smith had unilaterally decided that the solution was to take the screen out of the scope of works by indicating on an invoice dated 22 September 2015 that ACDG was giving a “rebate for screen & plants” of $2,000. (There is no dispute that the parties had verbally agreed in the course of the project that Mr Bryant, instead of ACDG, would put the plants in). Mr Smith’s explanation in cross-examination for additionally excluding the screen from the scope of works was that Mr Bryant did not know what sort of screen he wanted and so to speed the process up Mr Smith rebated the cost. It was not open to ACDG to take this course of action. ACDG, if it could not get a clear answer from Mr Bryant about what sort of screen he wanted, could simply have installed a frosted glass screen as per the contract. Instead ACDG decided, invalidly, not to do that part of the works. [24] ACDG persisted in its refusal to install the stepping stones and the screen despite the notice sent by the Bryants on 20 November 2015. [25] I do not accept evidence given by Mr Smith during cross-examination on the morning on 12 April 2017 that he had sent an email to Mr Bryant on 2 October 2015 suspending work. Mr Bryant, for his part, said he has no recollection of such an email. Mr Forde for the Bryants called on Mr Smith to produce the email. Mr Smith insisted that he no longer has access to the work email account as he no longer works for ACDG. He went on to acknowledge, however, that his parents run that company. He said he would ask the company’s information technology firm to obtain and forward the email. The email was not produced by the time the hearing ended. I note that Mr Smith appears to have had no difficulty forwarding from his i-phone emails from that work account dating from August 2015 on another topic to ACDG’s solicitor Mr Hall in the evening of 12 April 2017. -- 6 of 21 -- 7 [26] As I have found that ACDG persisted in its unwillingness to complete the works after receiving the Bryants’ notice of intention to terminate, and the works had not been suspended in the way provided for in the contract, the Bryants had the right to terminate the contract as at 8 December 2015 unless they were in “substantial breach” of the contract. [27] “Substantial breach” is not defined in the contract. Mr Hall for ACDG submitted that the Bryants were in substantial breach by not having paid the last three invoices within three business days as required by the contract. Mr Forde for the Bryants pointed to problems with the invoices. He submitted that the mere issue of an invoice does not establish liability: ACDG must establish on the balance of probabilities that the relevant stage of work had been completed. [28] It is therefore desirable to examine the three invoices in question. Invoice issued on 22 September 2015 [29] The total amount billed was $11,313 made up of $4,686 for stage 4 of the “pool works” (“completion of coping and/or tiling”) plus $8,627 for “balance payable on practical completion of other works”, less a $2,000 rebate for the plants and gazebo screen. Stage 5 of the “pool works” had been previously invoiced and paid. ACDG had postponed issuing the stage 4 bill, apparently because of problems with the coping tiles. [30] Under the contract ACDG was entitled to claim payment “progressively, on the completion of the stages set out in the Schedule”. This means that ACDG could claim payment for stage 4 only if that stage had been completed. The contract also provided that the Bryants had no right of set- off: they were not permitted to hold “any retentions for defects or omissions”. [31] It is a question of fact and degree whether a stage of work is incomplete, or complete albeit with defects or omissions. [32] It is apparent from the emails that leaks were a problem at around the time the invoice was issued. When Mr Bryant advised Mr Smith on 20 September 2015 that the pool was leaking, Mr Smith expressed confidence that any leaks would be minor, such as in a gland or valve. The following summary of events, which I regard as uncontentious, is drawn from the emails and other documents. Mr Smith found and fixed a number of leaks, in components such as lights and returns, on 21 September 2015. Mr Bryant thought – correctly as it turned out – that the problem was continuing and advised Mr Smith on 22 September 2015 that he would engage a leak detection firm. This was Australian Leak Detection. That firm attended on 23 and 30 September 2015 and on 5 and 6 October 2015. On all occasions other than 5 October 2015, Australian Leak Detection found and fixed leaks. Some of these were in fittings and some were in the underwater bench which is on the left side of the pool and is paved with granite tiles. On 1 October 2015 Mr Smith asked the firm Leaky Pool Guys to check for leaks. They attended on 2 October -- 7 of 21 -- 8 2015 and could find no leaks. However, the Leaky Pool Guys returned on 12 October 2015 and fixed a leak or leaks. [33] As far as I am aware, there have been no further leaks. [34] Mr Smith’s position is that leaks are “extremely common” in a new pool. I do not accept, however, that a properly constructed pool would have such a large number of leaks. When water is dropping, quite commonly an extensive investigation is required to discover why: there may be a structural problem, or a faulty or imperfectly-fitted component, or faulty tiling and so on. In my view the part of the invoice that related to stage 4 of the “pool works” was issued prematurely: there was leaking, the cause or causes of which was unresolved. It was unclear whether there was a mere defect that could be fixed or some more fundamental problem. In my view stage 4 could not be considered complete until it was properly established that all leaking had been arrested and would not continue. I find that there was no valid claim for payment in the part of the invoice that related to the stage 4 works. [35] So far as other sum claimed in the invoice, $8,627, is concerned, the contract provided for a progress payment for this amount as the “balance payable on completion of other works”. (The invoice inaccurately used the expression “practical completion”, a term which – as defined in the contract – would cater for completion notwithstanding minor defects or minor omissions.) As noted earlier, two parts of the “other works” – the installation of the gazebo screen and of the stepping stones – were never done by ACDG. Accordingly, the “other works” were not complete and ACDG was not entitled to make the claim for $8,627. [36] I find that the invoice was not valid. The Bryants were not in breach of contract by failing to pay ACDG within three business days. Invoice issued on 28 September 2015 [37] The total amount billed on this invoice was $10,452 but an adjustment note issued by ACDG on 1 October 2015 reduced the amount claimed by $1,200. The adjustment note indicated that an incorrect tiling allowance figure had been used in preparing the invoice. When the invoice is read in conjunction with ACDG’s contract summary of 24 September 2015, it can be seen that the effect of the adjustment was to charge the Bryants $1,056 instead of $2,256 for the cost of tiles and sealer in excess of a “tile allowance” of $5,500 shown in the quote dated 8 June 2015. [38] However, the only provisional sum stated in the schedule to the contract was $5,000 for an excavation allowance. A tile allowance was not included. [39] The contract described the scope of works by reference to the quote, but this did not serve to incorporate other terms from the quote. Had the parties wished to give ACDG the contractual power to charge the Bryants more than the tile allowance mentioned in the quote, it would have been -- 8 of 21 -- 9 necessary to include the tile allowance as a provisional sum in the schedule to the contract. This was not done. Accordingly, the invoice overcharged the Bryants by (as adjusted) $1,056. [40] Similarly, the invoice wrongly incorporated an amount of $1,489 for “pool interior – above contracted allowance” where there was not even an allowance provided for in the quote, let alone a provisional sum stated in the schedule to the contract. [41] The invoice incorporated an amount of $1,690 for “excavation – above contracted allowance” but (as I infer from Mr Bryant’s email to Mr Smith of 28 September 2015) ACDG had not yet provided the excavation invoices to the Bryants. This was contrary to the contractual requirement upon ACDG to “give to the owner a copy of any invoice … relating to the actual cost incurred by the contractor for any … provisional sum prior to or when seeking payment for, the relevant item or work”. [42] The Bryants challenged and queried various aspects of the invoice in an email sent by Mr Bryant to Mr Smith on 28 September 2015. The only resulting change made by ACDG was the $1,200 reduction made on 1 October 2015. The invoice was substantially flawed. I find that the Bryants were not in breach when they did not pay it within three business days. Invoice issued on 20 November 2015 [43] This was for $1,000 and was described as “Construction Contract Stage 6 Payment – Practical Completion Stage”. This invoice relates to the “pool works” part of the contract rather than the “other works” part. [44] “Practical completion stage” is defined in the contract as: that stage of the works when the works are completed in accordance with the contract and all relevant statutory requirements, apart from minor omissions or minor defects, and the works are reasonably suitable for its intended use. [45] However, there is a mechanism in the contract that can bring forward the practical completion stage. The contract says that the owner must not take possession of the works prior to payment of the practical completion stage claim unless the owner has obtained the contractor’s written consent. “Possession” is widely defined in the contract to include when the owner uses the works. The contract provides that if the owner takes possession of the works when not entitled to do so under the contract, the works are deemed to have reached practical completion stage on the date of possession. [46] ACDG argues that the Bryants used the pool for swimming from 18 September 2015, without written permission from ACDG, and that this amounted to possession. Therefore, according to ACDG, the practical completion stage was reached on 18 September 2015. [47] There is no direct evidence about when the Bryant family started using the pool, and Mr Bryant says he cannot recall. However, from subsequent -- 9 of 21 -- 10 correspondence, I consider it reasonably likely that they used the pool for swimming from about 18 September 2015. I will proceed on the basis that they did. It is undisputed that there was no written permission from ACDG. [48] It is common ground between Mr Smith and Mr Bryant that they had a conversation on 15 September 2015, when the pebblecrete interior was installed, about when it would be “okay” to swim in the pool. Mr Smith indicated that it would be okay in a few days, once the chemicals had balanced. Mr Smith says he added that he would inform the Bryants when they could swim in the pool. So there appear to be different views about whether Mr Smith gave permission to swim, or merely answered a query from Mr Bryant about when the pool would be fit for swimming. [49] It is not possible on the limited available evidence, quite some time after the event, to make precise findings about what was said. However, I consider it likely that Mr Smith on behalf of ACDG gave verbal permission on 15 September 2015 for the Bryants to use the pool from a few days later. The project was running late. The Bryants were upset about the delays and other problems but they had paid all invoices up to that point. It is inherently likely in these circumstances that Mr Smith would have told the Bryants that they could use the pool if they wished. I find that verbal permission was given. [50] It is noteworthy that ACDG did not at the time treat the contract as having reached practical completion on the basis of possession. On 22 September 2015 ACDG issued the invoice for stage 4 of the pool works. On 24 September 2015 Mr Smith emailed Mr Bryant an unsigned notice of practical completion which asserted that the works would reach practical completion stage on 25 September 2015. [51] Mr Forde submits that in such circumstances: …the applicant is estopped from relying on the absence of written consent as its conduct in providing the oral consent makes it unfair, inequitable and unconscionable for the applicant to [insist] on the requirement for the consent to be in writing in an attempt to trigger the application of [the term in the contract that deems the practical completion stage to have been reached]. [52] Mr Forde cites two cases on this point.2 I accept Mr Forde’s submission, and find that the practical completion stage was not reached on 18 September 2015. [53] Mr Forde also submits that the practical completion stage could not have been reached before 9 December 2015 when the final inspection certificate was issued. Until then, Mr Forde submits, there was an outstanding statutory requirement and so the definition of “practical completion stage” was not met. 2 Walton Stores (Interstate) Limited v Maher (1987-1988) 164 CLR 387 and Larratt v Bankers and Traders Insurance Co. Ltd (1941) 41 SR(NSW) 215. -- 10 of 21 -- 11 [54] The final inspection certificate was issued under specified sections of “the Building Act 1975 and/or … the Building Regulation 2006”. I find that there was a statutory requirement that was outstanding until 9 December 2015, and so practical completion stage cannot have been reached by 20 November 2015 when the invoice for the practical completion stage was issued. The invoice was invalid. I find that the Bryants were not in breach of contract when they did not pay the invoice within three business days. [55] Mr Hall drew my attention to a term in the contract which deems the owner to have agreed that works have reached the practical completion stage if the owner fails to attend the final inspection. The parties had different accounts of what transpired at handover or attempted handover meetings, but I consider that such an inspection was never properly triggered prior to 8 December 2015 because the works had not actually reached the practical completion stage. Conclusion on the termination question [56] As the Bryants were not in breach of contract when they issued the notice of termination, I find that they validly terminated the contract on 8 December 2015. Is ACDG entitled to further payment for work performed? [57] ACDG’s position is that the Bryants are liable to pay the total amount of $21,565 claimed in the three unpaid invoices (as adjusted by the adjustment note). [58] Mr Forde for the Bryants, in written submissions tendered at the hearing, concedes that the Bryants owe some money to ACDG namely $8,781 comprising:  $4,686 for stage 4 of the pool works; and  $4,095 which is said to be the total amount conceded by the Bryants in emails as payable in respect of sums claimed in the invoice issued on 28 September 2015. [59] The basis for this concession is not clear to me from Mr Forde’s submissions. I gather from his oral submissions that the concession was not based on quantum meruit (reasonable compensation awarded to avoid unjust enrichment) but I consider that the matter is best approached on that basis in view of my findings about the invoices. I consider that the appropriate approach is to assess what ACDG would have been entitled to receive had it issued accurate invoices at the correct times and had gained approval to delete items of work. Accordingly, I will re-examine the three invoices in this light. -- 11 of 21 -- 12 Invoice issued on 22 September 2015 [60] It is undisputed, and I find, that ACDG is entitled to $4,686 for stage 4 of the pool works. [61] The other sum claimed in the invoice was, effectively, $6,627 for the last stage of the “other works”: $8,627 for the last stage for “other works” minus the $2,000 rebate nominated by ACDG for the plants and gazebo screen. [62] It is undisputed that Mr Smith and Mr Bryant had verbally agreed to remove plants from the scope of works. ACDG should, pursuant to a term in the contract, have prepared a written variation document for signing by both parties. However, as with several other changes, it failed to do so. The variation document required by the contract would have stated any adjustment to the contract price. [63] I have earlier found that ACDG failed to perform two other tasks it was required to perform under the contract in respect of “other works”: installation of the gazebo screen and installation of the stepping stones. [64] Mr Forde submits that none of the amount claimed is owing because the “other works” were never completed. However, as I am approaching the matter on a quantum meruit basis, I do not consider that this failure negates all entitlement to payment. The difficulty is calculating a reasonable amount to be deducted from the figure of $8,627 for the plants, screen and stepping stones. [65] ACDG nominated the figure of $2,000 for the plants and the screen in its rebate entry on the invoice. In an email to Mr Smith on 12 October 2015, Mr Bryant nominated $1,200 for the plants, $1,500 for the screen, and $500 for the stepping stones. However, Mr Bryant subsequently obtained a quote for the screen from the glazier working on the project, which came in at $2,200. I consider it reasonable to adopt that figure for the screen. I also consider it reasonable to adopt the figures of $1,200 for the plants and $500 for the stepping stones estimated by Mr Bryant, in the absence of any independent evidence and bearing in mind that this exercise has resulted from ACDG failing to properly document a variation and abandoning part of the work. This is not to say that ACDG should be punished for its breaches of contract, but simply that the Bryants should be given the benefit of the doubt in the circumstances. [66] Accordingly, I find that the sum payable for the final stage of the “other works” is $4,727 (being $8,627 minus $3,900). Invoice issued on 28 September 2015 [67] This invoice must be read in conjunction with the contract summary prepared by ACDG on 24 September 2015. The total amount billed was $9,252.63 (factoring in the $1,200 downward adjustment made in the adjustment note) for changes in the course of the project, comprising: -- 12 of 21 -- 13  $2,353.14 for switching over to a larger heater;  $752.40 for tiling under the pool equipment;  $1,341.25 for a variation for the rear boundary fence;  $1,690.95 for excavation costs over the provisional sum amount of $5,000;  $218.50 for tile risers;  $1,056.85 for tile and sealer “above contracted allowance” (as reduced by the adjustment note);  $632.50 for “increase in fence height & retaining sleepers”;  $1,498.20 for pool interior “above contracted allowance”; and  $313.84 for “electrical – timer and double power point”;  minus $605 for the cost incurred by the Bryants in paying Australian Leak Detection’s first invoice. [68] Mr Forde in his written submissions does not take issue with the first three sums in the above list, and I agree they should be included. They were never disputed by the Bryants. Mr Forde also includes an amount of $990. However, I do not agree that the $990 should be added. This sum related to the painting of a fence and the Bryants had already paid for it when they paid the invoice issued on 18 September 2015. [69] Mr Forde submits that the excavation sum of $1,690.95 is not payable on the basis that there is no evidence of the amounts expended or that ACDG sent invoices to the Bryants prior to or when seeking payment. There is, however, evidence in the emails that ACDG sent copies of the excavation invoices to Mr Bryant at his request after issuing the invoice. Mr Bryant went on to discuss invoice numbers and amounts in emails to Mr Smith. Of course, ACDG should have sent copies before or at the time of issuing the invoice, as required under the contract. However, for present purposes it is reasonable to treat the sum of $1,690.95 as payable. [70] In email correspondence Mr Bryant also acknowledged liability for the $313.84 electrical expense, though he commented that it seemed very expensive. I infer that Mr Bryant must have eventually seen a copy of the invoice and accepted liability on the basis that it was a verbally agreed variation. So $313.84 is payable. [71] The same cannot be said for the other items included by ACDG. As discussed earlier, some were presented as if they were referable to provisional sums, but in fact they were not. Others might well have been allowable if there had been signed variations or applicable prime cost -- 13 of 21 -- 14 sums, but this was not the case. In the absence of any acts on the part of the Bryants that would give rise to an estoppel in favour of ACDG, the sums are not payable. [72] In the contract summary dated 24 September 2015 ACDG deducted $605 for the first invoice paid by the Bryants to Australian Leak Detection, presumably on the basis that this was an expense incurred with the approval of ACDG. Subsequently, Australian Leak Detection billed the Bryants $165 for another visit. I consider it reasonable to deduct the combined amount of $770. [73] Accordingly, I find that the amounts payable in respect of the work referred to in the invoice issued on 28 September 2015 are:  $2,353.14;  $752.40;  $1,341.25;  $1,690.95;  $313.84;  minus $770;  Total: $5,681.58 (rounded up to $5,682). Invoice issued on 20 November 2015 [74] This was the invoice for $1,000 for stage 6 – practical completion stage – of the “pool works”. This sum was not payable under the contract because I have found that the contract was terminated before practical completion stage could have been reached. However, that does not preclude liability on a quantum meruit basis. [75] Mr Forde’s written submissions about this invoice mention the failure of ACDG to install the gazebo screen and the stepping stones. However, I do not regard those failures as relevant because stage 6 related only to the “pool works”. The $1,000 was part of the overall price for the “pool works”. I see no reason in principle why it should be excluded from the amount reasonably payable. Conclusion on the amount owing to ACDG [76] Accordingly, I find that the amount properly outstanding for the work done by ACDG is $16,095 (comprising $4,686, $4,727, $5,682 and $1,000). [77] As I have found that the Bryants did not breach the contract in failing to pay the invoices, interest is not payable under the contract. I do not consider it reasonable to allow any amount for interest on a quantum meruit basis. The problems could have been avoided if ACDG had -- 14 of 21 -- 15 followed the contract by seeking signed variations, providing excavation invoices at the required time, and correctly invoicing. What defects exist and how should they be fixed? [78] The joint expert report was written by Mr Yourell who is an engineer with considerable experience in pool design, and Mr Webb who is a pool inspector with long involvement in the sector. Their opinions are expressed jointly in the joint expert report. The joint expert table was later commissioned to obtain recommendations for rectification. Mr Yourell and Mr Webb expressed their opinions separately in that document, with Mr Webb declining to express a view on some structural issues due to a lack of relevant expertise. Problems with the surround slab [79] The joint expert report identifies a number of problems with the surround slab. Large areas fall back towards the pool which means that dirt, particularly from the inset garden, tends to get washed into the pool. A lack of drainage from the inset garden exacerbates this problem. Water ponds in a number of areas in the paving and there is a lack of drainage under the timber floors of the gazebo and deck. There has been movement of the surround slab relative to the pool shell, variously up and down, resulting in damage to coping tiles and waterline tiles. [80] As there is little direct evidence of the process used by the workers who laid the surround slab, and there is no opportunity to inspect the works thoroughly without demolishing the slab, there has been some controversy over the causes of the problems. In an earlier sole report in June 2016, Mr Yourell had noted the lack of an expansion joint between the pool shell and the surround slab in one area. The joint expert report indicates that in sections at least there appears not to have been a layer of ableflex foam (to cushion movement) in the joint between the pool shell and the surround slab. There may not have been any pinning together of the two concrete structures with dowels, which would have contained movement. However, the exact causes are not known. It can be safely inferred, however, that there must have been serious shortcomings in the processes used to have produced the problems within a relatively short time. [81] In his earlier report Mr Yourell had recommended a trench method of rectification. This involved firstly cutting a trench of one tile’s thickness in the slab adjacent to the pool shell. Then new concrete would be poured in the trench, with pinning of the new concrete to the pool shell on one side and to the surround slab on the other. Mr Yourell also recommended that a flexible sealant be applied to the expansion joint. [82] Mr Yourell’s recommendations in the joint expert table are somewhat hard to follow because although in item 2 he appears to be discussing the right area and in item 3 he appears to be discussing the left area, some comments do not seem to fit neatly into that pattern. It is, however, -- 15 of 21 -- 16 apparent from the joint expert table that Mr Yourell no longer advocates the trench method. In the joint expert table Mr Yourell referred to “demolition of the slab”, a “new slab”, drainage of the inset garden (situated well outside the trench area) under the base of the new slab, and removal of the tiled area (not just a trench) on the left side with support from piers on the outside edge of the new slab (to the left of where a trench would be). Mr Yourell said that on the left side, only the slab in the tiled area needs to be removed, not the area under the gazebo “as this is not a structural defect as the slab is not seen due to the timber floor of the gazebo”. Mr Yourell said that any ponding under the gazebo floor can be addressed with a concrete levelling product. [83] There was no suggestion by Mr Yourell in the joint expert table that the area under the deck on the right side should be excluded from the slab removal and replacement work. Mr Yourell has not explained why he recommended a different approach in respect of the gazebo, but presumably an explanation may involve the weight of the gazebo (and perhaps how it is attached) and the fact that the gazebo straddles the top of the pool shell as well as the surround slab. This may create stability that is absent elsewhere or inadequately provided by the deck. [84] Mr Yourell recommended a process for pinning the new slab to the pool shell. He also recommended the bored piers reinforced with bars along the outside edge of the new slab on the left side. This is “to prevent settlement of the slab due to possible fill up against the neighbour’s retaining wall”. [85] In the joint expert table Mr Yourell did not expressly address the tiled area along the edge at the shallow end of the pool. However, given that Mr Yourell was no longer recommending a mere trench, I infer that Mr Yourell must have envisaged the complete removal and replacement of the part of the surround slab that is in that area. [86] Mr Webb did not express an opinion in the joint expert table about the extent of slab removal and replacement. [87] Mr Nicholls of Queensland Family Pools expressed the view in his oral evidence that it would be preferable to completely replace the surround slab (including under the gazebo). This was on the basis that joins are points of weakness that can cause problems in the future. Mr Nicholls is an experienced pool builder (though Mr Hall submitted that Queensland Family Pools lacks the licence needed to do work on the scale envisaged). I do not discount Mr Nicholls’ opinion even though he has a potential financial interest in maximising the scope of rectification works. Mr Webb also expressed the view in oral evidence that a complete new slab was preferable. [88] Ultimately, though, I am inclined to place more reliance on the opinion of Mr Yourell because of his qualifications as an engineer, and despite some indications of partisanship on his part in some comments he made in the joint expert table. -- 16 of 21 -- 17 [89] I find that rectification works as envisaged by Mr Yourell involve the replacement of all the surround slab apart from the area under the gazebo, pinning of the new slab to the pool shell to control movement, the installation of piers and bars on the left side, the installation of drainage for the inset garden, and the application of cushioning material/s to the joint between the pool shell and the surround slab. I accept that such rectification work is necessary and appropriate. It can be assumed that the new slab, if properly laid, will not permit ponding or the flow of water from the surrounds into the pool. [90] It appears to be undisputed that the existing granite tiles on the surround slab would not adequately survive the demolition process and so new tiles will be required. The quotes from Queensland Family Pools and Intouch Renovations (and possibly other quotes) provide for new tiles. I accept that new tiles are likely to be necessary. [91] Mr Webb has also suggested surface drainage along the top of the small retaining wall that runs along the right perimeter of the pool area below the glass fence. This is to prevent storm water from entering “the lower pool zone”. I accept that this is also appropriate. The returns [92] The joint expert report said that there are six return to pool water outlets, but three would have sufficed. Further, there appears to be a lack of manifolding to evenly distribute the flow. [93] Mr Yourell appeared to retreat from this opinion, or at least question its relevance, in the joint expert table. [94] Mr Webb gave oral evidence to the effect that the flow of water is uneven and too widely distributed, at the expense of maximal water circulation desirable for filtration purposes. In cross-examination Mr Hall suggested that Mr Webb had failed to check the speed of the pump when he inspected the pool. Mr Hall also highlighted the general cleanliness of the pool observed by Mr Webb during his inspection. [95] Mr Webb has long experience in the pool industry. I have no reason to doubt his evidence that he observed, under appropriate inspection conditions, that the flow of water was uneven. Mr Yourell was the engineer who had drawn up the technical plans for the pool, and his drawings specified six returns. However, I accept the opinion of Mr Webb that in practice the number of returns is not optimal and that adding to this was a failure by ACDG to take measures to evenly spread the flow. I accept that appropriate rectification will involve reducing the number of outlets by blocking some of the existing returns, and regulating the flow of water to each outlet. -- 17 of 21 -- 18 Other defects [96] Other defects were also noted in the joint expert report. These include discolouration of the front board of the gazebo. The tiled skimmer box is non-compliant with pool safety regulations. There are some blotches in the pebblecrete interior. [97] I accept that a new skimmer box lid is required and that the front board of the gazebo needs to be replaced or fixed. So far as the interior of the pool is concerned, Mr Yourell said in the joint expert table that any defects in the waterline tiles and the pebblecrete would be from normal wear and tear and “maintenance being withheld to make the issues relating [to] the pool look worse than they would normally look”. In the absence of further explanation from Mr Yourell, I do not accept the suggestion that the Bryants have failed to maintain the interior. Interestingly, however, Mr Webb in the joint expert table did not recommend any particular rectification to the interior but he warned of potential harm resulting from the exterior rectification works. On the available evidence, I am not satisfied of a present need for rectification work in the interior of the pool. Is ACDG liable for the cost of fixing the problems? [98] Under the contract ACDG was required to carry out the works “in an appropriate and skilful way”. I find that the defects demonstrate a failure to fulfil that obligation. Accordingly, ACDG is liable to pay damages for the reasonable anticipated costs of rectification. What are the reasonable anticipated costs of rectification? [99] The parties obtained several quotes but the most relevant are those from Queensland Family Pools and Intouch Renovations. Mr Nicholls of Queensland Family Pools and Mr Mathieson of Intouch Renovations gave oral evidence. [100] Queensland Family Pools provided quotes in April 2016, March 2017 and April 2017, each in the amount of $41,000. There was little difference in the scope of works between the first and second quotes, so the consistency of price between those quotes is not surprising. They both involved replacement of the entire surround slab. The last quote was prepared in response to the joint expert table, and it is somewhat surprising that there was no change in the overall price given that the area under the gazebo (some 15 square metres) was excluded, even bearing in mind that some new requirements also arose particularly drainage and the installation of piers. In cross-examination Mr Nicholls conceded that the last quote was still premised on replacement of the entire slab. I also note that the final quote still includes works described as “acid wash pool interior to remove white staining” and relaying “granite pavers on entry benches to pool”. The latter must be a reference to the large underwater bench. Mr Yourell and Mr Webb did not, in the joint expert table, recommend these items of work. -- 18 of 21 -- 19 [101] It can be seen therefore that the last Queensland Family Pools quote includes substantial work beyond that which I have found is necessary. Further, I have doubts about the amount of care taken in providing the quote in light of the fact that there was no adjustment in price from the earlier quotes. [102] Intouch Renovations also provided three quotes: one in February 2017 for rectification using the trench method, for $11,982.29; one dated 10 April 2017, again using the trench method, for $10,696.46; and another dated 11 April 2017, involving the replacement of the slab except under the gazebo and deck, for $18,982.29. In excluding the area under the deck, the quote deviates from the joint expert table recommendations (as I understand the table). The quote otherwise incorporates the recommendations such as the particular pinning process and the installation of piers. [103] In light of the findings I have made about what rectification work is required, only the latest quote is ultimately relevant. I have mentioned the earlier quotes, though, because it is noteworthy that the last quote is exactly $7,000 more than one of the earlier quotes. In cross-examination Mr Mathieson insisted that the last quote was the result of detailed calculations based on estimated hours of work, costs of materials etc., and that it is coincidental that the price was exactly $7,000 more. I am sceptical about that. Mr Mathieson was also cross-examined about the reference in the latest quote to 7.2 square metres of slab mesh, which is the same area listed in the February 2017 quote for the trench method, which of course would require much less mesh. Mr Mathieson insisted that there was merely a typographical error in the latest quote and that he would have calculated the cost based on the amount of mesh actually required. Again, I have some doubt about this. [104] Mr Mathieson explained in oral evidence that the price difference between the slab and trench methods is not as pronounced as a lay person might assume because the trench method would involve finer work requiring some additional preparation and care. I regard this as a valid point. [105] The latest quote is expressed to be subject to “site measure” and to “provision of soil test and engineering design of new concrete slab”. Intouch Renovations also recommended that an “independent engineering and soil test be carried out to confirm slab removal is required”. In cross- examination Mr Mathieson agreed with propositions put by Mr Forde that Intouch Renovations was not prepared to do the work for the price quoted because of the reservations and that the quote was really a “guesstimate”, but not with the proposition that $41,000 would be a fair and reasonable price. Mr Mathieson said that in a “worst case scenario” involving a bad soil report, the price could be $30,000. [106] I consider that the quote for $18,982.29 underestimates the likely cost of the required rectification, for several reasons. First, the quote does not include replacement of the slab under the deck (an area of some four to five square metres). Second, there are reasons to doubt whether the -- 19 of 21 -- 20 quote has been carefully costed. Third, Intouch Renovations does not commit to a price because of the reservations expressed in the quote. [107] Overall, it can be seen that the evidence presented by both parties about the likely cost of rectification has significant problems. This precludes any precise quantification of the likely cost. [108] The contract price for the whole of the “other works” was $43,136, though a more accurate price in light of subsequent changes and cost overruns would probably have been more like $48,000. The rectification work will involve redoing a lot of the work as well as demolishing and removing most of the existing surround slab after dismantling the glass fence. On the other hand, work on the boundary fences and gardens will not be required and the materials for the glass fence, gazebo and deck will not have to be repurchased. So one might expect the overall cost to be rather lower than the original cost. [109] Taking these considerations into account, and regarding the two main quotes as indicating a range, I consider that a reasonable estimate of the likely cost of rectification is approximately midway between the two quotes, at $30,000. I assess this as the amount of damages. What orders should be made about the payment of money? [110] I have decided that the Bryants are liable to pay ACDG $16,095 for work done, and that ACDG is liable to pay the Bryants $30,000 in damages. In the result, ACDG should pay the Bryants $13,905. [111] Mr Hall for ACDG submitted that there should not be such a “set-off” because the contract prohibits set-off (except in limited circumstances that are not presently relevant) and because the Bryants had not made a counter-application for damages. In my view the first point is no longer relevant because I have assessed the Bryants’ liability on a quantum meruit basis. I do not accept the second submission. While the “response and counter-application” prepared by Mr Bryant (who is not a lawyer) did not use technical legal terms, it is obvious from the form and attachments that the Bryants were seeking compensation for the anticipated costs of rectification. QCAT is intended to be a relatively informal forum where parties usually represent themselves. It is not realistic to expect the sort of pleadings that would be prepared by lawyers for court proceedings. [112] Mr Hall also submitted that the better course would have been for the Bryants to pursue redress under the Queensland Building and Construction Commission’s statutory insurance scheme. He did not suggest, however, that a failure to follow that course precluded the Bryants from seeking damages. Accordingly, I do not need to consider that issue further. [113] Given that ACDG has had plenty of notice that it might be ordered to pay damages, I consider that a period no longer than 28 days should be allowed for payment. -- 20 of 21 -- 21 [114] It is appropriate to make an order for Master Builders Queensland to release the funds deposited by the Bryants back to the Bryants. While it is generally not desirable to make an order against a non-party, especially one who has not had the opportunity to make submissions, I do not foresee a problem in making such an order in this case. The contract form used by the parties was a standard-form contract published by Master Builders Queensland. It contained a standard term for payment of funds into the holding account in certain situations pending dispute resolution, for release in specified circumstances including upon receipt of an order from QCAT. So it can be assumed that Master Builders Queensland is content to abide an order of QCAT in such a matter. Costs [115] Each party indicated at some point in the proceeding that it seeks costs. Of course neither party has made submissions about costs without knowing the outcome. [116] Costs orders are not routine or automatic in QCAT, so I am not expressing a view on whether an application for costs should be pursued. However, given that applications have been made for costs, it is appropriate to direct that if a party wishes to pursue their application they must lodge written submissions in support of the application. If such submissions are received, I will issue further directions about response/s and, in all likelihood, a decision on the papers on that issue. -- 21 of 21 --