Dinamick Developments Pty Ltd v Niksic [2016] QCAT 406

CITATION: Dinamick Developments Pty Ltd v Niksic [2016] QCAT 406 PARTIES: Dinamick Developments Pty Ltd (Applicant) v Milan Niksic (Respondent) APPLICATION NUMBER: BDL180-15 MATTER TYPE: Building matters HEARING DATE: 19 August 2016 HEARD AT: Southport DECISION OF: Member Steven Holzberger DELIVERED ON: 21 October 2016 DELIVERED AT: Brisbane ORDERS MADE: 1. The application is dismissed. CATCHWORDS: BUILDING DISPUTE - Domestic Building Dispute - Cost Plus Contract - effect of s55 Domestic Building Contracts Act 2000 (Qld) - Enforceability of Contract. Domestic Building Contracts Act 2000 (Qld), s 55 A.L. Builders Pty Ltd v Fatseas [2015] QCAT 166 APPEARANCES: APPLICANT: Michael Hughes RESPONDENT: Milan Niksic REASONS FOR DECISION [1] Mr Niksic wished to have a number of alterations made to his existing dwelling, most importantly a granny flat for his father who was elderly and in ill health. In those circumstances he was anxious to have the granny flat completed and his father relocated as soon as possible. -- 1 of 5 -- 2 [2] He had had plans and engineering plans drawn but had been unable to obtain an acceptable quote. [3] Mr Hughes was a registered builder and a director of Dinamick Developments Pty Ltd (‘Dinamick’). Like Mr Niksic, he was also a member of the Yeronga Football Club. Both had sons who played there and both had strong connection to the club. [4] At the club, Mr Hughes was approached by a mutual acquaintance and club member, Boris Dragicevic, and told of Mr Niksic’s problem. He was asked whether he was interested in taking the job. [5] Mr Hughes was given copies of the plans. He spoke to Mr Niksic by telephone and was asked to provide a price for the job as quickly as possible as Mr Niksic was going to Germany in August. [6] Discussions proceeded on the understanding that Mr Dragicevic would act as Mr Hughes’ labourer as well as undertaking some of the works, in particular the tiling. Mr Niksic was to pay Mr Dragicevic , the certifier and the engineer directly. [7] An initial quotation of $1,000.00 per square metre for the plan as drawn including a car port was given. The car port was subsequently removed from the works and an estimate of $40,000.00 was given for the 40sqm granny flat. [8] On a subsequent site visit, Mr Hughes determined that the proposed works would require a change to the roof plan which was not contemplated in the plans provided to him. As a result, Mr Hughes changed his estimate to $45,000.00 to cover the additional costs. [9] Mr Hughes prepared a contract in the form of the Master Builders Cost Plus contract. A copy of the contract was identified by the parties and admitted as Exhibit 1 in these proceedings. [10] The contract was executed by both parties on Saturday 27 June 2015. Mr Hughes had already commenced work on the project on 23 June 2015. [11] Part D of the contract appendix specified an estimated total cost of the works at $45,000.00 payable by instalments at various stages of the works, and relevantly to these proceedings, a deposit of $2,250.00 and a first instalment (base stage) of $9,000.00. [12] Mr Niksic departed for Germany on 20 or 22 July 2015 and did not return until after completion of the base stage. [13] It is Mr Hughes’ evidence that he encountered problems almost immediately. Most significantly, the engineer designed footings proved to be inadequate and had to be redesigned. His evidence, which I accept, is that this and various other matters resulted in significant extra work and expense and some wastage. -- 2 of 5 -- 3 [14] Mr Hughes did not, prior to carrying out the additional works, seek Mr Niksic’s approval or give an estimate of the additional costs. Mr Nicksic was overseas and difficult to contact. There was little or no effective communication between them at this time. [15] When Mr Hughes had reached base stage he met with Mr Niksic’s wife and claimed an additional payment of $9,744.35 over and above the estimate contained in the contract. [16] After brief and ineffective discussions with Mr Hughes, Mr Nicksic purported to terminate the contract by written notice on or about 9 September 2015. [17] Mr Hughes subsequently lodged an application in this Tribunal claiming the amount of $9,744.35. [18] Mr Nicksic’s response lodged in the Tribunal on 8 March 2016 asserted that the contract was ‘illegal and… not enforceable’1 under s 55 of the Domestic Building Contracts Act 2000 (Qld) (‘DBCA’). [19] The significance of s 55 appears to have been lost on both parties. Mr Hughes did not address it at any stage in his material or at the hearing. Notwithstanding his reliance on s 55, Mr Niksic purported to terminate the contract, and the material he lodged in the Tribunal and the evidence he gave at hearing concerned itself almost exclusively with showing, unsuccessfully in my view, that Mr Hughes had overcharged him. [20] That this matter should end in dispute is hardly surprising. The estimate was to be prepared with indecent haste, the scope of the works was poorly defined, the plans and the works were to be undertaken as quickly as possible with the owner absent and largely uncontactable during much of the process. [21] The parties willingness to proceed with such a risky venture is at least in part explained in their common membership in the ‘football family’ as Mr Niksic described it in evidence. However, any benefit or courtesy that could be expected to flow from that disappeared when the dispute arose. Both parties have taken great offence and neither has considered the position of the other. [22] Mr Niksic does not acknowledge that Mr Hughes may have undertaken works in addition to those originally contemplated as a result of defects in the plans provided and unanticipated site conditions. Mr Hughes does not acknowledge that Mr Nicksic would have concerns of a significant blow out in the estimated costs as a result of the extra work which had not been discussed with him at any stage, let alone approved. 1 Response and Counterclaim dated 7 March 2016 at page 3. -- 3 of 5 -- 4 [23] The consequences are significant for both. I accept that Mr Hughes is significantly out of pocket for work undertaken by him, unwisely, but in good faith. Mr Nicksic complains that he has incurred several thousand dollars in legal bills, but more significantly has not completed the works and as a consequence has had to make alternative arrangements for the care of his father. [24] It is disappointing that the dispute was not resolved between the parties prior to the hearing. Domestic Building Contracts Act 2000 (Qld) section 55(1) [25] Section 55 of the DBCA provides: (1) A building contractor must not enter into a cost plus contract that would be a regulated contract unless— (a) the contract is included in a class of contracts prescribed under a regulation; or (b) the cost of a substantial part of the subject work can not reasonably be calculated without some of the work being carried out. Maximum penalty—100 penalty units. [26] The contract in these proceedings is a regulated contract and is described as, and is in fact, a cost plus contract. [27] The onus is on Mr Hughes to establish to establish that it comes within the exceptions set out in s 55. He does not assert, nor could he, that the contract is included in a class of contracts prescribed under regulation. [28] His evidence does not establish that the cost of a substantial part of the subject work could not reasonably calculated without some of the work being carried out. [29] Mr Hughes says he adopted the cost plus format of the contract because of the lack of detail in the drawings of any of the works over and above the granny flat, as well as the uncertainty in the change of roof line and connection of the extension to the existing deck. [30] On his own evidence Mr Hughes had little difficulty in calculating the cost of constructing the granny flat at $1,000.00 per square metre. This comprised roughly 90% of the cost estimate. [31] While there may have been some uncertainty as to the works that is common to most domestic building contracts. That uncertainty is not appropriately dealt with by use of a cost plus contract where it can be -- 4 of 5 -- 5 dealt with under the provisional cost and variation provisions of a domestic building contract.2 [32] In those circumstances I am satisfied that the applicant does not satisfy s 55(1)(b), and accordingly cannot enforce the contract against Mr Niksic. Domestic Building Contracts Act 2000 (Qld) section 55(4) [33] As I have said, Mr Hughes did not react to Mr Niksic’s assertion in his response that the contract is not enforceable. [34] Despite having had ample opportunity to make application to the Tribunal for an award under s 55(4) he has not done so, nor has he addressed in his evidence the matters which would be necessary for the Tribunal to consider any such application. In those circumstances the Tribunal’s discretion to make an award to him is not enlivened. [35] The contact Mr Hughes relies on is unenforceable. The application is dismissed. 2 A.L. Builders Pty Ltd v Fatseas [2015] QCAT 166 at para 47. -- 5 of 5 --