Bestlay Pty Ltd v GY Consulting Pty Ltd [2015] QCAT 531

CITATION: Bestlay Pty Ltd v GY Consulting Pty Ltd [2015] QCAT 531 PARTIES: Bestlay Pty Ltd (Applicant) v G Y Consulting Pty Ltd t/as Leap Constructions (Respondent) APPLICATION NUMBER: BDL262-14 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Howard DELIVERED ON: 19 November 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. Bestlay Pty Ltd must pay to GY Consulting Pty Ltd trading as Leap Constructions the sum of $13,229.98 within 21 days of these orders; and 2. The application for costs made on the request for decision by default is adjourned for hearing on the papers with Leap Construction’s application for miscellaneous matters seeking indemnity costs. CATCHWORDS: BUILDING DISPUTE – APPLICATION FOR DEFAULT DECISION – LIQUIDATED AND UNLIQUIDATED DAMAGES – assessment of damages Queensland Building and Construction Commission Act 1991 (Qld) s 77 Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 32, 50A Queensland Civil and Administrative Tribunal Rules 2009 (Qld) rr 44, 64 -- 1 of 8 -- 2 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). REASONS FOR DECISION [1] Bestlay Pty Ltd (‘Bestlay’) filed an application for a minor commercial building dispute under the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’) against G Y Consulting Pty Ltd t/as Leap Constructions (‘Leap Constructions’) claiming an amount said to be outstanding under a sub-contract agreement. [2] Under the agreement, Bestlay was sub-contracted by Leap Constructions to ‘dig, prep and pour all concrete works as per plans provided’ at a Highgate Hill address. The agreed sub-contract sum was $52,236.66 plus GST of $5,223.67 (that is, $57,460.33). [3] Leap Constructions made a counter-claim for $13,229.98, in most part, for overpayment to Bestlay taking into account, what it refers to, as back charges and liquidated damages.1 On 2 February 2015, Leap Constructions served Bestlay with a copy of its response and counter-claim.2 It was emailed to the email address included in Bestlay’s address for service. [4] Bestlay did not file a reply to the counter-claim in accordance with the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) (‘QCAT Rules’) within 14 days.3 Nor did it file a reply when directed by the Tribunal to do so by 23 June 2015.4 The proceeding was listed for hearing on 29 July 2015. Bestlay failed to attend the hearing. It subsequently failed to explain the reason for its non-attendance as directed by the Tribunal.5 When it failed to do so, its claim was later dismissed.6 [5] Leap Constructions has now filed a Request for Decision by Default - Unliquidated Damages7 in respect of its counter-claim seeking orders for payment to it from Bestlay in the sum of $13,229.98, together with filing fees, legal costs and interest. However, Leap Constructions has also filed a separate miscellaneous application for costs in accordance with directions 1 Response and count-claim filed on 2 February 2015. 2 Affidavit of Service of Paul Gillett filed as part of the Request for Decision by Default. 3 QCAT Rules r 44. 4 Directions of 9 June 2015. 5 Directions of 29 July 2015. 6 Orders of 9 September 2015. 7 QCAT Act s 50A and QCAT Rules r 60A provide for an application for decision by default for unliquidated damages. Such an application may also contain a claim for any liquidated amount claimed in the application starting the proceeding. -- 2 of 8 -- 3 of the Tribunal dated 9 September 2015 when the order was made dismissing Bestlay’s claim. [6] The claimed amount of $13229.98 is comprised of unliquidated and liquidated amounts. Leap Constructions claims that the amount owed to Bestlay was reduced by the amount of ‘back charges’ and liquidated damages calculated as follows: Contract price and variations: $61,810.43 Less back charges: $12,843.11 Less liquidated damages: $12,060.00 TOTAL: $36,907.32 [7] The material filed by the parties reveals that Leap Constructions has paid $50,137.30 ($45,579.36 plus GST). Therefore, Leap Constructions claims overpayment to Bestlay of $13,229.98. The evidence in support of the claim [8] The response and counter-claim attaches a copy of the Subcontract Agreement. An affidavit of Paul Gillett, director of Leap Constructions, in support of the request for a decision by default deposes to relevant matters. [9] Mr Gillett confirms that Bestlay has not paid the amount claimed or any part of it. [10] Mr Gillett acknowledges that Leap Constructions required Bestlay to incur additional variation costs totalling $4350.10, as follows:  $375.00 to finish stairwell cut with an excavator;  $585.00 for rectifying the works of surveyors;  $1,992.60 for preparation of the slab; and  $1,397.50 for additional steel. Accordingly, he explains the amount payable under the contract ($57,460.33 plus $4,350.10), totalled $61,810.43 (inclusive of GST). [11] However, Mr Gillett says that the amount owed by it to Bestlay was reduced by back charges and liquidated damages. The total of the back charges and liquated damages claimed is $24,903.11. The claim for ‘back charges’ [12] Under clause 9 of the contract, Bestlay agreed to indemnify Leap Constructions against ‘any claim, loss expense or liability’ arising out of, inter alia, any defect of the subcontract works: clause 9(a). Leap -- 3 of 8 -- 4 Constructions was required to mitigate any such loss or damage: clause 9(b). [13] Under clause 10, Bestlay agreed to pay to Leap Constructions ‘any cost incurred… in making good any damage done by the Subcontractor..’ and to keep its ‘Part of the site clean and tidy.’ Failure to comply entitled Leap Constructions to have the rectification or cleaning work carried out and the cost became a debt due and payable by Bestlay to Leap Constructions. [14] Leap Constructions claims an amount of $11,675.55 plus GST (totalling $12,843.11) is owing to it for the cost of rectification of Bestlay’s defective or incomplete work as follows: a) Repair of plumbing pipes broken during excavation by Bestlay $885.00; b) Costs of Bestlay’s over- ordering concrete which was unused $854.55; c) Costs of a drain camera required because Bestlay drilled piers in the wrong spot and damaged newly laid storm water piping $375.00; d) In the atrium area of the project, costs to rectify uneven concreting undertaken by Bestlay $830.00; e) Costs for labour supplied for the cleaning of the fourth floor suspended slab (27 hours at $60.00 per hour), which was the responsibility of Bestlay under the contract and which it failed to do $1,620.00; f) Agreed reduction of the contract price relating to the finish of the garage floor failing to meet minimum reasonable standards for exposed concrete surfaces and failing to drain the water to the floor waste as required $6,000.00; g) Additional costs for repairs to the garage floor including drainage holes in the slab, minor grout repairs and repairs to areas that Bestlay had attempted (unsuccessfully) to repair to bring them back to a reasonable standard $800.00; and h) An adjustment of $311.00 associated a separate project. Mr Gillett deposes after completion, it was established that there was a substantial deviation in floor finish which required rectification. Mr Gillett says that Bestlay and Leap Constructions agreed that the rectification costs would reduce the amount payable under the contract on this particular project by $311.00. [15] Several of the amounts claimed are debts owing as liquidated sums under clause 10. In particular, the amounts claimed in sub-paragraphs a), c) and e). These amounts should be allowed on that basis under this application for default orders. (If I am wrong and these amounts or any of them are unliquidated amounts, if it was necessary for me to assess the damages, I would consider the amounts claimed reasonable, and assess damages in the amounts claimed). [16] The amounts claimed in sub-paragraphs b), d) and g) fall within the indemnity given by Bestlay pursuant to clause 9. There is no evidence to -- 4 of 8 -- 5 the effect that Leap Constructions failed to mitigate its losses. Therefore, under clause 9 the indemnity operates. I accept Mr Gillett’s evidence. Bestlay has not reimbursed Leap Constructions for these amounts. I find that Bestlay should be required to pay damages to leap Constructions to compensate it for the costs, which I am satisfied were reasonably incurred, in rectifying the defects. I am satisfied that the amounts claimed should be allowed in full and assess damages accordingly. [17] In respect of item f) , Mr Gillett’s evidence (which I accept) is that the defects were assessed on numerous occasions and agreement reached about the reduction because this defect. An email between Bestlay and Leap Constructions was attached to the response and counter-claim. It suggests that the estimated costs of rectification were expected to be significantly higher than the $6000 now claimed. Bestlay’s representatives email acknowledges Leap Constructions advice about defects and expected costs (of a greater amount than is claimed) of rectification and notes agreement. On that basis, I am satisfied that damages should be allowed in the amount of $6000 as claimed and assess damages for this item accordingly. [18] Item g) does not arise out of the subcontract agreement or works relevant to this proceeding. It is an amount which Mr Gillett claims is owing to Leap Constructions arising from defective work by Bestlay on an unrelated project, which the parties had agreed would be adjusted against this project. Once again, Bestlay did not contest the claim. I accept Mr Gillett’s evidence and assess damages payable by Bestlay at $311 as claimed. [19] In all damages are assessed at the amount claimed as ‘back charges’ by Leap Constructions. The claim for liquidated damages [20] Leap Constructions also claims an amount of liquidated damages under the contract at the rate of $670.00 per day because the works were not completed within the specified timeframes. [21] In particular, the Special Conditions in the contract and clause 24 provide for liquidated damages. Clause 28 provides that the special conditions prevail to the extent of any inconsistency between the special conditions and the general conditions of the contract (this includes clause 24) to the extent of any inconsistency. [22] The special conditions are in the following terms: Liquidated damages apply when delays to the construction schedule are caused as a result of the follow [sic] time frames not being adhered to. Contractor will be onsite within 5 days of notice being provided that the site will be ready Time allowed for completion of each stage of work is 1 day allowed per 50 l/m of footing to be prepared -- 5 of 8 -- 6 1 day per 80m2 of slab minimum of 2 days allowed per visit days are rounded up to the next whole day, ie 105l/m of footing has an allowance of 3 days for completion of the dig / prep / inspection and pour [23] The total amount claimed as liquidated damages is $12,060.00. These charges are calculated by Mr Gillett as follows: a. The ground floor footings comprised of 92.4 l/m of strip footings plus 37.6 l/m of piers totalling 130 l/m of footing at 50 l/m of footing per day gives a total allowance under the contract of 3 days to complete the footings. Works onsite progressed quite slowly and the ground floor footings were started on the 3 April 2013 [sic] and the footings were poured on the 8 April 2013, [sic] being a total of 5 days (excluding Sunday). This being the case then 2 days of liquidated damages at the agreed rate of $670.00 per day are due and payable by Bestlay Pty Ltd to LEAP Constructions totalling $1,340.00. b. The ground floor slab consisted of 250m2 of slab area and 130 l/m of extra footings. This entitles Bestlay Pty Ltd to 7 days to complete the works for this stage. Again works onsite progressed slowly and included some rectification by Bestlay Pty Ltd of some damaged pipes during this work. It is worth noting this damage was caused by Bestlay Pty Ltd and does not entitle Bestlay Pty Ltd to further time to complete their works. Works commenced on this slab on the 23 April 2013 [sic] and the slab was poured on the 9 May 2013 [sic] taking a total of 14 days for this stage (excluding Sunday). This being the case then 7 days of liquidated damages at the agreed rate of $670.00 per day are due and payable by Bestlay Pty Ltd to LEAP Constructions totalling $4,690.00. c. The third floor slab consisted of 415m2 of slab area and 18 l/m of piers. This entitles Bestlay Pty Ltd to 7 days to complete the works for this section. Works commenced on the 4 July 2013 [sic] and the slab was poured on the 17 July 2013 [sic] taking a total of 12 days (excluding Sundays). This being the case then LEAP Constructions is entitled to charge for 5 days of liquidated damages at the agreed rate of $670.00 per day totalling $3,350.00. d. The fourth floor slab consisted of 413m2 of slab area and 114 l/m of beams. This entitles Bestlay Pty Ltd to 9 days to complete the works for this stage of the project. Works on this stage commenced on the 7 August 2013 [sic] and the slab was poured on the 21 August 2013 [sic] taking a total of 13 days to complete (excluding Sundays). This being the case then LEAP Constructions is entitled to charge for 4 days of liquidated damages at the agreed rate of $670.00 per day totalling $2,680.00. [24] Clause 24 provides that there is no liability for liquidated damages in the absence of strict compliance with the notice provisions in clause 24. However, under the Special Conditions, no reference is made to giving of notice for liquidated damages to apply. Having regard to clause 28, I am satisfied that reading the contract as a whole, the Special Conditions are intended to apply in the absence of the giving of notice and that this requirement overrides the notice provision in clause 24. In any event, Bestlay has not disputed the claim. I accept Leap Construction’s calculations of the number of days under the contract for Bestlay to -- 6 of 8 -- 7 complete each stage of work. I also accept their calculation of the overrun days on which liquidated damages accrue. [25] Judgment should be given for these liquidated damages under the contract in the full amount claimed of $12060. Filing fees, legal costs and interest [26] Leap Constructions, as the respondent, has not incurred any filing fees. It appears the claim for filing fees may have been made in error. The claim for the filing fees is dismissed. [27] As discussed earlier, Leap Constructions has filed a separate miscellaneous application claiming legal costs in the proceedings on an indemnity basis of $8042.50. It seeks costs on an indemnity basis on the basis that Bestlay has acted vexatiously in the proceeding. The claim for costs made on the miscellaneous application (which includes an unspecified amount relating to the request for default orders) is yet to be determined by the member who dismissed Bestlay’s application. [28] Any costs order sought on the request for decision by default are limited to costs on the Magistrates Courts scale.8 Accordingly, it appears that the claim for legal costs on the request for default decision (which was made by merely’ ticking a box’ and without quantification of the costs) was made erroneously, since Leap Constructions could only be entitled to one order for its legal costs (if the Tribunal in its discretion decides to award costs) and it seeks them on an indemnity basis, which cannot be considered on this application currently before me. In the circumstances, I do not make orders for legal costs on the request for default orders. However, I do not dismiss the application. I make directions that it be heard with the application for miscellaneous orders seeking costs. [29] Leap Constructions makes no submissions about the basis upon which it claims interest. The parties made no provision for interest in the subcontract agreement about payment of any amounts due to the Contractor.9 Nor have they otherwise agreed on a rate of interest. In those circumstances, the Tribunal may award interest as prescribed in the QBCC Regulation 2003, payable on and from the day after the day that the amount became payable until the day it is paid. [30] Clause 24 makes provision for payment of liquidated damages within 15 days of the Contractor giving the required notice under that clause. I have found that Notice was not required to be given under the Special Conditions for liquidated damages to accrue. However, Mr Gillett’s affidavit in support of the default orders does not refer to any claim (other than in these proceedings) for the liquidated damages sought under the Special Conditions. 8 QCAT Act s 50A(3)(d); QCAT Rules r 64. 9 Cf: Interest on payments owing to the Subcontractor is provided for in clause 12. -- 7 of 8 -- 8 [31] I have concluded that none of the amounts claimed for which judgment is given fell due for payment until these orders of the Tribunal. Accordingly, I make no orders for payment of interest. Orders [32] Orders are made for payment by Bestlay to Leap Constructions of $13,229.98 within 21 days of these orders. Further, I direct that the application for costs on the request for decision by default is adjourned for hearing on the papers with Leap Construction’s application for miscellaneous matters seeking costs. -- 8 of 8 --