Doran v Simon Jobling t/a SAJ Constructions [2015] QCAT 113

CITATION: Doran v Simon Jobling t/a SAJ Constructions [2015] QCAT 113 PARTIES: Kent Doran and Peta Doran (Applicants) v Simon Jobling t/as S.A.J. Constructions (Respondent) APPLICATION NUMBER: BDL276-14 MATTER TYPE: Building matters HEARING DATE: 17 February 2015 HEARD AT: Brisbane DECISION OF: Member Hughes DELIVERED ON: 7 April 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. The Application is dismissed; and 2. The Counter-Application is dismissed. CATCHWORDS: LIQUIDATED DAMAGES – DAMAGES FOR DELAY – whether delay – where contract did not nominate date for practical completion or commencement – where home owners did not provide ‘Notice of Lender Approval’ before builder commenced work – where builder did not properly deliver ‘Notice of Practical Completion’ PREVENTION PRINCIPLE AND CAUSATION – whether delay caused or contributed to by home owners or builder or other factor – where delay in homeowners supplying water ESTOPPEL – whether parties’ conduct accepted delay as part of relationship – where builder failed to formally request extensions and send notices – where home owners delayed approvals and notices – where home owners did not deliver any notice to remedy or notify that time would continue to be of essence – where correspondence showed mutual -- 1 of 11 -- 2 responsibility for and mutual commitment to work through delays – where home owners and builder did not seek to enforce contractual rights – where owners and builder acquiesced to delays EVIDENCE – where builder adduced no invoice or evidence of costs or lost profit margin – where sub-contractor invoices unsigned – where no attendance by witnesses Domestic Building Contracts Act 2000, s 67 Queensland Civil and Administrative Tribunal Act 2009, s 28 Clarke v Cascade Pools (Qld) Pty Ltd [2010] QCAT 323 Coastal Patios v Bennett & Anor [2013] QCAT 268 Commonwealth v Verwayen (1990) 170 CLR 394 Contrast Constructions Pty Ltd v Bartlett [2014] QCATA 262 Hayes v Aramac Developments Pty Ltd [2014] QCAT 119 Hughes v Metropolitan Railway Co. (1877) 2 App Cas 439 Lida Build Pty Ltd v Miller & Anor [2013] QCATA 139 Olindaridge Pty Ltd & Anor v Tracey & Anor [2014] QCAT 207 Peak Constructions (Liverpool) v McKenney Foundations Limited (1970) 69 LGR 1 SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391 at 397 Turner Corporation Limited (Receiver and Manager Appointed) v Austotel Pty Ltd (1994) 13 BCL 378 APPEARANCES: APPLICANT: Mr Kent Doran and Mrs Peta Doran appeared in person RESPONDENT: Mr Simon Jobling appeared on behalf of SAJ Constructions -- 2 of 11 -- 3 REASONS FOR DECISION What is this Application about? [1] Neither the Home Owners nor the Builder insisted on strict compliance with time limits in a residential building contract. [2] Despite this, Mr and Mrs Doran as Home Owners now want SAJ Constructions as Builder to pay them $9,300.00 compensation for the delay in completing the work; while SAJ claims $19,481.00 expenses from the delay and $784.64 interest on overdue payments. [3] The issues for me to determine are whether there was a delay, who or what caused any delay and whether the parties accepted delay as part of their relationship. [4] Two of SAJ’s claims may be dispensed with as background to these issues. BACKGROUND Insufficient evidence of SAJ’s expenses from the delay [5] During the hearing, Mr Jobling for SAJ conceded that he had no evidence to support to support his claim of $11,520.00 for the alleged delay in providing “electricity access”. SAJ has never rendered an invoice to Mr and Mrs Doran for the amount claimed. [6] SAJ therefore did not adduce evidence of costs or lost profit margin.1 Indeed, the claim appears to have only surfaced after Mr and Mrs Doran filed their claim against SAJ for liquidated damages. Because of this lack of evidence, I do not accept the claim as proven: In the face of poorly prepared material, the Tribunal cannot make assumptions or guess at facts and events or the meaning or importance of material. The Tribunal cannot make findings of facts where there is no evidence. It cannot award damages if there is no material that points to the quantum of damage suffered. Parties must take responsibility for the preparation of their own case.2 [7] I also do not accept the invoices purporting to be from other entities as evidence to support each of SAJ’s other claimed expenses. None of the apparent authors of each invoice attended the hearing to give evidence. None of the invoices is attached to a sworn statement of evidence or even signed. [8] The rules of evidence do not bind the Tribunal.3 However, the Tribunal must afford the parties procedural fairness.4 Before the Tribunal can 1 Mahmudov v Goncalves [2012] QCAT 629 at [91]. 2 Clarke v Cascade Pools (Qld) Pty Ltd [2010] QCAT 323 at [3]. 3 Queensland Civil and Administrative Tribunal Act 2009 s 28(3)(b). 4 Ibid s 28(3)(a). -- 3 of 11 -- 4 attach any weight to the invoices, it must give Mr and Mrs Doran the opportunity to respond to them and test them in cross-examination.5 [9] If SAJ wished to rely upon the invoices, it should have made their authors available for cross-examination. It did not. The unsigned invoices have little, if any, evidentiary value. At most, it appears that SAJ incurred these costs directly with these contractors without recourse to Mr and Mrs Doran. SAJ has failed to adduce sufficient evidence that the claimed amounts are beyond the fixed costs component of construction. [10] This alone is sufficient to dismiss SAJ’s counter-application for expenses. The basis for liquidated damages [11] SAJ argues that Mr and Mrs Doran can only claim ‘liquidated damages’ to compensate them for costs or losses they incur, including rent and storage. [12] However, liquidated damages need only be a reasonable estimate of loss and does not require proof of loss – it is claimable pursuant to the Contract.6 [13] The Contract sets the amount at $50 per day.7 This is not an unreasonable amount and indeed is the default amount set by the Master Builders Association.8 ISSUES Was there a delay between scheduled completion and actual completion? [14] SAJ must pay liquidated damages as compensation if it does not complete the works by the scheduled date for completion. The Contract refers to scheduled completion as the ‘date for practical completion’9 and actual completion as the ‘date of practical completion’.10 [15] SAJ must therefore bring the works to ‘practical completion stage’ by the ‘date for practical completion stage’.11 [16] I must therefore compare the date for completion with the date of actual completion to determine whether there was a delay. 5 Olindaridge Pty Ltd & Anor v Tracey & Anor [2014] QCAT 207 at [40]. 6 Coastal Patios v Bennett & Anor [2013] QCAT 268 at [58]; Lida Build Pty Ltd v Miller & Anor [2013] QCATA 139 at [45]. 7 Residential Building Contract dated 28 April 2012, Item 18 of the Schedule. 8 Ibid. 9 Item 10 of the Schedule to the Contract. 10 Clause 1 Definition of ‘Practical Completion Stage’ and see Domestic Building Contracts Act 2000 s 67(6). 11 Item 10 of the Schedule to the Contract and Clause 1 Definition of ‘Date for Practical Completion Stage’. -- 4 of 11 -- 5 When is the ‘date for practical completion’? [17] The parties did not insert a calendar date for completion. Instead, they inserted ‘TBA’ and ‘100 days’” from ‘Date for Commencement’12 and noted 100 days for construction.13 [18] However, Mr and Mrs Doran now concede the correct construction period (including delays) is 144 days.14 SAJ did not dispute this. [19] The ‘date for practical completion’ is therefore 144 days from the ‘date for commencement’. [20] I must now decide the ‘date for commencement’. When is the ‘date for commencement’? [21] ‘Date for Commencement’ means the date15 by when the Contractor must commence the works.16 The parties inserted “TBA” and ticked ‘To be determined under Clause 8’.17 [22] The Contract relevantly requires the Contractor to commence works by the date in Item 9 of the Schedule or within 10 business days of receiving ‘Notice of Lender Approval’ to commence works.18 [23] SAJ therefore had 10 days from whenever Mr and Mrs Doran provided ‘Notice of Lender Approval’. Mr and Mrs Doran verbally advised SAJ of finance approval on 27 September 2012.19 However, Mr and Mrs Doran’s verbal advice is not ‘Notice of Lender Approval’ to commence works.20 [24] Neither party provided the Tribunal with the ‘Notice of Lender Approval’. Mr Jobling testified that he did not receive a letter from the lender releasing funds until 17 October 2012. Mr and Mrs Doran could not refute this. The parties also agreed that SAJ commenced actual construction on 12 October 2012. [25] I am satisfied that by commencing work on 12 October 2012, SAJ at least tacitly accepted the owners’ capacity to pay – prior to receiving the letter from the lender on 17 October 2012. By doing so, I am satisfied that SAJ waived the benefit of Clause 8.1(b)(iv) that work was to commence later. [26] 12 October 2012 is therefore the ‘date for commencement’. 12 Item 10 of the Schedule to the Contract. 13 Item 8 of the Schedule to the Contract. 14 Part C of the Appendix to the Contract. 15 In accordance with Clause 8.1 of the Contract. 16 Clause 1 Definition of ‘Date for Commencement’. 17 Item 9 of the Schedule to the Contract. 18 Clause 8.1(b)(iv). 19 Affidavit of Peta Doran sworn 4 February 2015 at [8]. 20 Clause 8.1(b)(iv) specifically requires ‘a notice from the lending body that works may commence’. -- 5 of 11 -- 6 How is the date for ‘practical completion’ calculated? [27] The ‘date for practical completion’ is 144 days from the date for commencement. 144 days from 12 October 2012 is 5 March 2013. [28] 5 March 2013 is therefore the ‘date for practical completion’. [29] This means work was to be completed by 5 March 2013. When is the ‘date of practical completion’? [30] The ‘date of practical completion’ is when:  works are reasonably suitable for habitation (apart from minor omissions or minor defects);21 and  the Builder issues a Notice of Completion.22 When did the Builder complete the works to be ‘reasonably suitable for habitation’? [31] SAJ claims that Cooloola Building Approvals did the final inspection on 8 July 2013. However, SAJ did not produce any evidence of this ‘final inspection’ or a report from Cooloola Building Approvals. I am therefore not satisfied the works were ‘reasonably suitable for habitation’ on 8 July 2013. [32] Mr and Mrs Doran’s Building Consultant, Mr Rodney Gatt attended the property for final inspection on 20 August 2013 and noted minor defects. Although Mr and Mrs Doran did not move into the property until 26 October 2013, they conceded during the hearing that the minor defects did not prevent them from moving in. The defects therefore did not render the works not ‘reasonably suitable for habitation’. [33] I am therefore satisfied that the works were ‘reasonably suitable for habitation’ when Mr Gatt completed the final inspection on 20 August 2013 and noted only minor defects. When did the Builder provide ‘Notice of Completion’? [34] SAJ claims to have emailed the ‘Notice of Practical Completion’ with the invoice for practical completion on 1 July 2013 and again on 17 July 2013. SAJ claims to also have emailed Mr and Mrs Doran on 21 July 2013 attaching the final invoice with a notation that the house was ‘at practical completion’. [35] Without the prescribed information, the notation added to the invoice on 21 July 2013 is not sufficient to constitute ‘Notice of Practical Completion’.23 21 Domestic Building Contracts Act 2000 s 67(6); Clause 1 Definition of ‘Practical Completion Stage’. 22 Clause 17.1(b) of the Contract. -- 6 of 11 -- 7 [36] Moreover, SAJ did not provide the Tribunal with these emails. Mrs Doran did annex emails from SAJ dated 1 July 2013 and 21 July 2013 to her affidavit sworn 4 February 2015. However, neither email attaches any ‘Notice of Practical Completion’. In any event, the Contract does not provide for email service of Notices.24 [37] I am therefore not satisfied that SAJ provided ‘Notice of Practical Completion’ on 1 July 2013, 17 July 2013 or 21 July 2013. [38] SAJ also claims to have given the ‘Notice of Practical Completion’ to Mr and Mrs Doran in person while standing on their rear deck on 20 August 2013 and then re-sent it to them before 30 August 2013. I am not satisfied that SAJ has proven this in the absence of supporting evidence. I am therefore not satisfied that SAJ provided ‘Notice of Practical Completion’ on 20 August 2013 or by 30 August 2013. [39] Mr and Mrs Doran did receive a ‘Notice of Practical Completion’ on 20 October 2013. However, it is illegible and therefore deficient. Because of this, Mr and Mrs Doran emailed SAJ on 24 and 25 October 2013, requesting another copy of the ‘Notice of Practical Completion’. Mr and Mrs Doran finally received the ‘Notice of Practical Completion’ dated 17 July 2013 via post on 30 October 2013. [40] SAJ is unable to prove providing Mr and Mrs Doran with the ‘Notice of Practical Completion’ before then. I therefore find that SAJ did not issue Mr and Mrs Doran with ‘Notice of Practical Completion’ until 30 October 2013. [41] Although the works were ‘reasonably suitable for habitation’ by 20 August 2013, SAJ did not provide ‘Notice of Practical Completion’ until 30 October 2013. [42] The ‘date of practical completion’ is therefore 30 October 2013. How long was the delay in ‘Practical Completion’? [43] The delay between scheduled completion on 5 March 2013 and actual completion on 30 October 2013 is therefore 239 days. Who or what caused the delay in ‘Practical Completion’? [44] Importantly, an Owner who causes or contributes to a delay may lose the right to liquidated damages under the ‘prevention principle’:25 As a general principle, it makes good sense not to burden the contractor with liquidated damages where it is the conduct of the home owner which results in delays.26 23 Clause 17.1(b) and (c) of the Contract requires the Notice to include the date the works reached ‘practical completion’, a time and date for inspection by the owner and certificate and approvals for the works. 24 Clause 24. 25 Peak Constructions (Liverpool) v McKenney Foundations Limited (1970) 69 LGR 1. -- 7 of 11 -- 8 [45] SAJ attributed the delay to inclement weather and flooding and lack of electricity and water. [46] However, inclement weather and flooding could at most only account for a delay of 35 days from 25 February 2013 to 28 March 2013. [47] Mr Jobling also conceded during the hearing that electricity was only a minor inconvenience, as Mr and Mrs Doran’s generator was sufficient. [48] Mr and Mrs Doran claim they were not required to provide reticulated water and delivered water tanks to the site on 22 May 2013.27 Mr and Mrs Doran did not immediately fill the tanks because they were ‘hoping for rain’28 and that no water was required until tradesmen started working.29 They claim that rainfall from 4 June 2013 to 5 July 2013 provided ample water for painters and tilers to access from the tank. They also claim ‘all of the water tanks would have been full if the shed had been erected when originally agreed’30. This is because the shed was to provide a powered and watered source of accommodation at the site.31 [49] Mr Jobling testified that fresh water is paramount and he had approached Mrs Doran on at least two occasions in April 2013 and mid-May 2013 for water. He said that Mrs Doran had told him to wait until it rains or to find an alternative place to shower, such as the local pub. Mrs Doran did not refute this. [50] The requirement for the owner to connect water is a precondition to work commencing on 12 October 2012.32 Mr and Mrs Doran merely filling water containers upon request by tradespersons33 does not meet that requirement. An absence of tradespersons does not obviate from the owner’s requirement to connect water – reliable water must be available throughout the period of construction. [51] The shed was constructed because of a later verbal contract.34 This does not vary the fundamental requirement under the original building contract for the owner to connect water. Even if SAJ had constructed the shed on time, the evidence is that Mr and Mrs Doran would not have filled the tanks, but were content to wait for rain.35 26 Lida Build Pty Ltd v Miller & Anor [2013] QCATA 139 at [39]. 27 Affidavit of Peta Doran sworn 4 February 2015 at [45]. Mrs Doran clarified in her oral testimony that [45] of her Affidavit sworn 4 February 2015 should read 22 May 2013. Mr Jobling agreed with this date during his oral testimony. 28 Ibid at [47]. 29 Ibid. 30 Ibid. 31 Statement of Evidence of Kent Doran and Peta Doran dated 16 December 2014 at [3] and Affidavit of Peta Doran sworn 4 February 2015 at [31]. 32 Appendix to the Contract, Part I. 33 Affidavit of Peta Doran sworn 4 February 2015 at [46]. 34 Statement of Evidence of Kent Doran and Peta Doran dated 16 December 2014 at [3] and Affidavit of Peta Doran sworn 4 February 2015 at [31]. 35 Affidavit of Peta Doran sworn 4 February 2015 at [47]. -- 8 of 11 -- 9 [52] Even if tank water was sufficient to meet the contractual requirement, the tanks did not have rainfall until 4 June 2013. This is 235 days after the date for commencement. [53] In any event, I do not accept merely supplying tanks and waiting for rainfall is sufficient to comply with Mr and Mrs Doran’s contractual obligation. Building a home requires reliable and adequate water. [54] This is because water is essential for washing equipment, personal hygiene, drinking and plumbing. Mr Jobling’s unrefuted testimony was that he needed non-contaminated water to not taint chemicals and that tradespersons ‘cannot work without it’ for these reasons:  to wash glue from their hands and mix products such as cement and grout (plasterers use 20 to 40 litres per day for cement mixing, while painters use 10 to 15 litres per day to wash their brushes);  to construct the septic system (at least 500 litres); and  basic hygiene. [55] Relying upon anticipated rainfall is not sound commercial practice, regardless of the amount that actually falls. Rainfall is sporadic and not necessarily consistent. Water should at least be supplied immediately upon installing the tanks, rather than adopting a “wait and see” approach. [56] Mr and Mrs Doran did not deliver water to the site until 7 July 2013 – 268 days after the date for commencement. Working without adequate water for up to 268 days must impede progress. [57] I am satisfied that Mr and Mrs Doran’s failure to provide a consistent and reliable supply of water would have caused delay by impeding SAJ’s ability to work consistently or at least requiring SAJ to devote time to access its own water. SAJ had to supply its own drinking water, washing up water, site water and did not have enough water to shower. [58] Because Mr and Mrs Doran did not provide this fundamental service for up to 268 days, I am not satisfied that the delay in completion of 239 days is reasonably attributable to SAJ. [59] Because I am not satisfied that SAJ could complete the works until Mr and Mrs Doran connected water, SAJ would usually be entitled to an extension, thereby preventing Mr and Mrs Doran from recovering ‘liquidated damages’. [60] However, Mr and Mrs Doran say that SAJ did not request an extension as the Contract requires.36 They say it was not until 8 August 2013 that SAJ first advised them of any claim for delay or extension of time ‘in writing’. 36 Affidavit of Peta Doran sworn 4 February 2015 at paragraph 28 and see Clause 15.1 of the Contract that requires the Builder to claim any extension equal to the period of delay within 10 business days and set out the causes and consequences of the delay. -- 9 of 11 -- 10 [61] A builder who fails to request an extension as required by the Contract may be unable to rely upon the ‘prevention principle’.37 However, Mr and Mrs Doran –and SAJ – will be unable to strictly enforce their contractual rights if they led each other to believe that they would not.38 Did the parties accept delay as part of their relationship? [62] From the outset, it is clear that both parties were flexible about time limits. Mr and Mrs Doran and SAJ agreed during the hearing that they had all failed to strictly comply with their contractual obligations at various stages. [63] For example, Mr and Mrs Doran did not provide a letter of finance approval until at least 15 October 2012. This is six months late.39 This did not delay the works once commenced. However, it would have induced SAJ to reasonably believe that that Mr and Mrs Doran did not consider time to be of the essence. [64] Correspondence prior to SAJ’s written request of 8 August 2013 also shows Mr and Mrs Doran were aware of delays relating to power, water and access.40 Mr and Mrs Doran did not raise seek to enforce their contractual rights,41 but allowed construction to continue. It was only well after SAJ completed the work that Mr and Mrs Doran attempted to retrospectively enforce strict compliance. [65] Claiming liquidated damages without giving notice of concerns about delay,42 some eight months after receiving Notice of Practical Completion43 denied SAJ the opportunity to remedy the alleged breaches.44 [66] Correspondence over several months does not show an insistence by either party upon strict compliance with time limits, but more a mutual responsibility for and commitment to simply work through any delays. This no doubt flows from an indirect family connection between the parties,45 shown by them sharing news beyond their contractual relationship.46 [67] Neither Mr and Mrs Doran nor SAJ acted in a manner consistent with strict compliance with contractual requirements for notices and time limits. 37 Turner Corporation Limited (Receiver and Manager Appointed) v Austotel Pty Ltd (1994) 13 BCL 378. 38 Hughes v Metropolitan Railway Co. (1877) 2 App Cas 439, per Lord Cairns at 448; Commonwealth v Verwayen (1990) 170 CLR 394, per Deane J at [19]. 39 Clause 11.1 of the Contract requires the owner to provide satisfactory evidence of financial capacity within 10 business days of the owner signing the contract. 40 For example, text messages dated 24 February 2013, 25 February 2013, 3 March 2013, 4 March 2013, 6 March 2013, 27 June 2013, 30 June 2013, 1 July 2013, 3 July 2013, 5 July 2013 and 6 July 2013. 41 Clause 20.1 of the Contract. 42 As contemplated by Clause 20.1(a) of the Contract. 43 Mr and Mrs Doran first filed their Application on 19 August 2014 as a Minor Civil Dispute. 44 As contemplated by Clause 20.2 of the Contract. 45 Mr Jobling’s parents-in-law are friends of Mr Doran’s parents. 46 For example, text messages dated 14 February 2013, 7 April 2013 and 7 May 2013. -- 10 of 11 -- 11 Rather, and perhaps to their credit, they seemed to just ‘get on with it’. This explains why SAJ did not formally seek an extension of time and did not claim expenses for any delays. [68] I am satisfied that Mr and Mrs Doran’s delays in providing approvals and notices, their failure to deliver to SAJ any notice to remedy breach47 or at least notify SAJ during the delays that time would continue to be of the essence48 and SAJ’s failure to request extensions of time, deliver Notices as required by the Contract, and claim interest on overdue payments during construction shows the parties accepted delay as part of their relationship. [69] In these circumstances, Mr and Mrs Doran and SAJ cannot now depart from their mutual understanding that time limits were not strict and that reasonable allowances were to be made.49 They acquiesced to the delays. Time was not of the essence. [70] The prevention principle is based on fairness and reasonableness.50 I consider that it would be unconscionable51 for SAJ to pay liquidated damages for not formally seeking an extension of time and for Mr and Mrs Doran to pay expenses and interest to SAJ, when both parties showed a flexible approach to contractual compliance. [71] Mr and Mrs Doran’s claim for liquidated damages is therefore dismissed. [72] SAJ’s claims for expenses and interest are therefore also dismissed. What are the appropriate Orders? [73] Mr and Mrs Doran’s claim is dismissed because they did not show they were relying on time limits during construction. [74] SAJ’s claims are also dismissed because it did not show it required payment on time during construction and cannot prove it incurred any expenses because of delay. [75] Because the parties by their conduct accepted that time limits would be flexible, they cannot now rely on those time limits to claim compensation, expenses or interest. [76] The appropriate Orders are therefore: 1. The application is dismissed; and 2. The counter-application is dismissed. 47 Contrast Constructions Pty Ltd v Bartlett [2014] QCATA 262 at [39]. 48 As required by Clause 20.1 of the Contract and unlike Hayes v Aramac Developments Pty Ltd [2014] QCAT 119 at [31]. 49 Hughes v Metropolitan Railway Co. (1877) 2 App Cas 439, per Lord Cairns at 448. Commonwealth v Verwayen (1990) 170 CLR 394, per Deane J at [19]. 50 SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391 at 397. 51 Commonwealth v Verwayen (1990) 170 CLR 394, per Deane J. -- 11 of 11 --