Fergbilt Pty Ltd v Burnett & Anor [2014] QCAT 517

CITATION: Fergbilt Pty Ltd v Burnett & Anor [2014] QCAT 517 PARTIES: Fergbilt Pty Ltd (Applicant) v Greg Burnett Jackie Heath (Respondents) APPLICATION NUMBER: BDL048-14 MATTER TYPE: Building matters HEARING DATE: 23 June 2014 HEARD AT: Brisbane DECISION OF: Member Howard DELIVERED ON: 21 October 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. Greg Burnett and Jackie Heath must pay to Fergbilt Pty Ltd the sum of $11,319 by 4:00pm on 19 November 2014. CATCHWORDS: BUILDING DISPUTE – VARIATIONS – whether variations should be approved under s 84 of Domestic Building Contracts Act 2000 – whether exceptional circumstances – whether builder will suffer unreasonable hardship by strict operation of requirements for variations – whether not unfair to the homeowners for builder to recover – where work has been done – where accepted work instructed by homeowner Domestic Building Contracts Act 2000 (Qld), s 79, s 80, s 82, s 83, s 84, Black, G v Toowoomba Resort Pty Ltd [2007] QCCTB 122 Brown & Anor v Noosa Constructions Pty Ltd [2012] QCATA 194 -- 1 of 22 -- 2 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Craig Ferguson, director, Fergbilt Pty Ltd, represented Fergbilt Pty Ltd RESPONDENT: Mr Greg Burnett represented himself and Ms Heath REASONS FOR DECISION Background to the dispute [1] This proceeding concerns a relatively small claim for variations in a building dispute totalling a little over $12,000. However, it generated voluminous material, although some of the individual variation claims are for as little as $40. [2] On 24 July 2013, Fergbilt Pty Ltd entered into a contract for domestic building work with Mr Greg Burnett and Ms Jackie Heath for works at their property at Farrington Street, Alderley. It involved renovation of an existing home. The contract price for the works was $325,865. In total $328,373 has been paid under the contract, including some amount for variations. There was a credit of $4,230 (because on the day to the contract was signed the homeowners changed their minds about the linings for the downstairs living areas and this change reduced the cost by $4,230). Accordingly, an amount of $6,738 has been paid, for variations. [3] In its application, Fergbilt Pty Ltd claimed unpaid variations in the amount of $12,814. This represents the difference between the contract price of $325,865 and the total of the claimed variations, less the credit of $4,230. It also claims the fee for filing its application in QCAT and interest in accordance with the contract. [4] At the hearing, Fergbilt clarified that an amount of $110 for a letterbox is no longer in dispute. It reduced its claim by that amount to $12,704, plus the application fee and interest. [5] The homeowners acknowledge that there were some variations. However, in essence, they say that they have paid for agreed variations. In respect of the issues in the dispute, they say that they are entitled to offset an amount paid by them as a variation for extra concreting and tiling at the rear of their home. They now say that this was included in the contract price and should not have been paid. They say that the other items claimed should be disallowed. In essence, the reasons given are that the variations were not instructed; or were not put in writing in accordance with the contract and were done without detailed costings being provided. -- 2 of 22 -- 3 [6] Despite some evidence and calculations in Mr Burnett’s witness statement1 which appears to suggest the homeowners seek a refund of some amount, Mr Burnett confirmed at hearing that the homeowners seek only orders that the builders claim be dismissed. What were the contract documents? [7] There is some disagreement about the contract documents. It is apparent that Mr Burnett provided several proposed scope of works documents to Mr Craig Ferguson, a director of Fergbilt, before the contract was entered into. Further, a preliminary set of plans was initially provided to Fergbilt and later a ‘BA Issue’ version of the plans. [8] The parties agree that the contract documents included the Master Builders Contract dated 24 July 2013; the costs estimate prepared by Fergbilt in the amount of $325,865;2 copy of plans dated 10 April 2013 (endorsed BA Issue);3 and a schedule of works prepared by Fergbilt.4 All of these documents were signed or initialled at the time of the signing of the Master Builders Contract. [9] The homeowners contend that a scope of works document prepared by Mr Burnett which appears at pages 151-207 of Exhibit 6 also forms part of the contract. Mr Craig Ferguson denies this is so. He says that Mr Burnett presented this further amended scope of works on the day the contract was to be signed, but that he refused to sign it. He says he informed the homeowners he would have to take it away and review it and amend it, pointing out the lack of clarity in it. Mr Burnett later forwarded an email version of the scope of works to Craig Ferguson on 4 August 2013, which he says he had gone through and updated ‘as discussed’ in the meetings leading to the final quotation.5 Mr Ferguson says he amended it in accordance with the building specifications and returned an amended document with the amendments written in red. Mr Burnett acknowledges that it was amended and returned. This version with Mr Ferguson’s amendments appears at pages 211-240 of Exhibit 6. [10] Mr Burnett does not dispute that this is what occurred, however, he says that the document he prepared, without Mr Ferguson’s allegedly unauthorised amendments forms part of the contract documents. I do not accept this. It did not embody agreement reached between the parties. [11] It is common ground that when he was provided with a scope of works document by Mr Burnett at the time the contract was signed, Mr Craig Ferguson said he would take it away make any necessary changes, initial it, and send it back. In the end result, he amended and returned yet another version of the document which had subsequently been emailed to 1 Exhibit 6. 2 Exhibit 6, pages 21 – 24. 3 Exhibit 6, pages 125 – 138. 4 Exhibit 6, pages 143 – 146. 5 Exhibit 6, paragraphs 17 – 20 and pages 147 – 207. -- 3 of 22 -- 4 him by Mr Burnett. The homeowners dispute the changes that he made to the document. [12] Except as concerns the items included in the scope of works which were not changed by Mr Ferguson (which on both versions of events were therefore agreed), the contents were not agreed. Therefore, the scope of works document which, with some exceptions, forms part of the contract, is at pages 211 to 240 of Exhibit 6. The items included by Mr Burnett which are subject to deletions by Mr Ferguson are not agreed items and nor are the additions made by Mr Ferguson in red. [13] That said, the scope of works as accepted by me as forming part of the contract contains a large number of items. What variations are in dispute? [14] There were 7 variations issued in respect of the works, although multiple items were included in most variation documents and there were 2 variations called variation 6. [15] Variations 1 (for a total of $1,373), 2 (which included a debit of $717, as well as the credit of $4,230 for the wall linings), and 4 (for a total of $560) were accepted and satisfied in full by the homeowners. In respect of Variation 3 totalling $4,418, an amendment was made to the variation document by the homeowners, reducing it to $4088 (that is, an amount of $330 was deleted and has not been paid) by the homeowners. The $4,088 has been satisfied. [16] The remaining $330 from Variation 3, as well as Variations 5, (both numbered) 6, and 7 are unpaid. [17] The claim by Fergbilt concerns the unpaid portion of Variation 3 of $330, Variations 5 ($150), 6 ($7,206) and 7 ($5,128 minus letterbox $110, leaving claimed amount of $5,018). An item for additional concreting is included in Variation 7, which in part relates back to the amount of $330 by which the homeowners reduced Variation 3. The other variation numbered 6 ($291) was not claimed by Fergbilt but has been conceded by the homeowners in the proceedings as owing. [18] The Tables below set out the items claimed in variations 3, 5, 6 and 7. Variation 3 Description Cost Supply and spread top soil to elevated area at rear of site $550.00 Additional areas of reinforced concrete slab to rear and sides of building 46 sqm x $ 55 plus supply of pump $550 $3,080.00 -- 4 of 22 -- 5 Lay and grout additional external tiles (provided by proprietor) to the area at the back of the house 17.5 sqm x $45 $788.00 Variation 5 Description Cost Additional 2 Single GPO for security system $150.00 (First) Variation 6 Description Cost Supply 2 x 1200 double fluro fittings $106.00 Supply 1 double spot light $45.00 Earthing to 4 external light fittings $140.00 (Second) Variation 6 Description Cost Centre lower floor shower waste under rose $240.00 Provision of Shower niches $920.00 Reframe external stair and landing – provide new footing brackets and stair stringers and associated labour incl steel work $2,940.00 Patching old down light holes in living rm. Ceiling $130.00 Supply and install AC support bracket $180.00 Additional light over downstairs toilet $85.00 Replace wall light over vanity upstairs bathroom $40.00 Renovation of east and west window awnings repaint and provide and fix new miniorb sheeting and mini gable roll $878.00 Realign stair well wall to meet line of upstair walls – and associated structural works incl cutting and welding of beam and column $1,793.00 Re-framing ensuite shower and relocating plumbing out let $0 as agreed Variation 7 Description Cost -- 5 of 22 -- 6 Description Cost New sill stop to underside of existing living room bifold doors $195.00 Increased height of tiles to ensuite walls and provision of hanging rail to cover variations in wall thickness $128.00 Installation of additional framing and setout for wall hung basins $265.00 Installation of letter box provided by proprietor $110.00 Additional wall framing for insertion of recessed bathroom cabinets $195.00 Pier Caps less credit on Gate & fence panel PC $48.00 Provide and install electric strike to pedestrian gate $162.00 Original allowance for external concrete 21sqmx$55 + 42sqmx$53.5 Additional concrete cost per var3 – additional 46 sqmx$55 Total actual area of external concrete 157.5 sqm Less previous allowances 109 sqm Excess area 48.5 sqm x $53.5 $2,595.00 Construct external stair $710.00 Tiling to external stair $600.00 Provide new laundry taps and mixer $120.00 [19] Craig Ferguson says that the costs charged for each variation item claimed is the actual cost of having the work done plus a 10% margin for overheads and profit. He says, and I accept, that this is a modest and reasonable margin in the industry. [20] Further, he says that many of the variations arise from directions given by Mr Burnett within a very short time before the work was done or to be done. He says, and it is not disputed, that Mr Burnett visited the site almost daily. Mr Ferguson says that Mr Burnett sometimes issued instructions to Fergbilt’s subcontractors directly and in many cases without conferring with a Fergbilt representative prior to doing so. Haemish Ferguson, who was usually present during the works, confirms this and says Mr Burnett was aware that there would be costs associated with the extra work he instructed. [21] Overall in the course of the proceeding, the homeowners have ultimately conceded some $2,029 in variations, some evident from the material filed -- 6 of 22 -- 7 and several other small amounts as the hearing progressed. The variations conceded are as follows: a) Variation 5 $150; b) (the first) Variation 6 $291; c) (the second) Variation 6—items 4 ($130), 5 ($180),6 ($85) and 8 ($878), totalling $1,273; and d) Variation 7— items 1 ($195) and 11 ($120), totalling $315. [22] In reliance on the homeowners concessions, these amounts are included in the orders made. I make the observation that in the absence of concessions, I would in any event have been satisfied that they should be allowed, as the work has been done in each case on the homeowners instructions by the builder, who has incurred the costs of supplying materials and labour.6 I would have been satisfied that the builder would suffer unreasonable hardship as a result of the strict operation of the Domestic Building Contracts Act 2000 (Qld) (DBC Act), and that it would not be unfair to the homeowners for the builder to recover these amounts. [23] The balance of the variations claimed are disputed by the homeowners. Of those in dispute, only Variation 3 was put in writing before the work specified in them was done. Each of them specifies the effect on the overall price. What are the requirements for variations to the contract? [24] In this case, the contract entered into by the parties is in the form of a Standard Master Builders Contract Version RRC March 2012. Clause 7 provides for variations by agreement. Under the contract either party is entitled to request a variation.7 If the parties agree to a variation, the builder must put it in writing in a variation document signed by both parties within the shortest practical time and before the work is done.8 If the contractor requests the variation, it is payable only if it was necessary because of circumstances that could not reasonably have been foreseen when the contract was entered into.9 [25] The DBC Act applies to this fixed price contract for domestic building work. It provides that variations must be put in writing, and if the variation is for an addition to the works, before the subject work is carried out.10 Variation 6 Detailed reasons are not required where a party consents to the basis of an order or part of it (that is, where a party concedes an issue): Brown & Anor v Noosa Constructions Pty Ltd [2012] QCATA 194, [69]. 7 Exhibit 6, attachment 12, page 113, clause 7.1. 8 Ibid, clause 7.3. Also, 7.7 provides that as soon as possible and within 5 days of agreement about a variation, the contractor must give the homeowner a copy of the signed variation document. 9 Ibid, clause 7.6. 10 DBC Act s 79(1). However, there is an exception if the work is urgent and it is impractical to reduce it to writing before it is done: DBC Act s 79(2). -- 7 of 22 -- 8 documents for fixed price contracts must state the change to the contract price or how it is to be calculated.11 As soon as practicable after the variation document is made, the builder must sign the document and take all reasonable steps to have the homeowner sign it.12 [26] The right of a builder to recover for variations is provided for in s 84 of the DBC Act. If a variation was sought by a homeowner, a builder may recover an amount for the variation only if the relevant sections of the DBC Act have been complied with (s 79, s 80, s 82 and s 83), or alternatively with the Tribunal’s approval.13 [27] If the variation was not originally sought by the homeowner, the builder may recover for a variation only if it complied with s 79, s 80, s 82 and s 83 and the ground of unforseen circumstances (that is, because of circumstances which could not have been reasonably foreseen by the builder when the contract was entered into)14 applies, or alternatively with Tribunal’s approval.15 [28] The Tribunal may approve recovery for a variation only if, either, there are exceptional circumstances warranting such an order, or the builder would suffer unreasonable hardship as a result of the requirement to comply with s 79, s 80, s 82 and s 83.16 However, it may only do so if it would not be unfair to the homeowner for the builder to recover the amount.17 [29] The Appeal Tribunal has accepted that when instructions have been given by a homeowner to perform works which are a variation to the contract, those works have been carried out, and the homeowner has received the benefit of them, a builder will usually suffer unreasonable hardship by not being able to recover an amount for those works and it would not be unfair to the homeowner for the builder to recover it.18 The Evidence and Credibility Issues [30] Witness statements and a volume of attachments were provided by the directors of Fergbilt, Craig Ferguson and Haemish Ferguson, who are both builders and who both had dealings with the homeowners. Mr Burnett provided a witness statement also with a large volume of attachments, in which some concessions were made concerning some variation items. Ms Heath provided a very brief statement. Mr Anthony Trevor, the draftsman/designer who drew the plans for the homeowners gave oral evidence pursuant to a notice to attend. 11 DBC Act s 80(2)(e). 12 DBC Act s 82. 13 DBC Act s 84(2). 14 DBC Act s 84(5). 15 DBC Act s 84(3). 16 DBC Act s 84(4)(a). 17 DBC Act s 84(4)(b). 18 Brown & Anor v Noosa Constructions Pty Ltd [2012] QCATA 194, [58] – [60], accepting the statements made in Black, G v Toowoomba Resort Pty Ltd [2007] QCCTB 122. -- 8 of 22 -- 9 [31] It is clear that the homeowners made many alterations to the proposed works in the lead-up to the contract being entered into, ruling some items in and out, and then in again as discussions progressed. They initially asked for a costs estimate based on preliminary drawings obtained by them and a detailed scope of works prepared by Mr Burnett. Finding this outside their preferred budget, they asked for suggestions, which Fergbilt gave, to reduce costs. They had the plans drawn again and Mr Burnett produced a new detailed scope of works. The amended/updated documents were then provided to Fergbilt, the homeowners noting specifically items they had now deleted from the project.19 [32] Unfortunately, and somewhat misleadingly in my view (given how detailed they were about what they were now excluding), they failed to point out that they had nevertheless included in some new additions (including a significant volume of additional external concreting and tiling). Also, according to Craig Ferguson, in non-compliance with industry standards, the revised ‘BA version’ of the plans prepared for the homeowners and at their instruction by the designer/draftperson did not contain a revision cloud which would enable a builder to see at a glance what had been changed since the previous set of plans. [33] During cross-examination, Mr Burnett made some further minor concessions concerning small cost items. However, on numerous occasions, he claimed to have no recollection or knowledge of alleged events and discussions. For example, in respect of additional concreting in the front yard alleged by Fergbilt to have been instructed by him at short notice before the pour, he asserted he had instructed a very small additional slab (for the rubbish bins to sit on), but that he had no idea why the rest was concreted. However, inconsistently, he makes no complaint about it having been done. It is apparent from his material and oral evidence that Mr Burnett is not a person who is likely to accept something other than what he believes he bargained for. If he had not instructed the extra concreting, it would be reasonably expected that he would have raised as an issue that he had concrete in places where it should not be. That the extra concreting was apparently entirely to his satisfaction, suggests to me that Mr Haemish Ferguson’s version of events is accurate. [34] Mr Burnett also claimed, for example, that although he recalled a discussion initiated by him about shower niches, but he could ‘not recall’ instructing construction of niches. I did not find his assertion credible. Once again, the niches were apparently entirely to Mr Burnett’s satisfaction as no complaint is made about them. [35] Mr Burnett sought at all times to hold Fergbilt to his detailed scope of works and the plans, but was reluctant to acknowledge instances when his instructions amounted to variations to them. For example, vanities to be provided by the homeowners were to be installed in the bathrooms. However, the homeowners provided wall hung basins and recessed 19 Exhibit 6, attachments especially at pages 31 and 39. -- 9 of 22 -- 10 cabinets, requiring additional framing works for which instructions were also provided to the builders.20 [36] In respect of the claimed variations for these items, Mr Burnett said he did not realise there would be an additional cost. This is at odds with the approach taken by him to detailing the scope of works. His very detailed documents suggest to me that he was extremely aware that everything done in the works cost money and that he wanted to be clear about what the homeowners were going to get for their money. Similarly, his assertions that he only looked at the ‘bottom line’ and did not pay attention to what was included are at odds with his approach to the project and his prepared scope of works documents. For these reasons, I found his evidence unconvincing about these matters and I have given it less weight than the evidence of the Fergbilt representatives. [37] Ms Heath said she took little part in the discussions. She said in essence that (although acknowledging being present for three to five discussions in total) she was not actively involved in discussions and did not have specific recollection of anything. She further said that she did not participate in decisions and conversations as a matter of course when she was present at the premises: she often just looked at what had been done. The extent of her asserted lack of recollection is surprising. That said, it is apparent that she largely left the running of the project to Mr Burnett. [38] It is common ground that there were two measurement errors in the plans instructed and obtained by the homeowners in respect of which variation claims arise. Mr Burnett’s evidence was that by virtue of the designer’s contract with the homeowners the designer was to have liaison with the builder. He does not allege any such inclusion in the contract with the builder. The designer, Mr Trevor, gave evidence at the hearing. He said that he had no contact with the builder and essentially provided a drafting service. He seemed to deny that his contract with the owners provided for liaison with the builder. He did implicitly acknowledge that a detailed survey was undertaken to do measurements for the plans he prepared, although asserting that the builder should have measured twice and acted once. [39] It is apparent from the evidence that Mr Craig Ferguson did not look as closely at the various versions of voluminous documents forwarded to him by Mr Burnett as he could have to ascertain that there were undisclosed changes made, in addition to the disclosed ones. It is also apparent that he did not as a matter of course attend to preparing all variation documents and having them signed before the work was done in accordance with the contract. [40] The evidence of both Craig Ferguson and Haemish Ferguson presented as plausible and consistent with the documentation available and with the events which occurred. In contrast, some of Mr Burnett’s evidence about not recalling giving instructions as discussed above, was inconsistent with 20 Exhibit 9. -- 10 of 22 -- 11 events which then occurred. For this reason, I have preferred their evidence over Mr Burnett’s and given it more weight where there is a conflict between them, or either of them, and Mr Burnett. Variation 3 dated 17 September 2013 and concreting in Variation 7 dated 13 December 2013 [41] Craig Ferguson says that he signed the ‘BA plans’ as part of the contract without appreciating some changes that had been made to them after the preliminary plans on which he had based his initial costings. In particular, the differences included extensive increases in the areas of concreting and paving to the exterior of the building. His original cost estimate included provision for the external concreting was $1,155 and for external tiling $1,035. The tiles themselves were to be provided by the homeowners. [42] In approximately mid-September 2013, Craig Ferguson realised the difference in the BA Plans. He met with the homeowners and discussed the issue. The homeowners asked for a price for the increase and he provided them with Variation 3 totalling $4,418 as follows: Variation 3 Description Cost Supply and spread top soil to elevated area at rear of site $550.00 Additional areas of reinforced concrete slab to rear and sides of building 46 sqm x $ 55 plus supply of pump $550 $3,080.00 Lay and grout additional external tiles (provided by proprietor) to the area at the back of the house 17.5 sqm x $45 $788.00 [43] Mr Burnett says that the homeowners initially rejected the variations for concreting and tiling drawing Mr Craig Ferguson’s attention to the contract documentation. However, he says that Mr Ferguson would not accept this and as they did not want to get off-side with the builder, the homeowners reluctantly agreed to accept the variation. However, Mr Burnett replied, suggesting that Mr Ferguson had overestimated the additional square meterage, asserting that the external concrete and tiled area in the revised BA plans was in total 109 square metres, but accepting the rates quoted. Mr Ferguson responded that he would remeasure the area following the completion of the works and charge only for the actual increase using the rates set out. [44] The homeowners amended and signed the variation on 1 November 2013, reducing the square metres to 40 and reducing the price for concreting to $2,750 (from $3,080). -- 11 of 22 -- 12 [45] The concreting was done in December 2013. Late on the day before the pour, Mr Haemish Ferguson was supervising at the site when he says, Mr Burnett came onsite and instructed additional areas at the front of the property be concreted as well. Mr Craig Ferguson was advised and he passed these instructions on to the subcontractor engaged to do the concreting works. The following day, the concreting was done in accordance with Mr Burnett’s instructions. [46] Mr Ferguson subsequently measured the increased areas and found the total to be 157.5 square metres. That is, 48.5 square metres greater than Mr Burnett’s earlier measurement. I accept Mr Ferguson’s measurement as correct (and the final meterage does not appear to be disputed by the homeowners, although responsibility for the cost of it is). [47] Fergbilt then claimed as part of Variation 7, another additional amount for concreting of $2,595 as follows: Original allowance for external concrete 21sqmx$55 + 42sqmx$53.5 Additional concrete cost per var3 – additional 46 sqmx$55 Total actual area of external concrete 157.5 sqm Less previous allowances 109 sqm Excess area 48.5 sqm x $53.5 $2,595.00 [48] Mr Ferguson explains that the additional amount of $2,595 incorporates the balance of the increase in concrete costs between the preliminary plans and the BA Issue plans (which had been included in Variation 3 but was unpaid by the homeowners of $330) and the additional concreting at the front of the property instructed the day before the pour. Accordingly, the difference of 6 metres of concrete (at a cost of $330) between what the homeowners paid for variation 3 ($4,088) and the actual amount of Variation 3 ($4,418) was claimed in Variation 3 and again in Variation 7, presumably because of the homeowners amendment to Variation 3. I note that the cost charged per square metre in Variation 7 is $1.50 per square metre less than in Variation 3, that is, in total $321. The amount of $2,595 is otherwise to cover the additional concreting in the front yard. [49] Mr Burnett now says, after taking further advice, that the homeowners dispute the variation for additional concreting and tiling in Variation 3 because it was covered by the contract. He says in essence that they are entitled to offset the amount paid for the additional concreting and tiling of $3,538 against any variations allowed. [50] Each of the costs estimates prepared by Fergbilt include an amount of $1,155 for the external slab and tiling of $1035. It is clear that Craig Ferguson did not increase the estimate after receiving the BA Issue Plans which included a significantly greater area of concreting at the rear of the property than the preliminary plans. As discussed earlier, the plans did not -- 12 of 22 -- 13 contain a revision cloud to indicate the changes made, which I accept as Mr Ferguson says, is standard industry practice. It is plainly unrealistic that every revision should require that a builder compare each and every construction item on revised plans to ascertain precisely what has changed. Further, despite pointing out changes made by them to delete items from the project, the homeowners failed to point out when they made additional inclusions which any reasonable person would expect to increase costs. [51] That aside, Fergbilt’s representative signed the contract which included the BA Issue Plans. Despite the failures of the designer and homeowners discussed above, as a director of Fergbilt, Mr Ferguson had responsibility for his dealings on its behalf and signed the contract. Accordingly, I would have held Fergbilt to the contract signed by him on its behalf in respect of this item. [52] However, on both versions of events, the contract was varied by later agreement. The homeowners agreed to pay the additional costs for the concreting and tiling in the back yard, except for $330. The homeowners signed Variation 3, although altering the concreting amount to $2,750 (for 40 sqm at $55 and pump fees) and decreasing the total to $4,088.00. They subsequently also acted on that later agreement and satisfied the amount.21 The homeowners cannot now unilaterally go back on that later agreement. Therefore, the homeowners are not entitled to offset the amount for other variations. [53] Mr Ferguson says that he was to remeasure the concreted area following completion and the actual increase was to be paid for. He did not accept that the square meterage calculated by Mr Burnett was correct. [54] In respect of the $330 which was not paid in variation 3 for which $321 and is later again claimed in variation 7, the variation was requested by the builder because of changes to the plans, which had not been identified by the builder at the time the contract was entered into. The circumstances leading to the request could have been reasonably foreseen by the builder at the time the contract was entered into had he looked more closely at the BA plans. I am not satisfied that the builder would suffer unreasonable hardship by the operation of s 84(3)(a), nor that it would not be unfair to the homeowner for the builder to recover the amount. I would dismiss the builder’s claim for this amount. [55] With respect to the front yard, Mr Burnett acknowledges giving instructions to Haemish Ferguson for a small amount of additional concreting where the garbage bins were to be stored. He says that he did not ask for the more extensive concreting referred to in the variation. [56] I consider that it is inherently unlikely that Haemish Ferguson was mistaken about the request, particularly because the homeowners later made no complaint about the concreting of a large area of their front yard, 21 Exhibit 2, attachment 5. -- 13 of 22 -- 14 which was not their desire and contrary to their instruction. It is clear from his material that Mr Burnett is quite particular, and was very involved in setting the detail for the project. I accept that it is more likely than not that Mr Burnett instructed the concreting. I find that Mr Burnett did make the request and instruct the additional concreting in the front yard as Fergbilt alleges. [57] Variation 7 is dated 13 December 2013. It has not been signed by the homeowners. When the homeowners finally responded to the variation claim on 13 February 2014, they refused to pay any amount specified in Variation 7, including the $2,595. [58] I find that the variation in respect of this item was not prepared in accordance with the contract: amongst other things, it was not prepared before the concrete was laid, except in respect of the $330, which had been included in Variation 3 and which I have already indicated I would disallow. [59] However, the Tribunal can make an order approving recovery of an amount in accordance with s 84(2)(b) and s 84(4). [60] I have found that to the extent that the amount in Variation 7 was for the front yard, Mr Burnett instructed it late on the day before the pour. I am satisfied that the amount for concreting referable to the front yard is $2,595 less the $321 claimed for the back yard. That is, $2,274. [61] It is common ground that the work has been done. The builder has therefore incurred the labour and materials costs to carry out the work. I am satisfied that the builder would suffer unreasonable hardship by operation of strict compliance with s 79, s 80, s 82 and s 83 of the DBC Act. I am also satisfied that it would not be unfair to the homeowners for them to pay for the additional concreting works that they instructed. [62] Therefore, I would allow the amount of $2,274 for the concreting component of Variation 7. Variation 5 dated 14 November 2013: $150 [63] This variation was for an additional 2 single GPOs for the security system at a cost of $150. The builder says that during construction Mr Burnett advised that he wanted a security system installed. It was not covered by the contract. In November 2013, the builder later discovered that Mr Burnett attended at the site and gave instructions directly to his electrical subcontractor to install 2 single power points for the security system. [64] The homeowners now concede that they rejected this item in error. It has not been paid and is owing to Fergbilt. The first variation 6 dated 19 November 2013: $291 -- 14 of 22 -- 15 [65] The variation is in the amount of $291 for specified electrical fittings. As discussed earlier, the homeowners now also concede this amount is owing to Fergbilt. The second variation 6 dated 13 December 2013: $7,206 [66] Centre lower floor shower waste under rose: $240. As the builder says, the contract specifies the placement of the waste in the downstairs bathroom, but not the placement of the shower rose. During construction, Mr Burnett told Haemish Ferguson to move the shower waste to a position nominated by him under the shower rose. Haemish Ferguson says that this required an extension of the drainage system. Also, he says that Mr Burnett instructed a square drain rather than a strip drain. Haemish Ferguson says that he advised Mr Burnett of additional costs involved. [67] Mr Burnett says that the plumber had not installed the waste under the rose as he had specifically told him to do. He also says that Haemish Ferguson recommended a square drain rather than strip drain. It is implicit in these concessions that he told the plumber to move the waste outlet as alleged and instructed the square drain. I draw the inference that he did so. He says that the cost was because of the plumber’s error. [68] I find that the contract did not require placement of the waste under the shower rose. I accept that placement of the square drain in accordance with Mr Burnett’s instructions required an extension of the drainage system. [69] The variation was requested by the homeowner. The work has been done and the builder has incurred the costs of it. I find that the builder would suffer unreasonable hardship by the operation of s 84(2)(a). Further, I find that it would not be unfair to the homeowner for the builder to recover for the variation instructed by them in the sum of $240. [70] Provision of shower niches: $920. Haemish Ferguson says that Mr Burnett instructed him to construct niches in the walls of the shower recesses (which were not on the plans), which required additional timber framing, wall sheeting, waterproofing and tiling. [71] Mr Burnett concedes he initiated a discussion with Haemish Ferguson about shower niches at the premises at which he was staying during the renovation. However, he claims that he does not recall the end of the conversation, that is, whether he instructed them to be constructed in the works. He says that there is no evidence to say that he did, and in any event if he had been given a variation document, he would not have instructed them at the cost of $920 for soap dishes. [72] I do not accept Mr Burnett’s assertion that he does not recall whether he instructed the niches. It makes no logical sense. He raised the issue of niches, because of the niches where he was staying, not the builder. Haemish Ferguson gives evidence that he instructed niches in the works. I am satisfied that, as Haemish Ferguson says, Mr Burnett requested and -- 15 of 22 -- 16 instructed the niches. However, under the contract and the DBC Act, a written variation should have been given before the work was done including advising the homeowners of the cost associated with installing them before the work was done. [73] I accept that $920 is a relatively significant cost for what are essentially soap dishes. However, in the context of the renovation and the costs of the labour and materials required to install them, I consider that it is a reasonable cost being only the cost of the work plus a 10% margin. I find that the building contractor would suffer unreasonable hardship by operation of s 84(2)(a) if the variation was not allowed and that it would not be unfair to the homeowners for Fergbilt to recover the amount claimed for this work instructed by them. [74] Reframe external stair and landing: $2,940. The builder says that the plans provided by the homeowners contain two errors. One error involves the front stairs. A leaf of the window in the master bedroom could not be fully opened once the stairs were in place because it hit the new handrail. [75] Both Mr Fergusons and Mr Burnett met onsite to discuss the best way to overcome the problem. Craig and Haemish Ferguson both say it was agreed that the stairs would be demolished, the new patio landing cut back, and new stairs constructed. They say that Mr Burnett instructed those works. Mr Burnett then went away for work for several days. Mr Craig Ferguson says Mr Burnett subsequently asked for more information about the work required so that he could endeavour to recoup some costs from the drafting company that prepared the plans. He provided this information by email to Mr Burnett on 30 January 2014. [76] Mr Burnett acknowledges that the homeowners wanted full function of the affected street-facing window and that he rejected the proposed solution of Craig Ferguson that the affected leaf of the window could be nailed shut. He says he instructed modification of the handrail. He also says he requested (which is denied by Craig Ferguson) that Craig Ferguson contact the draftsperson/designer to discuss options. [77] Mr Burnett submits, but produced no independent expert evidence to this effect, (although the designer was called to give evidence, he is not independent as he does not wish to be considered responsible) that it is not uncommon for measurements to be ‘slightly out’ on plans for renovation of older homes and that it was incumbent upon the builder to double check the draftsperson’s calculations. I have no evidence that good building practice required this in the context of a detailed survey having been obtained by the designer. In these circumstances, it seems reasonable that the homeowners plans were relied upon by the builder. In any event, it is acknowledged that the issue results from a mistake in the plans in respect of which the homeowner was asked for instructions. If the builder had considered it his error, he may have found a solution other than the one that was instructed by the homeowners, of demolishing the stairs. -- 16 of 22 -- 17 [78] Also, Mr Burnett says that he did not receive a written variation before the work was done, and that he was ‘completely unaware’ that the builder intended to demolish the stairs and issue a variation for $2,940. [79] I give greater weight to the evidence of Craig Ferguson and Haemish Ferguson. What they say makes logical sense. I do not accept that they demolished new stairs and incurred the cost of replacing them, reconfigured slightly, in the absence of clear instructions to do so. Mr Burnett’s evidence makes it clear that he considered that only a solution which allowed all of the front street-facing windows being able to fully open was acceptable, referring to the substantial investment being made in the home. I find that Mr Burnett did give the instruction alleged by the builder. [80] However, once again the builder failed to provide the written variation document as required, among other things setting out the costs before the work was done. On this occasion, this failure occurred in the context of Mr Burnett going away for several days and completion of the works being imminently due under the contract, in circumstances that Mr Burnett was exerting pressure on Fergbilt for the works to finish on time. However, it is reasonable to infer that Mr Burnett knew that giving the instruction to demolish and reconfigure the stairs would involve some significant costs. [81] I find that there were exceptional circumstances. The builder could not have known that there were errors in the plans instructed obtained and provided by the homeowners, particularly in circumstances when a detailed survey had been undertaken by the designer before drawing the plans. The builder has done the work instructed by the homeowner, incurring the costs of labour and materials. I am satisfied that the builder would suffer unreasonable hardship by operation of the requirements in s 84(3)(a). I am satisfied in the circumstances that it would not be unfair to the building owner for the builder to recover the amount claimed of $2,940. [82] Patching down light holes: $130; Supply and install AC bracket: $180; and additional light over downstairs toilet: $85. These items were conceded by the homeowners at the hearing. [83] Replace wall light over vanity upstairs bathroom: $40. The builder says that no electrical work in the upstairs bathroom was included in the contract (it having been ruled out of the works by the homeowners at that stage).22 Craig Burnett says that Mr Burnett directly instructed the electrical subcontractor to replace the light. [84] Mr Burnett initially insisted that it was included in the works, but later conceded the item. [85] Renovation of east and west window awnings repaint and provide new sheeting and mini gable roll: $878. This item was conceded by 22 Exhibit 6, page 137 sets out the electrical works included. -- 17 of 22 -- 18 Mr Burnett, although Mr Burnett insisted a variation was not issued. Presumably, he means before the work was undertaken. [86] Realign stair well wall to meet line of upstairs walls and associated structural works: $1,793. This item arises out of the second alleged error in the plans. As the works progressed, it was discovered that the internal stair position did not line up with the upstairs walls. Once again, both Craig and Haemish Ferguson met onsite with Mr Burnett to discuss how to overcome the problem. The builders say that it was agreed that an additional wall would be constructed downstairs, a supporting beam cut back, and a steel beam relocated to overcome the error in the plans. A new column also had to be constructed and additional carpentry work to the existing floor frame. Craig Ferguson says once again that on Mr Burnett’s request, he subsequently prepared a detailed explanation of the work and costs which Mr Burnett hoped to claim from the designer. [87] Mr Burnett says the error in the plans was about 100mm, so that the critical lower floor wall did not line up with the upstairs wall of the internal stairs. Once again he says he was not given an estimate of costs before the work was done and that the homeowners were unprepared for the high additional costs. Once again, he claims that the designer says that the builder should have checked his measurements rather than relying on them. However, the designer has an interest in ensuring that blame is not attributed to him. I have no independent evidence that good building practice required independent measurement in these circumstances. A detailed survey had been done by the designer. I consider that it was reasonable in the circumstances for the builder to rely on the homeowners plans. [88] Once again, the contract and the DBC Act were not complied with: the signed variation document was not obtained as required before the work was done. The variation was originally sought by the builder. I am satisfied that there were exceptional circumstances, as the builder could not reasonably have foreseen the error in the homeowners plans upon which he was entitled to rely. The builder has done the work instructed by the homeowner, incurring the costs of labour and materials. I am further satisfied that the builder would suffer unreasonable hardship by the operation of s 84(3)(a). I find that it is not unfair to the homeowner for the builder to recover the amount. Variation 7 dated 13 December 2013 [89] New sill stop for underside of existing living room bifold doors: $195. At hearing, this item was conceded as owing by the homeowners, although I note that again Mr Burnett says a variation document was not provided. Once again, it appears he means before the work was done. [90] Increased height of tiles to ensuite walls and provision of hanging rail to cover variations in wall thickness: $128. During construction, Haemish Ferguson says that Mr Burnett instructed him to increase the height of the tiles on the ensuite wall over the allowance in the contract -- 18 of 22 -- 19 documentation. Mr Burnett says that he told the builder that he wanted the tiles to the height of the picture rail before the contract. He acknowledges a discussion with Haemish Ferguson, but says he was referring to his earlier discussion with Craig Ferguson about the height of the tiling. However, when cross-examined about this, he was unable to point to anything in the contract documentation which provided for tiling to this height. [91] Fergbilt’s schedule of work23 refers to installing tiles in the bathrooms in showers to 1.8m but elsewhere to ‘1000 high.’ Even the detailed scope of work prepared by Mr Burnett, as far as I have found it forms part of the contract, does not refer to the tile height contended for by Mr Burnett. [92] I find that this variation was instructed by Mr Burnett on behalf of the homeowners. The work has been done, and the builder has incurred costs of labour and materials. I am satisfied that the operation of s 84(2)(a) of the DBC Act would cause the builder unreasonable hardship in these circumstances and that it would not be unfair to the building owner for the contractor to recover the amount for the tiling instructed by Mr Burnett. Installation of additional framing and setout for wall hung basins: $265; and Additional wall framing for insertion of recessed bathroom cabinets: $195. [93] It is common ground that the contract documentation includes vanity units with basins set into them in the bathrooms. However, the homeowners provided wall hung basins and recessed vanity units for installation which required additional work.24 In response to questions, Mr Burnett said that nothing had been said about there being any additional costs to install them. He acknowledged providing instructions to the effect that that this is what the homeowners required only once it reached the time for them to be installed. He gave the units, together with installation instructions to the builder. There were three of these provided for installation. [94] However, Mr Burnett says that variations had not been raised and yet he was being charged $265 for the extra framing and $195 for the extra work in installing the recessed cabinets although he had not been provided any details. Mr Burnett further said essentially that he did not think there would be any additional costs for installing these items notwithstanding that they were different from what was in the plans, because he was not a builder and he did not ask the question. He said there was no schedule to say specifically the type of fitting to be provided. He considers this variation totalling almost $500 unreasonable. [95] I do not accept that Mr Burnett thought there was no cost to undertake additional framing and other work. For the reasons explained earlier, I am satisfied that Mr Burnett was aware that all items of additional work cost money. The builder has performed the work, incurring the costs of labour 23 Exhibit 6, page 143-146, at item 5.06 (page 145). 24 Exhibit 9, Installation sheet for recessed vanity unit. -- 19 of 22 -- 20 and materials. In the circumstances that the homeowners instructed the variation, I am satisfied that the builder would suffer unreasonable hardship by the operation of s 84(2)(a) and that it would not be unfair to the homeowner for the builder to recover the amount claimed for this variation. Installation of letterbox: $110. [96] This item is not in contention: Fergbilt’s claim was reduced by the amount of this item. Pier caps less credit on gate & fence panel PC: $48. [97] The plans show piers with a square finish. Craig Ferguson says that Mr Burnett requested pier caps, which he agreed to supply and off-set the cost against savings on the provisional cost for the front gate. The additional cost after the off-set was $48. [98] Mr Burnett says that he had advised Craig Ferguson that he wanted a fence exactly the same as a neighbour’s fence which had pier caps, and that this detail was included in his scope of works. The scope of works document refers to a block and metal rendered fence ‘as per plans,’ although (inconsistently with the plans) a photograph is provided of a fence with pier caps.25 [99] However, I am satisfied that there is no discrepancy between the plans and the words in the scope of works documents. The plans are a part of the contract. Despite including a photograph with pier caps, the scope of works refers back to the plans. The plans do not include pier caps. [100] The homeowners instructed the pier caps which were not included in the contract. The builder has supplied and fitted the pier caps, incurring labour and materials costs. I find that the builder would suffer unreasonable hardship by operation of s 84(2)(a) of the DBC Act and that it is not unfair for the homeowner to pay the builder for the pier caps instructed by Mr Burnett. Provide and install electric strike to pedestrian gate: $162. [101] Haemish Ferguson asserts that towards the end of construction, Mr Burnett requested installation of an electric lock release to allow the front pedestrian gate to be unlocked from inside the house. Craig Ferguson says that an additional electrical wire to the front fence was paid for by the homeowners, but an electric strike was required to be connected to the installed wire to allow it to be operated from within the house. [102] Mr Burnett acknowledges that the interior pad was not part of the contract: it was installed and fitted off by an installer engaged by the homeowners for this purpose, but he maintains that that the electrical strike was part of 25 Exhibit 6, attachment 7, page 75 and attachment 17, page 199. -- 20 of 22 -- 21 the scope of works. He referred in cross-examination to it being covered under item 4.8.4 or 7.3.10, neither of which refers to it. [103] The electrical strike was part of the requirement for the in-house lock release, which was only instructed at the end of construction. Logically, there could have been no agreement about it or provision for it in the contract since it was not anticipated when the contract was entered into. [104] I find that Mr Burnett on behalf of the homeowners instructed this item as alleged by Fergbilt. It has been provided, and the builder has incurred the costs of providing it. The builder would suffer unreasonable hardship by the operation of s 84(2)(a). It is not unfair for the homeowners to pay for the item requested by them. Additional concrete: $2,595. [105] This item has been dealt with earlier. Construct external stair: $710 and Tiling to external stair: $600. [106] Although originally the pre-contract negotiations included the construction of rear stairs off the back deck, these were deleted from the project by the homeowners after the first budget, as is apparent from the second budget provided by Fergbilt. The preliminary plans did not include the stairs. However, the BA approved plans do include concrete stairs. Craig Ferguson says that Mr Burnett was made aware that the cost was not included in the contract price. Craig Ferguson says that he requested that they be constructed and tiled in any event. [107] As Mr Burnett points out, the BA plans include concrete stairs from the rear ground floor patio to the rear yard upper grassed area (rather than from the back deck). He contends that they were therefore included in the contract. He did not specifically respond to Craig Ferguson’s assertions that it was discussed as alleged. [108] The preliminary plans did not include the stairs. However, unlike the situation concerning the additional concrete in the back yard, Fergbilt does not allege that there was an agreement to vary the contract following the discovery by Mr Ferguson that the BA Plans had considerably altered what was to be done in the back yard. [109] I find that the external stairs and tiling form part of the original contract. There was no agreement to vary: the work was simply done. Fergbilt’s representatives are responsible for the initial oversight of changes in the plans which had not been disclosed. I consider that there is no basis upon which the claimed variation should be allowed under s 84(3) and (4). I dismiss the claim for it. Provide new laundry taps and mixer: $120. [110] Craig Ferguson says that the homeowners were to provide all plumbing fittings under the contract. He says that they nominated that the laundry -- 21 of 22 -- 22 taps were to be reused. Haemish Ferguson says that in his presence Fergbilt’s plumbing contractor advised Mr Burnett that the existing taps were defective and that Mr Burnett instructed the subcontractor to source and install new laundry taps and a mixer for the tub. [111] Although responding that the homeowners were not issued with a variation for the item, Mr Burnett concedes this item is a variation. Amount outstanding for variations approved or conceded [112] Having regard to the amounts conceded by the homeowners as payable and the variations allowed by me the amount of $11,034 remains owing for variations to the builder by the homeowners, calculated as follows: (part) Variation 3 $ nil Variation 5 $150 (First) Variation 6 $291 (Second) Variation 6 $7,206 Variation 7 $3,387 Total $11,034 Costs and interest [113] The contract specifies interest of 10% is due on overdue payments. However, Fergbilt did not document the variations in accordance with the contract or the DBC Act. Therefore, it was entitled to payment for the amount only with the Tribunal’s approval. Accordingly, I do not consider that the payments are overdue. I refuse the claim for interest. [114] Fergbilt also claims its filing fee of $285. Fergbilt has been substantially successful on its claim. I accept that it is in the interests of justice that the homeowners pay their costs in this amount. Orders [115] I make orders requiring that the homeowners pay the builder the sum of $11,319 within 28 days of the date of these orders. -- 22 of 22 --