Brooke v QFlair Pty Ltd trading as Ezy Lifestyle Homes [2014] QCAT 402

CITATION: Brooke v QFlair Pty Ltd trading as Ezy Lifestyle Homes [2014] QCAT 402 PARTIES: Scott Brooke and Kylie Brooke (Applicant) v QFlair Pty Ltd trading as Ezy Lifestyle Homes (Respondent) APPLICATION NUMBER: BDL177-13 MATTER TYPE: Building matters HEARING DATE: 28 February 2014 HEARD AT: Rockhampton DECISION OF: Member Beckinsale DELIVERED ON: 25 August 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. From the sum of $6135.70 held in the Trust Account of the Queensland Building Construction Commission the amount of $ 4811.14 be paid to Scott and Kylie Brooke and the balance of $1324.56 be paid to QFlair Pty Ltd. 2. No order as to costs. CATCHWORDS: Domestic building dispute - Master Builders Residential Building Contract - Date of Commencement – responsibility for damage to underground electrical cable APPEARANCES and REPRESENTATION: APPLICANT: Scott Brooke RESPONDENT: Raymond Quirk, Director REASONS FOR DECISION Background [1] Scott and Kylie Brooke bought their residence at 64 McLaughlin Street Gracemere and then subdivided the block into two. They contracted with -- 1 of 7 -- 2 Ezy Lifestyle Homes to build a house on the vacant block of the subdivision. The Master Builders Residential Building Contract signed by the parties is dated 3 August 2011. [2] The Brookes have filed an application seeking payment for liquidated damages in the sum of $5700 they say is owed to them by the builder for delayed completion and reimbursement of a further sum of $435.70 they paid to Ergon Energy to reconnect power to their house for which they say the builder should be responsible. The total sum of $6135.70 is held in the Queensland Building Construction Commission Trust Account. [3] The builder’s response and counter-application contends that the liquidated damages for delayed completion are $2950. The builder denies responsibility for the Ergon Energy charge and seeks reimbursement from the Brookes of $475.20 he paid an electrician for repairs to the Brookes’ power line. The builder therefore contends the sum of $2474.80 only should be paid to the Brookes from the Trust Account and the balance to the builder. Damages for Delayed Completion [4] Both parties agree discussions occurred between them in relation to the work to be carried out by Ezy Lifestyle Homes throughout the first half of 2011. [5] Ray Quirk records his first meeting with Mr Brooke as 25 March 2011 with the first time he visited the site 5 April 2011. [6] Mr Quirk prepared a quote dated 8 June 2011 for the construction of a retaining wall at the property which was accepted by the Brookes on 27 June 2011, the same date they signed a Project Quote Acceptance for the residence and Special Conditions. The residential building contract is dated 3 August 2011. The parties agree the intention was that the contract be dated post 1 August 2011 for the Brookes to be entitled to a Queensland Building Boost Grant. [7] Mr Quirk’s then office manager, Haley White, completed the contract for signature by the Brookes. At Item 8 of the Schedule to the contract Ms White has stated the construction period is 176 days. At Part C of the Appendix to the contract she indicated the allowance for actual construction days, not including delays is 126 days with 14 days for inclement weather and 36 days for weekends and public holidays making the total of 176 days. Item 9 has been completed to provide that the Date for Commencement is not fixed but is to be determined under Clause 8. [8] Ms White did not attend the hearing to give evidence. A letter from Ms White to Mr Quirk dated 19 August 2013 provided to the Tribunal states: As per section 8.2 of the Queensland Master Builders Contract’s terms and conditions, a site start letter was generated dated the 8th of November -- 2 of 7 -- 3 2011. This was to advise Scott & Kylie of their site start date as an actual date was not nominated on the contract. [9] Ms White’s letter goes on to say that the letter was not able to be emailed to Mr and Mrs Brooke but was handed to them in person the next day. Mr Quirk gave evidence he was present in his office when Ms White gave the letter to the Brookes. [10] A copy of the letter to Mr and Mrs Brooke dated 8 November 2011 has been provided to the Tribunal. The letter advises construction ‘will be commencing Friday 11th of November, 2011’ and allowing 176 days the anticipated construction completion date of your new home will be on Friday 4th of May 2012. Please be advised that we will endeavour to complete your home before the above anticipated construction completion date. Once your construction schedule has been completed, another letter will be mailed to you providing a more definite date for completion. [11] Mr Quirk contends that the start date is 11 November 2011 as stated in the letter dated 8 November 2011 and the completion date 4 May 2012. He says construction actually took 235 days, an additional 59 days more than the 176 nominated in the contract. He contends Mr and Mrs Brooke were made aware when they signed the contract that his firm was experiencing a busy period but that work on their residence would be started as soon as possible. He says they were made aware they would receive a letter advising the start date. He said he is very sure of that as that is what his firm does every time. He suggests if Mr and Mrs Brooke had any issue with that arrangement they would have raised that upon receiving the letter advising the start date but they did not. He said after the letter was handed to the Brookes he had a discussion with Scott Brooke when Mr Quirk reiterated that if he could get finished sooner he would. He says the delay was raised only after final payment had been invoiced. [12] Mr Quirk also contended that the delay in commencement and construction was contributed to by the Brookes. He said when machinery first went to the site 6 September 2011 to cut the block and construct the retaining wall Scott Brooke requested that a fence be pulled down and changes to the cut to allow for a squared off retaining wall rather than the curve in the design he had made. The main delay however was that Mr Brooke wanted to negotiate with the owners of the neighbouring block to level a small segment of land on the boundary and put one fence along the boundary. At that time there were parallel fences about 300mm apart although Mr Brooke had Mr Quirk’s contractor pull down the timber picket fence on his side. Mr Quirk said he waited 2-3 weeks to hear back from Mr Brooke that the neighbour didn’t agree. Mr Quirk said he had delayed construction and sent the backhoe elsewhere as commencing construction would have impeded access to the machinery required to carry out the levelling of the strip of land on the boundary. [13] Mr Quirk says this hold up contributed to the late start date letter. -- 3 of 7 -- 4 [14] Mr Quirk says the other major delay occurred later in the build at the stage he should have been constructing a side path and installing airconditioners. He said Mr Brooke wanted to negotiate with new owners of the neighbouring block to level the segment of land and put a new fence on the boundary. Mr Quirk said that although his office had received a request from Mr Brooke for a quote to do this work in January 2012, he was not aware of that request until 13 February 2012. He says it wasn’t until late April 2012 that he had been able to have a site meeting with Mr Brooke and his neighbour and obtain all the information he required to do a quote which was sent to the Brookes in May. A copy of an email from Mr Brookes dated 14 May 2012 advising Mr Quirk’s office that they would not go ahead with the fence has been provided to the Tribunal. [15] Mr Quirk says the second occasion of the Brookes approaching their neighbour regarding the fence caused him 2-3 weeks delay. [16] Mr Quirk conceded at the hearing a variation ought to have been made at the time but he is prepared to “honour” the “start date letter” and calculate the days for delayed completion to commence from 4 May 2012. [17] Scott and Kylie Brooke signed a joint statement which was provided to the Tribunal dated 12 August 2013 although Kylie Brookes did not attend the hearing to give evidence. [18] Scott Brooke gave evidence that at the date he and his wife signed the contract he understood the Date of Commencement to be the date of the contract, that is, 3 August 2011. He denied being informed of receiving a start date letter to advise the date of commencement and denied receiving the letter dated 8 November 2011. [19] He agreed he and Mrs Brooke were informed that the business was busy and the Christmas period would result in delay but said they believed that was taken into account by the 176 days Haley White put on the contract. [20] Mr Brooke contends the initial delay while he spoke to the neighbour had nothing to do with the house construction, only the retaining wall which was separate from the residential building contract and had been agreed to over a month before the residential building contract. He said it was Mr Quirk’s call to send the machine away. [21] Mr Brooke also disputes that any delay can be attributed to him between January and May 2012 whilst he obtained the further quote from Mr Quirk and discussed that with his neighbour. [22] The issue about which the parties are in dispute is the Date of Commencement. Mr Quirk contends the date is as stated in his letter to the Brookes, that is, 11 November 2011. Mr Brooke says that although he initially believed the date was 3 August 2011, the Master Builders Residential Building Contract clearly sets out how the date is to be determined. -- 4 of 7 -- 5 [23] As noted Item 9 of the Schedule to the contract has been completed to provide that the Date for Commencement is to be determined under Clause 8. [24] Clause 8.1(b) applies because no date has been specified. That is, the Date for Commencement is within 10 business days of the contractor receiving all information, evidence and consents required to be given by the owner under Clause 7, evidence of the owner’s capacity to pay, all necessary building or planning approvals and, where relevant, notice of finance and Engineer Specification and Confirmation document. [25] The builder did not dispute that the last requirement to be satisfied for the Brookes’ residence was building approval from the Rockhampton Regional Council on 1 September 2011. Although Mr and Mrs Brookes statement suggests 18 September 2011 as “fair and reasonable” to calculate the commencement of construction, I have looked at a calendar for that year and ascertained that 10 business days is 15 September 2011. [26] Clause 8.2 provides that within 10 business days after commencement of the works the contractor shall give written notice to the owner stating the date the contractor commenced the works and the date for practical completion. Mr Quirk and his office appear to have been treating the “site start letter” to which he and Ms White refer as complying with Clause 8.2 but that is not my interpretation of the contract. The written notice contemplated by Clause 8.2 is of the date which will be in accordance with Clause 8.1(b). That can be no later than 10 business days after the requirements in the clause have been satisfied. [27] If Mr Quirk had been always working on a “site date letter” in my view he misapprehended the provisions of the Master Builders Residential Building Contract. At the hearing he conceded he had now taken advice from the Master Builders Association and had amended the contracts he uses. Nevertheless, he expressed the view that Mr Brooke well understood what Mr Quirk’s business proposed in relation to a start date and that Mr Brooke was taking advantage of him. [28] Mr Brooke denied that and in the absence of written variations as required by the contract between these parties, I find the terms of the contract apply. [29] Mr Brooke adopts the date of the Final Inspection Certificate, 4 July 2012, as the date for Practical Completion. Mr Quirk proposes Practical Completion as the date the final inspection was carried out, 2 July 2012, and that is the date on the Practical Completion Stage Notice given to the Brookes. Having regard to “practical completion stage” as defined in the general conditions of the contract I find the date of Practical Completion was 2 July 2012. [30] The number of days between 15 September 2011 and 2 July 2012 is 291, that is, 115 days more than the contracted days for completion. The -- 5 of 7 -- 6 contract provides for $50 per day liquidated damages which I calculate to be $5750. Interest on late payment [31] The contract signed by the parties also provides that interest is payable at the rate of 15% on payments which are outstanding. The Date for Practical Completion was 2 July 2012. An invoice for final claim for practical completion was issued 26 June 2012 and was due 2 July 2012. The documentation provided by the builder, which has not been disputed, shows the Brookes did not pay the amount they agreed was owing after deduction of the sum they calculated as liquidated damages, $28, 929.50, until 10 August 2012, a delay of 39 days. [32] I allow 15% interest on the amount of $28,929.50 for 39 days which I calculate to be $463.66. (15%x39/365x$28,929.50) Costs of repair to power line [33] In the course of excavation required to construct fencing along the boundary between the Brookes’ blocks of land an underground power cable was damaged. [34] Mr Brooke’s evidence is that he obtained all available information from Ergon Energy regarding the location of the power supply but no plan was available. He said Mr Quirk did not suggest or require that he engage a licenced cable locator. There was discussion as to whether the cable would run around the corner of the subdivided block, remaining on the block it was supplying, that is the block where the Brookes lived. That is what was required, however, it was agreed a possibility was that the cable had instead been installed in a straight line. [35] Mr Brooke said that the excavator operator damaged the underground electrical cable on his block. He incurred a fee of $435.70 charged by Ergon Energy to reconnect power after repair of the cable. Mr Brooke says the location of the cable was the builder’s responsibility as contractor on the job, that the Brookes did all that was asked of them and that Mr Quirk agreed to be responsible for the bill from Ergon Energy. [36] Mr Quirk gave evidence that he agreed he would have a “spotter” while the excavations were made in the vicinity of the power cable. Mr Quirk gave evidence that an underground electrical cable is supposed to be installed with highly visible warning tape 300mm above the cable with fill in between. As long as the machinery operator works carefully, the spotter will be able to see the warning tape before there is a danger of striking the cable. [37] Mr Quirk gave evidence that there was no warning tape and the excavator did strike the electrical cable. He had an electrician attend to repair the cable. He said only the insulation ducting was “nicked” with no damage to the actual wiring and the fault was actually found back near the power -- 6 of 7 -- 7 pole. The cable appeared to have been damaged by previous excavation and was just wrapped in ducting without proper repair. The electrician told him it would have only been a matter of time before that damage would have become apparent. [38] While repairs were carried out Mr Quirk provided his own generator and labour to ensure the Brookes were not left without power. The amount of $475.20 is the sum he paid the electrician to replace the damaged cable. [39] I accept Mr Quirk’s argument that he took all reasonable measures in excavating near the electrical cable and that effectively the cost of the electrical repairs would have been incurred by the Brookes at a point in the near future. That cost would have included Ergon Energy reconnecting power. [40] On that basis I find that Mr and Mrs Brookes should reimburse the sum of $475.20 to Ezy Lifestyle Homes and I decline to order the reimbursement of the sum of $435.70. Order [41] From the sum of $6135.70 held in the Queensland Building Construction Commission Trust Account an amount of $4811.14 ($5750 liquidated damages less interest of $463.66 less refund of electrician’s account $475.20) be paid to Scott and Kylie Brooke and the balance of $1324.56 be paid to QFlair Pty Ltd. I make no order as to costs. -- 7 of 7 --