Clelland v Ommensen [2014] QCAT 366

CITATION: Clelland v Ommensen [2014] QCAT 366 PARTIES: Alaisdair Clelland (Applicant) v Stuart Ommensen (Respondent) APPLICATION NUMBER: BDL301-13 MATTER TYPE: Building matters HEARING DATE: 25 July 2014 HEARD AT: Brisbane DECISION OF: Member Gardiner DELIVERED ON: 31 July 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. Mr Clelland is to pay Mr Ommensen $32,302.11 within 14 days. 2. Mr Clelland is to provide to Mr Ommensen any outstanding warranty documentation within 14 days. CATCHWORDS: BUILDING MATTER – Dispute between builder and home owner about the final payment of a contract to renovate a house – WHERE applicant did not attend hearing at short notice – WHERE final invoice not paid by homeowner because of allegations of defects – WHERE 53 variations but only 5 in dispute – WHERE experts have different views of workmanship of builder – WHERE one expert must be preferred – WHETHER there are major defects with the renovation of the home – WHETHER liquidated damages and loss of rent should be allowed Queensland Building and Construction Commission Act 1991 (Qld) Domestic Building Contracts Act 2000 (Qld) ss 82, 84 -- 1 of 9 -- 2 APPEARANCES and REPRESENTATION (if any): APPLICANT: No appearance RESPONDENT: Mr Ommensen, in person REASONS FOR DECISION [1] Alaisdair Clelland is a builder who entered into a contract with Stuart Ommensen to renovate Mr Ommensen’s Queenslander style home at Paddington by building in under the house and making other alterations. [2] The original contract amount was $338,977.00. Without counting the variations in dispute, the final contract price as agreed by the parties with all other consensual variations allowed is $335,605.051. [3] Added to this are further consensual plumbing, electrical and provisional sum variations which add $1,037.00, $6,221.36 and $3,304.00 respectively. This totals $346,167.41. [4] In December 2013 Mr Clelland filed an application for a domestic building dispute seeking monies owing under, and as a result of the contract, from Mr Ommensen of $17,024.92. [5] While Mr Clelland seeks payment under the contract, Mr Ommensen in his response and counter-claim filed on 6 February 2014 seeks the following amounts: Reimbursement of funds overpaid $ 5,903 Structural defects costed and assessed at $ 41,355 Water damage assessed at $ 11,539 Loss of rental $ 50,062 Total $108,859 [6] The matter was set down before the Tribunal as a hearing at 9.30am on 25 July 2014. At 9:00am on the morning of the hearing an email was received by the registry from Mr Clelland advising the Tribunal that he did not intend to appear at the hearing. The registry, on instructions from the Tribunal, both emailed and spoke to Mr Clelland, encouraging him to attend the hearing and pointing out that the Tribunal would be limited to considering his application and any submissions received already if he did not attend. [7] Mr Clelland accepted this in a telephone call with the case officer of the registry saying that he did not mean any disrespect to the Tribunal, but that he had had personal issues and that he understood the decision may go against him. 1 Mr Ommensen’s amended spreadsheet filed 25 July 2014. -- 2 of 9 -- 3 [8] Mr Ommensen appeared on his own behalf in this matter. There was sufficient material on the file, both by way of application and submissions from both parties, for the matter to be determined in Mr Clelland’s absence. [9] Mr Ommensen provided a spreadsheet attached to his submissions received by the Tribunal on 27 May 2014. This spreadsheet details the outstanding amounts and includes some of the items which are in dispute and about which decisions will be made by this Tribunal. [10] There were 53 variations or rectification items to this contract. There is no evidence to show whether any of these variations (if they can be isolated from the rectification items) complied with the requirements of the contract signed by the parties2 that they: a) must be written, b) must describe the variation, c) identify the reason if requested by the contractor, d) estimate any delay in works, e) state any adjustment to the contract price (that part to be signed by the owner) and f) The owner must pay the variation within the time stated in the variation. [11] The Domestic Building Contracts Act 2000 (Qld) (DBC Act) s 82 also reflects these requirements. [12] In the absence of any evidence about the variations themselves, s 84(4) of the DBC Act allows that a variation may be approved by this Tribunal for recovery of an amount by the building contractor only if the Tribunal is satisfied that (a) either of the following applies: (i) there are exceptional circumstances to warrant the conferring of an entitlement on the building contractor for recovery of an amount for the variation; (ii) the building contractor would suffer unreasonable hardship by the operation of subsection (2)(a) or (3)(a); and (b) it would not be unfair to the building owner for the building contractor to recover an amount. [13] Mr Ommensen’s evidence was that he was satisfied that this section should be applied to the overwhelming number of variations in this matter and that Mr Clelland should be allowed to recover amounts under each of the variations not in dispute. 2 Clause 12. -- 3 of 9 -- 4 [14] Mr Ommensen’s evidence was that there are only five of the variations/rectification items which are not agreed between the parties. [15] I accept that the overwhelming bulk of the variations are consented to by both parties. Mr Clelland indicates this also in his submissions. [16] I am satisfied that exceptional circumstances apply and that the hardship and fairness considerations are made out. I will allow the variations agreed by the parties pursuant to s 84(4) of the DBC Act. [17] These reasons will reflect decisions on the five outstanding variations/rectifications which will then finalise this matter between the parties. [18] Mr Ommensen sets out the five building contract variations/rectifications between the parties in page 2 of his submissions received on 27 May. These items are not strictly variations as they include rectification costs and damages. For convenience however, I will treat them under this heading. They are as follows; Building Variation 1 – Additional costs for the timber landing [19] This item is covered in submissions from both parties. In essence, the study floor was raised with a landing created, and a spotted gum timber floor was laid in the area. [20] Mr Clelland claims $1,320.00 for the extra costs involved in laying this floor. Of this, Mr Ommensen has paid $804.50. Mr Clelland provides a receipt from Chermside Building Centre for the timber itself of $705.71 and says that the remaining money is for carpentry, labour to install the boards and the painter’s time to apply the finishing coats plus glue and nails. [21] I accept this amount as extra costs as being reasonable in the circumstances and delete from the $1,320.00 the $804.50 already paid by Mr Ommensen. This leaves an amount of $515.50 to be added to the contract price. Building Variation 2 – Deletion of Timber shutter in Ensuite [22] There were two possible solutions to the amount to be deleted from the contract for these shutters. The first solution provided by the preferred supplier, Trojan Timbers Pty Ltd, was an engineered solution, but did not allow for a colour match with the colours chosen by Mr Ommensen under the contract. This option was costed by Mr Clelland at $358.54 (including the builder’s margin). [23] Mr Ommensen submits that the second option – timber shutters that could be painted to match to the other chosen colours – is the appropriate option to be allowed. With the builder’s margin included this is costed at $945.00 -- 4 of 9 -- 5 [24] I am satisfied that this second option is the reasonable option in the circumstances. It is reasonable that the colours should match. I will allow a deletion of $945.00 from the contact price. Building Variation 3 – Excavation to repair Water Membrane [25] Mr Ommensen says these costs were to remove gravel and dirt along the eastern wall of the house. This was necessary in his view to as the waterproofing along this wall was deficient and the use of gravel as backfill was not in accordance with the contract drawings. [26] Mr Ommensen claims extra rectification costs and provides a receipt from Jet Enterprises Pty Ltd for the amount of $1,270.003 although the invoice does not specify the work performed. [27] Mr Clelland says removing the gravel would have compromised the wall which would damage the warranty on Mr Ommensen’s house. Mr Clelland says Mr Ommensen had the gravel removed by other persons, after which the Brisbane City Council issued a directive to install fall protection as this adjoined a footpath. [28] Mr Clelland accepts the waterproofing was re-applied but says it was not necessary to remove the gravel to do this4. [29] I am unable to be satisfied on the evidence as to who should be liable for these costs. In the circumstances I propose to let the loss lie where it has fallen as Mr Ommensen took active steps to remove the gravel. I make no order in this respect. Variation 4 – Tiling [30] This argument involves the laying of tiles in a brick bond pattern. The evidence from Mr Ommensen was that the storeroom was found to be not laid in the correct pattern according to the contract drawings after the tiles were laid in this area. However the contract drawings themselves show that instructions for the pattern of the tiling were to be supplied by the owner. It was clear that prior to at least laying the tiles in the storeroom, there had been no discussions between the parties. [31] Mr Ommensen says that he then asked for the rest of the area to be tiled in this brick bond pattern. [32] Mr Clelland’s submissions are that this added cost to the laying of the tiles and claims $946.00 as added to the price. In support of this submission, Mr Clelland provides an invoice from the tiler and a letter from the tile supplier saying that extra costs would have been incurred in laying the tiles in this pattern. [33] Mr Ommensen does not accept that extra time would have been required. 3 Exhibit 4 page 104. 4 Ibid page 3. -- 5 of 9 -- 6 [34] I am satisfied that for this variation Mr Clelland did incur further costs to lay the tiles as requested by Mr Ommensen and will allow the amount of $946.00 to be added to the contract price. Building Variation 5 – Water damage to ceiling [35] This argument involves who was responsible for water damage which occurred when new taps were installed in the upstairs kitchen and had not been securely sealed prior to the water being turned on. [36] Each party blames the other or the plumber involved. There is conflicting evidence from both sides. There is no direct statement from Ben Mundt the plumber involved but rather a statement from another member of Plumbing and Drainage Pty Ltd, Les Mundt the office manager. All parties deny liability. [37] The reality is that the damage occurred to the ceiling whomever is to blame. The rectification costs on Mr Ommesen’s evidence are $1,272.00 to replace the ceiling. Mr Clelland was the head contractor at the time and responsible overall for the site, and rectified the damage. [38] I am unable to be satisfied on the evidence as to who should be liable for these costs. In the circumstances I propose to let the loss lie where it has fallen. I make no order in this respect. Contract Price [39] The subtotal of all of these building variations is as follows: (a) Variation 1 +515.50 (b) Variation 2 -945.00 (c) Variation 3 Nil (d) Variation 4 +946.00 (e) Variation 5 Nil Subtotal +516.50 [40] Overall, this makes the building contract price $346,167.41 plus $516.50 equalling $346,683.91 [41] Mr Ommensen has paid $338,505.00. The difference between these two amounts is $8,178.91 to be paid by Mr Ommensen to Mr Clelland. Defects [42] Mr Ommensen claims $41,355.00 as the cost for the structural defects. [43] In support of this claim Mr Ommensen provides in his submissions, a breakdown of the components for this work being the engineering report of Structerre Consulting Engineers at $1,100.00, the construction cost estimate report of Estimating Australia at $660.00 and the estimated -- 6 of 9 -- 7 construction costs of $39,595.00 being a total of $41,355.00. These invoices are supplied by Mr Ommensen. [44] In the absence of any submissions by Mr Clelland in response to this estimated rectification work and after examination of the breakdown of estimated costs of rectification, I allow the costs sought by Mr Ommensen under the headings of Demolition, Material Supply, Carpentry Labour, Hardware Items, Scaffolding, Electrical, Insulation, Internal Fitout, Painting and Site Clean and Preliminaries. [45] I am not satisfied that the costs listed as Insurance (as the insurance is listed as the NSW Home Warranty) should be paid by Mr Clelland and I will disallow this item. This represents a minus mount of $238.98. [46] I do not accept the costs of the reports undertaken by Mr Ommensen as these are costs in the proceedings created to support his claims. [47] I will allow the rectification costs sought by Mr Ommensen at an amount of $39,356.02. Further Water damage [48] This damage is also not included in the claim for the structural defects and is costed by Mr Ommensen at $11,539.00. It covers extra damage to floor coverings, ceilings and wall finishes as a consequence of water egress. [49] Mr Ommensen provides a break down of these costs and photographs of the consequential damage. [50] Mr Ommensen must mitigate his losses. The damage was first noted on 12 February 20105. It was not repaired until mould was noticed. Appendix 8 to Exhibit 5 called “assessment of carpet mould” was not included in the materials provided to the Tribunal by Mr Ommensen. In the absence of direct evidence, I am not satisfied on the balance of probabilities that this amount is appropriate. [51] The rectification by Mr Ommensen was in a period that cannot be determined by me on the evidence and I am not satisfied that the delay (whatever that period was) was reasonable in the circumstances and did not contribute increasing the rectification costs. I disallow this amount. Liquidated Damages [52] The building took longer than the contract originally allowed for. Mr Ommensen claims liquidated damages up to the practical completion date of $12,155 being 221 days at $55 per day (the contract amount). [53] Mr Clelland disputes this amount. He says in his submissions that he conceded in a meeting chaired by the Master Builders Association the 5 See page 8 onwards. -- 7 of 9 -- 8 amount of $1,125.00 being damages for the time delays caused by the pool building process. [54] Mr Clelland says he claimed for further time but Mr Ommensen refused to accept these delays and wanted him to demonstrate how the “critical pathway” of the project was delayed. [55] Mr Ommensen says the building was delayed because of a lack of onsite supervision, insufficient tradesmen allocated to perform the work, inadequate skill and experience level of the Clelland Construction employees, and an inability of Clelland Constructions to co-ordinate and manage subcontractors and other trades. [56] Mr Clelland says he asked Mr Ommensen to sign time extension claims which he refused and that the governance of this is covered by clause 15.3 of the contract general conditions, which automatically extends the date for practical completion. Mr Clelland says the extension was given to allow for time delays in the construction of the pool by an independent sub-contractor. [57] Mr Ommensen sets out his calculations for liquidated damages at pages 2 and 3 of exhibit 5. He says the days between the contract date for practical completion and the actual date were 221. He denies any time extensions should be allowed. [58] On the balance of probabilities, this seems unreasonable based, if for no other reason, on the high number of variations undertaken on this build, for which no time extensions have been allowed. [59] I do accept that some time delays have occurred but on balance, the amount claimed is unrealistically high and does not allow for the variations. I disallow the figure at $12,155.00. [60] Mr Clelland submitted he conceded liquidated damages of $1,125.00 in the meeting chaired by the Master Builders Association. This represents just over 20 days extension. I am satisfied that this number of days is a fair representation of the time taken for necessary rectifications undertaken on this build. [61] I will allow an extension to the contract of 20 days from the contract date of practical completion (24 October 2009). [62] Liquidated damages will be calculated on 20 days at the contract rate of $55.00 per day and set at $1,125.00. Loss of rental [63] The final amount claimed by Mr Ommensen is $50,062.00 as a loss of rental on a bedroom which he says was water damaged. -- 8 of 9 -- 9 [64] I do not propose to allow this amount. Mr Ommensen’s evidence was that he was unable to rent the master bedroom downstairs because it was affected by water. It was not rented even when repaired on 13 May 2014. [65] Mr Ommensen’s evidence at the hearing was that his circumstances changed around the beginning of the year in that he repartnered. Although his new partner does not live in the premises, he now occupies the whole house and the couple is unwilling to have other people living in the property. [66] It appears that: a) Mr Ommensen waited until May to repair the bedroom involved and therefore did not mitigate his loss earlier than January of this year; and b) Even when the bedroom was available to be rented, he and his current partner had decided not to do so. [67] I therefore do not accept that Mr Ommensen is entitled to loss of rent allowing that his repairs were slow and that once available the room was not rented in any event. I will disallow this amount. Non-monetary items [68] Finally Mr Clelland has indicated in his submissions that once this matter is finalised that he would return to Mr Ommensen any outstanding warranty documentation. This issue seems to be consented between the parties. I will make an order directing that Mr Clelland provide any outstanding warranty documentation to Mr Ommensen within 14 days of this order. Conclusion [69] Amounts payable by Mr Ommensen to Mr Clelland: (i) Plus balance on contract $8,178.91 [70] Amounts payable by Mr Clelland to Mr Ommensen: (i) Rectification costs $39,356.02 (ii) Plus liquidated damages $1,125.00 Subtotal $40,481.02 Balance payable to Mr Ommensen $32,302.11 [71] The final orders of the Tribunal will therefore be that: 1. Mr Clelland is to pay Mr Ommensen $32,302.11 within 14 days. 2. Mr Clelland provide to Mr Ommensen any outstanding warranty documentation within 14 days. -- 9 of 9 --