Don Hobson Pty Ltd v Rackham [2013] QCAT 415

CITATION: Don Hobson Pty Ltd v Rackham [2013] QCAT 415 PARTIES: Don Hobson Pty Ltd (Applicant) v Amanda Rackham (Respondent) APPLICATION NUMBER: BDL103-13 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Jeremy Gordon, Member DELIVERED ON: 12 August 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. The Respondent shall pay to the Applicant the sum of $1,791.50 including filing fee and service fee. CATCHWORDS: BUILDING DISPUTE – whether there was agreement not to charge for labour - amount of reasonable sum for labour and materials - who are correct parties APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION [1] Don Hobson a licensed plumber drainage contractor and gas fitter, had done a lot of work for Mrs Rackham over many years and had formed a friendship with her and her husband. [2] In 2011 and in early 2012 Mr Hobson carried out work for Mrs Rackham at her house. There is a dispute as to the recompense to which Mr Hobson -- 1 of 6 -- 2 is entitled for this work. His company issued an invoice to Mrs Rackham and he claims there is $4,297 owing. [3] The claim is resisted on the grounds that there was an agreement that no labour would be charged, and that Mr Hobson’s claim for materials is excessive. [4] Mr Hobson’s response to this is that all he said to Mrs Rackham about charging was that he would “look after her”. There was no agreement that he would not charge for his labour. Since tradesman normally charge for labour he is free to do so in his invoice. [5] Mrs Rackham also says that the wrong applicant is suing because the arrangement was with Mr Hobson personally and not with his company. The history between the parties [6] This is important because it tends to demonstrate why it might be that Mr Hobson would do work at Mrs Rackham’s house only for the cost of materials as Mrs Rackham says. [7] Mr Hobson and Mrs Rackham had known each other for about 20 years. In the past, Mrs Rackham had been a kitchen designer for many years and in that role she had provided Mr Hobson with a lot of lucrative work. Then she joined her husband in another kitchen business and Mr Hobson or his company did work for that business. Not only did they know each other well on that business level but they were also friends, as indeed were their respective families. From the evidence it would appear that they would visit each others’ houses and the two families would go out for dinner together. And when Mr Hobson did work at Mrs Rackham’s house, her husband would work with him on occasions, and he would be given breakfast and/or lunch and drinks. The separate pieces of work [8] There is an all embracing invoice that Mr Hobson’s company has submitted to Mrs Rackham and which forms the basis of this claim. The invoice describes the work but does not give the dates when the work was done. However this does appear from Mr Hobson’s evidence, and it is necessary to identify each piece of work because each was treated differently and they stretch over a period of time. [9] As for materials, Mr Hobson has provided some invoices which demonstrate that he did purchase materials for the work done for Mrs Rackham. But he says that in addition to making specific purchases of materials, he added some materials from his own stock. His calculations include those supplies. Between the parties, the value of the materials he supplied is disputed. -- 2 of 6 -- 3 [10] The work was:- 1 23 June 2011 Connection of refrigerator and replace toilet pan 2 hrs 2 7 Nov 2011 Shift gas stove and run hot and cold water and waste to wall near ensuite 7 hrs 3 3 May 2012 Repair leaking shower 1 hr 4 12 May 2012 Install guttering, replace laundry taps and reconnect waste 7 hrs 5 30 and 31 August 2012 Plumbing work for a new kitchen being installed, and installed new gas stove 13.5 hrs 6 3 Sept 2012 Plumbing work for bathroom ensuite 10 hrs 7 20 Sept 2012 Fixing gas leak 1 hr [11] It can be seen from this table that whereas some piecemeal work was done by Mr Hobson prior to job 5 in August 2012, a fair amount of work was done in jobs 5 and 6 on the new kitchen and bathroom being installed at Mrs Rackham’s house. [12] For job 1, Mr Hobson asked Mrs Rackham only to pay for materials, which she did. For job 2 Mr Hobson purchased materials, he says in the sum of $703.11, but he did not charge for these at the time. For job 3 Mr Hobson made a decision not to charge for labour. It is unclear whether Mrs Rackham paid for the materials which were $4.80. For job 4 Mr Hobson purchased materials he says in the sum of $50.85, but did not charge for these at the time. [13] The agreement reached between the two sides as to whether there would be a charge for labour must be judged objectively. In other words, it is not what the parties thought in their own minds about this (and they probably did think differently about it). Instead it is how an officious bystander would view it. [14] It is clear to me that viewed objectively in this way, the common understanding between the two sides in respect of the work in jobs 1 to 4 was that Mr Hobson would do the work only for the cost of the materials. This is amply indicated by the business relationship and friendship between Mr Hobson and Mrs Rackham and by the fact that he never charged for his labour over that whole period. [15] In August 2012 things changed. Mrs Rackham says that at that time Mr Hobson “brought up the money” after he was sued for some defective work and he appeared to go on a “money grab”. She says at that time there was a discussion about payment. She says that Mr Hobson agreed to charge only for materials when she raised the possibility of his doing work on the ensuite bathroom. This is denied by Mr Hobson who says -- 3 of 6 -- 4 that he merely said that he would “look after her” and that this conversation was back in November 2011. [16] To my mind, it is unlikely that Mr Hobson agreed not to charge for his labour in respect of jobs 5 and 6. He would have known the amount of work involved and even allowing for his possible desire to keep Mrs Rackham happy for business reasons or because of their friendship, the work was far more extensive than previously and was also compressed into a much shorter period of time. [17] Further, Mr Hobson agreeing to do jobs 5 and 6 without charging labour would be inconsistent with his being on a “money grab” at that time as Mrs Rackham says. [18] Mr Hobson’s evidence that he had told Mrs Rackham that he would “look after her” is much more likely to have been all that was said about what would be charged for the work. [19] The objective view would be that because of these circumstances, there was no agreement that he would not charge for labour in respect of jobs 5 and 6. [20] Job 7 was a very small job and I think it unlikely that the parties contemplated this would be charged for at all, bearing in mind their earlier dealings. Indeed it does not appear on the final invoice. As for job 1, on the basis that no labour can be charged for it, it has been paid for in full because an agreed amount for materials was paid for that job. [21] So when considering the award, I am only concerned with jobs 2 to 6. [22] I am satisfied that despite the friendship between Mr Hobson and Mrs Rackham there was an intention to create legal relations in respect of jobs 2 to 6, because they did do formal business together on other occasions. Therefore in respect of each job, a contract was established upon Mrs Rackham asking for the work to be done and Mr Hobson agreeing to do it. It is true as Mrs Rackham says that there was no contract in writing, but this does not make the contract illegal, void or unenforceable1. [23] Since no price was agreed for jobs 2 to 6, the law would imply that Mrs Rackham should pay a reasonable price. On my findings, in respect of jobs 2 to 4 this would be a reasonable price for materials only. For jobs 5 and 6 it would be a reasonable price both for the work and materials. Conclusion as to the contract [24] For the reasons given above, Mrs Rackham is liable to pay a reasonable price for materials only for jobs 2 to 4, and a reasonable price for materials and labour for jobs 5 and 6. 1 Domestic Building Contracts Act 2000 s 92. -- 4 of 6 -- 5 Alleged defective work [25] In paragraph 13 of the response to the claim Mrs Rackham says that some of the work was defective and incomplete. She paid someone else to fix the defects and complete the work. If there was any unfinished work, Mr Hobson has not charged for this. Mr Hobson disputes that there was any defective work; Mrs Rackham does not say how much any remedial work cost and there is no supporting evidence. I am unable to take this into account. Assessing a reasonable price for materials and labour [26] The reasonable charge for materials in respect of all the jobs is affected by the fact that on those occasions when Mr Hobson asked to be paid for the materials he had purchased, he only sought their cost price and he did not apply a mark up. It would be reasonable to continue this approach, and Mr Hobson does not argue otherwise. [27] As for a reasonable charge for labour in respect of jobs 5 and 6, this is affected by Mr Hobson’s promise to Mrs Rackham that he would “look after her”. Mr Hobson accepts in his claim and in his evidence that this tempers the amount that he can claim. This is correct because Mrs Rackham would have been entitled to assume that the charge for the work would be extremely reasonable bearing in mind their close business and personal relationship. [28] Mr Hobson says that the total of materials and the council inspection fee came to $2,741 plus GST. This appears to include some amount for materials supplied from his own stock, however he does not itemise these. It seems to me that in order to reach an accurate figure here, he would have needed to itemise and cost the provision of his own materials and since such records are not submitted, he has probably not done this. Bearing in mind on my findings his claim is exaggerated in other respects I am not persuaded that the figure of $2,741 plus GST is accurate. Doing the best I can with this, I am going to use a figure of $2,500 inclusive of GST for the total cost of materials on jobs 1 to 6 and for the council inspection fee. [29] Of this amount, Mr Hobson says that $2,140 has been paid which does not seem to be disputed by Mrs Rackham. I shall assume this includes the payment for job 1. This leaves $360 which needs to be added to the award in respect of materials for jobs 2 to 6. [30] As for the time spent on jobs 5 and 6, it is common ground that Mr Rackham assisted Mr Hobson in the work he did at the house, but Mr Hobson’s hourly figures in his evidence already take account of this. From the table above the total hours for the chargeable work for jobs 5 and 6 is 23.5 hours and I accept this figure. -- 5 of 6 -- 6 [31] As for the reasonable charge for labour per hour, Mr Hobson says that his usual rate as a plumber is $100 plus GST per hour, and as a gas fitter is $120 per hour. In his invoice he has discounted these rates to $80 plus GST per hour. I think that the understanding between the two sides that Mrs Rackham would be looked after, in the light of the business history and friendship between the two sides, results in a much lower hourly rate than the usual rate charged by Mr Hobson of $100 plus GST per hour. In the circumstances, I think a reasonable rate in the circumstances is $50 plus GST per hour. [32] The chargeable labour for jobs 5 and 6 is therefore $50 x 23.5 hours = $1,175 plus GST = $1,292.50. Is the company the correct party? [33] Mrs Rackham says that the wrong Applicant is suing. She says it should be Mr Hobson, and that if there was any contract it was with Mr Hobson. [34] However, Mrs Rackham was aware from her own business dealings with him, that Mr Hobson operated through his company which is the Applicant. And she would have seen from the invoices he gave to her when he asked her for payment for his materials, that it was the company which had purchased these materials. [35] In these circumstances, she would have realised if she had thought about it, that the true identity of the party which was to do the work at her house and which was supplying materials to her was the Applicant. [36] Accordingly I shall make the order in favour of the Applicant. [37] There is no claim for interest. The order shall be that the Respondent shall pay to the Applicant the total sum of $1,791.50 made up as follows:- Remaining unpaid cost of materials $360; Chargeable labour cost $1,292.50; Filing fee $98; Service fee $41. -- 6 of 6 --