Campbell v Telford & Heida [2013] QCAT 423

CITATION: Campbell v Telford & Heida [2013] QCAT 423 PARTIES: Mr Gregory Campbell (Applicant) v Mr Mark Telford & Ms Nynke Heida (Respondents) APPLICATION NUMBER: BDL342-12 MATTER TYPE: Building matters HEARING DATE: 6 May 2013 HEARD AT: Brisbane DECISION OF: J Allen, Member DELIVERED ON: 7 August 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. Mr Telford and Ms Heida must pay to Mr Campbell the amount of $21,419.10 within 14 days. 2. Mr Telford and Ms Heida must pay interest on the amount to be paid under Order 1 in accordance with clause 33 of the contract general conditions calculated to the date of this order. 3. Mr Telford and Ms Heida must pay to Mr Campbell the debt collection costs in respect of the amount awarded in Order 1 in accordance with clause 34 of the contract general conditions. 4. Mr Campbell must file in the Tribunal and give to Mr Telford and Ms Heida his calculation of the amounts that he is entitled to under Order 2 and 3 on or before 16 August 2013. 5. Mr Telford and Ms Heida must file in the Tribunal and give to Mr Campbell any submissions in reply by 23 August 2013. 6. Unless otherwise objected to by either party the amounts to be allowed under Orders 2 and 3 will be determined on the papers without an oral hearing. 7. Mr Telford and Ms Heida are granted -- 1 of 7 -- 2 leave to withdraw that part of their counter-application in regard to item 1 and items 3 to 21 of their list of alleged defects. 8. Mr Telford and Ms Heida’s counterclaim is otherwise dismissed. CATCHWORDS: DOMESTIC BUILDING DISPUTE - failure to pay final progress claim - claim for default interest and payment of costs of recovery under contract general conditions - claim for variations not in compliance with contract or act - counterclaim for loss of warranty and failure to supervise Domestic Building Contracts Act 2000 Part 4 and Part 7 Bellgrove v Eldridge (1954) 90 CLR 613 Lida Build Pty ltd v Miller & Anor [2013] QCATA 139. APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Campbell was represented by Mr Hatcher, partner of Woods Hatcher Solicitors. RESPONDENT: Mr Telford and Ms Heida appeared in person REASONS FOR DECISION [1] Mr Telford and Ms Heida engaged Mr Campbell to build a residence for them at 51 Hidden Woods Drive, Advancetown in 2011. While not apparent from the contract1 itself it is clear that Mr Telford, who is a licensed plumber, had arranged for certain parts of the building works to be performed by himself or others under his control. [2] The building works proceeded to the point where it was agreed that Mr Campbell had performed all of the tasks that he was contracted to perform and this was on or about 25 June 2012. A certificate of practical completion dated 19 July 2012 was produced at the hearing2. Mr Campbell and Mr Telford agreed at the hearing that 25 June 2012 was the date for practical completion. [3] Following practical completion Mr Campbell issued to Mr Telford invoice MT013 dated 25 June 2012 which was in the amount of $21,409.10. This was the progress payment (practical completion) claim in the amount of 1 Annexure B to the response/counterclaim. 2 Exhibit 6. -- 2 of 7 -- 3 $67,915.60 less client supplied items totalling $46,496.50. These items were dealt with in variation 19 which was attached to the tax invoice. Mr Telford accepted that the amount of $21,419.10 was due and payable at the hearing. [4] In his application Mr Campbell was claiming the amount of $28,925.96, which comprised the amount for invoice MT013, invoice MT015 in the amount of $189.41 for supply of an extra bin, variation 20 in respect of extra blockwork, reinforcement and core fill in the amount of $6,522.78 and variation 21 in the amount of $794.67 in respect of extra cost for villaboard and waterproofing. Mr Campbell is also claiming interest on the amounts outstanding amounts as well as the recovery costs under the general conditions of the contract. Payment of final progress claim [5] Mr Telford stated that the final progress payment had not been paid to Mr Campbell due to concerns that he had in regard to the sarking which had been installed on the exterior of the building. Mr Telford was of the opinion that the sarking was not of the correct type having regard to the cladding of the building with a product known as Weathertex. [6] Mr Telford has accepted that practical completion has occurred and that all things being equal the invoice for practical completion is payable. A claim for progress payment under a building contract is not subject to set off against any claim for defective works3 and the Tribunal is therefore satisfied that the payment of invoice MT013 in the amount of $21,419.10 is due and owing and will order that Mr Telford and Ms Heida pay that amount to Mr Campbell. [7] Mr Campbell is then also entitled to his claim for default interest and debt collection costs under clauses 33 and 34 of the contract general conditions respectively in regard to that amount. The calculation of the amounts claimed was not available at the hearing, the Tribunal will make directions that Mr Campbell provide calculations of the amount of default interest and his legal costs and that Mr Telford and Ms Heida have an opportunity to make submissions in reply. Variations [8] Mr Campbell seeks two variations. Variation 21 which is in regard to the supply and fixing of additional villaboard and waterproofing in respect for additional work to the ensuite and bathroom and variation 20 in regard to additional blockwork, reinforcement and corefill as a result of changes to the excavation works. [9] Variations 20 and 21 are both dated 1 August 2012 which is after the tax invoice for final payment and practical completion on 25 June 2012. Mr Telford disputes variations 20 and 21, on the basis firstly that the 3 Lida Build Pty ltd v Miller & Anor [2013] QCATA 139. -- 3 of 7 -- 4 Domestic Building Contracts Act 2000 has not been complied with in regard to those variations. [10] In his reply to the response Mr Campbell admitted that he had not given variation 21 to Mr Telford prior to the commencement of the work and that the work was not urgent. He states that the work was not reasonably foreseeable and was agreed to by the owner who was aware that he would be seeking payment for the work. [11] Both the contract in clause 20 of the general conditions and Domestic Building Contracts Act4 mandate certain requirements in regard to variations. In accordance with the contract a variation must be in writing before the work commences unless the work is urgent. The work in this case has been acknowledged as not being urgent and so there is no claim available under the contract as the work was performed before any written variation was created. [12] Under the DBC Act the Tribunal may approve the recovery of payment in exceptional circumstances or where the builder would suffer unreasonable hardship. Having regard to the circumstances here if there was additional work to be done in regard to the ensuite and bathroom and the parties agreed to that work there is no reason why the builder should not have followed the requirements of the contract and the Act to document the variation. Having regard to the amount claimed of $794.67 the builder absorbing this amount in an overall contract of $315,000 does not constitute unreasonable hardship. No amount will be allowed in regard to invoice 21. [13] Mr Telford also claimed in regard to variation 21 that this work was set out in the plans for the building and works which should have been performed by Mr Campbell in the ordinary course of him undertaking his building work. Copies of the plans relevant to the work in the bathroom and ensuite were handed up at the hearing5. As the variations were not otherwise allowed the Tribunal will not separately deal with this question in the reasons [14] Variation 20 relates to additional blockwork, reinforcement and corefill due to over excavation to elevation 4 and 3. The parties agree that due to changes in the excavation of the site the house pad was moved higher and this resulted in additional piering which was made subject to a variation. Mr Campbell states that he was in no position to reasonably foresee the need for additional charges for blockwork, reinforcement or corefill and it was not until he was completing his final costings in or around August 2012 that he was able to quantify the additional costs. Mr Telford states that Mr Campbell agreed to perform any additional work as described in variation 20 for a nil amount. 4 Part 7 of the Domestic Building Contracts Act 2000. 5 Exhibit 4. -- 4 of 7 -- 5 [15] The contract in this case was for a fixed price and if there was to be additional work it was required to be subject to a written variation. At the hearing Mr Campbell stated that the piering was discussed but not the blockwork. The parties both agreed in their material on the extent of the extra excavation and it is clear from the plan that this was a significant departure from the plan. The fact that a variation was issued in regard to the piering but not the blockwork inclines the Tribunal to accept Mr Telford’s version of events that there was no variation in regard to the blockwork. [16] If after the works have finished Mr Campbell looks at his costs and decides that the amount incurred in regard to the blockwork is more than he was prepared to wear that is not then an opportunity for him to decide to issue a variation. [17] The Tribunal accepts that Mr Campbell agreed to do the work set out in variation 20 without any additional cost on the basis that a variation was issued for part of the work that is the piering and if there was to be additional cost then it would have been made subject to a further variation before the work commenced. There will be no amount allowed in respect of variation 20. [18] In relation to invoice MT015 in the amount of $189.41 this tax invoice also has been given after the final claim and is an additional amount which represents a variation of the contract. As noted by Mr Telford it is not in the form of a variation and otherwise does not comply with the contract or the DBC Act in terms of it being after the work was performed and it was not suggested it was urgent or that there are exceptional circumstances or unreasonable hardship. The claim in respect of this tax invoice will not be allowed. [19] The total amount to be allowed on Mr Campbell’s claim is then $21,419.10 with interest and recovery costs. Counterclaim [20] Mr Telford and Ms Heida have filed a counter application for damages payable by Mr Campbell for breach of contract and negligence in regard to a $10,000.00 management fee, an amount of $65,000.00 for correcting the sarking and a further sum to be particularised for additional defective work. At the time of the hearing there had been no further particularisation of the additional defective work and Mr Telford requested that the Tribunal grant leave to withdraw those items set out in the alleged defective work/incomplete work schedules numbered 1 and 3 to 21. The only defective item then is the sarking issue. The Tribunal granted leave at the hearing for the withdrawal of the other items. -- 5 of 7 -- 6 Management Fee [21] Mr Telford and Ms Heida have alleged that the purchase price of the contract included an amount of $10,000 for Mr Campbell to properly manage and supervise the works under the contract. That Mr Campbell did not properly manage and supervise the works with particulars given of this and he failed to supply the materials agreed pursuant to the contract and failed to complete the works to a high-end finish. [22] Mr Campbell denied the allegation of failure to supervise the works and stated that in any event the contractual management fee as alleged by Mr Telford was never agreed upon or included in the Contract entered into between Mr Campbell and Mr Telford and Ms Heida or alternatively the price did include a management fee which has nothing to do with the client as the project was a lump sum building contract with variations. [23] Mr Campbell had provided Mr Telford with a copy of his costings6 and these showed at item 19 an amount of $10,000 for supervision/construction management. This document was not incorporated into the contract as part of the works and the price was reflected as a lump sum. So this amount is not a separate component of the contract which could be subject to a claim. [24] If there has been a failure to supervise which resulted in a defect or another breach of the contract then the remedy will be in relation to that breach and damages or rectification costs will be allowed in respect of the item. There can be no global or ambit claim where there has not been any defect or breach identified and allowed. There will be no amount allowed in respect of this claim. Sarking [25] The major issue in regard to the sarking is that the Weathertex product is claimed to require sarking of a particular type and the sarking which was used was not of that type. Mr Campbell provided evidence to support that the sarking which had been used would be appropriate for Weathertex7. That is correspondence from the installers confirming that Weathertex required a vapour permeable sarking and that the sarking used met that requirement. A test report showing that the sarking has a water vapour transmission of 0.0192 microgram/N.S is provided. It is stated that this constitutes a medium vapour barrier and the installation guide attached states the breather membrane must be medium to high permeability. [26] Mr Telford provided correspondence from the Plant Manager of the Weathertex company, Mr Simpson which stated that the testing result provided by Mr Campbell indicated a high water resistant sarking which would not be appropriate for use with Weathertex. The Weathertex 6 Exhibit 2. 7 Exhibit 1 item 8, 8(a) and 8(b) and Exhibit 7. -- 6 of 7 -- 7 warranty8 states that Weathertex will not be liable for any claim where the product is not installed in accordance with the instructions. [27] There is no evidence that there has been any defect in the Weathertex cladding. On the face of the contract documents there is also no requirement that a particular sarking be used. The issue for Mr Telford is that the Weathertex cladding is subject to a warranty which is for a 30 year period and he claims that the warranty has been voided due to the use of the incorrect sarking. The remedy he wants is that the cladding and sarking be removed and replaced with new cladding and sarking. Mr Telford provided two quotes one for $71,646.25 and the other $74,500. [28] A builder is required to perform their work in an appropriate and skilful way and with reasonable care and skill9 and warrants that all materials to be supplied for use in the subject work will be good and suitable for purpose10. At common law if there is a departure from the plans and specifications the building owner is entitled to recover damages for the cost of making the work conform to the contract to the extent that the work is necessary and reasonable11. [29] In this case the damage which Mr Telford says he has been suffered as a result of the breach is the loss of the Weathertex warranty and he is asking for the complete replacement of the all of the external linings as compensation. Mr Campbell stated that if there is any defect which arises he is primarily responsible for it for the statutory period which is 6 years and 6 months12. Therefore the cost of rectification of any defects in the Weathertex will be borne by Mr Campbell during that period. [30] The measures of Mr Telford and Ms Heida’s damages as a result of the alleged incorrect sarking causing a loss of the Weathertex warranty would be the cost of work which could not be recovered under the warranty and as there has been no defect found in the Weathertex at this point there can be no amount of damages calculated and certainly the cost of replacing all of the Weathertex and sarking could not be considered reasonable. Therefore no amount will be allowed in respect of the sarking claim. [31] The counterclaim is dismissed in respect of the sarking and management fee issues and the Tribunal has granted leave for Mr Telford and Ms Heida to withdraw their in respect of items 1 and 3 to 21 on the list of alleged defective work. 8 Exhibit 2. 9 Domestic Building Contracts Act 2000 s 44. 10 Ibid s 42. 11 Bellgrove v Eldridge (1954) CLR 613. 12 Domestic Building Contracts Act 2000 s 51. -- 7 of 7 --