Contrast Constructions Pty Ltd v Bartlett [2013] QCAT 322

CITATION: Contrast Constructions Pty Ltd v Bartlett [2013] QCAT 322 PARTIES: Contrast Constructions Pty Ltd (Applicant) v Brett Bartlett (Respondent) APPLICATION NUMBER: BD469-08 MATTER TYPE: Building matters HEARING DATE: 4, 5, 6, 7, 8 February 2013 and 1 July 2013 HEARD AT: Brisbane DECISION OF: Joanne Browne, Member DELIVERED ON: 5 July 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. The Applicant to pay the Respondent the amount of $219,162.84 plus $130,547.35 in interest by 4.00pm on 5 September 2013. 2. Any submissions on costs to be filed in the Tribunal and served on the other party by 4.00pm on 12 September 2013. 3. Any submissions on costs in reply to be filed in the Tribunal and served on the other party by 4.00pm on 26 September 2013. 4. Any application for costs will be determined on the papers without an oral hearing by the member who conducted the hearing in these proceedings. CATCHWORDS: BUILDING DISPUTE – where contract to build house – where architect to administer and assess claims under the contract – where contract provided for adjustment of time costs for an extension of time – whether home owner was in breach – where builder abandoned the -- 1 of 21 -- 2 site – assessment of claim for incomplete and defective works. Queensland Civil and Administrative Tribunal Act 2009, s 47 Queensland Building Services Authority Act 1991, s 77 Shevill v Builders Licensing Board (1982) 149 CLR 620 Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8 APPEARANCES and REPRESENTATION (if any): APPLICANT: Contrast Constructions Pty Ltd represented by Mr Michael Labone of counsel instructed by Mills Oakley Lawyers RESPONDENT: Mr Brett Bartlett represented by Mr Peter Hacket of counsel instructed by MSB Lawyers REASONS FOR DECISION [1] Mr Bartlett contracted with a building company, Contrast Constructions Pty Ltd, on 23 June 2006 to build a house on the riverfront at 32 Hiron Street, St Lucia at a cost of $2,302,000.1 [2] The contract was administered by an architect who also acted as an assessor. The role of the architect was to provide instructions to the builder, to act independently in assessing claims for delay costs, costs for completion of work and any claims for liquidated damages arising from a change to the date of practical completion. [3] The architect for the purposes of administering and assessing the contract was initially Bligh Voller Nield Pty Ltd (BVN). The parties agree dm2architecture (DM2) became the architect from 14 October 2008. 2 [4] The house could be described as unique in that it had various items to be used in its construction that are of a high quality and design. For example, there were approximately 20 windows to be installed using a PVC product instead of wood. The PVC product is rare for Australian standards but not uncommon in the European and Asian markets and was, according to the builder, a difficult product to source. [5] The Tribunal heard evidence at the hearing about the difficulties associated with the supply of the PVC windows and the application of paint to the surface which had to be sourced through a German 1 Adjusted contract sum (agreed) is $2,520,097.96. 2 Agreed “Issues for determination” filed on 8 February 2013. -- 2 of 21 -- 3 automotive paint supplier. Mr Bartlett later elected to proceed with wood instead of PVC for the windows. [6] There were many disputed issues during construction of the house, a change of architect, and issues about incomplete and defective works. The parties could not resolve the issues and proceedings were commenced in the former Commercial and Consumer Tribunal in September 2009. The contract came to an end on 15 December 2009.3 [7] The matter proceeded to a hearing before QCAT over 5 days and both the builder and Mr Bartlett were legally represented. The material before the Tribunal was voluminous including 38 exhibits which were tendered at the hearing. On the second day of the hearing the Tribunal made orders in relation to an application to strike out and leave to adduce further evidence.4 [8] The Tribunal heard evidence at the hearing from Mr Gerard Durkin, General Manager, on behalf of Contrast Constructions Pty Ltd (the builder), and the expert witness, Mr Graeme Spender, architect and project manager. Evidence was also given by Mr Shane Thompson and Mr Daniel Fox, architects (BVN). [9] Mr Bartlett did not give evidence in these proceedings but the Tribunal heard evidence on his behalf from the expert witness, Ms Maoibh Russell, quantity surveyor and Mr Jonathon Medhurst, registered architect (DM2). [10] The parties have agreed on a list of issues to be determined by the Tribunal and final submissions in writing, in relation to the agreed issues, were exchanged and filed in the Tribunal on 18 March 2013. Application for miscellaneous matters to adduce new evidence [11] Prior to making final orders and publishing reasons, the Tribunal received an application for miscellaneous matters filed on 12 June 2013 by Mills Oakley Lawyers, solicitors acting for the builder (together with supporting material). [12] The builder sought a direction from the Tribunal for leave to file and read, as part of the hearing, affidavit material annexing a copy of an email sent on 11 February 2009 by the builder’s legal representatives to Mr Bartlett’s legal representatives (representing him at the time). 3 Agreed “Issues for determination” filed 8 February 2013. 4 The Respondent did not proceed on 5 February 2013 with his application for leave to file an amended response and counter-claim save for paragraphs 29 and 30; and did not seek the Tribunal’s leave to file further affidavit material. By order of the Tribunal made on 5 February 2013, the Respondent’s application to strike out the Applicant’s amended statement of claim dated 25 November 2010 in respect of paragraphs 17(a), 17(b) and 18 only was allowed; the Applicant’s application for leave to adduce further evidence in support of their amended statement of claim dated 25 November 2010 being the affidavit of Darren Charles Ho sworn 5 February 2012 was refused; the Respondent was given leave to file an amended response and counter-application dated 1 February 2013 to incorporate amendments made on 5 January 2013. -- 3 of 21 -- 4 [13] The matter was listed for a further hearing on 1 July 2013 and oral submissions were made in respect of the application for miscellaneous matters. The parties agreed at the further hearing to the evidence (email dated 11 February 2009) being adduced and directions were made by the Tribunal (by consent). [14] The new evidence (email dated 11 February 20095) was sent by the builder’s solicitors to Mr Bartlett’s solicitors and refers to an earlier document provided by the builder in which “design details, clarifications and instructions” were requested from Mr Bartlett to enable the builder to “substantially progress the works to practical completion”. [15] The new evidence is consistent with evidence adduced during the 5 day hearing commencing on 4 February 2013, although it is not clear from the email as to what the outstanding “instructions” were that the builder required to enable the works to reach practical completion. [16] The Tribunal has made findings in paragraphs [46], [52], [54], [56], [66], [76] and [80] that as at 18 December 2008 there were outstanding instructions to be provided by Mr Bartlett (to the builder) such as the hot water system, that would delay practical completion and that would otherwise give rise to an extension of time claim in the builder’s favour for the delay caused in providing the instructions. Is the builder entitled to an adjustment of time costs for an extension of time between 18 January 2007 and 16 July 2007? [17] This claim relates to a delay in relation to the installation of windows, in particular the decision to proceed with the installation of timber windows instead of the PVC product. [18] There is a requirement under the contract that the architect promptly assess any claim received for an adjustment of time costs resulting from a delay.6 [19] The builder gave final notice of the claim for a delay caused by the windows under the contract to the architect on 3 July 2007.7 The notice identified the reason for the delay, the number of days claimed and “direct costs associated” with the delay but did not itemise any extra costs attributable to the delay, as required under Clause H2.1 of the contract. [20] There were 2 earlier notices8 provided by the builder and again the notices did not set out any “extra costs” associated with the delay and the claim for costs, for the relevant period. The architect (BVN) dealt with the 5 The document is identified as the 3-page document marked “SEV1” exhibited to the affidavit of Serena Elizabeth Vale affirmed 7 June 2013. 6 Clause H requires the architect to assess claims within 20 working days. 7 Exhibit “1”, Tab 16. Clause H1.1 requires the contractor to notify the architect of its intention to make a claim. 8 Exhibit “1”, Tab 9 and 12. -- 4 of 21 -- 5 builder’s claim in the Adjustment of Time Notice (ATN) No 3 dated 14 April 2008.9 [21] There is a dispute about whether the builder should be entitled to claim costs in relation to the delay and (notwithstanding) whether ATN No 3 assessed the builder’s extension of time claim at 50 days or 79 days. [22] The correspondence sent by the builder about the issue of delay and costs in relation to the windows supports the evidence of Mr Durkin. Mr Durkin gave evidence that there was an agreement that Mr Bartlett would cover the costs of the delay caused by the windows and would waive liquidated damages with respect to the delay. The agreement was never put in writing but was noted in correspondence dated 22 September 2008.10 [23] Based on the evidence before the Tribunal, I am satisfied that there was an intention by the builder to claim costs in relation to the delay11 and an intention to compensate the builder, by Mr Bartlett, for the delay caused by the windows. I accept the evidence given by Mr Durkin about the delay and costs associated with the installation of windows. [24] Mr Thompson, architect, gave evidence about his experience as an architect and assessor and stated that there would have been a claim by the builder in relation to costs caused by the delay. Mr Thompson’s evidence was that one half of the preliminaries daily rate would be an amount that is reasonable for costs in relation to the builder’s claim. [25] The daily preliminaries rate of $1207 is set out in the builder’s letter to Mr Bartlett dated 24 November 2008.12 The builder’s intention to claim half the cost of preliminaries was also set out in the final claim dated 3 July 2007.13 The builder now claims a rate of 76% of the daily preliminaries rate ($923.08 per day) for costs.14 [26] I accept the evidence of Mr Thompson in relation to the costs to be allowed for the builder’s claim. I am not satisfied, however, that the builder is entitled to claim 79 days for the delay caused by the window based on the architect’s assessment in ATN No 3. [27] The role of the architect under the contract is to assess claims promptly. Mr Thompson gave evidence at the hearing that notwithstanding the passage of time since the claim was assessed, the number of days would have been 79 days. [28] Mr Thompson’s evidence about the number of days that would have been allowed is not consistent with what is stated in the ATN No 3 and the 9 Exhibit “2”, Tab 5. 10 Exhibit “1”, Tab 28. 11 As set out in the builder’s final notice dated 3 July 2007, Exhibit “1”, Tab 16. 12 Exhibit “1”, Tab 52. 13 Exhibit “1”, Tab, 16. 14 Written submissions filed 6 March 2013, para 26. -- 5 of 21 -- 6 reference, as it appears to the relevant claim: “delays in instructions regarding paint finish to the windows”. [29] The ATN No 3 refers to “50 days” in relation to “[extension of time] 23.02.07 – 07.06.07”. The dates referred to in the ATN No 3 are within the date range claimed by the builder. There is (notwithstanding) no evidence before the Tribunal that the builder disputed the architect’s assessment ATN No 3 under clause A8.1 of the contract within 20 working days. [30] The Tribunal determines that the time assessed was 50 days and the amount of $30,17515 is allowed for costs caused by the delay based on the evidence of Mr Thompson in relation to the amount of costs that would be allowed being one half of the preliminaries amount of $1,207 per day. Is the builder entitled to an adjustment of time costs for an extension of time between 14 March 2008 and 15 August 2008? [31] The builder made a further claim for extension of time on 18 July 2008.16 The claim refers to several “items” contributing to the delay and that the builder “reserves” its right in relation to claiming an extension of time with costs. [32] The architect (BVN) assessed the claim in ATN No 6 dated 19 September 2008 and allowed 15 days.17 The builder did not dispute the architect’s decision under clause A8.1 of the contract within 20 working days. [33] The builder later issued a variation of time with costs dated 23 September 200818 setting out the number of days claimed in relation to the delay and costs based on a daily amount.19 The variation notice was issued to Mr Bartlett and BVN. There was a dispute about whether the builder is entitled to claim costs in relation to the extension of time and a notice dated 8 October 2008 was issued by the builder.20 [34] I am satisfied that there was an intention by the builder to claim costs in relation to the delay and that such costs were anticipated at the time of giving the initial notice in relation to the extension of time claim.21 15 The amount of $603.50 per day (half the preliminaries rate of $1207) for 50 days is $30,175. 16 Exhibit “1”, Tab 21. 17 Exhibit “1”, Tab 29, ATN No. 6. 18 Authority for variation to contract No. 62 dated 23 September 2008, Exhibit “1”, Tab 30. 19 The costs claimed were based on the preliminary costs of the contract at a daily rate of $923.08 (76% of the preliminaries rate of $1207). 20 Exhibit “1”, Tab 38. The dispute notice refers to the assessments contained within the ATN No 6 dated 19 September 2008 and the ATN No 7 dated 22 September 2008. The builder also issued a notice to Mr Bartlett stating the architect’s failure to act – notice dated 22 October 2008 in relation to variation claim no 61 dated 18 September 2008, claim no 62 dated 18 September 2008 and claim no 63 dated 18 September 2008 and an adjustment of time with costs, Exhibit “1”, Tab 43. 21 The builder reserved its right to claim costs in the initial claim dated 18 July 2008. -- 6 of 21 -- 7 [35] The Tribunal determines that the number of days assessed by the architect was 15 days and based on the evidence of Mr Thompson the amount of costs to be allowed in relation to the claim is one half of the preliminaries amount of $1207 per day. The amount of $9,052.50 is allowed in relation to the claim. Is the builder entitled to an adjustment of time costs for an extension of time between 15 August 2008 to 26 September 2008? [36] The builder made a further claim for extension of time on 26 August 2008.22 The claim refers to several “items” contributing to the delay in the “projects critical path” and states that the builder will “leave the avenue of extension of time with costs open”. [37] The architect (BVN) assessed the claim in ATN No 7 dated 22 September 2008 and allowed 20 days.23 The builder did not dispute the architect’s decision under clause A8.1 of the contract within 20 working days. [38] The builder later issued a variation of time with costs dated 23 September 200824 setting out the number of days claimed in relation to the delay and costs based on a daily amount.25 The variation notice was issued to Mr Bartlett and BVN. There was a dispute about whether the builder is entitled to claim costs in relation to the extension of time and a notice dated 8 October 2008 was issued by the builder.26 [39] I am satisfied that there was an intention by the builder to claim costs in relation to the delay and that such costs were anticipated at the time of giving the initial notice.27 [40] The Tribunal determines that the number of days assessed by the architect was 20 days and based on the evidence of Mr Thompson the amount of costs to be allowed in relation to the claim is one half of the preliminaries amount of $1207 per day. The amount of $12,070 is therefore allowed in relation to the claim. Was Mr Bartlett in breach of contract entitling the builder to damages for extension of time costs in the period 2 October 2008 to 20 December 2008? [41] There was a change of architect in October 2008. Mr Bartlett removed BVN from the role of superintendent effective 2 October 2008.28 By email dated 2 October 2008 Mr Shane Thompson (BVN) wrote to Mr Bartlett stating that the builder had not received any advice (from Mr Bartlett) 22 Exhibit “1”, Tab 23. 23 Exhibit “1”, Tab 29, ATN No. 7. 24 Authority for variation to contract No. 62 dated 23 September 2008, Exhibit “1”, Tab 30. 25 The costs claimed were based on a percentage of the preliminary rate being $923.08 (76% of the preliminary rate of $1207). 26 Exhibit “1”, Tab 38. The builder also issued a notice to Mr Bartlett stating the architect’s failure to act – notice dated 22 October 2008, Exhibit “1”, Tab 43. 27 The builder has reserved its right to claim costs in the initial claim dated 26 August 2008, Exhibit “1”, Tab 23. 28 Email dated 2 October 2008, Exhibit “1”, Tab 37. -- 7 of 21 -- 8 about a replacement architect and superintendent.29 The parties agree that DM2 was the architect under the contract from 14 October 2008. [42] The builder contends that they were obstructed in carrying out their obligations under the contract for 13 days30 and this delay was attributed to Mr Bartlett in his failure to promptly appoint and instruct the replacement architect (DM2) and to ensure that the builder was provided with proper instructions to enable works to proceed. [43] The builder sent an email dated 24 October 2008 to DM2 stating their intention to seek an extension of time with costs from 3 October 2008 on the basis that the builder is “in limbo” awaiting “clarification” on aspects of the work.31 [44] In support of the claim for an extension of time with costs, the builder relies on a notice of dispute dated 8 October 2008 previously sent to Mr Bartlett. The notice refers to the owner (Mr Bartlett) being in breach of the contract, having failed to give notice of the new architect appointed.32 [45] The builder also relies on correspondence and emails sent to Mr Bartlett and DM2 to support their claim that they were obstructed in carrying out their obligations under the contract - the builder sent correspondence dated 16 October 2008 listing outstanding items that require information and/or instructions,33 a notice of the architect’s failure to act in relation to assessing claims dated 22 October 200834 and an email was sent to DM2 dated 23 October 2008 referring to outstanding assessments.35 [46] The builder received correspondence dated 31 October 2008 from DM2 requesting further information in relation to completion of the building work. DM2 stated (in the correspondence) that following the resignation of BVN it (DM2) “had been retained by Mr Brett Bartlett to complete the administration of the contract”.36 [47] On 19 November 2008 the architect DM2 provided a response to the builder in relation to the assessment of the builder’s claim dated 29 October 2008 and identified incomplete and defective work items.37 [48] The architect DM2 issued further instructions to the builder on 18 December 200838 responding to issues identified by the builder in their letter dated 16 October 2008. [49] Mr Thompson gave evidence at the hearing about the transition period from when BVN ceased acting as architect. He stated that BVN gave 29 Exhibit “2”, Tab 32. 30 The period from 3 October 2008 to 31 October 2008 (inclusive) and for the period 31 October 2008 to 19 November 2008 (inclusive) and the period from 19 November 2008 to 20 December 2008 (inclusive), Submissions on behalf of the Applicant filed 6 March 2013, 6. 31 Exhibit “1”, Tab 40. 32 Exhibit “1”, Tab 38. 33 Exhibit “1”, Tab 41. The letter states that a copy was sent to DM2. 34 Exhibit “1”, Tab 43. 35 Exhibit “1”, Tab 39. 36 Exhibit “1”, Tab 45. 37 Exhibit “1”, Tab 47. 38 Exhibit “1”, Tab 56. -- 8 of 21 -- 9 some documents to DM2 “but not everything”. Mr Thompson stated that there was no briefing in relation to the handover and DM2 elected to take the files available in digital format only. [50] Mr Medhurst, on behalf of DM2, gave evidence at the hearing that he could not recall whether BVN had offered to meet with them and to brief them on the work. Mr Medhurst stated that he had all of the documents needed except for some architect instructions. Mr Medhurst stated that some of the electronic documents from BVN could not be read. [51] Evidence was given at the hearing by Mr Durkin about the items awaiting further instructions identified in the 16 October 2008 correspondence, the completion of which he claims prevented practical completion. [52] During cross-examination Mr Durkin was referred to various documents prepared by the former architect (BVN) and newly appointed architect DM2, providing further instructions and information in relation to some of the alleged outstanding items. Mr Durkin gave evidence that despite numerous discussions the issues identified by the builder were never resolved, for example, the flu in the gas hot water system. [53] Mr Durkin also gave evidence during cross-examination about the basin issue which he says contributed to a delay in completing the works - the basins were to be supplied by Mr Bartlett and installed by the builder. Mr Durkin gave evidence that the basins were never supplied. [54] There is evidence before the Tribunal in relation to the number of days claimed by the builder for the alleged delay caused by Mr Bartlett in failing to promptly appoint a new architect (DM2) and to instruct DM2 during the period of transition. Documents comprising of time sheets and invoices were produced by Mr Durkin at the hearing in relation to the period from 2 October 2008 to 20 December 2008, inclusive.39 Mr Durkin also gave evidence during cross-examination about the number of days the builder worked on site during the relevant period in support of their claim of 13 days. [55] I am satisfied that there was a delay caused by the architect DM2 in providing instructions to the builder during the period of transition from when BVN ceased acting in the role of architect in October 2008 to the date when further instructions were provided by DM2 by letter dated 18 December 2008 and that this caused a delay in the works and a delay in reaching practical completion. [56] The builder has given notice of its intention to claim an extension of time with costs in relation to the delay and this was communicated to Mr Bartlett on 8 October 2008 and to DM2 on 24 October 2008. [57] The Tribunal has already made findings based on the evidence of Mr Thompson in relation to the amount of costs to be allowed for an extension of time claim being half the preliminaries daily rate. The amount of $7,845.50 is allowed for the delay claim. 39 Exhibit “13”. -- 9 of 21 -- 10 Is Mr Bartlett entitled to liquidated damages and if so, for what period and in what amount? [58] Clause M8 of the contract gives Mr Bartlett an entitlement to claim liquidated damages in the event the builder fails to complete the works by the date of practical completion (as adjusted). The entitlement begins from the date notice is given to the architect and will end when the works have been completed. The builder is then entitled to issue a final claim or a certificate for final payment will be issued by the architect in the event that there has been a termination of the contract. [59] There is no evidence before me and no submissions were made by either parties’ legal representatives that practical completion has been reached. The parties agree the adjusted date for practical completion is 21 March 2008 and the contract came to end on 15 December 2009. [60] Mr Bartlett claims liquidated damages for the period from 21 March 2008 to 15 December 2009 (inclusive) plus interest at the rate of 10%. [61] Mr Bartlett relies on various documents in relation to the claim for liquidated damages. In particular an email sent by Mr Bartlett dated 30 September 2008 to Mr Thompson (BVN) referring to his “intent to pursue liquidated damages”.40 Reference was made, in the email, to a meeting with Mr Thompson and Mr Fox (BVN) on 6 August 2008 whereby Mr Bartlett states that BVN were “advised verbally” that they (BVN) had “failed to meet it’s obligations under M8 [of the contract]”.41 [62] Mr Bartlett also refers to a letter sent to Mr Fox (BVN) following the meeting on 6 August 2008 stating his intention to pursue a claim for liquidated damages. Mr Bartlett’s intention to apply liquidated damages was also noted by the architect DM2 in their correspondence to the builder dated 19 November 2009.42 [63] Mr Thompson gave evidence at the hearing that he could not (as architect) apply liquidated damages unless he had received advice in writing from Mr Bartlett. Mr Thompson stated that he had no record of receiving any written advice from Mr Bartlett although he (Mr Bartlett) may have advised words to the effect that he would likely pursue a claim for liquidated damages. [64] Mr Thompson’s evidence given at the hearing is consistent with the evidence before the Tribunal in particular the response provided by him to Mr Bartlett by email dated 2 October 2008. Mr Thompson confirms in the email Mr Bartlett’s intention to apply liquidated damages. Mr Thompson states, “we have no record of any written advice previously that you wished to definitely seek liquated damages”.43 [65] I am satisfied based on the evidence before me that Mr Bartlett did not give notice of his intention to claim liquidated damages as required under 40 Exhibit “2”, Tab 31, 32. 41 Exhibit “2”, Tab 31. 42 Exhibit “2”, Tab 87. The Memo states: “the contractor has been previously advised that the owner intends to apply liquidated damages in accordance with the contract”. 43 Exhibit “2”, Tab 31. -- 10 of 21 -- 11 clause M8.2 of the contract and notice was otherwise given on 30 September 2008.44 [66] The builder’s contention that they were awaiting instructions in relation to outstanding items, for example the hot water system, and this would give rise to an extension of time claim under the contract, is accepted based on the findings previously made by the Tribunal. The builder has identified outstanding items awaiting instruction in their letter dated 16 October 2008 and Mr Durkin gave evidence at the hearing that some of the items awaiting instruction would delay practical completion and there were otherwise items that were variations under the contract. [67] There were instructions provided, however, by DM2 on 18 December 200845 responding to outstanding issues raised by the builder to enable works to be continued. [68] In late December 2008 and early January 2009, the builder elected to no longer proceed with the works. Mr Durkin gave evidence at the hearing that on 18 December 2008 the builder took the scaffolding down and removed materials from the construction site. Mr Durkin agreed, during cross-examination, that the builder had vacated the site. [69] Following the builder leaving the construction site on 18 December 2008 there was an exchange of correspondence between the parties’ legal representatives making various assertions about purported breaches of the contract. [70] Mr Durkin was questioned at the hearing about the inconsistency between his evidence given at the hearing, that the builder had vacated the site on 18 December 2008, and the correspondence sent by the builder’s solicitors to Mr Bartlett’s solicitors, after 18 December 2008, in which the builder’s solicitors state that their client would be returning to the site. Mr Durkin gave evidence that the parties were “in discussions”. [71] The builder’s solicitors, by letter dated 8 January 2009, state that the builder had not abandoned the site and had left the site due to an “industry shutdown period” and would continue works from 12 January 2009. The builder’s solicitors further state that they would be delayed from “meaningfully” progressing the works to reach practical completion due to Mr Bartlett’s failure to nominate an architect under the contract and to provide further instructions such as design details and clarifications.46 [72] The builder’s solicitor’s contentions raised on 8 January 2009 were clearly misapprehended based on the evidence given by Mr Durkin at the hearing with respect to the completion of the works under the contract and the evidence before the Tribunal in relation to the appointment of an architect. [73] There was, from 16 October 2008, an exchange of correspondence including emails sent by the builder to Mr Bartlett with DM2 copied into the emails.47 The builder also sent emails to DM2 on 22 October 2008, 23 44 Exhibit “2”, Tab 31. 45 Exhibit “1”, Tab 56. 46 Exhibit “1”, Tab 59. 47 Emails dated 16 and 21 October 2008. Exhibit “1”, Tab 42. -- 11 of 21 -- 12 October 2008 and 24 October 2008.48 The builder also made reference to DM2 being provided a copy of its letter to Mr Bartlett dated 16 October 200849 outlining items that required further clarification. DM2 also provided written notification to the builder about its appointment as architect by letter dated 31 October 2008.50 [74] The exchange of emails throughout October 2008 demonstrate that the builder was communicating with DM2. The builder has therefore waived any alleged breach by Mr Bartlett’s failure to provide written notification under the contract of the appointment of DM2 as the architect and has otherwise elected to continue performance of the contract with DM2 as the new architect. [75] The solicitors acting for Mr Bartlett have raised the issue of abandonment of site by letter dated 6 January 200951 and again on 3 February 2009.52 The solicitors for Mr Bartlett state that the builder had not returned to site as at 12 January 2009 and confirm that instructions were provided to enable progress of the works and that the builder’s failure to progress the works since 12 January 2009 is a “refusal to perform and/or abandonment of the works”. The solicitors have indicated that their client will take “appropriate action to address this issue”.53 [76] The Tribunal finds that as at 12 January 2009 notwithstanding the outstanding instructions in relation to, for example, the hot water system and vanity basins, there were incomplete works for which instructions had been provided by the architect DM2 to enable the builder to continue progress of the works. Mr Spender also gave evidence at the hearing that there were several incomplete items for the builder to complete as at 18 December 2008. [77] The architect DM2 provided details of the incomplete and defective items to the builder by letter dated 19 November 2008.54 There is also evidence before the Tribunal in relation to the works and the incomplete and alleged defective items referred to in the expert reports of Ms Russell and Mr Spender. [78] The Tribunal finds that the builder has as at 12 January 2009 abandoned the works under the contract and has otherwise failed to continue completion of the works. The builder’s failure to return to the site and continue completion of the work was repudiatory conduct such as to evince an intention to no longer be bound by the contract, or to be bound by the contract only on terms other than those provided for in the contract.55 48 Exhibit “1”, Tab 40. 49 Exhibit “1”, Tab 41. 50 Exhibit “1”, Tab 45. 51 Exhibit “1”, Tab 58. 52 Exhibit “1”, Tab 61. 53 Exhibit “1”, Tab 61. The solicitors for Mr Bartlett have also by letter dated 31 December 2008 (Tab 58), responded to issues raised by the builder’s solicitors in relation to the Notice of Dispute and have requested payment of the progress certificate No 2. 54 Exhibit “1”, Tab 47. 55 Shevill v Builders Licensing Board (1982) 149 CLR 620. -- 12 of 21 -- 13 [79] Mr Bartlett has accepted the builder’s repudiatory breach some 9 months later, on 14 September 2009,56 when a notice to remedy default referring to, amongst others, the builder’s abandonment of site and a failure to complete works, was issued. Mr Bartlett elected to terminate the contract by notice dated 15 December 2009.57 [80] The claim for liquidated damages by Mr Bartlett must fail on the basis that there were outstanding issues including instructions that would delay practical completion and that would otherwise give rise to an extension of time claim in the builder’s favour for the delay caused in providing the instructions. Mr Spender, the builder’s expert witness, gave evidence at the hearing that the installation of the hot water system was necessary for practical completion to be reached. The Tribunal has already made a finding that this instruction was outstanding as at 18 December 2008. [81] Mr Bartlett has otherwise failed to act reasonably by issuing the notice to remedy breach some 9 months after the builder abandoned the site. It would not be fair to allow Mr Bartlett’s claim for liquidated damages in circumstances where he knew the builder had abandoned the site in late December 2008 and early January 2009. Mr Bartlett is entitled, however, to be put in the position he would have been in had the contract been performed properly but he must give credit to the builder for work performed or any money outstanding in relation to work performed under the contract. [82] Mr Bartlett is only entitled to recover damages for any defective work so long as rectification of the defect was reasonable and necessary to enable the works to conform with the contract.58 Mr Bartlett is entitled to be put in the position had the works been completed by the builder as provided under the contract. What is a reasonable value of the incomplete and defective work? [83] There is no evidence before the Tribunal to indicate when Mr Bartlett engaged another contractor to complete the works. It is agreed by the parties, however, that the outstanding works to Mr Bartlett’s house were completed in December 2010. [84] The parties engaged expert witnesses to assess the outstanding works including incomplete and defective works. The expert witnesses did not agree as to their assessments and were directed by the Tribunal to attend an experts’ conclave on 22 August 2011. The expert witnesses prepared a joint experts’ report dated 7 September 201159 identifying items agreed and items in dispute. The expert witnesses made further concessions about the disputed items at the hearing. There are still a number of disputed items to be determined by the Tribunal.60 [85] Ms Russell is a quantity surveyor of some 17 years and a partner of Mitchell Brandtman, Quantity Surveyors. She inspected the works on 5 56 Exhibit “1”, Tab 63. 57 Exhibit “1”, Tab 65. 58 Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8. 59 Exhibit “6”. 60 Amended schedule of incomplete works, Exhibit “3”. -- 13 of 21 -- 14 November 2008 and a report was prepared dated 14 October 2011.61 Ms Russell relied on instructions provided by DM2 as to what works were incomplete and defective. Ms Russell also gave evidence about what she observed during the inspection of the works. [86] The Tribunal found Ms Russell to be a reliable witness and she gave her evidence in an honest and forthright manner. In giving her evidence at the hearing Ms Russell conceded that there were some items she could not recall. She also made concessions for some items already assessed by her in the report. For example, she conceded that some items for item 105 could have been included in item 438. [87] Mr Spender is an architect and project manager and inspected the works on 28 April 2011 with Mr Sternberg a quantity surveyor. He relied on instructions provided by the builder as to whether items were incomplete and whether particular items were within the scope of the contracted works. [88] Mr Spender prepared reports dated 24 June 2011 and 15 August 2011.62 He also made concessions about some items during his evidence. He stated that in the event the Tribunal accepts that items were within the scope of works then he would allow the assessment made for that item by Ms Russell. For example in relation to item 2 of the joint expert report, Mr Spender did not have an issue with the amount allowed by Ms Russell if the item was determined to be within the specification of the works. In relation to item 360 Mr Spender agreed to adopt Ms Russell’s assessment if the Tribunal determined the item should be rectified. [89] There is an issue of credit that the Tribunal must address in relation to Mr Spender and his reliability as a witness. Mr Spender gave evidence at the hearing about the measurement of the stairs (item 327) and was referred to drawings in relation to the stairs and the measurement of the as constructed stairs. Mr Spender’s evidence was interposed and when giving his evidence some 3 days later he changed his opinion about the measurements of the as constructed stairs. [90] An issue of credit was also raised at the hearing in relation to the architect Mr Medhurst (DM2) in the context of a potential conflict of interest in that, amongst others, he was a friend of Mr Bartlett. I am satisfied that Mr Medhurst was suitably qualified to act in the role of architect and assessor under the contract and was appointed by Mr Bartlett to perform that function under the contract. [91] The Tribunal is satisfied that Mr Medhurst (DM2) was suitably qualified as the architect administering the contract to assess the works completed by the builder in respect of any incomplete and defective items. [92] Notwithstanding the conflicting evidence given by Mr Spender about the stair measurements, the Tribunal preferred the evidence of Ms Russell in relation to the assessment of the incomplete and defective items on the basis that she inspected the works on 5 November 2008. 61 Exhibit “25”. 62 Exhibits “4” and “5”. -- 14 of 21 -- 15 [93] The items agreed by the expert witnesses are identified in the amended schedule of incomplete works. These items do not include GST, an amount for preliminaries (12%) and the builder’s margin at a rate of 10%. Incomplete (agreed) - $144,700 Defective (agreed) - $40,050 [94] The builder concedes additional assessments of items identified by the experts as being in dispute: Item 50 – Joinery unit over wiring - $400 Item 85 - veneer sliding doors - $5,000 Item 175 – Louvres - $820 Item 200 – Copper to vergola columns - $2,000 Item 279 – Light Point - $300 Item 430 – credit for Bayliss Blinds – $10,000 Item 438 – Stonework rectification - $20,000 Item 439 – Timber floor rectification - $4,400 [95] In considering the disputed items the Tribunal has considered the context in which the work was to be undertaken by the builder - that is the fixtures and fittings were of a high quality and standard in keeping with the evidence adduced at the hearing that this house may appropriately be described as unique. [96] The Tribunal has identified the remaining items in dispute that require determination: a) Item 2 – Corner protection to stone Mr Spender gave evidence at the hearing that it is good building practice to have the specification and although he would like to see the practice specified in the scope of works he conceded that it may not be so specified. Mr Spender did not have any issue with the assessment allowed by Mr Russell. I will therefore allow the amount assessed at $750. b) Item 33 – Seal ceiling/wall The Tribunal prefers the evidence of Ms Russell who inspected the works prior to any rectification and completion of the works were undertaken. I will allow the amount of $200. c) Item 50 – Joinery unit over wiring The Tribunal must make a determination as to whether the cabinets were on site and therefore an amount for installation only, as conceded by the builder, will be allowed. The Tribunal cannot be satisfied based on the evidence of Mr Durkin and Mr Spender that the cabinets were on site. Mr Spender was unable to identify the cabinets from the photograph63 tendered at the hearing. Ms 63 Exhibit “26”. -- 15 of 21 -- 16 Russell has inspected the site and allowed an amount for the cabinets plus installation in her assessment. I will allow the full amount of $2,000. d) Item 175 – Louvres/Jalousies Ms Russell gave evidence that it was not possible to use the louvres to determine if they worked. The Tribunal accepts the evidence of Ms Russell who inspected the works prior to completion and rectification. I will allow the assessed amount of $820. e) Item 182 – Sealer to sandstone Mr Durkin gave evidence that the sealer had been applied to the sandstone. Ms Russell gave evidence that she was advised by the architect DM2 that the sealer had not been applied and that during inspection it was her opinion that the sealer had not been applied. I accept the evidence of Ms Russell that the sealer had not been applied. I allow the assessed amount of $7,425. f) Item 200 – Copper to vergola columns The issue in dispute is whether the copper was on site and therefore only installation was required. The builder concedes the amount of $2,000 should be allowed for installation. Mr Durkin relies on a photograph64 tendered at the hearing that he states depicts the 1200 mm sheets and states that the photograph supports his evidence that the sheeting was on site. Ms Russell gave evidence that she did not see the copper on site and the architect DM2 has provided instructions to Ms Russell to assess the work on the basis the copper was not on site. I have considered the photograph and accept the evidence of Mr Durkin that the copper was delivered on site as depicted in the photograph. I will allow the assessed amount of $2,000 for installation. g) Item 211 – Side screen to west side There is no evidence before me to contradict the evidence of Mr Durkin that this item was not part of the contracted works and was a variation for which there was no adjusted contract value. I will not allow this item. h) Item 224 – Pool upgrade Mr Durkin gave evidence that this item was not done but it was not part of the contract works. He was referred (at the hearing) to a document prepared by the architect BVN dated 30 September 2008 that identifies “item 14 – upgrade pool”.65 I am satisfied that this item was a variation for which instructions had been provided and the contract price had been adjusted accordingly. I will allow the amount assessed of $1,500. 64 Exhibit “30”. 65 Exhibit “1”, Tab 32. -- 16 of 21 -- 17 i) Item 244 – Damaged heat fins to AC I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $1,000 is allowed. j) Item 246 – Stain on tread I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $350 is allowed. k) Item 247 – Nosing incorrect width This item relates to the tread on the stairs as depicted in the photograph tendered at the hearing.66 I cannot be satisfied based on the evidence of both experts that this item is incomplete or defective. Ms Russell states, in the joint expert report dated 7 September 2011, that the stair shop drawings and architectural details do not confirm the requirements of the stair tread. Mr Spender also stated in the joint expert report that there are no drawings to indicate that the nosing width is to be the full width of the stairs. Ms Russell has assessed this item based on the advice of architect DM2. I will not allow the assessed amount for this item. l) Item 253 – Stair treads too short I cannot be satisfied based on the findings made in relation to item 247 that this item as assessed should be allowed. m) Item 262 – Light and GPO in wrong position I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $500 is allowed. n) Item 268 – Fridge doors/handle – replace I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $500 is allowed. o) Item 274 – Pipe in wall Mr Durkin gave evidence at the hearing that the pipe is thicker than the wall and that the pipe would have been behind a cabinet. He was referred to a photograph and plans tendered at the hearing.67 I am satisfied based on the evidence before me that this item is a defect. The assessed amount of $700 is allowed. p) Item 279 – Light point in wrong position It is agreed by the expert witnesses that the light switch has been moved to the opposite wall and is therefore not in accordance with the drawings. I will allow the assessed amount of $300. 66 Exhibit “28”. 67 Exhibits “18” and “17”. -- 17 of 21 -- 18 q) Item 326 – Shower door hinge I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $100 is allowed. r) Item 327 – Stair flight width different It is accepted that the stair width differs from the plans. Mr Spender gave conflicting evidence about the measurement of the stairs at the hearing. If I accept Mr Spender’s evidence (at first instance) about the measurements of the as constructed stairs from wall to wall as being 805mm (compared to a design width of 879mm) and 750mm (compared to design width of 850mm) it is accepted that the stairs are a defect having regard to the “Guide to Standards & Tolerances 2007” and the expert opinion of Mr Fox. I am unable to accept Mr Spender’s further contradictory evidence given in relation to the measurement of the stairs. Mr Spender gave evidence at first instance that the stairs as constructed differ from the drawings and that they (as constructed) are narrower than the drawings. I am satisfied based on the evidence before me that the stair width as constructed was not in accordance with the drawings and based on the evidence of Mr Fox the as constructed stairs although functioning as a stair would be narrow taking into account a railing. Notwithstanding the evidence before the Tribunal about the standards and tolerances of stairs, this item should also be considered in the context of the work to be undertaken by the builder in that construction of the house included many fixtures that were of a high quality design and this would include the construction of the stairs. I will allow the assessed amount of $30,000. s) Item 338 – Tasmanian oak styles to door Mr Durkin gave evidence that no instruction was issued in relation to the edging however it was good building practice to include solid timber edging. This item should be considered in the context of the work to be undertaken by the builder in that construction of the house included many fixtures and finishings that were of a high quality design and this would include the finishing to the main bedroom door. I will allow the assessed amount of $1,200. t) Item 346 – Bow in wall behind shoe cabinet I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $400 is allowed. u) Item 360 – Door hits motion sensor I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $150 is allowed. v) Item 400 – Hose cock incorrect location -- 18 of 21 -- 19 Mr Spender gave evidence that his opinion was based on instructions provided by the builder that the item had been installed as per instructions provided by Mr Bartlett and the plumber. I cannot be satisfied based on Mr Spender’s evidence alone. I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $1,500 is allowed. w) Item 404 – Copper Gutter on ply Mr Durkin gave evidence that Mr Bartlett was to engage a separate contractor to finalise the spitter and rear finish. He referred to a minutes of site meeting no 9.52.14.68 The as constructed gutter spitter is not in accordance with the design plan69 that demonstrates the design was plywood wrapped in copper. I cannot be satisfied based on the evidence before me that the there was a variation from the plans. I will allow the assessment of $6,500. x) Item 426 – Sandstone fence to neighbour Ms Russell has prepared her assessment of this item on the basis that the scope of works was revised to include Silkcoat Render and there is a credit owing to Mr Bartlett. Mr Durkin gave evidence that the builder was doing some labour only work on the tiles. Mr Spender states in the joint expert report that the builder had to supply additional stone to complete the works as the quantities supplied were insufficient. I prefer the evidence of Ms Russell who inspected the site and has assessed the item based on her inspection and instructions provided by the architect DM2 that this item was incomplete work. I will allow the assessment of $9,800 for this item. y) Item 427 – Stone capping I prefer the evidence of Ms Russell in relation to the calculation of the difference between the render and laying of the sandstone capping and the costs associated with returning the client supplied sandstone capping. I will allow the assessed amount of $ 6,800. z) Item 433 – Retro fit SW pit I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $2,500 is allowed. aa) Item 434 – Repair floor to basement Mr Spender gave evidence in relation to items 433, 434, 435, 436 and 437 that no defects were obvious at the time of inspection by him and there was no evidence of water damage. It is accepted, however, that Mr Spender inspected the works after the defect had been remedied. 68 Exhibit “1”, Tab 34. 69 Exhibit “38”. -- 19 of 21 -- 20 I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $500 is allowed. bb) Item 435 – Replace water damaged particle board I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $4,000 is allowed. cc) Item 436 – Replace water damaged floors I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $600 is allowed. dd) Item 437 - Replace water damaged stair treads I will allow this item as assessed by Ms Russell who inspected the works based on items identified by the architect DM2 as incomplete and defective. The assessed amount of $300 is allowed. ee) Item 438 – Budget for general stone work rectification Mr Spender gave evidence that in his opinion the work necessary was not extensive. I prefer the evidence of Ms Russell who stated at the hearing that the sandstone was not laid well, the joints were not aligned and not flushed and there were damaged tiles. I will allow the assessment made by Ms Russell in the amount of $20,000. ff) Item 439 – Allowance for timber floor rectification Mr Spender gave evidence that the work was not extensive. I prefer the evidence of Ms Russell who stated that the items were assessed on the basis that the timber flooring was laid in the wrong direction. I will allow the assessment made by Ms Russell in the amount of $4,400. [97] The total cost of the defective and incomplete items plus interest is: Agreed items $ 184,750.00 Plus items 85 and 430 $ 15,000.00 Plus assessed items $ 106,795.00 Subtotal $ 306,545.00 Plus preliminaries at a rate of 12% ($36,785.40) $ 343,330.40 Plus builder’s margin at 10% ($34,333.04) $ 377,663.44 Plus GST ($37,766.34) $ 415,429.78 Total value for incomplete and defective items $ 415,429.78 Plus interest at 10% from 15.12.09 to 04.02.13 $ 130,547.35 -- 20 of 21 -- 21 [98] I will also allow the claim for preliminaries at a rate of 12% on the total amount of the assessed incomplete and defective works.70 I will allow interest on the incomplete and defective items (as assessed) from the date of termination (15 December 2009) to the date of the hearing at the rate of 10%. It would not be fair to the builder to allow interest from the date of assessment by DM2 of the alleged incomplete and defective works as claimed by Mr Bartlett on the basis of the findings made by the Tribunal. Final calculations [99] The Tribunal has assessed the amounts payable under the contract as follows: Adjusted contract sum $ 2,520,097.96 Less amounts paid $ 2,382,974.02 Balance contract sum $ 137,123.94 Plus ATC 18.01.07-16.07.07 $ 30,175.00 Plus ATC 14.03.08-15.08.08 $ 9,052.50 Plus ATC 15.08.08-26.09.08 $ 12,070.00 Plus ATC 02.10.08-20.12.08 $ 7,845.50 $ 59,143.00 Less defective & incomplete items $ 415,429.78 Less liquidated damages $ Nil Total $ 219,162.84 [100] The order is that the Applicant to pay the Respondent the amount of $219,162.84 plus interest in the amount of $130,547.35 by 4.00pm on 5 September 2013. [101] The builder is to take all reasonable steps to provide to Mr Bartlett as soon as possible all necessary certificates to enable final certification for the works completed in particular the certificate in relation to the electrical installation. 70 See Amended Respondent’s outline filed 13 March 2013 and Exhibit “2”, Tabs 87 & 126. -- 21 of 21 --