AAD Design Pty Ltd v Paisley and Anor [2013] QCAT 15

CITATION: AAD Design Pty Ltd v Paisley and Anor [2013] QCAT 15 PARTIES: AAD Design Pty Ltd v Andrew Paisley Darren Dwyer APPLICATION NUMBER: BDL119-12 MATTER TYPE: Building matters HEARING DATE: 14 September 2012 HEARD AT: Brisbane DECISION OF: Jim Allen, Member DELIVERED ON: 14 September 2012; reasons for decision delivered on 11 January 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. Andrew Paisley and Darren Dwyer pay to AAD Design Pty Ltd the amount of $3,149.86 for the existing building drawings and $1,416.80 for the surveyor’s fees less the deposit amount of $1,930.50 a total of $2,636.16 within 14 days. 2. AAD Design Pty Ltd is to provide to Andrew Paisley and Darren Dwyer all copies of the survey plan created by Q Spatial in respect of 86 Belgrave Street, Morningside within 7 days of satisfaction of order 1. 3. AAD Design Pty Ltd is to provide copies of pages 3 of 11, 4 of 11 and 5 of 11 of AAD Design Pty Ltd’s proposed additions and alterations to existing dwelling at 86 Belgrave Street, Morningside to the nominated designer or architect of Andrew Paisley and Darren Dwyer in a format which can be used by that professional to complete the Town Planning requirements in respect of the proposed work within 7 days of satisfaction of order 1. -- 1 of 7 -- 2 CATCHWORDS: Contract for architectural services – termination by client for failure to produce design within client’s budget without additional cost – award of payment for work performed which was ongoing value to client APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Albert Daher, director of AAD Design Pty Ltd appeared for the company RESPONDENT: Mr Andrew Paisley and Mr Darren Dwyer appeared in person REASONS FOR DECISION [1] AAD Design Pty Ltd was engaged by Mr Paisley and Mr Dwyer to prepare drawings for the proposed renovation of their house at 86 Belgrave Street, Morningside. A dispute arose and now AAD Design is claiming an amount of $6,360.71 in respect of monies it says are owed by Mr Paisley and Mr Dwyer for work it performed for them. History of the claim [2] The dealings between the parties began with a site visit by Mr Daher on 5 August 2011. This had been arranged earlier and a confirming email and invoice for $330 was issued on 3 August 2012 by AAD Design for a site feasibility study. Mr Daher stated that he had estimated to Mr Paisley the costs of the renovation would start at around $400,000 and Mr Paisley had said he did not plan to spend that much. If the building in underneath component was left out he should expect a construction cost of $250,000 and that work could be done at a later stage. Upon request he also gave Mr Paisley a break down of the costs. Mr Paisley is said to have responded that he could get things built cheaper as he has friends that are tradesman in the industry. Mr Paisley then said that he liked the ideas and solutions provided to him by AAD Design and requested a quotation be forwarded to him accordingly. [3] Mr Paisley and Mr Dwyer confirmed that a meeting was held on 5 August 2011 with Mr Daher and that they had stated that the renovations were to be completed within their budget of $150,000.00. That this had been verbally agreed by the parties and would be the basis of proceeding with the project. Mr Paisley denied that Mr Daher had discussed the costs of doing the works. At the hearing Mr Daher confirmed that Mr Paisley had said that he had a budget of $150,000. [4] A fee proposal was forwarded to Mr Paisley and Mr Dwyer on 9 August 2011. The description of the works was “Proposed additions and alterations to existing residence- raise, slide, restump with internal reconfigurations and additions to rear. Provision to build under”. The -- 2 of 7 -- 3 proposal was in two stages – Town Planning and Working Drawings. The scope of works for the Town Planning stage was: i) Measure and draw up existing house including streetscape analysis (setbacks plans, elevations, photographs), photographs; ii) Concept plan, design development; iii) Compliance report against local planning scheme; iv) Preparation of erosion assessment report; v) Lodgement and liaison with council. The fee for this work was to be $6,435.00. [5] There were also surveyor and consultant’s fees of $1,200.00 and council development application lodgement fees of $1,335.00. A 30% deposit of $1,930.50 was required prior to AAD Design commencing work. The fee proposal was to be accepted by the signing and returning of the “Acceptance of Fee Proposal” section for each stage. The acceptance was to confirm acceptance of the fee proposal and the terms of engagement that form part of the fee proposal. The terms of engagement relevantly state in clause 1 that “By completing and returning the fee Proposal and/or paying the deposit or full fee, you are acknowledging that you agree to perform the work defined in the scope of work outlined in the fee proposal”. [6] An email was sent by AAD Design to Mr Paisley on 26 August 2011 confirming the engagement of AAD Design for the project and noting that the completed fee proposal had not been returned. There was also an invoice attached in the amount of $1,930.50 for the deposit for town planning and it was stated that work would commence once the deposit was paid. This is stated by AAD Design to have followed Mr Paisley verbally engaging AAD Design to perform the work. AAD Design then commenced work in accordance with the fee proposal and its scope of works. [7] A survey was arranged in September and Mr Paisley is said to have agreed to proceed with the survey at a quoted price of $1,529.00 on 6 October 2011 following a series of emails and phone calls. Mr Paisley confirmed at the hearing that he had authorised Mr Russell to engage a surveyor. A copy of an invoice to AAD Design for survey work at 86 Belgrave Street, Morningside from Q Spatial dated 20 October 2011 in the amount of $1,416.80 was produced at the hearing by AAD Design. [8] At that time neither the fee proposal acceptance nor the invoices mentioned above had been attended to by Mr Paisley and Mr Dwyer. Letters requesting payment of the invoices were sent on 20 October 2011 and 28 November 2011. Payment in the amount of $2,260.50 was made by Mr Paisley and Mr Dwyer on 2 December 2011. Mr Paisley stated that that the payments were made in the belief that the project was progressing -- 3 of 7 -- 4 according to his budget and the verbal agreement between Mr Paisley and Mr Daher that the project would be undertaken in accordance with Mr Paisley and Mr Dwyer’s budget. [9] A concept plan was emailed by AAD Design to Mr Paisley on 7 December 2012 for his and Mr Dwyer’s comments. Some preliminary comments were made by email and a meeting was then arranged between Mr Les Briant, representing AAD Design and Mr Paisley and Mr Dwyer on 10 January 2012. [10] Mr Les Briant stated in his written evidence that at the meeting on 10 January 2012 refinements were made to the concept plan including larger bedrooms, an increase in living space and an upstairs laundry with development of the ground-floor reduced to a minimum ie car accommodation and entry stairs. The changes agreed to were emailed on 11 January 2012 to Mr Paisley for approval with a request that “you sign the authorisation box on the plans and return them to our office with any small changes marked up on the plans”. [11] Mr Paisley states that at the meeting on 10 January 2012 he had requested a copy of the plans to obtain a builder’s quote to determine if AAD Design was proceeding with the project in accordance with Mr Paisley and Mr Dwyer’s budget. Following receipt of the draft design plans Mr Paisley consulted a builder who informed him that it would not be unreasonable to assume that the cost to build in accordance with the plans would be in excess of $300,000 on a square metre cost of between $1,400 and $2,000. Mr Paisley provided a quote at the hearing dated 23 August 2012 from Michael Ross Builders to perform the work set out in the plan for a lump sum amount of $354,581.80. [12] Emails were sent by AAD Design on 16 and 31 January 2012 requesting feedback in regard to the revised plans. Contact was made by Mr Geoff Russell of AAD Design with Mr Paisley on 21 February 2012. A memorandum of the conversation was provided to the Tribunal and it was confirmed in Mr Russell’s written evidence. The memorandum states that “he was annoyed that clearly communicated budget of $150,000 was obviously ignored and that the builders estimate had come in at $250,000. He believes Albert didn’t listen to original brief. Mr Paisley suggested where savings could be made and a meeting was organised for 27 February”. Mr Russell sent a memorandum to Mr Briant setting this out and mentioning that Mr Paisley had wanted confirmation that there would be no additional AAD expenses. The memorandum states “I (Mr Russell) confirmed we would deliver service as per contract and wear time spent on inappropriate concept design”. Mr Paisley and Mr Dwyer confirm that AAD Design had agreed to alter the plans at no extra cost. [13] Mr Daher states that at the meeting on 27 February 2012, Mr Paisley claimed that he had an estimate from a builder to say that the construction works were going to cost in the order of $250,000 and that he had responded that was along the lines of what was discussed during the site feasibility meeting. That Mr Paisley had claimed he advised us his budget -- 4 of 7 -- 5 was $150,000 and was asked what costs were involved with making further changes to the design to which the response was no cost. He also was said to have asked what was the balance still owing to complete the project and was told the balance of the fee proposal. Mr Paisley is then said to have advised Mr Daher that he was no longer proceeding with the job and left the meeting. A memorandum prepared by Mr Les Briant dated 27 February 2012 states “Andrew withdrew from the project claiming issues with the budget”. [14] Mr Briant in written evidence stated that Mr Paisley was concerned about the amount of money already paid and asked what costs were involved in making further changes to the design to which Mr Daher is said to have responded no cost. Mr Paisley is said to have then asked about the building costs of several parts of the building like the kitchen, bathrooms and was given the same costs as described at the site feasibility meeting. He then expressed his opinion that the costs were considerably higher than what he would build them for. Mr Paisley then advised that he was no longer proceeding with the project and left the meeting. [15] Mr Paisley in his written and oral evidence states that at the meeting on 27 February 2012 he said that the estimate for building the renovations would be in excess of $300,000 as mentioned above. That Mr Daher had suggested alterations to the plans in accordance with Mr Paisley’s budget. Mr Daher then advised that AAD Design would have to recoup costs to amend the design to the original request and they then advised AAD Design that they were no longer proceeding with the project as there should be no additional costs for the amendment as the design in accordance with their request that the cost of the renovations in accordance with the plan were to be to the value of $150,000.00. [16] Following this an invoice in the amount of $6,064.16 for work completed to date, surveyor and consultancy fees was emailed to Mr Paisley on 29 February 2012. The invoice was said to be in accordance with paragraph 10 of the terms of engagement. It was noted that more time had been expended on the project than has been allocated and the invoice was based on pro rata costs for the work done to date which was said to be 80%. The time sheet showed total costs of $7,224.85. [17] Clause 10 of the terms of engagement relates to payment for work done to date when termination occurs before the completion of the work or the work is placed on hold for more than a month. Payment is to be made for work completed based either on the proportion of the work completed or on a time basis in accordance with the hourly rates set out in the terms of engagement. A 10% penalty rate is said to apply in these instances. Discussion [18] AAD Design has performed work for Mr Paisley and Mr Dwyer in respect of the design of renovations for the property at 86 Belgrave Street, Morningside. Although a written agreement was prepared by AAD Design this document was not signed by either party and the work proceeded on -- 5 of 7 -- 6 the basis of Mr Paisley paying the deposit and giving instructions in respect of changes to the drawings and authorising the engaging of a surveyor. [19] There is disagreement as to whether it was a term of the agreement that the plans produced were to be able to be built on a budget of $150,000. Mr Paisley claims that this was made known to Mr Daher at the initial meeting on 5 August 2011 and was accepted by him. Mr Daher saying that while discussions were had about the cost of doing the works there was no agreement that the works contemplated in the plans could be built for that amount. At the hearing Mr Daher did acknowledge that Mr Paisley had said that his budget was $150,000. Clearly then the plans drawn should have had regard to this as plans which would have required expenditure in excess of this amount in particular where the budget was $150,000 and the work was later quoted at a price of $354,000 would have been of little utility to Mr Paisley and Mr Dwyer. [20] The contract was terminated on 27 February 2012 by Mr Paisley he says because he was told that the necessary changes to the drawings to bring them within his budget would be charged to him and Mr Dwyer in addition to the agreed amount. Again there is disagreement as Mr Daher states that he told Mr Paisley that there would be no further charge. While Mr Daher’s recollection of this meeting is confirmed by his colleague, Mr Briant the Tribunal has difficulty with the fact that Mr Paisley who had already invested $2,260.50 in terms of the feasibility study and deposit would walk away without some justification. Mr Paisley’s position is also confirmed by the memorandum from Mr Russell in regard to his conversation with Mr Paisley on 21 February in regard to the $150,000 budget and Mr Daher not listening to the original brief and the promise by Mr Russell that any changes would be at no extra charge and this was then advised to Mr Briant. The Tribunal is satisfied that Mr Paisley had a right to terminate the contract due to AAD Design’s failure to honour the commitment to absorb the costs of the necessary changes to the plans to bring them within Mr Paisley and Mr Dwyer’s budget. [21] While Mr Paisley and Mr Dwyer should not then be liable to pay for the work done in regard to the concept plan as it has not been done in accordance with instructions there was work performed by AAD Design in regard to the plans drawn of the existing building and the surveyors fees. This work will be able to be used by Mr Paisley and Mr Dwyer when they subsequently renovate the property. [22] The fees for the surveyor were as mentioned in the amount of $1,416.80 and a perusal of the time sheet for the work done by AAD Design discloses an amount $3,149.86 in respect of the preparation of plans of the existing building less the deposit of $1,930.50, a total of $2,636.16. This amount is to be paid by Mr Paisley and Mr Dwyer to AAD Design within 14 days. [23] In exchange for the payment of this amount AAD Design is to provide Mr Paisley and Mr Dwyer with all copies of the survey plan created by Q Spatial in respect of the property at 86 Belgrave Street, Morningside within seven days of the satisfaction of the payment order. AAD Design is -- 6 of 7 -- 7 also to provide copies of pages 3 of 11, 4 of 11 and 5 of 11 of AAD Design Pty Ltd’s proposed additions and alterations to existing dwelling at 86 Belgrave Street, Morningside to the nominated designer or architect of Mr Paisley and Mr Dwyer in a format which can be used by that professional to complete the town planning requirements in respect of the proposed work within 7 days of the order for payment to AAD Design by Mr Paisley and Mr Dwyer. -- 7 of 7 --