Burness v Halemead Investments Pty Ltd [2011] QCAT 405

CITATION: Burness v Halemead Investments Pty Ltd [2011] QCAT 405 PARTIES: Mrs Hydie Dawn Burness v Halemead Investments Pty Ltd t/as Casino Pools APPLICATION NUMBER: BDL060-11 MATTER TYPE: Building matters HEARING DATE: 10 August 2011 HEARD AT: Southport/On the papers DECISION OF: Mr Andrew McLean Williams, Member DELIVERED ON: 29 August 2011 DELIVERED AT: Brisbane ORDERS MADE: Application dismissed. CATCHWORDS: Domestic building dispute – swimming pool – unforeseen excavation costs invoiced to customer together with contractor‟s margin – no variation document presented to customer beforehand – circumstances in which variation document required/not required – contractual entitlement to contractor‟s margin in circumstances where site access difficulties cause additional costs APPEARANCES and REPRESENTATION (if any): APPLICANT: Mrs Burness, in person RESPONDENT: Mr Phillip Dufty (director), in person. REASONS FOR DECISION [1] This matter was originally listed for a compulsory conference before me at Southport, at 9.30am on 10 August 2011. Owing to some confusion regarding the location for the compulsory conference (a matter that was not due to the fault of either of the parties), the Applicant and the Respondent did not appear at the same time, such that it was not physically possible to convene a compulsory conference, at least not on the scheduled occasion. -- 1 of 8 -- 2 [2] In the circumstances, and rather than re-list the matter for a compulsory conference on another occasion (and by consent), each party agreed to make ex parte submissions to me, and to then have the matter determined by me on the basis of those submissions, together with any materials filed by them as part of this application. I now proceed to give my reasons for decision on that basis. Factual Background [3] Mrs Hydie Dawn Burness commenced her application before QCAT on 18 March 2011. Mrs Burness seeks the recovery of $2,522.10, together with her QCAT filing fee of $255 (a total claim of $2,771.10), from the Respondent, who is Halemead Investments Pty Ltd, trading as “Casino Pools” (hereafter referred to as “Casino Pools”). [4] Mrs Burness entered into a contract with Casino Pools on a standard Swimming Pool and Spa Association of Queensland („SPASA‟) Domestic Contract – Swimming or Spa Pool. That contract (SPASA Contract No. 10747) was signed by the contracting parties on 23 September 2010. The agreed price was $29,500 and the contract required Casino Pools to construct an 8.5 metre by 4 metre in-ground swimming pool (together with associated works) at an address at Pacific Pines where Mrs Burness and her husband were also having a new home constructed at about that time. [5] The swimming pool has now been completed. Casino Pools handed the pool over to Mrs Burness on 15 December 2010. Mrs Burness reports no real difficulties with the quality of workmanship in the construction of the swimming pool, and this dispute is confined to one invoice (being Invoice No. 52174) as was sent to Mrs Burness on 26 November 2010, claiming $2,762.10 for additional pool fencing and some extra excavation costs. [6] The additional costs for approximately two metres of pool fencing (totalling $240 inclusive of GST), which forms one part of invoice 52174, is not in dispute. Mrs Burness agrees that she was required to pay this additional amount, due to some changes that were made during construction to make further space available for the pool pump and filter. Mrs Burness does however dispute her obligation to pay the additional excavation costs, in the sum of $2,522.10 that makes up the majority of the amount charged to her by invoice No. 52174. [7] Invoice 52174 has already been paid by Mrs Burness, in full. Mrs Burness seeks orders from QCAT that Casino Pools be required to repay $2,522.10, together with her $255.00 QCAT filing fee. [8] Mrs Burness states that the first that she became aware that she was being asked to pay these extra excavation costs by Casino Pools was when she received Invoice No. 52174, which was sent to her as an e- mail attachment, on 26 November 2010. Mrs Burness also informs QCAT that she did not receive any variation document pursuant to the contract before she received Invoice No. 52174. Her own inquiries -- 2 of 8 -- 3 with the Swimming Pool Association („SPASA‟) lead her to believe that Casino Pools were required to issue her with a variation document before she was invoiced for any extra amounts. [9] In his evidence, Mr Dufty (who is the principal of Casino Pools) confirmed that he did not send a variation notice to Mrs Burness. It seems therefore that the central issue in this dispute becomes whether Casino Pools are entitled to claim payment for the additional excavation costs, notwithstanding that no variation document was raised by Casino Pools before the invoice was sent. The answer to that question is to be discerned from an analysis of the terms and conditions of the standard SPASA contract. [10] Before analysing the terms and conditions of the SPASA contract, some further understanding of the reasons why Casino Pools invoiced Mrs Burness for additional excavation costs is also important, as it may have some bearing on any contractual entitlement to payment. [11] In both the written material filed by Casino Pools before QCAT, and in his brief oral submissions on 10 August 2011, Mr Dufty explained that there had been a number of initial delays in constructing the pool by reason that the builder, (who was also constructing a new home for Mrs Burness on the same site), was unable to provide Casino Pools with unfettered site access, for a variety of practical reasons. This meant that the pool dig had to be rescheduled a couple of times, in circumstances in which Mrs Burness was also anxious to see the pool construction completed quickly. Finally, the pool dig was scheduled for 1 November 2010. However, in the days leading up to 1 November 2010, there had been a lot of rain, such that site became very boggy. Mr Dufty informed me – and I now accept – that his excavator arrived at approximately 10am to commence the dig on 1 November 2010, together with trucks to remove the spoil. However, the first truck that day became very heavily bogged, and it became clear to Mr Dufty that it would be all but impossible to remove the spoil from site, at least not until the ground had first been allowed to dry out enough to enable his trucks to run over it. Mr Dufty says that he had a conversation with the builder, Keith, and a decision was made on the morning of 1 November 2010 that it would be better to cancel the trucks and stockpile the soil excavated from the pool site into a spoil heap, with the trucks to return on a later date to collect the spoil, once conditions had become drier. Mr Dufty says this was his decision, but that Keith had agreed that this was a sensible strategy, given the circumstances. Mr Dufty also informed me – and I accept – that he tried to telephone Mrs Burness to tell her about the problem, yet he was unable to contact her. Mr Dufty says that the extra excavation costs were thereby incurred by reason that he had to have trucks and an excavator return on another date, to remove the stockpile of spoil. [12] Having developed a factual appreciation of the circumstances in which the extra costs came about, examination must now turn to the terms and conditions in the standard SPASA contract, which govern the -- 3 of 8 -- 4 relationship between the parties. A copy of the contract was provided to me for these purposes by Mrs Burness. [13] Clause 7 of the Standard Form SPASA contract provides: “Clause 7 Site Access 1. The customer gives the contractor a licence to enter and occupy the site for the purpose of performing the works and exercising the contractor‟s rights under the contract, and must, at its own cost, ensure that the contractor has sufficient access to the site to carry out the works, including sufficient access for vehicles and other equipment, during the contract and the defects and liability period. 2. The contractor may exclude persons from the site other than the customer or the customer‟s authorised representative and any officer of the BSA or other authority. 3. The contractor is not liable to the customer for any damage to any driveway, footpaths, curb, gutter, paving, underground service, drain, structure or other property on or near the site, which arises as a result of the reasonable carrying out of the works by the contractor and the contractor‟s employees and sub-contractors. 4. If sufficient access to the site is not available when required by the contractor, the cost incurred by the contractor in obtaining access, plus the contractor‟s margin is to be added to the contract price and included in a progress claim. 5. The customer, and any person authorised by the customer to attend the site, must not interfere with the performance of the works. 6. If the customer fails to comply with this Clause, the customer is liable to the contractor for any delay and any additional cost incurred by the contractor if the contractor gives the customer a written notice advising of the delay or the additional cost within five working days of the contractor becoming aware of the interference. [the emphasis is not in the original, and has been included here, by me] [14] Relevant provisions in the contract going to variations and provisional sums are clauses 11 and 13, which provide: -- 4 of 8 -- 5 “Clause 11 Variations 1. The work to be done, or materials used, under the contract may be varied: a. by agreement between the parties; b. where there is a latent condition, in order to overcome the latent condition; or c. where due to the requirement of a private certifier, statute, local authority or other body having jurisdiction over the carrying out of the works, in order to comply with the requirement. …/ Procedure for Variations 13. Before commencing any work comprising of variation, the contractor must ensure that the details of the variation are put in writing in a variation document signed by both the parties and initialled as necessary by the customer. …/ Clause 13 Provisional Sums 1. The contract price includes the items of work shown in the provisional sums schedule, which sets out the contractor‟s estimate allowance of the cost of carrying out each item of work for which the contractor cannot give a definite price. 2. The contractor may at its discretion allow the customer a reasonable opportunity, upon the giving of adequate notice, to be present of the site during the performance of any work included as a provisional sum in order to verify the actual cost of the work. 3. If the actual cost for a provisional sum is greater than the amount allowed, the excess amount together with the contractor‟s margin on the excess amount is to be added to the contract price. 4. If the actual cost for a provisional sum is less than the amount allowed, the difference between the amount allowed and the actual cost is to be deducted from the contract price. -- 5 of 8 -- 6 5. Unless otherwise agreed in advance in writing by the parties, any adjustments to the contract price in accordance with this Clause, are claimed by: (a) the contractor making a claim for any adjustment within five working days from the contractor becoming aware of the actual cost/s, and (b) the customer must pay each adjustment claim within five working days of receiving the contractor‟s claim. 6. Where the actual cost for a provisional sum is greater than the provisional amount, the contractor must provide a copy of any relevant invoice; receipt or other document evidencing the actual cost of the work at the time payment is requested.” [15] In essence, Mrs Burness contends that Casino Pools has no entitlement to the cost of the additional excavation works occasioned by the pool builder having to send away the trucks because of wet weather and then return on a later date, because she did not receive a variation document from Casino Pools, in accordance with the procedure specified in clause 11.13. [16] Variations (thus requiring a “variation document”) are those matters identified in clause 11.1, being: (a) variations agreed between the contracting parties; (b) those arising as a result of “latent conditions”; or (c) those caused by the need to conform with some directive given by an inspector, or certifier. [17] At least arguably, the practical problems that confronted Casino Pools on 1 November 2010 fall within the rubric of a latent condition, as that term is used in clause 11.1(b), which would then require the giving of a variation document beforehand. Latent conditions are referred to in clause 11.5 and 11.6 of the SPASA contract in the following terms: “Variation for Latent Condition 5. If, in carrying out the works or attempting to gain access to the site for materials or equipment, the contractor becomes aware of any latent condition which affects the performance of the works, the contractor must give the customer a written notice describing the latent condition and the contractor‟s estimate of the work and cost required to overcome the latent condition. -- 6 of 8 -- 7 6. Subject to this Clause, the contractor may, with the written consent of the customer, vary the works to overcome the latent condition. The expression “latent condition” as used in the SPASA contract is defined in clause 28 of the Standard SPASA contract, such that “latent condition” means: “Any physical condition on or around the site, including surface, access and sub-surface conditions, which differ materially from the physical conditions reasonably expected by the contractor at the time the contract was entered into.” [18] It seems tolerably clear that, when confronted with abnormally wet and boggy conditions on 1 November 2010 this was something that constituted a “latent condition” (as defined), by reason that those boggy conditions were matters within the notion of “any physical condition” going to “access conditions”, which differed materially from the physical conditions reasonably expected by the contractor, from the time when the contract was entered into. It would seem therefore that Casino Pools would ordinarily be required, because of clause 11.13, to ensure that the details of the latent condition variation were put in writing in the form of a variation document for presentation to Mrs Burness, for her signature, before works proceeded any further. Although that conclusion is open, I have used the word “ordinarily” because it is to be noted that clause 11.13 also needs to be read in conjunction with clause 11.18, which provides that the requirement for a signed variation document prior to the carrying out of any works does not apply if, in the contractor‟s opinion, the variation was required to be carried out urgently and/or it was not reasonably practicable to produce and have signed a variation document, prior to carrying out those works. [19] I accept for present purposes that Mr Dufty had to make a practical decision “on the spot” on the morning of 1 November and call off the trucks, as there was really no point in having the trucks continue to become bogged; thereby still incurring an hourly cost, yet not achieving any practical purpose. I further accept that reasonable attempts were made by Mr Dufty to contact Mrs Burness by telephone, albeit unsuccessfully. I find that, by reason of clause 11.18, Mr Dufty was not required in these circumstances to issue a variation document to Mrs Burness before making this pragmatic decision. The inevitable result of the decision to call off the trucks was that it meant that the trucks had to return on another occasion, and that further costs were thereby incurred. This was largely unavoidable, and certainly not due to any fault by Casino Pools. [20] Any entitlement to have the disputed invoice paid must also be considered in the context of the specific site access provisions contained in clause 7 of the Standard SPASA contract. I have already set out the words of clause 7, earlier in these reasons for my decision. -- 7 of 8 -- 8 [21] Clause 7.4 (which I have emphasised by means of underlining, further above) provides that, should insufficient access be available (for whatever reason) when required by the contractor, then any additional cost incurred by the contractor in obtaining access, plus the contractor‟s margin is to be added to the contract price. [22] Clauses 7 and 11 must be construed and read in a manner such that the two clauses can sit together as part of the same contract. In my view that reconciliation is to be found by means of clause 11.18 which provides that the process for a signed variation document prior to the carrying out of any works does not apply if in the contractor‟s opinion the variation is required to be undertaken in circumstances where it is “not reasonably practicable” to produce and have signed the variation document prior to carrying out those works. Casino Pools has thereafter sufficiently complied with clause 13.6 (also set out by me, above), by reason that it has subsequently provided Mrs Burness with a copy of the relevant invoice given to it by the earthworks excavation company, in order that Mrs Burness has been kept informed of the actual provisional sum cost which was greater than that originally allowed under the contract on a provisional basis. [23] I am of the view therefore that the additional claim made by Casino Pools pursuant to No. Invoice 52174 is a legitimate claim, and it should have been paid to the pool builder, by Mrs Burness. Casino Pools are entitled to claim their contractor‟s margin in addition to the actual amount of the extra excavation costs, because of clause 7.4. The emergent conditions on the day the trucks were cancelled is a matter governed by clause 11.18, such that Casino Pools are excused from their not having provided a variation document, at least in the specific circumstances of this case. [24] For the foregoing reasons I find that Mrs Burness‟ claim should be dismissed. Casino Pools legitimately raised invoice 52174 and the respondent remains entitled to retain the disputed sum. -- 8 of 8 --