Anstead Constructions P/L v Stillwater Investments P/L [2010] QDC 37

DISTRICT COURT OF QUEENSLAND CITATION: Anstead Constructions P/L v Stillwater Investments P/L [2010] QDC 37 PARTIES: Anstead Constructions Pty Ltd ABN 55 097 667 411 (Plaintiff) v Stillwater Investments Pty Ltd ABN 53 082 165 151 (Defendant) FILE NO/S: No: 2732 of 2006 DIVISION: Civil PROCEEDING: Trial ORIGINATING COURT: District Court of Queensland DELIVERED ON: 9 February 2010 DELIVERED AT: Brisbane HEARING DATE: 2, 3,4 and 6 February and 11 March 2009 JUDGE: Andrews SC DCJ ORDER: JUDGMENT RESERVED PENDING WRITTEN SUBMISSIONS IN RESPECT OF INTEREST AND COSTS CATCHWORDS: BUILDING CONTRACT – where cost plus contract – where builder orally estimated cost at $80,000 but agreed to insertion of estimated cost at $75,000 - whether builder’s estimate not fair and reasonable – whether builder in breach of Domestic Building Contracts Act s 55(2) BUILDING CONTRACT – DAMAGES - where cost plus contract – where breach of contract by builder – where contact terminated by agreement – where owner entitled to damages for cost to rectify works – whether owner entitled to cost to complete works BUILDING CONTRACT – DAMAGES – assessment of damages Domestic Building Contracts Act 2000 s55(2) COUNSEL: G Coveney for the Plaintiff L A Jurth for the Defendant SOLICITORS: John Nagel & Co for the Plaintiff -- 1 of 12 -- 2 Mahoney Lawyers for the Defendant Nature of the disputes [1] The plaintiff is a builder which did renovation work on the defendant’s house. Their disputes are over what works were the subject of the contract, whether work done was in breach of contract, whether the contract was terminated by the owner for breach, whether the owner’s damages for breach include the cost to complete unfinished work. The builder claims $30,488.93 as the balance owing under a standard form Master Builders “cost plus” building contract in writing. The owner alleges that when the contract was signed the builder did not comply with a statutory obligation 1 to include a fair and reasonable estimate of the total amount the builder was likely to receive. The figure of $75,000.00 was inserted as the estimate. The owner submits that figure was not a fair and reasonable estimate and that the consequences are that the contract is void2 and unenforceable and that the builder’s right to payment is reduced by statute3 to the cost of providing the contracted services plus a reasonable profit, subject to that amount not being unfair to the owner. The owner submits the proper result is that it is entitled to a refund for overpayment of $5,930.00 and damages for breach of contract of $36,582.45. By the end of oral submissions the builder conceded the owner’s entitlement to a set-off for damages for the builder’s breaches of contract in the sum of $4,322.50. [2] Some work was incomplete when the builder ceased work. The owner alleges that work done in breach of contract requires rectification. More controversially, the owner alleges that incomplete work requires completion at the builder’s expense. The owner claims a declaration that the contract is void, voidable or unenforceable pursuant to s 93(1)(a) Domestic Building Contracts Act 2000 ( the Act ) and seeks a declaration that the builder is liable in restitution for overpayment made by the owner to the builder. [3] The owner has abandoned a claim for remedies pursuant to section 87 of the Trade Practices Act 1974 (Cth). That claim was significant when made by the owner because it could not be litigated in the Commercial and Consumer Tribunal where litigation between the parties commenced. Because of that claim, the matter came to this court. Costs are not awarded in the Tribunal for such a dispute as this. The works initially agreed [4] The builder was a licensed building contractor at all material times. The builder and the owner entered into a contract in writing on 22 August 2005 being in a standard form styled “Queensland Master Builders – Cost Plus (Residential)”4 . At Item 3 of the contract form it provided a space after a heading “DESCRIPTION OF WORKS”. Into the space Mr Kuenstner for the owner inserted problematically vague words: “Rennovations as directed by owner.” (sic) There is a dispute as to the works which were the subject of the contract. Resolving that dispute is easier if the discussions about the scope of works are set out chronologically. 1 Domestic Building Contracts Act 2000 (Qld) s 55 (2) 2 Domestic Building Contracts Act 2000 (Qld) s 93 (1)(a) 3 Domestic Building Contracts Act 2000 (Qld) s 55 (4) 4 Exhibit 5 -- 2 of 12 -- 3 [5] Negotiations were done for the builder by Mr Smith and for the owner by Mr Kuenstner. Each was a director of the corporate party he represented. Mr Smith had a contractor’s license for as long as they have been required and a builder’s license since 2000. Mr Kuenstner lived at the home with his wife and children. Mr Smith met Mr Kuenstner at the site as a result of receiving a telephone call from Mr Kuenstner in July 2005. That month, at the house, Mr Kuenstner showed Mr Smith where he wanted some small renovations to be done. Those renovations included relocating steps, changing a wall and fitting a door. Mr Smith estimated that the builder would charge about $7,000.00 to $8,000.00 for such work. Following that meeting Mr Kuenstner rang again to say he had an interior designer and that the scope of work he wanted done had changed. In early August 2005, Mr Kuenstner rang again to say that he had a lot more work in mind than had been discussed. Mr Smith went to the house again to discuss with Mr Kuenstner prospective work. It was prior to the 15th August. On 8 August 2005, Mr Kuenstner sent by facsimile a detailed schedule of works for renovations. At that time the builder had not been engaged. [6] There is a dispute as to whether one page or two were sent by facsimile. Mr Smith recalls receipt of one page, but not of the second page. It seems implausible that Mr Kuenstner would have sent one page only. I accept his evidence that two pages were sent. The content of the facsimile was essentially a draft prepared by Mr Kuenstner of renovation works he wished to have done, identifying in most cases a contractor to perform the task, the entity to manage performance, a starting date for various jobs and an estimate of time to complete various jobs. It contained an estimate of prices for about half of the items. It would have been an appropriate document to refer to in any discussion of scope of works and estimates of prices. The document which is exhibit 18 is a copy retained by Mr Kuenstner of the facsimile sent though exhibit 18 bears handwriting added by Mr Kuenstner afterwards. I accept Mr Kuenstner’s evidence that an identical document was produced by him at the time of a discussion with Mr Smith and reject the contrary evidence of Mr Smith. I accept Mr Kuenstner’s evidence that the discussion was on about 13 August 2005 and find that it was on that day that Mr Kuenstner wrote on the document a list of costs as a result of advice from Mr Smith. [7] Mr Kuenstner made handwritten notes on his copy of the document he had sent by facsimile to Mr Smith. The notes appear on exhibit 18. In particular, notes on the last page detail items under a notation “basis of estimate, Les Smith”. Those details written in by Mr Kuenstner included certain prime cost items estimates of their cost, an estimate of their total cost of $90,000.00 with a further $20,000.00 estimate for the builder’s “cost plus” component. Those amounts written by Mr Kuenstner did not repeat all of the typed items and were not all of the costs which would have been incurred by the owner had the whole of the typed list of works been done. Thus, for a component of the works Mr Kuenstner had been led by Mr Smith to contemplate a cost of the order of $90,000.00 and about another $20,000.00 payable to the builder. The parties did not then make an agreement that the builder would for complete the works for the estimated prices. [8] I do not find dishonesty against Mr Smith arising out of the rejection of his evidence that the facsimile was of one page and his evidence that it was not the subject of discussion. There are plausible explanations for Mr Smith’s failure to recall receipt of the second page. He gave evidence that the list of works set out in the facsimile did not become the subject of an agreement between him and Mr Kuenstner and was -- 3 of 12 -- 4 not produced to him when the two men were negotiating orally about the scope of the works on the day when the contract was later signed. Instead, he gave evidence of several discussions with Mr Kuenstner during which the scope of the works Mr Kuenstner proposed varied and of agreement being reached on 22 August 2005 before signing the contract that the builder do works Mr Kuenstner identified without reference to the list in the facsimile. If this evidence is accepted, the second page of the facsimile would not have been of much significance to a builder in Mr Smith’s position and the list of works and prices contained in the facsimile would have been superseded by subsequent discussion about particular work and prices. [9] On 15 August 2005 Mr Smith went to the site with some of his workers to discuss with them the work which they should do. On 16 August work started on the site. The work done then over three days was the demolition of an existing patio and demolition of a bar-be-que and some bricks. It would not have been necessary to conclude agreement about the scope of prospective works before undertaking the demolition. The parties had not concluded agreement as to the scope of the works when demolition commenced. [10] On 22 August the contract was signed. Mr Kuenstner’s evidence was that the words he inserted into the contract at item 3 “Description of Works” being the words “Rennovations as directed by owner” were sufficient to identify the works. His evidence was they were sufficient because he and Mr Smith had previously agreed that the builder would do all the works set out in the schedule he had sent by facsimile being the typed words appearing in exhibit 18. It is the owner’s case that the works set out in exhibit 18 became the scope of works which the builder was obliged to perform. The owner relies upon more than the oral testimony of Mr Kuenstner. [11] In addition, the owner refers to the builder’s pleading in the reply at paragraph 3(l)(ii) which alleged that “on about 22 August 2005 and prior to the defendant’s entering into the contract, at the site, the plaintiff (by Mr Smith) and the defendant (by Mr Kuenstner) prepared a list (the list of items of work that the defendant wanted done at the site)”. The owner submits that no written list was produced and that Mr Smith agreed that the facsimile5 was the only document capable of being a detailed description of works under the contract. The owner’s submissions imply that the “list” referred to in the builder’s reply must be a fantasy because the builder did not produce it in court. The reply did not give particulars of whether the list was written or of its author. [12] Mr Smith gave evidence about his meeting with Mr Kuenstner on 22 August 2005. According to Mr Smith, Mr Kuenstner nominated certain of the works which he wanted to be done and Mr Smith gave him prices for those works. Mr Kuenstner wrote the various prices down on a piece of paper. Mr Smith did not receive Mr Kuenstner’s notes or a copy of them. The total came to $80,000.00. The uncertainties created by the builder’s ambiguous pleading about a “list” and the confusion shown by Mr Smith under cross examination about the pleading did not cause me to reject his evidence that Mr Kuenstner nominated only certain works which led to Mr Smith’s estimate. 5 Exhibit 18. -- 4 of 12 -- 5 [13] Mr Smith gave evidence which I accept that Mr Kuenstner, on 22 August 2005 nominated the following works to be done: • Sheet exposed bricks inside the house; • Extend kitchen walls; • Fill a doorway; • Remove a kitchen window; • Remove a big lounge room window, brick up the lower portion of the space created and install a smaller window above the bricks; • Rebuild the patio; • Downstairs, remove three sets of louver windows and replace two of them with aluminium sliding windows and brick up the space created by the removal of the third set; • Downstairs, demolish the existing cellar and build an office area. [14] I accept this evidence because of the figure which appears in the contract at item 6 for “Estimated Total Cost Of The Works”. That figure entered into the contract on 22 August 2005 was $75,000.00. The figure is substantially less than the $110,000.00 which Mr Kuenstner wrote as Mr Smith’s estimate for works discussed on about 13 August 2005 by reference to the facsimile. There was no evidence or submission to the effect that the estimate was reduced from $110,000.00 to $80,000.00 on account of some demolition work already performed. The most obvious rational explanation is one consistent with Mr Smith’s evidence that the works nominated that day by Mr Kuenstner were less than the works for which a higher estimate had been given. The figure of $75,000.00 was written in by Mr Kuenstner. It leads me to reject Mr Kuenstner’s argument that he and Mr Smith agreed that the works to be done were all of the works set out in Exhibit 18 and it leads me to reject the owner’s argument that “Rennovations as directed by owner” should be interpreted as referring to the typed items in Exhibit 18. [15] Mr Kuenstner asked if Mr Smith could reduce the figure for “Estimated Total Cost of the Works” to $75,000.00. Mr Smith agreed. At trial Mr Smith explained that he agreed because the contract was a cost plus contract and the owner was going to pay for all the costs and would pay the builder an agreed margin. [16] It is not obvious why Mr Kuenstner would ask for the estimate of $80,000.00 to be reduced to $75,000.00 if Mr Kuenstner was contemplating a cost plus contract. The estimate was not guaranteed by the builder to be the total cost. Whatever figure was inserted as the estimate, the contract required the owner to pay the builder all actual costs and expenses paid by the builder in the construction of the works and to pay the builder 20 per cent of all the actual costs and expenses paid by the owner and the builder in the construction of the works. The amount to be paid was not limited by the estimate inserted. There was no obvious financial benefit to the owner and no obvious financial detriment to the builder caused by reducing the estimate inserted in the contract. Mr Smith expressed the opinion that Mr Kuenstner was trying to save the owner some fees which the owner may have been obliged to pay to the Building Services Authority. I accept that this was Mr Smith’s opinion. I make no finding as to Mr Kuenstner’s motive for the request. I accept that the figure of $75,000.00 was written into the contract by Mr Kuenstner after Mr Smith had -- 5 of 12 -- 6 estimated $80,000.00 as an appropriate figure to insert in the contract. I accept that the estimate made by Mr Smith was for works which were less than the scope of works set out in exhibit 18 and was for the works Mr Kuenstner orally nominated on 22 August 2005 before the contract was signed. Is the contract void? [17] When the contract was signed there was a statutory obligation6 upon the builder to include a fair and reasonable estimate of the total amount the builder was likely to receive under the terms of the contract. The figure of $75,000.00 was inserted as the estimate. The owner submits that figure was not a fair and reasonable estimate and that the consequences are that the contract is void 7 and unenforceable and that the builder’s right to payment is reduced by statute8 to the cost of providing the contracted services plus a reasonable profit, subject to that amount not being unfair to the owner. [18] If the builder estimated about $110,000 on 13 August and then estimated $75,000 for the same works on 22 August, the owner submitted that, prima facie, the lower estimate was not fair and reasonable. The submission is attractive but its premise is unsound. The owner’s submission was premised upon my finding a fact which I have not found, namely that the agreed works for which an estimate of about $110,000.00 was made on about 13 August were the same as those for which an estimate was made on 22 August. [19] The builder does not dispute that the contract is a “regulated contract” to which Domestic Building Contracts Act 2000 s 55 applies. It provides: “55 Cost plus contracts (1) A building contractor must not enter into a cost plus contract that would be a regulated contract unless— (a) the contract is included in a class of contracts prescribed under a regulation; or (b) the cost of a substantial part of the subject work can not reasonably be calculated without some of the work being carried out. Maximum penalty—100 penalty units. (2) A building contractor must not enter into a cost plus contract that would be a regulated contract unless the contract contains a fair and reasonable estimate by the building contractor of the total amount the building contractor is likely to receive under the contract. Maximum penalty—100 penalty units. (3) If a building contractor enters into a cost plus contract in contravention of this section, the building contractor can not enforce the contract against the building owner. (4) However, the tribunal may, on an application made to the tribunal by the building contractor, award the building contractor the cost of providing the contracted services plus a 6 Domestic Building Contracts Act 2000 (Qld) s 55 (2) 7 Domestic Building Contracts Act 2000 (Qld) s 93 (1)(a) 8 Domestic Building Contracts Act 2000 (Qld) s 55 (4) -- 6 of 12 -- 7 reasonable profit if the tribunal considers it would not be unfair to the building owner to make the award.” [20] I accept the owner’s submissions that the section required the builder to ensure that the contract contained an estimate, that Mr Kuenstner’s selection of the figure of $75,000.00 and his writing of the estimate did not absolve the builder of its statutory obligation, that the estimate must be the builder’s estimate, that the estimate must be fair and reasonable at the time of contracting and that the estimate was to include the builder’s cost plus fee of 20%. [21] The owner pleaded that the builder breached its statutory obligation and accepted in oral submissions that it bears the onus of proof of this factual matter. The owner also submitted that there was a shifting onus because Mr Smith orally estimated $80,000.00. The owner submitted that it must follow that the builder’s acceptance of $75,000.00 could have no reasonable basis. I do not accept that submission. If $80,000.00 was a fair and reasonable estimate it is plausible that a 6.25% reduction below $80,000.00 was also a fair and reasonable as falling within a reasonable margin to allow for uncertainties. There was no evidence that it was not plausible. The issue of whether $75,000.00 could not be reasonable if $80,000.00 was reasonable was not alleged the owner’s pleadings and was not explored by either counsel with Mr Smith. There was no sufficient evidence to satisfy me that $80,000.00 and $75,000.00 were not fair and reasonable estimates when made for the scope of works discussed on 22 August 2005. [22] The owner has not satisfied me that the contract contravened the Domestic Building Contracts Act s 55(2). It is not void. In that circumstance the builder’s claim for payment for work done for $30,488.93 which was the subject of unpaid invoice 171 is not disputed by the owner and it becomes unnecessary to calculate the builder’s claim on the hypothesis of a void contract being the amount to which the builder would have been entitled under s 55(4) for that work and other work for which he was paid. The owner’s claim for a declaration that the contract is void, voidable or unenforceable pursuant to s 93(1)(a) Domestic Building Contracts Act 2000 fails. Termination of the contract [23] Much time was devoted during the trial to the issue of whether the contract was terminated by mutual agreement or by the owner for breach by the builder. Each accepts that the contract was terminated on 5 October 2005. The owner submitted that the manner in which the contract came to an end is only relevant in the event that the contract was not declared unenforceable. The reason that the owner requires that this issue be determined appears to be based upon a concern by the owner that there is doubt as to whether the owner would be entitled to claim damages for breach of contract if the contract was terminated by mutual agreement. [24] I find that the contract was terminated by mutual agreement. That is the effect of the evidence given by Mr Smith. It is consistent with the evidence given by Mr Kuenstner at trial. It is consistent with the owner’s solicitors’ letters of 19 October and 2 November 2005 which purport to set out the owner’s instructions about termination. [25] The finding of termination by mutual agreement rather than termination by the owner for breach by the builder does not prejudice the owner. The consequence of -- 7 of 12 -- 8 the termination was that each party was discharged from any future obligations pursuant to the contract whilst preserving existing rights. The existing rights preserved include the owner’s right to damages for losses suffered by the owner from the builder’s breaches of contract occurring before termination. The issue of whether there was termination for breach can be significant in a case where the builder has agreed to perform the works for a fixed price. In such a case the owner’s damages for the builder’s breach of contract would include the amount by which the cost of the works exceeds the contract price for the works. In such a case the cost to complete unfinished work has relevance to damages. It does not have the same significance where, as here, the builder has not agreed to a fixed price. The owner has not sought to prove that the works were completed by others at a cost which is higher than the builder would have been entitled to charge pursuant to the terms of the contract. Owner’s damages [26] When the builder left the site after the termination of the contract the works which the builder had contracted to perform were incomplete. If the builder had continued with the work after 5 October 2005 until completion of the works it would have been entitled to seek payment for the further works in accordance with the terms of the contract. By establishing that certain works were incomplete when the contract was terminated the owner does not establish that it suffered damages for breach of contract. The contract in issue in this trial was not a contract to complete works for a fixed price but rather to perform them for costs and expenses and a percentage of costs and expenses. By establishing that the owner paid or needs to engage other contractors to complete work left unfinished by the builder, the owner does not establish loss. The owner is entitled to the cost to rectify work where the need was caused by the builder’s breach of statutory and contractual warranties. [27] The evidence of the costs incurred by the owner to rectify work was not always separated from evidence of the costs incurred to complete work left unfinished when the contract was terminated. As a result, there are instances where it is not possible to determine from the evidence what portion of a cost can be attributable to the need to rectify defective work caused by breach of contract and for which the owner is entitled to damages and what portion is attributable to the cost of completion of work for which the owner has no entitlement to damages. [28] The owner’s claim for damages for the cost of rectifying defects was reduced to $36,582.45 by the time of oral submissions. Apron flashing [29] The owner claims $11,998.80 for defective apron flashing on the roof and for the cost of tie downs for patio posts and patio rafters. The builder does not contest the owner’s entitlement to damages for the apron flashing but contests the quantum. The owner based the claim in submissions upon exhibit 22, an invoice for labour to do 148½ hours work and for some materials. Ten and a half hours of the labour are identified in the invoice as relating to work including work related to flashings. It is unclear how much of the ten and a half hours was attributable to flashings rectification. $96.20 of the cost of materials can be seen to relate to flashings. I am unable to determine from exhibit 22 what part of the cost is attributable to the apron flashing defect. The builder concedes that it is appropriate to allow $250.00 for this -- 8 of 12 -- 9 item in accordance with the evidence of Mr Dickson who regarded that as appropriate for labour but did not regard it as necessary to purchase materials. The owner bears the onus of proof. The owner has satisfied that onus to the extent of an allowance of $250.00 for labour and the material cost of flashing shown in the invoice of $96.20. Patio post tie down and patio rafter tie down [30] The builder contests the owner’s entitlement to damages for tie downs. The owner relies upon exhibit 22 for the quantum. It is not possible by referring to exhibit 22 to determine what portion of the labour cost or of the cost of materials is attributable to the relevant tie downs. The builder contests this claim on another basis too. I accept the builder’s submission that the tie downs installed after the builder left the site were not the cost of rectifying defective work but were more properly the cost of completing work. However, if the builder had installed the appropriate tie downs at an earlier time before various building elements were fixed into place the owner would have saved the cost of removal of various building elements required to access the areas of concern. I accept the evidence of Mr Dixon that it is appropriate to allow 16 hours labour for this. The labour charges in exhibit 22 were a minimum of $40.00 per hour. The builder does not contest the damages to the extent of $640.00. The owner has satisfied its onus of proof of this issue to the extent of $640.00. Soffit Sheeting [31] The owner claims $2,340.00 for the cost of removal and replacement of soffits. Contemporary building practices with respect to soffits are different from those of 50 years ago. The builder placed new soffit sheeting and timber moulding on to the original soffit frame. I am not satisfied that there was a breach of contract by the builders’ selection of this method rather than a more contemporary method preferred by Mr Fritz. The evidence of Mr Dixon is that the proper remedial cost for defective workmanship by the builder is an amount of $800.00. The builder concedes for this item an amount of $1,000.00. I assess damages for this item at $1,000.00. Soffit Venting [32] The owner claims $940.00 being the amount of an estimate by Mr Fritz for scaffolding and for labour to install vents in soffits. Mr Fritz reported that it had become more expensive to install the soffits at the end of the job because of the need to erect and dismantle scaffolding. I accept the evidence of Mr Smith to the effect that it was appropriate practice for the builder not to fit the vents because they would be removed by the painting contractor and instead to allow the painting contractor to fit vents. As a result, I do not find a breach of contract arising out of the builder’s failure to fit vents at the time that the builder installed the soffits. I disallow the claim for scaffolding as an extra cost because the cost of scaffolding does not arise from a breach of contract. I disallow the claim for the other labour costs of installing the vents because it is an expense which would have been payable by the owner to the painting contractor or to the builder. Patio Ceiling -- 9 of 12 -- 10 [33] Ceiling sheeting was fixed as part of the scope of work done within a new roof over the patio at the site. The rafters to which the sheeting was attached were at spaces greater than 600 mm centres which was contrary to the recommendations of the manufacturer of the plasterboard ceiling sheets. As a consequence, there was undulation showing in the sheets. At the time the builder left the site the patio ceiling had been fixed to the rafters but had not been set, sanded or painted. The builder accepts that it is appropriate for the owner to have as damages the costs of removal of the sheeting. The builder contends that it should not be liable for the cost of sanding and painting and installation of rafters because that is not a loss caused by its breach of contract because they are costs of completing the work rather than of repairing it. I accept that this distinction must be drawn. The owner’s evidence does not distinguish what part of expenses met by the owner with respect to the patio ceiling were the costs of remedying the defects. The builder allows a sum of $1,600.00 in its submission. I accept that concession and assess damages under this head at $1,600.00. Chimney Flashing [34] The owner claims $660.00 in respect of this item by reference to an invoice exhibit 24 for that amount. The claim is inconsistent with the evidence of the plaintiff’s expert witness that the defect “has been addressed by the roofer at his cost”. I am not satisfied that a defect in chimney flashing has arisen as a result of a breach of contract by the builder. I am not satisfied that the owner has suffered a loss in the amount claimed. Guttering [35] The owner claims $602.00 for this heading. Mr Fritz in his report exhibit 3 refers to the incorrect shape of guttering used as a replacement to a section of roofing above and forward of the front entry stairs and said that it was a defect which had been rectified. The allegedly defective guttering was removed and replaced for $602.80. The owner has not by its pleading alleged that the defect was caused by breach of contract. I accept the builder’s submission that, in these circumstances, no amount should be allowed for the item. Office Wall [36] The builder constructed an office wall under the house. The area was already tiled with floor tiles. The partition wall which was constructed was made parallel by the builder to the external perimeter wall. That is normal practice. By constructing it parallel with the external perimeter wall an aesthetic problem arises in that the wall constructed does not follow the lines created by the floor tiles. I accept that this result is not ideal. I am not satisfied that the method of construction has arisen as a result of a breach by the builder of contract. Rectification would cost $1,500.00. Because I find no breach, I do not allow this sum. Lounge Ceiling [37] The owner claims $9,822.00 as the estimated cost to remove and replace the ceiling in the lounge room. The original fibrous plaster ceiling in the lounge room was cracked and undulating when the builder was engaged. Two choices available to the owner were to have the builder remove and replace the ceiling or to fix a -- 10 of 12 -- 11 replacement ceiling below and onto the existing ceiling. Removal and replacement would have been more expensive than fixing a replacement ceiling onto the existing ceiling. After consulting with Mr Kuenstner, the builder used the cheaper method. [38] Mr Kuenstner gave evidence that he saw undulations in the finished ceiling. I accept his evidence, though I am unable to say whether those undulations were sufficient to amount to evidence of breach of contract. Despite the undulations seen by Mr Kuenstner, after the builder left the site the owner had the lighting and air- conditioning ducts installed in it and had it painted. [39] I accept the evidence of Mr Dixon that when he inspected the ceiling from the lounge room floor and was directed by Mr Kuenstner to an area he nominated as being of concern, Mr Dixon was unable to detect any undulation though he looked at the area from different angles and different light conditions. I find that at the time of Mr Dixon’s inspection, such undulation as may have existed was not so great as to lead to a finding of a breach of contract by the builder. [40] A concern arises from the method used by the builder of attaching new sheeting to the old. The possibility arises that the old sheeting can be expected to sag progressively over time because of the extra weight from the fresh sheeting. [41] There has been some sagging of the ceiling since the time of Mr Dixon’s first inspection. It is difficult to say that it was caused by the builder because it is highly likely that the areas of concern have since been subjected to the weight of workmen in the roof space and it is difficult to determine the cause of any subsequent sagging. I accept this evidence of Mr Dixon. He estimated that it would be appropriate to reduce the undulation by screwing, patching and painting at a remedial cost of $500.00 and that it would be inappropriate to upgrade the finish in the way recommended by Mr Fritz as the result would achieve a quality finish exceeding the original construction undertaken 50 years before. I accept the evidence of Mr Dixon in that regard. [42] Despite Mr Dixon’s evidence that remedial work of $500.00 is required, the builder admits that $800.00 is appropriate. I allow that item. Council Approval [43] The owner claims $3,437.50 being an amount due or paid to a consulting engineer. Particulars of the work done by the consulting engineer are set out in exhibit 26 being an invoice. The builder was obliged by clause 10.1(a)(iv) of the contract to carry out the works in accordance with all relevant laws and legal requirements. [44] Local authority approval was required. To obtain it, it was necessary to obtain suitable plans prepared by a licensed drafts-person or designer so that those plans could be submitted with the application for approval. [45] The cost of obtaining such plans and an approval are not a proper subject for damages for breach of contract if the owner would have been obliged to meet those costs had the builder complied with the obligation at clause 10.1(a)(iv) of the contract. [46] Mr Kuenstner gave evidence that the owner could have obtained for no charge the services of a drafts-person to prepare the necessary drawings to submit with an -- 11 of 12 -- 12 application for local authority approval and that that drafts-person would not have charged the owner for that work. There was no evidence called from the drafts- person to that effect. The builder objects to the evidence of Mr Kuenstner being received as evidence of the truth of the opinion of Mr Kuenstner. On the hypothesis that the builder’s failure to obtain at the owner’s expense or advise the owner that plans were required was a breach of contract, in the absence of evidence from the drafts-person I am not satisfied that the owner has suffered damages in the sum claimed. I am not persuaded on the admissible evidence that the owner has been put to a greater cost of submitting drawings with an application to the local authority than it would have paid if the builder had properly advised it to obtain plans. Special Damages [47] The owner claims $450.00 as special damages being inspection fees paid to the Master Plumber’s Association of Queensland. The claim was first raised in submissions. It is supported by exhibit 27 and referred to by Mr Fritz as an inspection fee incurred to identify defects in the roof. It has not been established that the defects were due to a breach of contract by the builder. It is not a matter which was the subject of a pleaded claim. I reject the submission that it should be allowed as special damages. SAI Global Invoice [48] The builder claims $73.15 being an amount paid to SAI Global related to metal cladding. It has not been the subject of a pleaded claim and it has not been established to have been an expense incurred as a result of a breach of contract by the builder. Conclusion on Counterclaim [49] As a result of those findings, the owner is entitled on its counterclaim to damages in the sum of $4,386.20. The owner seeks to set that amount off against the amount of the builder’s claim. Conclusion [50] There should be judgment for the builder in the proceeding in the sum of $26,102.73. I will hear the parties as to the matters of interest and costs about which they have made no submissions. -- 12 of 12 --