Easyway Building Brokers Pty Ltd v Lindley & Ors [2014] QCAT 54

CITATION: Easyway Building Brokers Pty Ltd v Lindley & Ors [2014] QCAT 54 PARTIES: Easyway Building Brokers Pty Ltd (Applicant) v Craig Anthony Lindley Megan Patricia Lindley Val Eco Homes Pty Ltd (Respondents) APPLICATION NUMBER: BDL357-12 MATTER TYPE: Building matters HEARING DATE: 18 June 2013 HEARD AT: Brisbane DECISION OF: Member Hanly DELIVERED ON: 31 January 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The application against the respondents is dismissed. 2. Easyway Building Brokers Pty Ltd must pay the sum of $2,500.00 to Craig Anthony Lindley and Megan Patricia Lindley by 28 February 2014. 3. There is no order as to costs. CATCHWORDS: Building matters – engagement of Building Broker – engagement agreement not signed – where engagement agreement was a domestic building contract – where work was domestic building work – performance of unlicensed works – whether entitled to consideration Building matters – engagement of Building Broker – engagement agreement not signed – whether breach of contract – whether damages payable Domestic Building Contracts Act 2000 ss 7, 8, 9, 30, 92 Queensland Building Services Authority Act -- 1 of 11 -- 2 1991 s 42(3) Queensland Civil and Administrative Tribunal Act 2009 ss 100, 102 APPEARANCES and REPRESENTATION (if any): APPLICANT: Easyway Building Brokers Pty Ltd represented by See Well Law RESPONDENT: Craig Anthony Lindley Megan Patricia Lindley Val Eco Homes Pty Ltd REASONS FOR DECISION [1] Mr and Mrs Lindley are a young married couple. In mid 2011 they decided to buy a block of land and build their first home. Their mortgage broker referred them to Mr Grantley Rohde, who operated a business called Home Building Advisory Service (HBAS), which was a building broker. Later the business became known as Easyway Building Brokers Pty Ltd (EBB). Mr Rohde remained the contact person for EBB. [2] Mr Rohde held his business out to be one which could simplify the building process for Mr and Mrs Lindley, and which could obtain the best price for the building of their home. As a building broker it was claimed that clients would receive ‘up to 15% savings on building costs; fixed price building contracts; no hidden extras; no variations; no untold price rises’. The website for HBAS and EBB contained comprehensive details of these claims1. [3] Most importantly for the Lindleys, Mr Rohde represented that they would not have to pay anything for this service, as the business would be paid a commission by the successful tenderer for the building project. [4] Unfortunately for the Lindleys, as events unfolded over the next 7 months, it became evident that Mr Rohde could do none of the things that he had represented he could do. [5] The Lindleys signed an agreement with EBB in October 2011. [6] The Lindleys ultimately terminated that agreement in February 2012, and had their home built by Val Eco Homes. [7] The Lindleys and Val Eco Homes are now the respondents to the proceedings commenced in this Tribunal by EBB. 1 Affidavit of Craig Lindley – Annexures CAL06 and CAL07 – Exhibit 4. -- 2 of 11 -- 3 The Relationship between the Lindleys, Val Eco Homes and EBB [8] After meeting Mr Rohde, the Lindleys informed him that they had a tight budget for their project, as they wanted to avail themselves of the government buyers’ boost, and therefore the total cost for their house and land could not exceed $600,000.00. [9] Once the Lindleys signed a contract on a block of land in September 2011, the price of which was $276,000.00, they were able to definitively state that the cost of building the house could not exceed $324,000.00. [10] Several months after meeting the Lindleys, Mr Rohde informed Mrs Lindley that HBAS was undergoing a “name change” to Easyway Building Brokers Pty Ltd, which he said was just a marketing strategy and that otherwise nothing was changed. Mr Rohde continued to communicate with the Lindleys as before, and to their minds he was still managing the project for them. In all written communications with the Lindleys, Mr Rohde signed himself as “Sales Manager”. [11] On 10 October 2011 the Lindleys signed an agreement with EBB.2 [12] The terms of the agreement can be summarised as follows: (a) The Lindleys contracted EBB to undertake the co-ordination of pre- constructions works for their project. (b) The Lindleys acknowledged that EBB would act in the capacity of building broker and consultant and none of the construction works would be performed by EBB. (c) The Lindleys agreed to pay EBB a minimum engagement fee of $2500.00 upon signing the agreement, which would become part of the commission payable to EBB by the builder. (d) The Lindleys would sign a contract with the selected builder, pay progress payments to that builder and the final payment upon practical completion would be less the $2500.00 paid to EBB. (e) EBB would co-ordinate all and any necessary sub-contractors to obtain a building permit for the project, and the associated costs would be included in the total building contract sum and be paid by the builder to EBB from deposit monies paid by the Lindleys upon their signing the building contract. (f) The Lindleys agreed that in the event they did not proceed with a building contract for any reason whatsoever they would pay all EBB’s costs, plus a profit margin of 20%. (g) The Lindleys acknowledged that EBB charged the builder a commission of 3% of the total building contract for their services, which commission was offset from savings generated for the builder as a result of EBB’s bulk buying discounts negotiated from suppliers. 2 Affidavit of Joshua Rohde – Annexure JR04 – Exhibit 1. -- 3 of 11 -- 4 [13] The agreement was never signed by the company. Mr Rohde continued to be the point of contact for the Lindleys. Although Mrs Lindley conducted the initial communications with Mr Rohde, Mr Lindley became more involved towards the end of 2011, as Mrs Lindley, who was pregnant, was suffering increasing periods of ill-health. [14] Shortly after meeting the Lindleys, Mr Rohde visited several blocks of land with them, none of which they purchased. [15] Mr Rohde prepared house plans based on the instructions of Mrs Lindley. [16] On 2 November 2011 Mr Rohde met with the Lindleys at a tile warehouse and later the same day at a kitchen joinery business. At the tile warehouse, the Lindleys were introduced for the first time to Ros Holmes, who was said to be a “part time colour consultant” with the business. Subsequent enquiries by the Lindleys revealed that at that time Ms Holmes was the sole director of EBB, which had been incorporated on 12 August 2011. [17] The November meetings were critical for the Lindleys, as it was at the conclusion of these meetings that Mr Rohde started to articulate figures for the building project around $350,000.00. The Lindleys became alarmed, as they had consistently informed Mr Rohde that their upper limit for the building was $324,000.00. [18] They were also concerned that Mr Rohde had not provided them with a building contract in spite of his claims in November 2011 that one would be forthcoming shortly and that a slab would be laid before Christmas. In addition their finance approval was due to expire on 20 December 2011. [19] The Lindley’s finance did expire on 20 December 2011. However, because they had been promised so much by Mr Rohde, and almost seven months had elapsed since they first met him, they decided to give him one last chance to make good on his many promises. They reactivated their loan with Suncorp, and advised Mr Rohde that they would put in the government grant money to the building cost. Still Mr Rohde failed to produce a contract, or even a quotation within budget. [20] It was at this point that the Lindleys began to conduct investigations into Mr Rohde, and they discovered not only was Mr Rohde an undischarged bankrupt, and an excluded individual under the Queensland Building Services Authority Act 1991, but also the claims on EBB’s website that it was “Australia’s largest building broker….with volume sales increasing year after year”, were patently false when EBB had only been incorporated in August 2011. They further deduced from the invoice bearing the number 000001 given to them by EBB requesting payment of $2500.00 that their project was the first one undertaken by EBB. [21] In the meantime, the Lindleys had entered into discussions with Val Eco Homes in order to obtain a price comparison for their project. The price -- 4 of 11 -- 5 comparison highlighted the falsity of Mr Rohde’s claims of best price and competitiveness. [22] On 1 February 2012 the Lindleys terminated the agreement with EBB. [23] The Lindleys turned to Val Eco Homes, which was not only able to eliminate provisional earthwork figures and design a home to make better use of their land but also to deliver a figure within budget with all inclusions that the Lindleys had requested from EBB. The Lindleys entered into a contract with Val Eco Homes. Their home was duly built by that company for $322,700.00. [24] On 15 February 2012 EBB demanded payment from the Lindleys for “services rendered”. [25] The Lindleys declined to pay the sum demanded, pointing out, through their then solicitors, that EBB had no foundation for such a claim. [26] EBB commenced proceedings against the Lindleys and Val Eco Homes in November 2012. The claim against the Lindleys was for monies due and owing as a result of breach of contract. The claim against Val Eco Homes was for infringement of EBB’s intellectual property rights in respect of house drawings prepared by EBB but used by Val Eco for the construction of the Lindley’s home. EBB claimed that the infringements occurred under the Copyrights (sic) Act 1968 and Australian Consumer Law, neither of which confers jurisdiction on this Tribunal. [27] EBB filed an Application for Miscellaneous Matters in May 2013, by which it sought to amend its original claim against the Lindleys and Val Eco to include a quantum meruit claim plus a claim for costs. That application was never served on the respondents. [28] The matter was heard on 18 June 2013, at which time EBB did not advance its claim for amendment, nor did it adduce any evidence to sustain a quantum meruit claim. Was the work contemplated by the purported engagement agreement “domestic building work” [29] The purported agreement was a domestic building contract3. The work contemplated by EBB was domestic building work4, as it included associated work5 for the erection and construction of a detached dwelling, namely design works and other pre-construction works. [30] A regulated contract6 is a domestic building contract for which the contract price is more than the regulated amount of $3,300.00. Although the purported agreement provided only for the calculation of commission (at 3 Domestic Building Contracts Act 2000 (DBCA) s 7. 4 DBCA s 8. 5 DBCA s 8(3). 6 DBCA s 9. -- 5 of 11 -- 6 3%), that commission would have exceeded $3,300.00, based on the amount that the Lindleys expected to pay for the construction of their home. [31] As the agreement was not signed by EBB it has no effect.7 However this does not make the contract illegal, void or unenforceable.8 [32] As events would show, the Lindleys terminated the agreement, and it was never signed by EBB. Was EBB licensed to perform the works outlined in the purported engagement agreement? [33] It is uncontroversial that EBB performed design works, for which it was unlicensed, and for which it was fined by the Queensland Building Services Authority (as admitted by Joshua Rohde in paragraph 10 of his affidavit 20 Feb 2013). Consequently EBB is not entitled to any monetary or other consideration for such work9, other than as provided in s 42(4) of the Act. Is EBB entitled to claim any monetary consideration for the work performed? [34] EBB was directed by the Tribunal on 23 April 2013 to provide full details by 21 May 2013 of Invoice 09 given to the Lindleys in the amount of $8,167.06. On 4 June 2013 EBB’s solicitors provided details of work allegedly performed by EBB amounting to $16,825.53. [35] EBB sought, by its application filed on 16 May 2013, to amend its claim against the Lindleys to include a quantum meruit claim, but did not serve the application on the Lindleys. At the hearing, EBB did not pursue the amendment, but neither did it withdraw its application. The Lindleys did not formally respond to the application. However, evidence elicited by way of cross-examination of all witnesses, permitted the Tribunal, for the sake of completeness, to consider the issue. [36] The purported engagement agreement clearly states that EBB was to be paid by the builder; that its fee was a commission of 3% on the total building contract value and that the $2,500.00 engagement fee paid by the Lindleys to EBB would be deducted from the final payment made by the Lindleys to the successful building contractor.10 [37] The only circumstance by which the Lindleys would be required to pay EBB was set out in clause 6 of the purported agreement. That clause stated ‘The client agrees that in the event they do not proceed with a building contract for any reason whatsoever, they will pay all Easyway 7 DBCA s 30. 8 DBCA s 92. 9 Queensland Building Services Authority Act 1991 s 42(3). 10 Cls 4 and 7 of EBB Engagement Agreement – Annexure JR04 to affidavit of Joshua Rohde – Exhibit 1. -- 6 of 11 -- 7 Building Brokers costs and those incurred in respect of works performed under this agreement, plus a standard provision for profit margin of 20%’. [38] In the Tribunal’s view, the activation of this clause pre-supposes that a building contract would have been entered into between the Lindleys, and the successful tenderer for the building project. [39] The problem for EBB was that it did not ever produce a building contract for the Lindleys to sign, in spite of repeated assurances from Mr Rohde that he had sent the project out to tender, had had discussions with builders to keep the project within budget and generally had the project on track. [40] On this basis, the Tribunal is satisfied that EBB is not entitled to claim any monetary consideration from the Lindleys under clause 6 of the purported agreement. [41] However, if the Tribunal is found to have erred on this point, an examination of the evidence in respect of quantum meruit follows. What evidence exists to sustain a claim in quantum meruit? [42] The only evidence that EBB provided in relation to a claim in quantum meruit was the invoice submitted as directed by the Tribunal.11 [43] Curiously, Mr Grantley Rohde’s affidavit sworn on 20 February 2013 did not set out the details of his dealings with the Lindleys, other than in the most general terms. [44] Mr Joshua Rohde’s affidavit, also sworn on 20 February 2013, set out in significant detail the dealings between the Lindleys and EBB. Mr Joshua Rohde, however, had never met the Lindleys and was not a director of EBB until well after the purported agreement was signed by the Lindleys. This was also well after the meetings, telephone discussions and email communications that took place between the Lindleys and Mr Grantley Rohde. There was no evidence produced by Mr Joshua Rohde of ‘emails, telephone calls and weekly meetings with the entire EBB team’12 by which he allegedly was ‘kept updated on their matter’. [45] The Tribunal is satisfied that the presentation of the evidence by EBB in the manner described above was contrived to minimise the role of Mr Grantley Rohde within EBB, and that Mr Joshua Rohde did not have any role with respect to the Lindleys, nor was he kept updated in relation to them. [46] In a letter dated 18 April 201213 responding to the Lindley’s solicitors, Mr Joshua Rohde objected, amongst other things, to the reference to Mr Grantley Rohde being an undischarged bankrupt and an excluded 11 Exhibit 2. 12 Paragraph 21 Affidavit Joshua Rohde - Exhibit 1. 13 Annexure CAL08 to affidavit of Craig Lindley – Exhibit 4. -- 7 of 11 -- 8 person. Mr Joshua Rohde stated that Mr Grantley Rohde’s history had ‘absolutely no bearing on the dealings (between Mr Grantley Rohde and the Lindleys)’ and that his past personal life was ‘completely irrelevant’ to EBB’s claim against the Lindleys. [47] The Tribunal is further satisfied that Mr Joshua Rohde was either wilfully ignoring the significance of Mr Grantley Rohde’s status as an undischarged bankrupt and an excluded individual, or else he had no understanding in April 2012 of the significance and legal ramifications of those events. The Tribunal infers the latter, because by the time Mr Joshua Rohde swore his affidavit on 20 February 2013, he was at pains to downplay the role that Mr Grantley Rohde had in EBB, describing him as a ‘sales consultant’ and stating that the title of ‘Sales Manager’ shown on Mr Grantley Rohde’s business cards, and any correspondence sent by him was a ‘symbolic’ title provided to him ‘as a matter of respect only’.14 [48] The Tribunal completely rejects this evidence as a considered attempt to deflect any legal implications for Mr Grantley Rohde from the true nature of his role in EBB, which the Tribunal finds was a managerial role as characterised in all communications, both oral and in writing, with the Lindleys. Does EBB’s invoice contain any items potentially claimable under s 42(4) of QBSA Act 1991? [49] The amounts which might be claimed under s 42(4) are limited and must not be more than the amount paid by EBB in supplying materials and labour for carrying out the work, but cannot include allowance for the supply of EBB’s own labour; the making of profit by EBB; and costs incurred in supplying materials and labour if they were not reasonably incurred. The amounts must also not be more than any amount agreed as the price for the work and does not include any amount paid by EBB that might fairly be characterised as being for EBB’s own direct or indirect benefit. [50] EBB’s itemised invoice15 spans the period from 3 May 2011 to 15 February 2012. EBB was only incorporated on 12 August 2011. Prior to that date the Lindleys were dealing with Mr Grantley Rohde as the owner of HBAS. HBAS is not a party to these proceedings. There is no evidence before the Tribunal that EBB acquired any of HBAS’s work in progress, in spite of Mr Rohde’s assertion to that effect under cross- examination. Accordingly, any claim prior to 12 August 2011 on the itemised invoice is rejected. [51] Mr Grantley Rohde’s evidence, such as it is, is largely consistent with the evidence of Mr and Mrs Lindley, except in relation to Mr Rohde’s assertion 14 Paragraphs 11-20 Affidavit Joshua Rohde – Exhibit 1. 15 Exhibit 2. -- 8 of 11 -- 9 that EBB fulfilled all requirements pursuant to the contract with Mr and Mrs Lindley. This assertion is rejected by the Tribunal. [52] Otherwise, it is accepted that Mr Grantley Rohde was the person with whom the Lindleys had all dealings, except for the brief meeting with Ms Ros Holmes on 2 November 2011. Given the Tribunal’s finding that Mr Grantley Rohde was the sales manager of EBB, any claim for his labour is precluded by s42(4)(b)(i) of the QBSA Act 1991. Similarly, any claim in respect of Ms Holmes ‘colour selections’ is precluded as she was at the time the director of EBB. [53] The Tribunal rejects Mr Joshua Rohde’s evidence that construction quotes were sourced on behalf of the Lindleys. The only document provided to the Tribunal was a Bill of Quantities16. Even the most cursory examination of this document reveals that it was merely a ‘quick estimate from concept drawings only and without sighting the proposed lot’. Further disclaimer appears with the following statement: ‘unforeseen items may be called for by the engineer and these will need to be added to the B of Q’. Clearly the builder had not been provided with all necessary documentation to formulate a firm quotation. [54] No other construction quotes were provided to the Tribunal, and the Tribunal is therefore satisfied that no other quotes were ever obtained. [55] In any event, no payments were made for these purported quotes, and no claim was made in that regard. [56] The Tribunal similarly rejects Mr Joshua Rohde’s assertion that a final quotation of $336,025.00 was ever provided to the Lindleys. The Lindleys’ evidence, which the Tribunal accepts, was that they were simply advised in an email by Mr Grantley Rohde that a price of $336,025.00 had been obtained, but their request for a copy of the quotation was not successful. It is not challenged that this figure was well over the budgeted amount of $324,000.00. Once again, any claim for Mr Grantley Rohde’s labour around these events is precluded. [57] The only outlay in the itemised invoice was for the sum of $297.00 for a soil test. However, that invoice was to HBAS, and presumably paid by HBAS. As HBAS is not a party to these proceedings, that outlay is not recoverable. Was EBB in breach of the purported agreement with the Lindleys? [58] The agreement did not include a specific time frame within which EBB was to carry out the pre-constructions works. In the absence of such a term, it is not unreasonable to imply a term that the work would be completed within a reasonable time. What is reasonable in the circumstances? 16 Annexure JR05 to Affidavit of Joshua Rohde – Exhibit 1. -- 9 of 11 -- 10 [59] The Lindleys began their discussion with Mr Rohde in May 2011. They purchased their land in September 2011. Their finance approval was due to expire on 20 December 2011. [60] Mr Rohde produced a set of plans to the Lindleys on 2 November 2011. [61] In spite of repeated requests from the Lindleys after that date for the schedules and itemised lists of finishes, electrical plans, plumbing plans, and an itemised quotation, nothing was forthcoming from EBB. [62] The Lindley’s finance approval did expire on 20 December 2011, and they were put to the expense and inconvenience of re-applying for finance. [63] The government first homeowner’s grant was due to expire on 31 January 2012. That was another imperative for the Lindleys, as they were counting on the $10,000.00 grant to help them defray the costs of their home, and they could not submit a claim for it unless they had a binding building contract to attach. [64] As it happened, on 13 January 2012 the government extended the grant for a further period of 3 months. However, neither EBB nor the Lindleys could have foreseen that decision. [65] The Tribunal is satisfied that EBB was in breach of its agreement with the Lindleys, because it did not, in a reasonable time or at all, obtain and produce relevant documents when requested to do so; it did not obtain a building permit for the project and it did not produce a building contract for the Lindleys to sign. [66] Furthermore EBB still had not signed the purported agreement with the Lindleys. [67] In the circumstances, the Lindleys were entitled to terminate the agreement, which they did on 1 February 2012.17 [68] The Tribunal dismisses EBB’s claim against the Lindleys in its entirety. Are the Lindleys entitled to damages for EBB’s breach? [69] The Lindleys had paid the sum of $2,500.00 to EBB as an engagement fee, which was to be deducted from their last payment to the successful building contractor for their project. [70] The Lindleys were never provided with a contract for the building works, and so they are entitled to be reimbursed the sum of $2,500.00 by way of damages for EBB’s breach. [71] The Tribunal orders that EBB refund that sum to the Lindleys by 28 February 2014. 17 Affidavit of Megan Lindley – Annexure MPL20 – Exhibit 5. -- 10 of 11 -- 11 Costs [72] The Lindleys have claimed for their costs. [73] Under section 100 of the Queensland Civil and Administrative Tribunal Act 2009 the question of costs is addressed as follows: ‘Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the parties own cost for the proceeding’. [74] The Tribunal has discretion, under section 102 of the Act, to award costs if it considers it is in the interests of justice to do so. [75] In the decision of Ralacom Pty Ltd v Body Corporate at Paradise Island Apartments (No 2) [2010] QCATA 412, Wilson J stated: ‘Under the QCAT Act the question that will usually arise in each case where costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘in the interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in section 100.’ [76] The Tribunal is not satisfied that a costs order is warranted in the circumstances of this matter. Determination in relation to Val Eco Homes [77] The claim against Val Eco Homes is dismissed on the basis that the Tribunal has no jurisdiction in relation to commonwealth legislation. -- 11 of 11 --