Brentkel Constructions Pty Ltd v Sinclair [2012] QCAT 383

CITATION: Brentkel Constructions Pty Ltd v Sinclair [2012] QCAT 383 PARTIES: Brentkel Constructions Pty Ltd v Bernadette Sinclair APPLICATION NUMBER: BDL170-11 MATTER TYPE: Building matters HEARING DATE: 29 August 2012 HEARD AT: Brisbane DECISION OF: R F King-Scott, Member DELIVERED ON: 30 August 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The Respondent pay the Applicant $2,300 within 21 days of the date of this order. 2. The Respondent pay the Applicant interest at a rate specified under the contract at 20% on that sum, fixed at $567.12 within 21 days of the date of this order. 3. On the Counter-Application, the Applicant deliver to the Respondent within 21 days of the date of this order, the items referred to in paragraph 9 of the Response and Counter-Application, namely: i) spare tiles from the works; ii) touch up paint pots from the painting works; iii) air conditioner handset for study; iv) stove instruction manual; v) $180 for damage to the bath as agreed; vi) copy of signed Defects List; vii) all keys. 4. I make no order in respect to costs of the application or counter-application. CATCHWORDS: Contract – Domestic Building Contract – -- 1 of 8 -- 2 Remuneration – Home owner’s right to liquidated damages caused by contractor‘s delay – Is practical completion stage deemed to have been reached when owner takes lawful possession of part of the works – Retrospective claims for delays caused by inclement weather and variations – Fair and reasonable assessment APPEARANCES and REPRESENTATION (if any): APPLICANT: In person representerd by Ms Kelly Vincent RESPONDENT: In person REASONS FOR DECISION [1] This is a domestic building dispute between the builder, Brentkel Constructions Pty Ltd, and the owners, John and Bernadette Sinclair, relating to some home extensions at 42 Dann Street, Graceville. Brent and Kelly Vincent are the directors of the company. John and Bernadette Sinclair are the owners of the property, however the builder has proceeded only against Bernadette Sinclair, although both John and Bernadette Sinclair were parties to the contract. [2] The parties entered into a Residential Building Contract in its standard form as published by the Master Builders’ Association. The value of the work the subject of the contract was $329,490, but with variations that increased to $346,362.94. The contract was signed by the parties on 15 March 2010 and work commenced on 10 June 2010. Progress payments were made in accordance with the contract, save for the final stage on completion. [3] The builder claims moneys due as part of the final payment under the contract which remains unpaid. The owners have set off against the final payment an amount they have calculated as liquidated damages for the delay in completing the contract. [4] Although the issues appear relatively straightforward, it is necessary for the Tribunal to determine a number of preliminary issues, namely: a) whether the Works were deemed to have reached practical completion because the owners, with permission of the builder, entered into possession of part of the Works then completed, namely, the downstairs bathroom; b) the calculation of the extension of the completion date; c) whether claims for extensions were validly made for weather delays and/or agreed variations. -- 2 of 8 -- 3 [5] The amount owing at the purported date of practical completion was $14,574.50. The owners deducted $8,500 from that amount as liquidated damages and paid the builder the balance of $5,074.50 on the day the builder filed the application herein. The difference of $1,000 has been earlier paid by direct deposit. [6] The amount now in issue is the sum of $8,500 which the builder claims is due and owing under the contract with interest and costs. [7] At the completion of the hearing, the Tribunal raised the issue of costs. It was agreed between the parties that, irrespective of the outcome, in view of the fact that both parties were not legally represented, there should be no order as to costs. [8] It is not disputed that the works reached actual practical completion stage by 3 June 2011. It is alleged by the builder that the owners took possession at an earlier time and that precluded the owners from claiming liquidated damages. [9] Clauses 18.1 and 18.2 provide: 18.1 Owner’s entitlement to liquidated damages If the Contractor fails to bring the Works to Practical Completion Stage by the Date for Practical Completion Stage, the Contractor must pay or allow to the Owner liquidated damages at the rate stated in Item 18 of the Schedule for the period commencing from the Date for Practical Completion Stage and ending on the day the Works reach Practical Completion Stage, or the date the Owner takes Possession whichever is earlier. 18.2 Liquidated damages may be deducted from the Practical Completion Stage Payment Liquidated Damages may only be deducted by the Owner from the Practical Completion Stage payment. Any deficiency may be recovered by the Owner as a debt due to the Owner by the Contractor. [10] The owners allege the date for practical completion calculated under the contract is 10 December 2010. The builder claims two extensions: one for inclement weather of 126 days and one as a result of variations in the contract of 71 days, and arrives at the date of 26 July 2011. [11] The builder’s calculations of the weather delays and time extensions due to variations are disputed. [12] The builder says the owners took possession when, with the permission of the builder, they used the downstairs bathroom on its completion. As other stages were completed, the builder allowed the owners limited access. [13] In the General Conditions of the Residential Building Contract, ‘Possession is defined as meaning: -- 3 of 8 -- 4 ... when the Works, or any part of the Works, are taken over, occupied or used by the Owner or the Owner’s employees or agents. [14] Clause 17.8 is as follows: 17.8 Owner’s entitlement to keys and possession of the Works The Owner must not take Possession of the Works, nor is entitled to the keys of the Works, prior to payment to the Contractor of a final progress claim unless the Owner has obtained the Contractor’s written consent. 17.9 If Owner takes possession of the Works when not entitled to do so If the Owner takes Possession of the Works, or any part of the Works, when not entitled to do so under this Contract, the Works are deemed to have reached Practical Completion Stage on the date of Possession and the Owner is liable to the Contractor for any loss or damage arising as a result. [15] Ms Kelly Vincent, who is one of the proprietors of the company, gave evidence that there are two types of Master Builders’ Association contracts relevant to this matter: one that is designed for works of a limited value, being house extensions etc, and another contract, being the one in question, which is more designed for the complete house. It was decided to use the latter contract because of the monetary amount involved. She intimated that for this reason the contract was probably not designed to address the situation where the owner remained in possession and was entitled to use part of the works as they were completed. I note that the definition of ‘Works’ in the contract means: ... the whole of the work to be carried out by the Contractor under the Contract, a description of which is contained in Item 3 of the Schedule, and includes variations to the Works. [16] It should be noted that the definition refers to the whole of the work not to parts of the work to be carried out by the Contractor (my emphasis). [17] Item 3 of the Schedule ‘Description of Works’ is not very helpful as it only refers to ‘Renovations/Additions’. [18] Ms Vincent also gave evidence that she inserted the sum of $50 in Item 18, being the amount per day for liquidated damages. [19] It seems clear from the evidence and from a reading of the contract that the owners did not take possession of the Works as defined and as referred to in paragraph 17.8. That would require the owner to take possession of the whole of the Works which did not occur. Nor did the owners take possession of any part of the Works under Clause 17.9 when not entitled to do so under the contract, in a manner that would have deemed the works to have reached practical completion stage as defined in Clause 17.9. -- 4 of 8 -- 5 [20] There are numerous occasions evidenced in emails and other documents before the Tribunal that the builder consented to the owners moving into possession at certain stage of the works. Indeed, it was to the builder’s benefit that the owners did so: for instance, the builder, as part of his contractual requirements, had to hire a portable toilet and shower for the use of the owners whilst the bathroom was being renovated. On completion of the bathroom, the builder invited the owners to use those facilities and removed the rented toilet and shower from the site. There was obvious benefit for the builder in bringing that rental to an end. [21] The parties also appeared to be in agreement that there were other areas of the works that were barricaded off whilst construction was proceeding, and even afterwards, for the purposes of workplace health and safety and other reasons. Had the owners attempted to move into possession of that stage of the works, it might be arguable that they had taken possession of the works for the purpose of establishing practical completion. However, in all the circumstances of this case, I think it is tolerably clear that the owners did not at any stage take possession of the Works or any part of the works that they were not entitled to do. [22] Therefore, I reject the argument that the owners are not entitled to claim liquidated damages on the basis that they had moved into possession. [23] It is readily apparent from the evidence of Ms Kelly Vincent that the builder did not keep contemporaneous records of delays caused either by variations or inclement weather. On the other hand, the owners kept detailed records that culminated in the preparation of a spreadsheet which is Attachment 6 to the respondent’s evidence and Exhibit 4 in the Tribunal. [24] I accept the accuracy of that document subject to some qualifications. Firstly, that for some of the period the owners were away and entries relating to matters during that period amount to a reconstruction from before and after photographs kept by Mr John Sinclair. Those photographs were not tendered at the hearing but I accept Mr Sinclair’s evidence on the point. That period related to a two week period only in June/July 2010. Secondly, the owners both worked, and when recording attendances by the builder and other trades, Mr John Sinclair relied upon who attended the premises before he left for work at between 8 and 9am, and what progress he observed, if any, on his return. [25] I accept that the witnesses for both parties gave their honest recollection of events. I should interpolate here that Ms Kelly Vincent gave evidence for the builder and Mr John and Mrs Bernadette Sinclair gave evidence for the owners. The builder, Mr Brent Vincent, did not give evidence. I note that Ms Vincent’s evidence was hampered by a lack of any contemporaneous records and the many instances she did not attend the site when events had occurred and was not able to give evidence in relation to those issues. [26] The builder’s claims for extensions for inclement weather and variations were made retrospectively and not in accordance with the time limitations contained in the contract. Both claims were made in a document signed on -- 5 of 8 -- 6 30 April 2011. In relation to the inclement weather claim, Ms Kelly Vincent gave evidence that she had calculated the days lost by reference to data obtained from the Bureau of Meteorology. However, the data source was not available as evidence and not detailed in the builder’s statement. On the other hand, Exhibit 4 contains specific references on a daily basis to rainfall that occurred during the period of the contract. I was cautioned during the hearing that I should be careful in relying on those records because they do not detail whether the rain fell towards the end of the 24 hour period or at the beginning. For instance, it may be that even though there was heavy rainfall on a particular day, it may have occurred towards the end of the day or in the evening and not affected work on that day. [27] Clause 15.1 of the contract requires that the builder shall within 10 business days from the day the delay ended, claim a reasonable extension of the date for practical completion stage, setting out the causes of the delay equal to the period of the delay. That is in respect of not only variations to the works but also inclement weather. The builder in this case did not do so, and left it to near to the end of the contract before making that claim. The owners, on receipt of the claims, gave written notice to the builder rejecting the claim in compliance with Clause 15.4 of the contract. Nevertheless, that clause still entitles the contractor to a fair and reasonable extension of time of the date for practical completion stage. [28] In view of the dispute between the parties as to the date of practical completion, it is necessary for the Tribunal to examine as best it can the evidence to establish what periods should be allowed for weather delays and/or agreed variations. The contract itself allowed a period of 184 days for the contract which included 25 days for inclement weather, 45 days for holidays and public holidays and 14 days for other matters. [29] In the builder’s case, the time extension sought in the notice dated 30 April 2011 was 126 days for inclement weather and 71 working days for variations. Attachment C to the builder’s application is a schedule relating to the variations and the sum of the days there claimed is 56. In evidence, Ms Vincent agreed that the correct claim was 56 days for variations. Although the builder gave appropriate notices in respect of variations to the contract, it did not include any time allowance as it should have under the requirements of the contract. To do so belatedly at the end of the contract leaves the issue to be determined in accordance with the terms of contract, namely whether it is a fair and reasonable claim.1 [30] Attachment C to the builder’s application sets out the number of days spent in respect of each variation. As stated earlier, the original claim was for 71 days and apparently for no reason it was reduced in this document to 56 days. Ms Vincent gave evidence that this was accurate but could give no reason for the initial inaccurate assessment of 71 days. 1 See Clause 15.4. -- 6 of 8 -- 7 [31] The owners make the point that one of the variations agreed to was to remove the following items from the contract: a) electric driveway gates; b) paver edging around driveway; and c) carpet. Consequently, there was a saving of time to the builder. [32] Again, there was no discussion in relation to the reduction of time allowed for those items and the owners submit that there should be some set-off for days for that work. I am inclined to agree. It is difficult to assess the number of days that the variations would have taken, however the builder is entitled to a fair and reasonable amount. Doing the best I can on the material available, I will reduce the time variations by 20% to 45 days. [33] In respect of rain delays, as I have stated earlier, the builder is unable to particularise from any contemporaneous notes the days lost to inclement weather. On the other hand, the owners maintain that once the roof was on, which was on 27 October 2010, there were few reasons for delay due to inclement weather. This is disputed by Ms Vincent who suggested that the builder had to access their tools in their vehicles etc and that depending upon the extent of the weather conditions, that might cause them not to work on that particular day. In my opinion, the owners’ submissions are reasonable and their calculations are that from the time of the contract to 10 December 2010, there were 6 days lost due to inclement weather; however, there was 25 days allowed in the contract, therefore there was no reason for any extension of time for rain delay as not all the delays allocated under the contract had been spent. For the period 11 December 2010 to 10 June 2011, there were a further 9 days of inclement weather and 3 flood days totalling 12 days in all. Again, combined with the earlier 6 days, that still did not exceed the allocated inclement weather days allowed under the contract. [34] The owners also complain that the builder had other projects in progress and was not devoting all his resources to their extensions and hence that was the reason for delay. Ms Vincent acknowledged that the builder did have other projects on at the same time. The owners detail quite a number of instances in Exhibit 4 when there were no attendances at the property when the project did not progress. I accept that because the builder had other projects on foot he was under resourced and that was a reason for the delay in completing the extensions to the owner’s property. [35] On my calculations, allowing 45 days for variations and 5 flood days, that means that the delay in reaching the date for practical completion stage was 124 days which amounts to $6,200 at a rate of $50 per day. [36] In respect of the claim by the builder, I order the owners to pay the builder $2,300 within 21 days of the date of this order. -- 7 of 8 -- 8 [37] I order the owners to pay the builder interest at a rate specified under the contract at 20% on that sum, which I fix at $567.12. [38] In respect of the counterclaim, I order Brentkel Constructions Pty Ltd to deliver to Mrs Bernadette Sinclair within 21 days of the date of this order, the items referred to in paragraph 9 of the response and counter- application, namely: i) spare tiles from the works; ii) touch up paint pots from the painting works; iii) air conditioner handset for study; iv) stove instruction manual; v) $180 for damage to the bath as agreed; vi) copy of signed Defects List; vii) all keys. [39] I make no order in respect to costs of the application or counter-application. -- 8 of 8 --