CITATION:	Sand & Surf Design Pty Ltd v Surrey [2014] QCAT 151	

PARTIES:	Sand & Surf Design Pty Ltd
(Applicant)	
	v	
	Kevin Surrey
Alexis Surrey
(Respondents)	

APPLICATION NUMBER:	BDL275-13	

MATTER TYPE:	Building matters	

HEARING DATE:	1 April 2014	

HEARD AT:	Brisbane 	

DECISION OF:	Member Gardiner	

DELIVERED ON:	17 April 2014	

DELIVERED AT:	Brisbane 
	
ORDERS MADE:	It is declared:
1.	The building contract the subject of these proceedings was not lawfully terminated by the applicant.

It is ordered:
2.	The matter is adjourned to a directions hearing in Brisbane at 1:30pm on 14 May 2014.	

CATCHWORDS:	BUILDING – WHERE contract entered into for kit home – WHERE a pier and footing system installed – WHERE owners allowed machinery on site without consent of builder before pier system cured – WHERE pier and footings disturbed – WHERE no testing undertaken of system because of destructive testing – WHERE breach notice issued by builder – WHETHER notice lawful in circumstances

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 60	

APPEARANCES and REPRESENTATION (if any):

APPLICANT:	Sand & Surf Design Pty Ltd represented by Ben Ferguson 	

RESPONDENTS:	In person	

REASONS FOR DECISION
[1]	Kevin and Alexis Surrey entered into a contract with Sand & Surf Design Pty Ltd represented by Ben Ferguson to build a kit home for them north of Brisbane on 23 June 2013.
[2]	Sand & Surf commenced work under this contract and a pier footing system was laid at the site on or about 31 July 2013.  Sand & Surf told Alexis Surrey in an email dated 31 July 2013 that the concrete piers require at least 28 days curing prior to any heavy machinery being on site.
[3]	In the same email, Sand & Surf reminded Kevin and Alexis Surrey that under the general conditions of the contract, they required authorisation from Sand & Surf before allowing any other persons to enter the building site.
[4]	It is common ground that on or about the 30th and 31st of August 2013, (without permission from Sand & Surf), Kevin and Alexis Surrey commissioned earthworks on the site.  This involved a bobcat undertaking works that Mr and Mrs Surrey considered necessary to maintain the integrity of the building pad.
[5]	Mr and Mrs Surrey deny that the bobcat went anywhere near the pier footing system constructed by Sand & Surf.
[6]	When Sand & Surf left the site the day the piers were laid, there is photographic evidence of the site cleanup showing the area around the footings clear of machinery tracks.
[7]	Mr Ferguson says that on 13 September 2013 he attended the site and found evidence of machinery track marks close to and between the pier footings and that the individual metal cast-in support brackets and metal columns supporting the pier system were no longer in the postions in which they had been originally installed.  
[8]	Mr Ferguson says this called into question the structural intregrity of the pier system and his ability to rely on the system for further construction.  
[9]	On 20 September 2013, Sand & Surf issued a notice of breach under clause 22.1(b) of the contract saying Mr and Mrs Surrey breached the contract by obstructing, interfering or hindering the works.  Sand & Surf gave notice of its intention to terminate the contract unless the owners remedied the breach within 10 working days.
[10]	Sand & Surf’s proposal to remedy the alleged breach was for Kevin and Alexis Surrey to sign a variation on the contract for the pier system to be redone at a cost of $42,660.00.
[11]	Mr and Mrs Surrey deny their employed bobcat came anywhere near the footings, although it is quite clear from the photographic evidence that earthworks were undertaken on the site involving cleanup earthworks and work to the batter on the fill embankment side of the building pad.
[12]	Mr and Mrs Surrey refused the sign the variation proposed by Sand & Surf and later a notice of intention to terminate and then a termination notice were issued by Sand & Surf, culminating it says with a termination of the contract on 28 October 2013.
[13]	On 17 October 2013, Mr and Mrs Surrey wrote to Sand & Surf saying they accepted what they called Sand & Surf’s repudiation of the contract and that they (Mr and Mrs Surrey) terminated the contract because of their alleged breaches by Sand & Surf.
The issue for the hearing
[14]	By order of the Tribunal dated 5 March 2014, the issue for the hearing before me on 1 April 2014 was limited to whether the building contract the subject of these proceedings was lawfully terminated by the applicant – here Sand & Surf.
[15]	The evidentiary question becomes whether it was reasonable for Sand & Surf to issue the notice of breach on 20 September 2013.
[16]	I am satisifed on the balance of probabilities that the trackmarks visible on the site on 13 September 2013 were the result of the unauthorised earthwork undertaken by Mr and Mrs Surrey at the end of August 2013.  No other machinery had been on site in that period.
[17]	I am satisfied that the bobcat involved had disturbed the pier and footing system as set out by Mr Ferguson on behalf of Sand & Surf.  Mr and Mrs Surrey carry this responsibility.
[18]	But now the evidence becomes unclear.  Mr Ferguson is concerned his pier system has been compromised by the intrusion onto the pier site.  He said in oral evidence that to confirm this, he was told he had to dig up the piers to examine them but that in so doing, he was also destroying the pier – whether they were intact or not.  He said if he dug them up to examine them, they would have to be replaced. 
[19]	Mr Ferguson said his requested variation was the cheapest way to ensure the intregity of the piers as even if he engaged an engineer to examine the piers and report, the destructive testing would mean replacement anyway.  
The contract
[20]	The terms of the contract between the parteis at general paragraph 22.2 allowed the contractor to terminate the contract if the owner fails to remedy a breach.  
[21]	Clause 11.12 of the contract says the owner must not obstruct, interfere with or hinder the carrying out of the works and to take all reasonable steps to prevent all others from doing the same.
[22]	It is this clause that Sand & Surf rely on to terminate the contract.
The Engineers Reports
Tom Gehrmann from ENG Consulting in his report to the Tribunal dated 19 March 2014 opined as follows: 
…
My advice was that it would be virtually impossible to tell from a visual inspection, and that the only way he would be able to remove doubt as to the integrity and the performance of the pier footing system would be to conduct excavation works, exposing each pier footing concerned, or remove and replace those pier footings.
…
I confirm my initial advice, that I was unable to determine the existence or extent of damage to the pier footing system and it may have been possible that machinery had effected the alignment of the brackets. If Sand and Surf were to remove any doubt as the performance of the piers, then each pier would need to be exposed, assessed and rectified, or removed and replaced.
[23]	Jon Murphy from NJA Consulting opined in a report to Mrs Surrey dated 10 October 2013 as follows:
It is implausible to suggest that any vertical settlement of the installed pier footings could have occurred as a result of the minor earthworks undertaken by MNKM.
Similarly, we do not consider it plausible to suggest that the MNKM earthworks could have resulted in any significant lateral movements of the footing piers.
We observed no evidence of such movement in the course of our inspection.
If there is indeed any minor misalignment of the brackets and posts then it is much more likely that those misalignments would have been caused by set-out errors in the positioning of the posts/brackets in the wet concrete and/or by disturbance of the footings by the Contractor’s plant operating in close proximity to the piers in the course of the construction and clean-up processes.
…
We can see no plausible basis for the Contractor’s suggestion that the engineering design certificate may have been invalidated. 
Discussion
[24]	On the basis of this expert evidence, Sand & Surf are unable to prove that there is any compromise to the intregiry of the pier system now or at the time of the breach notice.
[25]	Mr Ferguson had his concerns (and still does) but because of the destructive nature of testing these concerns, he did not undertake the necessary investigations to prove this one way or another.
[26]	As he points out, testing added another financial layer to the investigation because it necessitated destruction.  It was easier in his view to just replace – hence the suggested variation notice.    
[27]	For the purposes of this hearing however, without the testing evidence, I am unable to be satisfied that the breach notice issued by Sand & Surf on the basis of their suspicions and not on test results showing fault with the pier and footing system was reasonable – even though this may have proven to be the cheapest way forward.
[28]	I reiterate that on my findings of fact, Mr and Mrs Surrey are responsible for the bobcat on site that, on the balance of probabilities, created the tracks around the piers and footings and that this machine was on site without the knowledge or consent of Sand & Surf, the builder having control of the site under the contract.
[29]	On the basis of my findings of fact however, I am satisfied that the building contract the subject of these proceedings was not lawfully terminated by the applicant.  Pursuant to section 60 of the Queensland Civil and Administrative Tribunal Act 2009 I will make a declaration in those terms.
[30]	The matter will be returned to the Tribunal for a further directions hearing on the future conduct of the matter.