CITATION:	Franklin (QLD) Pty Ltd v Holliday [2015] QCAT 217	

PARTIES:	Franklin (QLD) Pty Ltd
(Applicant)	
	v	
	Fiona Holliday and David Holliday
(Respondent)	

APPLICATION NUMBER:	BDL093-14
	
MATTER TYPE:	Building matters
	
HEARING DATE:	1 May 2015	

HEARD AT:	Mackay	

DECISION OF:	Member Rogers 	

DELIVERED ON:	16 June 2015	

DELIVERED AT:	Brisbane	

ORDERS MADE:	1.	That Fiona and David Holliday pay Franklin (QLD) Pty Ltd the amount of $18,448.83 on or before 19 August 2015.
2.	That the counterclaim of David and Fiona Holliday be dismissed.	

CATCHWORDS:	BUILDING DISPUTE – where variations to contract not written and signed- where counter claim already before tribunal in different proceedings- where respondent failed to appear at hearing- whether tribunal  grant approval for applicant to recover amount for variation. 

Domestic Building Contracts Act 2000 (Qld) s 84(2)	

APPEARANCES:

APPLICANT:	Franklin (QLD) Pty Ltd through its Director Francis John Galea,   
 	
RESPONDENT:	No appearance

This matter was part heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

Procedural Matters

[1]	The applicant builder is seeking an order for the payment of the sum of $36,140 plus interest plus costs. This claim relates to a contract dated 25 June 2013 for the construction and completion of a new garage and storeroom (the extensions contract) at the building owners’ home and is restricted to work that formed part of that contract. Part of the claim relates to unwritten variations to the contract and requires leave of the Tribunal pursuant to s 84(2) of the Domestic Building Contracts Act 2000 (Qld), (the Act).
[2]	The building owners filed a response and counter claim on 27 May 2014 seeking orders that the builder’s claim be dismissed with costs and orders relating to the final inspection of the extensions. 
[3]	The owners then referred to a building contract dated 21 August 2012 entered into by the parties for the construction of a concrete pool, (the pool contract) and applied for an order
‘to repair the pool surface and pool leak and leave the pool in ‘as-new’ condition or compensate us sufficiently to enable a professional and experienced builder to do so’
[4]	On 15 May 2014 the owners filed Application GAR167-14 in the tribunal seeking a review of a decision dated 17 April 2014 of the Queensland Building and Construction Commission, which declined to issue orders sought for the rectification of the pool. A letter provided to the tribunal in these proceeding from QBCC to the owners dated 4 November 2014 indicates the Commission found defective work but it was unable to issue an order until the building dispute is resolved.
[5]	The tribunal had adjourned the QBCC application pending the determination of this application.
[6]	This application was listed for hearing at 9.30 am on 1 May 2015 at Mackay. The applicant builder, through its director Mr Galea was present. The respondent building owners were not present. Repeated attempts to contact the owners by telephone were unsuccessful.
[7]	I satisfied myself the owners had been given notice of the time and date of the hearing, decided to proceed in their absence and indicated to the builder it was in order for him to advise his witnesses they were not required for cross examination by the owners.
[8]	The application proceeded at 10.10 am by way of submissions restricted to the builder’s application. 
[9]	Part of the builder’s claim was based on s 84 (2) of the Domestic Building Contracts Act 2000 (Qld). It is a requirement of the legislation that a variation of a contract is put into written form (s 79). Failure to comply with this section means the builder cannot recover an amount for the variation unless given approval by the tribunal under s 84. In the circumstances I was prepared to hear submissions on why approval should be granted because this was a threshold question to any determination of an amount owing.
[10]	The submissions were completed by 12 noon and the builder left the court at that time.
[11]	At 1.15 pm the owner arrived at the courthouse. He indicated to the Hearing Support Officer that he knew the hearing was listed for that day but made a genuine mistake and had the wrong time. 
[12]	The application could not proceed on that day because it was not practical in the time remaining to conduct a hearing. I indicated to the owner through the Hearing Support Officer that I would list the application for a Directions Hearing.
[13]	The Directions Hearing took place by telephone at 9 am on 21 May 2015. Both parties indicated they were eager for the matter to be completed and that they were prepared for a decision to be made without a further oral hearing. I indicated I would not be prepared to determine the pool application in that way but finalisation of this claim would allow the QBCC claim to proceed. The parties indicated they were satisfied with that approach.
[14]	The builder was prepared to proceed to hearing on the day listed and had its witnesses available. It is reasonable for its claims to be finalised without delay. I am prepared to determine the claim relating to payments outstanding under the contract and the variations based on the documents before me under the provisions of s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
[15]	However the counterclaim relating to the pool requires a hearing to allow cross examination of the expert witnesses. The owner has filed evidence claiming an amount of $195,000 for the demolition and reconstruction of the pool. The builder says the pool damage is due to circumstances outside his control. To reopen or continue the hearing for this purpose would delay the finalisation of the builder’s claim.
[16]	The allegations made and remedies sought by the owner in relation to the pool would be better dealt with in the QBCC application, where different options are available. This cannot occur while this application remains on foot.
[17]	I have decided to dismiss the cross application to the extent that it relates to the pool contract without a determination of the merits under the provisions of s 93 of the QCAT Act. This section provides that where a person does not attend a hearing and the tribunal is satisfied the person has been given notice of the hearing, the tribunal may hear and determine the matter in the person’s absence.
[18]	This decision means the QBCC application can proceed and the owners will have the opportunity for their claim in relation to the pool to be determined on its merits. If a satisfactory outcome does not result from that process the owner could then apply for a reopening of this application under s 138 of the QCAT Act. 
The builder’s claim. 
[19]	The material before the tribunal supplied by the builder comprises the application filed 24 April 2014 and Statements of Evidence filed 22 August 2014, 2 December 2014 and 5 March 2015. The material supplied by the owners comprises a Response and Counterclaim filed 27 May 2014, and Statements of Evidence filed 24 July 2014, 11 September 2014 and 28 January 2015. 
[20]	The amounts claimed by the builder are as follows
Item 				Claim			Invoice
a)	Extra works		        6,877.50		#6008
b)	Shed Extension		        8180.72			#5678
c)	Exposed Driveway 	        2808			Signed variation
d)	Slab			        1253			Signed variation
e)	Extra electrical 		        4825.19 		#5659
f)	Building fees		        5000.38			#2134
g)	Contract – balance owing     8043			#4166

Background

[21]	Mr Galea, a director of the applicant company, states that while working on the house next door he established a personal friendship with David and Fiona Holliday. Mr Holliday approached him to construct a pool and during the construction of the pool he was asked to build the extensions to their house. 
[22]	As a result of their friendship he says his approach to aspects of the job was more informal than would have been the case if he was dealing with an unknown owner and trust played a large role in the works that were carried out.
[23]	Mr Galea says that as the job progressed Mr Holliday requested changes and he agreed to carry them out. He said in some instances changes were made on the run so they did not hold up the project. Once changes were agreed he advised the owners the changes would cost extra and he assumed he would be paid. 
[24]	He said once the conflict had arisen and it became clear there was a dispute he issued Invoice #5678 on 31/10/2013 and Invoice #6008 on 5/12/2013 to recover those costs. Invoice #2134 was issued on 28/11/2012 and covered the planning for the new Garage. Invoice #5659 issued on 26/09/2013 and had been the subject of discussion and dispute in relation to extra electrical work. Invoice #4166 issued on 15/11/2013, the date of practical completion, for the balance owing under the contract. 
[25]	Mr and Mrs Holliday deny these accusations. They said the course of the dealings was professional, as evidenced by written contracts for both the pool and extension. They said during the extension works, the applicant continually suggested changes and modifications to the plans. When changes were discussed, they asked for written quotations. They say at no time did they instruct the builder to carry out  ‘extra works’.
[26]	In addition they say changes were made to the plans to suit the builder and no credit was allowed for the lower costs that resulted. They point to a retaining wall, included on the plans, which was removed from the plans without consulting them. They say the extra works are unapproved variations, which are the result of an error by the applicant whilst preparing the foundations for the extension.
[27]	The owners have provided a quote from O’Brien Plumbing Services Mackay Pty Ltd dated 16/01/2015 for $12,787.50 for rectification work to the plumbing in the storeroom and shed, which includes obtaining council approval. 
[28]	The owners also state
‘As the applicant had abandoned the site 29 November 2013, with no intention of returning …..the Owner sought trades to complete the Works to a satisfactory standard and in turn obtain a Final Inspection Certificate’. 
The relevant legislation
[29]	The provisions of the Act governing this situation are clear. Variations need to be in writing if the builder is to be paid for them. While Mr Galea states that as a result of their friendship his approach was more informal this is not an excuse for failing to comply with the legislation. The requirement for variations to be in writing is to clarify what is agreed and to ensure certainty. It gives both parties the opportunity to be satisfied they know their rights and obligations including costs. It is designed to limit disputes. 
[30]	The consequences of failing to obtain a written variation are serious. Costs cannot be recovered without the approval of the tribunal and approval may only be given if the tribunal is satisfied of two requirements.
[31]	First there must be either exceptional circumstances as defined in the Act or it must be established the builder would suffer unreasonable hardship. Secondly it must be satisfied it would not be unfair to the building owner for the contractor to recover the amount. Mr Galea agreed, on behalf of the builder, it has not established exceptional circumstances and is relying on unreasonable hardship. 
The claims
[32]	Item a) Extra works.  Invoice #6008 is designed to cover those items the builder assumed would be paid but have been denied. Mr Galea says they arose because he thought he could rely on their friendship to be paid for work he completed. 
[33]	Mr Galea says there was a lot of site work to be completed before the extension could start. Also works were requested on site and Mr Galea states he did his best to adhere to them. As examples, there were steep gardens with interlocking blocks that had to be moved requiring crane hire. He gave an estimate verbally. He was asked by Mr Holliday to raise the roller door to the garage 200mm to allow easier access. He rendered part of a wall of the existing house. He was asked for bigger drains than the contract specified for storm water run-off.
[34]	It is the owners’ submission that work included on this invoice includes either work that is covered by the original agreement or work substituted for work in the contract which was not completed For example, they say the crane hire was part of the original contract and the Item Lifting Roller door 200mm is in compensation for changing the design over the door for the builder’s convenience. They say the render to the existing house was repaired because it was damaged by the builder and therefore was his responsibility to fix. They say the work for the plumbing was faulty and needs to be replaced. They say a block wall was to be constructed under the original contract but it was removed from the plan and no cost adjustment was made in their favour.
[35]	I have been provided with lists but not invoices for outlays claimed. In its evidence the builder describes the work undertaken for the variations but does not address the conflicting arguments of the owners. Invoices for these claimed variations were not submitted at the time of the work to allow the owners to challenge them as they arose. From the evidence it appears some of these items would not have been charged at all and it was only when the conflict arose they were claimed. This is the type of claim the Act seeks to limit. I have formed the view it would be unfair to the owner to allow this claim. Accordingly I do not give approval for the builder to claim for these unwritten variations.
[36]	Item b) refers to the extension to the garage and Invoice #5678. In oral evidence Mr Galea said while the extension only extended the length of the garage by 600mm, because the extension is three storeys high this is a considerable size. He says Mr Holliday said extra length was needed to allow for his boat. At the time they were digging the footings and Mr Galea responded the decision would have to be made immediately. The statement of Mr Nathan Galea, who was present at the time, supports this version. 
[37]	The owners’ say the contract specifically provides for a change in dimensions at Clause 29.2, and no extra payment can be charged.  
[38]	I have formed the view the Clause 29.2 of the contract is intended to cover the usual variations that can occur in building but it is not meant to exclude a deliberate change of this magnitude. The owners paid Invoice #112 which the builder identifies as the cost of the revised drafting, indicating they accepted the change. In this item it would not be unfair to the owner for the builder to recover the amount because they have the benefit of the larger garage. The costs involved support the submission of the builder it would suffer unreasonable hardship if the approval to submit the claim was refused. I give approval for the cost to be claimed. 
[39]	The owner has submitted a quote for plumbing work from O’Brien Plumbing Services Mackay Pty Ltd dated 16/01/2015 for $12,787.50 for rectification work to the plumbing in the storeroom and shed, which includes obtaining council approval. This plumbing work was not included in the original contract. There is a charge for plumbing in Invoice #6008, but I have disallowed that invoice in full. Invoice #5678 includes a charge for  ‘Plumbing Fixtures’ of $1,264.15. I cannot compare the quote provided with the allowance for plumbing included in Invoice #5678 to ensure it is restricted to necessary repair of, rather than an improvement to, the plumbing that formed part of the work. The evidence is not sufficiently clear for me to subtract a further amount for plumbing rectification from this item. 
[40]	The builder has already removed some of the costs and reduced the amount from $9,371 to $8180.72. This adjustment has deleted items I would not have accepted.  However I subtract a further 20% builder’s margin to ensure the builder is relieved from unreasonable hardship but does not profit from failing to comply with the legislation. 
[41]	 Accordingly I shall allow an amount of $6,544.58.
[42]	Items c) and d) Exposed driveway and slab. I shall deal with these together. They are the subject of variations signed 27 November 2013, which the owners purportedly rescinded by email dated 3 December 2013. By this time the parties were in conflict. The owners say they were away for a few days at this time. Mr Galea says he prepared the formwork for the driveway and slab on 28 November 2013. Mrs Galea sent an email on 29 November 2013 to the owners saying the work would not be completed until payment of all outstanding accounts. The owners sent an email rescinding the variations on 3 December 2013 by which time the work had been completed. 
[43]	Both parties agree the builder did not complete the concreting work on the driveway. The builder reduced its claim based on the quoted amount of $3464 for the driveway to $2808 to allow for this partial completion of the work. 
[44]	The owners changed the amount for the slab from $1253 to $1053 before signing the variation saying this was the amount verbally quoted. The builder says this verbal quote was a mistake because it left out labour and claims the higher amount. The owner has accepted the quote at the lower amount so this is the full amount that can be claimed based on the signed variation. 
[45]	The builder does not require leave for these items, which remain unpaid. I find the amounts of $2808 and $1053 are owing to the builder.
[46]	Item e) Extra electrical. This Invoice is for $4825.19. The photocopy of the Invoice has a hand written note saying ‘21/11/13 Paid $3038.55’ This payment is confirmed in the builder’s statement.  There is a balance outstanding of $1786.64. 
[47]	The extra electrical work involved a substantial amount. The owners should have been advised in advance so they could decide if they wanted all the work to be undertaken. A considerable amount has been paid towards this invoice so it is not a situation where the builder suffers unreasonable hardship. I do not grant approval for this claim to be made.
[48]	Item f) Relates to Invoice #2134. This Invoice was originally for $8050.38 and the owners paid $3050. At the hearing the builder agreed this amount had been included in the contract price. I do not grant approval for this item to be claimed.
[49]	Item g) is the balance owing on the contract. The owners accept $8043.25 has not been paid. 
[50]	The builder is seeking an order for the payment of the amount outstanding under the contract. The builder acknowledged some rectification work needed to be completed but did not provide an estimate of the value of that work. 
[51]	The owners say they should not have to pay any amount. They have provided a quote for rectification of plumbing work in the amount of $12,787.50 and they say they engaged appropriate trades and arranged for a Final Inspection Certificate. They did not provide invoices or details of the cost of that work. 
[52]	The original contract only provided for drainage from the garage. The plumbing work, which requires rectification, forms part of the ‘shed extension’. This cannot be offset against a payment under the contract. The costs involved in obtaining the Final Inspection Certificate have not been provided to the builder or the tribunal. The builder has not had the opportunity to challenge the costs if need be. In these circumstances the builder is entitled to the balance owing under the contract of $8043.25
[53]	I order the owners pay the builder the amount of $18,448.83 on or before 19 August 2015.
[54]	The owners sought orders for a final inspection certificate but it appears from their evidence this is no longer necessary.
[55]	I dismiss the application for interest and costs.
[56]	I dismiss the counterclaim by the owners relating to the pool contract without consideration of the merits.