CITATION: William George Carlsen t/as W & E Carlsen Builders v Tresidder [2015] QCAT 260

PARTIES: William George Carlsen t/as W & E Carlsen Builders(Applicant)vSteven TresidderMelissa Tresidder(Respondents)

APPLICATION NUMBER: BDL130-13

MATTER TYPE: Building matters

HEARING DATE: 15, 16 and 17 April 2015 followed by submissions of 24 April, 1 May and 8 May 2015

HEARD AT: Brisbane

RESERVED DECISION OF: Member Gordon

DELIVERED ON: 30 June 2015

DELIVERED AT: Brisbane

ORDERS MADE: 1. Steven Tresidder and Melissa Tresidder pay to William George Carlsen t/as W & E Carlsen Builders the sum of $62,425.07. Interest shall accrue on this amount at 15% until payment.

2. If so advised, the parties may make submissions as to costs no later than 17 July 2015. If any such submissions are made then the other party may respond to the submissions by 31 July 2015.

CATCHWORDS: BUILDING – DOMESTIC BUILDING – whether owner must allow builder to rectify all omissions and defects – whether practical completion – impact of s 65 and s 67 of Domestic Building Contracts Act 2000 (Qld) on progress claims and completion payment and interest thereon – whether unsigned variations approved under s 84 for unreasonable hardship – in the counterclaim, whether any constraints on the award of damages for distress disappointment and inconvenience

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Domestic Building Contracts Act 2000 (Qld), s 16, s 17A, s 42, s 43, s 44, s 45, s 46, s 47, s 65, s 67, s 79, s 80, s 81, s 82, s 83, s 84Queensland Building and Construction Commission Act 1991 (Qld), s 77Queensland Building and Construction Commission Regulation 2003 (Qld), s 34BCriminal Code Act 1899 (Qld), s 23, s 34

Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286Augdome Corporation Ltd v Gray [1975] 2 SCR 354 (Supreme Court of Canada)Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344Boncristiano v Lohmann [1998] VR 82Butler v Mountview Estates Ltd [1951] 2 KB 563Cavalier Homes Brisbane Pty Ltd v Findville Pty Ltd [2011] QCAT 397Coastal Patios v Bennett & Anor [2013] QCAT 268Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337Coshott v Fewings Joinery Pty Ltd (unreported, New South Wales Supreme Court, CA, 15 July 1996)D Galambos & Son Pty Ltd v McIntyre (1974) 5 ACTR 10)Diesen v Samson 1971 SLT (Sh Ct) 49Farley v Skinner [2002] 2 AC 732 Faulks v New World Constructions Pty Ltd [2013] QCAT 658French v NPM Group Pty Ltd [2008] QSC 48Habchi & Anor v Harjrudin Turcinovic [2011] QCAT 309Heywood v Wellers [1976] QB 446Hobbs v London & South Western Rly Co (1875) LR 10 QB 111Jarvis v Swans Tours Ltd [1973] QB 233Jackson v Horizon Holidays Ltd [1975] 3 All ER 92Kaporonovski v R (1973) 133 CLR 209Kirkby & Anor v Coote & Ors [2005] QSC 197Pearce, Ronald Benjamin t/as Freestyle Projects v Caswell [2009] QCCTB 192Pendergast v Furniture Paint Repair Restore [2011] QCATA 252Protection Systems Pty Ltd [2013] QCATA 016Scott Building Pty Ltd v Minogue & Coal Basin Equipment Pty Ltd [2010] QCAT 420

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R v Taiters [1997] 1 Qd R 333Robinson v Harman (1848) 1 Exch 850Ruxley Electronics & Construction Co Ltd v Forsyth [1996] AC 344Smart State Vehicle Rental Pty Ltd v Tri Asset Protection Systems Pty Ltd [2013] QCATA 016Tamawood Ltd v Paans & Anor [2004] QDC 427Turner & Anor v Zachary Developments Pty Ltd [2010] QCAT 706Western Export Services Inc and Ors v Jireh International Pty Ltd [2011] HCA 604Wulf v Cooper [2007] QCCTB 3

McGregor on Damages 19th Edition July 2014 Chapter [4.25] to [4.30]Halsbury’s Laws of Australia: Damages paragraph [135-1085]

APPEARANCES:

APPLICANT: Mr Doug McKinstry, solicitor, of Williams Graham Carman, Cairns.

RESPONDENTS: Mr C E Taylor, counsel, instructed by Corsetti Lawyers, Cairns.

REASONS FOR DECISION

[1] The Respondents, Stephen and Melissa Tresidder, wanted an extension built to their house in Cairns. The Applicant, William Carlsen, a builder, organised plans and building approval for the work and entered into a contract1 to do the work. During the course of the work the Respondents asked for variations to the work. The statutory provisions applicable at the time required the variations to be in writing and signed. At first this was done, but after that the formalities were dispensed with.

[2] Mr Carlsen billed for the work done on a monthly basis. The extension was finished to a degree sufficient for the Respondents’ occupation over the Christmas break at the end of 2012. The last payment made by the Respondents was 28 December 2012. One third of the contract sum was unpaid and most of the variations were unpaid.

[3] In early March 2013 Mr Carlsen completed another variation on site. At about that time, the Respondents indicated that they were compiling a list of issues and defects and would be asking for rectification of those before making any further payments. They asked a building consultant to inspect the work and he found some work not done in accordance with the plans and some defects.

1 On the Master Builders Residential Building Contract standard form.

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[4] In these proceedings, Mr Carlsen claims $61,631.70 being the unpaid contract sum, and $19,367.34 for variations. He claims interest at 15% on the unpaid amounts. The Respondents seek an offset from the claim in respect of incomplete and defective work. The Respondents also counterclaim in respect of an overpayment, and claim damages including a claim for damages for distress, disappointment and inconvenience (a solatium claim) which requires special consideration.

[5] The issues which I have to decide in this case are:

(a) What are the builder’s obligations including the obligation to build ‘in accordance with plans and specifications’?

(b) Must the owner give the builder a chance to remedy omissions and defects? Should major and minor defects be treated differently?

(c) How should the owner’s compensation be assessed?(d) Was there any major incomplete or defective work, and if so what

compensation should be given? (e) Was there any minor incomplete or defective work, and what are the

costings? Is it right to allow compensation for this? Was the work practically completed?

(f) Were there any effective variations of the contract?(g) Does the Tribunal approve payment of an amount for the unsigned

variations because of unreasonable hardship under s 84(2) of the Domestic Building Contracts Act 2000 (Qld) (‘DBC Act’)?

(h) Can the builder’s claim for the contract sum properly be made?(i) How do s 65 and s 67 of the DBC Act impact on progress and

completion claims and interest thereon?(j) The counterclaim: damages for failure to provide or return keys,

restitution because of an overpayment, storage charges incurred because of incomplete work, experts fees and damages for distress, disappointment and inconvenience.

(k) Respective evidential reliability: an explanation for some findings of fact.

(l) What is the final reconciliation account between the parties?

[6] Both sides have helpfully produced schedules of the items with which I am concerned. Mr Taylor’s schedule is entitled ‘Summary of Competing Claims’. This was provided on day one of the hearing. Mr McKinstry provided a schedule entitled ‘Applicant’s Defective and Incomplete Works Evidence Schedule’ as part of his written submissions after the hearing.

[7] In this decision I refer to item numbers. These are the item numbers used by Mr Taylor in his document. This is merely for the sake of convenience since it was used at the hearing. It does not mean I favour that document over any other.

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[8] Three experts were called. Two on the question of liability for omissions and defects – Mr Thirkell on behalf of the Applicant and Mr Peach on behalf of the Respondents. Their evidence was heard concurrently. Then the Respondents called Mr Hewitt on the costings for the alleged omissions and defects. Although Mr Hewitt’s report had not previously been disclosed in the usual way, there was no objection to it being received in evidence nor to Mr Hewitt being called.

[9] In addition to these witnesses, a number of witnesses of fact were called.

[10] In his written submissions after the hearing Mr McKinstry attached emails of 3 and 4 September 2013 concerning his firm’s attempts to organise an inspection of the property for the purpose of the proceedings. Mr Taylor objected to this as being new evidence. However, the Tribunal does have those documents in evidence already, because when on 17 October 2013 the Respondents resubmitted their statement of evidence dated 27 August 2013 they attached this email correspondence.

What are the builder’s obligations including the obligation to build ‘in accordance with plans and specifications’?

[11] The builder’s obligations arise both by statute and under the terms of the contract itself.

(a) There is an obligation to use materials which are new and also good, and suitable for the purpose for which they are to be used having regard to generally accepted practices or standards applied in the building industry or having regard to specifications instructions or recommendations of manufacturers or suppliers of materials.2

(b) There is an obligation to carry out the work in accordance with all relevant laws and legal requirements, including for example the Building Act 1975 (Qld), under which the Building Regulation 2006 (Qld) has been made.3

(c) There is an obligation to carry out the work in an appropriate and skilful way and with reasonable care and skill.4

(d) If plans and specifications form part of the contract the contractor has an obligation to carry out the work in accordance with the plans and specifications.5

(e) When building an extension to a home the contractor warrants that the home will be suitable for occupation when the work is finished.6

(f) In a cost plus contract without a stated completion date the contractor must carry out the work with reasonable diligence.7

2 DBC Act, s 42(1), also clause 10.1(b) contains a similar obligation.3 Ibid, s 43, also clause 10.1(a)(iv).4 Ibid, s 44, also clause 10,1(a)(i) and (ii).5 Ibid, s 45, also clause 10.1(a)(iv).6 Ibid, s 46, also clause 10.1(d).7 Ibid, s 47.

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[12] In addition to the obligations set out above in (1) to (5) which apply to this case, Mr Carlsen had a further obligation to prepare the plans for the work he was asked to do. He engaged a designer to prepare the plans, but accepts that it was his own contractual responsibility to produce accurate plans and specifications showing the work required to erect the extension as designed.

[13] In Queensland, there is a statutory requirement that work under such contracts will be carried out in accordance with the plans and specifications.8 This requirement is also one of the contractor’s obligations in the building contract itself. This obligation is relied on by the Respondents in respect of a number of the areas of work. Because of this, it is necessary to explain my approach to this test.

[14] In deciding whether there was a breach of this obligation, a line needs to be drawn. A deviation from the plans and specifications which falls one side of the line will not be a breach. But a deviation falling on the other side of the line will be a breach. Where should the line be drawn?

[15] The legislature could easily have added a modifying expression immediately before the words ‘in accordance with the plans and specifications’. Examples would be, ‘generally’, ‘substantially’, ‘only’, ‘precisely’, or ‘strictly’. Such modifying words are found in other statutes and for example development permissions and sometimes in court orders. The absence of the word suggests that the legislature have left it to the Courts and to the Tribunal to decide how strictly the obligation should be construed.

[16] It is only reasonable that some departure from the dimensions or position of a structure given in the plans is permissible, because for a number of reasons including errors by the designer or architect, differing size of materials, or unforeseen practical difficulties on site, it will often be very difficult for the builder to be exact. It could not be the intention of the legislature for example to say that if a bathroom was built very slightly narrower or wider than in the plans, this would be a breach of the obligation.

[17] On the other hand, it would be wrong to read the obligation as requiring only ‘general’, or ‘substantial’ compliance. To do so, would be to add a word to the statutory obligation which is not there. This would not be permissible.

[18] The position of the line must lie somewhere between the two extremes. In this case, the alleged departure from the plans and specifications fall into the following categories: using different methods of construction from that specified, using different materials from that specified, omitting work specified, and positioning fittings differently from as shown on the plan. In each case it is necessary to reach a finding of fact whether the work was

8 This applies where the plans and specifications form part of the contract (as they did here) – DBC Act, s 45.

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carried out in accordance with the plans and specifications in all the circumstances.

Must the owner give the builder a chance to remedy omissions and defects? Should major and minor defects be treated differently?

[19] Mr McKinstry submits that where a house owner denies the builder an opportunity to complete any unfinished work or to rectify any defects, the house owner should be denied any remedy at all. This is presented as a complete answer to the Respondents’ claim for the cost of the work required to complete and to rectify the alleged defective work. The submission is based on the QCAT case of Scott Building Pty Ltd v Minogue & Coal Basin Equipment Pty Ltd9 and the QCAT appeal case of Pendergast v Furniture Paint Repair Restore.10 In Pendergast, citing Scott Building, it was recognised that it was an accepted principle in building cases that a contractor should be given an opportunity to rectify defective building work and that the failure to allow that opportunity will be reflected in any order for compensation.11 Scott Building however, was referring only to minor defects. Pendergast was concerned with minor defects too (paint overspray following the erection of a pergola). Reliance is also placed on another QCAT appeal case, Smart State Vehicle Rental Pty Ltd v Tri Asset Protection Systems Pty Ltd12 but that is quite a different situation where the Tribunal had already ordered the builder to do rectification work, and the builder had not been given access to comply with the order.

[20] To my mind, the ‘accepted principle’ in Pendergast is a reflection of the fact that both builders and house owners know that it is only to be expected that there will be some snagging work to do at the end of a building contract. Formal building contracts almost always include specific provisions about this. The principle is also a reflection of the duty to mitigate loss. It could be unreasonable for a house owner to refuse to permit a builder who had otherwise been reliable and efficient to return to do snagging work if the builder wished to do so. But where the builder had been responsible for a serious error in the work it could be reasonable for the house owner to engage another contractor to fix those errors as well as any minor defects left by the builder.

[21] That the principle is limited to minor defects accords precisely with the doctrine of substantial performance (whereby absent any other contractual provision a builder is not obliged to fix minor omissions and defects before being entitled to any payment under the contract). It also accords with the distinction at common law between conditions and warranties, which distinction in cases covered by the Australian Consumer Law codification is now described as minor and major failure.

9 [2010] QCAT 420.10 [2011] QCATA 252.11 Ibid, at [16].12 [2013] QCATA 016.

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[22] For this reason I do not accept the submission made by Mr McKinstry, and in the decision below, I deal with minor defects and omissions separately from the major defects.

How should the owner’s compensation be assessed?

[23] The starting point for assessing compensation for breach of contract is that the innocent party should as far as financially possible be put in the position in which that party would have been if the contract had been properly performed.13

[24] The manner in which this is to be done will vary from case to case, and sometimes within a case, it will vary from breach to breach. On the one extreme, sometimes, particularly where the aim of the contract is to produce something unique but which has simply not been delivered, the correct compensation is the amount of money required to achieve that aim. At the other end of the extreme, there are cases where the builder despite being in breach of contract, has in fact delivered a building or part of a building which is just as good if not better than that required under the contract and the owner has no intention to change the work. In such a case, damages may be assessed as the diminution of value of the property by reason of the breach. If that valuation is zero or cannot be assessed it may be possible to award damages for loss of amenity.

[25] Between the extremes are varying levels of awards, which all come down to a reasonable and fair level of compensation between the parties. The correct level of compensation may turn on whether it is reasonable and necessary to carry out remedial work. I apply these principles to the defective and incomplete work in this case.

Was there any major incomplete or defective work, and if so what compensation should be given?

Major incomplete work

[26] On my findings, the following work was not done and should have been done, and therefore is properly described as incomplete work. I am not including here anything of a minor nature which would normally be completed during the defects liability period.

[27] New slab to patio area (item 26). Specification S2 on the plans clearly shows that the existing slab was to be removed and a new slab was to be constructed where the patio was to go. The detail on the plans also shows that the new slab was to be tied into the slab of the existing house with dowels. None of this was done. Instead, new patio columns were provided on new pier footings and the existing slab was retained.

[28] A document was produced on Mr Carlsen’s behalf and on his instructions for the purpose of these proceedings14 and this said that this work was not

13 Robinson v Harman (1848) 1 Exch 850.14 ‘Defects/incomplete Works Schedule’ exhibited to Mr Thirkell’s report.

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in the contract. He was of this view because he had told Mr Tresidder before he quoted for the job, that there was no need for a new slab. This was because the slab was generally in good condition (a view with which I concur on the evidence that I have seen and heard), and because he was aware that the Respondents wanted to keep costs down. As a result, Mr Carlsen did not include the cost of a new slab in his job costings for the quote.

[29] However, Mr Carlsen did not ensure that the provision of a new slab was removed from the plans.

[30] On my findings, Mr Tresidder was always of the belief that the existing slab would be retained, and that a new slab was not part of the contract work. It was only when he received his expert’s report that he realised a new slab was part of the contract work because it was on the plans. This can be seen from the fact that he never complained until after that time that this work had not been done. On my finding he knew from the discussion with Mr Carlsen that this work would be excluded from the contract. The other contracting party Mrs Tresidder, left all contractual matters to Mr Tresidder.

[31] Both Mr Carlsen and Mr Tresidder therefore held the subjective intention that the existing slab would be retained and a new slab would not be constructed.

[32] In final submissions on Mr Carlsen’s behalf, the possibility that the work was not in the contract was not pursued. This is clearly right, because the inclusion of the new slab in the plans was not an obvious mistake and therefore stands as a contractual obligation. This is because of the objective test for contractual intention and the parol evidence rule. Together they do not permit the subjective beliefs of the contracting parties to add to, subtract from or vary the contractual provisions.15

[33] The facts here could possibly be sufficient for a court or tribunal to rectify the plans and specifications to accord with the actual subjective intention of the parties. QCAT has wide powers to adjust building contracts when it is just to do so, and this would seem to encompass the equitable remedy of rectification when resolving a building dispute.16 Whilst there is some authority for the proposition that rectification can be ordered in the absence of a formal claim for the remedy17 it would clearly be wrong to do

15 An approach required by Western Export Services Inc and Ors v Jireh International Pty Ltd [2011] HCA 604, applying Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337.

16 Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)(e) enables QCAT to ‘declare any misleading, deceptive or otherwise unjust contractual term to be of no effect, or otherwise vary a contract to avoid injustice’: the scope of this power includes altering the work to be done under the contract when ordering remedial works: French v NPM Group Pty Ltd [2008] QSC 48 (not disputed on appeal).

17 Butler v Mountview Estates Ltd [1951] 2 KB 563 where Danckwerts J, in the absence of a formal claim to that effect, rectified deeds of assignment so that they accorded with prior contractual agreement; also Augdome Corporation Ltd v Gray [1975] 2 SCR 354 (Supreme Court of Canada).

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so without full argument from both sides, and this did not happen because this remedy was not sought.

[34] It follows that the failure to remove the existing slab and to construct a new one was a breach of contract, and the surrounding events relating to this are relevant on the question of remedy only.

[35] Despite this being an inadvertent breach of contract the compensation falls to be considered in the same way as the other breaches. The Respondents claim an offset of $9,850.00 for the removal of the existing slab and construction of a new slab tied into the existing house. The question is whether it would be reasonable now for the Respondents to do this work, or whether they intend to do so. When Mr Peach visited the property in April 2013 he had no complaint about the slab. Mr Thurkell also considers it does not require removal and reconstruction. When giving evidence Mr Hewitt was asked his view about the condition of the slab and responded by identifying some problems with its surface only. He had costed the removal and reconstruction work at $9,850.00 not because it needed to be done, but because he was asked to cost it on this basis.

[36] In the circumstances, removal of the existing slab and construction of a new slab tied to the house is not necessary and reasonable. But it can be seen from the photographs that the finished result at the moment does not look good. It would have looked much better if the slab had indeed been removed and reconstructed. By the contract the Respondents were entitled to that visible result. The question is therefore how much it would cost to achieve that result.

[37] I note that the All Seasons Home Improvements quotation dated 24 October 2013 for pouring new concrete over the existing slab in this area to bring the level up to the level of the doorway was $13,365.00 including GST. There is a difficulty in accepting this in evidence as the cost of this work. Before the start of the hearing, the only evidence submitted by the Respondents for the cost of remedial work was from All Seasons Home Improvements. Hence Mr Carlson’s solicitors called for a witness to attend from All Seasons Home Improvements for the purposes of cross examination. Prior to the hearing the Respondents, who were then acting in person, stated that they would not be calling anyone from All Seasons Home Improvements. So Mr Carlson’s solicitors said that objections would be taken to this evidence being admitted.

[38] On day one of the hearing on the Respondents’ behalf, Mr Taylor sought to introduce new and entirely different evidence of cost to remedy, from a new expert witness, Mr Hewitt. The Respondents’ case was also amended by the submission of a ‘Summary of Competing Claims’ document to accord with Mr Hewitt’s evidence. This also reduced the number of complaints considerably. It was on the basis that the Respondents’ case had been clarified and recast in this way, which simplified matters considerably, that Mr McKinstry accepted that Mr Hewitt could be called as an additional expert witness at such a late stage. Mr McKinstry objected to the All Seasons Home Improvements evidence being submitted at all. It

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was, however, exhibited to the Respondents’ statement of evidence and so it was put before me on that basis, and it was referred to on the ‘Summary of Competing Claims’. The ultimate position of the parties with respect to the All Seasons Home Improvements quote was therefore that on the Respondents’ side the evidence was put before the Tribunal but that the primary evidence of cost to remedy was that of Mr Hewitt. On the Applicant’s side the evidence was objected to because no one from All Seasons Home Improvements was available for cross examination.

[39] In these circumstances, it would be unfair of me to place any great weight on the All Seasons Home Improvements quote. There is another difficulty with this costing. Mr Tresidder discussed the height of the slab on site with Mr Carlsen’s son and expressed the view that he did not want the slab to be as high as the entrance to the house to avoid dragging debris into the house. So it would appear that the Respondents would only wish to apply a thinner topping to the slab to make it look better. The only other evidence about the cost of placing a topping on the slab comes from Mr Carlsen. He said that if he was quoting to a retail customer for this work he would quote between $4,000.00 and $4,500.00 including GST. In the circumstances I shall accept this evidence, and allow the sum of $4,250.00.

[40] Existing bedroom 3 adjoining extension not painted or retiled, skirting boards not installed and robe not reinstated (item 27). This is said to be the making good work which was required to the existing house following the construction of the passageway into the new extension. If the passageway had lined up properly, this was a matter of constructing two new robes to replace those removed so that the cut through could be achieved, and making good around the new robes.

[41] Since the passageway did not line up properly, Mr Carlsen instead constructed a crank in the passageway as a way to resolve that problem as referred to in item 15 below. The work to complete the contract was therefore slightly different, because the robes had to be built in a different place. The robe to existing bedroom 2 was installed, but the robe to existing bedroom 3 was not. Mr Carlsen said in evidence that this was not done because the children were still using the room.

[42] On my findings the incomplete work under this item is limited to the failure to construct the robe in existing bedroom 3. Mr Carlsen said in cross examination that it would not be a problem to contract the robe on what was now the angled wall of existing bedroom 3 adjacent to the hallway and there is no evidence to refute this.

[43] The extent of this angle and the unfinished work in this area can be seen from photograph 15 on page 26 of the photograph bundle. In cross examination Mr Carlsen was shown photographs numbered 21 to 26 on pages 6 and 7 of the photographs bundle and it was put to him that these showed how the hallway had been left, which he disputed. I think he was right to dispute this because it can be seen from Mr Thirkell’s photographs that the hallway had been completed.

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[44] Mr Hewitt’s costings of this work which Mr Carlsen does not dispute as figures includes a complete retiling of bedroom 3 and new skirtings and work to the doorway. But this work was not required by the contract. Mr Hewitt costs the construction of the new robe at $1,105.00. This was required by the contract. I do believe there would be some additional making good around this area because of the crank in the passageway and I allow $200.00 for this, making a total of $1,305.00 for this item.

[45] The following things which are claimed to be incomplete work, I have found are not in fact breaches of contract.

[46] Tiling and skirting of new games room (item 28). This was work to the new games room which was constructed in the position of the existing carport. At the time the contract was entered into both sides contemplated that there was going to be a ‘stage 2’ which would involve internal works to the existing premises. Mr Carlsen explained that the tiling to the new games room and the skirting was not done because the Respondents wanted to have matching tiling throughout the property and the tiling would need to be aligned properly as well. This work would therefore be done with stage 2 works. This was a change of plan, because the tiling to the new games room was originally part of the main contract works.

[47] Whilst the Respondents do complain that the failure to tile the new games room was incomplete work and therefore was a breach, the facts of the purchase of tiles for the whole house (see item 8 below) lends credence to Mr Carlsen’s case here. For this reason I do not think it was a breach of contract not to do this work.

[48] The work was however not done and Mr Carlsen issued a credit note number 01464 in the sum of $1,100.00 for the tiling. This is accepted on the Respondents’ behalf as a reasonable amount. Mr Carlsen accepted in evidence that a further credit should be given because the skirting was not done in the new games room. Mr Hewitt costed this at $293.00 which Mr Carlsen accepted as reasonable. The total credit for these items should therefore be $1,393.00.

[49] Corridor joining master bedroom not painted, no lighting, not retiled, no skirtings (item 30). No evidence was given with respect to this item apart from a reference to it in Mr and Mrs Tresidder’s statements of evidence. I do not accept that this was contract work which was not done.

Major defective work

[50] On my findings, the following work was defective in the sense that the work was completed in breach of one or more of the contractor’s obligations set out above. I am not including here anything of a minor nature which would normally be fixed during the defects liability period.

[51] Incorrect roof sheeting to flyover at back patio (item 13). The plans required Trimdek roof sheeting for the flyover at a pitch of two degrees. Instead custom orb sheeting was used at that pitch or lower in some

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places. Trimdek has wider channels than custom orb sheeting and so is better able to allow rainwater and debris to run off the roof. Mr Peach said the run off was three times better. This would be important at lower pitch angles. Whilst the manufacturers of the custom orb sheeting (Lysaght) specify a pitch of five degrees, they say it can be used in lesser pitched roofs in certain circumstances. The Applicant’s expert Mr Thirkell considered that the roof as constructed was sufficient because it was a small roof. Whilst Mr Thirkell’s opinion is important for the question of remedy, I think that it was a breach of contract to use custom orb sheeting instead of Trimdek. It is clear in the light of the difference between Trimdek and custom orb sheeting described above, that this was an important specification with the aim of providing maximum water clearance and ease of maintenance, which aim was not achieved. The roof was not constructed in accordance with the plans.

[52] An offset of $7,330.00 is claimed to replace the roof sheets with Trimdek sheets being Mr Hewitt’s assessment of the cost of doing this work. Mr Carlsen thought that the labour costs in the assessment were too high and thought that a fairer price would be $5,574.00.

[53] When considering whether it would be reasonable for the Respondents immediately to replace this roof sheeting, I take into account that the risk of the roof not being able to cope in heavy rain is increased by the presence of the supports to the solar panels over parts of the roof. This means there is a risk of debris being caught there and causing long term problems. However, Mr Thurkell did not think these problems were a real risk, and he considered that the current roof arrangement was adequate bearing in mind the size of the roof, but he did concede that more maintenance might be required to check for debris.

[54] In my opinion, whilst I would not expect a reasonable house owner immediately to replace the current roof sheeting, I do think that when it comes to selling the house, a building inspector would probably report this as a potential problem. There is therefore a diminution of the value of the house by reason of this breach and so the work was worth less than it should have been. My assessment of this diminution of value is informed by the current cost to remedy and I believe it is properly assessed at $6,000.00.

[55] Incorrect ceiling to flyover at back patio (item 14). The plans required 6mm Villaboard sheeting to be flush finished and screw fixed to the bottom of the purlins. Instead Mr Carlsen used 4.5mm sheeting with plastic joining strips. The builder’s explanation for this change, a view supported by the experts during the hearing, is that Villaboard is for internal use only. Also the use of flush mounted Villaboard was not appropriate because of expansion problems. Mr Peach was also of the view that the structural integrity of the flyover could not be guaranteed because the use of the flush fitting Villaboard would have provided bottom constraint on the purlins. He accepted however, that where sheeting fixed with plastic strips was used instead, then battens could have been used to provide the necessary constraint on the purlins. Mr Thurkell was of the view that the

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structure as constructed was very stiff and robust. There was a discussion in the hearing about the distance between the purlins, and it was noticed that in a document attached to Mr Thurkell’s report18 they were said to be at 900mm centres. This document was prepared in Mr McKinsey’s office from Mr Carlsen’s instructions, but Mr McKinsey thinks it may have been an error. Overall in my opinion, the evidence is insufficient to prove that there was anything wrong with the robustness of the structure itself. However, the use of the 4.5mm sheeting and different method of mounting was so substantially different from the plans to amount to a breach.

[56] Since the structure is sufficiently robust and the current ceiling works well, the only difference between the end result and what was required by the contract is a cosmetic one. In my view it would be unreasonable and also unnecessary to replace the ceiling.

[57] Mr Tresidder says that he will be changing the sheet to Villaboard because he likes a flush finish rather than the plastic strips. I don’t accept this. I explain below why I have reservations about Mr Tresidder’s evidence, but on this particular issue, if Mr Tresidder had been unhappy with the plastic strips instead of flush fitting, then I would have expected him to have recorded this unhappiness earlier. Instead the first mention of this was day three of the hearing. There is no evidence that the designer used flush fitting because this was required by the owners for cosmetic reasons. Instead, it appears to have been a way to make the structure more robust. There is no suggestion that the current ceiling would affect the value of the house, and I do not think it would. There is no loss of amenity either. In the circumstances I cannot see that any compensation should flow from this particular breach. I award a nominal amount of $10.00 only.

[58] Crank in passageway (item 15). This is a reference to the fact that as constructed, the passage between the existing house and the extension containing the new master bedroom and new bedroom 3 is not straight. On the plans it is clearly marked as straight. The plans show the passage in the extension as in a central position relative to the external walls either side. The plans assume that the passage in the existing house is central as well, so that after the extension was constructed, there would be one straight passage between the existing house and the extension. In fact the passage in the existing house was not central because the rooms either side of the passage were not of the same width. This meant that all times before the work was started the passage in the existing house was offset to one side and not as shown on the plans. The error in the plans was discovered upon cutting into the external wall of the house from outside. The opening so made did not emerge in the existing house in the anticipated position.

[59] There is a disagreement between the two sides as to what then happened. Mr Carlsen says that he agreed with Mr Tresidder that a crank would be constructed to resolve the problem. Mr Tresidder denies this

18 Entitled ‘Defects/Incomplete Works Schedule’.

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saying that no such conversation took place. Either way, this was a breach of contract. This is because the end result was not in accordance with the plans, the plans themselves were incorrect in that they did not show the correct position of the passage in the existing house. I also think that the work was not done with reasonable care and skill because it would have been obvious from a cursory inspection of the rooms of the existing house that the two passageways would never in fact meet.

[60] The appropriate remedy for this breach turns on whether this work is going to be corrected, and if so whether this is reasonable. Both Mr and Mrs Tresidder say they intend to have the passage straightened by altering the sizes of the rooms on either side. I do not accept that they intend to have this work done because on my findings Mr Tresidder did indeed agree with Mr Carlsen when the non-alignment of the passageways was first discovered, that installing the crank was the best option to resolve the issue.

[61] In any case I do not think it would be reasonable to have the straightening work done. Mr Thirkell was of the view that the finished result has been done to an acceptable standard and that the aspect of the hall in the finished result is satisfactory. I agree with this. It can be seen from the photographs taken by Mr Thirkell on 4 December 2013.

[62] I do agree with Mr Peach however that the crank in the passageway is unusual and causes problems for fittings and floors because the wall is not straight. I think whilst some prospective purchasers of the house when considering the crank from an aesthetic point of view will find it acceptable, some might dislike it. There is therefore a diminution in the value of the house arising from this breach. The extent of that diminution is informed by the cost to straighten the crank and make good. Mr Hewitt’s costings for this of $8,653.00 include the sum of $1,105.00 for the construction of the robe for existing bedroom 3, but whether that work would actually be required when straightening the passageway depends on where that robe is to be constructed (this is the robe that was not installed and which was considered under item 27 above). Mr Carlsen is of the view this Mr Hewitt’s costings in any event are a little excessive and should be reduced to $7,855.00, if this claim is proved. However, whilst Mr Hewitt said that his figures were in the middle of a range or a little high, I think they are reasonable. As Mr Hewitt pointed out, it would take more time to do this work because the builder is not already on site and the owners are living in the house.

[63] Doing the best I can with the information available, I think the value of the house is diminished by $7,500.00 by reason of the crank in the passageway.

[64] Flashing at support of patio flyover to main part of house (item 17). The parts of the flyover at the back patio which overlapped the main part of the existing house and the newly constructed games room were supported by posts which penetrated the roof. The plans required ‘approved flashing’ to be used for these penetrations. It is common ground

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that a flat pan flashing should have been used but this was not done. The inadequate flashing caused water to leak into the house and this was fixed by Mr Carlsen in March 2013 by installing a flat plan flashing over the fourth penetration. A further leak developed because of the same problem from another penetration later in 2013 and this was fixed on a temporary basis by another contractor. Unless the flashing is replaced such problems will recur.

[65] An offset is claimed at $1,287.00 for rectification work, that is installing three of the necessary flashings. Mr Carlsen thinks that is excessive and costs it at $560.00. A sum of $583.00 is also claimed19 for the temporary repair carried out by the other contractor in November 2013. I am accepting Mr Hewitt’s figures here. It is correct as he says that it will cost more to get this remedial work done because the contractor is not already on site. The actual cost of the other contractor’s attendance in November 2013 supports Mr Hewitt’s view. I allow $1,287.00 for this work and I allow the $583.00 for the temporary repair.

[66] Position of toilet bowl (item 24). This was not central in the space available to it. I do consider this to be a failure to do the work in accordance with the plans (which shows it as central to the space available to it) and also a failure to do the work with reasonable care and skill. Space was restricted because Mr and Mrs Tresidder decided that they wanted a double vanity instead of a single one, and this made it more important to place the toilet bowl centrally in the space available.

[67] I think the work will be done to position this properly, and that it is reasonable to do this work. The cost of $559.00 is not disputed as an amount.

[68] Reconstruction of the ensuite shower (item 25). The main problem was that the shower head was placed the wrong side of the shower. Although the position of the shower head was not shown on the plans, the shower screen was shown on the plans and it was obvious that the shower head should be on that side. Because the shower head was on the wrong side, inevitably there would be a problem with spray escaping, and to deal with that a shower door was installed. But this caused a safety issue because the door when opened hit the toilet bowl and being made of glass could shatter. It was important for these reasons to follow the design shown and implied by the plans and this was not done.

[69] I am satisfied that work will be done to correct the problems with the shower and that it is reasonable to do this work. The cost is put at $2,047.50, a sum not disputed as an amount.

[70] I have found that this item which was claimed as defective work did not amount to a breach of contract:-

19 Although at one time during the hearing this claim was withdrawn it was reinstated.

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[71] Failure to install a vent to the ensuite plumbing (item 16). This was shown on the plans but I accept Mr Carlsen’s evidence that the plumber must have been satisfied that the existing vent was sufficiently close to meet the requirements of the Australian standards.20 This is indicated by the fact that a compliance certificate was issued by Cairns Regional Council. It is accepted on Mr Tresidder’s behalf that such circumstances would be an acceptable deviation from the plans.

Was there any minor incomplete or defective work and what are the costings? Is it right to allow compensation for this? Was the work practically completed?

[72] I regard the following matters as minor defects and omissions only.

[73] Poor concrete finishing to slab edge of new bedroom (item 18). This could do with some touching up because of some ‘honeycombing’ at a cost of $403.00.

[74] Poor roof gutter alignment causing ponding (item 19). It appears from the evidence that this work was done, probably just before Mr Thirkell’s visit to the house on 4 December 2013. The invoice concerned included other work, so the claim is based on Mr Hewitt’s costings of $241.00.

[75] Joints to fascia boards (item 20). There is a claim of $254.00 being the agreed cost of more neatly aligning all the fascia board joints. The experts agree that at least one of these was unacceptable, and that the others are out of sight. I do not regard it as reasonable to realign all the joints so I shall allow only $130.00 for this work.

[76] External pipework to air conditioning unit (item 21). This flexible piping was simply left to one side of the channel into which it would eventually fit, and would cost $100.00 to fix.

[77] Loose electrical cable from soffit (external light not fitted) (item 22). A lamp needed to be fitted and wired up. Cost: $305.50

[78] Concrete splashes near plinth to air conditioning unit (item 23). The cost to fix would be $91.00.

[79] Sill adjacent to bi-fold doors at existing kitchen area (part item 29). Mr Carlsen accepted in cross examination that this should have been feathered to reduce a tripping hazard pending anticipated further work to the existing house. Mr Hewitt costed this at $169.00, whereas Mr Carlsen said half that amount ($85.00) was more appropriate. I think the correct costing is somewhere between these two figures. I shall say $125.00 for this item.

[80] The remainder of item 29 (that area ‘not painted, no lighting, not retiled, no skirtings’) was not pursued.

20 AS/NZ 3500.2.

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[81] Building clean and waste removal (item 31). Mr Carlsen agrees that a fair price for contractors to clean the house and dispose of waste after such work would be $360.00.

[82] The total of these amounts is $1,755.50. Should Mr Carlsen give a credit for these amounts to the Respondents?

[83] The contract provides the answer to this. Had the parties complied with their obligations under the contract and everything had gone smoothly, Mr Carlsen would have completed the works in accordance with clause 8.3 of the contract by bringing the works to the Practical Completion Stage by 20 December 2012.

[84] Then he would have been able to give to the Respondents a Practical Completion Stage Notice under clause 17.1 of the contract, together with a practical completion claim and a date for final inspection so that a defects document could be produced if required.

[85] Alternatively bearing in mind the Christmas break and the variations which he was asked to do, Mr Carlsen could have sought more time by agreement if he needed it. Had he used written variation documents he could have stated on that document by how much the practical completion date would be delayed by reason of the variations. And this would have been signed by the Respondents and given him more time. It is noteworthy that Mr Carlsen had access to the site right up to early March 2013, mainly in working on the bedroom wall variation.

[86] Practical completion is defined in the contract in clause 1 as meaning (in the context of this case):

... that stage of the Works when the Works are completed in accordance with the Contract and all relevant statutory requirements, apart from minor omissions or minor defects, and the Works are reasonably suitable for habitation.

[87] The works were not completed in accordance with the contract. In particular, the roof sheeting and ceiling to the flyover at back patio, the patio slab, and the passageways were not done in accordance with the plans and specifications.

[88] Even when the Final Inspection Certificates were obtained on 10 May 201321 practical completion was not reached, as defined.

[89] The builder’s obligations continue under the contract even if not paid. Here the Respondents did not pay the monthly progress claim of 29 January 2013, nor the one on 1 March 2013. They also had left a variation invoice unpaid (the other variation invoices came later). And on 14 March 2013 they stated that they were not paying any more until they had compiled a list of issues. Clause 16 entitles the builder to suspend the works if the owner is in substantial breach of the contract, but this must be done in

21 Exhibit 20.

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writing and it must give the owner 10 days to remedy. Clause 22 entitles a builder to give 10 day’s notice of termination if not paid or on other breaches. Neither of these things were done by Mr Carlsen so his obligations under the contract continued.

[90] If he had complied with the obligations under the contract and brought the work to practical completion, then his further obligation would have been to complete the minor omissions and rectify the minor defects, within the 6 months allowed in the defects liability period.

[91] Mr Carlsen was therefore in breach in not completing the contract in these two ways. In these circumstances the Respondents are entitled to be put in the position in which they would have been if this had happened. And this means that they should recover the $1,755.50. Analysed in this way, it can be seen that what actually happened, with the Respondents prevaricating over meeting Mr Carlsen on site to create a defects list so that he could attend to it, is not relevant. This is because Mr Carlsen never reached practical completion stage so the Respondents obligation to co-operate in producing a defects list never arose.

[92] It is submitted by Mr McKinstry however, that clause 17.9 of the contract deemed that practical completion was reached because the owners took possession of the works when they were not entitled to. By clause 17.8, the owner is not entitled to take possession of the works until payment of the practical completion stage claim unless the builder has given ‘written consent’. It is quite true in this case that from 20 December 2012, the Respondents took possession of the extension which had been built and there were further payments due under the contract (but not at that time invoiced). However this was done with Mr Carlsen’s consent. What was missing was that he had not given his consent in writing as required by clause 17.8. The requirement of consent in writing in the contract was to benefit both parties, to avoid arguments later about what had happened. It was open to the parties to waive this requirement and this is what happened. Therefore there was no deemed practical completion.

Were there any effective variations of the contract?

[93] Variations in these types of contracts require formality. This is required not only by the contract itself in clauses 12 to 14 but also in s 79 to s 84 of the DBC Act which were the statutory provisions applying at the time. A variation document containing the required information must be signed by the builder and the builder must take all reasonable steps to get the owner to sign it. And a copy of this document must be given to the owner at the time required by statute.

[94] Mr Taylor submits that there were no variations to the contract which complied with the statutory requirements so that the contract price remained at $163,181.70. I do not agree. I note here that there are some differences between the statutory requirements and the requirements of the contract in clause 12 which deals with variations by agreement. In particular by clause 12.4(c) the contract requires the variation document to

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state the builder’s estimate of any delay to the works as a result of the variation. The statute only requires this if there will be a delay.

[95] There were two written quotations signed by Mr Carlsen and by Mr Tresidder. One was for fascia works to the existing house which had been affected by rot and termite infestation, and one was for drainage works. In my view all elements of s 79, s 80 and s 82 were satisfied and these signed quotations acted as valid variation documents under clause 12. In particular I believe that a single signature on behalf of the owners was sufficient22 and the change in the contract price because of the variation was clear from the quotation. There is no evidence that s 83 (copy to owner) was not complied with in these two cases. If clause 12 required any more formality, I think that requirement was waived by the parties.

[96] Mr Carlsen’s purchase of tiles for the Respondents on 13 November 2012 did not have a signed document, but in my opinion it was not for domestic building work and so was not covered by the statutory provisions.23 The first part of clause 12.3 of the contract allows the parties to agree to vary the works. The second part of that clause gives the procedure to be followed including the need for a signed variation. It is open to the parties to waive these formalities and in my opinion this is what they did in the tiling variation. This means that the contract sum was varied. The purchase of tiles variation is discussed below under item 8.

[97] The contract sum therefore altered as follows:

Original contract sum: $163,181.70Fascia work variation of 24 August 2012 $7,119.20Drainage works variation of 24 August 2012 (item 12) $2,092.50Purchase of tiles variation on 13 November 2012 (item 8) net effect $2,591.58Total contract sum as varied: $174,984.98

Does the Tribunal approve payment of an amount for the unsigned variations because of unreasonable hardship under s 84(2) of the DBC Act?

[98] In the case of variations which increase the work and which have been requested by the building owner, s 84 provides that the builder can only recover an amount for that variation if the formality has been complied with or if QCAT approves it on the builder’s application.

[99] In this case, for each variation which was done without proper formality, Mr Carlsen does apply to QCAT for approval.

22 Bearing in mind that the owners’ obligations under the contract were joint and several: clause 29.8.

23 It was not a ‘variation’ as defined by s 16 – it was not for domestic building work but was for the sale of goods; it was not however a separate contract: s 17A combines multiple contracts capable of being a single contract for domestic building work.

21

[100] Section 84(4) gives the test which QCAT must apply. Approval can only be given if there are exceptional circumstances to warrant the approval, or if the builder ‘would suffer unreasonable hardship’ if unable to recover an amount. In both cases, there is a second limb of the test which must be satisfied and that is that it would not be unfair to the building owner for the building contractor to recover an amount.

[101] Mr Carlsen does not rely on exceptional circumstances, but does rely on unreasonable hardship.

[102] It has been held that a builder cannot rely only on the non-payment of the payment for the variation to show unreasonable hardship, because the purpose of the provision is to deprive the builder of this payment if the required formalities are not followed. And the hardship itself will be viewed from the subjective standpoint of the builder, whilst consideration whether that hardship is unreasonable is an objective consideration in the light of the circumstances of the case.24

[103] Since the test is whether the builder would suffer unreasonable hardship if unable to recover an amount for the variation it seems to me that this hardship must be tested at the time of the Tribunal hearing, bearing in mind that if such hardship is financial it may have accumulated over time.

[104] Mr Carlsen’s evidence of hardship concentrated on the adverse financial position in which he was placed because the Respondents did not pay his invoices. In particular he reached the limit of his overdraft with the bank at the end of April 2013, and he borrowed on his personal credit card, incurring a lot of interest.

[105] He also said that on March, April and May 2013 he had difficulty paying his employees, subcontractors and suppliers, and he ended up drawing on his home loan to do so.

[106] There is no suggestion that Mr Carlsen’s financial fortunes have dramatically improved since that time, and I can see from the documents that he still had his overdraft at the end of 2014. Under cross-examination he was questioned about hardship using the present tense, and so confirmed that he was claiming hardship at the date of the hearing by reason of the non-payment. From these things I infer that his financial position at the date of the hearing was similar to the position last year.

[107] Therefore Mr Carlsen’s financial position is such that if he is not paid for the variations he will suffer hardship financially. I do not agree as was submitted to me on the Respondents’ behalf that the hardship arising from paying interest on a debt which is already arranged is not a great hardship. The difficulty is that the interest will continue unless the debt is reduced.

24 Allaro Homes Cairns Pty Ltd v O’Reilly & Anor [2012] QCA 286.

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[108] As for whether the hardship suffered by Mr Carlsen if approval is not given is unreasonable, there are a number of things to take into account in this case.

[109] There were two variations that were done formally with a signed document, that is the fascia variation and the drainage variation. These were at the very start of the contract work in August 2012. In both cases, the work was done and an invoice was submitted. The invoice for the fascia work was paid, the other one was not.

[110] Mr Carlsen’s reason why he did not prepare the variation documents properly after that time, which I accept, is that relationships between the two sides were good and they trusted each other. This can be seen from the emails. Also I note that the Respondents were paying Mr Carlsen’s monthly invoices at that time, albeit later than the required payment date.

[111] Also one of the early variations, that is for backyard works, had no signed variation document yet the Respondents largely paid it. So Mr Carlsen thought he could safely cut corners.

[112] This good relationship between the parties ended in March 2013.

[113] The speed with which the early variation invoices were provided by Mr Carlsen is in marked contrast to that later in the contract. There were significant delays in providing the invoice to the Respondents for the other variations. For example, the invoice for the fascia works was provided seven weeks after the work was completed. Other invoices were much later. The solar panel works were not invoiced until over six months after the work was done. The last variation work to be carried out however, the relocation of bedroom wall works, was invoiced about a month after the work was completed.

[114] These delays could also be significant for the second limb of s 84(4) which requires that to be recoverable, it would not be unfair to the building owner for the building contractor to recover an amount.

[115] It might happen for example, that a house owner has, by the delay of the builder to bill for previous work, been encouraged to ask for extra work perhaps in the belief that the builder was content to work voluntarily. Or the house owner to the knowledge of the builder may have organised financial affairs in the belief that no charge would be made for past variations.

[116] Whilst Mr Tresidder told me that the invoices came as a surprise, I do not think they really did. As well as being in delay in issuing the invoices for variations, Mr Carlsen was very relaxed with his invoicing for the main contract work, and the Respondents were obviously aware of this.

[117] Mr Tresidder is certainly not saying that he was misled by the delay, or that he assumed that the builder was working voluntarily. Instead the overall impression I have from his evidence is that the sole reason he

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believes the builder cannot now charge for the variations is because of the lack of paperwork.

[118] So generally it would not appear that because of the late invoicing it would be unfair for the Respondents to pay for variations which may be allowed under the first limb of s 84(4).

[119] My view about this also accords with what is said by Mr Taylor on the Respondents’ behalf in his final submissions. He says that in respect of the work that was requested and beyond the contract work it is conceded that it would not be unfair for them to pay for that work. I think that concession was correctly made.

[120] In several of the variations it is suggested on behalf of the Respondents that the amount recoverable should be limited to Mr Carlsen’s outlay to subcontractors or in purchasing materials. However, it seems to me that s 84(6) prescribes that the amount to be awarded for a variation to a fixed price contract must either be that agreed in the signed variation document, or if there isn’t one then it should be the cost of carrying out the variation plus a reasonable profit.

[121] Solar panel works (item 2). When Mr Carlsen attended the site on 23 February 2012 for the purpose of quoting for the work there were no solar panels on the roof. He provided his quote two days later. The contract was signed some four months later on 3 July 2012, and Mr Carlsen started on site in about mid August 2012. By that time the Respondents had installed solar panels on the roof of the main house.

[122] The solar panels had to be removed in order for the supports for the patio flyover roof to be installed, and then the solar panels had to be placed back in position and reconnected. This work was organised in early November 2012 and paid for by Mr Carlsen. Although Mr Tresidder was of the view that this work was required by the contract, I disagree – it was work outside the contract work. There was no variation document or quotation for this work.

[123] There is a disagreement about how this work came about. Mr Tresidder says it was done without his consent because he wanted his contractors to do it. However on my findings, there was a discussion about this between Mr Carlsen and Mr Tresidder and whereas at first it was agreed that Mr Tresidder would arrange for the solar panels to be removed and replaced, he subsequently asked Mr Carlsen to do this instead.

[124] Having regard to Mr Carlsen’s financial position and the fact that he paid electricians to do this work and paid his apprentice to assist, I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of this work. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind Mr Tresidder confirmed in evidence that he knew his installers (whom he initially asked to do this) were going to charge for this work.

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[125] As for the amount which is properly claimed for this, Mr Carlsen has taken the electricians invoice which he paid and added a small margin. He has not claimed for the time of his apprentice on this job (3½ hours). Mr Carlsen’s invoice is for $1,573.00. In my view this is a reasonable price for this work.

[126] Footpath and slab works (item 3). Mr Tresidder informed Mr Carlsen’s site foreman that they would like a footpath installed next to the new carport and have some additional concrete laid to create a concrete slab between the house and carport. After consultation with Mr Carlsen, the site foreman proceeded to do these works. This was completed on 24 November 2012.

[127] Although as part of site works generally this area would have needed filling and left with a loose covering as part of the contract work, the creation of a footpath and the concrete work was additional to this. Although Mr Tresidder said in evidence that he did not think it was additional work and that it was part of the original contract, I don’t accept this. The site foreman gave evidence about the discussion with Mr Tresidder. He said that Mr Tresidder was very specific about what he wanted, and ran through the job and gave the height and dimensions that he wanted. Mr Tresidder knew it was extra work. In any case what a party thought was in the contract is not the test. Viewed objectively it is clear that this was extra work.

[128] In order to do this work, equipment had to be hired and the concrete ordered, delivered and laid.

[129] Having regard to Mr Carlsen’s financial position and the fact that he paid third parties to do this work, I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of it. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind (on my findings) Mr Tresidder was aware it was extra work which would have to be paid for.

[130] As for the amount which is properly claimed for this, Mr Carlsen has taken the invoices to him and added a small margin. Mr Carlsen’s invoice is for $1,391.50. In my view this is a reasonable price for this work.

[131] Electrical works (item 4). Originally, the contract works included the relocation of an air conditioning unit so that it was to operate in the new games room, and the provision of four round fluoro lights in the master bedroom. The Respondents decided not to have this done but instead asked for some additional electrical work.25

[132] No variation document was drawn up and signed for these changes.

[133] The work was all done by electricians engaged by Mr Carlsen.

25 Various fans, lights, switches and a TV point as appears in Mr Carlsen’s invoice 1457 which is WC-19 to his statement of evidence.

25

[134] Mr Carlsen’s invoice for the variation gave credit for the electrical work that the Respondents no longer wanted so the cost of the additional electrical work was reduced accordingly.

[135] At the commencement of the hearing, Mr Taylor on the Respondents behalf accepted that the additional electrical work was extra to the contract. But when Mr Tresidder gave evidence on day 3 of the hearing, he said he thought all this work was contractual work, in other words none of it should be the subject of a variation at all. However, there is an email from Mrs Tresidder sent on 11 December 2012 stating that they were happy to make up the difference in the cost of the fans from that quoted, showing that at least in that respect she knew she was asking for extras. My finding is that the electrical work was obviously extra work, which means the concession made on Mr Tresidder’s behalf was properly made.

[136] Having regard to Mr Carlsen’s financial position and the fact that he paid the suppliers and paid the electrician to do this work, I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of this variation. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind there was obviously to be an extra cost.

[137] As for the amount which should be awarded for this variation, Mr Carlsen claims $836.93. On his invoice, this includes GST. A comparison of Mr Carlsen’s invoices discloses that sometimes the figures in the main body of his invoices include GST and sometimes they do not. On the basis that on this invoice the figures in the main body of the invoice include GST then contrary to Mr Carlsen’s belief, he has not charged 10% on top of the electrician’s invoices as his margin: he has simply passed on the GST as he should have done.

[138] However, this means that the Respondents did not receive the full amount of credit for the work removed from the contract. 10% should have been added to the credit of $1,454.37 to allow for GST, so Mr Carlsen should have given an additional credit of $145.44. It was conceded however on the Respondents behalf that a sum of $760.84 would be payable to Mr Carlsen for this variation if the Tribunal exercised its discretion on s 84 on this item. In the circumstances I propose to allow the conceded amount of $760.84 as the amount payable on this variation.

[139] Purchase of tiles (item 8). In an email on 7 November 2012 Mrs Tresidder informed Mr Carlsen that she had chosen some tiles from a supplier and she wanted him to purchase them. He went ahead and did so. There was no signed document relating to this.

[140] In this purchase, there were sufficient tiles for the whole house, that is the existing house (outside the contract works) and the extension (within the contract works). Mr Carlsen purchased the tiles at a cost of $4,253.48 and they were delivered to the house. Mr Carlsen then issued a tax invoice (number 1445) to the Respondents in the sum of $2,591.58. The difference between the two amounts was the saving to the Respondents in

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the main contract sum, there being no longer any need for a purchase of tiles in the main contract.

[141] A challenge is made to the reasonableness of Mr Carlsen’s invoice 1445 because it is said that Mr Carlsen should not have added a margin. However, it seems to be implicit in Mrs Tresidder’s request that Mr Carlsen would add a margin to the price that he was given for the tiles and in any case the margin he applied was very modest. I think the whole of the $2,591.58 is payable to Mr Carlsen by the Respondents.

[142] The net result of this transaction is that the main contract was varied upwards by $2,591.58 when Mr Carlsen’s purchased the tiles on 13 November 2012. That is the correct date because the agreement was certain enough on that date (being the difference between the two figures plus a reasonable margin).

[143] As discussed above26 this variation is not caught by the statutory provisions so there is no need for me to consider whether it is right to order payment under s 84(2). For the sake of completeness, if I had needed to consider that I would certainly approve its recovery having regard to Mr Carlsen’s outlay on the tiles.

[144] Sliding door to master bedroom (items 5 and 6). When the blockwork was being laid for the wall to the new master bedroom in the extension, the Respondents asked for a sliding door instead of a window to be installed there. This involved removing the blockwork which had been laid, and purchasing a sliding door instead of a window with associated security screen and having it installed by a subcontractor. Mr Carlsen did not prepare a variation document for signature.

[145] Mr Carlsen invoiced for this work in two parts, the first invoice number 1448 was for $292.82 and covered the work in removing the block wall which had been built in order to accommodate the new door. The second invoice number 1446 for $771.98 covered the cost of changing the window to the sliding door and security screen being the difference in price between the two.

[146] The first invoice differed from Mr Carlsen’s input to the Master Builder’s variation document maker. He inserted $242.00 for that work. This meant that the variation document he asked the Respondents to sign was for $242.00 and not $292.82 as he now claims in his invoice.

[147] Having regard to Mr Carlsen’s financial position and the fact that he has paid or will have to pay the subcontractors who installed the sliding door instead of the window, I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of this work. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind that it was obvious that to install a

26 ‘Were there any effective variations of the contract?’.

27

door required blockwork to be dismantled, and it was also obvious that a sliding door and security screen would be more expensive than a window.

[148] As for the correct amount to award, Mr Carlsen claims that his invoices represent a fair and reasonable value of the work done. However, he originally thought $242.00 was the correct amount. I allow $242.00 for item 5 and $771.98 for item 6.

[149] Window to new games room (item 7). This was extra work to install a window (provided by the Respondents) in the wall of the new games room which was not on the plans. This involved removal of blockwork which had already been laid the day before, and the installation of the window. No variation document was drawn up and signed for this work.

[150] Mr Carlsen paid his subcontractors for this work.

[151] Having regard to Mr Carlsen’s financial position and the fact that he has paid or will have to pay the subcontractors who did this work, I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of this work. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind it was obvious that in order to install a window in a wall which had already been laid that this would incur further cost.

[152] As for the correct amount to award, Mr Carlsen says in his statement of evidence that he charged $951.67 for this work in invoice 1451. But his invoice is actually for $786.50 and this was the amount that the Respondents were asked to sign on the variation document. I allow $786.50 for this work.

[153] New internal doors (item 9). In about January 2013 the Respondents asked Mr Carlsen to supply and hang new internal doors for the existing house to ensure consistency with the doors which he had installed in the new extension. Mr Carlsen agreed to this and supplied five doors. His own workmen hung ‘a couple of them’ but Mr Carlsen agreed with Mr Tresidder that the others should be left on site and not yet hung because the floor was not yet in its final state where they were to go.

[154] No variation document was drawn up and signed for the supply of these doors and the work done to hang them.

[155] Having regard to Mr Carlsen’s financial position and the fact that he has paid or will have to pay for the doors which he purchased I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of this work. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind they either knew or ought to have known that it would cost more.

[156] As for the correct amount to award, Mr Carlsen’s invoice for the supply and the work (number 1447) was for $804.25. The actual cost of materials for these five doors to Mr Carlsen was $363.13. From the evidence, I

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believe that Mr Carlsen based his invoice for $804.25 on the cost of nine doors plus the cost of hanging two doors. Instead it should have been based on the cost of five doors plus the cost of hanging two doors. Extrapolating from the available invoices, I believe that the labour cost of hanging the two doors was actually $139.58. This amount plus the cost of five doors in the sum of $363.13 comes to $502.71 which I find as a reasonable amount for this variation.

[157] Bedroom wall works (item 10). In about January 2013, the Respondents asked Mr Carlsen to relocate a wall of bedroom 2 in the existing house to increase the size of the bedroom.27

[158] No variation document was drawn up and signed for this work.

[159] In order to do this work Mr Carlsen engaged a number of trades listed in paragraph 93 of his statement of evidence and purchased materials shown in the exhibited invoices. Whilst some payments made to these trades probably included other work on the same site, it does seem clear that quite a substantial amount was paid by Mr Carlsen to others in order to complete this work.

[160] Having regard to Mr Carlsen’s financial position and the fact that he has paid these amounts I find that he would suffer unreasonable hardship if he were not to recover an amount in respect of this work. I am also of the view that it would not be unfair to the Respondents to have to pay an amount for this work bearing in mind they either knew or ought to have known that it would cost more.

[161] As for the correct amount to award for this variation, Mr Carlsen has given evidence that the invoice 1453 in the sum of $7,814.00 represents a fair and reasonable value for the variation work. Despite that, he accepted under cross examination that the invoice contained some duplication of charges in the following respects:

(a) it included ‘hang new doors where able’ which was in respect of the same two doors which were hung under item 9;

(b) he charged for ‘install robe’ when there was a robe allowed for in the original plans and so this was not extra work;

(c) as for ‘gyprock sheet walls, install new cornices’, some of this work (near to the extension) would have had to be done anyway as contract work, and so this was not extra work;

(d) a window or opening would have been required anyway from this bedroom as a result of the contract work, to comply with Australian standards.

[162] Mr Carlsen accepted (b) on the basis that the construction of two robes were shown on another version of the plans. These were the plans for

27 The actual work done is described in [91] of Mr Carlsen’s statement of evidence dated 2 August 2013, and is shown in Exhibit 17 which was tendered in evidence by Mr Tresidder and in Exhibit 7 from Mr Carlson.

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which building approval was given.28 These plans differ from the plans as they were originally drawn by the addition of a smoke alarm shown and these two robes on WD02. These things appear to have been drawn in by somebody, probably for the purpose of obtaining building approval. The building approval was given, based on these plans as amended, on 24 August 2012, so this was before the contract was made.

[163] It was put to Mr Carlsen in cross-examination and he accepted that his obligation was to build as shown on the plans for which building approval had been obtained. He had organised and obtained the building approval. Thus it included the construction of the new robes. The reason why these robes were required was because there were two robes in the existing house where the breakthrough to the extension was to be. So the extension work would have required their removal and replacement.

[164] The invoice is not challenged on any other grounds nor by the experts, so I shall accept it as a reasonable cost of the work that was done subject to the proper deductions on the above points. (a) can be dealt with by deducting the sum of $139.58 which was charged in item 9 instead. On (b), the best I can do is to reduce the invoice by $1,395.00 which was a sum paid to Wardrobe World which is in the pile of invoices Mr Carlsen says was referable to this work, plus his 10% margin = $1,534.50. And I think allowing for (c) would properly increase the total allowance to a round figure of $2,000.00. As for (d), this does not appear to have been charged on this invoice anyway and so must have been included in the original contract sum. I am going to reduce the amount payable on this variation by $2,000.00 to $5,814.00.

[165] Drainage works (item 12). The Respondents accept this sum is payable in this claim but reserve their position on the question of interest. The claim is $2,092.50.

[166] This claim for variation works I am not allowing.

[167] Backyard works (balance) (item 11, related to item 33). This was work that was requested very soon after Mr Carlsen first started on site. Mr Tresidder asked the earthmoving contractor engaged by Mr Carlsen to do extra work in the back yard. According to Mr Tresidder this was limited to removing a playhouse but I accept Mr Carlsen’s evidence (supported to an extent by the contractor himself) that it involved removing a number of palm trees and a large cane.

[168] No variation document was drawn up and signed for this work.

[169] Mr Carlsen billed the Respondents $2,975.00 plus GST of $297.50 for this work. The Respondents paid the $2,975.00 only. The claim is for the remaining amount $297.50.

28 They appear in an exhibit to the additional statement of evidence of Mr and Mrs Tresidder dated 27 August 2014.

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[170] Since no sum was agreed in advance for this work, the basis of this claim must be that the invoice was for a reasonable sum and the Respondents have failed to pay that reasonable sum.

[171] For reasons given when considering the claim for restitution in item 33 (below) Mr Carlsen has failed to show that the $2,975.00 plus GST was a reasonable sum for this work. In this claim, he has the burden to show this. The claim fails.

Can the builder’s claim for the contract sum properly be made?

[172] In these proceedings Mr Carlsen brings a claim for payment of the invoices of 27 January 2013 for $16,500.00 and 1 March 2013 for $25,000.00, and 12 April 2013 for $21,131.70. Together with the earlier ones, these invoices brought the total amount that Mr Carlsen had invoiced up to the original contract sum of $163,181.70. He invoiced for the variations separately.

[173] I need to consider whether he has a right to claim these amounts. If so, then the final reconciliation between the parties will be to allow these amounts but subject to an appropriate setoff for the incomplete and defective work.

[174] Of central importance here are the contractual provisions for payment of the contract sum. The standard form contract used here contemplates two types of claims for payment: progress payments and a final completion payment.

[175] Part D of the Appendix to the contract governs the progress payments. In that part, the parties may choose either payment Method A or payment Method B. Method A is for a designated stages contract and if that method is chosen certain percentages are payable at the completion of each stage, for example, 5% deposit, then 20% on completion of base stage, then 25% on completion of frame stage, then 50% on completion of enclosed stage. These and other variants of such progress payments correspond with the limits set by s 66 of the DBC Act.

[176] In the contract signed by the parties in this case, Method B was chosen and the following entry was made in Part D of the contract:

Deposit 5% value $8,159Monthly – 21st of each month.

[177] So this contract provided for progress payments to be claimed monthly and on the 21st of each month. The contractual provisions which relate to progress claims are in clauses 11.6 to 11.8. These provisions are triggered by a builder making a progress claim in compliance with clause 11.6 which entitles the builder to make such a claim ‘on completion of the stages set out in Part D ...’. Since in this contract, there were no such stages specified, Mr Carlsen’s claims for progress payments were not made under clause 11.6.

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[178] Instead, it seems to me that they were payable by the Respondents because of clause 11.4 which reads:

The owner must pay the Contractor the Contract Price in accordance with this contract.

[179] The reference here to ‘in accordance with this contract’ is to the agreement that progress claims were payable by monthly instalments.

[180] As for the final completion payment, clause 17.1 requires the builder on reaching the practical completion stage to issue a Practical Completion Claim together with a notice stating when the works reached that stage, giving a date for final inspection, and attaching the final certificates and approvals. This clause and other provisions in the contract, if followed, result in the parties entering into the defects liability period in which the contract contemplates that minor omissions and defects will be identified and dealt with.

[181] Since (on my findings) the practical completion stage was never reached, Mr Carlsen’s last invoice dated 12 April 2013 for $21,131.70 was not made under clause 17.1. It did purport to be however, since it was entitled ‘Invoice for practical completion stage as per contract & quote’.

[182] Was Mr Carlsen entitled under the contract to make this final claim in any other way? Of importance here is the agreement in Part D to make progress payments in monthly instalments. Was the last invoice of 12 April 2013 also a claim for a monthly instalment? The words ‘progress claim’ and ‘progress payment’ are not defined anywhere in the contract. Method A of Part D dealing with designated stages, does include the final payment in the list of stage claims. And clause 11.6 refers only to one type of progress claim (that which is payable on completion of a stage). Overall, I take the view that the agreement to pay monthly instalments means that the whole contract sum was payable by monthly instalments. This means that the last invoice of 12 April 2013 was also a claim for the payment of a monthly instalment, and therefore it was payable by the Respondents under clause 11.4.

[183] This construction of the contract has some practical sense, which also suggests that objectively the parties intended that the whole contract sum was payable by monthly instalments. If monthly instalments were limited to progress claims only, and omitted the final instalment, then a builder could easily eschew the difficulty he faced by this construction by issuing a penultimate invoice one dollar short of the contract sum, and issuing an invoice one month later for one dollar. The penultimate claim would be a progress claim and the later one would be the claim for final payment. Such an absurd result would not reasonably be in the contemplation of the parties when making this contract.

[184] It follows that Mr Carlsen can claim his final invoice under clause 11.4 set out above, subject to deductions for incomplete or defective work. However, because of the submissions which have been made it is also

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necessary to consider whether the progress and completion claims may be adversely affected by s 65 and s 67 of the DBC Act.

How do s 65 and s 67 of the DBC Act impact on progress and completion claims and interest thereon?

[185] There is very little case law on the impact of s 64 to s 67 of the DBC Act on a civil claim. In this case Mr Taylor on the Respondents’ behalf submits that s 65 and s 67 adversely affect Mr Carlsen’s ability to recover on his invoices issued during the progress of the work, and on his invoice for a completion payment, and on his ability to recover interest on unpaid amounts.

[186] It is necessary to set out the relevant sections:

65 Progress payments for contracts other than designated stages contracts

(1) This section does not apply to a designated stages contract.(2) The building contractor under a regulated contract must not demand

or receive an amount under the contract, other than a deposit, unless the amount is directly related to the progress of the work—(a) carried out under the contract; or(b) the carrying out of which has been managed under the contract.Maximum penalty—50 penalty units.

(3) Subsection (2) does not apply to a building contractor if—(a) the parties to the contract agree the subsection is not to apply;

and(b) the agreement is made in the way, and satisfies any

requirements, prescribed under a regulation.67 Completion payments(1) This section only applies to a regulated contract for which the subject

work consists of—(a) the erection or construction of a detached dwelling to a stage

suitable for occupation; or(b) the renovation, alteration, extension, improvement or repair of a

home to a stage suitable for occupation.(2) The building contractor under a regulated contract must not demand

all or part of the completion payment unless the practical completion stage has been reached.Maximum penalty—100 penalty units.

(3) The building contractor under a regulated contract must not receive all or part of the completion payment unless—(a) the practical completion stage has been reached; and(b) if the building owner claims the stage has been reached with

minor defects or minor omissions—the first and second

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requirements stated in subsections (4) and (5) have been complied with.

Maximum penalty—100 penalty units.(4) The first requirement is that the building contractor must have given

the building owner a document (the defects document) that—(a) lists the minor defects and minor omissions that both the

building contractor and building owner agree exist; and(b) states by when the building contractor is to correct the listed

defects and omissions; and(c) lists the minor defects and omissions the building owner claims

exist, but that are not agreed by the building contractor to exist; and

(d) is signed by the building contractor.(5) The second requirement is that the building contractor must have

made all reasonable efforts to have the building owner sign the defects document to acknowledge its contents.

(6) In this section—completion payment, for a regulated contract, means a payment required to be made under the contract by the building owner to the building contractor for the practical completion stage.practical completion stage, for a regulated contract, means the stage when—(a) the subject work has been completed in accordance with the

contract and all relevant statutory requirements, either—(i) without any omissions or defects; or(ii) apart from minor omissions or minor defects; and

(b) the detached dwelling or home is reasonably suitable for habitation.

[187] There is also s 64 which makes it a statutory offence for a builder to demand or receive a deposit more than the allowed limit. And there is s 66 which applies to designated stages contracts. Section 66 makes it a statutory offence for a builder to demand or receive a progress payment in excess of a limit for each stage of the contract. In each case the limits are set as percentages of the original contract price.

[188] Section 64 to s 67 therefore act to regulate the amount that builders can claim ‘up front’ before work starts and while it progresses. The percentages are a balance between the builder’s need for cash flow and what is fair to the owner. They can be read in the light of one of the purposes of the statute set out in s 3(a): ‘to achieve a reasonable balance between the interests of building contractors and building owners’.

[189] Relevant to this case, s 65(2) makes it a statutory offence for a builder to claim or receive a progress payment which is not directly related to the progress of the work. It is common ground that the parties did not exclude the operation of s 65(2) by using the procedure permitted by s 65(3). Mr

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Taylor submits that it is necessary for the Tribunal to decide, for each progress claim now being claimed in these proceedings, whether there was progress of work to back up the claim. If not, he submits that this may affect Mr Carlsen’s ability to recover on these progress claim invoices and certainly affects his right to interest.

[190] Section 67 makes it a statutory offence for a builder to claim or receive a completion payment unless the work has been practically completed. I have found that the work never reached practical completion stage as defined by the contract, because it was not completed in accordance with the contract and the omissions and defects were more than minor. The statutory definition of practical completion in s 67(6) is the same as in the contract. Mr Taylor submits that in these circumstances Mr Carlsen is unable to recover on the final invoice, being a claim for a completion payment as defined in s 67(6).

[191] These provisions expressly prohibit a builder claiming or receiving an amount which is unlawful under the provisions. It would appear therefore that the Tribunal would be unable to make an award if it would result in an unlawful receipt covered by the provisions. Such an award would also entail the builder relying on an illegal act and this could not be permitted.29

[192] But Mr McKinstry submits that s 92 permits this after all. That section reads:

Unless the contrary intention appears in this Act, a failure by a building contractor to comply with a requirement under this Act in relation to a domestic building contract does not make the contract illegal, void or unenforceable.

[193] The difficulty with this submission is that s 92 cannot make possible what is effectively an unlawful result. In addition to this, s 93 renders void any provision in a contract to the extent to which it is contrary to the Act (subject to any contrary intention). So an express contractual right to payment could not mean the prohibitions in s 65 and s 67 could be ignored.

[194] It is however, necessary to consider in what circumstances the issue of an invoice for a progress claim or for a completion payment would be unlawful under s 65 and s 67.

[195] Section 23 of the Criminal Code Act 1899 (Qld) states:

23 Intention—motive(1) Subject to the express provisions of this Code relating to negligent

acts and omissions, a person is not criminally responsible for—(a) an act or omission that occurs independently of the exercise of

the person’s will; or(b) an event that—

29 The doctrine of ex turpi causa non oritur actio would prohibit recovery.

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(i) the person does not intend or foresee as a possible consequence; and

(ii) an ordinary person would not reasonably foresee as a possible consequence.

…(2) Unless the intention to cause a particular result is expressly declared

to be an element of the offence constituted, in whole or part, by an act or omission, the result intended to be caused by an act or omission is immaterial.

(3) Unless otherwise expressly declared, the motive by which a person is induced to do or omit to do an act, or to form an intention, is immaterial so far as regards criminal responsibility.

[196] Section 24 of the Criminal Code Act 1899 (Qld) states:

24 Mistake of fact(1) A person who does or omits to do an act under an honest and

reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for the act or omission to any greater extent than if the real state of things had been such as the person believed to exist.

(2) The operation of this rule may be excluded by the express or implied provisions of the law relating to the subject.

[197] It has been authoritatively held that ‘act’ in s 23(1)(a) is limited to some physical action apart from its consequences while ‘event’ in s 23(1)(b) is a reference to the consequences of the act.30 So that the provisions mean that there is no criminal responsibility for an ‘accident’ being ‘a consequence which was not in fact intended or foreseen by the accused and would not reasonably have been foreseen by an ordinary person’.31

[198] Section 24 is perhaps wider, and would excuse a builder who honestly and reasonably believed a state of affairs to exist.

[199] This means that a builder who issues an invoice for a progress claim in the reasonable belief that it relates to the progress of work but due to some unexpected thing it does not, is not committing a statutory offence under s 65. Similarly a builder who is under the erroneous belief that the work was completed in accordance with the contract, but due to some unexpected thing it was not, does not commit an offence under s 67 by issuing a claim for a final completion payment. Such things could happen in the case of hidden defects not known to the builder, for example inadequate foundations because the ground engineer wrongly classified the site, or the supply and installation of an air conditioning unit which requires major repair after six months because of a latent manufacturing defect.

30 R v Taiters [1997] 1 Qd R 333.31 Gibbs J in Kaporonovski v R (1973) 133 CLR 209 at 231.

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[200] Mr Taylor submits that s 65 requires a progress claim to equate to the work done to the date of its issue calculated by reference to the contract sum less the value of the incomplete work at that time less the cost to remedy any defective work. There is a semantic difficulty with this submission because it requires reading the words in s 65 ‘directly related to the progress of the work’ as meaning ‘equal to the progress of the work’. A builder may well wish to issue a progress claim in a non-designated stage contract less than the value of the work up to that date, and this would not be unfair to the owner. There could be several reasons for this, such as awaiting an account from sub-contractors or from suppliers before being able accurately to calculate the outlay on a particular contract to a certain date. Read strictly in the way that Mr Taylor proposes, there is nothing in s 65(2) which would permit this. This makes it unlikely that the legislature intended that the provision should be read in this way.

[201] As from 1 July 2015 the DBC Act is repealed. Instead from that date, there are new provisions governing domestic building contracts in Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld). Section 34 of that schedule will govern all contractual claims other than the deposit. The new provision requires that the claim is directly related to the progress of the work and that it is proportionate to the value of the work or less than that value. This will therefore resolve the semantic difficulty with s 65(2).

[202] But do s 65 and s 67 have any effect at all in a final reconciliation of the parties carried out by a court or tribunal if such were permitted by the contract? If the answer to this question is ‘yes’, then in order to mitigate the effect of s 65, a builder might be advised to issue, in the alternative, a series of progress invoices of differing amounts to anticipate the findings of the court or tribunal about incomplete or defective work. And to mitigate the effect s 67, a builder who might not have practically completed the work might be advised to load the progress claims and keep the claim for completion payment very small. A builder who followed such advice might then be in a better position in the final reconciliation than a builder who did not. It seems unlikely that this was the intention of the legislature when enacting these provisions. It makes it unlikely that the legislature intended that s 65 and s 67 can impact upon a final reconciliation between the parties.

[203] In Cavalier Homes Brisbane Pty Ltd v Findville Pty Ltd32 Member Adrian Williams found that the conditions in s 67(3) had not been satisfied, but nevertheless calculated the award as the builder’s completion payment less damages for defective work. So the learned member must have been of the view that s 67 had no effect on the final reconciliation between the parties that he was carrying out.

32 [2011] QCAT 397.

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[204] In Habchi & Anor v Harjrudin Turcinovic33 Member Ann Fitzpatrick considered the effect of a breach of s 67(3) upon the final account between the parties in legal proceedings. She said at [111]:

(although the builder) has no statutory right to payment of a progress claim at the Practical Completion Stage, in circumstances where the requirements of the statute with respect to a defects notice were not complied with, the respondent is not precluded altogether from seeking recovery of the sum in question as part of the contract price.

[205] Member Fitzpatrick reached that view having regard to the provisions of s 69 which permits the court to refund the amount to the owner if there has been a contravention of s 67(3), but then under s 69(4) any such refund does not stop the builder from later demanding and receiving payment for the contract price.

[206] On other words, s 67 only governs the position between the parties at the time when the end of the work is reached or is close. It does not affect the position between the parties forever.

[207] Having regard to the analysis above, I respectfully agree with Member Fitzpatrick that this must have been the intention of the legislature with respect to s 67. Consistent with this approach I think also that the impact of s 65 is limited in the same way.

[208] Contraventions of s 65 and s 67 will however, have an impact on the interest claim, because a right to interest on a principal sum only arises where the principal sum was lawfully payable.

[209] Since s 65(2) has an effect on the claim for interest on the progress payments, it is still necessary for me to make a finding of fact as to whether there was any progress claim which was unlawful under s 65(2). As at 18 December 2012 the contract sum as varied was some $174,985.00. It is right to take that figure and not the original contract sum because the variations had the effect of changing the contract sum. Of that amount some $107,670.00 had been paid, and there was a credit of $1,393.00 due.34 There was therefore $65,923.00 odd due to be paid for the contract work as varied, subject to deductions for incomplete and defective work. I have not deducted anything in this calculation for minor defects because I agree with Mr McKinstry that the contract provided that these were to be dealt with later by a defects list.

[210] The obviously incomplete work as at 18 December 2012 was some $5,555.00. As for major defects, there were several, and on my findings they have now been costed at some $17,987.00. But the costings both for incomplete and for defective work are based on the current cost to the Respondents to remedy and also include the sum of $583.00 paid to a third party. Judging from the evidence given at the hearing, the reduced

33 [2011] QCAT 309.34 And a further $2,975.00 had been paid for the backyard works which was an ineffective

variation and so is not included in the $174,985.00.

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value of the work at the time of the progress claims would be some 10% to 20% less than the amounts that I have awarded, because of Mr Carlsen’s presence on site and his lower costs and ability to absorb the cost of necessary remedial work. In the circumstances, I cannot say that the progress claims made on 29 January 2013 for $16,500.00 and on 1 March 2013 for $25,000.00 were not ‘directly related to the progress of the work’ on those dates.

[211] My finding is different on the invoice for the completion payment. The completion payment is defined in s 67(6) and the definition is capable of encompassing the very last monthly instalment under the contract. Section 67(3) provides that before payment of this completion payment can lawfully be demanded two things must have happened.

[212] Firstly the work should have reached practical completion stage. This did not happen.

[213] Secondly the builder must comply with s 67(4) and s 67(5). Section 67(4) requires a signed defects document to be given to the owner and s 67(5) requires a builder to make all reasonable efforts to have it signed by the owner. Mr Carlsen was under some difficulty in doing these things. He knew at the time of this invoice that the Respondents were complaining about the work, but he did not know whether they were complaining about major or minor omissions and defects. Whilst he was aware that there were some things to finish, he was not aware exactly what defects were alleged. One of the main points made by Mr McKinstry is that the Respondents at this time were prevaricating over the defects process, which I think is indeed what was happening. Even in such circumstances, however, a builder must comply with these provisions.35 Whilst Mr Carlsen was trying to comply, he did not in fact produce a complying defects document.

[214] Since neither of the conditions in s 67(3) were satisfied, Mr Carlsen was precluded by s 67 from demanding all or part of the completion payment of $21,131.70.

[215] These findings of fact will be reflected in the interest award dealt with at the end of this decision.

The counterclaim

[216] Keys not provided and original keys not returned (item 32). The Respondents claim $572.85 paid to a locksmith for the cost of rekeying the whole house. It is correct that Mr Carlsen refused to hand over the keys to the bi-fold doors (supplied and installed as part of the contract work) and to the sliding door to the master bedroom (one of the variations) because he was not being paid.

35 Although it was held in Habchi & Anor v Harjrudin Turcinovic [2011] QCAT 309 that substantial compliance with s 67(4) is sufficient.

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[217] Clause 17.8 of the contract provides that the owner is not entitled to the keys for the works until payment of the builder’s practical completion stage claim, unless the builder has agreed in writing. Neither of these things happened. It follows that the Respondents are not entitled to any compensation for not being given the keys.

[218] The Respondents say also that Mr Carlsen did not return the one key to the house which they gave to him. Mr Carlsen denies he or any of his operatives were given a key to the house. I do not think Mr Carlsen was given a key. The locksmith’s invoice for rekeying the house was 27 June 2013, and it is notable that the Respondents had every opportunity to ask for the return of the key in one of the many emails they sent to Mr Carlsen and also in correspondence with Mr Carlsen’s solicitors before that date. Then in the evidence received on 30 August 2013, in paragraph 39 they complain that ‘no keys were given in possession’. There is no complaint there that a key to the existing house had not been returned. I do not allow this item.

[219] Overcharge of backyard works invoice (item 33 related to item 11). When considering the variation item 11 (above) I described the nature of the work done by the earthmoving contractor in the backyard at Mr Tresidder’s request. For this work, Mr Tresidder paid Mr Carlsen $2,975.00.

[220] The Respondents now claim reimbursement of $2,012.50. They say that Mr Carlsen should only have charged $962.50 for this work. The evidence relied on to support this overcharge is the earthmoving contractor’s invoice to Mr Carlsen number 5168 which is for $2,975.00 plus GST = $3,272.50. The Respondents say that only the first two items on that invoice were extras. They come to $875.00 and with the GST the total is $962.50.

[221] Any difficulty in analysing the earthmoving contractor’s invoice was dispelled when Mr Carlsen gave evidence under cross examination. He readily accepted that only the first two items were in respect of the extra work as the Respondents say. This was much more acceptable evidence than that given by the earthmoving contractor whose evidence was confused.

[222] There was therefore an overcharge in the final payment.

[223] Whilst claims for restitution may give rise to some legal argument as to whether there was a true injustice, or to various defences particularly where the amount has been paid where there is a contract to pay a reasonable sum, these arguments have not been canvassed. In the circumstances I allow this claim and award the Respondents the sum of $2,012.50 on this part of their counterclaim.

[224] Storage of patio furniture/external day bed (item 34). The claim here is for $4,645 being storage costs claimed from January 2013 to 15 June 2015. Prior to the start of the work, the Respondents placed several things from the house into storage. After the work was done, they moved

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personal effects back into the house, but left the patio furniture and equipment in storage. Mr Tresidder explained the reason for this was that the patio was not finished and was wet, and there was nowhere else to put them. In paragraph 88 of their additional statement of evidence of 27 August 2014 Mr and Mrs Tresidder blame the incomplete works and leaking patio area for the need to maintain the storage contract.

[225] The problem with this claim is that there was no leak in the patio area because of any breach by Mr Carlsen. Any wetness there would be because of the natural effect of weather in a patio area. As for the unfinished house to be to blame for this, I cannot see how the incomplete work or for that matter the defective work which I have found, could be the cause of the ongoing storage contract. This claim fails.

[226] Brian Peach’s attendance (item 35). A claim is made for the cost of Mr Peach’s attendance at the Respondents home and the production of his report at a cost of $700.00. This is put as a claim for damages caused by Mr Carlsen’s breach of contract. This claim does not include the cost of Mr Peach’s attendance at the hearing as an expert. I agree that the costs of $700.00 need to be dealt with either as damages or as costs in the claim and the question is which is appropriate for this fee.

[227] Mr Carlsen presented this application to the Tribunal on 23 May 2013. Prior to that, Mr Carlsen’s solicitors had written a letter before action dated 24 April 2013, sent by email. In response to this letter, on 3 May 2013 Mr Tresidder stated that he had commissioned a report which was being prepared. Mr Peach submitted a statement of evidence to the Tribunal dated 14 April 2015 in which he said that he delivered his report to the Respondents on 12 April 2013. The Respondents did not send this report to Mr Carlsen or to his solicitors until the proceedings were well under way.36 When this was done there were Tribunal directions that the Respondent’s evidence including the expert evidence had to be served and filed. On 22 November 2013 Mr Carlsen’s solicitors sought further and better particulars of the Respondent’s case by reference to Mr Peach’s report. On 19 December 2013 Mr Peach responded to that request.

[228] Mr Peach’s report was also used by the Respondents to obtain a quote for work of rectification and completion, which until very close to the hearing was relied on by the Respondents in this claim as evidence of their loss.

[229] Mr Peach was instructed throughout by the Respondents as their expert witness in the claim and he attended the hearing as such.

[230] The bill presented by Mr Peach is for the preparation of his reports of 12 April 2013 and of 19 December 2013. It is not, for example, for the cost of supervising any remedial work which would be of a different nature.

36 Mr McKinsey has given two different dates when he first received the report – 30 August 2013 and 15 November 2013. For these purposes however the exact date does not matter.

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[231] It is clear from the above that all Mr Peach’s costs fall to be considered at the appropriate time as part of the costs of the proceedings, rather than dealt with separately as part of the claim for damages.

[232] Mr Hewitt’s attendance (item 36). Mr Hewitt was instructed about two weeks before the date of the hearing in order to provide better evidence of costings for remedial work for the Respondents. He attended the hearing as a second expert witness on behalf of the Respondents. It is clear that his costs fall to be considered at the appropriate time as part of the costs of the proceedings, rather than dealt with separately as part of the claim for damages.

Claim for solatium – distress, disappointment and inconvenience

[233] A claim is made by the Respondents under this head. I take it the claim is for damages for the distress, disappointment and inconvenience they have suffered by reason of the builder’s breach of contract, and which they will suffer when the remedial work is done. Whilst Mr McKinstry accepts that an award is available under this head, he submits that there are certain constraints which apply to such awards. It is necessary for me to consider whether this is correct.

[234] In the English courts, damages for distress and disappointment were first awarded in spoilt holiday cases because such contracts are intended to provide entertainment and enjoyment.37 There are also examples of similar awards in contracts to prevent worry or provide peace of mind, such as a solicitor asked to obtain a domestic violence order,38 or a surveyor asked to say whether or not a house suffered from aircraft noise.39

[235] The House of Lords in Ruxley Electronics & Construction Co Ltd v Forsyth40 dealt with a claim against builders who had constructed a pool nine inches too shallow. In the absence of any other measure of loss the House approved the judge’s award for £2,500.00 for ‘loss of amenity’.

[236] Damages for inconvenience have a more physical manifestation, and have long been available, for example in Hobbs v London & South Western Rly Co,41 where the plaintiff was deposited at a station short of his destination, and was awarded £10.00 for the inconvenience of having to complete the journey on foot.

37 Jarvis v Swans Tours Ltd [1973] QB 233 Court of Appeal; Jackson v Horizon Holidays Ltd [1975] 3 All ER 92, and also Diesen v Samson 1971 SLT (Sh Ct) 49 where a wedding photographer failed to take pictures.

38 Heywood v Wellers [1976] QB 446.39 Farley v Skinner [2002] 2 AC 732 (House of Lords); in fact the surveyor said the house

did not suffer from noise, when it was under the Gatwick airport flight path.40 [1996] AC 344.41 (1875) LR 10 QB 111.

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[237] In Australia, the High Court in Baltic Shipping Co v Dillon (The Mikhail Lermontov)42 accepted that damages for distress and disappointment can be awarded where the very object of the contract was to provide pleasure, relaxation or freedom from molestation. And that damages can be awarded to compensate for mental suffering as a result of physical inconvenience.

[238] In Tamawood Ltd v Paans & Anor43 dealing with a house that by reason of its construction became flooded in heavy rain, McGill DCJ was of the view that damages could be awarded for consequential losses because of this including damages for inconvenience and mental distress directly related to that inconvenience. And he opined that loss of amenity damages of the type awarded in Ruxley could be awarded if diminution in value of the property could not be shown.44

[239] In Kirkby & Anor v Coote & Ors45 an agreed sum of $20,000.00 for inconvenience and distress was awarded to the owner of a house with such inadequate footings that there was a risk of the house collapsing.

[240] Mr Taylor cites Pearce, Ronald Benjamin t/as Freestyle Projects v Caswell46 where Member Morzone (now Morzone DCJ) citing Ruxley, awarded damages for the stress and discomfort of not having a home to move into until almost 12 months after the due date for completion, plus the anxiety that arose because of totally unsatisfactory workmanship.

[241] In D Galambos & Son Pty Ltd v McIntyre47 damages were awarded in circumstances where the homeowner was unable to make habitable rooms out of certain areas of the dwelling.

[242] In Coshott v Fewings Joinery Pty Ltd48 damages were awarded for inconvenience caused by the need for remedial work and for the disappointment of not getting the quality result bargained for where it was unreasonable to remedy the breach.

[243] In Boncristiano v Lohmann49 damages were awarded for stress caused by physical inconvenience because the builder had built an inadequately supported house, with incorrectly fitted weatherboards.

[244] There is another thread of cases where damages for loss of use may be awarded where a chattel is not available to the plaintiff because of damage by the defendant, even if it is a non-profit making chattel.50

42 (1993) 176 CLR 344 at [40] and [44].43 [2004] QDC 427.44 Ruxley Electronics & Construction Co Ltd v Forsyth [1996] AC 344 at [59] and [60]

respectively.45 [2005] QSC 197.46 [2009] QCCTB 192 (Commercial and Consumer Tribunal).47 (1974) 5 ACTR 10.48 (unreported, New South Wales Supreme Court, CA, 15 July 1996).49 [1998] VR 82.50 See Halsbury’s Laws of Australia: Damages paragraph [135-1085].

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[245] The current thinking in New South Wales however, is that damages for non- financial loss cannot be awarded because of the wording in the Civil Liability Act 2002 (NSW), which governs awards for non-economic loss.51

[246] Mr McKinstry argues that such awards are limited to these three categories of cases:(a) where the owner is disappointed with the result and/or has been

precluded from enjoying the building work for some period of time;(b) where the owner has been significantly inconvenienced; (c) where the owners have suffered significant stress and anxiety.

[247] Mr McKinstry points to Wulf v Cooper52 where an award under this head was refused because rectification work would take place over a few days and was a ‘mere inconvenience’. It was said in the same case that the claim for stress and anxiety would require evidence which goes beyond mere inconvenience and perhaps to the extent of what would be customarily considered a personal injury claim.

[248] Mr McKinstry submits that there are other decisions which show that the inconvenience or stress and anxiety must be significant before an award can be made: Turner & Anor v Zachary Developments Pty Ltd,53 Coastal Patios v Bennett & Anor54 and Faulks v New World Constructions Pty Ltd.55

[249] Mr McKinstry also submits that an award for solatium is not appropriate where the owner is successful on their claim for rectification or reinstatement, as can be seen from Ruxley and Coshott cases. He submits it is only an alternative to such an award.

[250] For my part, I do not regard any of the authorities as setting out any binding rules or established principles when considering whether an award is appropriate for distress, disappointment or inconvenience in a contract for domestic building work.

[251] Instead I believe the concept is more flexible as suggested in this passage from McGregor on Damages:56

[4.25]Secondly, the very important decision in Ruxley Electronics & Construction Co Ltd v Forsyth may presage a second, wider, exception to the 'financial loss only' approach in non-commercial cases. In that case builders constructed a swimming-pool, but in breach of contract built it 9 inches too

51 It would appear that this reservation does not apply to Queensland where there is a similar statute (the Civil Liability Act 2003 (Qld)) but which is in quite different terms.

52 [2007] QCCTB 3.53 [2010] QCAT 706.54 [2013] QCAT 268.55 [2013] QCAT 658.56 19th Edition July 2014 Chapter 4 E; Disappointment, Distress, Humiliation and Loss of

Enjoyment.

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shallow. The main point of contention was whether the client was entitled to claim the cost (some £21,000) of digging out the pool to the required depth, the diminution in the overall value of the client's house due to the breach (negligible), or the rough-and-ready sum for 'loss of amenity' given by the judge (£2,500). The House of Lords decided in favour of the third solution. As Lord Bridge pointed out, the idea that the client had to receive either 'cost of cure' or 'diminution in value' represented a false dichotomy, since on the facts before their Lordships it was not true that the only possible measure of what the client had lost was a financial one. Lord Bridge continued:

''[T]he court, in assessing the measure of the claimant's loss has ultimately to determine a question of fact, although the law has of course developed detailed criteria which are to be applied in ascertaining the appropriate measure of loss in a wide variety of commonly occurring situations. Since the law relating to damages for breach of contract has developed almost exclusively in a commercial context, these criteria normally proceed on the assumption that each contracting party's interest in the bargain was purely commercial and that the loss resulting from a breach of contract is measurable in purely economic terms. But this assumption may not always be appropriate.”

Lord Mustill argued on similar lines:''[I]n several fields the judges are well accustomed to putting figures to intangibles, and I see no reason why the imprecision of the exercise should be a barrier, if that is what fairness demands.… The judgment of the trial judge acknowledges that the employer has suffered a true loss and expresses it in terms of money.”

Thus in the event the House of Lords correctly upheld the trial judge's award of £2,500.[4.26]This reasoning, which has since been approved again in the House of Lords (Farley v Skinner [2002] 2 AC 732), is highly significant. Logically, it suggests that in any contract case where the benefit that ought to have been, but was not, obtained was something with a sentimental rather than a strictly pecuniary value, then on principle the value of that benefit may be assessed on a non-pecuniary basis. This is a good deal wider than the 'contracts for pleasure or peace of mind' principle adumbrated in Jarvis v Swans Tours Ltd: only by stretching the definition to breaking-point can a construction contract be regarded as a contract whose object is to provide amusement or freedom from disturbance. [4.27]Moreover, it is tentatively suggested that this principle makes good sense, for several reasons. First, it correctly restates what the law of tort has long accepted: namely, that non-commercial losses may need to be valued non-commercially. Second, it explains convincingly why personal injury damages are available for breach of contract on exactly the same basis as in tort. This is not so much an exceptional rule, as simply a recognition that damages for personal injury, whatever their juridical source, represent an attempt to value non-commercial interests. Third, it may well explain why damages for physical inconvenience are available in contract even if those for disappointment are not (on which, see below). And fourth, if the law of

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contract does distinguish between commercial and non-commercial interests, this goes a long way towards assimilating the contractual rules on non-pecuniary damages with those obtaining in tort, where a very similar distinction holds good.

[252] In this passage, the reference to see below is:

[4.30]Nevertheless, since Ruxley Electronics & Construction Co Ltd v Forsyth the subject of damages for inconvenience in breach of contract actions may be able to be reconciled with principle. We suggested above that, in so far as a contract was aimed at protecting interests that were not simply commercial, damages for infringement of such interests might be assessed on a not strictly commercial basis. Arguably cases like Hobbs v London and South Western Rly Co are best explained as a working out of this principle: in so far as public transport undertakings promise to transport one home quickly and reliably and then break that promise, there is no reason why damages for that breach should not be assessed, at least partly, on a non-commercial basis.

[253] I propose therefore in this case to assess the proper level of compensation to the Respondents to compensate them for their non-financial loss for the breach of contract unbound by any restrictive rules.

[254] Any homeowner will reasonably contemplate that construction or renovation work at their home will be disruptive, inconvenient and messy. And it will be rare in a project of this type involving several trades that the work will be done perfectly the first time. It is to be expected for example that the builder will need to return to the property to deal with some defective workmanship or unfinished work.

[255] I have found that the Respondents will need to tidy up the patio slab (item 26), but I have also found that they never expected to have a new slab. It was just because the remaking of the slab was inadvertently left in the plans that they are able to bring the claim with respect to the slab at all. I am already awarding $4,250.00 to compensate them for their financial loss. I do not accept that until the tidying up work to the patio slab is done, they cannot use the patio. In the circumstances I cannot see that they have any non-financial loss which falls to be compensated.

[256] I cannot see that the Respondents have any non-financial loss caused by the other incomplete work for which Mr Carlsen was responsible. I do not think that the delay in getting these things completed is caused by any breach of contract by Mr Carlsen.

[257] I cannot see that there will be any real inconvenience to the Respondents when the roof sheeting is replaced. This is outside work, and they will merely lose the use of the patio for a while. Prior to this work being done, they are not suffering any real inconvenience or distress because of it.

[258] The leak into the house of water from the defective flashing did cause distress and upset to the Respondents because it caused an ingress of water into the new games room and into the master bedroom robe area.

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The pooling water can easily be seen from the photographs. This went well beyond the inconvenience which would normally be suffered in a contract of this sort. The financial loss to the Respondents arising from this is compensated by the award of $583.00 which they paid to a contractor in November 2013 to have one of the leaks temporarily repaired, and by the award of $1,287.00 to have the remaining flashings replaced so that they will not leak again. In addition to the financial loss by reason of this breach, the Respondents did suffer some non-financial loss arising from this leak.

[259] However, like the roof sheeting the Respondents will not suffer any real inconvenience while the permanent remedial work is being done.

[260] As for the shower, Mrs Tresidder expressed her concern when giving evidence about a safety hazard for her three young children by the risk of the shower door fracturing if it should hit the toilet seat when being opened. To reduce the chance of this happening, she has placed a towel over the toilet seat. Whilst it is difficult to assess the real risk here without knowing more about the domestic arrangements and the propensities of the children, Mrs Tresidder did demonstrate some genuine anguish about this issue when giving evidence and I take this into account in my assessment under this head.

[261] Further, when the shower is being remade and the toilet bowl moved, the Respondents will lose the use of their ensuite and this will be an inconvenience to them. This is non-financial loss which needs to be compensated.

[262] I have not accepted the Respondents complaints that they are upset by the crank in the passageway, and that they are upset by the flyover ceiling not having boards which are flush for the reasons given in the next section below.

[263] There is no doubt from the manner in which they gave evidence, both Mr and Mrs Tresidder displayed symptoms of distress and upset but I agree with Mr McKinstry’s submissions57 that there are probably multiple causes of this. It is important for me to compensate for the non-financial loss caused by Mr Carlsen’s breach of contract and not for loss caused by other things.

[264] There are only two issues therefore for which it is appropriate to make an award for non-financial loss. They are respectively, the distress, disappointment and inconvenience caused by the leaks, by the shower arrangement and by the need to remake the shower and move the toilet bowl. For these matters I award the Respondents $1,500.00.

[265] I do not agree with Mr Taylor’s submission that there ought to be an award equating to Mr Carlsen’s overheads or builder’s margin because the Respondents will suffer the inconvenience of having to organise remedial

57 Page 62.

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work. I do not think they will need to do this in the case of those defects which are reasonable to remedy.

Respective evidential reliability: an explanation for some findings of fact

[266] There are many instances in my findings of fact when I have preferred the evidence given by Mr Carlson over that given by Mr Tresidder. And there are instances when I have not accepted the evidence of Mr and Mrs Tresidder when it is not controverted at all. I need to explain why.

[267] As the evidence from Mr Carlsen progressed it was clear that he had a good recollection of events. He made no attempt to improve his case in any way in his answers to questions under cross examination. To the contrary, he readily made concessions when asked in detail about certain matters, which included errors made in his paperwork.

[268] Mr Tresidder’s evidence was in marked contrast to that of Mr Carlsen. On many occasions he gave answers which demonstrated that he was looking for the implications of the questions. He tried on many occasions to catch out the questioner and was argumentative and uncooperative with the cross examination process.

[269] Mrs Tresidder’s evidence was strange in that she claimed to have no or little knowledge of what had happened at her home and said that she left everything to Mr Tresidder. She was reluctant or unable to answer questions which she should have been able to answer.

[270] When asked about how the alleged defects and incomplete building work might have caused them stress and upset, both Mr and Mrs Tresidder were very theatrical and offered effectively a highly rehearsed speech.

[271] The material presented to the tribunal prior to the hearing from Mr and Mrs Tresidder was extremely verbose and repetitive and failed properly to address any of the real issues in the case. It transpired that although the statements of evidence purported to be the evidence of both Mr and Mrs Tresidder, they were put together by Mr Tresidder and Mrs Tresidder claimed to have little direct knowledge of the matters in the statements.

[272] All the above things can of course be explained by things other than poor credibility. They may be products of anger, distress, nervousness, misunderstanding or of deeper personality or emotional factors. But here, there are certain contentions made by Mr Tresidder which are so unlikely that it is difficult to accept his other evidence.

[273] Firstly, there is his reaction to the builder finding that upon making the opening in the outside wall of the existing house, it did not line up with the internal hallway. Ultimately, this was dealt with by building a crank in the hallway to provide a passage between the two parts of the house. Mr Carlsen’s position is that he discussed with Mr Tresidder two possible solutions and they settled on the crank in the hallway as the preferred option. He says that Mr Tresidder actually was quite content with this

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because it meant that when looking down the hallway you could not see directly into the new master bedroom.

[274] Mr Tresidder however, says that there were no discussions at all about a solution to this. Instead he says that Mr Carlsen disappeared from site and little was seen of him after that, and then he found that the crank had been made – something which he had not consented to. Mr Tresidder says however, that he was aware of the misalignment immediately it happened. And it is relevant here that Mr Tresidder was present on site during the progress of the works, and indeed the whole family was living in the house while the work was progressing. They could observe its progress first hand.

[275] He now claims that he was outraged about the misalignment, and also about the building of the crank. He says that he expressed this outrage to his wife and to workers on the site but not to Mr Carlsen because he was not to be found, although he was aware of his concerns.

[276] The fact is that Mr Carlsen remained as the builder on site for many weeks after the breakthrough occurred. Even if Mr Tresidder did not see him on site, which I think is unlikely, telephone and email contact was possible but it seems, not even attempted on this issue.

[277] Mr Tresidder’s contention that he did not complain directly to the builder because he could not be found is not credible. The first recorded complaint about the passageways being misaligned and about the crank is about 10 months later in his witness statement of 30 August 2013. Prior to that, and while Mr Carlsen and his solicitors were pressing for payment, Mr Tresidder had several opportunities to complain about this but did not do so in correspondence between them. Mr Tresidder’s denial that there was an on site agreement about how to resolve the problem which had arisen looks very unlikely when contrasted with these known facts.

[278] Mr Tresidder’s expressed belief that the footpath and slab works (item 3) was part of the original contract, cannot survive the evidence of Mr Carlsen’s site foreman who described the conversation he had with Mr Tresidder very clearly.

[279] The same happened with the electrical works (item 4) a point which was actually conceded on day one of the hearing on Mr Tresidder’s behalf, but which he claimed was part of the original contract when he gave evidence.

Final reconciliation between the parties

[280] For reasons given earlier in this decision I have found the total contract sum was varied to $174,984.98.

[281] For reasons given earlier in this decision, I approve under s 84(2) recovery of the following additional variations and assess the amount payable under s 84(6) as follows:

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Solar panel works (item 2) $1,573.00

Footpath and slab works (item 3) $1,391.50

Electrical works (item 4) $760.84

Sliding door to master bedroom (items 5 and 6) $1,013.98

Window to new games room (item 7) $786.50

New internal doors (item 9) $502.71

Bedroom wall works (item 10) $5,814.00

Total additional variations now approved: $11,842.53

[282] These are the amounts paid or properly credited in the Respondents’ favour:

Paid by owners up to 28 December 2012 for original contract work $100,550.00

Paid by owners for fascia work variation of 24 August 2012 $7,119.20

Restitution of overpayment for backyard variation (item 33 related to item 11) $2,012.50

Add credit for tiling and skirting in new games room (item 28) $1,393.00

Add allowance for minor omissions and minor defects $1,755.50

Total: $112,830.20

[283] I have found this work was incomplete and should be credited in these sums:

New slab to patio area (item 26) $4,250.00

Robe in existing bedroom 3 (part item 27) $1,305.00

Total deduction for incomplete work: $5,555.00

[284] I have found this defective work proved, and the appropriate compensation to award as being:

Incorrect roof sheeting to flyover at back patio (item 13) $6,000.00

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Incorrect ceiling to flyover at back patio (item 14), nominal damages only $10.00

Crank in passageway (item 15) $7,500.00

Flashings at supports of flyover at back patio to main part of house (item 17) $1,287.00

Paid to contractors for temporary repair of the flashings (item 17) $583.00

Position of toilet bowl (item 24) $559.00

Reconstruction of the ensuite shower (item 25) $2,047.50

Total compensation for defective work: $17,986.50

[285] This additional amount is due to the Respondents for consequential loss:

Claim for distress, disappointment and inconvenience $1,500.00

[286] The net position between the parties is therefore as follows:

Total contract sum as varied: $174,984.98

Total additional variations now approved: $11,842.53

Total Mr Carlsen is now entitled to $186,827.51

LESS

Paid or to be credited $112,830.20

Incomplete work: $5,555.00

Defective work: $17,986.50

Solatium award: $1,500.00 $137,871.70

Total owed to Mr Carlsen: $48,955.81

Interest

[287] Clause 11.9 and item 19 of the contract specify that interest is payable on outstanding amounts at the rate of 15% and that this is payable from the time payment is due until the date of payment. Section 34B of the Queensland Building and Construction Commission Regulation 2003 (Qld) provides that interest is payable on the amount of damages awarded at the rate specified in the contract.

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[288] I agree with Mr McKinstry that because of the terms of clause 11.9 of the contract the order should provide for interest continuing at 15% until payment.

[289] I agree with Mr Taylor that no interest is payable on the unsigned variations until the Tribunal’s order.

[290] By clause 11.7 and item 20 of the contract the progress claims and the completion claim should have been paid within seven days of issue of the claim. Interest is payable on these provided that I am satisfied that the provisions of s 65 (in respect of progress claims) and s 67 (in respect of the completion payment) were not contravened. In this case I have found that s 65 was not contravened, but s 67 was.

[291] I have calculated all awards from the due date to 15 June 2015.

[292] In respect of these invoices, interest is therefore dealt with as follows:

Date Amount Remarks Interest awarded

29 Jan 2013Due: 5 Feb 2013 $16,500.00

The whole of this amount was payable at the time and there was no contravention of s 65

$5,831.51

1 Mar 2013Due: 8 Mar 2013 $25,000.00

The whole of this amount was payable at the time and there was no contravention of s 65

$8,517.12

12 Apr 2013Due: 19 Apr 2013 $21,131.70

This was the completion payment. Section 67 had not been complied with so this claim should not have been made - no interest is awarded

NIL

Total: $14,348.63

[293] On two items, there is some interest payable in the Respondents’ favour. It seems fair to apply the same rate of interest to these. On 28 December 2012 they overpaid the invoice for the backyard variation by $2,012.50. Interest on this is $743.52. On 25 November 2013 they paid the bill for the temporary repair to one of the leaks caused by the defective flashing in the sum of $583.00. The interest on this comes to $135.85. I shall deduct these amounts from the interest of $14,348.63 owed to the Applicant. This makes the net interest owed to the Applicant the sum of $13,469.26.

[294] I therefore order that the Respondents shall pay to the Applicant the sum of $48,955.81 plus interest of $13,469.26 = $62,425.07. In accordance with the contract interest shall accrue on this amount at 15% until payment.

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[295] I shall order that, if so advised, the parties may make submissions as to costs not later than 17 July 2015. If any such submissions are made then the other party may respond to the submissions by 31 July 2015.

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