Victorian Civil and Administrative Tribunal|2004-07-19|Before: Mr J

Fasham Johnson Pty Ltd v Ware [2004] VCAT 1361 (19 July 2004)

Domestic Building - claim and counterclaim - respective quanta.

2. On the counterclaim I order Applicant to pay the Respondents the sum of $24,815.00.

4. I direct the Principal Registrar to fix a date for further hearing (of one (1) day).

1. I have previously delivered written Reasons for Decision in this matter on 25 July 2003. The Respondents appealed my decision to the Supreme Court but were unsuccessful.

2. My conclusion on that occasion was that the Respondents had wrongfully repudiated their building contract with the Applicant. At the same time, I was satisfied that there were items of defective workmanship which fell to the responsibility of the Applicant.

3. As I indicated, however, I was unable to finalize the question of quantum for either party. It has been necessary, therefore, to conduct a separate hearing on quantum only. That hearing has taken place on various dates up to and including 1 June 2004.

4. It should not have been necessary to conduct that separate hearing. The parties should have been fully prepared for any reasonable eventuality at the time of the principal hearing. Further, even making allowances, the separate hearing should not have taken as long as it did. Both parties are at fault in this regard - the Respondents moreso, however. The Applicant provided various differing figures in support of its claim but the Respondents - who by now were acting for themselves, as they were entitled to do - took issue with very nearly every point. Then the Respondents sought to traverse, at length, nearly every possible item which might be claimed by them, even though many, quite plainly, were not defects but were completion items or had no grounding at all. This caused the hearing on quantum to be lengthy and protracted. But this possibility would not have been opened up, if there were not defects in the Applicant's work in the first place. Or, perhaps, it would not have been opened up if the Applicant had paid somewhat closer attention to quantum at the principal hearing.

5. I should also mention a point argued by the Respondents. They submitted, without embarrassment, that the Applicant should not be heard on quantum at all because it had failed to file any affidavits. However, this was to misunderstand the directions which I made. The Applicant chose to rely upon the evidence elicited at the principal hearing and to make submissions accordingly. The Applicant was quite within its rights in choosing to proceed this way. It would have been indefensible to decline to hear from the Applicant in such circumstances. At the same time I was prepared to receive affidavit materials from the Respondents which set out the matters they wished to raise and I also heard from them orally in making further submissions to me. Reluctantly, I should also mention, I received from them as well a lengthy and detailed document setting out points in reply. I received that document from them, and I have considered its contents, despite there being, as they well knew, no direction made by me allowing or contemplating the filing of the same.

6. In light of the following I order on the claim in the sum of $83,138.18. I also order on the counterclaim in the sum of $24,815.00. I reserve, to further argument, whether the latter sum should be set off against the former so as to establish an order for payment to the Applicant of the sum of $58,323.18 as a net balance. I also reserve the questions of interest and costs, although I have given certain indications of my views in the latter regard. The Tribunal is under no obligation, I should add, either to award interest or to order costs. I refer to IVBP Designers & Builders v Mitrevski [2004] VCAT 1207.

7. Considering the submissions, and in accordance with authorities (including Hadley v Baxendale [1854] EngR 296; (1854) 9 EX 341 at 354; 156 ER 146 at 151), I am satisfied I may make findings on the evidence for the Applicant as follows:-

(a) payment to lock up stage. I am satisfied on the evidence that, under the contract, lock up stage as defined was reached. The contract price was $291,792.00. I consider, however, that on the evidence an adjusted contract price of $284,292.00 applies. As per item 23, 60% of the same equals $170,575.20. From this is to be subtracted the sums paid by the Respondents which total $152,161.00. The balance due is thus $18,414.20.

(b) GST entitlement. I am satisfied that, under the contract, GST is payable by the Respondents as 10% of the Third Progress Payment (to which there was an entitlement by reason of lock up stage having been reached). That payment under the contract is $87,500.00 and 10% of that equals $8,750.00. I find that figure is due. I reject the argument, as put to me, that the GST provision is prohibited by s15 of the Domestic Building Contracts Act 1995 which relates to cost escalation clauses.

(c) adjustments due to variations. This was a most complex area of disputation (amongst others) between the parties and very detailed submissions have been made. I am satisfied that various agreed adjustments were made under the contract, during its currency, and that, nonetheless, certain rebates and credits must be allowed. The calculations are helpfully set out in a revised Table A of the submissions of the Applicant. I am persuaded that the various calculations made in that Table are correct and that the total claimed for variations of $9,141.90 is true and correct. I find that figure is due.

(d) work/materials supplied and/or installed not required to meet lock up. Various items are claimed under this head and many of the same were disputed by the Respondents. Again the calculations are helpfully set out in the Applicant's submissions in revised Tables B and C. The former is post-GST and the latter is pre-GST. Under the latter is a figure of $2,433.00 (not including builder's margin) and under the former is a figure of $21,350.07 (again not including builder's margin). I am persuaded that both such figures are correct and I note that the figure under Table B includes a sum of $2,000.00 for a staircase which I allow. I do not, however, allow a GST component on the figure of $21,350.07 because I am satisfied that the component figures making up that figure do already include GST. That is why they are specified as post-GST as I would understand it. The two Table figures which I allow total $23,783.07. I allow this figure which I find due, but I note no builder's margin is included in the same.

(e) loss of profit. I rely upon authorities including Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64. I am quite satisfied that the Applicant is entitled to claim a sum for loss of profit brought about by the Respondents' wrongful repudiation of the contract. The profit which is lost and which is claimed constitutes the profit the Applicant could reasonably be expected to have made had the contract continued through to its conclusion instead of prematurely terminating. I consider the Applicant is entitled to a loss of profits on the amounts specified in revised Tables B and C totalling $4,756.61 and respectively standing as $4,270.01 and $486.60. As well, I consider the Applicant is entitled to a further sum, as claimed, of $23,398.40 (being 20% of the value of the fixing stage ($72,900.00) and the value of the completion stage ($44,092.00) both of which are in my view properly claimable). The margin I have allowed is 20%. This is higher than the Respondents were prepared to concede of 13.5% but lower than the 25% sought by the Applicant. The former in my view is too low while the latter is too high. I consider a figure of 20% is appropriate and reasonable by industry standards. I take into account the evidence of Mr Atchison and I note that the Respondents chose to seek out a premium builder, knowing that the Applicant was one and that, therefore, they would be likely to be paying higher prices. For the loss of profits, all up, therefore, I allow a figure of $28,155.01.

8. I reject the Applicant's claim for restitutionary relief in respect of consultants' fees incurred as a result of a mediation (by an independently arranged mediator) in the sum of $10,968.92. I cannot be satisfied that the Respondents may have failed to perform the so-called "further" agreement. In any event, as I recall, the Applicant expressly withdrew this particular claim.

9. I note that the Applicant concedes a credit to the Respondents of $5,106.00 arising from double counting in error. I cannot see where else any allowance has been made for this. The credit is properly allowable in my view if arising upon an error. I shall reduce the Applicant's quantum by an equivalent amount.

10. The Respondents claim various items in their Counterclaim. They have repeated their claim for damages for suffering and inconvenience. I do not doubt they have experienced much suffering and inconvenience - including having to attend Tribunal hearings, as they said. However, I am satisfied that this had been brought about by their own wrongful repudiation of contract. Or, at least, I am not satisfied that they have suffered any loss in this regard beyond that which would be suffered by any other party which had wrongfully repudiated a contract. I am not persuaded it is due to defects in the Applicant's works at the premises. It is very clear to me that this litigation has become the Respondents' central focus. Yet the fundamental finding is, that it is they who acted wrongfully in terminating the contract with the Applicant. This is not to say, though, that there were not defects in the works at the premises in the first place. I am not satisfied, therefore, that the ground of inconvenience and suffering is made out and I reject it.

11. The Applicant has conceded numerous items in the very lengthy Buildcheck Report dated 28 February 2002 and they total $11,284.00 (not $10,725.00 as I was advised). They are items -

1.5 ($239.00); 1.10 ($101.00); 1.16 ($437.00); 2.1 ($411.00); 2.2 ($473.00);

2.4 ($230.00); 2.10 ($142.00); 2.11 ($263.00); 2.18 ($329.00); 2.21 ($230.00); 3.14 ($152.00); 4.39 ($65.00); 4.42 ($208.00); 5.1 ($1,290.00); 5.2 ($214.00);

5.4 ($408.00); 5.8 ($62.00); 5.15 ($276.00); 6.10 ($2,064.00); 12.1 ($823.00); 12.8 ($56.00); 12.11 ($51.00); 12.13 ($62.00); 12.17 ($131.00); 15.8 ($314.00); 15.9 ($144.00); 15.10 ($90.00); 15.12 ($116.00); 16.1 ($116.00); 16.4 ($175.00); 16.9 ($116.00); 16.12 ($112.00); 16.13 ($104.00); 16.18 ($440.00);

16.24 ($78.00); 16.26 ($112.00); 17.1 ($112.00); 17.5 ($168.00); 17.9 ($258.00); and 17.10 ($112.00). I am satisfied that these items are properly conceded by the Applicant. I find for the Respondents accordingly.

12. I am satisfied also, though, that (considering the submissions) I may make findings on the evidence on balance for the Respondents as follows in respect of defective works based on the Buildcheck Report.

(a) item 2.8. Non-colourbond flashings. I allow $250.00.

(b) item 4.34. Finish to northern face of retreat. I allow $1,432.00.

(d) item 5.13. Brickwork not sealed. I allow $26.00.

(e) item 6.1. Sub-floor ventilation openings need screening. I allow $428.00.

(f) item 6.2. Timber posts to doors needing metal shoes. I allow $775.00.

(g) item 6.3. Timber decking gaps. I allow $2,414.00.

(h) item 6.5. Sub-floor access door. I allow $155.00.

(i) item 6.6. Metal tray desk gaps. I allow $1,132.00.

(j) item 6.8. Roof Flashing. I allow $1,540.00 (This seems to incorporate also item 7.17).

(n) item 8.18. Roof insulation blanket. I allow $793.00.

(y) item 17.4. Water entry to window. I allow $900.00.

13. I do not allow any other items appearing in the Buildcheck Report. Mostly, they are of a completion or finishing off nature. And, of course, after its contract was terminated, the Applicant was unable to return to do any completion or finishing off works. As well, some of the items in the Buildcheck Report, which otherwise I might have allowed, I have disallowed as covered by the Applicant's conceded items (especially item 5.1). Some items I have disallowed also for lack of a quantum. I accept the Applicant's submissions in that regard. I have excluded from my consideration, except as indicated, any items relating to the roof (which I understand may have been replaced, in any event, some time ago). See my earlier Reasons.

14. I have excluded also a claim by the Respondents for liquidated damages as having been abandoned at the hearing by their Counsel, presumably on instructions.

15. I allow to the Applicant, all up, the sum of $88,244.18. I subtract $5,106.00 which leaves a total of $83,138.18.

16. I allow to the Respondents, all up, the sum of $24,815.00.

Fasham Johnson Pty Ltd v Ware [2004] VCAT 1361

At a glance

Court

Decision date

Before

Source

Judgment (42 paragraphs)

Fasham Johnson Pty Ltd v Ware [2004] VCAT 1361 (19 July 2004)

Parties

Cases Cited (1)