Shaun Reynolds Builder Pty Ltd v Rawlings

NCAT Consumer and Commercial|2017-07-21

REASONS FOR DECISION

The matter was listed for hearing at the Tribunal in Wollongong on 21 July 2017. Mr Reynolds, the director of the applicant, appeared by telephone and gave evidence. Mr Osgood, a friend of the respondent, appeared as her representative by telephone. During the course of the hearing, the respondent also appeared by telephone and gave evidence.
The parties were granted leave to appear by telephone because of the distance of their residence from the place of hearing. The applicant is a company located in Albury NSW. The respondent resides in Victoria. The dispute involves a claim by the applicant ('the builder') for unpaid work on a property located in Lavington NSW.
As the applicant is a company, the principles set out by the NSW Court of Appeal in Burns v Corbett [2017] NSWCA 3 regarding the inability of the Tribunal to hear disputes involving persons who are residents of different States at the time proceedings are commenced is not applicable to this matter.
Mr Osgood appeared as representative of the respondent as he stated the respondent has a mental health condition that affected her ability to appear. No medical evidence was provided in that regard. The director of the applicant did not oppose Mr Osgood appearing as the respondent's representative, and leave was granted for him to do so. Mr Osgood is a friend of the respondent. During the course of the hearing, the respondent also participated and gave evidence. The manner in which the respondent participated in the hearing did not raise any issues that she was unable to reasonably participate in the hearing in accordance with Section 38(5) of the Civil and Administrative Tribunal Act 2013. Neither party applied for an adjournment of the hearing, and both parties informed the Tribunal at the outset of the hearing they were ready to proceed.

Background

The applicant is a licensed builder. The respondent one of the trustees of a self-managed superannuation fund that owns residential premises as an investment property in Lavington NSW. The applicant claims that the parties entered into a contract for the applicant to perform residential building work for the sum of $16,288.80 on 11 November 2016 and on 10 December 2016 the respondent unlawfully terminated the contract by way of repudiation. The repudiation was an email dated 10 December 2016, in which the applicant indicated that she had changed her mind due to not being aware of restrictions on improvements to properties owned by self-managed superannuation funds; and that the total cost of the renovations was likely to be in excess of $60,000.00. The applicant claims $6,994.97, as set out in an itemised invoice dated 20 December 2016.
Each party filed and served documentary evidence. The evidence of the applicant included (i) written quotation dated 4 November 2016 in the sum of $16,288.80; (ii) written contract dated 11 November 2016; (iii) letter of demand dated 20 December 2016; (iv) invoice dated 20 December 2016 in the sum of $6,994.97; (v) invoice of Steeline dated 13 December 2016 in the sum of $762,99 for fence posts and rails; (vi) invoice of 3G Building dated 12 December 2016 in the sum of $1,430.00 for a "Hamersley Sliding Door"; (vii) photographs of the rear of the property showing scaffolding; (viii) a statutory declaration of Royce Everson dated 10 March 2017 stating that on 8 December 2016 he saw scaffolding and colorbond panels at the premises; (ix) emails between the parties; and (x) a statutory declaration of Nicholas Mitas dated 8 March 2017 stating that on 10 December 2016 he attended the site with Mr Reynolds to "remove a sliding door, colourbond lattice panels and scaffold".
The respondent's documents included (i) a quotation of the builder dated 27 October 2016 in the sum of $13,898.50; (ii) a quotation of the builder dated 4 November 2016 in the sum of $16,288.80; (iii)a quotation of the builder dated 9 December 2016 in the sum of $37,967.60; (iv) a certificate of title to the property showing the registered owner of the property was the respondent's self-managed superannuation fund; a copy of the written contract dated 11 November 2016; (v) a copy of a plan of house drainage; (vi) a "request to withdraw" a proposed development application in respect of the property dated 16 December 2016 in the name of "Shaun Reynolds" and signed by "Shaun Reynolds"; and (vii) emails between the parties.

Applicant's Evidence

The evidence of Mr Reynolds was that the applicant contacted him by telephone, and sent an email on 24 October 2016 requesting a quote. Mr Reynolds attended the residence and spoke to the respondent, who had travelled from Melbourne. Mr Reynolds stated that he provided a written quotation dated 4 November 2016 and on 11 November 2016 a written contract was signed. The work involved the removal of windows; the installation of a sliding door in place of the windows; colourbond lattice extensions; and removal of gable cladding to be replaced with colourbond cladding. The agreed price for this work was $16,288.80.
Mr Reynolds stated that he had quoted for other work that involved the installation of a rear deck, and had arranged for plans to be drawn up, but the respondent had not signed a written contract and had told Mr Reynolds she had changed her mind, in an email of 10 December 2016. The respondent had paid for the cost of the plans being drawn. Mr Reynolds stated that this work was "not part of the claim" as the applicant had been separately paid for this work, and the applicant was relying upon the written contract of 11 November 2016.
Mr Reynolds stated that he had pre-ordered colourbond material; a sliding door; and scaffolding. He attended the property on 8 December 2016. Scaffolding was erected. According to Mr Reynolds, the colourbond material and sliding door were delivered to site (he did not clearly state when they were delivered), but he had removed the materials for "security reasons".
On 10 December 2016, the respondent telephoned Mr Reynolds and sent an email. The respondent "cancelled the job". The email of the respondent stated that (i) the respondent was not aware at the time of entering into the contract of restrictions on renovating a property owned by a self-managed superannuation fund; (ii) the quote "did not address also the more expensive but required parts of the intention (sic) keeping the quote under the $20,000 contract as per below original email. Please also note I had asked a number of times for a full costing which I didn't receive until Friday 9 December 2016"; and (iii) as the total cost was likely to be "approximately $60,000.00" which was approximately one-third of the value of the property, neither the applicant nor her self-managed superannuation fund could afford the work.
The email of the respondent dated 10 December 2016 concludes: "Therefore I wish for you to complete the work you commenced on Thursday 8 December 2016, being remove existing cladding and fascia and replace with new colourbond steel panel cladding. New tile pointing to gable end, scaffold. Also I will pay for the architect for the plans he drew up on my behalf. The rest of the job is to stop. Please contact Albury City Council to stop plans that have recently been submitted."
The applicant sent a letter of demand on 20 December 2016, seeking payment of $6,994.97 asserting the respondent had repudiated the contract, and attaching a tax invoice. The tax invoice sets out the work the applicant says it performed; time spent; amount charged; and cost of materials. The tax invoice includes a component of $2,816.07 for loss of profit.
Mr Reynolds stated that the tax invoice of 20 December 2016 sets out the amount of time he spent performing work for the respondent.

Respondent's Evidence

Mr Osgood only gave brief evidence, because he was not present when the respondent and Mr Reynolds were having conversations, other than in the room when a conversation occurred over the telephone after the agreement to perform residential building work had come to an end. Mr Osgood submitted that he believed the respondent "got in over her head" and was "overwhelmed".
The respondent gave evidence. The respondent stated that when Mr Reynolds attended the property to give a quote for the work she had requested a quote for in her email of 24 October 2016, he had suggested that that the addition of a rear deck would add value to the property, and she "felt pressured" to agree. The respondent stated that she had agreed to the respondent obtaining architectural plans for the deck and submitting a development application to the Council, and had repeatedly requested the applicant provide a quote for this work, but no quote was provided until 9 December 2016. The respondent stated that at all times the applicant was aware the property was owned by a self-managed superannuation fund, not the applicant personally. The respondent stated that, when she finally received the quotation on 9 December 2016, she realised that neither she nor the self-managed superannuation fund could afford the work, and cancelled the contract immediately.
The respondent agreed she had signed a contract on 11 November 2016 in her own name, rather than the self-managed superannuation fund, but this was only in respect of part of the work, and she felt "pressured" or "coerced" to sign the contract. The respondent did not clearly indicate precisely what conduct of Mr Reynolds caused her to be pressured or coerced into signing the contract, other than it was his suggestion that further work should be performed (the construction of the deck) rather than her suggestion.
The respondent submitted that, because the owner of the property was the self-managed superannuation fund, and she was only one of a number of trustees of the self-managed superannuation fund, the contract was with the self-managed superannuation fund, nor her.

Jurisdiction

By reason of Section 48K and 48A of the Home Building Act 1989 ('the HBA') the Tribunal has jurisdiction to hear and determine claims by licenced builder's against a party to a contract that involves the provision of building goods and services in respect of residential building work, including damages for breach of contract. Proceedings in this matter have been brought within the limitation period contained in Section 48K (8) of the HBA, and the Tribunal has jurisdiction.

Residential Building Work

There is no dispute that the contract between the parties involved residential building work. The applicant relies upon the written contract dated 11 November 2016, and in the alternative, the principles of quantum meruit. As the contract involved work for an amount less than $20,000.00, no home warranty insurance was required (Home Building Regulation 2014 Reg 5).

Parties to the Contract

There is a written contract dated 11 November 2016, and that is the document the applicant relies upon, asserting that the quotation dated 4 November 2016 is the scope of works. It is clear from the documents of the parties that the residential premises are owned by the respondent's self-managed superannuation fund. However, the Respondent's email of 24 October 2016 does not state she is acting on behalf of her self-managed superannuation fund, and the written contract is in her named and signed by her personally.
In respect of the jurisdiction of the Tribunal under Section 48K of the HBA, the key issue is who are the parties to the contract, not who is the owner of the property. The owner of the property is not automatically the contracting party. In circumstances where there is a signed written agreement between the parties dated 11 November 2016 and that is the agreement the builder is suing upon, I am satisfied that the respondent is the contracting party, rather than the respondent acting in her capacity of trustee for the self-managed superannuation fund, or as agent for the self-managed superannuation fund, is the contracting party.

Does the Contract Comply With the Requirements of the HBA?

Although the respondent argues that there was one single agreement (being all of the work including construction of the deck) rather than a contract to replace the windows with a sliding door and associated work set out in the quotation of 4 November 2016 forming the scope of works for the written agreement dated 11 November 2016, and a separate agreement that the builder would obtain approval for construction of the deck and provide a quote, subject to the parties entering into a written contract for the construction of the deck (as the builder asserts), I am satisfied that there was a separate contract for the items the respondent had asked the builder to quote for on 24 October 2016, which forms the basis of the quotation of 4 November 2016 and the written agreement dated 11 November 2016.
As the work in respect of which the builder quoted on 4 November 2016 and a written contract was signed on 11 November 2016, involved an amount greater than $5,000.00 and less than $20,000.00, the provisions of Section 7AAA of the HBA apply. Relevantly, under Section 7AAA (2) the contract "must be in writing and be dated and signed by or on behalf of each of the parties to it". Under Section 7AAA (3) the contract "must contain" (a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence; and (b) the number of the contractor licence; and (c) a description of the work to which the contract relates; and (d) any plans or specifications for the work; and (e) the contract price if known.
The copy of the contract dated 11 November 2016 contained in the documents filed and served by the applicant does not comply with Section 7AAA of the HBA. The document does not contain the name of the contractor, which has been left blank. The details of the contractor (i.e. the address; licence number; email address and mobile telephone number) are listed, but not the name of the contractor (i.e. Shaun Reynolds Builder Pty Ltd). Further, the contract does not set out a description of the work to which the contract relates. The written contract states that, in respect of "work details", the work is "maintenance and rubbish removal". There is no statement in the written contract that the contract incorporates the items set out in the quotation of 4 November 2016 as the scope of works under the contract, despite the amount of the quote and the contract price ($16,288.50) being the same figure.
The written contract states, in the part of the document containing "work details", the following: "Are there any quotes, plans and/or specifications which detail the work the Contractor will complete? If No: ensure the work is sufficiently described above. If Yes: they need to be attached to this document and signed by both parties. Tick to confirm".
The written contract contains a tick in the box "tick to confirm". However, it does not tick the boxes confirming that documents have been attached and signed by both the owner and contractor. There was no evidence before the Tribunal that the quotation of 4 November 2016 had been attached to the contract and signed by the parties, as is required by the written contract if the description of work set out in the written contract is insufficient.
Accordingly, although I am satisfied that there was a contract between the parties for the builder to perform residential building work as set out in the quotation of 4 November 2016, the written contract does not comply with Section 7AAA of the HBA, and by reason of Section 10 of the HBA, the applicant cannot seek to enforce the written contract of 11 November 2016.

Circumstances of Termination of the Contract

I am satisfied that the builder has established that the respondent's email of 9 December 2016 was a repudiation of the oral contract between the parties that the builder do work as set out in the quotation of 4 November 2016. The email of the respondent refers to the respondent requesting the applicant "complete the work you commenced on 8 December 2016 being removal of existing cladding and fascia and replace with new colourbond steel cladding. New tile pointing to gable end, scaffold". However, the quotation dated 4 November 2016 that the respondent had agreed upon contained further work, in respect of removal of the dining room window and replacement with sliding door, and removal of shade sale, decking, bamboo and pavers. The respondent's email of 4 November 2016 makes no reference to this further work.
I am satisfied that by requesting the applicant perform part of the work agreed upon and contained in the quotation of 4 November 2016, but not the rest of the work contained in that quotation, the respondent has acted in a manner clearly inconsistent with her obligations under the contract, and which is a repudiation of the contract (Shevill v Builders Licencing Board [1982] HCA 47; (1982) 149 CLR 620 at 634). The applicant subsequently accepted that repudiation and the contract was discharged.

Quantum Meruit

By reason of Sections 10 and 11 of the HBA, if the applicant is unable to sue under the written contract, the builder can claim under the principle of quantum meruit for the reasonable value of the services and work provided. The applicant did not set out in the application filed with the Tribunal, nor his documents, that the applicant was claiming on a quantum meruit basis as an alternative to claiming under the contract.
However, the Tribunal raised with the parties the principle of quantum meruit at outset of the hearing, in the context of the whether the applicant was claiming on a quantum meruit basis if his claim under the contract was unsuccessful, due to in particular to the provisions of Section 7AAA of the HBA. Mr Reynolds stated that he was claiming on a quantum meruit basis if his claim under the contract was unsuccessful. Mr Reynolds stated that the documents he had provided, including the invoice of 20 December 2016, was the fair and reasonable value for the services and work provided.
Neither party sought an adjournment to obtain further evidence in respect of quantum meruit. In circumstances where the issue of quantum meruit was raised at the hearing; both parties were given an opportunity to make submissions on the issues; and neither party sought an adjournment to obtain further evidence in respect of the issue, I am satisfied it is procedurally fair to consider the issue of quantum meruit (SHH Pty Ltd v Woodorth Plumbing Services Pty Ltd [2014] NSWCATAP 46).
In respect of quantum meruit, the key issue is what is the reasonable value of the services, materials, and work provided by the builder and which the applicant accepted. The builder bears the onus of proof in this regard. The relevant principles regarding quantum meruit have been discussed by the Supreme Court of NSW and this Tribunal on a number of occasions (e.g. Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprises Pty Ltd [2004] NSWSC 273; Pender v Robwenphi Pty Ltd and Anor [2008] NSWSC 1144; Urban Constructions (NSW) Pty Ltd v Shearer [2015] NSWCATCD 9 at [68]-[69]; Zammit t/as Zammit Quality Constructions v Markunsky [2015] NSWCATCD 21 at [47]; Kelly v Smith [2016] NSWCATCD 92). The relevant principles can be summarised as follows: 1. The task is not to assess damages for breach of contract, but to ascertain what is fair and reasonable compensation to the builder for the benefit of the services performed or goods provided, and accepted actually or constructively by the recipient; 2. The enquiry is not primarily directed to the cost to the builder of performing the work since the law is not compensating that party for loss suffered; however, the actual cost should not be ignored; 3. Any price or commission agreed between the parties may be received as evidence of the value the parties themselves put on the services performed, even where the services have not been totally performed, but the agreed amount is not determinative of the matter. The totality of the evidence must be considered, including whether or not there is evidence such as timesheets; diary notes; and independent expert evidence showing the fair and reasonable value of the work, goods or services provided to the homeowner, and accepted by the homeowner. 4. The onus of proof is on the builder to prove that the goods or services were actually or constructively received by the homeowner, and what is the fair and reasonable amount of compensation for the benefit of the services performed or goods provided.
In respect of the builder's claim as set out in the invoice of 20 December 2016, I assess the claim on a quantum meruit basis as follows:

Loss of Profit ($2,816.07)

Loss of profit under the contract does not fall within the principle of quantum merit, which only applies to the fair and reasonable value of the work, goods, or services actually provided. This aspect of the claim is dismissed.

Hire of Scaffold ($325.00 plus GST)

The photographic evidence of the applicant shows a scaffold erected on site, and the statutory declaration of Mr Mitas corroborates the evidence of Mr Reynolds that a scaffold was erected, then removed.
However, the documents of the applicant contain no tax invoice for the cost of hiring scaffolding, and there was no clear oral evidence of Mr Reynolds that he had hired a scaffold, and the cost. In circumstances where the applicant invoiced the respondent for the cost of hiring a scaffold, there is no explanation why the applicant has not included a copy of the tax invoice for the cost of hiring a scaffold in his documents.
In the absence of such documentary evidence to verify the cost of hiring scaffolding (and whom it was hired from) I am not satisfied the applicant has proved the fair and reasonable value of the cost of hiring scaffolding, and this aspect of the claim is dismissed.

Erection and Removal of Scaffold ($420.00 plus GST)

The applicant claims the sum of $420.00 for the cost of erecting and removing scaffolding on the site. The applicant claims 6 hours at $70.00 per hour, plus GST.
From the evidence, including the photographic evidence, I find that there was scaffolding erected and removed from the site. The amount charged for labour does not appear to be excessive. I am satisfied that the applicant has established that the fair and reasonable value for the work in attending the site; erecting scaffolding; and removing scaffolding is $420.00 plus GST (i.e. $462.00).

Labour ($315.00 plus GST)

The applicant claims $315.00 for the costs of "site measure; delivery and removal of materials; time spent with client; emailing" for 4.5 hours at $70.00 per hour plus GST.
The evidence establishes that Mr Reynolds did attend the site to quote, however, he spent further time to quote for items that involved the construction of the deck, which are not part of this claim. I am satisfied that he and/or Mr Mitas attended the site on 8 December 2016, but there is no evidence to establish any physical work done on the site other than the erection and dismantling of scaffolding, and removal of the sliding door and colourbond materials.
I am satisfied the applicant has proved that $315.00 plus GST (i.e. $346.50) is a fair and reasonable amount for the cost of labour in respect of site attendance; delivery and removal of materials; time spent with client; and emailing.

Labour for New Robe Sliding Doors ($175.00 plus GST)

The applicant claims $175.00 plus GST for this item. The item is calculated on the basis of 2.5 hours of measuring and consultation with the respondent. Labour is charged at $70.00 per hour.
The quotation of 4 November 2016 contains reference to the installation of sliding doors for the wardrobe of a bedroom of the premises. I am satisfied that $175.00 plus GST (i.e. $192.50) is a fair and reasonable amount for time spent by the applicant in respect of the wardrobe.
Sliding Door Delivered to Site and Labour for Delivery and Removal ($1,300.00 plus GST)
The applicant claims $1,300.00 plus GST for the cost of the sliding door, and $254.00 plus GST for the cost of "delivery and removal" of the door. The amount of $245.00 is calculated at 3.5 hours of labour at $70.00 per hour, plus GST. The amount of $1,300.00 is evidenced by a tax invoice of 3G Building, Boral Selection Centre dated 12 December 2016.
The tax invoice of 3G Building, Boral Selection Centre states the amount contained in the tax invoice is $1,430.00, rather than $1,300.00, but that is explicable because the tax invoice of the applicant dated 20 December 2016 appears to have, as an oversight, omitted GST.
The tax invoice is dated 12 December 2016. The statutory declaration of Mr Mitas refers to the sliding door being on site on 8 December 2016, and the statutory declaration of Mr Everson (the tenant of the property) states that the sliding doors and colourbond panels were present on site on 8 December 2016.
However, the tax invoice of 3G Building states that the date of the invoice was 12 December 2016. This is 3 days after the respondent sent the email of 9 December 2016, and 2 days after the respondent sent an email on 10 December 2016 to the applicant stating: "Thank you for our conversation today and it is with regret out business has come to a close but better I guess before any commencement of work. Once I receive the invoice for the drafter it will be paid promptly. Thank you for removing all costs to yourself. I appreciate it".
From the emails of the respondent dated 9 and 10 December 2016, and a conversation that had occurred between Mr Reynolds and the respondent, it was clear that the contract between the parties was over. From the documentary evidence of Mr Mitas and Mr Everson, and the oral evidence of Mr Reynolds, I infer that the sliding door was ordered and paid for prior to 8 December 2016 .
However, even if the door was ordered and paid for by the builder prior to the email from the respondent on 10 December 2016, and the tax invoice of 3G Building is merely the date on which the invoice was issued rather than the date the goods were paid for by the builder, I am not satisfied that the builder should recover for the cost of the sliding door on the principles applicable to quantum meruit.
Mr Reynolds stated that he retains the sliding door, having "removed it for security reasons". Mr Reynolds stated that he would return the door if the Tribunal ordered the respondent compensate the applicant for the cost of the door. However, the door clearly has value, and there is no evidence that the respondent cannot use the door for other building contracts, or return the door to the supplier and receive a refund. There is no evidence the door was a custom made door. Further, there is no evidence, such as an email or text message from the applicant to the respondent, that the door had been delivered and that it would be removed within a certain period of time unless the respondent paid for the door.
As the builder has taken possession of the sliding door, and retains possession of it, he has not "supplied" the sliding door to the applicant; nor did the applicant actually or constructively accept the sliding door; nor has the applicant received a benefit for the supply of the sliding door. In the circumstances of this matter, the builder cannot obtain payment for cost of purchasing the sliding door on the principles of quantum meruit.
However, on the basis of the evidence that the door was delivered to the site and removed, I am satisfied the applicant is entitled to a component for the cost of labour. I am satisfied that, if the time spent also delivering and removing the colourbond lattice extensions is also taken into account, 3.5 hours is fair and reasonable at $70.00 per hour, plus GST (i.e. $269.50)

Labour for Delivery and Removal ($245.00 plus GST)

The applicant claims $245.00 plus GST in respect of this item. The item is calculated on the basis of 3.5 hours of labour at the cost of $70.00 per hour, plus GST. The invoice of the applicant dated 20 December 2016 does not set out what work was involved, and the oral evidence of Mr Reynolds did not clarify the issue. To the extent that the claim is for delivery and removal of the sliding doors; or delivery and removal of the scaffolding; or delivery and removal of colourbond lattice extensions, those items have been dealt with separately, and no further claim is established on a quantum meruit basis in respect of this item.

New Colourbond Lattice Extensions ($762.99 plus GST)

The applicant claims $762.99 plus GST in respect of the cost of colourbond lattice extensions to 14 panels. The statutory declarations of Mr Mitas and Mr Everson indicate the colourbond lattice extensions were on site as of 8 December 2016. The tax invoice of Steeline Roofing Centre is dated 13 December 2016, 3 days after the respondent sent her email repudiating the contract. The evidence of Mr Mitas is that the colourbond lattice extensions were removed on 10 December 2016, and Mr Reynolds confirmed this in oral evidence. As with the sliding door, Mr Reynolds stated that the colourbond lattice extensions were removed for "security reasons" and remain in his possession. Mr Reynolds stated that he would return the materials to the applicant upon the Tribunal ordering the applicant to pay for them.
In respect of the colourbond lattice extensions, I accept from the evidence of Mr Reynolds; Mr Mitas and Mr Everson that the materials were delivered to the site on or before 8 December 2016, and the evidence of Mr Reynolds is that he paid for the materials prior to delivery.
However, as in respect of the sliding door, in circumstances where the applicant has taken back possession of the materials, he has not "supplied" the materials to the respondent; nor has she actually or constructively accepted the materials; nor has she received any benefit from the materials. The builder cannot obtain payment for the cost of purchasing the colourbond lattice extensions under the principles of quantum meruit, and the labour cost of delivering and removing the colourbond lattice extensions had been taken into account previously.

Conclusion

By reasons of the above findings, on a quantum meruit basis the respondent is to pay the applicant the sum of $1,270.50.

Civil and Administrative Tribunal of New South Wales

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 September 2017

At a glance

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Judgment (20 paragraphs)

Parties

Cases Cited (9)