CITATION: Nairn Constructions Pty Ltd v Industrial Roof Technology [2012] QCAT 501

PARTIES: Nairn Constructions Pty Ltd (Applicant)

v

Industrial Roof Technology (Respondent)

APPLICATION NUMBER: BDL255-11

MATTER TYPE: Building matters

HEARING DATE: 25 September 2012

HEARD AT: Brisbane

DECISION OF: Sandra G Deane, Member

DELIVERED ON: 8 October 2012

DELIVERED AT: Brisbane

ORDERS MADE: 1. Industrial Roof Technology is to repay Nairn Constructions Pty Ltd the sum of $587.61.

CATCHWORDS: Commercial building dispute – adjudication under Building and Construction Industry Payments Act 2004 – whether claims for variations valid under the construction contract

– whether amount paid pursuant to adjudication ought to be repaid – concession that variation overstated – affect of entire agreement clause

Building and Construction Industry Payments Act 2004, ss 7, 31, 100

James Trowse Constructions Pty Ltd v MG Constructions (QLD) Pty Ltd [2012] QCAT 42

Messiha v EA & S Plaster Co Pty Ltd [2010] QCAT 277

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337

APPEARANCES and REPRESENTATION (if any):

APPLICANT: Nairn Constructions Pty Ltd represented by Mr John Codd and Mr Geoffrey Hassan of Nairn

Constructions Pty Ltd

RESPONDENT: Industrial Roof Technology represented by Mr Darren Middleton and Ms Donna Gunn of Industrial Roof Technology Pty Ltd

REASONS FOR DECISION Background

[1] Nairn Constructions applied for an order for the payment of an amount of $13,623.67 said to have been overpaid to Industrial Roof Technology (IRT) under a construction contract for work performed at Mabel Park State School.

[2] The amount relates to 2 claims for variations by IRT, which were the subject of a successful adjudication under the Building and Construction Industry Payments Act 2004 (BCIPA) and which Nairn Constructions paid.

[3] Nairn Constructions did not seek to have the adjudication set aside under BCIPA¹ but rather commenced proceedings for a commercial building dispute in this Tribunal.

[4] The only matters in dispute between the parties which have been sought to be determined in this Tribunal are the matters which were adjudicated. There are no claims for damages or other amounts claimed to be owing by either Nairn Constructions or by IRT pursuant to the construction contract. Based on the material before the Tribunal it appears that the construction contract has otherwise been fully performed.

Does the successful adjudication affect the Tribunal’s power to determine the dispute?

[5] Nairn Constructions relies upon section 100 of BCIPA which it contends preserves the parties’ rights under the construction contract.

[6] The Tribunal has previously considered what appears to be a similar circumstance in James Trowse Constructions Pty Ltd v MG Constructions (QLD) Pty Ltd² where the only matter sought to be determined was effectively the overturning of the decision of an adjudicator under BCIPA although it was styled an application for commercial building dispute. In that case the Tribunal found that the Tribunal was not competent to determine the application where there was no matter under a construction contract other than what had already been subject of an adjudicator’s decision.

¹ _{Section 31 BCIPA.}

² _{[2012] QCAT 42.}

[7] In an earlier decision of the Tribunal it was accepted that an adjudication does not extinguish contractual rights.³

[8] These decisions appear to be in conflict.

[9] Section 100 of BICPA is to be construed in light of its stated objects,⁴ which is to ensure that progress payments are made under construction contracts.

[10] BCIPA provides a mechanism which assists cash flow during construction projects while preserving parties’ contractual rights⁵.

[11] In proceedings in relation to matters arising under a construction contract a court or the Tribunal is required to take into account any amount paid pursuant to an adjudication⁶ and ‘may make orders for the restitution of any amount so paid’.⁷

[12] In this context I accept that parties are entitled to an interim determination (adjudication) but despite the apparent duplicity of process are also entitled to seek a final determination of any entitlements under the construction contract in this Tribunal or where appropriate the Courts.

Roof Penetrations

[13] IRT claimed a variation in the sum of $4,519.92 (incl GST). The full amount was allowed by the Adjudicator.

[14] During the course of the hearing IRT amended the amount of its claim for this work and contended the variation amount ought to properly be $3,932.31 (incl GST) and conceded IRT had therefore been over paid $587.61.

_{[15] The amount claimed is calculated as follows:}

³ _{Messiha v EA & S Plaster Co Pty Ltd [2010] QCAT 277.}

⁴ _{Section 7 BCIPA.}

⁵ _{Section 100(2).}

⁶ _{Section 100(3) BCIPA.}

⁷ _{Section 100(3)(b) BCIPA.}

Total $3,932.31

[16] Nairn Constructions concedes that this work was a variation to the IRT scope of works but disputes its value. It also disputed that the process under the sub-contract was followed but does not give any evidence of any prejudice or loss which arises from this failure. At the hearing this contention was not expressly relied upon and in each of the statements relied upon by Nairn Constructions the witnesses state ‘the fact that this was a variation was not questioned, it was the amount charged that was not reasonable’.⁸

[17] During the course of the hearing Nairn Constructions conceded the amended claim for materials and mark up but disputed the amount for labour, which it contends ought to be $1,782 being $1,620 plus GST.

[18] Nairn Constructions contend that the labour hours claimed were excessive and that on its calculation 3 men took 9 hours each to perform the work. It considers a reasonable hourly rate is $60 and therefore does not take issue with IRT’s claim of an average of $40 per man hour.

[19] Mr Hassan gave evidence that:

a) he was not on site regularly and did not know whether the work had been performed on one or more days;

b) he spoke to Nairn Constructions’ site foreman in relation to this matter;

c) the site foreman told him he looked at the site diary and site register to determine the number of hours for this work;

d) he relied upon the site foreman’s advice.

[20] Neither Mr Hassan nor Mr Codd viewed the site diary or site register documents themselves when evaluating this variation nor were they on site regularly. The site foreman did not give a statement of evidence and the site diary and site register were not produced to the Tribunal nor were any extracts from these documents produced.

[21] Mr Codd gave evidence that he believed this item was a variation under the head contract but was unable to inform the Tribunal as to the amount that had been allowed under the head contract. In these circumstances there is no evidence upon which the Tribunal can find that the amount claimed exceeds the cap provided under clause 14.5 of the sub-contract.

_{[22] Mr Middleton gave evidence that:}

⁸ Statement filed 30 January 2012 – Bradley James Nairn paragraph 11; Statements filed 12 March 2012 – Bradley James Nairn paragraph 11, Geoffrey Wayne Hassan paragraph 5, John Patrick Codd paragraph 3.

a) he has a process whereby he fills out a daily construction report form at the end of each day by speaking with IRT’s head foreman who advises him what work was performed that day on the site. Daily Construction Report forms for 1, 2 and 8 February 2011⁹ show that 3 men were on site performing this work for a total of 72 hours;

b) the work consisted of 15 penetrations on 3 different buildings;

c) based on his 25 years experience this work would take 3 days to perform.

[23] Nairn Constructions did not contend that the Daily Construction Reports were not contemporaneous records.

[24] Nairn Constructions is the applicant in these proceedings and bears the onus of establishing on the balance of probabilities the facts that support its claim that the amounts were not properly payable under the sub contract.

[25] I note that the adjudicator in his written reasons¹⁰ raised concerns about the lack of supporting evidence or contemporaneous documentation provided by Nairn Constructions in relation to this issue. Despite those comments Nairn Constructions chose not to provide better evidence to assist it to prove its case in these proceedings. This raises a doubt as to whether that better evidence exists.

[26] In any event on the evidence before the Tribunal I prefer Mr Middleton’s evidence supported by contemporaneous records to the evidence provided by Nairn Constructions. I find that it is more likely than not that the reasonable costs of labour to perform this variation was $2,880 (excl GST).

[27] I find that IRT is entitled to a variation in the amount of $3,932.31 (incl GST) for this work and have been overpaid the sum of $587.61 in respect of this variation and that amount ought to be repaid.

Downpipe protectors

[28] IRT claimed a variation in the sum of $11,214.64 (incl GST). The full amount was allowed by the Adjudicator. IRT contend that the adjudicator was correct and that the variation ought to be allowed. IRT also contends that to the extent that there is an ambiguity as to the scope of works that ambiguity can be resolved by having regard to the express terms of the IRT quote dated 7 December 2010.

[29] Nairn Constructions contend that this work was part of IRT’s scope of works and therefore not a variation and the amount should be ordered to be repaid. It also disputed that the process under the sub contract was

⁹ _{IRT submission filed 29 February 2012 pages 51, 52 and 53.}

¹⁰ _{Reasons dated 7 July 2011 – paragraph 46.}

followed in relation to claiming a variation but does not give any evidence of any prejudice or loss which arises from this failure. At the hearing this contention was not expressly relied upon.

[30] Nairn Constructions contend that:

a) The sub contract¹¹ is the entire agreement¹² and that regard cannot be had to IRT’s quote, which it concedes expressly provides that 14 downpipe covers were included in the quoted price, when determining the scope of works;

b) The sub contract sets out the scope of work.¹³ Item 4 provides ”includes CHS downpipe protectors”;

c) This was intended to refer to all areas and not just to the covered outdoor learning area (COLA) and walkway areas;

d) IRT assumed the risk by signing the sub contract that if there were discrepancies or ambiguities between any documents in the sub contract it would not receive any additional amounts under the sub contract;¹⁴

e) The roof plan¹⁵ showed the number of downpipes required in all areas of the project;

f) Drawing CD AR06.01 provides that ‘all rainwater downpipes to be fitted with steel protectors unless noted otherwise’.

[31] Nairn Constructions did not produce to the Tribunal the roof plan nor did Mr Codd or Mr Hassan provide clear evidence as to the number of downpipe protectors required in the sub contract drawings in the various areas or the particular ambiguity or discrepancies between the sub contract documents upon which Nairn Constructions rely to dispute that a variation may be claimed.

[32] Nairn Constructions is the applicant in these proceedings and bears the onus of establishing on the balance of probabilities the facts that support its claim that the amounts were not properly payable under the sub contract.

[33] There is insufficient evidence before the Tribunal for it to be satisfied that the roof plan which Nairn Constructions contend formed part of the subcontract showed 30 downpipes. If this is the ambiguity between sub

¹¹ Nairn Constructions’ bundle of documents filed 12 March 2012 pages 10, 11, 12-16, _17-28.

¹² _{Cl 36.2.}

¹³ _{Nairn Constructions’ bundle of documents filed 12 March 2012 page 11.}

¹⁴ _{Cl 3.3.}

¹⁵ _{Nairn Constructions’ bundle of documents filed 12 March 2012 page 13, NC5.}

contract documents alleged to dispute the variation claim then Nairn Constructions has failed to establish the facts necessary for it to succeed.

[34] Nairn Constructions does not dispute that:

a) Another roofing contractor was initially engaged but was falling behind on the construction programme;

b) It sought a quote from IRT for part of the roofing works;

c) IRT’s quote dated 7 December 2010 in the sum of $80,300 (excl GST) expressly stated that it was in respect of the COLA and walkways and included 14 protectors¹⁶;

d) It provided a letter of intent also dated 7 December 2010 for the amount of IRT’s quote ($80,300 excl GST) and requested IRT to commence work prior to execution of formal sub contract documents;

e) There were no discussions between IRT and Nairn Constructions between receipt of IRT’s quote and the issuing of the letter of intent during which IRT agreed to vary its offer;

f) It did not draw to IRT’s attention that it contended the scope of works included protectors for downpipes in areas other than COLA and the walkways as was expressly included in the quoted price;

_{g) It did not draw to IRT’s attention that it was, on Nairn Constructions’ argument, effectively making a counter-offer;} ¹⁷

h) There were communications which passed between Nairn Constructions and IRT prior to the quote being provided which indicated that the number of protectors was not known but would be approximately 14¹⁸. Beau Lloyd was the Nairn Constructions employee involved in these communications. Mr Lloyd is still employed by Nairn Constructions but no statement of evidence was provided by him;

i) IRT received a direction dated 19 January 2011 that it was to provide protectors to all downpipes;¹⁹

j) IRT provided a variation claim on 27 January 2011 to perform the work the subject of the direction;²⁰

k) IRT provided protectors to all downpipes, including to areas other than COLA and the walkways;

¹⁶ _{Nairn Constructions’ bundle of documents filed 12 March 2012 page 7-8.}

¹⁷ _{Nairn Constructions’ bundle of documents filed 12 March 2012 page 9.}

¹⁸ _{IRT bundle of documents filed 29 February 2012 page 14-15.}

¹⁹ _{Nairn Constructions’ bundle of documents filed 12 March 2012 page 30.}

²⁰ _{IRT bundle of documents filed 29 February 2012 page 28.}

l) the amount claimed is a reasonable price if the work is a variation.

[35] Mr Middleton gave evidence that:

a) IRT was requested to price the COLA and walkway areas but given drawings for the whole project;

b) the scope of IRT’s work was the COLA and the walkways as set out in item 2²¹ and therefore item 4 in relation to protectors was to be construed by reference to the COLA and walkway areas;

c) he attended site every few days;

d) there were 14 downpipes in the COLA and the walkway areas;

e) as constructed there were 16 downpipes in the other areas.

[36] The general rule for the use of extrinsic material is that it should only be used to assist the interpretation of ambiguity or where there is more than one meaning. Extrinsic material should not be used to contradict the language of the contract when it has a plain meaning.²²

[37] The language in the scope of works part of the subcontract is ambiguous and is capable of more than one meaning.

[38] It is therefore appropriate to have regard to the quote and the email communications prior to the quote being provided to ascertain the meaning. The quote was expressed to be in relation to the COLA and walkways areas and provided for 14 protectors. The email communications indicated that there were to be approximately 14 protectors.

[39] I find that on the balance of probabilities the scope of works only extended to protectors in the COLA and walkway areas and that to the extent that the direction required protectors to be provided to other areas this was a variation to the scope of works and not a mere clarification of an ambiguity or discrepancy between sub contract documents.

[40] There is no material before the Tribunal which challenges the value of the work. I therefore find that IRT is entitled to claim a variation as claimed and that no amount is repayable in respect of this item.

Orders

[1] Industrial Roof Technology is to repay Nairn Constructions Pty Ltd the sum of $587.61.

²¹ _{Nairn Constructions’ bundle of documents filed 12 March 2012 page 11.}

²² _{Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR} 337.