NZ Landscaper reviews a judgement from the Dispute Tribunal handed down following a major dispute on a $59,000 landscaping job
Landscaping can be complicated work and dealing with clients can make it even more challenging. The case below serves an important reminder about how clear communication and proper documentation between client and contractor can – or in this case could have – made a tricky situation a bit easier.
At odds on everything
A landscaping firm that took a client to court has been awarded a payment of $10,367.46.
The Disputes Tribunal found that the company, referred to as MN Ltd, should be paid the sum after its client ended the agreement between the two parties and refused to pay the full invoiced amount because they were not satisfied with the cost and time it was taking MN Ltd to complete the job.
MN Ltd initially claimed the $25,533.74 difference between payment and invoiced amount from its client, while the client counter-claimed $8,000 ‘in relation to the service carried out and costs of reinstatement’.
The job included major site preparation, a 45sqm extension to existing decking around a pool, landscaping between the pool and the house, a new pergola/pool house, removal and reinstatement of fencing including approximately 40sqm in horizontal boards, and a new pool pump shed.
A roof extension was added to the job after it commenced, which both parties agreed was not included in the initial quote.
There were several issues which contributed to the dispute between client and landscaper:
Difference in agreed quote – the client said it was $40,000 but wasn’t sure if that included GST. The landscaper said it was $45,000-$50,000 including GST.
Difference in agreed completion date.
Work not being finished by the completion date.
No completed design, which would have alleviated arguments over materials, instructions, and designs.
Breakdowns in communications due to absence of client during works and limited time on site by the landscaper’s director.
No communication as to the effect of the roof extension (which was added after the commencement of the project) on price and timeframe.
During arbitration, the landscaping firm and the clients were criticised for failure to provide a quote in writing, and for failure to enter a contract without ‘anything in writing or any drawn plan’. The Dispute Tribunal added: “That was a risk they (the clients) took, and they too must bear some of the consequences of that decision.”
The landscaper charged $48,192.72 for the work around the pool, and an additional $11,514.88 to the deck roof extension – a total of $59,664.60. Of this, the client paid $34,130.76.
At this point, several other areas remained unfinished:
Bracing and installation of barge flashing on the pool house structure.
The pool pump shed.
The area between the pool and the house.
Part of the $34,130.76 paid included $11,514.88 for the roof extension. To reach a conclusion as who owed what, the Tribunal enlisted an assessor ‘to first establish the value of the work carried out and the work remaining’. The assessor valued the pool areas works at $34,730.00, excluding site preparation work (as it can’t be seen) and a new pool pump shed (not yet completed).
“As the estimate excludes the site preparation and pump shed, it is also not too far from the quote given by MN for the work (especially as MN attribute site preparation to much of the cost accrued),” said the Tribunal.
An independent audit
The amount paid for the pool work and roof extension was $559.24 less than the value placed on the pool works by the assessor. Therefore, the Tribunal found that, ‘(in) effect, no payment has been made for the roofing extension,’ and ordered the clients to pay the remaining $559.24 to cover the assessed cost of the pool works.
Next, the independent assessor estimated the cost for the roofing extension at $9,133.22 – more than $2,000 less than MN had quoted. This amount did not appear to be challenged by MN and the Tribunal found the entire $9,133.22 sum was payable by the client to MN Ltd.
As the total paid was less than the assessed work carried out, and didn’t include fees for site preparation, additional compensation of $2,000 was found payable ‘for the site preparation work on top of the setoff of the pump shed.’ This setoff addressed the client’s concerns with regards to the cost required for remedial work to the pump shed, and thus brought the counter-claim to an end.
The $2,730 cost of the assessor’s report was born equally between the two parties, therefore $1,365 was deducted from the total owed to the landscapers.
MN Ltd initially claimed $25,533.74 from its former clients for unpaid invoices but was awarded $10,367.46 based on the assessor’s findings and a deduction made for the cost of the report.
That $10,367.46 was based on $559.24 to square up the pool area works, plus $2,000 for site preparation work and setoff of the pump shed, plus $9,133.22 for the roofing extension, minus half of the $2,730 fee for the assessor’s report.
Criticisms of client and contractor
The Disputes Tribunal referee criticised MN Ltd for failing to provide a drawn plan, which would have provided clarity on the scope of the works, the instructions given from client to contractor and the materials to be used in construction. It also criticised the clients for entering a contract without a drawn plan or confirmation in writing.
As a result, the Disputes Tribunal found that the service was not carried out with reasonable skill and care, given the lack of proper documentation in relation to the design, score and price, and therefore the clients were within their rights to cancel the contract.