Al-Atabi v Zaidi

District Court of NSW|2008-03-28

CITATION: Al-Atabi v Zaidi [2008] NSWDC 128

HEARING DATE(S): 29, 30 and 31 January, 1 February and 28 March 2008

Judgment for the plaintiff against the 1st, 2nd and 3rd defendants for $4,920.33 DECISION: 2. Judgment for the 4th defendant against the plaintiff 3. Judgment for the plaintiff against the defendants on the Cross-Claim

LEGISLATION CITED: Civil Procedure Act 2005: s 100 Fair Trading Act 1987: s 44

Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 at [11] - [13] Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 Liebe v Molloy (1906) 4 CLR 347 Lion Nathan Australia Pty Ltd v Coopers Brewery Limited (2006) 223 ALR 560 CASES CITED: Ormwave Pty Limited v Smith [2007] NSWCA 210 at [68] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [22] Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 at [69] Source and Resources Pty Ltd v Porada [2007] NSWSC 883 at [27] The Commonwealth v Verwayen (1990) 170 CLR 394 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [40] and [42] Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251

Muhanad Al-Atabi (Plaintiff) Attia Zaidi (First Defendant) PARTIES: Mohammad Ali Abbas (Second Defendant) Salma Raza (Third Defendant) Hasan Zaidi (Fourth Defendant)

COUNSEL: Mr Weinberger (Plaintiff) Mr E White (Defendants)

SOLICITORS: Maccallum Lawyers (Plaintiff) Dominic Stamfords (Defendants)

The proceedings and the issues

During 2004 Mr Al-Atabi, a licensed builder trading under the business name 'Civil Choice', constructed 8 two-storey residential townhouses for the defendants on their property at 6 Methven Street, Mount Druitt. He alleged that he had not been paid in full for that construction work. He commenced these proceedings claiming payment on various bases including contract, quantum meruit and misrepresentation. The defendants alleged that the construction work was never fully or properly completed, and that they have paid to Mr Al-Atabi his full entitlement under the relevant construction contract, and more.

It was not disputed by the parties that the construction work was performed pursuant to a construction contract entered into between them that was negotiated between Mr Al-Atabi and the fourth defendant, Mr Hasan Zaidi, on behalf of the defendants. It was also common ground that the parties brought three contractual documents into existence at or around mid 2004, but the parties fundamentally disagreed as to the sequence in which they came into existence and which of the documents ultimately constituted the agreement between them. The documents are:

(i) a Cost Plus Quotation for $1.1m plus 15% dated 21 June 2004. (ii) a Cost Plus Contract for $900,000 plus 15%, bearing the date 25 June 2004. (iii) a Lump Sum Contract for $1.1m, bearing the date 1 August 2004.

Mr Al-Atabi contends that all three documents constituted the construction contract, which was a costs plus agreement for $1.1m, pursuant to which there were numerous additions and variations, the total cost of the works being $1,872,210.28, of which he has received only $1,139,117.83, a shortfall of $733,092.40. The defendants contend that the last of the three documents, the Lump Sum Contract for $1.1m, constituted the construction contract, and that it superseded the previous documents, and that the full contract sum has been paid.

There are, therefore, various fundamental factual issues surrounding the applicable terms of the construction contract, in particular the contract price, that need first to be determined before proceeding to consider the consequential aspects of the dispute. Before embarking on an analysis of the factual matrix relevant to the determination as to the terms of the construction contract, and the price agreed, it is appropriate to consider the relevant legal principles that inform the exercise.

The High Court has strongly reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [22]. This principle was reaffirmed in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [40], in the following terms:

"It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction."

The Chief Justice of NSW, Spigelman CJ, has recently discussed the High Court's approach and the circumstances in which it is appropriate to have regard to the extrinsic facts and matters surrounding the contract document to assist in the ascertainment of the common intention of the parties as to their contractual rights and liabilities. In Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 he said, at [11] - [13]:

"In a number of joint judgments the High Court has adopted an approach to statutory interpretation which requires attention to the broader context of the words in issue in the first instance, not only after some kind of 'ambiguity' has been identified. (See, e.g. CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 335 at [69] and Network Ten Pty Limited v TCN Channel Nine Pty Limited (2004) 218 CLR 273 at 280 - 281.) There is nothing new about this approach. (See e.g. R v Wilson; Ex parte Kisch (1934) 52 CLR 234 at 244.) However, its application in recent cases was based on a judgment of Mason J in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309 at 315.

It has been suggested that Mason J adopted a different approach to the task of contractual interpretation by requiring the identification of ambiguity in the first instance. (See Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 at 348.) I have, however, expressed the view that his Honour did not intend to confine the approach to contractual interpretation in that way but that his reference in Codelfa at 348 to the proposition that language may not only be 'ambiguous' but also 'susceptible of more than one meaning' invoked a concept of 'ambiguity' extending to any situation in which the scope and applicability of the formulation was, for whatever reason, doubtful. (See South Sydney Council v Royal Botanic Gardens [1999] NSWCA 478 at [35].)

This approach is consistent with the subsequent authority in the High Court, particularly the passages to which I have referred in Pacific Carriers [Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 461-462] and in Alphapharm. In this respect I agree with the reasoning in the Federal Court at first instance in Lion Nathan Australia Pty Limited v Coopers Brewery Limited (2005) 223 ALR 560 at [78]-[79] and on appeal in Lion Nathan Australia Pty Limited v Coopers Brewery Limited (2006) 156 FCR 1 at [45]-[52], [98], [101] and [254]. In this respect also, contractual interpretation has been brought into alignment with statutory interpretation. (See Bowtell v Goldsborough Mort & Co Limited (1905) 3 CLR 444 at 456-457; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287-288; Repatriation Commission v Vietnam Veterans' Association of NSW Branch Inc (2000) 48 NSWLR 548 at [116].)"

A court may find that a contract exists, and enforce it, notwithstanding a lack of clarity in the conduct and language of the parties in the formative stages: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326]. McHugh JA (as he then was) said:

"It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of 'offer' 'acceptance', 'consideration' and 'intention to create a legal relationship' which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship ...Moreover, in an ongoing relationship it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed… A contract may be inferred from the acts and conduct of parties...The question…is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement."

Consistent with this approach, the Court of Appeal has also recently held that it is not necessary, in determining whether a contract has been formed, to identify either a precise offer or a precise acceptance, nor the precise time at which an offer was made or accepted: Ormwave Pty Limited v Smith [2007] NSWCA 210 at [68]. The offer and acceptance analysis is a useful tool in most circumstances, and indeed is 'normal' and 'conventional', but it does not work well in various circumstances: Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 per Heydon JA (as he then was) at [71] - [74]:

"While the process by which many contracts are arrived at is reducible to an analysis turning on the making of an offer, the rejection of the offer by a counter-offer and so on until the last counter-offer is accepted, that analysis is neither sufficient to explain all cases nor necessary to explain all cases."

However, the concept of commercial unreality should not be seen as unrestricted permission for judicial rewriting of contractual provisions: Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5, per Basten JA. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered inconvenient or unjust: even if it suspects that the parties intended something different: Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 per McColl JA at [69]:

"If the words used [in a written contract] are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered inconvenient or unjust." 10. Also consistent with the objective approach to the determination of the rights and liabilities of contracting parties is the significance that the law attaches to the signature (or execution) of a contractual document: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [42]. In that decision the court reviewed the authorities relevant to this issue, and reiterated the relevant principles at [42] - [47]):

· A written agreement is proved by signature, and, in the absence of fraud, misrepresentation or some other special circumstance, it is wholly immaterial that the party has not read the agreement and does not know its contents. A party cannot escape the consequences of signing a document by saying, and proving, that they did not understand it.

· If a party signs and thereby binds themself to the terms of a contract it is immaterial that the party did not trouble to discover the contents of the contract. That party is nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument.

· To sign a document known and intended to affect legal relations is an act which ordinarily conveys a representation to a reasonable reader of the document that the person who signs either has read and approved the contents, or is willing to take the chance of being bound by those contents.

These principles are all pertinent to the analysis of the factual circumstances surrounding the formation of the construction contract in the present case.

The contractual documents 12. In 2004 some of the defendants owned property at 6 Methven Street, Mount Druitt in respect of which they had lodged an application to Blacktown City Council for the construction of 8 two-storey residential townhouses. They were seeking a builder for the project. Mr Hasan Zaidi was introduced to Mr Al-Atabi, and they had a discussion in which Mr Al-Atabi was invited to submit a quotation for the construction work. Mr Al-Atabi was provided with plans and other documentation. There is a dispute as to precisely what that documentation comprised, and Mr Al-Atabi says he was not provided with all relevant information. Nevertheless, according to his version, he then provided the Quotation dated 21 June 2004, which was expressed as a 'cost plus quotation for the estimated budget of One Million One Hundred Thousand Dollars, GST inclusive'. That price was to include various specified allowances, which were listed. Two pages of 'Terms and Conditions were attached, which provided for a deposit of 5% and for the builder's cost plus fees at 15% of the construction cost plus GST. The signatures of two of the defendants appear on the final page (5) under the word 'Acceptance'. Mr Hasan Zaidi's signature also appears, as having signed on behalf of the third defendant, Salma Raza.

Mr Zaidi did not dispute the date of this Quotation, nor did he dispute that although it was addressed to the first three defendants only, he regarded himself as also bound by the document, presumably as their agent. He also conceded that, given there were a number of provisional sums, the ultimate contract price as finally adjusted might have reached $1.5m or $1.7m (T 222.40-55 and 223.22).

Nevertheless, in the written submissions (paragraphs 44 - 62), counsel for the defendants sought to resile from these concessions and call into question the veracity of the Quotation. These submissions were unconvincing: see also Exhibit F. The evidence as to the Quotation is overwhelming, and I am satisfied that the defendants signed it with the intention of entering into legal relations on the basis set out in that document. The only question is whether it was superseded by subsequent documents, or incorporated into them.

Mr Al-Atabi's case is that the next document brought into existence was the Lump Sum Contract. He says the Quotation of 21 June 2004 was intended to form part of the Lump Sum Contract, which was prepared several days afterwards, because his home warranty insurer required a more detailed contract. He contended that this Lump Sum Contract was entered into on 25 June 2004 (Statement of Claim at 3, T 11.50 and 15.7). The defendants' case is that this document came into existence much later at the behest of their financier and was in fact signed on 1 August 2004.

Mr Al-Atabi's evidence as to the Lump Sum Contract is unreliable. It is notable that nowhere in his affidavit evidence does he say when that document was signed, and he conceded that his own copy was undated. It is clear that he has sought to rationalise the documentation with a view to making it suit his case, and in my view the evidence points to the Costs Plus Contract as the document that was signed on 25 June 2004.
I am unable to accept the assertion of Mr Al-Atabi that the Costs Plus Contract was signed some time later, but backdated to 25 June 2004. His explanation for the need to backdate the document is unconvincing. That it was in fact signed on 25 June 2004 is corroborated by Mr Abbas. Furthermore, the contention that the Costs Plus Contract was necessitated because of further works required by the architectural, engineering and stormwater plans is not supported by the evidence. The existence of the Full Estimate Summary dated 24 June 2004 (Exhibit 2.2) makes it improbable that Mr Al-Atabi did not have a full appreciation of the full extent of building work required prior to 30 June 2004.

Having regard to the $900,000 estimated cost of the construction work it is more probable that the Cost Plus Contract was brought into existence as a follow up to the discussions between Mr Zaidi and Mr Al-Atabi, and the Costs Plus Quotation. It is inconceivable that the additional works could be costed in that amount, and the contention of Mr Al-Atabi that he prepared a whole new contract to avoid going through the variation process required by the Lump Sum Contract, as he says in his affidavit evidence, is illogical. If the Costs Plus Contract was truly a response to new architectural, engineering and stormwater plans, why is there no reference to them in the document, or to the additional work required, or to an existing Lump Sum Contract. Nor is it suggested that it was an entirely new contract, designed to replace the Lump Sum Contract. The true position was in fact the reverse (T 247.1-7).

I find as follows. The Costs Plus Contract (Exhibit 2.1) came into existence on the date it bears: 25 June 2004. The Lump Sum Contract was not brought into existence until July of 2004 and was entered into on 1 August 2004 at the meeting between Mr Zaidi and Mr Al-Atabi when Mr Zaidi inserted the date on page 23 of the counterpart retained by him. In my view, therefore, the Lump Sum Contract, together with all the plans and drawings given to Mr Al-Atabi, constituted the construction contract, under which the price became fixed at $1.1m inclusive of the builder's margin, and that contract superseded and replaced both previous documents.

In my view, therefore, the common intention of the parties, viewed objectively, was that their contractual rights and liabilities in respect of the construction project were to be governed by the Lump Sum Contract for a fixed price, without any provisional items. The document was subsequently amended by mutual agreement to include some alterations to which I will refer shortly. Some of the drawings were also later revised, but the price never changed. For these reasons I find that Mr Al-Atabi agreed to carry out the construction work for a fixed price of $1.1m. However, in interpreting the common intention of the parties in respect of that contract, it is appropriate that regard be had to the extrinsic circumstances, including the discussions between Mr Zaidi and Mr Al-Atabi, plans and drawings, the prior contractual documents such as the Quotation and the Costs Plus Contract, and other documents such as the Full Estimate Summary, as well as their subsequent conduct and subsequent documents such as the claims for progress payments.

The Lump Sum Contract 21. It thus becomes appropriate to look more closely at the Lump Sum Contract entered into on 1 August 2004, as the document is singularly lacking in detail on critical matters, and there are factual features surrounding the document that require consideration, as well as questions of interpretation as to certain of its terms.

For example, Mr Zaidi was not nominated as a party to the contract. Second, there is no reference in the document to any other contractual documents: see Clause 3. Third, there is no word description as such of the work covered by the contract, and there is a significant lack of clarity as to the scope of the works included in the contract price: see T 226. Fourth, the contract prescribes a procedure for variations involving the builder giving notice in writing, and acceptance by the owner's signature on the notice: see Clause 12. Fifth, there are significant differences between the three versions of the document that are in evidence: see the annexure at Tab D to Mr Al-Atabi's affidavit evidence, Annexure HZ2 to Mr Zaidi's affidavit evidence, and Exhibit 1. These are:

▪ Page 3 - Clause 3: Deposit: In the annexures, the deposit provided for is $55,000, but in Exhibit 1 that amount is changed to $30,000. ▪ Page 9 - Clause 10: Prime Cost Items: In HZ2, the box provided for the contractor's margin has a slash through it. In the other versions the figures '15%' appear in the box. Likewise, in HZ2 the Schedule of items has a slash through it, but in the other versions a series of items is listed. ▪ Page 10 - Clause 11: Progress Payments: In HZ2, the items in the Schedule of progress payments differ from what appears in Exhibit 1 and at Tab D. It appears that the two annexures are copies of different documents, as the handwritten entries differ in each. The number of progress payments in Exhibit 1 has changed, although the total contract sum ($1.1m) remains the same. The alterations are dated 30 August 2004, and initialled. ▪ Page 12 - Clause 13: Time for payment: In HZ2, the time for payment of a progress claim is specified as 5 days, but in Exhibit 1 the period is changed to 10 days.

Not unexpectedly, there was cross-examination as to these alterations to the original document and both parties attempted to make capital out of them. In my view the evidence makes it abundantly clear that Mr Al-Atabi made them all after discussion with Mr Zaidi, with an eye to the requirements of the defendants' financier (T 246-7 and 270). This fact lends considerable verisimilitude to the proposition that in August 2004 the parties regarded this document as the contract governing their rights and obligations in respect of the construction project. As to which version of the document governed the rights and liabilities of the parties, there can be little doubt that it was the version that incorporated these agreed alterations, namely Exhibit 1.

Variations to the Lump Sum Contract 24. Having determined the applicable contract and the contract price for the construction project, I now turn to consider whether there were any additions or variations to the contract works and the agreed contract price. It is Mr Al-Atabi's case that there were numerous variations in respect of which he is entitled to recover.

Clause 12 of the Lump Sum Contract deals with Variations. The Explanation to the Clause reads:

"If, after work has commenced, the owner decides to delete, alter or add to the work to be done, a variation to the contract may be required. The work also may be varied at the request of the contractor, due to a requirement of the council or other authority, or a matter which could not be foreseen at the time of signing the contract."

"The work to be done or materials used under this contract may be varied: ¶ at the request of the owner; or ¶ at the request of the contractor. If the necessity for the variation is due to the fault of the contractor the owner will not be liable for any increase in the contract price; or ¶ due to such other matter that could not reasonably be expected to be necessary for the completion of the work at the date of the contract; or ¶due to a requirement of council or other statutory authority relating to the work, if at the date of this contract such requirement could not reasonably have been foreseen by the contractor.

Procedure for variations Before commencing work on a variation, the contractor must provide to the owner a notice in writing containing a description of the work and the price (including GST) to the owner. If not specified, the price will be taken to include the contractor's margin for overheads and profit. The notice must then be signed and dated by both parties to constitute acceptance…

Adjustment of the contract price The cost of deletions from the contract will be deducted from the contract price. The price of extra work will be added to the contract price.

Any adjustment to the contract price due to an agreed variation will be taken into account at the time of the next progress payment or paid as agreed by the parties."

The procedure provided for in Clause 12 was not complied with and Mr Al-Atabi never provided any written notices for variations to the defendants.

It was Mr Al-Atabi's case that the defendants waived the requirements of Clause 12. Alternatively, he alleged there were separate contracts in respect of each variation: see the Reply. He also alleged that the defendants have been unjustly enriched at his expense and that he is entitled to damages on the basis of a quantum meruit. Finally, he alleged that Mr Zaidi, by his conduct, represented that the other defendants agreed to the variations alleged and would pay for them, and claims damages accordingly (the Statement of Claim and the written submissions at 75 - 80).

It was contended for Mr Al-Atabi that the variations he claims were approved by Mr Zaidi on behalf of the defendants, either verbally or by a combination of verbal approval and the signing of various documents such as invoices or quotes with the knowledge and understanding that the work involved was outside the contract, and with the intention of being bound by the variation and liable for the additional cost. The acquiescence of Mr Zaidi to such variations, absent formal compliance with the procedure required under Clause 12, induced Mr Al-Atabi to continue with the extra work, to his detriment, such that the defendants should be estopped from relying upon the requirements of Clause 12, in particular the need for a written notice. Reference was made to such cases as Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251, The Commonwealth v Verwayen (1990) 170 CLR 394, Source and Resources Pty Ltd v Porada [2007] NSWSC 883 at [27], Liebe v Molloy (1906) 4 CLR 347.

It was also submitted that Mr Zaidi conceded in cross-examination that compliance with Clause 12 was waived (relying upon questions and answers at T 292.30 - 39 and 296.47 - 52). In my view such an inference cannot be drawn from that evidence. Even if I were satisfied that Mr Zaidi fully appreciated the significance of the questions, which must be doubted, his answers were equivocal at best.

The onus of proving variations based other than on compliance with the strict requirements of Clause 12 fell upon Mr Al-Atabi, and much of the material relied upon to discharge that onus is unsatisfactory in a number of ways. Mr Al-Atabi did not satisfy me that Mr Zaidi ever had a full appreciation of the reason for many of the documents discussed with him or signed by him. The word 'variation', much used in Mr Al-Atabi's affidavits and submissions, was conspicuously absent from most of the documentation and from such evidence as there was as to any conversations with Mr Zaidi. In my view, there was a large element of reconstruction in seeking to make the available documentary evidence fit the case sought to be made. Nor do all the documents relied on to support variations claimed contain Mr Zaidi's signature.

I am not satisfied, without more, that the mere appearance of Mr Zaidi's signature on invoices and quotes amounted to anything more than an acknowledgment, or in some instances an approval of the product or supplier. A signature of itself cannot be said to have amounted to a proper and considered action by which the defendants agreed to the further costs over and above the agreed contract price, and therefore an approval. The placing of invoices in front Mr Zaidi and asking him to 'approve' them, without some further explanation was in my view insufficient to put the defendants on notice as to the significance of the costs being claimed. Mr Zaidi could not be expected to have had an immediate and constant knowledge of the works or their cost, nor indeed whether the amounts claimed fell within the contemplated scope of the work covered by the agreed lump sum price.

Mr Zaidi had no independent knowledge about how the amounts being incurred in connection with the building work related to the agreed price, and whether they were included or not. At no time did Mr Al-Atabi tell him that the cost was not going to come within the agreed sum of $1.1m. As the defendants submitted (at 165 - 168): 'One would expect that if a builder was going to be $772,210 over on a agreed price of $1,100,000.00 or 70% over budget, it would be something that the builder would ensure the owner would be aware of and that any additional cost incurred would be scrupulously examined in an attempt to stick to the budget if at all possible. Rather than a series of communications dealing with incremental overages and notices clearly advising the defendants that each dollar incurred was an additional cost that the defendants would need to pay on top of the agreed price and clearly stating the budget price and the cumulative increases, the plaintiff relies on booklets of invoices and bundles of documents to justify a claim for a 70% increase in the price. With the possible exception of the document at Tab K to the plaintiff's exhibit there is not a single document given to the defendants that clearly states that the fixed contract price is $1,100,000 and that additional amounts will be required to complete the contract'.

In the context of the variations alleged, the annexure dated 23 January 2006 at Tab V to Mr Al-Atabi's affidavit evidence assumed particular significance. I will refer to the document at Tab V as the 'Variations Document'.

Work on the building project was 80% completed by 20 March 2005 (T 271) and Mr Al-Atabi carried out no further work on it after 5 May 2005 (T 82). In October 2005 he discovered that two of the units had been sold. He sent a tax invoice to Mr Zaidi dated 20 October 2005 (Tab T) for variations totalling $297,689.71 and claiming an outstanding balance of $742,092.45.

Just before Christmas 2005, Mr Zaidi asked Mr Al-Atabi to break down the claim 'to justify the variations'. On 23 January 2006 he gave Mr Zaidi the Variations Document at Tab V. This contains a list of items in two parts and sets out what is described as the total cost of the 'job' ($1,872,210.28) and the 'overdue amount' ($742,092.45) after deducting the amount received ($1,130,117.83). In his affidavit evidence, Mr Al-Atabi describes all the items in the Variations Document as variations. It is also significant that the document is addressed to A Zaidi, M A Abbas & S Raza, but not Mr Hasan Zaidi. Although Mr Hasan Zaidi acknowledged receipt of the document and wrote on it 'Received the original 23/1/05', having regard to the date on the document and on the document at Tab W, it is probable that was a mistaken reference to 23 January 2006.

Mr Al-Atabi relies on the Variations Document as setting out his claim (in his written submissions at 73. It is therefore appropriate to set out the full content of the document and then examine each item in turn:

"Re. Construction Site at No. 6 Methven St., Mt Druitt

As per our meeting on 11/12/2005, please find out down below is the total cost and overdue amount for the above mentioned job site.

Original contract $1,100,000.00 Site preparation $8,375.00 Excavation as per the new plans $6,958.00 Tip fee to above excavations $29,530.00 Concrete to ground slab $12,500.00 Pest control (chemical treatment) $2,490.00 Carpentry (frame works) $10,530.88 Masonry $65,596.43 Metal works $17,240.00 Roofing $10,306.00 Plumbing $61,035.31 Joinery $73,128.09

Variations Redesign ground floor plan (RLs) $500.00 Windows design & schedule $2,700.00 Hydraulic engineer fee $1,000.00 S96 application including council fees $7,310.00 Preliminary variation to new plans $11,300.00

Retaining walls structural design $1,350.00 Excavation to R.W $1,780.00 Tip fees to above $4,365.50 Concrete to R.W $41,200.00 Block work to R.W including materials $35,084.94 Surveyor $1,715.00 Labour hire $3,245.00

Structural design to piers & ground slab $6,000.00 Excavation to piers $3,920.00 Concrete to piers $34,000.00 Excavation to gas lines $3,180.50 New gas lines to 8 units including gas $15,500.00 Labour hire $1,960.00 Gas appliances $2,350.00 Blacktown CC water rate $3,512.00 Fire rate services $14,597.00 Frame work & gyprock to 8 garages $17,000.00 Mail boxes $745.80 Tool and equipment hire $4,115.00 Signs and unit numbers $600.00 New boundary fence between No 4, 8 & 6 $16,265.00 Retaining wall to visitor car park $11,920.00 Preliminary cost from June 2005 to November 2005 including 24 hr. security guard $119,736.00 Profit and overheads to these variations $109,368.84

TOTAL $1,872,210.28 RECEIVED $1,130,117.83 BALANCE $742,092.45"

Site preparation 38. Mr Al-Atabi made a claim for an additional sum of $8,375.00 by way of a variation for site preparation. The Lump Sum Contract contains insufficient detail as to the work included in the contract price to form a view as to whether site preparation was included in the agreed contract price of $1.1m, and it is therefore appropriate to have regard to the extrinsic circumstances. In my view it was the common intention of the parties that site preparation was not included in the agreed contract price of $1.1m. This is abundantly clear from the Quotation and Full Estimate Summary.

Mr Al-Atabi's case in respect of the claim for this alleged variation is that when he arrived at the site in August 2004, it was overgrown and there was building debris throughout the site that needed to be cleared. He expanded on this in cross-examination (T 105.16):

"Because the demolishing been done by Mr Zaidi or the owner or by a contractor appointed by them, so I'm not aware about what's hidden, or still hidden underground in terms of footings, pipes, services. That's why I didn't allow for a site preparation for it. If I had done the demolishing myself I would be aware of all the services, all the footings, all type of bricks which was hidden under the ground, because I'm going to clear up the site. That's why."

Mr Al-Atabi claims that he discussed this with Mr Zaidi who said, "Please prepare the site and invoice me". There is no evidence that he in fact ever provided such an invoice. Instead, Mr Al-Atabi relies upon the invoices set out in Table 1: Table 1

Tab Invoice Amount Date Paid X(i) Nikora Excavations $2,618.00 30.8.04 PV.meth/08 X(ii) Burton & Field $2,200.00 6.8.04 OPM X(iii) Burton & Field $220.00 18.1.05 OPM X(iv) Burton & Field $1,254.00 27.9.04 OPM chq X(v) Temporary Fence Hire $1,430.52 1.9.04 OPM Cr card X(vi) Kennards Hire $96.00 28.8.04 OPM X(vii) Nadhim Alamara $3,080.00 15.12.04 OPM $10,898.52

The conversation was in fact denied by Mr Zaidi, whose evidence was that Mr Al-Atabi had undertaken a site inspection and it was inevitable that site preparation would be necessary. Mt Al-Atabi contends that he only saw the site for the first time in August 2004. For that to be true, he would have prepared the Quotation without inspecting the site. I find that improbable. I am unable to accept the evidence of Mr Al-Atabi on this issue, and I prefer the evidence of Mr Zaidi. I find, therefore, that there never was a request by Mr Al-Atabi for a variation in respect of site preparation.

But even apart from the alleged conversation, and leaving to one side the absence of any invoice for site preparation given to Mr Zaidi, the documentation does not support the claim. Although in the Variations Document Mr Al-Atabi claimed $8,375.00 for site preparation, in his affidavit he says the correct amount is $8,242.52. The total of the invoices in Table 1 does not correspond with either amount. Furthermore, not all the invoices relied upon in Table 1 were signed by Mr Zaidi, and as to those that were not signed there is no evidence of them having been given to him, let alone him having agreed to them. Third, not all of the invoices relate to site preparation, at least not to site preparation of the sort contemplated, that is, clearing and the removal of debris. Site marking and security fencing clearly fall outside this description. (See also Clause 19 of the Lump Sum Contract.) The invoice at Tab X (vii) is for labour between 1.11.04 and 10.12.04, and clearly nothing to do with site preparation.

For these reasons, the claim in respect of site preparation fails.

Excavation as per the new plans and tipping fees 43. Mr Al-Atabi made claims for additional amounts by way of variations for excavation costs 'as per the new plans' of $6,598.00 and for tipping fees of $29,530.00. His case was put as follows:

"The new plans provided to me required that the site be excavated because there was a detention tank and the footings for a retaining wall noted in those plans. Excavation was not part of the quotation or the lump sum contract. Mr Zaidi was aware that there would be excavation costs, as these were indicated to him in the fax dated 18 August 2004 (Exhibited at "K"). Excavation was required due to the stormwater engineer's specifications. The specifications required a detention tank to hold 48 cubic metres of water, therefore the excavation had to be about 65 cubic metres of soil"

The whole thrust of this claim was the assertion by Mr Al-Atabi that he received 'new plans', only given to him following provision of the Quotation, that required excavation work not previously contemplated for a detention tank and retaining wall. The excavation required consisted of some 65 cubic metres of soil. Reliance for the variation is placed on the letter at Annexure K, dated 18 August 2004, in which Mr Al-Atabi refers to a conversation the previous day and sets out preliminary costings for the construction of the retaining wall and detention tank.

Whatever may have been the motivation for that letter, it cannot have been the 'new plans'. Even if I were to accept that these plans were not available to Mr Al-Atabi before he prepared the Quotation, which I don't, it is abundantly clear that he had them at the time he entered into the Lump Sum Contract. It cannot be said, therefore, that it was intended that the cost of the detention tank and the retaining wall was not included in the agreed contract price of $1.1m.

There are also problems with the documentation relied upon for the claim. The excavation work said to have been the subject of the variation is contained in the invoices at Tabs Y and Z of Mr Al-Atabi's affidavit evidence. These invoices provide no guidance as to the excavation work to which they relate, and in particular whether it was excavation work relating to the detention tank (OSD) and retaining wall, or something else. For example, some of the tipping fees claimed pre-date the excavation work claimed. It is also clear that extra excavation work in respect of the detention tank was necessitated when the excavators struck rock, for which no provisional sum was agreed in the Lump Sum Contract.

In the result I was left with a factual conflict as between Mr Al-Atabi and Mr Zaidi. Neither witness was particularly impressive and in my view the evidence of each was to be approached with caution and accepted only if corroborated or otherwise verified by extrinsic evidence. In the case of a direct conflict between the two, however, I preferred the evidence of Mr Zaidi. In my view the credibility of Mr Al-Atabi was severely weakened by his false version of events surrounding the contractual documentation. I was not, therefore, satisfied that the work the subject of this claim, even if it did fall outside the agreed contract price, was approved by Mr Zaidi by way of variation to the Lump Sum Contract.

For these reasons, the claims in respect of excavation as per the new plans and tipping fees fail.

Concrete to ground slab 49. Mr Al-Atabi made a claim for an additional sum of $12,500.00 by way of a variation for concrete to the ground slab. His case was put as follows:

"The quotation had an allowance for concrete to the ground slab at $65,000.00 (paragraph 4 of Exhibit C.) This amount was allowed at that stage because there was no specification. I was never provided with a specification at any time. However, an amount of $77,500.00 was spent on concrete to the ground slab. The evidence for the variation is outlined in Annexure "AA" (an invoice from Belfield Concrete for $77,500.00)…The amount of $12,500.00 represents the difference between the initial tender document and the amount actually spent on concrete to the ground slab."

Put this way, the claim presupposes that the Quotation formed part of the Lump Sum Contract, which it didn't, and it fails for that reason alone. It is clear that the ground slab was contemplated by the parties as forming part of the works included in the agreed contract price. In the absence of any agreement as to a provisional sum for the ground slab in the Lump Sum Contract, even if the work cost more than Mr Al-Atabi estimated, that is irrelevant.

Although Mr Zaidi's signature appears with the word 'approved' on the invoice from Belfield Concrete Co (Tab AA), for the reasons given earlier, without more that was insufficient to evidence a variation by which the defendants agreed to the additional costs over and above the agreed contract price of $1.1m. There was no evidence of anything more. Furthermore, the invoice included other items such as excavation and labour costs. As the total amount is not broken down, it was not proved that the concrete exceeded even the original allowance of $65,000.00.

For these reasons, the claim in respect of concrete to the ground slab fails.

Pest control (chemical treatment) 53. Mr Al-Atabi made a claim for an additional sum of $2,490.00 by way of a variation for pest control (chemical treatment). His case was put as follows:

"An amount of $2,666.00 is claimed in respect of pest control. The initial quote was from Front Line Pest Control dated 9 August 2004 (Exhibit "BB(i)") in the sum of $3,424.00. This was for Granitguard Protection (this formed part of the original tender). As the area was a high risk termite area I had a discussion with Mr Zaidi in September 2004 at which I said, "its better if we switch to an irrigation system so we can inject chemicals every second year as an extra protection. That will be more expensive. It is about $3,000.00 more". He said "I don't mind" and Mr Zaidi approved a quotation from Clear Away Pest Control for an Altis irrigation system costing $14.00 per linear metre plus GST (Document "BB(iii))"). I found a cheaper quotation from Eddy's Pest Control for a similar product and we used that.

The amount spent on pest control is therefore $5,990.00. The amount quoted for pest control was $3,324.00. The difference claimed is $2,666.00"

The first observation to be made is that there was no quote for $3,324.00, at least not in the Quotation. The common intention of the parties was that the cost of pest control for the project was included in the agreed contract price. The second observation is that none of the documents relied upon (Tab BB) bears Mr Zaidi's signature. There is, therefore, no evidence of any approval for a variation other than Mr Al-Atabi's assertion about a conversation with Mr Zaidi in which he said "I don't mind".

Mr Zaidi denied any discussion relating to pest control. It was his evidence that he did not suggest or agree to any particular system: "I was building the town houses to sell for a quick profit and had no interest in anything more than basic pest control measures as it would have been most unlikely that this would be cost effective in enhancing the sale price or saleability of the town houses." I am satisfied that this was the intention and if any of the defendants did keep any of the units, they did so because the market subsequently dropped. The suggestion that Mr Zaidi opted for a more expensive system as alleged by Mr Al-Atabi simply does not ring true. In any event, as I have indicated before in these reasons, I am not prepared to accept the evidence of Mr Al-Atabi unless otherwise objectively supported or corroborated. I therefore prefer Mr Zaidi's evidence on this issue.

For these reasons, the claim in respect of pest control fails.

Carpentry (frame works) 57. Mr Al-Atabi made a claim for an additional sum of $10,530.88 by way of a variation for carpentry (frame works). His case was put as follows:

"I claim the amount of $10,530.88 for carpentry. I allowed the amount of $17,000.00 per unit, multiplied by 8 units ($136,000.00) for carpentry. The amount was $146,530.88."

As was the case with the ground slab, the claim for the additional cost of carpentry presupposes that the Quotation formed part of the Lump Sum Contract, which it didn't, and it fails for that reason. In the absence of any agreement as to a provisional sum for the carpentry in the Lump Sum Contract, even if the work cost more than Mr Al-Atabi estimated, that is irrelevant.

Mr Zaidi's signature does appear with the word 'approved' on some of the documents relied on in support of the claim (Tab CC), but for the reasons given earlier, without more that was insufficient to evidence a variation by which the defendants agreed to the additional costs over and above the agreed contract price of $1.1m. There was no evidence of anything more.

Once again, the invoices relied on are inadequate to enable a conclusion that there was in fact any 'additional' cost for carpentry work. Included in the invoices are references to work other than carpentry. There is also a reference to the repair of damaged windows that was left unexplained (T 142.35). Furthermore, in the absence of corroboration, I am not prepared to accept the evidence of Mr Al-Atabi as to the payment of quotes or invoices (T 190.8).

For these reasons, the claim in respect of carpentry fails.

Masonry 62. Mr Al-Atabi made a claim for an additional sum of $65,596.43 by way of a variation for masonry. His case was put as follows:

"I claim $65,596.03 for masonry. I allowed $71,000.00 in the contract. I spent $136,596.43 on masonry. This includes costs for labour, equipment hire, surcharge brick elevator, wheelbarrow hoist, sand, cement, brick supply, block supply, bricklayer, wall ties, flashing, weepholes, nails, lentel bars, scaffold, delivery charges, bycole."

In cross-examination, Mr Al-Atabi added further bases for this alleged variation, namely a change in the design of the works requiring additional bricks (T 156.36ff and 158.5-15), and an increase in the price per hundred bricks (T 157.1-11 and 158.17ff).

Again, the claim for the additional cost of masonry presupposes that the Quotation formed part of the Lump Sum Contract, which it didn't, and it fails for that reason. In the absence of any agreement as to a provisional sum for the masonry in the Lump Sum Contract, even if the work cost more than Mr Al-Atabi estimated, that is irrelevant.

Mr Zaidi's signature appears with the word 'approved' on at least one of the documents relied on in support of the claim (Tab FF), but for the reasons given earlier, without more that was insufficient to evidence a variation by which the defendants agreed to the additional costs over and above the agreed contract price of $1.1m. There was no evidence of anything more. In respect of this claim, it was not even alleged by Mr Al-Atabi, in his affidavit evidence, that there was some conversation with Mr Zaidi about the increased cost, and it was not until he was cross-examined that such an assertion emerged (T 156.46). It was not put to Mr Zaidi in cross - examination that he approved a variation. The other problem for Mr Al-Atabi is that the only conversation in which bricks were referred to in fact occurred prior to the Lump Sum Contract being signed (T 158.46-159.4). I do not accept the evidence of Mr Al-Atabi on this issue.

For these reasons, the claim in respect of masonry fails.

Metal works 67. Mr Al-Atabi made a claim for an additional sum of $17,240.00 by way of a variation for metal works. His case was put as follows:

"There was a variation with respect to the metal works… At the initial tender stage there was no metal work, columns & beams permitted in the price. The original plan had no metal work, no columns and beams. Additionally there was no allowance for motors for the garage doors in the lump sum contract. A later alteration to the plans showed metal works involving the columns and beams thereby resulting in a variation."

It is true that no metal works ("balustrades and beams") were allowed for in the Quotation. Mr Zaidi contended that metal work, column beams and garage doors were all part of the works and included in the contract sum, because it was 'inevitable that metal work, column beams and garage doors would be necessary', and no provisional allowances were specified for these items in the Lump Sum Contract.

But it was Mr Al-Atabi's case that there was extra work not allowed for in either the Quotation or the Lump Sum Contract, because it only arose as a result of the revised Construction Certificate dated 6 September 2004 (Tab N) issued by Blacktown City Council, which (for the first time) required steel beams to the first floor, as specified in the drawings (Tab O (vii) - O (x)). Mr Zaidi, however, says the requirements in these drawings as to a revised beam distribution was apparent in the plans given to Mr Zaidi at the time he first quoted, that is, before signing the Lump Sum Contract, and that he never discussed, let alone approved, a change.

The first question to be determined, therefore, is whether the original specifications did or did not in fact include a requirement as to metal beams to the first floor. Mr Zaidi was unable to say. It was his assumption that 'every building requires a metal work column and garage doors' (T 314.55). I am left with an assertion by Mr Al-Atabi that the original plans contained no requirements as to metal work, columns or beams, evidence which was not corroborated or otherwise objectively supported. No architect was called. The plans remained unexplained. Of the invoices relied upon (Tab GG), the only document on which the signature of Mr Zaidi appears relates to garage doors. Nor was there evidence of any specific conversation in which the question of additional cost for metal work was raised with Mr Zaidi at or around the date of the documents relied upon to evidence a variation. The only clue to the mystery is a handwritten note on one of the revised drawings (Tab O (viii)) to the effect that the beam distribution was 'revised'. This suggests that beams were always required, but that the distribution was changed. In the end I was not satisfied that the requirement for metal beams was new, in the sense that metal beams or columns did not form part of the original works contemplated at the time of signing the Lump Sum Contract and were not included in the agreed contract price of $1.1m. And even if there was some revised distribution of the first floor beams, there was no evidence that in fact led to any additional cost. Similarly, it was not proved that any need for lintels due to a requirement as to motors for the garage doors was something new. If indeed there was some other, separate new requirement for the garage doors to be fitted with motors, Mr Al-Atabi proved neither the requirement nor a variation resulting from it.

For these reasons, the claim in respect of metal works fails.

Roofing 72. Mr Al-Atabi made a claim for an additional sum of $10,306.00 by way of a variation for roofing. His case was put as follows:

"The quotation allowed an amount of $40,000.00 for roofing. Variations to the roofing are outlined in Annexure "HH"… The additional amounts, over and above the amount quoted (in) the tender document of $40,000.00, amounted to $12,997.44."

This is another item where the claim for the additional cost presupposes that the Quotation formed part of the Lump Sum Contract, which it didn't. The claim for roofing fails for that reason. In the absence of any agreement as to a provisional sum in the Lump Sum Contract, even if the work cost more than Mr Al-Atabi estimated, that is irrelevant.

As with other documentation relied upon by Mr Al-Atabi, Mr Zaidi's signature appears on some of it along with the word "approved", there is no other evidence sufficient to establish a variation by which the defendants agreed to the additional costs over and above the agreed contract price of $1.1m. And there are problems with the documentation in the sense that they include work that could not be classified as roofing. Mr Zaidi also points to a discrepancy as to the cost of the tiles that went unexplained.

For these reasons, the claim in respect of roofing fails.

Plumbing 76. Mr Al-Atabi made a claim for an additional sum of $61,035.31 by way of a variation for plumbing. His case was put as follows:

"I claim the amount of $61,035.31 in relation to plumbing. I allowed $8,500.00 per unit in the quotation. I was charged $105,262.00 by the plumber. Exhibited at "DD" are the plumbing invoices. In addition I incurred labour machine hire, sand and blue meatal and backfill."

This claim also fails because the Quotation did not form part of the Lump Sum Contract. Mr Zaidi's signature appear on some of the documents relied upon but there is no evidence of an approved variation, whether by waiver or otherwise. The invoices relied upon (Tab DD) include extraneous items and in any event the total of the documents does not come anywhere near the amount suggested.

For these reasons, the claim in respect of plumbing fails.

Joinery 79. Mr Al-Atabi made a claim for an additional sum of $73,128.09 by way of a variation for joinery. His case was put as follows:

"I claim the amount of $73,128.09 in respect of joinery. Exhibited at "EE" are the quotations and invoices with respect to joinery used for the work on the project..."

This claim also fails because the Quotation did not form part of the Lump Sum Contract, and no provisional sum was included for it in that contract.

Mr Zaidi's signature appears on some of the documents relied upon (Tab EE), and in one case the word "approved' also appears, but there is no evidence of an approved variation, whether by waiver or otherwise. The admixture of quotations and invoices makes it impossible to verify what the actual cost was, let alone whether there was any actual additional work.

For these reasons, the claim in respect of joinery fails.

Redesign ground floor plan (RLs) 83. Mr Al-Atabi made a claim for an additional sum of $500.00 by way of a variation for the redesign of the ground floor plan. His case was put as follows:

"A variation occurred in relation to the redesign of the ground floor plan (Relief Levels)… The approval for the variation is found in the document noted as Claim No 1"

The invoice relied on (Tab II) from Designbuild is dated 3 September 2004 and is in fact addressed to Mr Zaidi. The work is described as "RLs Checking/ Amendments to DA/CC approved architectural documents."

Like so much of the evidence in this case, the evidence surrounding this claim was confused and unconvincing. I have already determined that Mr Al-Atabi had all the relevant plans and drawings prior to him signing the Lump Sum Contract. I am, therefore, not satisfied that any changes in the work required as a result of any redesign were not included in the agreed contract sum of $1.1m. On the other hand, it cannot have been the case that he proceeded on some whim to arrange for new drawings for an application to Council for a revised Construction Certificate in September 2004. The submission that the plans and drawings used to support the original Construction Certificate issued on 28 June 2004 did not require alteration, and that Mr Al-Atabi had them altered for unknown reasons of his own is in my view inherently unlikely. There must have been a reason. More probably than not it was to regularise the documentation for the works as a result of the need to correct the design discrepancies identified. It is one thing to say that the plans and drawings needed revision. However, it is quite another to suggest that the work required by reason of the changes was not included in the agreed contract price under the Lump Sum Contract. If there was any uncertainty in this regard, it could have been made the subject of a provisional sum, but wasn't. It was, in my view, the common contractual intention of the parties that the work to be done, even in its revised form, was included in the agreed price under the Lump Sum Contract. All that happened later, in September, was for the plans to be revised, to reflect the design changes required, and then submitted for Council approval. The redesign of the ground floor plan was one of the changes to the documents. Thus understood, it is inconceivable that Mr Zaidi did not know that revised plans and drawings were required. It is also clear that the work claimed for under this item was not a variation at all. It does not even relate to building work. It had nothing to do with the building work or materials and was not, therefore, subject to Clause 17 of the Lump Sum Contract. Rather it was a design or architectural cost that fell to the account of the owners, not the builder. Why Mr Al-Atabi paid the invoice is not explained. What is clear, however, is that he is entitled to reimbursement for the work done in revising the design, but not for the building work involved as a result of the design revisions.

For these reasons, the claim for the cost of the redesign of the ground floor plan succeeds, albeit not as a variation.

Windows design and schedule 87. Mr Al-Atabi made a claim for an additional sum of $2,700.00 by way of a variation for the windows design and schedule. His case was put as follows:

"There was a variation with respect to the windows design & schedule. There was no schedule in the architect's plan for the windows. A verbal approval was given by Mr Zaidi for the window schedule (at annexure "JJ")… on 30/07/04."

Where the sum of $2,700.00 came from was not made clear in Mr Al-Atabi's affidavit evidence and what in fact happened only emerged in cross-examination. There was no invoice (T 168.33). Mr Al-Atabi drew the schedule himself and then charged a lump sum amount for it in the first progress claim. His case was that this amount was approved because the progress claim was paid. There was a faint suggestion that the amount was verbally approved first (T 169.3), but there is no evidence to corroborate such a conversation, and Mr Zaidi denied it. I do not accept the evidence of Mr Al-Atabi on this issue. Payment of the progress claim was not of itself sufficient to constitute a waiver of the express requirements in the Lump Sum Contract as to the procedure to be followed for a variation. Not unsurprisingly, there was nothing in the written submissions from counsel in support of this claim. I find that there was no variation in respect of the windows design and schedule.

For these reasons, the claim for the windows design and schedule fails.

Hydraulic engineer fee 90. Mr Al-Atabi made a claim for an additional sum of $1,000.00 by way of a variation for the fees of a hydraulic engineer. His case was put as follows:

"Further variation occurred with respect to the storm water drainage design. Annexed hereto and marked with the letter "KK" is a true copy of the invoice (dated 4 August 2004 for $1,000.00 from Siva Sivakumar)... Although the notation on the invoice says "Paid by Zaidi" and although the amount was paid by Mr Zaidi, I was told in 2004 to "deduct the payment from the work on my house at Coachman Crescent, Kellyville". I was working on Mr Zaidi's house at Kellyville however I never deducted the payment from the work."

Why the amount would be deducted from the cost of this other project, rather than added to it, was never made clear.

In any event, Mr Zaidi denied such a conversation, and there is no corroboration or other objective support for Mr Al-Atabi's evidence on this issue. I therefore reject his evidence and I find that no such conversation occurred.

It follows that in fact Mr Zaidi paid for the fees of the hydraulic engineer and that Mt Al-Atabi never incurred any loss.

For these reasons, the claim for the fee for the hydraulic engineer fails.

S 96 application including council fees 94. Mr Al-Atabi's next claim for an additional sum was an amount of $7,310.00 he alleges was incurred in connection with the s 96 application to Blacktown City Council for the revised Construction Certificate that issued in September 2004.

As with other aspects of Mr Al-Atabi's case, there were significant problems with the documentation relied upon to support this claim (Tab LL). Firstly, the two documents annexed only amounted to $5,570.00.

The first of these two documents was a receipt from Blacktown City Council for $2,570.00 for the fee relating to the Construction Certificate. The second document was a payment voucher submitted as part of the first progress payment, which included a claim for $3,000.00 for 'following up the drawings changes with Blacktown City Council'. For these amounts to have become the responsibility of the owners rather than the builder required a variation (Clause 16 of the Lump Sum Contract). The only evidence in support of such a variation, whether by way of waiver or otherwise, would require me to accept the uncorroborated evidence of Mr Al-Atabi as to conversations between them in preference to the evidence of Mr Zaidi. For reasons already given I am not prepared to do that.

For these reasons, the claim in connection with the s 96 application to the Blacktown City Council fails.

Preliminary variation to new plans 98. A claim was next made by Mr Al-Atabi for an additional sum of $11,300.00 by way of a variation for the preliminary variation to the new plans. His case was put as follows:

"There were variations in relation to the Second CC in the sum of $11,300.00 for preliminaries. This is my best estimate. It is the cost of scaffolding hire, erection and dismantling, labour hire and materials."

There are no invoices relied upon in support of this claim and it is otherwise unexplained in the affidavit evidence. The attempted explanation in cross-examination was unsatisfactory (T 171.7-22). Whatever this claim might have related to, there is simply no evidence it was for additional work, nor is there any evidence of a variation.

For these reasons, the claim in respect of the preliminary variation to the new plans fails.

Retaining walls structural design 101. A claim was next made by Mr Al-Atabi for an additional sum of $1,350.00 by way of a variation for structural design in respect of retaining walls, said to be supported by an invoice for fees for an engineering consultant of $1,100.00 and several receipts for printing (Tab LL), which in fact only add up to $230.00. Mr Zaidi's signature does not appear on any of these documents.

Mr Al-Atabi put his case for this claim as follows:

"... I had a conversation with Mr Zaidi to the following effect. I said: "We must lodge a Section 96 Application otherwise we cannot commence any work due to the discrepancy between the architectural plans and the stormwater plans which I had received". Mr Zaidi said: "Ok, go ahead".

I said: We have to appoint a new architect "because the existing architect is bankrupt at that time" and you should ask your engineer to forward the structural design for the OSD and retaining wall to us and you have to consult the stormwater engineer to revise the plans".

I later discovered that Mr Zaidi's engineer was overseas, so I appointed another engineer named A&K Engineering. I had a conversation with Mr Zaidi to the following effect. I said: "I will attend to lodge the Section 96 and coordinate it and charge you for it". I note Clause "C" of Schedule 3 of the contract (the Cost Plus Contract) at page 9 which notes it is the owners responsibility to obtain any contract drawings or specifications. Mr Zaidi said "OK".

I view this claim in the same context as the claim for the redesign of the ground floor plan discussed earlier in these reasons. It had nothing to do with the building work or materials and was not, therefore, subject to Clause 17 of the Lump Sum Contract. Rather it was a design or architectural cost that fell to the account of the owners, not the builder and because Mr Al-Atabi incurred the cost, he is entitled to reimbursement, for the design work, but not for the building work involved as a result of the design.

Leaving to one side the arithmetic error, the claim amounts to $1,330.00 and is corroborated by the documentation.

For these reasons, the claim for the cost of the structural design in respect of retaining walls succeeds in an amount of $1,330.00, albeit not as a variation.

Other costs relating to the retaining wall 106. The next series of claims made by Mr Al-Atabi in his Variations Document was for additional sums by way of variations for various costs for work in connection with the retaining wall. These claims were:

▪ Excavation - $1,780.00 (Tab NN) ▪ Tip fees - $4,365.50 (Tab OO) ▪ Concrete - $41,200.00 (Tab PP) ▪ Block work including materials - $35,084.94 (Tab QQ) ▪ Surveyor - $1,715.00 (Tab RR) ▪ Labour hire - $3,245.00 (Tab TT)

There are numerous problems with the documentation, which it is not necessary to examine in detail, as the claims fail due to the failure of Mr Al-Atabi to prove variations were approved. Each depends for its success on Mr Al-Atabi proving a conversation that could constitute a waiver of the requirements of Clause 12 of the Lump Sum Contract. In the absence of any corroboration or other objective support for his evidence I rejected it, for the reasons already given.

For these reasons, the claims for additional amounts for work and costs associated with the retaining wall fail.

Piers and ground slab 109. The next series of claims made by Mr Al-Atabi in his Variations Document was for additional sums by way of variations for various costs for work in connection with the piers and the ground slab. These claims were:

▪ Structural design - $6,000.00 (Tab UU) ▪ Excavation - $3,920.00 (No documents annexed) ▪ Concrete - $34,000.00 (Tab VV)

Once again there are numerous problems with the documentation, which it is not necessary to examine in detail, as the claims fail due to the failure of Mr Al-Atabi to prove variations were approved. Each depends for its success on Mr Al-Atabi proving conversations that could constitute a waiver of the requirements of Clause 12 of the Lump Sum Contract. In the absence of any corroboration or other objective support for his evidence I rejected it, for the reasons already given.

For these reasons, the claims for additional amounts for work and costs associated with the piers and the ground slab fail.

Gas lines and appliances 112. The next series of claims made by Mr Al-Atabi in his Variations Document was for additional sums by way of variations for various costs for work in connection with the gas lines and appliances. His affidavit evidence in support of these claims was as follows:

"The lump sum contract was signed on the basis of electrical appliances, not gas appliances. Gas was however used in the projects. The difference between the quotation, based on the use of electrical services and appliances, and the use of gas services and appliances was $15,500.00. Zaidi agreed to use gas in the project... The approval for the gas services was given by Mr Zaidi in October/November 2004...after the contract had been signed on the basis of the provision of the electrical appliances not gas."

▪ Excavation to gas lines - $1,380.50 (Tab WW) ▪ New gas lines to 8 units including gas - $15,500.00 (Tab XX) ▪ Labour hire - $1,960.00 ▪ Gas appliances - $2,350.00

Mr Zaidi's answer to these assertions was that gas appliances and supply were discussed before the contract was entered into, and no variation was approved for these claims.

The documentation is again contentious. Nor is there any reconciliation as to the cost of gas installations as opposed to whatever allowance was made for electrical appliances, or how the difference was calculated. I leave all these problems to one side because I was not satisfied that there were any variations approved as claimed in respect of gas lines and gas appliances.

The evidence of Mr Al-Atabi in relation to this claim is not corroborated and I preferred Mr Zaidi's evidence that the decision to use gas appliances had been made before the Lump Sum Contract was signed, and that he did not approve any variations in that regard.

For these reasons, the claims for additional amounts for work and costs associated with gas lines and appliances fail.

Blacktown City Council rates 118. The next claim in the Variations Document was for overdue water rates of $3,512.00. Mr Al Atabi put his case for this claim as follows:

"A further variation occurred on the project when the Council sent a reminder notice to Mr Zaidi to pay the overdue council rates. The failure to pay these rates would lead to Council cutting off the water from the site which would result in the work not being able to be completed. Accordingly I raised the issue with Mr Zaidi in August 2004. At that time he advised me in respect with the invoices to "just pay it and add it to your costs".

The claim is in fact for council rates, not water rates. The documents relied on (Tab AAA) only add up to $1,816.20.

In his affidavit, Mr Zaidi conceded that the council rates were paid by Mr Al-Atabi, and said:

"I accept that the plaintiff is entitled to offset the amount paid for council rates against the overpayments he has received..."

For these reasons, the claim for the rates succeeds, albeit not as a variation.

Fire rate services 122. The next claim in the Variations Document was for fire rate services of $14,597.00. Mr Al Atabi put his case for this claim as follows:

"A further variation occurred when it became apparent that fire protection for the common wall was required by the Council."

Mr Zaidi says, however, that Mr Al-Atabi not only failed to install appropriate fire protection materials, but acknowledged that it was necessary to retro-fit appropriate materials at his own cost (Tab BBB). There is no corroboration for Mr Al-Atabi's version on this issue, and I therefore accept Mr Zaidi's evidence.

For these reasons, the claim for installing appropriate fire protection materials fails.

Frame work & gyprock to 8 garages 125. The next claim in the Variations Document was for an additional sum of $17,000.00 by way of a variation for the frame work and the gyprock to 8 garages.

Mr Al Atabi put his case for this claim as follows:

"A further variation occurred with respect to the frame work and the gyprock to 8 garages. Around March 2005 Zaidi said to me "can we gyprock all the garages. I want architraves and skirting boards in the garages as well". The variation is evidence by the following documents… (Tab CCC)…The amount of $17,054.32 is ascertained by taking the price allowed for in the original contract signed by the parties and deducting that amount from the price paid for all the materials and labour used…"

The conversation is denied by Mr Zaidi, who said such a matter was never discussed.

This claim suffers from the same problem as most of the other variations alleged, in that it relies upon a waiver of the contractual procedure for variations and is dependent upon an asserted oral conversation that is uncorroborated and unsupported by objective material. For the same reasons I have previously expressed, I am not prepared to accept the evidence of Mr Al-Atabi in such circumstances in preference to that of Mr Zaidi.

For these reasons, the claim for the frame work and the gyprock to 8 garages fails.

Mail boxes 130. The next claim in the Variations Document was for an additional sum of $745.80 by way of a variation for mailboxes. Mr Al Atabi put his case for this claim as follows:

"A further variation occurred due to the requirement for mailboxes for each unit. The variation is evidenced by the following document…(Tab DDD)…signed by Mr Zaidi on 25 July 2005."

As I have previously found, the mere appearance of Mr Zaidi's signature on documents amounted to nothing more than an acknowledgment, or in some instances an approval of the product or supplier, but without some further explanation or justification was insufficient to amount to a variation by which the defendants agreed to the further costs over and above the agreed contract price.

For these reasons, the claim for mail boxes fails.

Tool and equipment hire 133. The next claim in the Variations Document was for an additional sum of $4,115.00 by way of a variation for tools and equipment hire. Mr Al Atabi put his case for this claim as follows:

"My quotation originally assumed that all timber was to be cut on site. However, Mr Zaidi insisted that pre manufactured frames be used. In September 2004 Mr Zaidi said to me "please use MCM for pre manufactured frames as they are the cheapest and good quality"… Accordingly a crane was necessary to place the pre manufactured articles in place. The variation is evidenced as follows: (Tab EEE)."

The documents only add up to $4,115.00. Mr Zaidi's signature does not appear on them.

Mr Zaidi denied that he insisted upon the use of pre-fabricated frames or that MCM be used. Whilst he may have known of that company, he did not know anyone and had no interest in it.

Even if the conversation alleged could be construed as an approval for the use of a crane as an additional cost, it was uncorroborated and unsupported by objective material. For the same reasons I have previously expressed, I am not prepared to accept the evidence of Mr Al-Atabi in such circumstances in preference to that of Mr Zaidi.

For these reasons, the claim for tool and equipment hire fails.

Signs and unit numbers 138. The next claim in the Variations Document was for an additional sum of $600.00 by way of a variation for signs and unit numbers. Mr Al-Atabi put his case for this claim as follows:

"A further variation involved building name signs for the Property. This variation is evidenced by the following: (Tab FFF)"…The approval for the variation was given verbally by Mr Zaidi in September 2005. The variation was for signs and unit numbers for the units on the Property."

Mr Zaidi's evidence is that the only conversation on this subject was when Mr Al-Atabi asked him what name he wanted on the building and he replied "Zahraa Paradise". But there was no discussion as to the type of sign, the cost or who would be responsible for the cost.

In any event, the document concerned (Tab FFF) does not support the claim. It purports to be an invoice for $650.00, as to which there is no evidence of payment and relates to 'Construction Signs". Nor was it signed by Mr Zaidi.

At a glance

Court

Decision date

Source

Judgment (255 paragraphs)

Parties

Cases Cited (25)

Cited By (1)