Broadlex Services v RCR Resolve FM;

Solicitors: Johnson Winter & Slattery (Plaintiff / Cross-Defendant) Kennedys (Defendant / Cross-Claimant) File Number(s): 2014/69596

Judgment

1. HIS HONOUR: In these proceedings the plaintiff claimed payment of about $241,000 for services provided by it to the defendant. The defendant did not suggest that the services had not been provided, or that they had been performed inadequately. Rather, the defendant relied on a cross-claim, and defence by way of set-off.
2. To enable what follows to be understood, I set out paras 1 to 8 of my reasons given on 16 October 2015 [2015] NSWSC 1514: 1 HIS HONOUR: The plaintiff (Broadlex) contracted with the defendant (Resolve) to supply cleaning services at the Villawood Immigration Detention Centre (VIDC) and a related "facility" known as Villawood Immigration Residential Housing (VIRH). It is common ground that Resolve has not paid Broadlex the value of some nine invoices for services, amounting in total to a little over $241,000.00. Resolve does not suggest that the services the subject of those invoices were not performed, or were not performed appropriately. It defends the claim by way of what might be called confession and avoidance, together with a claimed set off, and a cross-claim. The issues 2 The real issues in dispute are, in substance: (1) on the proper construction of the contract made between Broadlex and Resolve, what services was Broadlex required to perform for the fixed remuneration payable to it? (2) If the contract is construed as Resolve submits, so that Broadlex was required to provide more services than it did (for reasons that will become apparent, I will call those the "extra charge services"), did the parties nonetheless conduct their relationship on the conventional basis that Broadlex should be paid additional remuneration for those services, so as to give rise to a conventional estoppel? (3) If the contract is to be construed as Resolve contends, and if there is no conventional estoppel, what were the further services that Broadlex should have performed as part of its duties in exchange for the fixed remuneration? (4) On the same assumptions, what if any loss has Resolve sustained by reason of the failure of Broadlex to provide the extra charge services without additional remuneration? (5) Did Broadlex perform such services as it did provide to the standard required by the contract? (6) If Broadlex did not perform its services to that standard, was that breach a material cause of the loss that Resolve claims to have suffered because its principal "abated" payments otherwise due to Resolve? (7) Whether, on the assumption that Resolve's general terms and conditions of contract formed part of the contract between Broadlex and Resolve, Broadlex has any entitlement to interest on any amounts that may be found owing to it having to regard to the proper construction of cl 7.6 of those general terms and its application in the events that have happened. Background 3 Serco Australia Pty Ltd or the group of which it forms part (Serco) has a contract with the Commonwealth of Australia, or the relevant Minister of the Commonwealth, to "manage" immigration detention centres and related facilities throughout Australia. Resolve contracted with Serco to provide "facilities management services" at those centres. As part of that contract, Resolve was required to provide cleaning services at each centre. 4 In about May 2010, Resolve contracted with Broadlex for the latter to supply cleaning services at VIDC and VIRH. There were two separate contracts: one for VIDC and one for VIRH. Only the former is relevant. The parties' contractual relationship continued up until about March 2013. 5 It is not contentious that, in April 2011, the unfortunate inmates of VIDC rioted, and set fire to some of the buildings within that complex. Very considerable damage was caused. Resolve and Broadlex agreed that Broadlex would undertake additional services, essentially cleaning up the damage and making good. Of course, that was for additional remuneration. 6 Resolve asserted that it was entitled to be paid $6.3 million by Serco for services provided "to additional assets". It claimed, further, that Serco owed it about $1.4 million in respect of work done and invoiced, but not paid. The total claim was a little in excess of $7.7 million. 7 Serco defended Resolve's claim, and filed a cross-claim. In that cross-claim, it asserted that Resolve had failed to meet "Key Performance Indicators" (KPIs) in respect of services provided at VIDC. Serco said that it "was entitled to adjust the fee to be paid by [it] to Resolve by the amount of $266,240.45". It said that it had not deducted that amount from fees otherwise due to Resolve, and, accordingly, that the amount was due and payable. That is the "abatement" referred to in the sixth issue. 8 The claim between Resolve and Serco was settled on 30 June 2015. On that date, the parties executed a deed of release and settlement, under which Serco agreed to pay Resolve $3.685 million in full settlement of all claims, and the parties released each other. That sum was paid a few days later. There is no evidence as to how that sum was calculated. There is no material allocating it between the two claims that Resolve made against Serco, and the abatement that Serco claimed against Resolve.