BUILT INTERIORS PTY LTD v THREE DINOSAURS PTY LTD & ANOR

BUILT INTERIORS PTY LTD v THREE DINOSAURS PTY LTD & ANOR - [2003] NSWCA 290 - NSWCA 2003 case summary — Zoe

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10 Clause 10.6 provided: VALUATION OF VARIATIONS Unless otherwise agreed, any Variation (including a Variation to the work of a sub-contractor or supplier identified under clause 4.2) shall be valued by the Architect on a fair and reasonable basis having regard to the rates and prices (if any) shown in items M1 and M2 of the appendix but varied so far as reasonably necessary in respect of relevant alterations of award rates and conditions since the date of this Agreement. 10.6.1 Where the Variation results in an addition to the Contract Sum, the cost thereof, together with the percentage stated in Item N of the Appendix shall be added to the Contract Sum. 10.6.2 Where the Variation results in a deduction from the Contract Sum, the cost thereof shall be deducted from the Contract Sum. 10.6.3 Any delay costs and expenses arising from the Variation shall be added to the Contract Sum. 11 Clause 11 required the Builder, within 20 days following the date of Practical Completion, to submit to the Architect a detailed statement showing all of the then ascertainable adjustments to the Contract Sum. A final claim by the Builder was to be submitted on the expiration of the Defects Liabilities Period (13 weeks after Practical Completion) or on the completion of making good any defects. The Architect was required to issue a Final Certificate 10 days later. 12 Work was Practically Completed on 27 November 1998. The Proprietors took up occupation the next day. The Architect issued defects lists on 28 November 1998, 2 December 1998 and 1 March 1999. 13 The Builder wrote to the Architect on 30 November 1998 (Blue 334) indicating that it was attending to the matters in the first list and that 75% of them had already been attended to. The letter called upon the Architect to administer the Contract according to its strict terms. It concluded: As you are aware Built Interiors have absorbed a number of legitimate variations in the interests of the project and the client's wish to maintain the original budget. Should the above items not be actioned by the week's end, these variations will be submitted in full along with the supporting Built Interiors contract scope of works in order to begin negotiation/litigation on the outstanding amounts.

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14 The Builder's response to the second defects list (sent on 22 December 1998) generally disputed the claims made therein by the Architect. 15 Progress Claims Nos 1-7 had issued from the Builder between 15 August 1998 and 23 November 1998. All but $495 of these claims appear to have been paid without dispute (see Red 4). These claims included 65 variation claims, most of them duly documented and approved in writing. On 13 January 1998 the Architect issued a Variation Summary for these 65 variations claims, indicating a detailed response to them on behalf of the Proprietors (Blue 268). It recorded that variations totalling $84,242 had been claimed to date and that variations totalling $45,866 had been approved to date. 16 On 3 February 1999 the Builder forwarded Progress Claim No 8. (It is doubtful whether this was a Progress Claim as contemplated by the Contract and it appears to have been treated by the Builder as a final claim at one stage (cf Blue 337). Nothing turns on this distinction and no point was made on this account at trial.) 17 It is clear on the evidence that Progress Claim No 8 was received by the Architect, discussed to some degree with representatives of the Proprietors, never approved and never paid. (See Blue 248, 335, 336 and the evidence of Mr Barber at Black 124). 18 Progress Claim No 8 claimed $66,387.95 based upon what were described as a number of "Unapproved Variations" (Blue 85). Six of them appear to be repeats of six of the variations previously submitted to the Architect and previously rejected by him, as recorded in the Variation Summary. But the bulk of the "Unapproved Variations" were those numbered 66 -100 (Blue 85, 115-149). 19 One issue fought at trial was whether individual claims for variations 66-100 were ever sent to or received by the Architect. These documents appear not to have been included in the Lists of Documents filed by either party. The Builder's Mr Bath said in evidence that he faxed them to the Architect (Black 59). He was challenged about this in cross-examination. Dr Doyle who appeared for the Builder at trial and in this Court submitted that Mr Bath got flustered at this unexpected challenge and that the learned trial judge erred in concluding that he was not satisfied that these documents were sent (Red 181-2), and in allowing this conclusion to colour his overall assessment of the credibility of Mr Bath's evidence. At the end of the day I am unpersuaded by this challenge. I think that it was open to his Honour to reach this conclusion (see esp Black 59 V-X) and that it was in no way inconsistent with the evidence that the Progress Claim itself was sent, received and rejected. I should add that I am also persuaded that this aspect of the reasoning had little to do with the issues ultimately fought and decided adversely to the Builder. 20 Progress Claim No 8 sought payment based upon "variations". It related to work previously done or allegedly done which the Builder asserted was not part of the contract works. It is common ground that the items for which payment was sought had not been the subject of prior written instruction or written approval by the Architect or written confirmation or even written request for confirmation, as contemplated by cl 5.3 of the Contract. It follows - and this too was common ground - that the Builder had no direct entitlement to payment in accordance with the terms of the Contract. Any contractual liability to pay all or any part of Progress Claim No 8 depended upon proof that:

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24 Proceedings were commenced in the District Court in October 2000. The Builder sued for $66,883 plus interest totalling $13,539 (if calculated according to the Contract) and/or unspecified interest "pursuant to the Court Rules". The Builder pleaded its entitlement in contract and unjust enrichment. Except for $495.30, the principal sum claimed represents the subject matter of the "Unapproved Variations" totalling $66,387 submitted as Progress Claim No 8. 25 The way in which the contractual counts are framed in pars 5-9 of the Statement of Claim does not correspond with the express terms of the Contract. Judge Patten raised concerns about this early in the trial, but the responses from the Builder's solicitor were quite unsatisfactory (see Black 72-74). What is however clear from the pleading is that the Builder did not purport to terminate the contract for fundamental breach or repudiation. 26 Nor does the alternative restitutionary claim proceed on the basis of an accepted repudiation. It is in the following terms: 24. Further or alternatively, and in all the circumstances, it is fair and equitable that the Plaintiff be entitled to reimbursement of the retention monies and payment for the work done and materials supplied to the First Defendant and/or Second Defendant since otherwise the First Defendant and /or Second Defendant would be unjustly enriched in the sum of $66,883.25 or thereabouts. 25. Further or alternatively, the Plaintiff claims for the fair and reasonable sum for the value of work and services provided to the First Defendant and/or Second Defendant under Quantum Meruit as requested by the First Defendant and/or Second Defendant, being the sum of $66,883.25 or thereabouts. 27 The sum claimed in unjust enrichment/quantum meruit is the same as that based on contractual variations. 28 The Proprietors filed a Defence asserting that they had paid all amounts certified by the Architect and otherwise disputing the Builder's claims. The Proprietors also cross-claimed for damages totalling $171,898 for faulty workmanship. The details of this cross-claim became the subject of a Scott Schedule. 29 The Builder's claim was rejected by Patten DCJ. There was a verdict with judgment for the defendants. The Cross-Claim succeeded to the tune of $34,689. The cross-claimants were given credit for the balance of a security deposit, namely $16,489, and accordingly they obtained a judgment for $18,200. The Builder was ordered to pay the costs of the action. 30 There is no appeal or cross-appeal by the Proprietors. 31 The Builder purports to appeal as of right. It seeks a new trial on all issues, alternatively on the issues affected by the errors it asserts. Alternatively, it seeks judgment for $48,308.83 on its claim, plus interest of $13,539.95 (or interest pursuant to statute). 32 An affidavit purporting to satisfy Pt 51 r8 of the Supreme Court Rules was filed by the Builder's solicitor Dr Doyle (Red 251). That affidavit and the submissions in response to the Court's intimation of concern about the competency of the appeal are misconceived. 33 The Builder's solicitor has read s127(2)(c)(i) of the District Court Act 1973 as if it took as its point of reference the judgment claimed in the court below, indeed the judgment claimed in the cross-claim filed by the Builder's largely unsuccessful opponent in the District Court. Written submissions from the Builder refer to High Court authorities touching a provision in the Judiciary Act 1903 (Cth) which did focus on the matter at issue in the proceedings in the court below. But s127 and its counterpart in the Supreme Court Act 1970 (s101(2)(r)) - each inserted in 1997 - proceed on a different basis. 34 Section 127 requires leave to be sought even in relation to a final judgment or order, unless the appeal (and I emphasise the appeal) involves a matter at issue amounting to or of the value of $100,000 or more. This Court has consistently held that these words require an appellant to focus on what he or she has at stake in the appeal. For example, in Gillard v Hunter Wire Products Pty Ltd t/as Hunter Screen Products (No 2) [2001] NSWCA 450 the Court said (at 10-11): 10. Leave is required in relation to a final judgment or order unless the appeal involves a matter at issue or a claim, demand or question amounting to or of the value of $100,000 or more. Accordingly, an appellant appealing against quantum of damages has an appeal as of right if the amount "at issue" on appeal exceeds $100,000. Otherwise, leave to appeal is required. 11. What then is meant by "at issue" on appeal? The legislature cannot have meant whatever variation from the judgment below might be claimed on appeal. Were that so, an appellant appealing against quantum of damages would have an appeal as of right merely by claiming $100,000 more or less (as the case may be) than the damages assessed below, irrespective of merit. The phrase "at issue" must be construed as meaning truly at issue or, inversely, not unrealistically at issue.

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44 This passage shows that his Honour was of the view that Mr Moore's absence had not been satisfactorily explained. But nowhere in his reasons did he indicate which party or parties bore the burden of giving the explanation. 45 Later in his reasons, the judge made reference to the Architect's absence as a matter that assisted him in drawing conclusions touching particular aspects of the case adverse to the party that bore the burden of proving those aspects. Thus, when addressing particular issues arising under the Proprietors' cross-claim his Honour preferred the Builder's explanation in the absence of evidence from the Architect (see eg Red 205, 206). 46 When his Honour considered the particular issue of whether the individual Variation Notices were faxed to the Proprietors or the Architect, he included "the failure of the Plaintiff to adduce relevant evidence from the Architect" (Red 182) amongst several matters supporting the rejection of the plaintiff's evidence. (It is unclear whether this was a reference to Mr Moore or Ms Meller or both. The cross-examination of Mr Bath indicates that Ms Meller was the architect with whom he had day to day dealing in the project.) The Builder submits that this comment should not have been made, because "the Architect" was never in the Builder's camp (cf Payne v Parker [1976] 1 NSWLR 191 at 201-2 per Glass JA). The Builder points to Clause 5.1 of the Contract (which made the Architect the agent of the Proprietor for purposes of contract administration). 47 His Honour regarded the absence of Mr Moore as unsatisfactorily explained. He was clearly entitled to do so. His absence at the time of trial was temporary and, on the evidence, in the teeth of a subpoena. Neither party had thought to obtain a statement from him or Ms Meller in advance of the hearing nor seek to have the hearing adjourned so that the subpoena to Mr Moore could be enforced on his return to Australia. Nor had either party taken steps to require production of the Architect's file. 48 In my view, the primary judge was entitled to conclude that Mr Moore and Ms Meller were witnesses available to be called by either party. There was material to suggest that the relationship between the Proprietor and the Architect had become strained (see Blue 336M and Black 111). No evidence was led from the Builder to the effect that either architect had refused to speak to the Builder's lawyers (which Mr Moore later did when providing them with the affidavit which has been tendered in the appeal, see below). At a different stage in his submissions in this Court, Dr Doyle made reference to Perini Corporation v Commonwealth of Australia [1969] 2 NSWR 530 and he emphasised the quasi-independent status of an architect vested with functions of contractual administration. 49 Without researching the matter in detail I incline to the view that a "Jones v Dunkel " inference can be drawn against the interests of each and any party who, bearing the onus on a particular issue, fails to call a witness or tender evidence in relation to it, where that party had the power to do so. Jones v Dunkel is not a one-way street. 50 It is however unnecessary to pursue that matter because I remain at a loss to understand the way in which a Jones v Dunkel inference drawn adversely to the Builder's position (cf Red 182P) bore upon any ultimate issue; or how the failure to draw a Jones v Dunkel inference in favour of the Builder (something now complained about on appeal) betokens legal error. I shall explain this in the course of addressing the remaining issues in the appeal. The nub of the point is that the Builder failed to prove its case.

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The "Variations" issues fought at trial 51 It is important to understand what was in dispute. The poorly drawn statement of claim casts practically no light on the matter. Fortunately, the broad picture is fairly clear. 52 None of the so-called Variations had resulted from written instructions from the Architect or were otherwise documented in the manner required by Clause 5.3 of the Contract. They were correctly described in Progress Claim No 8 as "Unapproved Variations". 53 The Builder bore and assumed the difficult task at trial of establishing either that the Contract had itself been varied so as to permit contractual recovery on a different basis; or that restitutionary principles permitted the Builder to sue off the Contract. As I understand it, the Builder contended that a contractual variation, and/or unjust enrichment giving rise to a restitutionary claim, occurred every time an individual "Variation" was actually agreed upon and the necessary work done. This was in the context where the formal Contract continued in force as the framework for regulating the parties' rights during construction work and its aftermath, including the proceedings litigated in the District Court. This was a difficult task, all the more so because no question of repudiation or acceptance thereof was ever raised (Liebe v Molloy (1906) 4 CLR 347; Brooks Robinson Pty Ltd v Rothfield [1951] VLR 405 at 409; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; Trimis v Mina [1999] NSWCA 140 (1999) 16 BCL 288). 54 The Builder's evidence was completely unmatched to any claim that the contract had been varied and the trial judge was correct to reject the alternative restitutionary claim (Red 181-2). The type of work involved in the disputed variations claims was very much part and parcel of the overall project. There was nothing to indicate that at any time the parties moved away from viewing the Contract as the complete framework by which their legal rights would be governed. Some of the items may well have qualified as "Variations" within the definition in Clause 1.2, but the procedural stipulations in Clause 6.7 had not been complied with. This offers no basis for the Builder ignoring the contract (by suing in restitution) and leaves the Builder far short of proving a case of contractual variation. 55 The Builder faced additional hurdles. Assuming that it was open for it to ignore Clause 6.7, the Builder could only recover additional recompense, either in contract or restitution (assuming availability), if it could show that:

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. that work had a proven cost and/or value. 56 For many "variation" items there was simply no attempt to grapple with these matters. For others, the attempt was half-hearted or unsuccessful. 57 The trial judge dealt with this essential part of the Builder's case in the following terms (Red 182-3): As to whether the Plaintiff should be entitled to recover for the unapproved variations upon a quantum meruit, or unjust enrichment basis, I am of the opinion that the evidence in the Plaintiff 's case lacks sufficient cogency to enable the court to conclude that the amounts claimed represent both variations to the contract and also reasonable and proper sums for the carrying out of such variations. The evidence of Mr Bath, in relation to these matters was, in my opinion, vague and unsatisfactory and did not provide a proper basis for the conclusions contended for by the Plaintiff. Moreover, as it seems to me, the law does not permit recovery on a quantum meruit, or unjust enrichment, basis where there is, between the parties, as there was in this case, an existing and enforceable contract, which covers the situation. In my opinion, the amount claimed in respect of unapproved variations relates to works performed within the scope of the contract in order to complete that which was contracted for. In so far as the claims, in truth, constituted "variations" as defined, then the contract provided for the authorisation of such variations, for the valuation of the work done, and for the resolution of disputes. That being so, there is no room for the application of principles of quantum meruit or unjust enrichment (Pavey and Mathews Pty Ltd v Paul 162 CLR 221 and Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251, especially Priestley JA a t 275). 58 In my view these conclusions were entirely justified in light of the evidence and the legal principles to which his Honour refers. 59 It is true that his Honour dealt with this aspect of the Builder's case somewhat compendiously. Earlier in his reasons (Red 178-80) he had set out Mr Bath's written evidence referable to Claim Variations 92-8, stating that it was illustrative of the claims in total. It has not been suggested that his Honour was wrong in this regard, nor have paucity of reasons been raised as a ground of appeal. I have however looked at the totality of Mr Bath's oral evidence, and am satisfied that the conclusions were well open on the evidence. I am unpersuaded of any error. 60 Mr Bath's witness statement addressed Variation Claims 66-100 item by item. He was cross examined extensively and effectively on this evidence (see Black 7-98). 61 The cross-examination exposed the conceptual problems with the Builder's pleaded case, ie how it bore no relationship to the Contract as regards approved Variations (see esp Black 72-4). The cross examination also confirmed that the Builder always knew that Variation Claims 66-100 had never been admitted by the Proprietors or by Mr Moore. They were submitted after Practical Completion in an attempt to recover additional payment for contentious items, many already known to be such. As to some items, it emerged that they were repeats of previously rejected claims or were apparently doubled up with earlier claims (eg Black 30-32, 69, 71, 81-3); as to others, there was no supporting documentation (eg Black 26, 46-7, 53-4, 58, 64, 75, 80); as to most, they were submitted long after the work claimed for had been done. One item related to work for which the Architect had admitted personal responsibility (Black 27). Another related to work not yet completed (Black 34). There was no satisfactory explanation as to why requests for extra work said to have emanated from Ms Meller had not been documented by either side at the time, as had been the general practice during the currency of work (Black 8-9, 23, 41). Nor was there an explanation why the Builder had not raised its claims for payment until after the retention moneys had been divided on Practical Completion and until after (and apparently in response to) the Architect's Lists of Defects. 62 The Proprietors' witness, Mr Barber, gave cogent evidence touching a number of the items in dispute (see Blue 248-51). His cross examination did not address any part of this evidence except at a level of extreme generality (Black 123-6).

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Fresh evidence 63 The Builder sought to read an affidavit of Mr Moore as fresh evidence in the appeal (Blue 425-30). The Proprietors did not dispute the credibility of the evidence, but submitted that there was no satisfactory explanation why it had not been advanced at trial, nor was there a high degree of probability that Mr Moore's evidence would lead to an opposite result in the appeal (cf Akins v National Australia Bank (1994) 34 NSWLR 155 at 160). The Court heard full argument on the basis that the matter would be addressed in our final reasons. I would reject the evidence. 64 I have already indicated why the primary judge was entitled to consider Mr Moore's absence as not having been satisfactorily explained. The recent affidavit takes this matter no further. At its highest, it discloses details of a falling out between the Proprietors and Mr Moore relating to payment of fees. This has no bearing on the issue of availability. The simple fact was that neither party obtained a statement from Mr Moore, thereby indicating to the other in advance of trial an intention not to rely on his evidence. Neither party subpoenaed the Architect's file. The Proprietors issued a subpoena to secure Mr Moore's attendance, disclosing this fact to the court (see Black 111. See also Blue 336N). The Proprietors chose not to enforce their subpoena and neither they nor the Builder chose to seek an adjournment pending Mr Moore's return from his temporary overseas absence. Neither side had apparently subpoenaed Mr Moore's file. 65 Neither side could have been in doubt about the relevance of Mr Moore's evidence on some of the issues. This, however should not be exaggerated in light of the material indicating that it was Ms Meller who was privy to the day to day decision-making during the project. 66 Mr Moore's recent affidavit does not, in any event, demonstrate that his testimony would be likely to affect the result of the appeal. The Builder points to four matters that it seeks to draw from the affidavit. 67 The first is proof that the notices of unapproved variations Nos 66-100 were actually received by Mr Moore's office. This does not go to any issue, because it remains as clear as it was at trial (see eg Black 124) that neither Mr Moore nor the Proprietor were minded to accept or validate these disputed claims. I have already referred to the minimal impact of the Builder's inability to prove service of the individual variations notices. In any event, the Builder had means at its disposal to prove service, had it been material. 68 The second matter is said to be that the unapproved variations were not assessed, valued or certified due to a dispute over fees. However par 12 of the affidavit establishes the contrary, because it shows that it was the architect's opinion that the unapproved variations were not true variations. 69 The third matter is the suggestion that the Proprietors had repudiated their obligation under cl 5 of the Contract to ensure that there was at all times a supervising architect dutifully performing his or her contractual role. No such repudiation was ever pleaded or litigated at trial, nor had the Builder taken a position tantamount to the acceptance of a repudiation. 70 The fourth matter is said to relate to painting (Orange 9). However, the affidavit is silent on this topic.

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Application for new trial 71 The Builder raised a cluster of issues which I would group under this heading. 72 One argument concerned the deficiency of discovery given by the Proprietors. This had not been raised as a ground of appeal, but it entered the discourse at some stage. The point evaporated at the end of the day, because the Builder could not demonstrate that the Architect (the putative Agent of the respondents) had the allegedly relevant documents in his possession or power. 73 Next there was a submission relating to the manner in which the trial judge came to accept the credibility of the Proprietors' expert witness, Mr Daniels who gave written and oral evidence on the cross-claim issues. Mr Daniels had provided a report detailing his assessment of moneys due in relation to 38 of the 53 disputed defective items that were the subject of the cross claim. The nub of the criticism on appeal focuses upon Mr Daniels' concession in cross examination that he had not examined the Builder's responses embodied in the Scott Schedule. The cross-examiner elicited a concession from the witness that there were "some documents" referred to therein that he had not examined (Black 207). Having done so, the cross examiner announced that it was his view in the circumstances that there was little to be gained by further cross-examination. 74 Judge Patten correctly and charitably observed in his judgment that Mr Daniels' views "were not shaken by cross examination". His Honour generally accepted Mr Daniels' views, observing that he was shown to be a highly experienced and qualified Building Consultant (Red 201). 75 I have read Mr Daniels' evidence and am satisfied that this favourable assessment of his testimony was well open to the trial judge in light of Mr Daniels' written report (Blue 366ff) and his oral evidence (esp Black 174 Q-W, 175 W, 184 D, 196 D-J). Mr Daniels acquitted himself well in the limited areas in which he was challenged by the cross examiner. 76 Mr Daniels identified the material upon which he gave his expert opinion. Merely because he was not shown part of the Scott Schedule does not invalidate his expertise or necessarily undermine the areas that he addressed. The "documents" to which Mr Daniels failed to direct his attention before giving evidence have not been identified in this Court. The materiality of any omission in that regard is therefore something upon which it is unprofitable to speculate, especially having regard to the smallish sum involved and its minute integers. 77 The next complaint related to the trial judge's criticism of Mr Bath's evidence about the disputed despatch of the individual draft Variation Notices. I have already concluded that it was open to his Honour to reject Mr Bath's evidence on this point, which had little materiality in any event. I am also unpersuaded that there was anything improper in the cross-examination of Mr Bath on this issue, given that it was confined to the individual Variation Notices as distinct from Progress Claim No. 8 itself.

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Judgment (26 paragraphs)

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Legislation Cited (1)

Cases Cited (8)

Cited By (11)