C&V Engineering Pty Ltd v Hamilton & Marino Builders Pty Ltd [2019] NSWDC 220 | Case summary

District Court of NSW|2019-03-21|Before: Mason J, Brennan J

INTRODUCTION

The result of this case turns on the resolution of the questions: 1. whether or not on 13 April 2015 the Defendant accepted the offer made by the Plaintiff on 10 April 2015; and 2. whether the Plaintiff's offer was of a lump sum contract for the supply and installation of 1,000 plates and angles to the construction of the Futra Apartments Mascot building at 105 O'Riordan Street, Mascot, NSW ('the Project').
Plates and angles were different types of metal joiners, sometimes in the evidence referred to as "clips" or "connections" which were used to secure pre-cast concrete panels. The Project involved construction of a residential, 54 apartment building, composed of 3 basement and 12 above ground levels.

PLEADINGS

By its Statement of Claim filed 15 May 2018, the Plaintiff pleaded a course of communication leading up to contract by offer on 10 April 2015 and acceptance on 13 April 2015. The Plaintiff did not plead causes of action based on misrepresentation, warranties, or implied terms of contract. At paragraphs 6 and 7 the Plaintiff pleaded the contract in the following terms: "6. By email dated 10 April 2015 at 4:28pm from the Plaintiff, by Pizzolato, enclosing the Plaintiff's quote ("Offer") and email from the Defendant, by Thompson, dated 13 April 2015 accepting the Offer ("Acceptance") the Defendant agreed to pay the Plaintiff $176,000.00 (plus GST) for: a. The supply of 1,000 Angle LP02/Plate LP01 (ratio 20:80) at $44 per plate totalling $44,000.00; b. Welding services to install the 1,000 at $128 per plate totalling $128,000.00; c. Preliminaries of $2,000.00; d. Site Establishment fee of $2,000.00; (the "Agreement") 7. Essential terms of the Agreement included: a. That upon the Acceptance the Plaintiff was bound to accept and pay for the 1000 plates, welding services, preliminaries, and establishment fee in the premises of [2]-[5] above and by the words stated in the offer "Prices offered… based on full package being awarded". b. Payment terms of: i. 10% on placement of order (non-refundable); ii. 30% on receipt of workshop drawings; iii. 50% prior to delivery; iv. nil on delivery; v. 10% on completion unless credit is not approved then 10% is to be paid prior to delivery c. Payments were to be in accordance with the Payment terms above."
The reference to paragraphs 2 to 5 of the Statement of Claim was a reference to pre-Offer dealings on 10 April 2015. These reasons include analysis of those dealings. The parties joined in the approach that evidence of pre-contractual dealings was admissible: T Day 3, page 144 line 6 (Defendant); T Day 3, page 147, line 32 (Plaintiff).
The reasons adopt the Plaintiff's reference "Offer" for its quotation of 10 April 2015.
By Defence filed 14 June 2018, the Defendant denies that on 13 April 2015 it accepted the Plaintiff's Offer of 10 April 2015 (paragraph 6b) and pleaded that negotiations between Mr Pizzolato for the Plaintiff and Messrs Thompson and Mangione for the Defendant continued after 10 April 2015 (paragraph 6c). Further, that by its email at 6:20pm on 13 April 2015 from Mr Thompson to Mr Pizzolato, rather than communicate acceptance, it made a counter offer for the Plaintiff to supply and install the angles and plates at the rate of $44.00 ((paragraphs 6b(i)) and 6(c)(i))). The Defence pleaded that price to have been stated in the Plaintiff's 4:28pm, 10 April Offer ((paragraph 6b(i)) and in the Defendant's 12:35pm, 11 April 2015 response to the Plaintiff's quotation ((paragraph 6c(i)). The Defendant pleaded that a concluded agreement was reached on 14 April 2015 at 9:18am when Mr Pizzolato for the Plaintiff emailed Messrs Thompson and Mangione for the Defendant accepting the Defendant's counter offer. The Defendant denied the Plaintiff case of lump contract: Defence [7].

PRINCIPLES - COMMUNICATIONS TO THE MAKING OF THE CONTRACT

The evidence of pre-contractual dealing was agreed to be and was properly admissible and to be considered for determination of: 1. When a contract was made; 2. What was the contract made; and 3. What was commonly known of the surrounding circumstances by the parties when making their contract.
To constitute a term of contract, a statement must have been incorporated into the contract at the time of formation. This is not a case involving a signed contractual document, but rather the parties' point to different times in a stream of communication between them, predominantly by email, as when a contract was made and on what terms. The legal rights and obligations of the parties' turn on what their words and conduct, predominantly contained in the emailed communications, would be reasonably understood to convey, not on actual beliefs or intentions: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34]. Insofar as the contract was inconsistent with any prior term discussed or even agreed, that prior agreement was discharged: Equuscorp Ibid at [36].
As was said by McHugh JA with whom Kirby P (as their Honours' then were) and Glass JA agreed in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1996) 40 NSWLR 631 at 634F-634G: "The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude, or complexity of the transaction."
As Giles JA with whom Hodgson and Campbell JJA agreed in Sagacious Procurement Pty Ltd v Symbion Health Ltd (formally Mayne Group Ltd) [2008] NSWCA 149 at [68] stated: "However, there is the prior question whether the document is the sole repository of the parties' contractual intention. A formal document expressed to be "subject to contract", for example, may provide that starting-point, but it may nonetheless be shown that a legally binding contract was not intended. McHugh JA gave examples in Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 336-7, and said that a party may prove that before signing an agreement the signatories agreed that it did not constitute a binding contract and that "the intention to be bound is a jural act separate and distinct from the terms of their bargain"."
Accordingly, evidence of the circumstances surrounding the making of the agreement is admissible and relevant in the determination of what document or documents the parties' intended to constitute the legally binding contract, and the answer to that question must be objectively ascertained from the terms of the documents in light of the surrounding circumstances; but the starting point of the factual investigation is whether the Offer was the sole repository of the parties' contractual intention.
In this task it is to be borne in mind that "it is not legitimate to use as an aid in the construction of contract anything which the parties said or did after it was made"; James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603 per Lord Reid, repeated by Gibbs J in Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 446; [1973] HCA 59; and again by the majority (Gummow, Hayne and Kiefel JJ) in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35]. As Basten JA explained in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 at [120]: "That principle derives from the "objective" theory of contract, which provides that the legal obligations of the parties to the contract do not depend upon their subjective beliefs but upon the view of the reasonable bystander informed as to the surrounding context and circumstances, which in practice means the view of the court based on the evidence before it."
During opening, the parties' confirmed that they did not rely on oral express terms of contract but upon the documents exchanged between officers of the parties by email contained in the Exhibit to the affidavit of Mr Mario Pizzolato made 19 October 2018, identified in this judgment by the letters 'MP' and the page numbers within the Exhibit. Other limited documentation was attached to affidavits of Mr Mangione, the Defendant's Contracts Administrator, made 3 December 2018, and to Mr Pizzolato's affidavit in reply made 22 January 2019.
In these reasons, I adopt the "safe course" of giving primary emphasis in fact determination to the objective factual surrounding material and the inherent commercial probabilities; see Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at 603; [1999] HCA 15 at [15]. The parties communicated by email extensively in the course of making their agreement and the evidence of those emails provides a particularly valuable resource for the process of fact finding. In their affidavit evidence and when cross examined, Messrs Pizzolato and Mangione provided inconsistent and opposed recollections of conversations. To the limited extent that resolution of those contests is required, these reasons adopt "the safe course".
As both parties approached the case on the basis of contract made by offer and acceptance; the contract to be found will be that of which the acceptance precisely corresponds to the offer. That is, a contract comes into being when and where an acceptance of an offer is communicated to the offeror. It is the terms of the offer which determine the express content of the contract. In order to determine whether a contract has been made by offer and acceptance, by applying an objective test the Court answers the question: what would a reasonable bystander possessed of the background knowledge shared by the parties, infer or deduce from observing the exchange between the parties- contract or no contract?: Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 per McHugh JA (as his Honour then was) at 336F. Equally, an objective assessment of pre contractual negotiations, background facts, and circumstances known to each of the parties and of the conduct of the parties is admissible to prove that a contract was not made; Air Great Lakes supra at 337C-E.
It is the Plaintiff's case that the Defendant accepted the Plaintiff's Offer, thereby contracting on the terms and conditions of its Offer document (MP50 to MP57) for the supply and installation for a total of 1,000 plates and angles for the lump sum of $176,000.00. It is the Defendant's case that there was no lump sum contract agreed and no unequivocal acceptance of the Offer given; but rather, it made a counter offer which the Plaintiff accepted.
Nevertheless it is not required for resolution of this case to determine some contract other than that pleaded in the Statement of Claim at [6] and [7]; i.e. a lump sum contract. If the Plaintiff fails in its claim for the lump sum contract, it fails in the proceedings.

THE EVIDENCE

In November 2014 the Defendant was engaged by another party, conveniently referred to as "Longton", as head contractor for the design and construction of 'the Project'.
The Plaintiff was a supplier of steel fabrication, engineering, and installation to the building and construction industry. Mr Mario Pizzolato was its sole director and shareholder.
In January 2015, Mr Pizzolato approached the Defendant and expressed the Plaintiff's interest in the provision of steel fabrication and installation to the Project.
Mr Ross Mangione, the Defendant's Contracts Administrator, at 7:43am on 9 April 2015, forwarded to Mr Pizzolato the Defendant's request that the Plaintiff quote two jobs named Gallery and Futra, of which Futra was 'the Project'. The email attached drawings and sought a quotation in relation to the Project including:

"for welding stitch plates for Pre Cast to lift shaft"; and
"for supply and installation of steel for roofing pergola on Roof Terrace".

For the purposes of this case, only supply and installation, including welding of steel plates and angles for securing pre-cast concrete panels, needs to be considered (being "stitch plates"). Whereas the original email (Exhibit MP1 and MP2) from which I have quoted above referred to "stitch plates for Pre-Cast to lift shaft"; the parties in response to my enquiry agreed that the Defendant engaged with the Plaintiff in regard to the supply and installation of plates and angles for the whole of the construction of 'the Project' and not just for the lift shaft.
By use of the words "these documents may be uneasy to understand currently", Mr Mangione's email informed, and the parties agree, that the documents and drawings attached were preliminary, not workshop drawings. The final engineering design was not finalised at that time. In their respective Statements of Facts and Issues, the parties agreed the description of the drawings to be "preliminary versions of the structural drawings for the Project": MFI 1 and 3.
The actual drawings are located at MP3 to MP11. The parties jointly identified as relevant MP8, MP9, and MP10. MP8 and MP9 are engineering design drawings showing fixation of structural concrete panels at basement level 3 lift well only. MP 8 and MP9 show a concrete structural panel rising two levels and locations for plates (only in relation to the depicted panel) at 6 locations, meaning 3 locations per level of the basement lift well. MP10 contains the working or engineering design drawings for a plate (LP01) and for an angle (LP02) as would be required. Each of the design drawings in MP10 in the box titled "quantity" shows "XX" and therefore, they do not state a quantity. It is common ground that such engineering design drawings showing fixation by plates and/or angles throughout the remainder of the building were not available. The significance of this point is that the Defendant requested the Plaintiff to quote in the absence of workshop drawings or engineering design drawings showing locations and specifications for installation of the plates and angles throughout the remainder of the building.
On 9 April 2015 at 10:01am, Mr Pizzolato informed Mr Mangione that he was unable to determine the quantity of steel plates required from the drawings provided. Mr Pizzolato suggested (MP 12): "works be executed on an hourly basis plus cost of each connection plate/angle. After speaking with Matt yesterday he indicated that some pre cast panels could be arriving next week. If this is the case then can you get back to me ASAP so we can organise ourselves accordingly." [NOTE: 'Matt' was Matthew Thompson, who was Mr Mangione's superior at the Defendant]
By response email (MP14), Mr Mangione confirmed their agreement to meet at 8am, 10 April 2015 at the Project site.
Messrs Mangione and Pizzolato, by their affidavits and oral evidence disagree as to the content of a discussion held between them on 9 April 2015 in the course of agreeing to meet the next day. In my opinion nothing turns on their disagreement, the significant common ground being that the meeting occurred at 8am on 10 April 2015 when construction design of above ground floors was not documented. There is disagreement as to whether Mr Jahid Nassour, an employee of the Plaintiff, and Mr Karavelatzis of the Defendant, were at the meeting. This is not a question of fact requiring determination because the common ground is that the dealing at the meeting was between Messrs Pizzolato and Mangione. Those other gentlemen may have been in the vicinity on other evidence.
Each of the parties directed focus upon the meeting, as I understood it, with the purpose to attributing responsibility between Mr Pizzolatto and Mr Mangione for the estimating which there occurred of the quantity of plates and angles required for the Project. The common ground is that the drawings MP 3 to MP 11 of the basement lift well structure and floor plans of the above ground levels of the building were before them at the meeting. Exhibit MP2-6 to the affidavit of Mr Pizzolatto made 22 January 2019 is his handwritten note made at the meeting which records; "13 floors - approx. 50 clips - 75 clips (TBC). Basement 3 of approx. 12-15 clips per floor."
That contemporaneously made record contemplates a method of mathematical estimation by multiplication of the number of floors by an approximation of the combined number of plates and angles per floor. It is uncontested that the reference to "clips" is a reference to plates and angles.
Angles were more expensive than plates because their manufacture involved a second process. Plates cost the Plaintiff $12.90. There is no evidence of the cost of angles for the Plaintiff. Angles and plates were different structural elements: evidence of Mr Pizzolato at T page 78 to page 79. The differences can be seen in the MP10 design drawings of a plate and of an angle.
In the absence of workshop or engineering design drawings for the above ground construction, it was not available to Messrs Pizzolato and Mangione to know which connections required plates and which connections required angles or the locations at which plates or angles would be required. That level of detail was only available in relation to the basement level 3 drawings to which I have referred, MP 8 and 9.
That the quantities were to be confirmed, is consistent with Mr Pizzolato's handwritten note "(TBC)". The calculation estimated the number of concrete panels, and assumed that plates or angles would be required at each connection.
Two pieces of objective evidence revealing surrounding circumstances to the meeting on 10 April 2015 are: 1. Mr Pizzolato had been informed on 9 April 2015 that "some pre-cast panels could be arriving next week" (MP15), which meant the plates and angles could be required to meet the process of fixation of those panels after a time which included the panels being held up by props for up to a week until the concrete "hits its strength then the props can be removed and the plates welded": unchallenged evidence of Mr Mangione in cross examination (T page 102 line 05 to page 103 line 14); and 2. At 9:02am on 10 April 2015, the Defendant caused to be emailed to Mr Pizzolato 500 documents of drawings (a schedule of which drawings appears at MP17 to MP33) after receipt of which, by email at 9:58am on 10 April 2015, Mr Pizzolato informed Messrs Mangione and Thompson of an interim approximate quantity pending receipt of finalised drawings.
As to (2), it was put to Mr Pizzolato during cross examination (T page 84 and 85); that the 500 drawings permitted him to estimate the quantity of plates and angles without participation of Mr Mangione, for the Defendant. The cross examination focussed on the difference between his hand written note made at the meeting (MP2-6) of "50 to 75 clips (TBC)" per floor for 13 floors (above) and the estimate of 65-75 connections per floor contained in his 9:58am 10 April 2015 email (MP 35 and 36). Mr Pizzolato denied that the plans identified the requirement for plates and angles such as to permit that refinement. The drawings listed in the schedule (MP17 to MP33) were not in evidence and their content and specification was not otherwise described by the evidence. It is available that Mr Pizzolato simply refined in contemplation his estimate after the meeting. I accept his denials of relying on the 500 drawings.
It was a component of the Defendant case and conceded by the Plaintiff (T page 66 line 45) that at the time of the making of the contract, engineering design or "workshop drawings", being drawings specifying the number and dimensions of pre-cast concrete panels and connection design of pre cast concrete panels (other than for the basement 3 drawings referred to at MP 8 and 9), were not available to the parties. For the Defendant see Mr Mangione's evidence at T p 104 line 33 to line 39 and T p 111 line 01 to line 44. They were dealing on the basis of estimation as permitted on that basis only. The important point here, is that workshop drawings showing how the connections of pre-cast panels were to be constructed and how many connections there would be, were not available.
Between T Page 102 and 114, it was repeatedly put to Mr Mangione in cross examination and he repeatedly denied that he contributed to determination of the estimation of quantity of plates arrived at during the 8am 10 April 2015 meeting. The effect of his evidence was that he relied on the experience of Mr Pizzolato and that Mr Pizzolato alone made that estimation: See particularly, T page 104 lines 15 to 19.
One answer given by Mr Pizzolato during cross examination at T page 81 lines 9 to 14 was: "Q. What do you say happened? A. I met up with Mr Mangione in his office and we went through some drawings and we marked up the floor plan and together we just made notes on the drawing roughly where the plates were going to be, and we both established that was the quantity per level, and that's how we came up with the estimate."
I accept Mr Pizzolato's summary of what occurred. They were both experienced in construction. It seems most likely.
On the whole of the evidence of the meeting conducted at 8am on 10 April 2015, it was known to each of Mr Pizzolato and Mr Mangione that neither of them could accurately forecast the engineering requirements for the fixing of the concrete panels, or the number of connections, or the dimensions of the concrete panels. They knowingly jointly participated in a process of pooling their individual expertise to arrive at an estimate of only such accuracy as the information upon which it was based, permitted. I reject the factual propositions advanced by each of Messrs Pizzolato and Mangione in their evidence, that the other was entirely responsible for that estimation. The objective evidence of emails exchanged between the parties pre-contractually, to which these reasons will come, is entirely supportive of the proposition that the parties were mutually aware that they were communicating on the basis of an estimate so arrived at, and further, that only by reference to workshop drawings and engineering design; when they became available, could the actual quantities of plates and angles be known.
After the meeting, Mr Pizzolato's email to Mr Mangione and others of the Defendant at 9:58am on 10 April 2015 at MP 35 to MP 36 plainly stated that final quantities could not be calculated until the "drawings", which I understand to mean workshop drawings depicting the structural design including connection of concrete panels to all floors above ground of the Project, were received. For that reason it states: "However in the meantime approximate quantities as touched up this morning provided a total estimate of connections by plates and angles in the range (At this point in time) of 881-1020."
Consistent with this emphatic expression of qualified reckoning, the final paragraph read: "The ratio between angles and plates, let's assume numbers 20:80 which will enable us to start procuring some of the angles and plates. I suggest, with your consent, to get 50% of the plates/angles under way and we can finalise in due course. That way, connectors are ready for when you start installing precast panels."
The ratio of angles to plates was correctly expressed on the first page of the email (MP35). It was 20:80. It was incorrectly expressed in the inverted ratio of 20% plates and 80% angles on the second page of the email (MP36). Mr Pizzolato's email at 2:56pm that day again stated the ratio of angles to plates at 20:80 (MP48). The email concluded referring to "many unknowns" in estimating installation time and recommending installation be quoted on an hourly hire basis.
At 10:07am on 10 April 2015, an email from Mr Matt Thompson (MP37) to all participants in the dialogue responded directly to Mr Pizzolato's 9:58am email in the following terms: "we don't do any works on hourly rate, can you please estimate the time to do one stitch plate and simply times it by the number of plates, this way we can lock in a total price for the project. You might weld one off in your factory and see how long it takes and then you can give me a locked in price, we just don't do hourly rates as day works kill projects."
Mr Pizzolato responded by email at 10:11am requesting that Mr Thompson share the rates the Defendant was currently paying. This was done. At 1:08pm Mr Pizzolato responded to Mr Thompson by email showing return on that hourly rate of installation per plate against the cost of a worker over an eight hour day and asked that the rate of $44 per plate indicated by the Defendant be checked. By email at 1:22pm Mr Thompson clarified that the $44 rate was for supply of the plate and that the cost of installation per plate regularly paid by the Defendant was $100 equating to a total cost per plate supplied and installed of "approx. $144 give or take some welding rods etc"; emails at MP37 to MP41.
Following the Defendant's rejection of paying on an hourly basis, the parties' negotiated on a supply and install price per piece basis.
Mr Mangione by email at 2:29pm to Mr Pizzolato confirmed Mr Thompson's earlier information and requested that Mr Pizzolato "provide a quote per plate based on the estimated quantities as discussed today…. Once we review your quotation, we can discuss the finer details." (MP45).
At 2:56pm Mr Pizzolato emailed (MP48) Mr Mangione and others at the Defendant informing: 1. the Plaintiff would "very shortly" deliver to the Defendant a "price per angle/plate" and referred to the development of a harmonious working relationship with the Defendant by agreeing to match the Defendant's material cost of $44 per angle/plate; 2. that the "installation component" of cost would be informed to the Defendant "very shortly"; 3. the Plaintiff sought email confirmation of the "green light" on angles and plates in a quantity of 1000 at a ratio of 20:80; and 4. the "only next hurdle" to be the Plaintiff's general requirement for 10% deposit with full balance payment prior to delivery.
The Defendant promptly responded by requesting a complete piece price, by email from Mr Thompson at 3pm expressed in the words "install price per one before we place an order for material" (MP 49).
The dealings preceding the Offer referred to in paragraphs 2 to 5 of the Statement of Claim have been discussed in the above reasons.
At 4:28pm on 10 April 2015 the Plaintiff forwarded to the Defendant its Offer (MP50 to MP57), identified at [6] and [7] of the Statement of Claim as describing a lump sum contract obliging the Defendant on acceptance to pay to the Plaintiff $176,000.00 plus GST. The covering email sought the Defendant's "confirmation" and in the meantime an indication if the Defendant required the lift shaft angles for Wednesday or Thursday of the following week.
Because the starting point consideration is whether the Offer was the sole repository of the terms and conditions of contract (Sagacious Case Supra at [68]), it is appropriate to give specific consideration to construction of the Plaintiff's "Offer" in greater detail below.
At 11:27am the following day, 11 April 2015, Mr Pizzolato emailed Messrs Thompson and Mangione asking for "status of order" so he could "get plates and angles underway" (MP58). Mr Thompson responded, copying in Mr Mangione, at 12:35pm in the following terms (MP59): "We're happy to lock in a price per plate as per your quote, please note though that it may be 800 plates or more I notice you allowed for 1000, I don't want the quantity to affect the price. Also please be aware that you will be responsible for your own access to reach high level plates on the outside of the lift stair cores etc, you will also need to adjust plates to get them ready for welding. We will install them on the bolts but they always need slight adjustment by the welder. In short Mario, we don't want any variations from you in relation to these works, if there is something that needs to be worked out we need to work it out now. Ross will call you Monday to run through all aspects so we can move forward. Should you have any queries, please do not hesitate to contact me."
This first response to the Plaintiff's Offer showed again Mr Thompson's use of the expression "lock in" a price. The email contained a clear expression of the Defendant's requirement to agree a price in circumstances of the parties' joint understanding that their reckoning was based on an estimate of the range of quantity made on the basis of the then available preliminary drawings at the meeting at 8am on 10 April 2015 as described in the email of Mr Pizzolato to Mr Mangione and copied to Mr Thompson at 9:58am 10 April 2015 (MP37). Again, their mutual background understanding was that actual quantities would be known when workshop drawings and engineering specifications for above ground construction became available. In those background circumstances, Mr Thompson expressed that the Defendant did not want variations from the Plaintiff side on the basis of things which could be, on 10 April 2015, worked out.
At 11:51am on Monday 13 April 2015, Mr Pizzolato emailed Messrs Thompson and Mangione (MP60), referring to his discussion with Mr Mangione that morning and confirming their agreement of uncertainty of quantities at that stage of negotiations with the words: "… he agrees that until we receive pre-cast drawings for the higher levels we are essentially flying blind."
In his affidavit made 19 October 2018 at [27], Mr Pizzolato effectively confirmed that his reference to "flying blind" meant that it was not possible to limit the range of quantity estimated for plates and angles until the Plaintiff received the pre-cast drawings. He said there was discussion of the quantities exceeding the estimate of 881 to 1020 but not discussions that the quantities would decrease. Mr Pizzolato's email of 13 April 2015 at 11:51am showed that the parties continued to negotiate for both supply and installation of the plates and angles. This is shown by the reference to access for work and to adjustment of plates by the Plaintiff's welder, being Plaintiff activities of installation referred to in Mr Thompson's earlier email of 11 April 2015 at 12:35pm (referred to above).
On 13 April 2015 at 12:43pm, Mr Pizzolato emailed Messrs Mangione and Thompson asking them to identify the Defendant's pre-cast panel contractor in order that the Plaintiff might pursue with that entity supply of cast-in plates: Affidavit of Mr Mangione dated 3 December 2018 at page 9, annexure "B" and affidavit of Mr Pizzolato dated 22 January 2019 at [32]. Mr Mangione's email response at 12:51pm, which copied in Mr Thompson, informed Mr Pizzolato that the contractor was "Austral Precast". Following Mr Pizzolato's email thanking Mr Mangione for that information at 1:38pm, at 2:38pm Mr Mangione emailed to Mr Pizzolato "We are going to tender with Austral, but may not necessarily be awarded the project at this stage" and annexed a New Sub-Contractor Set Up Form, requesting that it be completed "so I can issued [as written] a Purchase Order for the works". The Defendant's "New Sub-Contractor Date Entry and Invoicing" Form is annexure "C" to the affidavit of Mr Mangione made 3 December 2018 commencing at page 11. For present purposes, it is important to observe that it is not in any way a formal purchase order but simply contains account records of the sub-contractor which would be useful in the administration of accounting between the Defendant and its subcontractor. At 2:45pm, Ms Antonella Pizzolato, the Plaintiff's Financial Controller, emailed the completed Form to Mr Mangione.
On 13 April 2015, Messrs Pizzolato and Mangione had a telephone discussion. At [28] of his affidavit made 19 October 2018, Mr Pizzolato set out in first person what he said was that conversation. At [38] of his affidavit made 3 December 2018, Mr Mangione said that he could not recall the discussion deposed to by Mr Pizzolato. Mr Mangione deposed to a discussion of other content. The Defendant accepts so much of Mr Pizzolato's evidence of that conversation as that he informed and Mr Mangione accepted that the Plaintiff had ordered 50 plates and 50 angles. This event was confirmed by the Plaintiff's email to the Defendant at 4:12pm on 16 April 2015 (MP189) and there is no dispute that the Plaintiff did order 50 plates and 50 angles.
At 6:20pm on 13 April 2015, Mr Mangione emailed Mr Pizzolato what the Plaintiff pleads to be the Defendant's acceptance of its Offer (MP61): "As discussed, please consider this email as your instruction to proceed with the supply and installation (welding as per structural engineers requirements) and the angles/plates as required for the pre cast panels associated with FUTRA Apartments and as per the rates noted in your quotation attached. I will issue a formal Purchase Order tomorrow once your details have been set up in our system."
The parties remained of the common understanding that ultimately the quantity of plates and angles to be supplied and installed would be determined by engineering design and workshop drawings. On the whole of the evidence, that fact is unchallengeable. That understanding was again conveyed in the Defendant's email's reference to "engineering requirements" for welding, and the words "as required" and "per the rates noted in your quotation attached".
The Plaintiff's Offer, including its standard terms and conditions, were attached as the email. The Defendant did not issue a formal Purchase Order.
By email on 14 April 2015 at 9:18am, Mr Pizzolato thanked Messrs Mangione and Thompson for their email at 6:20pm on 13 April 2015 and advised "I'll get the plates and angles underway ASAP": MP69. At 10:35am, the Defendant forwarded to the Plaintiff the "current program schedule": MP73 and MP74.
On 15 April 2015, the Defendant forwarded its Occupational Health and Safety documentation to the Plaintiff: MP74.
By internal Plaintiff email on 15 April 2015 at 5:26pm, from Mr Nassour to Mr Pizzolato, Mr Nassour reported on his meeting with Messrs Mangione and Thompson in regard to the installation of the connections in the basement: MP187.
On or about 23 April 2015, the Plaintiff supplied 100 plates to the Project, provided the proof of insurances required by the Defendant, and installed with welding six plates on site. The Plaintiff provided to the Defendant completed OH&S documentation by email at 1:57pm: MP174 to MP185.
By email dated 24 April 2015, the Plaintiff provided the Defendant with Certificates of Currency for the insurances required by the Defendant.
By email on 4 May 2015 from Mr Pizzolato to Mr Mangione (MP197), the Plaintiff issued to the Defendant a tax invoice, in the form of a Progress Claim in the total sum of $23,596.32 Incl. GST: MP198. The date on the Progress Claim is 1 May 2015. The parties jointly informed the Court that the Building and Construction Industry Security of Payment Act 1999 (NSW) has no application. The Plaintiff's claim was calculated on percentage of work performed as would be appropriate for a lump sum contract. In this way, it claimed for 10% of a total sum of $44,000 for 1,000 plates and angles, 10% of a total cost of $128,000 for installation of 1,000 plates and angles, 100% of Preliminaries and 100% of Site Establishment Costs, they being $2,000.00 lump sum amounts identified in its Offer forwarded at 4:28pm on 10 April 2015. The invoice required payment within 14 days.
Mr Mangione responded at 5:18pm by email, noting that the Plaintiff had billed by Progress Claim and stated: "… I believe you have carried out the following: Supply of 100 plates/angles - $3,960.00 - welding of 6 x Plates/Angles $691.20."
Mr Mangione informed Mr Pizzolato that he would issue a Payment Schedule to reflect the work actually carried out: MP202.
Almost immediately, at 5:24pm, Mr Pizzolato responded to Mr Mangione by email stating that the Plaintiff's claim was correct and in accordance with the accepted Offer. He demanded payment within 14 days: MP203.
By Email 12 May 2015 at 10:37am, Mr Pizzolato reminded Mr Mangione of the Plaintiff's claim of $23,596.32. He miscalculated 14 days by claiming payment "is due no later than 15 May 2015" (MP206). The miscalculation apparently arose by his calculating from the date of the Progress Claim document rather than, as he should have done, from 4 May 2015 when it was delivered by his email. The 14 day period would not expire until the end of 18 May 2015.
By email 12 May 2015 at 10:50am, Mr Mangione addressed to both Antonella and Mario Pizzolato that he had tried to discuss the dispute with Mr Pizzolato and forwarded the Defendant's Payment Schedule (headed with the words "Issued under s 14 of the Building and Construction Industry Securities of Payment Act 1999") in the sum of $5,380.00. The Defendant offered to pay for the work actually carried out, offered to pay a 10% deposit on material actually supplied and asked for the Plaintiff's agreement to Preliminaries and Site Establishment Costs being spread on a per piece basis; i.e., $2.00 per piece on an estimated quantity of 1,000, supply and weld. The Defendant refused to pay a 10% deposit on labour not yet carried out. The Schedule shows allowance per plate or angle at $46.00 and welding installation at $130.00. Each of these items therefore had been calculated on the rates in the Offer plus $2.00 for Preliminaries and Site Establishment costs respectively: MP207, MP 209, and MP210.
Mr Pizzolato responded by email within a short time at 11:08am, 12 May 2015 stating that if the Defendant did not amend its Payment Schedule, the Plaintiff would take the dispute to adjudication: MP211. The Plaintiff never took that step.
Mr Pizzolato continued to refuse to discuss the dispute with Mr Mangione: MP207-MP214. The parties remained in dispute as to payment of the Plaintiff's invoice forwarded 4 May 2015.
By email on 15 May 2015 at 2:09pm, the Defendant informed the Plaintiff that only 150 plates would be required. The relevant part of the email read: "We have confirmation of a revised quantity of plates required for our Project at FUTRA Apartments, Mascot. Based on our advice from our design team, we will require approx. 150 plates to be supplied and welded, not 1,000 as you had previously incorrectly estimated. Please review your quotation and resubmit in accordance with the revised quantity."
The email invited the Plaintiff to revise its quoted costings going forward on the basis of the reduced quantities and advised that the Defendant believed Preliminaries and Site Establishment costs would be reduced on the basis of the revised quantities: MP214. The Defendant's second attached Payment Schedule dated 15 May 2015 was in the sum of $5,091.20, shown to be a total calculated from 100 plates/angles at $44.00 (supplied) and 6 plates welded on site at $128.00 each. In the COMMENTS column, the Payment Schedule stated in relation to each item claimed in the Plaintiff's Progress Claim: "Design not finalised when C&V quotation issued; C&V estimated 1000 plates from Basement 3 to Level 12 on unconfirmed design; Design has been finalised as at 15/5/2015 and now requires 150 welded plates from Basement 3 to Level 12- refer attached email [MP214]; Quote to be revised to reflect 150 plates, not 1000 plates;…": MP218 to MP221.
In cross examination, Mr Mangione expanded on the construction design advice by explaining that only about 20% of the pre-cast concrete structural panels required connection by plates or angles, other means of connection being employed for the balance of connections which resulted in the requirement for 150 only: T p 125 line 40 to p 126 line 15.
On 15 May 2015 at 2:38pm, the Plaintiff informed the Defendant by email that in reliance upon the Defendant's acceptance of the Offer on 13 May 2015, the Plaintiff had ordered 400 plates which were due to arrive at the end of the following week. Further, that the Plaintiff's Progress Claim remained payable without reduction and forthwith. The Plaintiff referred to the Terms of Payment included in its Offer (clause 7.1.i). Significantly, the Plaintiff informed the Defendant that: "In the meantime, due to non-payment to date, our company will be unable to attend site and continue site welding. Please action payment immediately, without deduction, failure to do so may lead to adverse action…" (MP222)
This email and refusal to attend site was timed 3 days before the expiration of the 14 day period for payment stated in the Plaintiff's Progress Claim dated 1 May 2015 but not delivered until 4 May 2015.
Mr Pizzolato continued to refuse to discuss any issue of payment with Mr Mangione or other officers of the Defendant: MP222.
On 18 May 2015 at 1:46pm the Defendant informed the Plaintiff to cease all works associated with the Project: MP226.
By email on 1 June 2015, the Plaintiff served a further Progress Claim/Tax Invoice, this time adding the cost of supply of 400 plates, bringing the total balance due to $41,020.32: MP227 and MP228.
On 1 June 2015, the Defendant paid the Plaintiff $5,600.00 in respect of the Plaintiff's Invoice and the Defendant's Payment Schedule.
On 31 July 2015, workshop drawings for the Project were finalised.

THE PLAINTIFF'S OFFER

The Plaintiff delivered to the Defendant its Offer under cover of an email at 4:28pm on 10 April 2015: MP50 to MP57. The document of Offer was not restricted to a quotation of pricing but included pages of text of an introductory or general nature as well as pages of expression of contractual terms and conditions. It is obvious from their reading that they were standard terms and conditions. Because the Plaintiff case is that the Defendant by its email at 6:20pm on 13 April 2015 accepted the Offer and the parties then were joined in a lump sum contract on the terms and conditions expressed in the Offer; the Offer documentation is the appropriate starting point for consideration of whether or not the parties contracted as the Plaintiff's case claims.
The Offer does not in any place express the lump sum which the Plaintiff says was contracted. It does not in words at any place express that the agreement offered was for a single stipulated price for all work. The $176,000.00 pleaded in [6] of the Statement of Claim can be calculated by first totalling the cost of the angle/plate and the fee for installation by welding (total $172) and then multiplying that figure by 1,000 for the quantity shown, and lastly adding $4,000 for Preliminaries and Site Establishment fees which are priced at $2,000.00 each. This is the approach which the Plaintiff argued should be employed and which shows that the expression of price per piece is unambiguously an expression of a "locked in" lump sum price: see Plaintiff Closing Written Submission at [10] to [11]. The words closest to an expression of lump sum agreement are: "prices offered ex GST and based on full package being awarded". Whether or not the sums for Preliminaries and Site Establishment costs were required to be paid in lump sums, is a question of construction to be answered.
Because the expression of pricing is particularly material for present consideration, I reconstitute in the form in which it was presented in the Offer (MP55): " Item QTY Description Value (Each) 1 1000 of Angle LPO2/ Plate LP01 (Ratio 20:80) $44.00 Site Wielding of Angle/Plate 2 Including welding consumables $128.00 Including platform ladders to access

MISCELLEANOUS ITEMS Overall Preliminaries $2,000.00 Overall Site Establishment $2,000.00

Please note:

Prices offered ex GST and based on full package being awarded
This offer is valid until 25 April 2015, after which is subject to rise and fall and is reliant upon material prices prevailing at the time of order, value of purchase order, receipt of final engineer drawings, review of defined specifications and other reasons such as terms and conditions agreed upon;"

Use of the preposition "Including" preceding each of the Item 2 descriptions of installation matters indicates to the objective reader that the Item 2 work is part of the whole provision of 1,000 pieces quoted. In that sense, "Including" speaks a conjunction to Items 1 and 2. The objective reading of the Offer at MP55 requires the quantity "1,000 of" to be read as applicable to Items 1 and 2. This reading is consistent with the constantly communicated intention expressed by both parties that the Plaintiff was to price on the basis of an estimate of 1,000 pieces for supply and installation on the assumption of a ratio of angles to plates of 20:80. In addition, that expression of pricing, so read, is commercially plausible given the mutually held understanding of surrounding commercial circumstances of the preliminary stage of the Project when workshop drawings specifying how construction was to be carried out of the 12 above ground levels were not available.
To the objective reader, the 2 dot point provisions under "Please note" are entirely consistent with the expression of pricing on the basis of an estimated quantity of 1,000. This is so because the prices are described to be "based on full package being awarded" and after 25 April 2015 to be "subject to", among other things, "receipt of final engineer drawings, review of defined specifications" and "value of purchase order".
In the same way, the Preliminaries and Site Establishment fees, whilst stated in lump sums, were subject to those dot point provisos following "Please note". The word "Overall" preceding each item describes each $2,000.00 sum as a fee across an overall quantity of 1,000, subject to adjustment according to those events.
In my opinion, to the objective reader, the Offer at MP55 described a price to be paid for each item installed, on a quantity of 1,000, and provided the parties the right to vary that price upon the occurrence of specified future events including "value of purchase order", "receipt of final engineer drawings, and review of defined specifications".
In bold typeface on page MP52, the Offer was expressed to be "based on qualifications and/or assumptions". The first of these, identified at number 1, identified the drawings of the Project available at the time and referred to steel work not available to be seen ("not clearly shown, noted or indicated") on structural drawings. I repeat that the common background knowledge of the parties was that structural drawings giving construction method for the above ground levels were not available at that time. That price for carrying out installation and price for supply might be affected by method of construction as dictated by structural drawings was not just commercially plausible, but a common sense observation to the objective bystander in the circumstances of both parties.
The Plaintiff did not make the submission that the expressed validity of the Offer until 25 April 2015 at the second dot point under "Please note" meant that acceptance on or before that date bound the Defendant to the pricing which could not be subsequently varied. For completeness, I add that to the objective reader, pricing remained conditional upon variation on the occurrence of those specified events. This is the meaning of "after", as used. Consistent with this reading is the Plaintiff's standard term and condition appearing on page MP56 of its Offer which read: "(5) Fabrication will not commence until hard copy approval and all workshop drawings has been received by C&V."
The contract is to be read as a whole; however the Plaintiff efficiently identified the provisions which it submitted can only be consistent with a lump sum contract. They are as follows: 1. At the head of that part of the Offer entitled "Terms and Conditions" (MP56) the document included "GENERAL TERMS & CONDITIONS OF QUOTATION"; 2. The first line of the "Terms and Conditions" (MP56) read "Please read these terms and conditions of quotation carefully as in the event of acceptance of this quotation they will be binding upon you. It is C&V Engineering Services (C&V) policy to strictly enforce its terms of business in the event of any dispute"; 3. "Terms and Conditions" (MP56) (4) read "We will not undertake to do any work pertaining to additions and/or deletions or other amendments of this project unless the Customer issues prior written instructions. A written order will be required before and [as written] variation work is carried out"; 4. The expression of pricing which appeared on MP55 5. "Terms and Conditions" (MP56) At (7.1) "Terms of Payment" read: "If the customer does not have an existing credit agreement with C&V, then the customer shall remit payment to C&V as follows: 1. 10% on placement of order (non-refundable) 2. 30% on receipt of workshop drawings 3. 50% prior to delivery 4. NIL On delivery 5. 10% on completion subject to credit approval, otherwise full payment required prior to delivery"; 1. At "Terms and Conditions" (MP57) (26) read, "The acceptance of this quotation by the Customer acknowledges acceptance of the terms and conditions of quotation hereon. Modification of these terms and conditions in any form does not apply unless expressly accepted in writing by C&V. These terms and conditions of quotation are to be attached by way of annexure to any sub-contract, contract or works agreement entered into and will be deemed to form part thereof."
As to Plaintiff point for attention (a) above; that the document at page MP56 bore the title ascribing general terms and conditions, in my opinion adds nothing. The Defendant did not dispute that the Plaintiff document contained terms and conditions proposed by the Plaintiff on delivery of the Offer. Likewise, the words at Plaintiff point for attention (b) add nothing because the terms and conditions of the Offer would be binding on the Defendant in the event that they were accepted without qualification. Both expressions (a) and (b) when read with the whole Offer are not consistent only with a lump sum contract. They fit comfortably with the provisions for variation on the occurrence of the specified future events of receipt of final engineering drawings, review of defined specifications, and change of value of purchase order.
Contract term (4), at Plaintiff point for attention (c), falls into the same category. It did not characterise the Offer as of a lump sum contract. It was a term capable of application to other contract types. That said, it expressed the intention that variations of the contract be in writing. I repeat that, neither party relied on oral terms of contract. None of the provisions at the Plaintiff's points (a), (b), and (c) have any bearing on the question of whether or not the agreement reached between the parties was for a lump sum contract.
I have dealt with Plaintiff point for attention (d).
The clause (7) Terms of Payment: (1), to which the Plaintiff directed attention ((e) above)), would fit comfortably with a lump sum contract or a piece work agreement. There was no work order placed by the Defendant with the Plaintiff for 1,000 plates/angles or installation or at all. There was no term in the Offer which made the miscellaneous items of Preliminaries and Site Establishment costs payable in full lump sum up front. Each of them was expressed to be payable "overall".
Term and Condition (26) of the Offer to which the Plaintiff drew attention (f), in my opinion, adds nothing in support of or against the Plaintiff proposition of lump sum contract. It was merely an acknowledgment by the customer that the Plaintiff's standard terms and conditions of quotation applied on the event of acceptance. It also evidenced the parties intention that variation of contract only be by writing.
The common ground is that work did commence and, at the time of the Offer, was intended to commence on Basement 3 for which there was workshop drawings and engineering design (MP8 to MP10) but prior to workshop drawings and engineering design for the 12 floors above ground being delivered. In this case, therefore, the event of workshop drawings and defined specifications, normally contemplated by the Plaintiff's terms and conditions had not occurred for the above ground levels. The dot point provisos under "Please note" rendered the pricing subject to those events. By their email communications, the parties acknowledged that pricing for above ground construction was "flying blind". This is also obviously the commercially plausible reading of the Offer in the background circumstances of the then preliminary stage of the Project and its drawings.

CONSIDERATION

At the outset, I state that I reject the construction of contract pleaded in Defence paragraph 6b(i) and 6c(i). It is not available from the parties' expression of contractual intention and background knowledge; during the course of written and spoken communications up to 14 April 2015; it is inconsistent with the Offer; and it is commercially implausible to construe the agreement reached as for a price of $44.00 inclusive of both supply and installation of each plate and angle. I draw particular attention to the following communications: 1. by email 10 April 2015 at 10:07am (MP37) the Defendant refused the Plaintiff's proposition that price for supply of angles and plates only be agreed and that the installation be charged at hourly rates; the Defendant requested "a total price" incorporating the Plaintiff's estimate of the cost of installation time; 2. on 10 April 2015 just prior to the Plaintiff's Offer, the Defendant shared with the Plaintiff its regularly paid rate for installation, the Plaintiff having communicated the cost of a worker per day, assuming installation of 6 to 8 plates, divided across each piece: MP38 to MP49; 3. the Offer quoted both supply and installation: MP55; 4. the sum of $44.00 was clearly identified in the Offer (at MP55) as the price for supply only of each plate or angle; 5. the Defendant's email at 6:20pm on 13 April 2015, being the document said by it at paragraph 6b(i) of the Defence as expressing the counter offer of supply and installation of angles and plates at a price of $44.00, did no such thing; to the contrary, it explicitly instructed the Plaintiff to proceed with supply and installation at the rates stated in the Offer; 6. the Defendant's response to the Offer at 11:27am on 11 April 2015 expressly contemplated a price to be contracted inclusive of both supply and installation (MP59/ Defence paragraph 6c(i) does not accurately plead the expression of this email); 7. it is not accurate, as the Defendant sought to argue (Hamilton's Outline of Submissions - MFI 4 at [12]), to select from the Defendant's email at 12:35pm, 11 April 2015 (MP59) the words "we're happy to lock in a price per plate as per your quote" because, as already referred to, that email expressly made reference to things which could only be contemplated as components of installation such as access to reach high level plates; 8. the Plaintiff's email to the Defendant at 11:51am on 13 April 2015 (MP60), as earlier observed, also expressly contemplated installation by again referring to access and adjustment by the Plaintiff's welders.
It is convenient at this early point in the discussion of consideration to deal with the Defendant's opening submission (Hamilton's Outline of Submissions - MFI 4 at [15]) that the agreement reached between the parties was limited to 100 plates and angles. The evidence to which the Defendant pointed was Mr Pizzolato's recount of his conversation with Mr Mangione on 13 April 2015 prior to the 6:20pm email from the Defendant that day: affidavit of Mr Pizzolato made 19 October 2018 at [28]. At [38] of his affidavit made 3 December 2018, Mr Mangione deposed that he had no recollection of the conversation and set out in first person a different conversation as having occurred. The Defendant's submission was selective and inaccurate of the evidence. The Defendant selected from the conversation set out by Mr Pizzolato the following passage: [Mario] "Let me step in, we can organise 50 plates and 50 angles quite quickly which can be delivered to site next week. Does that help?" [Mangione] "Sure does."
In the balance of the conversation as it appears in Mr Pizzolato's affidavit, Mr Mangione also referred to the quotation based on a quantity of 1,000 or maybe 800 and to quantity being relevant to the pricing by the Plaintiff's suppliers. That reference to a quantity of 800 to 1,000 and the recount of a conversation that day by Mr Mangione in paragraph 38 in which he stated "but we do not want the quantity to affect rates", are common evidence of Messrs Pizzolato and Mangione that their discussion was in terms agreeing that pricing was sensitive to the economics of the quantity, estimated at the time of 800 to 1,000. This was consistent with the contemporaneous Defendant email, 11 April 2015, 12:35pm (MP59), and the Plaintiff response email 13 April 2015, 11:51am (MP60). In Mr Pizzolato's words, taken from that latter email, they were "essentially flying blind" until receipt of workshop drawings.
The inaccuracy of the Defendant's submission is to select the expression of 50 plates and 50 angles as if speaking of a specific and separate agreement when it was only the making of an arrangement for provision of sufficient pieces for connections during early construction, when further supply of plates and angles was mutually expected.
The early construction arrangement for supply of 50 plates and 50 angles at those rates is neither dismissive of the Plaintiff case for lump sum contract, nor confirmatory of it because the whole of the evidence established that the parties' were on 13 and 14 April 2015 proceeding on the estimate of a quantity in those large numbers given in MP59 for the whole of the Project. The surrounding circumstance was that the parties were still proceeding on their estimate of a quantity of 1,000, whilst knowing price might vary in accordance with construction design and quantity as to be dictated by workshop drawings and engineering specifications yet to be received.
This brings these reasons to the central issue contested. The Plaintiff says that Mr Mangione's email on 13 April 2015 at 6:20pm conveyed the Defendant's acceptance of the Plaintiff's Offer forwarded at 4:28pm on 10 April 2015, making a lump sum contract for the supply and installation of 1,000 plates and angles for a total contract price of $176,000.00. The Defendant denies a lump sum contract was expressed and says the email was not an acceptance but should be seen as an instruction for the Plaintiff to proceed if it accepted the Defendant's counter offer of a piece work contract at a price per plate, conveyed by Mr Thompson's email on 11 April 2015 at 12:35pm (MP59), the price being that described in the Offer: Hamilton's Closing Submissions (MFI 7) at [9]. The Defendant points to the Plaintiff's email at 9:18am, 14 April 2015 informing that it would proceed as evidence of acceptance of its counter offer.
The construction of the Offer reached earlier in these reasons, in my opinion, leads inevitably to the conclusion that the Offer at MP50 to MP57 did not describe a lump sum contract; but rather, expressly and clearly offered pricing for supply and installation of plates and angles including miscellaneous expenses of Preliminaries and Site Establishment costs on the basis of an estimate of 1,000 pieces. Further, that the pricing was subject to variation in event of engineering design development finally to be expressed in workshop drawings. That condition I found to be clearly expressed to the objective reader of the whole Offer, and I referred particularly to: the included qualifications of price (MP52), the expression of pricing (MP55), and the terms of the proviso under "Please note" (MP55). I also found this construction to be consistent with the Plaintiff's condition (5) on page MP56.
I did not find the terms and conditions as to payment or the expression of the miscellaneous items in lump sums "Overall" to be inconsistent with this construction.
Importantly, the construction of the Offer at which I have arrived is consistent with the background knowledge shared by the parties that the estimate of 1000 pieces was made at a time when, in the absence of workshop drawings, engineering design and specifications, they could not know the locations of or numbers required of angles or plates in the above ground construction. The common evidence was that they did not even know the dimensions of the pre-cast concrete panels and therefore could not accurately know how many panels were to be connected on each above ground level of the building. The evidence of Mr Mangione explained that other methods of connection of pre-cast concrete panels were contemplated. There is nothing in the evidence to suggest that the quantity of 150 pieces ascertained on 15 May 2015 through development of engineering design was the result of incorporating novel methods of construction not known to the parties to be available over the whole time of negotiating and contracting.
In my opinion, all of the evidence points to the parties' mutually intending to make the agreement on 13 April 2015. This is not a case where the evidence supports a finding that the parties merely agreed what would be the terms of an agreement when engineering development delivered to them workshop drawings and specifications for the construction of the 12 above ground levels. This is my opinion, having taken into account the importance of agreement as to price. The evidence of offer and acceptance, viewed objectively, communicated the making of the contract. The whole of the objective surrounding evidence points to a mutual intention to immediately enter into legally binding relations in the terms of the Offer for the immediate commencement of work: Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [72] and [73]. These observations are supported by the commercial implausibility of the proposition that the parties when "flying blind" agreed legally, once and for all, to a quantity of 1000 on an estimate or assumption of a ratio of 20:80, angles to plates, in a total contract sum of $176,000.00.
It is to be stated plainly that had the parties by the evidence intended to contract such a transaction, regardless of its commercial implausibility, they would have been bound to it. But, I have found the terms of the contract expressed in the Offer rendered pricing to be subject to variation following availability of workshop drawings and specifications for construction.
It must be remembered that the parties fell into dispute in May 2015 when the Plaintiff had supplied and installed plates to the Basement 3 only. From the commencement of their dealings on 9 April 2015, workshop drawings for that construction were available; MP8, MP9, and MP10. As I addressed to the parties on the first day of the hearing, at the time of their negotiating they could not know how many plates were required in the construction or even whether the construction method for the above ground levels (yet to be informed by workshop drawings and engineering specification) would employ connection by plates and angles or might dictate construction by different styles of fixation and connection. Other methods of connection of pre-cast concrete panels voiced in argument included "wet-fixed" and "dowel-fixed" and the Plaintiff acknowledged that indeed the Defendant's construction according to engineering design communicated on 15 May 2015, in fact, reduced the required quantity of plates and angles to only 150 because of the employment of such other methods; see particularly T page 38; page 142 line 33 to page 144 line 24.
The reality was that before 15 May 2015, the method of construction, in order for it to proceed above ground, was not available to the parties because it was pending engineering development. Commercial reality is highly supportive of the proposition that persons in commercial construction, in those circumstances, would not contract a fixed price for supply and installation of the connections in a significant high rise construction whilst "flying blind". On the other hand, it is commercially plausible to have contracted with the intention of working together for the whole of the Project and in order to facilitate pricing for early Basement 3 construction, for which workshop drawings were available, to agree pricing on the basis of an estimation whilst having the benefit of a term of agreement permitting variation of quantities and pricing upon receipt of workshop drawings and final engineering specifications informing the methods of connection, including requirements for installation of plates and angles to the above ground levels.
In further answer to the Plaintiff's case, the Defendant's email at 6:20pm on 13 April 2015 was an acceptance of the terms of contract contained in the Offer as I have construed it. The Defendant email, by attaching the Offer and instructing the Plaintiff to proceed, conveyed its acceptance. The parties' common intention was to contract immediately on pricing with provision for variation upon engineering design in workshop drawings and specifications. In my opinion, this result is what a reasonable bystander, possessed of the background knowledge of these experienced commercial construction parties would deduce from the expression of the Offer and observing the exchange between the parties.
There is no evidence contrary to the fact that the development of engineering design affecting quantities of angles and plates first came to the knowledge of the Defendant when it informed the Plaintiff of the reduced quantity of 150 pieces on 15 May 2015. Complete workshop drawings for the whole of the Project were finalised on 31 July 2015.
The Plaintiff Closing Submission (MFI 6) at [33] to [35] and Submission in Reply (MFI 8) at [5] argued in the alternative; that if I found ambiguity in the Offer arising from "1000 of", positioned beside Item 1 angles and plates but not beside Item 2 welding (MP55), "that uncertainty can only be in relation to the number of plates and angles to be welded". This alternative case was not pleaded and runs contrary to what was pleaded at [7] of the Statement of Claim of "Essential terms of the Agreement…; that upon the Acceptance, the Defendant was bound to accept and pay for the 1,000 plates, welding services, preliminaries, and establishment fee…"
In further answer to the Plaintiff's alternative case; I have not found ambiguity in the Offer. Such ambiguity, if it were available on the face of the document at MP55, would be readily resolved by the overwhelming evidence of mutual intention to contract for supply and installation expressed in the parties' negotiations and dealt with repeatedly in these reasons.
The express terms of contract, the overwhelming surrounding evidence of negotiation and acceptance of contract, and the commercial context in which the contract was made, support the conclusion that the parties intended to be immediately bound and their agreement for supply and installation for the whole of the Project was not intended to be postponed pending delivery of workshop drawings and engineering specifications: See JB Rogers Ltd v Harry Lesnie Ltd (1927) 27 SR NSW 427; (1927) WN NSW 44 at 151 COL 1.
It cannot be said that the prospect of the parties after 15 May 2015 not being able to agree variation of pricing for supply, installation, Preliminaries, and Site Establishment costs; leads to the conclusion that there was no contract made on 13 April 2015. The parties had "locked in" pricing on the common understanding of estimation before knowing how construction was to be carried out above ground. Each expression "locked in" was accompanied by (10 April 2015 MP37 and 11 April 2015 MP59) express reference to the context of estimation, which context Mr Pizzolato appropriately described as "flying blind". A condition of the contract was that the parties could vary the price on the occurrence of the event of that knowledge arriving by workshop drawings and engineering specifications and change of value of purchase order. The words "locked in", in any event, cannot prevail over the express terms of the contract.
To this point these reasons suffice to reject the Plaintiff's case for lump sum contract. There will be judgment for the Defendant.
For completeness, I observe that submission might be made that the condition concerning variation of price, in the absence of a formula for the reaching of agreement to vary, would be uncertain because it would be difficult to find breach: Collieries Pty Ltd v Sijehama (1991) 24 NSWLR 1. However, in my opinion, the proviso did not create an unenforceable agreement to agree; but rather, it was an implied term at law that each party was obliged to negotiate any such variation in good faith and to do all that was necessary on its part to enable the other party to have the benefit of the contract for the whole of the Project: GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635G.
In the event of agreement as to variation not being reached and performance toward agreement being in accordance with the contract; there would be non-fulfilment of what is termed by the authors Cheshire and Fifoot (Law of Contract, 11th edition at 20.2) to be a "contingent condition of performance".
The occurrence of the expressly specified contingency of variation of price on the event of workshop drawings and engineering specifications arriving was a condition of performance of the contract as a whole from that event. This is because price was an essential term of the contract upon which performance depended after that event. Non-fulfilment of agreement to vary the contract would excuse all further performance. A failure to agree variation of price of contract consequent of that specified contingency would not be a breach of the contract made 13 April 2015. This is because, assuming negotiation in good faith attempting to agree variation of price, there would be no failure to perform. The consequence of there being no price agreed upon which to continue performance would be pursuant to the terms of the contract. It is not necessary in this judgment to refine the terminology for the consequence of the parties' failure to agree the essential term of price in that contingency. It may be that they would acquire mutual rights of termination of the contract: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 per Mason J at 553; per Brennan J at 567; [1982] HCA 29.

BREACH - DEALT WITH FOR COMPLETENESS

The plaintiff cannot succeed on its case for breach of contract by the Defendant on two fundamental bases: 1. the contract made 13 April 2015 was not a lump sum contract and the Defendant was not obliged to pay the Plaintiff's claims (MP197 and MP198) calculated on the basis of percentage of the performance of a lump sum contract; and 2. whether or not there was breach by the Defendant to make payment, the Plaintiff was not entitled to, as on 15 May 2015 it did (MP222), inform the Defendant that "due to non-payment to date" it had ceased performance of the contract.
Indeed, even were the contract a lump sum contract as the Plaintiff claimed in these proceedings, on 15 May 2015, the 14 day period for payment stipulated in the Plaintiff's progress claim (MP209) had not expired because it was delivered to the Defendant by email dated 4 May 2015 (MP204). Even on the terms of payment insisted upon (wrongly) by the Plaintiff, the Defendant was not yet in breach.
The notice of refusal to perform the contract given by the Plaintiff to the Defendant on 15 May 2015 was also a breach of the express term of contract that the parties would negotiate a variation of contract, it being an implied term that they would engage in those negotiations in good faith. The Plaintiff's action taken on 15 May 2015 was a refusal to negotiate and therefore a breach of contract.
For its part, the Defendant's email 15 May 2015 at 2:09pm, by inviting the Plaintiff to review and resubmit price in consequence of the occurrence of the arrival of construction design advice for the above ground levels (quantity reduced from 1,000 down to 150) was an invitation in the performance of seeking agreement as to variation of price in accordance with the conditions of contract.
Otherwise, the Defendant's written submissions (Hamilton's Outline of Submissions: MFI4) properly respond to the case for breach of lump sum contract, as it was put by the Plaintiff as follows: 1. By 12 May 2015, a dispute had arisen between the parties as to the amount properly payable by [the Defendant] to [the Plaintiff]. As is usual in the construction industry, on 12 May 2015 [the Defendant] served on [the Plaintiff] a payment schedule disputing the amounts claimed in [the Plaintiff's] payment claim: MP207-MP209. 2. On 12 May 2015 at 11:08AM, Mr Pizzolato wrote to Mr Mangione stating: "Amend the payment schedule to reflect the payment claim or I will go to adjudication…": MP211. Adjudication is a reference to the statutory procedure under the Building and Construction Industry Security of Payment Act 1999 (NSW) which is the statutory scheme frequently employed by contractors to resolve disputes over amounts payable during the course of construction disputes. Absent an express contractual right (of which there is none in this case and none is pleaded) contractors are not free to refuse to attend a site where legitimate disputes as to entitlements arise during the course of a project. 3. On 15 May 2015, Mr Pizzolato wrote to Mr Mangione demanding the invoiced amount (being a reference to payment claim 1 served on 4 May 2015: MP196) be paid in full and stated: "In the meantime due to non-payment to date, our company will be unable to attend site and continue site welding. Please action payment immediately, without deduction, failure to do so may lead to adverse action… please refrain from calling me as I am not interested in discussing the above until our account is paid in full." MP222. 4. [The Plaintiff] does not plead any term of the agreement which gave it the right to suspend work for non-payment. In fact, [the Plaintiff]'s own standard terms and conditions do not provide for termination on failure to pay. Instead, they provide for the payment of interest on late payment: Offer Clause 7.2(ii) (MP56). That is a fairly standard term which provides an express contractual remedy for late payment. Suspension is not the appropriate or permitted remedy. It would elevate time as being of the essence in a manner not permitted by [Conveyancing Act 1919 (NSW) s 13] nor supported by a natural reading of the terms and conditions [of contract]….
The Plaintiff's case for damages was wholly premised on its allegation that on 18 May 2015, [the Defendant] was not entitled to terminate the contract in the circumstances, which I have not found, of the Defendant being in breach of an essential term to pay the Plaintiff's progress claim by 15 May 2015. Accordingly, the Plaintiff's claim for damages, even had I found the parties to have been bound by a lump sum contract as claimed by the Plaintiff, would fail.
In my view, the Plaintiff's cessation of performance made absolute by its refusal to discusses was a breach of contract which justified the Defendant, as it did on 18 May 2015, to terminate the contract by directing the Plaintiff to cease all works (MP226).

DAMAGES - DEALT WITH FOR COMPLETENESS

The quantum of the Plaintiff's claim for damages, had it succeeded, was expressed in its Schedule (amended at the close of the hearing)(MFI2). The calculation was for loss of profit in total sum of $111,511.14. Had Judgment contemplating the Plaintiff's Schedule of Damages (MFI2) been required, I would have assessed damages as follows: 1. The Plaintiff claimed for the cost of purchasing 400 plates, in addition to those for which it invoiced the Defendant on 4 May 2015. The Plaintiff submitted that the purchase of 400 plates was in accordance with reasonable performance of the contract in order that they be available when construction required. In my opinion, given that the parties on 13 April 2015 agreed for a purchase of 50 plates and 50 angles in the knowledge that the engineering design and workshop drawings for construction of the basement did not require so many pieces, it was not reasonable for the Plaintiff to have purchased 400 plates of an estimated total requirement of 800 plates (80% of 1000) in the circumstances, as Mr Pizzolato himself described it, of "flying blind" before receipt of workshop drawings and engineering specifications for the aboveground construction. 2. The Defendant contested that the 400 plates were actually purchased. The Plaintiff claimed this to be proved by evidence of an invoice (MP 230) and that a pallet containing the plates was at the Plaintiff's premises during the attendance of Messrs Karavelatzis and Mangione, of the Defendant. Ultimately, Mr Mangione, in oral evidence, conceded that he was shown a black plastic wrapped quantity of something in a pallet but he did not know if it was a pallet of plates: Transcript p 129, line 01 to line 36, and p 131, line 03 to line 14. On that evidence and Mr Pizzolato's evidence of the purchase of 400 plates, I accept that the Plaintiff purchased the 400 plates at the cost shown in the invoice but for the reasons given that fact did not make the purchase reasonable. 3. The Defendant complains that there is no evidence in the case of the cost of angles. Mr Pizzolato conceded in oral evidence that plates and angles are not of the same cost: transcript page 78 line 45. He said that angles cost more than plates and that the actual cost of an angle would be more than the $12.90. The $12.90 claimed for both plates and angles comes from the invoice for purchase of 400 plates just referred: transcript page 79 to page 80, line 02. That is, it was evidence of cost of plates only. In the Plaintiff's claim for loss of profit, it has averaged the cost of plates and angles at $12.90 and therefore, on the evidence, under-claimed the expected actual cost to it of purchase of angles. 4. The Plaintiff bears the burden of proving, on the balance of probabilities, with such precision as the subject matter of the loss reasonably permits, the amount of the loss sustained at the time of termination of the contract. The Defendant submission that reasonable expectation of proof here would include evidence of costs of angles is well made. The Plaintiff actually purchased 50 angles. 5. There is some evidence of the cost to the Plaintiff of installation per connection to be taken from Mr Pizzolato's email to Mr Thompson, dated 10 April 2015 at 1:08PM (MP39) wherein the hourly rate of a welder was given at $600/day equating to a labour cost of $75 per plate assuming installation of eight plates per day. In the Plaintiff's schedule of damages (MFI2), the cost of site welding was (after amendment at the end of the case) particularized at the different figure of $53.19 per piece. There is no evidentiary basis for arriving at that figure. The above referred to evidence suggests $128 billed, less $75 labour costs; equalling $53 less welding consumables. In NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at [72] Heydon J agreed with McPherson J (authorities referred to) "that as much certainty and particularity must be insisted on, in the proof of damages, as is reasonable, having regard to the circumstances and the nature of the acts themselves by which the damage is done." 6. The evidence in this case with regard to damages is extremely unsatisfactory. Where precise evidence is not available, the court must do the best it can in the assessment of damage, Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83; [1991] HCA 54 at [31]. The Defendant properly complains that the degree of precision with which damages have been proved is not proportional to proof which one might reasonably expect to have been reasonably available to the Plaintiff. Such evidence would have included a precise breakdown of the cost to the Plaintiff and the profit made by the Plaintiff on the installation of the six pieces actually installed, and then evidence reasonably explaining whether or not, and if so, to what extent, cost and profit on the installation of each piece would have been expected to vary in the course of construction of 12 levels of the Project above ground. Because the uncertainty in the assessment of damages has resulted from the Plaintiff's inadequate satisfaction of its obligation of proof by evidence, the difficulties of assessment are to be resolved against the Plaintiff: Cheshire and Fifoot Law of Contract (11th edition) paragraph 23.24. 7. Neither parties' approach to damages contemplated my finding that the contract made on 13 April 2015 expressly provided for variation of price in the event of change in the value of the purchase order, receipt of final engineering drawings, and review of defined specifications, which event in fact occurred on the evidence on 15 May 2015. The evidence advanced by the parties' does not go to performance following variation, such as, pricing on a quantity of 150 connections. 8. The court cannot engage in speculation in respect of the quantum of damages: Zaps Transport (Aust) Pty Ltd v PJG Warehousing & Distribution Pty Ltd [2016] NSWCA 97 at [102]. There are cases in which Courts have estimated damages despite a dearth of evidence. But, in Jones v Schiffmann [1971] HCA 52; (1971) 124 CLR 303 at 308, Menzies J went so far as to say that the "assessment of damages… does sometimes, of necessity, involve what is guesswork rather than estimation." Where precise evidence is not available the Court must do the best it can: (authority referred to).
In my opinion, the costs of construction were by their nature, matters which ought to have been serviced by evidence of considerable precision. In this, the Plaintiff has failed. Doing the best I can, I assess damages on the evidence as follows:

Total worth of project of 150 connections

Actual installation of 6 at $132.00: $792.00
Actual purchase of 100 connections at $44.00: $4,400.00
Supply of an additional 50 pieces at $44.00: $2,200.00
Installation of 144 pieces at $132.00: $19,008.00
Total worth of work: $26,400.00 [Note: installation at $128.00 plus $4.00 for Preliminary and Establishment costs equals $132.00]

Overheads

Assuming cost of angles at $20.00 and angles to plates at 20/80 multiplied by 150 equals $2,360.00
Assuming installation overhead at 75% on account of labour and materials, 75% of $19,798.00: $14,849.00.
Total overhead $17,209.00.
Total gross profit $9,191.00 allow $9,000.00.
Less actually paid by the Defendant $5,600.00. Balance $3,400.00. On Scenario A, after allowing for business administration costs at say 8% of value of work ($2,112.00), had I determined Judgment for the Plaintiff, I would have assessed damages in the amount of $1,288.00.

Total worth of project of 1,000 connections

Actual installation of 6 at $132.00: $792.00
Actual purchase of 100 connections at $44.00: $4,400.00
Supply of an additional 900 pieces at $44.00: $39,600.00
Installation of 994 pieces at $132.00: $131,208.00
Total worth of work: $176,000.00 [Note: installation at $128.00 plus $4.00 for Preliminary and Establishment costs equal $132.00]

Overheads

Assuming cost of angles at $20.00 and angles to plates at 20/80 for 900 pieces equals $12,888.00
Assuming installation overhead at 75% on account of labour and materials, 75% of $131,208.00: $98,406.00
Total overhead $111,284.00
Total gross profit $64,716.00
Less actually paid by the Defendant $5,600.00. Balance $59,116.00. On Scenario B, after allowing for business administration costs at say 8% of value of work ($14,080.00), had I determined Judgment for the Plaintiff, I would have assessed damages in the amount of $45,036.00.

ORDERS 1. Judgment for the Defendant; and 2. Plaintiff to pay the Defendant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 June 2019

C&V Engineering Pty Ltd v Hamilton & Marino Builders Pty Ltd

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