C & V Engineering Pty Ltd v Metropolitan Demolitions Pty Ltd

Issues

1. In its outline of submissions supplied to the Court at the outset of the hearing, the defendant identified the following issues as arising: 1. As to the contract concerning Building B: 1. what were the terms of the Building B contract? 2. whether the hours and charges claimed by C&V in its invoices were unreasonable and excessive such that the portion which was unreasonable and excessive are not recoverable? 1. As to the contract concerning Building C: 1. the scope of the contract: was it to procure steel only, or was it to fabricate or weld steel soldiers? 2. what were the terms of the Building C contract? 3. whether Metropolitan engaged in misleading or deceptive conduct causing loss or damage to C&V; 4. whether the hours and charges claimed by C&V in its invoices were unreasonable and excessive such that the portion which was unreasonable and excessive are not recoverable? 1. The quantum of damages, after crediting to Metropolitan the sum of $41,008 it paid C&V pursuant to an adjudication determination made under the Building and Construction Industry Security of Payment Act 1999 (NSW).

Narrowing issues for present adjudication

1. As noted, at the hearing, Counsel for the plaintiff abandoned a case of misleading or deceptive conduct. So too, it abandoned a pleaded point raised about the defendant repudiating either or both of the contracts for Buildings B and C.
2. On the subject of labour rates applicable to both contracts, I note that after having briefly perused the two expert reports of the parties, and in the light of being informed that neither had engaged in any joint expert conference, I indicated on the second day of the hearing that I was inclined to refer out (pursuant to Division 3 of Part 20 of the Uniform Civil Procedure Rules 2005 (NSW)) any necessary adjudication of detailed factual disputes regarding the reasonableness of rates or the time actually spent engaged in labour, or other charges incurred, about which there was extensive disagreement between the parties' respective quantity surveyor experts. On the plaintiff's case, its position was that the charges were sustainable without resolving such questions and if that position was accepted there would be no need for a referral. However, after raising my predisposition with Counsel, both agreed that factual disputes on the matters I have identified here were capable of and should be referred after the delivery of these reasons.

The FACTS

1. A 9-volume Court book was supplied to the Court by the parties, featuring the pleadings, the affidavits (with exhibits), expert reports and documents produced on subpoena by third parties although the ultimate evidence was somewhat more confined. I indicated to Counsel (who thereafter acknowledged) that no assumption could be made by the parties that material not referred to by Counsel in their Opening addresses, written or oral submissions would be considered by the Court.
2. The following account of the facts is largely taken from an agreed chronology supplied to the Court (MFI 3) predominantly based on contemporaneous documents whilst referencing accounts of conversations set out in the affidavits. For important entries in the chronology, concerning the significant conversations identified in the parties' affidavits, I have set out differences, where they materially exist, in the accounts of the lay witnesses, being Mr Mario Pizzolato, for C&V and Mr Erik Van Cooney and Mr Terry Faulder, for Metropolitan. I propose to follow the practice of Counsel adopted during the hearing in (generally) referring to Mr Pizzolato, Mr Cooney and Mr Faulder by their first names, without intending any disrespect.
3. Where factual disputes arise, to the extent necessary, these will be determined in the next section after the parties' contentions have been addressed.

Context

1. On 1 May 2018, Erik sent to Mario emails with drawings for buildings, A, B & C for the development at Young and Loftus Streets in or around Circular Quay.
2. On 2 May 2018, Mario emailed Erik an offer for the supply and fabrication to Metropolitan 103 (380 PFC ('Parallel Flange Channels')) steel soldiers of varying lengths, to suit shoring walls, as required for Buildings A, B and C. The figure of $335,080 was quoted, which equated to approximately $3,250 (plus GST) for each soldier. The covering letter stated that what was supplied was an 'indicative offer'. A note to the quote indicated that the prices offered excluded GST and were "based on full package being awarded." Erik accepted that this quote was forwarded to the head contractor (RCC).
3. On 6 June 2018, Erik emailed Mario drawings containing an updated design of the steel soldiers for the development project.
4. On 9 June 2018, Mario responded to Erik's email of 6 June 2018, noting the reduction in the requested number of soldiers (103 to 96) across the project and clarifying that there were three types of soldiers.
5. On 27 June 2018, at 1:53pm, Erik emailed Mario 'Issued for Construction' drawings for the fabrication, which featured changes to the design of the steel soldiers.
6. At 2:45pm on the same day, Mario sent an email to Erik, requesting additional drawings. At 2:59pm, Erik purported to do so, observing that he was "receiving FCD ('For Construction Drawings') on the Fly" and suggesting that Mario facilitate with Terry Faulder, who "knows what is required". Erik referred to him and Terry agreeing that the "best approach to this is an hourly rate". In that way there was "know (sic) cost issues/implications." It was put to, but rejected by Erik that he was trying to convey to Mario that work on Building B was to be performed on an hourly basis.
7. On 29 June 2018 Terry Faulder met Mario at Metropolitan's workshop. Mr Faulder provided a sketch to Mario. According to Mario's account of the conversation, Terry asked Mario, amongst other things, to fabricate 10 to 15 soldiers required in Building B and emphasised that building these was "very urgent". Mario explained to Terry Faulder that C&V had a 'beamline' capacity, capable of automatically cutting, drilling, beveling for 'weld prep'. Terry indicated that Metropolitan could send him steel for the Building B soldiers whenever he said so. But according to Terry Faulder's account of the conversation, although the latter confirmed discussion of the fabrication of steel soldiers for Building B, he cautioned Mario that before C&V commenced any work on Building B soldiers, Mario should confirm with Erik that C&V was engaged to perform that work; as it was "Erik's call" on who would be fabricating works for any of the buildings and not his (Terry's).
8. The next day, 30 June 2018 Erik forwarded to Mario, by email (7:29am), an email Terry had sent to him regarding steel soldiers required for Building B. At 2:12pm that same day, Mario emailed Terry, attaching a spreadsheet which he asserted that he had used to assist 'in fabrication'. Counsel for Metropolitan later compared this express reference by Mario to 'fabrication' to other words that Mario had chosen.
9. In his evidence, Erik acknowledged that by July, he had told the head contractor (RCC) that C&V had been engaged to process steel for Buildings B and C.

C&V's 4 July 2018 quote

1. On 4 July 2018, Mario sent (at 5:14pm) an email to Terry Faulder (cc'd to Erik) an updated lump sum proposal for the supply and fabrication of 25 steel soldiers of variable length. This proposal however was directed, by its terms, only to Building A. The quote was framed as an 'Indicative offer". The quote was for the sum of $116,500 and a note to it indicating that it was based on a 'full package' being awarded. For 25 soldiers, this equated to a price of approximately $4,660 per soldier. Attached to the quote was C&V's standard terms and conditions. These included, relevantly: (3) Work would not proceed until written confirmation and acceptance of our (C&V)'s quote and terms and conditions had been received; (7) interest calculation, on the assumption of the customer having a credit agreement with C&V, entitling C&V to charge interest at the current NAB Bank overdraft reference rate plus a late payment of 2.5% of outstanding amounts. Day Labour rates for different classifications of worker (boilermaker/welder/rigger/dogman; supervisor, project manager, general manager). A note indicated that a minimum charge would apply of 8 hours to works executed on an hourly basis, except for Project Manager (where a minimum 2 hours was applicable). It was agreed that the indicated rates would apply and extend to "the preparation of variations, correspondence and anything else outside the scope of works."
2. In cross-examination, Erik acknowledged that he was aware that Mario had set out labour rates. He did not recall having a conversation with Mario whereby the latter indicated C&V's capability, through machinery, to make the task of fabrication more efficient.

Building B contract

1. At 6:12pm on 5 July 2018, Mario emailed Terry Faulder a spreadsheet, relating to Building B.
2. Mario deposed in his first affidavit to receiving a telephone call from Terry Faulder on the morning of 6 July 2018. He attributed to Mr Faulder the following request: "I'm organising materials to be delivered to your workshop this morning. I need you to fabricate the soldiers as per list sent to you last Saturday which is for building B. These works are urgent. Please fabricate these soldiers on an hourly rates basis as discussed with Erik."
3. There was no express discussion about fabricating soldiers for Building C. In Terry's affidavit, he confirmed having discussions with Mario in the period from late June 2018 until 27 July 2018 about the fabrication of the Building B soldiers and design of the Building C soldiers.
4. On 6 July 2018 at 8:50am, Mario sent to Erik and Terry an email referring to his conversation with Terry the previous night and identified, as the 'main objective' reduction in the amount of weld testing. Some ideas were proposed and he invited discussion.
5. On 14 July 2018 at 1:02pm, Erik emailed Terry Faulder and Sean Ryan (copying the message to Mario) attaching updated drawings, for buildings A and B.
6. On 14 July 2018, at 2:35pm, Mario emailed Erik, Terry Faulder and Sean Ryan. The message was sent with 'High' Importance. In the email, Mario had the purpose of putting Metropolitan on notice that there were significant changes to the design of the steel soldiers for Building B, which would constitute a variation both as to cost and time, and suggesting that Metropolitan submit an extension of time.
7. Erik said in his evidence that he did not have the expertise to opine on the significance of the design changes. He was referred to statements in his affidavit (paragraph 51) where, in response to evidence in Mario's first affidavit (paragraph 182) he deposed to his experience. Under cross-examination, he said that although he had an understanding, his opinion was based upon guidance that someone else had given to him.
8. At 2:59pm on the same day, Erik emailed Mario back, instructing him not to modify any of the works and indicating that there would be further discussions ahead. Erik accepted that he did not respond to Mario by expressly disagreeing with Mario's opinion even if he believed that the design changes were not significant.
9. On 17 July 2018, Mario attended a site meeting with Erik, Terry Faulder, Daniel Howe and Mr Guy Bell (or RCC) at RCC's site office. Once the site meeting concluded, they continued discussion at a nearby café. Mario gave an account of the meeting in his first affidavit which was not challenged in cross-examination. It touched upon the additional costs to the steel soldiers due to design changes.
10. In his affidavit, Erik stated that he did not recall the exact nature of the conversation at this meeting (or the ensuing conversation at a nearby café) although he did recall that design changes were discussed in both instances. Mr Fielder did not depose to his recollections, specifically, about what was said at the meeting.
11. Under cross-examination, Erik said that he did not recall whether or not Mario had mentioned that the requirement for flatbar had introduced a lot of work, although he agreed that there was discussion about C&V supplying an updated costing, to take into account the Flatbar.
12. At 10:45am on 17 July 2018, Mario emailed Erik (copying Terry Faulder) discussing the type of flatbar needed for Building B.
13. At 1:22pm on 17 July 2018, Erik emailed Mario about the soldiers. The email contained several erroneous references. Erik was intending to refer to the quotation in relation to Building A as being applicable to the works for Building C and was inquiring whether the rates for the labourers were as they were in respect to Building B.
14. This email prompted Mario to email Erik at 4:44pm on 17 July 2018. Mario corrected Erik, indicating that the quote that had been sent did not relate to Building C, but related to Building A. He also stated that the soldiers that C&V were fabricating "relate to building B in particular SW11+SW12 Northern Internal Wall" and C&V intended to use the rates as indicated in the quotation.
15. In cross-examination, Erik accepted that this email was, despite the heading, a reference to Building B. It was put to Erik that he understood that the amount of the hourly rate could not be made referable to what had been quoted, in the light of the significant design changes. Erik said that the introduction of Flatbar was a straightforward modification.
16. On 17 July 2018 at 4:44pm, Mario emailed Erik indicating that the soldiers fabricating related to building B in particular and C&V were using the rates indicated in the quotation.
17. On 17 July 2018 at 5:43pm Mario emailed Erik indicating concerns about a welding requirement and flatbar requirement in relation to Building B.
18. Between 2 July and 23 July 2018, C&V completed the works for Building B. Mario deposed that C&V labourers were required to fill and did submit timesheets every day. These timesheets were utilised by Mario or Antonella, to develop claims for payments. I will return to the matter of timesheets later in these reasons.
19. Mario deposed in his first affidavit that by 23 July 2018, the Building B soldiers were completed and ready for collection from the C&V workshop.
20. Around this time, Erik queried Mario as to why only 8 of the 9 steel soldiers for Building B were delivered. Mario sensed that there were issues about payment. On 24 July 2018 only 8 of the 9 soldiers were collected. Mario and Erik had a dispute about the invoice C&V issued in relation to Building B. From Metropolitan's perspective, the amount claimed did not reflect those rates provided in the 4 July 2018 quote. As described by C&V's Counsel, an arrangement was struck that the 9th soldier would be capable of being collected upon promise of payment.
21. On 24 July 2018, Mario sent a text to Erik, in which he referred to C&V's accounts department being on his back because of his act in releasing the steel with (sic) payment. He asserted that Erik had informed him that payment would be made prior to pick up but complained that no remittance had yet come through.
22. On 27 July 2018, Antonella Pizzolato emailed Erik, requesting an update on payment of the invoice for the Building B soldiers.
23. At 5:03pm, on 1 August 2018, Erik sent Mario an email setting out Metropolitan's position that he would not authorise payment of C&V's invoice for Building B. The tenor of the message was to leave open the prospect of negotiation whilst signalling that he was not prepared to be abused.

Conversation between Mario and Erik on 5 July 2018

1. On 5 July 2018, Mario called Erik. The content of this conversation was disputed. According to Mario's account, in his first affidavit, the conversation (which he estimated occurred at 11:04am) was to the following effect: "Mario: Hi Erik, just following up on the quotation I sent to you guys yesterday. Erik: Yes, I've received it and discussing it with Terry. My preference as previously discussed is doing the works on an hourly, that we avoid any issues. Mario: Ok. Totally up to you Erik. Erik: Where do I find your rates in your quotation? Mario: They are at the bottom of the last page. Erik: I see them. Mario: As discussed with Terry we intend on using an external company to assist us in processing the materials, these guys will need some time to do their stuff. Erik: I thought you would be fabricating these soldiers. Mario: We will be. However, we use companies with specialised machinery to process the materials for us. This saves us huge costs and time. Apart from cutting materials to length and drilling holes, the company I want to use can even cut the notch in the 380PFC and bevel the ends to all the PFC's for welding purposes, all on the same machine Erik: I understand. Mario: I'm keen to get the order for Building A soldiers … Something else that you may wish to think about, is since Building C isn't required for a while you may want to start looking at getting those soldiers underway too, however to do so I need latest drawings. Erik: But my preference is hourly, if your supplying materials what rates are you going to charge? Mario: Erik, we all buy materials around the same rate. At time of invoicing, we'll show you our cost plus we'll add a margin. Erik: Ok that makes sense. Let me discuss that with Terry and see what we can handle, and I'll come back to you as soon as possible. Mario: I'll come back to you asap too regarding when we can have labour available."
2. Counsel for Metropolitan put to Mario that the above account of the conversation on 5 July 2018 was itself 'manufactured', but Mario denied that this was so. With some defiance, Mario asserted that Erik had conveyed the substance of this account himself to the head contractor. Mario agreed, however, with the propositions that Metropolitan's Counsel put to him that in the conversation that occurred on 5 July 2018:

• Mr Cooney said that Building C was not required at the moment;
• Mr Pizzolato's response was to say that it was best to procure materials first (T 44)

1. Erik recalled that the conversation regarding steel soldiers for Building C was to the following effect: "Mario: I sent over my quotation for the 25 steel soldiers. We are fabricating some steel soldiers for Building B now. Which other steel soldiers are we fabricating? Erik: Building C but it is not required at the moment. Mario: Will materials be provided or are we supplying materials. Erik: You will need to supply materials for this. Mario: If that's the case, it's best to procure the materials first."
2. In cross-examination, Erik said that he did not recall the specifics of the conversation on 5 July 2018, though he disagreed with the notion that Mario had told him that C&V wanted to work on an hourly basis for Building C. Erik did not recall saying that it was his preference for all of the works to be performed on an hourly rates basis; nor recalled asking Mario to refer him to the rates in C&V's quote.

Email communications on 5 July 2018

1. After this conversation, on 5 July 2018 at 11:04am, Mario emailed Erik. Material parts of that email were as follows: "As discussed, I understand that Building C is not required at the moment however best to start getting that material processed whilst we deal with other urgent areas. Therefore please shoot over latest drawings indicating RL's to building C so we may update our spreadsheet, etc. In regards to yesterday's quotation relating to 25 soldiers for Building A .. As discussed this proposal included for all materials as we were engaging an external company to supply materials .. We also intend to have all materials for Building C processed by external company, hence our request for updated drawings … .. As for the request to have 16 ready by Tuesday, Erik we won't beat around the bush and will tell you straight - that is not going to happen! It took you guys 1 week to complete 5 Soldiers (As I've said numerous times there is a lot of work on these soldiers) …"
2. Mario agreed in cross-examination that in the email that he sent to Erik shortly after this conversation (at 11:04am) there was no reference to Mario saying anything about performing welding works on Building C (at an hourly rate) or performing fabrication (T 45.22 - 45.40). However, Mario maintained that this had already been discussed and the reference in the email to 'processing' included features of fabrication: cutting, drilling, notching and so forth. He disagreed that processing meant the 'preparation' of materials.
3. Erik was referred to the part of Mario's second affidavit (paragraph 35(b)) in which Mario had deposed to the quote of 4 July 2018 being based upon identified drawings. He did not recall Mario's reference to 16 soldiers being a proportion of 34 or 35 soldiers for Building C. He said he did not recall Mario indicating that a lot of work would have to be done in connection with the soldiers.
4. On 5 July 2018 at 1:31pm, Erik sent Mario an email. The message was as follows: "Mario Proceed for building C as discussed. Need this till latest 2.5 weeks Erik"
5. In his evidence, Mario said that prior to this email, he and Erik had discussed fabrication. He suggested that Erik had indicated that Metropolitan would require C&V to fabricate builders for Building C in due course and explained that the earlier reference to processing included such things as drilling and cutting of the soldiers.
6. In his evidence, Erik accepted that the steel was only urgent if there was a timeline for the installation of the soldiers. He also accepted, at the time of this email, that Metropolitan had not sought a lump sum quote in relation to the Building C soldiers; nor had it sought a quote only in connection with the procurement of steel. He accepted that Metropolitan was instructing C&V to proceed without a lump sum price.
7. On 5 July 2018 at 5:23pm, Erik sent Mario an email (cc'd to Terry Faulder), inquiring of Mario whether he could order the steel for (Building) C of the drawings provided or whether C&V needed to wait for FCD with further information. At 5:24pm, Mario responded by indicating that he had sent the drawings to C&V's draftsman to see if he could convert the PDF into CAD and would chase him up again.
8. A very short time later on the same day (at 5:32pm), Erik sent an email to Mario attaching drawings. Underneath there was the following statement: "Like I said we need soldiers onsite 25/7/18! For building C even though we don't have FCD."
9. Then at 5:42pm the same day, Mario sent an email to both Terry Faulder and Erik, indicating, amongst other things, that C&V could have 6 labourers available for work the next Monday (9 July 2018). At 5:45pm, Erik emailed Mario back, asking him to talk to Terry Faulder as the 6 labourers may be needed for the next Monday.
10. Erik was challenged on his evidence that by 5 July 2018, Metropolitan had not given C&V the "go ahead" to fabricate Building C soldiers. Counsel for C&V put to him a number of circumstances which, it was insinuated, falsified that evidence. This included the urgency (two a half weeks) to have the soldiers for Building C installed; what was suggested was the unlikelihood of Metropolitan seeking out different steel fabricators: (a) to procure the steel and (b) to fabricate the soldiers; and the likelihood that if all that C&V was engaged to do was to procure the steel for Building C, Metropolitan would have given a direction to Mario to deliver the steel to another fabricator; and that other conduct by Metropolitan, such as Erik sending Mario drawings was only consistent with C&V being engaged to fabricate, in addition to procuring, the steel; that he conveyed to Mario Metropolitan's expectation that it would need six labourers (from C&V) to fabricate the Building C soldiers.
11. Erik agreed to some of these propositions. He agreed that there would be no reason to send C&V drawings unless Metropolitan expected C&V to fabricate; that his instruction could be interpreted as an instruction to fabricate and deliver soldiers to the site by 25 July 2018 adhered to his evidence about Metropolitan's position. He also agreed that the email that he sent (2 CB 452), in which he evinced a concern about the level of productivity, would have been beside the point if C&V's engagement was limited only to procuring steel for Building C.

Post-contractual conduct

1. On 9 July 2018 at 1:39pm, Sean Ryan, a Project Engineer within Metropolitan, emailed Terry and Mario that the set out for Building C had been finalised. Erik agreed with the proposition that there would be no reason for C&V to have been advised about the set up if all that it was engaged to do was to supply the steel.
2. At 9 July 2018 at 2:03pm, Mario responded to Mr Ryan's email earlier that day (copying in Terry and Erik), thanking him for the updated drawings, but asking for updated elevations "so we can finalise procurement to this area".
3. On 10 July 2018 at 8:07am, Mario sent an email to Sean Ryan and Terry, seeking advice as to how far the revised elevations for Building C were and pointing out that this issue was urgent, given that C&V was to start on Building C on Monday (apparently 16 July 2018) and "straight after fabricating the hand full of soldiers we are building for you.".
4. On 10 July 2018 at 3:00pm, Erik sent an email to Stuart Soltau (copied to Mario, Sean Ryan and Terry Faulder), checking whether they had up to date drawings for Building A and B, and indicating that Metropolitan was still awaiting FCD for Building C.
5. On 11 July 2018 at 2:35pm, Mario responded to Erik's email of 10 July (which was copied to Terry Faulder and also Sean Ryan) on the subject of soldiers for Building C. The message was an update on information on the latest drawings. Mario suggested that Metropolitan pressure its head contractor, indicating that a lack of information was causing delay.
6. On 13 July 2018 at 5:01pm, Mario emailed Erik again (copying the message to Sean Ryan, Terry Faulder and C&V's accounts email address). He thanked Erik "again for asking us to proceed with Building C" and indicating that C&V had placed an order for PFC's, which would arrive on Monday (16 July 2018) and the workshop could make a start.
7. On 17 July 2018, there was a site meeting. The content of that meeting is referred to below in the section of these reasons dealing with Building B. For present purposes, it is notable that under cross-examination, it was suggested to Erik that he told Guy Bell that C&V had been fabricating Building C soldiers. Erik did not recall this.
8. At 4:44pm on 17 July 2018, Mario emailed Erik. This was in response to Erik's email earlier that day (1:22pm) (which email is also addressed in the earlier section concerning Building B). In this email, Mario said that C&V had started updating the cost for Building C and would 'shoot it over' once it had final information, "such as confirmation of pile depths, capping beam heights and rock anchor locations". He indicated in the email, in connection with Building C, that: "So far we have managed to do some initial procurement using provided CAD files but haven't started cutting steel".
9. At 4:59pm on 17 July 2018, Erik emailed Mario in the following terms: "Really need a quote from you for building C before I give you the go ahead mate even though I know how much soldiers cost you may blow my budget! Fine to do rates for build B"
10. It was, as I understood it, common ground that the request for a quote could only have been in relation to fabrication: by then, steel had already been ordered and was located within C&V's workshop. At any rate, on C&V's case, the work that it had performed in procuring steel was pursuant to the quote of 4 July 2018. It was put to Erik, but he denied, that he was aware by this time that C&V's fabrication of Building C soldiers had commenced in accordance with the rates set out in the 4 July 2018 quote. Erik maintained that C&V was only engaged to procure the steel and Metropolitan awaited a quote to do any fabrication on the steel for Building C.
11. On 18 July 2018 at 10:20am, Mario responded to Erik's email sent at 4:59pm on 17 July 2018. He started by indicating surprise about what Erik had said "as you're aware you gave us the go ahead for building C back on 5 July". He indicated other points: C&V had been liaising with its drafts man to determine the lengths of soldiers; that C&V had informed Metropolitan "last week that we had placed a steel order for SW15, that steel is in our workshop and the workshop is currently marking and drilling the 300PFCs; and C&V was in the process of finalising steel requirements for SW13, which had been indicated in the site meeting on 17 July 2018. Accordingly, Mario concluded, "the works have progressed based on your instruction".
12. In cross-examination, Erik disagreed with the proposition put to him that, on the basis of this email, he understood Mario was proceeding on the basis of an instruction to fabricate the soldiers. Erik could not recall whether he responded to Mario's email or not.
13. On 20 July 2018, at 10:43am Mario emailed Erik, inquiring when C&V could expect updated elevations indicating RLs for Building C. At 3:01pm, Erik responded by indicating that he was still awaiting finalised drawings and further indicating that Metropolitan was "1.5 weeks away to start piling Building C" and stating that Metropolitan really needed C&V's soldiers being "made up in time which was now looking doubtful for 30 odd soldiers".
14. On 20 July 2018 at 3:01pm, Erik emailed Mario, indicating that Metropolitan was still awaiting finalised drawings, and were one and a half weeks away to start piling Building C, so really needed "your" soldiers. Erik agreed in cross-examination that this was a reference to soldiers being made ready for excavation at the site.
15. Later that same afternoon, at 3:29pm, Mario emailed Erik, seeking confirmation of elevation information for Building C. Mario indicated C&V's capacity to increase manpower in particular with welders and would look at that next week.
16. Later still on the same day, at 3:34pm, Erik responded by email, telling Mario to be careful in what he sent to the contractor as Metropolitan was 'pitching' for an EOT: it did not help Metropolitan for C&V to indicate it was capable of doing the work in the time.
17. On 26 July 2018, Mario, Erik and Terry arrived at the C&V workshop. They discussed progress with the Building C soldiers. Erik was concerned about timing for completion.
18. On 26 July 2018 at 8:00pm, Mario emailed Erik updated costs in relation to Building C. The covering email explained that the update was based on latest elevations and engineer requirements. The attached quote (which clearly identified Building C in the title and referred to applicable structural drawings) was styled "Investment Offer". It referred to 27 soldiers with an approximate cost per soldier of $8,148. The price quoted was $219,996. Metropolitan later argued that by sending a quote in these terms, C&V was offering a new contract, as distinct from offering a variation on an existing contract [1] . Mario deposed that fabrication of the Building C soldiers continued.
19. On 27 July 2018 at 1:19pm Erik responded to Mario's costs update, as follows: "$8,148 per soldier is crazy expensive we are doing soldiers for $3,500 each, I thought you have a method of doing things cheap, mechanically etc you illustrated to me previously? I didn't know your price has changed so significantly from 4/7/18 when you quoted the works ie 25 soldiers for $116,500 which is $4,600 per soldier which is a little high but around the correct pricing. Can you please send over a price for the steel you have in the workshop for the 8 soldiers so I can look at buying it of you please (sic)? We pay $1300 a ton for the steel, as per our inspection yesterday I understand you have drilled holes and welded end plates. Thanks Mario, sorry I cant (sic) give this work to you mate but these cost are blowing my budget massively!"
20. In cross-examination, it was put to, but rejected by, Mario that when he sent the quote with the estimate of $8,148 per soldier, he did so in the knowledge that Metropolitan was under pressure with the head contractor and in the expectation that Metropolitan would be forced to accept the quote.
21. The same day, at 2:32pm, Mario sent an email to Erik. The document was titled 'without prejudice' but Counsel for Metropolitan did not object to the email being referred to. Mario referred back to the instruction to proceed given by Metropolitan on 5 July 2017 (which should have been a reference to 2018), which C&V complied with. He asserted that Metropolitan had repudiated the contract, an assertion which was duplicated in C&V's pleading, but which was not pursued at hearing.
22. Mario sent Erik a further email at 2:52pm on 27 July 2018. This was to clarify that the updated costs for Building C was inclusive of materials and reiterated a desire to meet.
23. At 3:02pm on 27 July, Erik emailed Mario (copied to Terry Faulder) indicating that he was flat out and taking up the suggestion of a meeting the following Monday. In the meantime, he instructed Mario "please DO NOT work on any more soldiers."
24. According to Mario, however, on 27 July 2018, after Mario had received Erik's email, he rang Terry Faulder, indicating that he had tried to call Erik. Mario remonstrated with Terry about Erik's instruction not to do more work and deposed to Terry responding "What the fuck is he (Erik) doing? Don't listen to Erik, he can't stop you from what you've already started with those 8 soldiers, keep going. We need those soldiers you are working on urgently." In cross-examination, Mario acknowledged his awareness that Mr Faulder was Erik's 'leading hand'.
25. Mario's recollection of this conversation was disputed by Terry. In his affidavit, Terry recalled a conversation with Mario. However, the gist of Terry's account was that whatever Erik instructed Mario was Erik's decision and Mario would have to speak with Erik. Terry denied instructing Mario to continue working with the Building C soldiers as he did not have the authority to direct Mario to do so. He added that he did not subsequently deal with Mario or C&V any further.
26. Mario deposed to a meeting on 1 August 2018 in which Erik observed that C&V were continuing with the work on the Building C soldiers, and Mario indicated that Terry had indicated to him (Mario) that the soldiers were needed. Mario deposed to Erik not telling him to discontinue working on the Building B soldiers. Accordingly, Mario did not issue any direction to C&V's personnel to cease work.
27. Erik confirmed that a meeting occurred on 1 August, but recalled repeating his instruction to Mario not to do any further works on the Building C soldiers. He also recalled having an argument with Mario about the Building B invoice as being not reflective of the quote of 4 July 2018. He recalled, further that Mario started getting aggressive towards him, which prompted the meeting to end.
28. On 24 August 2018, Erick sent an email to Mario explaining that Metropolitan completed the work for the soldiers for Building C itself and was unwilling to accept the 8 building soldiers C&V had fabricated.
29. Mario deposed that between 23 July 2018 and 13 August 2018, C&V completed the works for Building C.
30. On 4 September 2018, C&V issued a payment claim for Building C (for the sum of $120,526.20, incl GST).
31. On 5 November 2018, C&V issued another payment claim for Building C (for the sum of $139,988.29 incl GST). This invoice incorporated the amount claimed in the payment claim of 4 September 2018.
32. On or about 17 December 2018, Metropolitan paid C&V the sum of $41,008 towards payment of that invoice, under an adjudication determination. This left C&V to claim the sum (as principal) of $98,980.29.
33. I will now address the issues, departing from the above order to reflect the circumstance that it was the issues concerning Building C which were the focal point of the dispute in the hearing.

The contract

1. The plaintiff submitted that the agreement was partly written and partly oral. The written part was the quote of 4 July 2018 and emails sent by Mario to Erik and then by Erik to Mario on 5 July 2018. The oral part of it was the version of the conversation between Mario and Erik given by Mario in his first affidavit (at par 135).

Did the parties agree that C&V would fabricate soldiers?

1. The terms of the agreement were relevantly that: 1. C&V was to fabricate 34 soldiers; 2. the soldiers were to be completed within 2 and a half weeks on the basis of drawings which would were to be supplied; 3. C&V would charge Metropolitan for work based on hourly rates set out in the terms and conditions attached to the quote; 4. payment was to be made within 14 days of the invoice.
2. As to the constituents of the contract, to the extent that the plaintiff's claim depended upon proof of what was verbally agreed, the plaintiff's Counsel submitted that the Court would prefer the evidence of Mario, over that of Erik and Terry. Unlike Erik and Terry, Mario gave a fulsome account of what was said in the relevant conversions. Attacks were made upon the credibility (in Erik's case) and reliability (in Erik's and Terry's cases) of Metropolitan's witnesses.
3. The plaintiff submitted that post-contractual conduct, including correspondence and conversations, is admissible to prove the existence and terms of the contract [2] . C&V's Counsel pointed (in his oral submissions in chief and in reply) to a stream of correspondence which, it was argued, was all against the notion that the contract was limited to the supply of steel: 1. Mario's email to Erik on 4 July 2018 (5:14pm) (which attached the quote and terms and conditions) alluded to a conversation, which Mario deposed to in his first affidavit (paragraph 135) in which Erik had referred to hourly rates; 2. Mario's email to Erik on 5 July 2018 (11:04am) set Erik straight about the impossibility of C&V having 16 (of 34) soldiers ready to be 'completed' (i.e., fabricated) by Tuesday. Mario set out his understanding of Erik's instruction that the steel material needed to be 'processed'. Erik was aware that this would at least involve 'cutting' and Mario had explained that it also required welding; 3. Erik's email to Mario on 5 July 2018 (1:31pm) provided an instruction to C&V to proceed and the 'need' was two and a half weeks at the latest. Read in context, the need should be taken to amount to the 'supply and fabrication' of the soldiers referred to in Mario's email of 4 July 2018, to which Erik was responding to. Counsel argued that, in view of the urgency of two and a half weeks, it would be a strange situation if all that C&V was required to do was to supply the steel material to a different steel fabricator: if Metropolitan simply wanted steel, it would have been expected to seek to acquire it from a supplier, rather than a fabricator, of steel and Mr Cooney did nothing to indicate that some other particular steel fabricator had been earmarked to fabricate the material which C&V was obliged to supply. Further, by the same email, Metropolitan adopted the quote (including the labour rates in it) that had been supplied by Mario on 4 July 2018, which quote was partly calculated by reference to a component for fabrication (albeit in relation to Building A); 4. by his email to Mario on 5 July 2018 (at 5:32pm), Mr Cooney had accepted that soldiers for Building C needed to be onsite by 25 July 2018 and at the time of supplying that indication to Mario, Erik attached drawings. The inference should be drawn that the supply of drawings was unnecessary if all that C&V was required to do was to supply steel and, in particular, deliver it to another fabricator. In fact, the soldiers needed to be installed (thereby necessitating fabrication) "onsite" and both parties had been working towards commencing the fabrication of Building C soldiers in the absence of 'FCD' ('For Construction Drawings'); 5. on 6 July 2018, Mario indicated to Erik that C&V was trying to reduce the amount of weld testing to reduce the slowing down in production and cost. 6. by email on 9 July 2018 (1:39pm), Sean Ryan notified Mario (and Terry) that the 'set out' for Building C had been finalised. That was unnecessary if the contract was as limited as Metropolitan posited; 7. by email on 10 July 2018 (8:07am), Mario emailed Sean Ryan and Terry (copying Erik) inquiring how far the revised elevations for Building C were and indicating C&V's intention to commence work on Building C, straight after fabricating the hand full of soldiers C&V was building for Metropolitan; 8. on 13 July 2018 (5:01pm), Mario's email to Erik expressed thanks for asking C&V to proceed with Building C indicated that an order had been placed for PFCs and that 9 of the soldiers that C&V had been fabricating were nearing completion and he sought an indication whether they required flat bars. This email never elicited any inquiry from Erik as to why C&V had been fabricating these builders. The email did not support the proposition that the agreement was confined to the ordering of steel; 9. on 17 July 2018 (4:59pm), Erik requested a quote before providing the go ahead. That was unnecessary if the contract was only confined to the supply of the material; it had to include fabrication; 10. on 18 July 2018 (10:20am), Mario asserted that Metropolitan had already provided the 'go ahead' for building the soldiers back on 5 July 2018 and that works had progressed. Mario reminded Eric that he had told him last week that a steel order had been placed, with the steel in C&V's workshop and that its labourers were currently marking and drilling. Erik did not take any step to reject Mario's assertions in this regard; 11. on 20 July 2018 (3:01pm), Erik's email to Mario alluded to soldiers needing to be "made up", given that Metropolitan was only one a half weeks' away to start piling up Building C; 12. on 26 July 2018 (8:00pm), Mario's email to Erik noted that 8 of the soldiers were "well in production". 13. on 26 July, according to Mr Faulder, in a meeting at the C&V workshop that occurred that day, he accepted that soldiers had been made up; 14. the Court should accept Mario's unchallenged evidence in his first affidavit (paragraph 291) about his telephone call with Terry Faulder on 27 July 2018, in which the latter indicated that Metropolitan needed the soldiers for Building C; 15. on 27 July 2018, Erik sent an email instruction to Mario not to work on any more soldiers. That was done in response to Mario having supplied Erik with a cost update for the work performed. However, the Court should also accept Mario's unchallenged evidence that on 1 August 2018 (first affidavit, paragraph 294-5) Erik gave a 'nudge and a wink' for C&V to continue on with the fabrication of the soldiers for Building C. Later Erik tried to negotiate with Mario to make payment if the soldiers were delivered: he was trying to get a discount. Further, in the face of Erik's instruction for C&V to stop work in late July, Terry Faulder said that it was up to Mario whether he wished to carry on completing the fabrication for the soldiers (although Terry indicated that this was not 'his call': T 103-104); 16. on 4 September 2018, C&V emailed the invoice for work. In the covering email, Mario indicated to Erik that the soldiers had been ready for pick up since 13 August. As it happens little work had been carried out after the instruction to stop work.
4. Counsel submitted that the Court would reject Metropolitan's argument that the contract was only for the supply of steel. He cited that Metropolitan's pleaded defence [3] represented an all-or-nothing position: that it was only for the supply of steel. It was emphasised that even Mr Cooney accepted that Metropolitan expected C&V to perform some 'processing' of the steel. It would be a strange turn of events for C&V to be asked, within urgent time constraints, to order and 'process', but not fabricate, the steel. The detailed work that C&V was asked to perform, or privy to, such as the design of the soldiers, the placement of notches and welds was all superfluous, or at least extraneous to the procurement of steel and were only relevant to the fabrication of the soldiers. A reasonable entity in Metropolitan's position would have been bemused by all of C&V's inquiries about information only relevant to the fabrication process if all that had been agreed was the procurement of steel.
5. C&V's Counsel submitted that Mr Cooney was not a witness of credit but if that was not accepted, his evidence was unreliable. His evidence was punctuated by answers that he did not know, or recall certain matters. This included the important conversation of 5 July 2018 (T 75.26). Mr Faulder's evidence was unreliable. Mr Pizzolato, on the other hand, had detailed recollections of events, supported by contemporaneous documentation.

The defendant's submissions

1. Counsel for Metropolitan argued that C&V's case of a contract to fabricate as of 5 July represented a distorted reconstruction of what occurred. He accepted that there was an expectation, perhaps even hope, between the parties, as of 5 July, that C&V would eventually fabricate material, but the agreement, as at that date (the date which, according to C&V's pleading was the date that the agreement was entered [4] ) was limited only to its procuring the material. In the events that occurred, C&V did order steel on or from 5 July until 17 July 2018, and it was stored in C&V's warehouse. But no fabrication works had been performed by then.
2. Then, on 17 July 2018, Mr Cooney asked Mr Pizzolato to supply a quote for fabrication of the material before it would give the 'go ahead' to C&V to fabricate. On 26 July 2018, that quote was supplied, but Metropolitan regarded the quote as exorbitant, and indicated its position on 27 July. Counsel submitted that the Court should find that prior to Metropolitan's negative response to the quote, from 23 July, C&V engaged in certain minor preparatory works in anticipation that it would be instructed to fabricate. In this regard, Metropolitan's Counsel referred to a Workshop labour spreadsheet attached to C&V's invoice of 4 September 2018, which said nothing about welding occurring until 23 July 2018. (Counsel also argued that the 'GM Charges' spreadsheet which had also been attached to the 4 September 2018 invoice, was proven, by Exhibit 1, not to be a contemporaneous record, but a document created, from 25 August 2018, for forensic purposes. This was a matter about which Metropolitan's Counsel not only argued made the GM charges spreadsheet unreliable, but also argued indicated Mr Pizzolato had lied about it in his evidence: (see the section on Credit elsewhere in these reasons) Further, in answer to a production requirement, only two invoices for welding were produced, without express indication, on the face of either invoice, as to which Building the welding related to (Exhibit 2).
3. By engaging in these preparatory works from 23 July 2018, Metropolitan argued, C&V took the risk that Metropolitan might not agree to C&V fabricating soldiers for the building. Counsel submitted that, in the consciousness that there were no contemporaneous documents to support an argument, but left with the prospect of non-payment for the 'preparatory' works that C&V performed from 23 July, Mr Pizzolato 'manufactured' the version of conversation with Mr Cooney, whose terms appeared in paragraph 135 of his first affidavit, to make it appear that an agreement to fabricate had been reached from 5 July when it had not. Counsel for Metropolitan generally attacked the credibility of Mr Pizzolato's evidence. But even, for the sake of argument, the content of his account of the conversation with Mr Cooney was accepted, it would still not (by itself or with other documents) establish agreement to fabricate. Unlike other occasions where Mr Pizzolato expressly referenced the task of fabrication, he did not do so in his verbal conversation of what was said or in the correspondence of 5 July.
4. Counsel submitted that after 27 July 2018, contrary to C&V's case, there was no request for C&V to fabricate. C&V's reliance upon Mario's conversation, in which he effectively attributed to Terry overriding of a clear instruction given by Erik, in late July, was misconceived. Terry gave no such encouragement. To the extent that C&V went ahead and completed fabrication of the soldiers for Building C between 27 July and 13 August 2018, this was not in accordance with contract.
5. More specifically, Metropolitan's Counsel argued that, with reference to conventional 'offer and acceptance' contract analysis, Mario's email to Erik at 11:04am on 5 July 2018 unambiguously recorded the agreement that, as at that date, fabrication was not required for soldiers for Building C "at the moment". The priority, in terms or urgency, was other areas. At 5:23pm in the same afternoon, Erik asked Mario whether he could order the steel for Building C of the drawings provided, or whether C&V needed to wait for FCD with further information.
6. Metropolitan argued that Mario's evidence under cross-examination (T 44-45) was more consistent with Erik's version of what was said on 5 July 2018 then the account Mario had given (at paragraph 135) in his first affidavit; which was incongruous, given Mario's expressed rejection of Erik's version given (at paragraph 40) of Mario's second affidavit.
7. This was not to say that the parties did not contemplate the possibility, even likelihood, that C&V may be asked to fabricate the soldiers. It was true that there was time pressure, but the moment had not yet arrived and any further agreement for C&V to actually fabricate the steel would not occur until a quote for the cost of fabrication had been furnished and price was negotiated and accepted. That quote was not furnished until 27 July and it was rejected. In effect, by fabricating the soldiers when it did, C&V jumped the gun or sought to pre-empt Metropolitan's determination that it should fabricate the soldiers.
8. Metropolitan's Counsel argued that C&V's contention that all the contemporary correspondence was consistent with an agreement to fabricate amounted to cherry-picking. The correspondence was equally consistent with a limited agreement by which C&V would only supply the steel in a context that Metropolitan might in the future agree that it fabricate it.
9. Thus: 1. Erik's email of 5 July 2018 (5:32pm) attaching drawings was consistent with an agreement merely to supply material, but consistent with the parties anticipating that fabrication may eventually occur; 2. Sean Ryan's email (9 July 2018) supplied a set out for Building C but that was not exclusively consistent with an agreement that C&V would fabricate. Mario's email of the same day, and in response, noted that C&V had been reviewing the drawings to determine the length of the soldiers but required updated elevations "so we can finalise procurement ..."
10. About the critical disputed conversation that occurred on 5 July 2018, Counsel for Metropolitan assailed the credibility or reliability of Mr Pizzolato [5] , submitting that nothing he said that was in evidence should be believed unless independently corroborated. He accepted, also, that Mr Cooney was a less than impressive witness, but unlike Mr Pizzolato, he had no continuing stake in the litigation (having left employment with Metropolitan) and although his preparation for giving evidence was conspicuously less than thorough, he was at least adamant in disputing the notion that, on this date, he instructed Mario to fabricate soldiers for Building C.
11. More generally, Counsel for Metropolitan submitted that although Mr Cooney made several concessions about what Metropolitan had agreed to in the post-contractual correspondence and communications, the concessions were only extracted on the basis of a limited sample of communications which the cross-examining Counsel had put to Mr Cooney.
12. Metropolitan referred to the "Investment Offer" which Mario submitted on 26 July 2018. The quote avowedly concerned Building C, even if it contained exactly the same terms and conditions that had been attached to the quote of 4 July 2018 in relation to Building A. This quote, Metropolitan argued, grossly inflated the aggregate price ($219,996) which could be gauged by the indication of the approximate unit price for each soldier ($8,148). Metropolitan's Counsel made the point that it was no coincidence that C&V had sent what was an offer for a proposed new contract, rather than following a practice it had earlier used of sending a proposed variation notice. In effect, Metropolitan asked rhetorically, why would a new contract be offered if Metropolitan was bound to an agreement through which C&V was engaged to fabricate steel on 5 July?
13. As indicated, Metropolitan cited the demonstrable absence of proven welding, until 23 July 2018, as indicative of the absence of agreement for fabrication on 5 July 2018. Metropolitan does not dispute, although it was not in a position to dispute, that 8 soldiers for Building C were ultimately fabricated, but this was not done pursuant to a contractual entitlement. Metropolitan never received soldiers from C&V for that building. It understands that they remain in C&V's workshop but do not know whether they relate to Building C or not.

The plaintiff's submissions in reply

1. The defendant's submission seeking to dilute the weight to be accorded to Erik's admissions provoked Counsel for C&V to give detailed transcript references to establish the many admissions that Erik had given in cross-examination. These were: 1. he told the head contractor around July 2018 that C&V had been engaged to process steel in relation to Building C (T 67.50 - 68.1); 2. when, in his email to Mario on 5 July (1:31pm) he emphasised the urgency (two and a half weeks), that meant the installation of the soldiers on site (T 74.21- 74.39); 3. if there was real urgency to fabricating soldiers within two and a half things, logic would suggest that if (as occurred) Metropolitan went to a steel fabricator, it would ask it to supply and fabricate, in a certain way, the steel (T 76.20 - 76.29); 4. he could provide no good reason why, given the state of urgency, he did not ask the other steel fabricators (who Mr Cooney had earlier said that he had "on the go at the same time") to supply and fabricate the steel for Building C (T 77.5 - 77.9); 5. when, by his email on 5 July (at 1:31pm), he instructed Mario "to proceed", he was intending to convey to Mario that C&V should supply and process the steel, but refrain from fabricating it until a quote had been agreed to, it made no sense to direct Mario to supply the steel to the excavation site at Circular Quay, but this was what Mr Cooney did by his later email that same day (5:32pm) (T 78.35 - 79.16); 6. if all that Mario had been engaged to do was to supply steel, there was no reason to tell him that Metropolitan did not have construction drawings or to send him the drawings (T 79.16 - 79.26); 7. the reason he sent the drawings to Mario was to fabricate the steel and deliver it to the site by 25 July (T 79.30) and his email of 5 July (at 5:32pm) was a clear instruction to Mario to fabricate the Building C soldiers and have them delivered on site by 25 July (T 79.49).
2. Counsel also submitted that Terry Faulder's evidence was consistent with C&V's submission that Erik had given a 'nudge and wink' to C&V's continued fabrication of work after 27 July 2018.
3. In response to Metropolitan's point that there was no contemporaneous record of fabricating work performed prior to 23 July 2018, C&V's Counsel referred to the document titled 'Young & Loftus St Project - GM charges' which was attached to its 4 September 2018 invoice; recording multiple entries recording the inspection of progress of works in its workshop from 13 July 2018.

Mr Pizzolato

1. I did not generally regard Mario as a witness of credit. I regarded his evidence, when challenged on his affidavit he had prepared in opposition to an application for security for costs (Exhibit 3) against C&V as manifestly unsatisfactory, when the material discrepancy between what he, as the sole director and member of various companies (C&V Engineering Co Pty Ltd and Pizzolato Nominees Pty Ltd, a trustee) produced about his financial position and the documents produced by a financial institution (Exhibit 6) and the non-disclosure of his interest in two properties. Then, when the substantial inflow and outflow of monies into the accounts were pointed out, he tried to disclaim knowledge and responsibility, by attributing the transfers to a family member who, he said, was the company accountant, when it was apparent that he was the General Manager and such decisions fell to him.
2. In fairness, in re-examination, he suggested that he did not have access to the accounts. But there was nothing in his affidavit on the security application, and nothing he said in cross-examination, to suggest that, at its highest, he did anything but turn a blind eye to the substantial activity occurring in the bank accounts of these companies, whether or not he controlled them. He was, at least, less than forthcoming in his disclosure of his capacity, through his own resources or through his capacity to exert control and influence in the companies, to meet any order for security and I agree with Counsel for Metropolitan that his affidavit evidence in opposition to the motion for security was misleading.
3. The impression that he was willing to say things if he thought they would assist C&V's case, irrespective of how implausible they may be, apparent in his approach to opposing the security application, was reinforced by his evidence on more substantive issues in the proceeding. It appeared to me, when confronted with an email of 5 July 2018 indicating the nature of Mr Cooney's direction, he suggested that there was a subsequent conversation to the email when, according to his first affidavit, there was only one. Then when challenged about his account of a conversation (par 135), he engaged in some advocacy, through providing a non-responsive answer, attributing to Mr Cooney an admission made to Metropolitan.
4. He also gave false evidence about the provenance of the administration spreadsheet attached to an invoice when it was proven that it was created months after the event.

Mr Cooney

1. Counsel for Metropolitan conceded that Mr Cooney was a less than fully satisfactory witness, with no significant recollection of detail or events. I agree with that concession. Mr Cooney struck me as being a nervous witness. His recollections as to detail were weak: making allowances for the period of nearly 4 years that had lapsed from the dates of the material events and, as Counsel for C&V emphasised, in his evidence there were many occasions when he said he did not know the answer. Moreover, I formed the view that with the effluxion of time, his evidence became affected by views and opinions formed which had become embedded and which were difficult to reconcile with contemporaneous correspondence (including correspondence emanating from Metropolitan), which caused me to doubt the reliability of some of his evidence. This led him, on several occasions, to give evidence which was plainly implausible.
2. I agree however, that although Mr Cooney was driven by the form of questioning in cross-examination to say that a statutory declaration that he had given in connection with the process of Metropolitan seeking security for payment from the head contractor was false on account of a belief that monies were payable to a sub-contractor (C&V), the contemporaneous documentation (not drawn to his attention in cross-examination) indicated that there was not only an honest, but also reasonable, basis for him to declare that no monies were payable.

Mr Faulder

1. Mr Faulder's evidence was brief. He had little detailed recollection of events and appeared, not altogether unreasonably, more preoccupied by a concern that he might give evidence which misstated dates and times, rather than the substance of events, including conversations and correspondence.
2. At least Mr Faulder's evidence struck me as being more disinterested than the other witnesses (even if Mr Cooney had left the employ of Metropolitan) and, for that reason, I considered that he was honest.
3. It may be seen that amongst the principal protagonists to this dispute, I have little confidence in any of the witnesses. I repose much more weight in the contemporaneous documentation, including correspondence and the objective probabilities. To the extent that the (affidavit and testimonial) evidence of these witnesses is probative, it is because of its consistency with the contemporaneous documentation and the objective probabilities. Similarly, where there is conflict between competing versions of conversations which are mutual, my preference will be made in accordance with my assessment of the objective probabilities and contemporaneous documents, on a case-by-case basis.

Pleading

1. At paragraph 6A of the Amended Statement of Claim, the plaintiff alleged that the contract entered into on or about 5 July 2018 was to fabricate 34 steel soldiers for Building C (on an hourly basis, in accordance with construction drawings to follow at a later time). Particulars were identified as follows: 1. emails form Erik Cooney of the defendant to Mario Pizzolato of the plaintiff dated 5 July 2018 at 1:31PM and 5:32PM ("Building C Written Instruction"). 2. the Building C Written Instruction was a counter-offer to the Offer, being for the quantity of 34 steel soldiers for Building C on an hourly rates basis, on the terms detailed in the Offer ("Building C Counter-offer") 3. the Building C Counter-offer was followed by an email from Erik Cooney of the defendant to Mario Pizzolato of the plaintiff dated 5 July 2018, confirming that the plaintiff was to proceed with the work of fabricating the 34 steel soldiers for Building C in accordance with the Drawings to be updated and the terms of the Building C Counter-offer. 4. the plaintiff then proceeded to fabricate the steel soldiers for Building C on the Project in accordance with the Drawings and the terms of the Building C Counter-offer. The plaintiff's performance of this work was an acceptance of the Building C Counter-offer. 5. on the morning of 6 July 2018, Terry Faulder of the defendant called Mario Pizzolato of the plaintiff on the telephone, and saif words to the following effect to Mr Pizzolato: "I'm organising materials to be delivered to your workshops this morning, I need you to fabricate the soldiers as per list sent to you last Saturday which is for building B. These works are urgent. Please fabricate these soldiers on an hourly rates basis as discussed with Erik." ("Building B Verbal Instruction"). 1. the building B Verbal Instruction was a counter-offer to the Offer being for the smaller quantity of 13 steel soldiers for Building B only on an hourly rates basis, on the terms detailed in the Offer ("Building B Counter-offer"), confirmed by email from Erik Cooney of the defendant to Mario Pizzolato of the plaintiff dated 17 July 2018 at 1:22PM.
2. Particular (ii) amounts to a legal characterisation of particular (i). Fairly construed the gist of the particularised allegation is that the agreement to fabricate (34) soldiers was ascertainable from Eric's emails on 5 July 2018 (at 1:31pm and 5:32pm (which C&V construed as an 'offer') and C&V's actual performance of the fabricating which performance, it was said was consistent with what was contained in those emails (which C&V construed as an 'acceptance').
3. However, in the way that the evidence unfolded, and without any pleading point taken by Metropolitan, C&V relied upon a version of a conversation that occurred on 5 July 2018 as well as conduct by C&V after 5 July 2018.
4. By its Amended Defence (paragraph 6A), Metropolitan denied C&V's allegation of a contract to fabricate 34 steel soldiers for Building C. It characterised Erik's email to Marion on 5 July 2018 at 1:31pm as a direction to C&V "to procure steel for Building C only".
5. However, it is fair to say that by the hearing, Metropolitan's position had evolved. By its Counsel's written outline of submissions supplied shortly before the hearing (MFI 5), it admitted that a contract was entered on 5 July 2018 (which, contrary to its submission, was not apparent from its Defence). Further, it posited a dichotomy: whether the contract was for C&V to procure steel only in preparation for Building C works or whether it was a contract for C&V to fabricate/weld 34 soldiers for Building C. On Metropolitan's view, no agreement to fabricate was ever reached at all.

Principles

1. In Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 the High Court observed (at [34]) that the "legal rights and obligations of the parties turn upon what their words and conduct would reasonably be understood to convey, not upon actual beliefs or intentions." As a general principle, conformably with the objective theory of contract, what matters is what reasonable persons in the positions of the parties would make of their contract; not their actual intentions, beliefs or expectations. This statement was directed to the construction of contracts, but it also has resonance to identification of terms of informal contracts. At the hearing, there was much time occupied in identifying the subjective beliefs of the witnesses as to what they intended.
2. It is not disputed that a contract in relation to Building C came into existence on 5 July 2018. It is also not disputed that the entirety of the contract was not reduced to a single written document; it was at least partly oral. What is disputed is the existence of a term.
3. In Masterton Homes Pty Ltd v Palm Assets (2009) 261 ALR 382 Campbell JA (Allsop P and Basten JA agreeing) said at [90] (citations omitted): "(4) Where a contract is partly written and partly oral, the terms of the contract are to be ascertained from the whole of the circumstances as a matter of fact ... Similarly, finding the terms of a wholly oral contract is a question of fact. (5) In determining what are the terms of a contract that is partly written and partly oral, surrounding circumstances may be used as an aid to finding what the terms of the contract are ….. If it is possible to make a finding about what were the words the parties said to each other, the meaning of those words is ascertained in the light of the surrounding circumstances …. If it is not possible to make a finding about the particular words that were used (as sometimes happens when a contract is partly written, partly oral and partly inferred from conduct) the surrounding circumstances can be looked at to find what in substance the parties agreed."
4. In relation to the contract C, the written part was manifested not only in the emails of 5 July 2018, but also, for reasons to be developed later on the section on quantum, also the quote of 4 July 2018, notwithstanding that this quote was directed to Building A. (The written part of the contract for Building B was similarly referable to the 4 July 2018 quote). But generally, there was a significant degree of informality to the parties' dealings in relation to both contracts.
5. It is not simply surrounding circumstances at the point of entry into a contract of this kind that may be used to identify contentious terms. As Gordon J observed in her Honour's concurrence in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89; [2022] HCA 1 at [177], where a contract is not wholly in writing, post-contractual conduct by the parties may also be relevant to establish the existence of a contractual term or terms. Thus, post-contractual conduct can amount to an admission that a contract contains a particular term [6] .
6. The Court is not now dealing with the task of construing an agreed term in the light of subsequent conduct. It is ascertaining whether a contested term in an informal contract existed. The subsequent conduct may be had regard to in a way that is designed to illuminate what was agreed as at the date when the agreement was entered - here 5 July 2018. It would be contrary to principle if an agreement which imposed obligations or rights upon parties on one day was, by reason of subsequent events, taken to have imposed upon them different rights or obligations on the next the next day. Care is needed, in the assessment of the relevance to post-contractual conduct to the identification of a term, not to supplant doctrines of variation and consideration.
7. Further, the common law recognises that contracts may be subject to contingent conditions the fulfilment of which depends on one of the party's decision or judgment, and, where that occurs, the existence of that party's state of mind must be proved [7] .

Analysis

1. For the reasons that follow, the parties presented, in substance, a binary choice: that there was either an agreement on 5 July for C&V to fabricate steel for Building C or there was not. I regard this choice, like Hamlet's "To be or not to be" soliloquy, as being too simplistic. For reasons shortly to be developed, I do not accept Metropolitan's pleaded position that the agreement was only to procure materials. Metropolitan never bargained with (and certainly did not pay) C&V, a steel fabricator who was fabricating steel for it on other buildings associated with the same development, simply and exclusively to procure steel for Building C. It was unreal, if not uncommercial, to suppose that the parties would enter into a new agreement for C&V to fabricate the steel once it had been procured. I find that there was an agreement on 5 July 2018 for C&V to procure and fabricate steel. However, the problem for C&V, stemming from the informality of the parties' dealings in apparently fluid conditions, was that, as at 5 July 2018, the parties did not agree as to when or how many steel soldiers for Building C C&V would fabricate. As to the timing, the parties agreed that this would be in the discretion of Metropolitan. I find that Metropolitan did not relinquish, or 'waive' its right to determine when the fabrication ought to occur. Viewed conceptually, Metropolitan's assent to commencement of fabrication might be regarded as a condition to C&V's performance of its obligation to fabricate and Metropolitan's corresponding obligation to pay [8] . As to the number of soldiers to fabricate, that would depend upon the drawings, which had not yet been finalised. The uncertainty about the number, as at 5 July 2018, was revealed when, in contrast to the pleaded number of soldiers (34), in the 'quote' C&V later submitted in late July, the number of soldiers for fabrication identified was 27.
2. First, the surrounding circumstances indicate that since May 2018, the parties had been dealing with each other in the expectation that C&V would supply and fabricate steel for Metropolitan in relation to all 3 buildings, A, B and C, as part of a single development. Quotes were rendered on 2 May 2018 (for all buildings) and 4 July 2018 (for Building A), respectively, for the supply and fabrication of soldiers. From late June 2018 in particular, Mario was aware that Metropolitan's priority, in terms of the fabrication of soldiers, was Building B. This much was indicated from Mario's account of his conversation with Terry on 29 June 2018. Further, on 4 July 2018, a quote had been supplied, for supply and fabrication of steel, not specifically for Building C, but for Building A. No thought had been given, by either party, as to the quantity of soldiers required, specifically for Building C, or when the fabrication would occur. But Terry, effectively as agent for Metropolitan, gave an express instruction to Mario as to when fabrication for the soldiers for Building B should commence. If not setting a course of dealing, the provision of a instruction as to timing by or on behalf of Metropolitan at least created a precedent for what might occur for Building C. Further, the materiality to Metropolitan as to its choosing the timing for fabrication is, to some limited extent, indicated by the uncertainty as to what was to occur with the installation. The quote of 4 July 2018 excluded installation as a service to be performed by C&V. Erik's emails of 5 July indicates that it was for Metropolitan to determine the timing for installation. It is likely that Metropolitan would desire some synchrony between the timing for fabrication and installation, for its budgeting purposes. It may fairly be said by C&V that the tightness in the timetable for installation indicated urgency and therefore an incentive for Metropolitan in instructing the commencement of fabrication, but on balance the significance of the timing of the installation is more weighted to the detailed involvement and general control exercised by Metropolitan consistent with an agreed discretion in Metropolitan to determine when steel was to be fabricated.
3. Secondly, Mario's evidence of what was discussed with Erik on 5 July 2018 is not an indicator of Metropolitan's assent to the disputed term. Viewed broadly, again on the basis of accepting that Mario's account was true, the topic of Building C was not the main focus of the discussion on 5 July 2018. It was an afterthought. Even if Mario's account of what he said to Erik at paragraph 135 of his first affidavit was accepted, it was not unambiguously clear from that account of the conversation when C&V should fabricate 34 soldiers for Building C. The main part of Mario's account of that conversation (which he initiated) indicated that he conveyed to Erik C&V's interest in getting the order for the Building A soldiers. That was a reference to the quote the preceding day, which was directed to Building A. At its highest, Mario had only mentioned in passing that Erik may wish to "think about" getting soldiers for Building C "underway too" as C&V required the latest drawings. At the pertinent point of the conversation, though, Mario did not expressly offer to Erik when C&V should 'process' steel for Building C and Erik did not indicate when that should occur.
4. Further, although Erik had no substantial recollection of what was said on 5 July 2018 when he gave evidence (thereby casting doubt also upon the extent of his recollection when he affirmed his affidavit on 15 December 2021), Mario accepted, when he gave evidence, that Building C was not required "at the moment" and that he agreed with the idea that, even if both parties expected or anticipated that C&V would fabricate the soldiers, it was only agreed that it would procure the materials.
5. Indeed, although Erik's account of the conversation in his affidavit needs to be treated with reservation, viewed, in retrospect, with the benefit of the other evidence, it had the ring of truth about it when Erik deposed that Mario had asked him what other soldiers were to be fabricated and Erik replied, "Building C", but that was not required "at the moment".
6. Thirdly, the contemporaneous emails on 5 July 2018 do not clearly indicate Metropolitan's agreement to C&V immediately fabricating 34 soldiers for Building C, but was consistent with its doing so only after Metropolitan directed it to. In Mario's email at 11:04am, there is an acknowledgement that Building C was "not required at the moment".
7. The parts of the conversation on 5 July that I have referred to, and Mario's email of 11:04am that day both support the propositions that there was an agreement that C&V would fabricate soldiers for Building C, but when and how many soldiers were matters for Metropolitan's unilateral determinations.
8. It is true that in the next breath, as it were, Mario was repeating the suggestion he advanced earlier that day that it would be "best" (for Metropolitan) to getting material for Building 'C' "processed" and I accept that Mario may, subjectively, have believed that processing was synonymous with the notion of 'fabrication'. However, that was only a suggestion. It could not be interpreted as confirmation that Erik had earlier agreed to the steel material that was being procured would be processed without further instruction or direction.
9. When Erik emailed to Mario at 1:31pm on 5 July 2018, the instruction "Proceed for building C as discussed", Erik was signalling acceptance of what had been offered in the earlier conversation that day; not acceptance of the suggestion, about 'processing', that Mario made in his subsequent email of 11:04am.
10. The statement in the email "Need this till latest 2.5 weeks" was certainly an indicator of urgency, but on its face did not unambiguously convey to C&V that it was entitled to commence fabricating 34 soldiers for Building C there and then. The statement also had to be viewed not only in the context of the priority that Mario knew Metropolitan accorded to fabricating soldiers for Buildings A and/or B, but also in the light of Erik's belief, to which he deposed, rightly or wrongly, that there was little difference in the time it would take to fabricate soldiers for Building C then the time taken to fabricate them for Buildings A and B. Of course, Mario disputed that this was so and, given his greater expertise, his view about how long it would actually take to fabricate the soldiers for each of the buildings would naturally be preferred to Erik. But the material point was what Erik believed as to how long fabrication would take and he was not shaken about the genuineness of such belief.
11. Fourthly, contrary to C&V's submission, the parties' post-contractual conduct does not unambiguously indicate agreement as C&V's immediate obligation to fabricate 34 soldiers and correlative right to receive payment for such fabrication.
12. On 9 July 2018, after receiving drawings from Sean Ryan, and the set out for Building C, Mario requested updated elevations so C&V "could finalise procurement" to this area. So, at this stage, C&V had not yet turned its collective mind to fabrication.
13. Then on 17 July 2018, in his email at 4:44pm, Mario disclosed to Erik that, in relation to Building C, all that C&V had done was "some initial procurement" but had not "started cutting steel". As it happens, for reasons developed elsewhere, there is no reliable objective and contemporaneous indication that C&V actually had fabricated soldiers specifically for Building C until 23 July 2018 if, by that expression, fabricating meant welding. At any rate, Mario's disclosure to Erik was consistent with the view that the agreed position of the parties on 5 July, in relation to Building C, was procurement first, with fabrication to occur later at a point of Metropolitan's choosing. Mario was clearly representing to Erik that, to the extent that it had been fabricating soldiers at all since 5 July, this was only those in relation to Building B. This was consistent with part of the context that I have described. His statement in this email "we will use rates as indicated in the quotation", read in the context of Erik's email earlier that day (1:22pm), was confirmation by Mario that the rates for fabrication of soldiers for Building B was in accordance with the 4 July 2018 quote. Mario was trying to dispel doubt as to the rates for Building B.
14. That partly explains why, at 4:59pm on 17 July 2018, in his email to Mario, Erik conveyed that he needed a quote for Building C before giving "the go ahead". The go ahead was the instruction for C&V to commence fabrication of soldiers for Building C. It is true that Mario took umbrage at this and his email the next day at 10:20am clearly conveyed his subjective belief that an instruction to fabricate had already been given back on 5 July. This was an assertion of belief which, as indicated, I find was erroneous.
15. As indicated in the section of the factual chronology concerning Building B, on 23 July, C&V sent its invoice for work on Building B to Metropolitan. It appeared to cause alarm in Metropolitan. This appears to at least partly explain why on 26 July, Erik requested and on 27 July, Mario supplied, an 'Offer' to fabricate (27) solders for Building C. Mario's covering email (8:00pm) characterised this as "updated costs", and also commented upon fabrication works for 8 of the soldiers which had been "well in production".
16. However, there is nothing to indicate any new written instruction from Erik to Mario in the period between 17 July 2018, at a point when Mario disclosed that no fabrication work had been performed and when Erik had responded (in his email at 4:59pm) by asking for a quote, and 26 July 2018, when the quote was supplied, in which Metropolitan conveyed, or confirmed its acceptance of C&V commencing fabrication works.
17. Metropolitan's Counsel submission that the sending of a 'quote' couched in the language of an 'Investment Offer' supported its position that there was no agreement to fabricate, at all, on 5 July 2018. I do not accept that submission. Although, by reason of its form, what Mario had submitted on 27 July may have amounted to an offer for a new agreement, what C&V was conveying, in substance, was an update of estimated costs for the fabrication of soldiers for Building C previously agreed to (subject to Metropolitan's rights which has been adverted to). Nevertheless, despite Mario's asserted reference to Erik having viewed 8 soldiers for Building C under construction, the sending of document does support Metropolitan to the extent that it proves that C&V understood and accepted that it would not receive Metropolitan's 'go ahead' to fabricate until Metropolitan was able to budget for it and this depended upon C&V providing a costs estimate. It sent the "updated costs" because it knew it needed Metropolitan's approval for the timing of the fabrication.
18. Erik was clearly alarmed at the quoted price for the soldiers for Building C, amounting to $8,148 per soldier. This was too much for Metropolitan's purposes; and I infer that it apprehended that, in conjunction with the invoice only recently received for C&V's work for Building B, it regarded the costs estimate as excessive. By his email on 27 July 2018 at 1:19pm Erik conveyed to Mario that Metropolitan had determined that C&V should not fabricate soldiers for Building C.
19. Metropolitan's conduct (Erik's email at 1:19pm) on 27 July 2018 effectively crystallised a dispute about the term, if that had not already occurred by 18 July 2018. Then, at 3:02pm, on 27 July 2018 Erik, even more explicitly, directed that C&V "not work" on any more soldiers for Building C. That did not amount to any admission by Metropolitan that it had given any previous 'go ahead' to fabricate soldiers for Building C. By 27 July, Mario had presented a fait accompli.
20. I do not accept that Terry Faulder effectively overrode this explicit direction, as C&V would have it. I accept Terry's evidence in his affidavit, despite Mario's disagreement with it, that from late June, he conveyed that it was 'Erik's call' on would perform any fabrication works; not Terry. I accept Terry's evidence that when Mario rang him on 27 July 2018, he was aware that Erik had instructed Mario by email to stop work on the Building C soldiers. Contrary to Mario's evidence in his second affidavit, this was not inconsistent with an email that Erik sent to Mario on 27 June 2018 at 2:59pm. That email was specifically directed to a technical matter about drawings the subject of Mario's email at 2:45pm the same day. It did not convey, or reasonably convey, any representation about the scope of Terry's general authority or authority to bypass any conflicting direction issued by Erik. Although there was a general vagueness in Terry's evidence, if there was one thing which he made clear: in the face of a clear instruction by Erik to the contrary, it was not up to him what Mario should do about commencing or continuing with the fabrication soldiers which appeared to have been going on since 23 July 2018.
21. Nor do I accept that on 1 August 2018, Erik was giving a 'nudge and a wink' - saying one thing and doing another - in acquiescing or implicitly encouraging C&V to continue with fabrication of the soldiers. Nothing had occurred which was shown to have alleviated the concerns about cost that Erik had evinced in his email at 1:19pm on 27 July 2018. I prefer Erik's account of what was said over Mario's account. To repeat, it was very implausible that Erik's attitude and position since 27 July had changed. I accept that Erik was still concerned with, and indeed had an argument about the costs for Building B; which reinforces his evidence that the quote for the fabrication of soldiers for Building C was intolerable, from his perspective. It is also implausible that he would have accepted, with equanimity, that his written instruction had been supplanted by Terry, his subordinate.
22. Ultimately, Metropolitan never gave any direction to C&V as to when it should fabricate soldiers for Building C before it finally indicated that it would never give such direction. Accordingly the plaintiff's claim for breach of the contract, in relation to Building C, based as it is upon a claimed payment for the fabrication and supply of material, fails.
23. If I am wrong in this conclusion, then the position on quantum of damages will broadly coincide with my conclusions on the damages claim in relation to the contract for Building B, to which I now turn adjusted to take into account the payment Metropolitan made under the legislation referred to.

the claim arising from the contract for building b

1. Metropolitan does not dispute that the work - the fabrication of the soldiers - was performed for this Building. It disputes its liability for the items charged in the invoice.
2. On 23 July 2018, Mario emailed Erik a payment claim for Building B in the sum of $105,964.11 (incl GST).
3. A copy of the invoice for Building B is now reproduced.
4. Exhibited to Mario's first affidavit was a bundle of timesheets for the period 2 July to 16 July 2018. Exhibited to Mario's second affidavit were invoices for 'consumables' incurred.
5. This dispute about what items C&V was entitled to charge Metropolitan was common to both contracts. In the argument that ensued at the hearing, Counsel for Metropolitan deployed the contract for Building B as substantially representative of the debate in connection with the contract for Building C. So shall I.

The plaintiff's submissions

1. The plaintiff's Counsel started his closing oral submissions by urging that the Court should accept Mario's evidence (first affidavit, par 156) that on 6 July 2018, Terry had given him an instruction to fabricate soldiers for Building B on an hourly rates basis, as (he, apparently Terry) had discussed with Mario, and there was reference made to a spreadsheet in the conversation. Mario's email to Terry of 5 July 2018 (6:12pm) referred to a discussion about a spreadsheet.
2. Counsel noted that drawings were being periodically updated. On 14 July 2018, Erik emailed updated drawings in relation to buildings A and B and not long after on the same day, Mario warned Erik that this would give rise to additional costs, advising him in the process that Metropolitan might submit an extension of time. Counsel argued that Erik could not reasonably have proceeded on any expectation that the ultimate charges would be referable to a rule of thumb belief of $4,660 per soldier, apparent from the 4 July 218 quotation. Counsel characterised the contract as permitting 'do and charge' variations. This did not mean that C&V was permitted to charge for work it did not perform.
3. C&V's Counsel submitted that further expense was inevitable once there was a stipulation for the size of a flat bar for the soldiers. That only came through on 17 July 2018. When Erik, later on that day, expressed (by his 1:22pm email) his anticipation that rates in relation to Building B (it had been erroneously referred to in the email as Building A) were in C&V's quotation, the plaintiff's Counsel argued, again, that the rate could not be the 'per soldier' basis. Erik's email had attached to it the quote and this had provided a 'floor' price. Later, still, on 17 July 2018 (at 4:44pm), Mario confirmed that C&V would use the rates as indicated in the quotation, which could only have been a reference to the hourly rates. Finally, on 17 July, Erik emailed Mario indicating Metropolitan's assent to "do rates for build B".
4. C&V's Counsel argued that Erik's belief that there was a fixed price by referable to a 'per soldier' basis, modified only, perhaps, by an entitlement in C&V to charge hourly rates for extra work to implement the flat bar instruction, was misconceived. The hourly rate applied across the board and not only in relation to the implementation of the flat bar.
5. C&V's Counsel then argued that the Court should accept Mario's account of the events surrounding delivery of the soldiers for Building B when Mario, being suspicious about Erik's intentions, initially only provided for collection of 8 of the 9 soldiers that had been fabricated. On 23 July 2018, C&V's invoice was sent to Metropolitan, but it had not been paid by the time the 8 soldiers were collected. Mario extracted a promise from Erik that the invoice would be paid upon delivery of the ninth soldier (Pizzolato, first affidavit, par 263).
6. C&V submitted that its invoice complied with contract requirements. The amounts claimed were supported by contemporaneous timesheets recording the workshop labour and consumables. It was unnecessary for the Court to engage in analysis to prove the reasonableness of what had been charged for.

The defendant's submissions

1. By its Counsel's written outline of submissions (MFI 5), Metropolitan accepted that C&V had been engaged by contract to supply and fabricate 9 soldiers for the Building B site and that it was to do so "on an hourly rates" basis (paragraph 8(c)-(d)).
2. What Metropolitan disputed was C&V's charge for labour (the component sum being $68,391.58) and the other charges in C&V's invoice. In this section of these reasons, I will address only Metropolitan's challenge to the items in the invoice other than the labour rates. Because of the significance of the issue, and its separate nature, the labour rates will be treated separately.
3. Metropolitan submits that proceeding on the basis most favourable to C&V, namely Mr Faulder's instruction on 6 July 2018 to fabricate on an hourly rates basis, there was nothing in that instruction, or any other verbal or written instruction to justify charges for:

• Workshop 'useage' costs ($20,859.43);
• Consumables ($3,800)
• Administration ($3,280)
• GST ($9,633.10)

1. To the extent that C&V relied upon Erik's email of 17 July 2018 at 1:22pm, which cross-referred to the quote supplied on 4 July 2018, that email post-dated the date (6 July 2018) which C&V alleged, in its pleading, was the date that the contract came into existence. Further, or alternatively, there was nothing in the covering email, which attached the quote of 4 July 2018 (with the attached terms and conditions) which generated an entitlement to the first three of these charges. As to the last, GST is not recoverable in damages awards [9] .

Consideration

1. Consistent with Metropolitan's concessions, I find that Mario received a verbal instruction on 6 July 2018 to fabricate 9 soldiers for this building and that the work was to be performed on an hourly rates basis. The need for urgent fabrication was manifest. Mario and Terry had been in close contact since late June. I accept Mario's evidence that on 29 June 2018, Terry asked him to fabricate 10 to 15 soldiers for Building B and that, on 30 June 2018, Mario had sent Terry a spreadsheet.
2. It was in this context that C&V sent the quote on 4 July 2018. Mario emailed it to Terry, but it was copied to Erik. Attached to the quote was C&V's standard terms and conditions. The quote was specifically directed to Building A - not Building B. But Metropolitan was well aware that such work as C&V was performing was being done in accordance with the standard terms and conditions of that quote. Thus, on 17 July 2018, Erik indicated (in his email at 1:22pm) to Mario his expectation that the charges for the hourly rates would be in accordance with C&V's quotation. As at that date, the latest, or current, quotation Metropolitan had received from C&V was the one from 4 July 2018. Later, after the soldiers had been fabricated and Erik and Mario were arguing about the cost of the fabrication for Building B, on 1 August (in his email at 5:03pm), Erik was again complaining that C&V's invoice did not reflect the rates provided in the 4 July quote. The labour rates were located within the standard terms and conditions. Metropolitan's post-contractual conduct was consistent with its agreement that price was calculated by reference to the rates identified in the standard terms and conditions supplied on 4 July, even if there was no specific written quote for that job.
3. That being so, the question of whether the charges claimed by C&V in its invoice were proper falls to be resolved by what was contained in the standard terms and conditions.
4. Addressing now the disputed charges (other than labour rates, which will be addressed later in these reasons) in the invoice, the standard terms and conditions contemplated that when "works were undertaken within C&V's workshop", there was an entitlement to claim, separate to the labour rates. As to what that expression actually means, in practical terms and whether or not the charge for this component ($20,859.43) was actually justified are matters which (on the assumption that the parties continue to disagree about it) should be considered on referral.
5. As to 'consumables', this expression was again used in the standard terms and conditions. In my view this is also something to which C&V was entitled to. Again, what the expression practically encompassed and whether the amount claimed was justified are matters which, in the absence of agreement, should be considered on referral.
6. As to the item for 'Administration', there is no reference to that concept in the standard terms and conditions. Indeed, to the contrary, there is a suggestion that the labour rates encompass such things as "preparation of variations, correspondence and anything else outside the scope of works". Accordingly, any additional item for Administration appear to amount to 'double counting'. I would not allow that amount.
7. As to the component for GST, having read the Court of Appeal's decision in Gagner Pty Ltd t/as Indochine Café v Canturi Corp Pty Ltd [2009] NSWCA 413 at [134]-[159], I am inclined to agree with Metropolitan's argument that the award of damages for breach of contract, the GST component for a supply on a tax invoice is not recoverable. Although that case concerned the recoverability of GST in an action for damages in tort, I do not see any material distinction.
8. In summary, subject to my consideration of labour rates, to be undertaken momentarily, I would recognise, as proper items for charging, the workshop useage costs and consumables. The practical content or operation of those items and quantum of those respective items are however, matters for a referee.

The pleadings

1. At paragraph 7 of the Amended Statement of Claim, C&V alleged, relevantly, that the contract for Building B entered into (on or about 6 July 2018) was "on an hourly rates basis, in accordance with the drawings". It was common ground at the hearing that what 'the drawings' were in connection with this contract evolved.
2. The first particular (though it was enumerated as "(v)") recited the substance of the telephone call between Terry Faulder and Mario Pizzolato on 6 July 2018 in which the latter, after requesting the fabrication of works, said "Please fabricate these soldiers on an hourly rates basis as discussed with Erik".
3. The second particular (enumerated as "(vi)"), treated what Terry had told Mario (as the 'Building B Verbal Instruction') as a counter-offer "on the terms as detailed in the Offer, confirmed by email from Erik Cooney … to Mario Pizzolato … dated 17 July 2018 at 1:22pm". To recapitulate, that email was expressed as follows: "In regards to 10 soldiers on build (B), I anticipate it is going to be your rate in regards to the guys over 1.5 weeks? The rates are in your quotation".
4. By its Amended Defence (paragraph 7) Metropolitan relevantly did not admit the term for price as alleged by C&V. Indeed, its position was that no express agreement had been reached on price, or the hours to be performed. In lieu of any express agreement on price, it pleaded: 1. An implied term in fact (to give the contract efficacy) or in law that any hours worked and charges billed would be reasonably and properly incurred and billed; 2. An implied term that the parties would undertake their obligations under the contract reasonably and in good faith, with such obligations encompassing an obligation not to incur and bill for excessive hours, at excessive rates and for excessive charges.
5. At the hearing, Metropolitan admitted that it was obliged to pay on an hourly rates basis. Metropolitan did not plead any contention that the absence of any express reference to agreed labour rates meant that the contract was uncertain in either case. As its Counsel acknowledged in his closing address, such contention, aside from its not being pleaded, could not sensibly be raised, certainly connection with the contract for Building B, where Metropolitan ultimately accepted delivery of the soldiers. Though the position as to acceptance of soldiers for Building B was different in that respect to the claim in relation to Building C, as indicated, Metropolitan did not distinguish the issue about labour rates in either contract.

The plaintiff's contentions

1. The plaintiff's Counsel argued that both contracts contained a term that the works would be charged on an hourly rate, being that which was set out in C&V's terms and conditions, attached to C&V's quote of 4 July 2018 which, although initially directed in relation to Building A, had been adopted in the relevant sense for the contracts for Buildings B and C.
2. Counsel emphasised the covering email attaching that quote indicated that C&V would get the PFCs cut to size, notched, weld prepped and holed via an external company. Mario had explained to Terry (on 29 June 2018) that the use of that external company would result (first affidavit par 118) in various efficiencies. Even when Erik complained, on 1 August 2018, about the Building B invoice, he did not do so on the basis of complaint that the invoice had been charged in accordance with hourly rates.
3. Counsel submitted the Court should reject Mr Cooney's evidence of his belief that the charging for work would occur on a unit price basis, being $4,660 per soldier, derived from the quotation, and not an hourly rate. There was no agreement that the rates charged would be 'reasonable'. That was a recipe for disputation down the line. Instead, C&V was entitled to 'do and charge' in accordance with the labour rates that consistently were indicated in the multiple quotes supplied to Metropolitan, which, it was said, Metropolitan adopted. Mr Pizzolato's evidence (paragraph 126 of his first affidavit) was unchallenged.
4. In terms of the suggested reasonableness of cost, the plaintiff's Counsel argued that there was no evidence of the cost of some alternative steel fabricator fabricating (as distinct from supplying) the steel material.

The defendant's contentions

1. Counsel for Metropolitan acknowledged that the parties had in contemplation the sort of lump sum prices previously (i.e., on 4 July 2018) quoted. The earlier quote, in terms of unit price for each soldier, was well short of the unit price ($10,000) ultimately claimed by C&V in its invoice. The problem was that no price for labour was ever agreed.
2. Counsel submitted that the Court could not accept Mario's evidence about what Terry had said about rates as being applicable to Building B (or C). Counsel submitted that C&V was picking and choosing between its deployment of the quote dated 4 July 2018 for its purposes. The quote was directed to Building A, which was of very different design to Building B (and, presumably Building C). The quote was made in connection with a 'lump sum' price and expressly contemplated both the supply of steel and its fabrication. In short, the pricing mechanism for the 4 July 2018 quote was inapposite for the contracts for Building B (and C).
3. Further, with reference to one of the particulars to the allegation, C&V could not rely upon any 'confirmation' made on 17 July 2018. C&V's argument about an agreed rate, as of 6 July 2018, was either good or it was not. At any rate, the terms of the email on 17 July 2018 provided no 'confirmation' at all on the face of the email, which spoke only in anticipatory terms. If, however, C&V was really contending that the agreement as to rates occurred on 17 July 2018, then C&V was not entitled to charge, as it had claimed in the Invoice for Building B, for all the work contained in the spreadsheet to that invoice, from 2 July to 16 July 2018 (incl). The upshot was that there was no express agreement as to price.
4. Consistent with its pleaded position, however, Metropolitan acknowledged that the Court could imply a term that the price was to be reasonable [10] . This, Metropolitan's Counsel argued, was essentially a market price, which had been canvassed by both parties' quantity surveyors.
5. As to the aspect of time, in terms of work performed, Metropolitan referred to a first instance judgment of Debelle J in OneSteel Manufacturing Pty Ltd v United King KG Pty Ltd (2006) 94 SASR 376 ("OneSteel") where, at [36]-[40], with reference to case authority and text - book commentary, his Honour found, as an implied term of fact, an obligation that costs must be reasonably incurred by the contractor; which imports notions of reasonable economy in the performance of the work.

Consideration

1. In the last section, (especially paragraph 179) when dealing with other contested charges, I effectively foreshadowed my substantial agreement with C&V's submission that the labour rates were in accordance with C&V's standard terms and conditions. Those labour rates never altered from May 2018 through to late July 2018, which broad period encompassed the entirety of C&V's completion of the works for Building B. Indeed, they applied across each of the buildings (A) and (B) in respect to which C&V was engaged to perform work.
2. Contrary to Metropolitan's submission, Erik's email of 17 July 2018 was not a new development potentially giving rise to a requirement for a variation nor as statement of anticipation of applicable rates to Building B. The only arguably anticipatory aspect about that email was C&V's rates in relation to Building C. Metropolitan indicated that it expected C&V's rates for Building B to accord with the quote issued on 4 July 2018. This was post-contractual conduct consistent with an agreement as to what were the labour rates on 6 July 2018.
3. It mattered not that, as at the date that this contract was entered, the quote was for a different building. In the urgency of the moment, C&V had to have an assurance as to the basis upon which it charged for the labour. It submitted, two days before, a quote which contained labour rates which did not vary according to the type of building or design for the soldiers. I agree with C&V's submission that the rates of labour were in accordance with the terms and conditions attached to that quote.
4. I also agree with C&V that the scope of the contractual relations were such that conceivably C&V might charge more than that for which Metropolitan had budgeted for on 6 July 2018. That was inherent in a situation where, as here, the drawings were not settled as at the date the contract was entered into. The post-contractual conduct clearly indicated that the parties commonly intended that for every adjustment caused by a new drawing or other requirement, C&V would do what it took to fabricate in accordance with the drawings and other requirements supplied to it. These conclusions have dealt with the aspect of the price of labour.
5. Metropolitan also takes issue with the time spent. This was no lump sum contract, but a contract upon which C&V could charge by the hour. Nevertheless, there is nothing within the standard terms and conditions which would militate against the implication of a term, for business efficacy, as articulated in the authority of OneSteel, that C&V was only entitled to charge for costs reasonably incurred; and was not entitled to charge more than would represent its discharge of reasonable competence and economy in carrying out the work. To that extent, I agree with Metropolitan's submission that it did not agree to a blank cheque.
6. Accordingly, on the item in the invoice that dealt with labour costs, although the price of labour should reflect the rates identified in the terms and conditions, the time incurred is limited in the fashion that I have described.

Interest

1. C&V claimed interest on the unpaid invoices arising from the contracts for Buildings B and C, respectively, on the contractual rate. The total combined amount claimed for interest ($36,888.06) was based on interest calculated in accordance with cl 7(2)(ii) of C&V's terms and conditions, to 13 May 2021 at the NAB overdraft rate (7.12% p.a). Metropolitan opposes interest being awarded under the contract rate, but concedes that interest would be recoverable under s 100 of the Civil Procedure Act 2005 (NSW).
2. There were no submissions by the parties during the hearing itself about interest. Since the matter will have to come back before the Court on damages, if the parties remain in dispute about interest in relation to the claim for breach of contract for Building B, they can agitate that at a later point.

Fees

1. C&V also claims amounts for filing fees ($1,406), service fees ($61) and preparation fees incurred in preparing the statement of claim ($786). As with interest, this was not something addressed by the parties during the hearing.

SUMMARY & ORDERS

1. In summary, I have found that: 1. the plaintiff's claim for breach of contract in respect to Building C fails; 2. the plaintiff's claim for breach of contract in respect to Building B succeeds, with the quantum to be as agreed between the parties or the subject of a referral, in accordance with directions I am about to make.
2. The Court makes the following directions: 1. the parties should confer and within 7 days, the plaintiff is to bring in short minutes to deal with the issues of referral, interest, fees and costs if no agreement is reached, with supporting submissions (not exceeding 5 pages; excluding relevant attachments); 2. the defendant is to supply short minutes and submissions in response (not exceeding 5 pages; excluding relevant attachments) in opposition to the plaintiff's documents within a further 3 business days; 3. remaining disputes will be determined on the papers absent further contrary indication to the parties.

Endnotes

1. Metropolitan's Counsel referred to a Variation Notice dated 9 April 2018 in connection with a different project involving the parties as a contrast to an offer of a new contract
2. Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89; [2022] HCA 1 per Gordon J at [177]
3. Amended Defence, par 6A(b)
4. Amended Statement of Claim, par 6A
5. A document was supplied, as an aide-memoire, containing extensive criticisms which, subsequent to the hearing, I have marked as MFI 6.
6. J D Heydon, Heydon on Contract: The General Part (Lawbook Co 2019) [9.1630], p 412
7. An example of such condition is the decision in Meehan v Jones (1982) 149 CLR 571, cited in N C Seddon & R A Bigwood, Cheshire and Fifoot Law of Contract (11th Australian ed) [20.07], p 1082
8. Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 552.
9. Gagner Pty Ltd t/as Indochine Café v Canturi Corp Pty Ltd [2009] NSWCA 413
10. Citing commentary by Lewison & Hughes, The Interpretation of Contracts in Australia (Lawbook Co, 2012) [6.16] 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: 12 May 2022