Cable (1956) Ltd v Hutcherson Bros Pty Ltd

Cable (1956) Ltd v Hutcherson Bros Pty Ltd - [1969] HCA 37 - HCA 1969 case summary — Zoe

[33]

The principal matter to be resolved is the effect upon the promise of the respondent of the incorporation in the contract of the terms of the specification. The competing views are that of the appellant that the promise of the respondent was to produce a result, namely, storage bins of given holding capacity which with the ancillary plant would operate and carry out the appellant's scheme or project, that is to say, receive, hold and discharge the volume of the stated mineral to the specified extent at the specified rate: and that of the respondent, that the promise was to do only the work described in the agreed drawings, the appellant being itself satisfied upon its own engineer's advice that work so done would operate and carry out the scheme or project it proposed. In my opinion, the choice between the contentions can be quite securely made without reference to decided cases or indeed any attempt to find an analogy in any of them or in the facts of any of them. No doubt at times the question whether the promise of a builder is to produce a result or merely to do specific work is difficult to answer. In reaching a conclusion, the fact that it can be seen that reliance is placed upon the skill and judgment of the builder may on occasions be an important if not a decisive consideration. Here, there is no doubt that the respondent knew the result which the appellant sought to achieve; and it might well be that at the time of tender an area of the design of the installation was left to the tenderer. Indeed, the respondent tendered a price to include "design" (see the letter of tender) though oddly enough the word "design" is not found in the basis of tender clause in the specification. The respondent did in fact propose the design of the foundation for the storage bins and prepared the first drawings for them. But, by the time the agreement was made the "design" of the foundations had been agreed, after participation of the appellant's consulting engineer in the determination of its form. That agreed design, extrapolated in a drawing, was expressed to be part of the contract works (see reference to drawing No. 155/8 in the articles of agreement). But the appellant says that notwithstanding that fact so much may be drawn from the inclusion of the specification in the articles of agreement, that the responsibility for the suitability of the design to the appellant's mutually known purpose remained with the respondent. It is therefore necessary and important to observe what is brought out of the specifications prepared for tendering into the operation of the articles of agreement.

[34]

The description of the "works" in the portion of the articles of agreement which I set out earlier in these reasons includes a reference to the specifications. The respondent's promise in cl. 1 of the articles is to do the work shown in the drawings and described by or referred to in the specification and conditions. The conditions refer to the works shown in the drawings and described in the specification: but the contract conditions are paramount (cl. 1 (c)). However, in any case the specification is only incorporated in so far as it describes the "works", presumably, the works which are to be found in or which form part of the works found in the drawings. It seems to me that the part of the specification most relied upon by the appellant, namely the basis of tender, does not perform or relate to the function of describing the works. In terms it relates only to the footing on which the tenderer should make his bid. Whether or not the building owner will exact a promise to make good that footing is quite another matter, particularly where as here, it is throughout intended that the mutual rights and obligations of the parties shall be exclusively expressed in a formal manner. So far from the basis of tender clause in the specification being a description of work, it seems to me to have become at the time of the execution of the contract no more than an historical step in a negotiation which preceded the making of the agreement. It is not reflected in the terms of that agreement either expressly or by implication. But out of deference to the submissions which were pressed upon us, let me say that, even if one moved the whole of the clause "Basis of tender" into the operative part of the articles of agreement, the result would, in my opinion, be the same. Nothing can be made, in my opinion, of the use of the word "turnkey". It is not a term of art and, even if it could be taken to mean that the works must be handed over as a going concern, I would not have thought that in the context of these articles the word or expression meant that the builder warranted the efficacy of the works he had agreed to erect. The same reasoning would, in my opinion, deny that the acceptance of all responsibility for supply and erection and efficient operation of the project - itself a very inapt word in any case in the circumstances - involved any undertaking as to the suitability of the agreed design. Lastly, the paramountcy of the contract conditions, which do describe the works agreed to be done, would prevent the clause of the specification having the submitted effect, if in truth it could be construed as imposing the obligations the appellant seeks to draw from it.

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Before

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Judgment (38 paragraphs)

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