District Court of WA|2010-03-31

WILLIAMS & HASSALL PTY LTD -v- AUSTPEAK AUSTRALIA PTY LTD [2010] WADC 41 (31 March 2010)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : WILLIAMS & HASSALL PTY LTD -v- AUSTPEAK AUSTRALIA PTY LTD [2010] WADC 41

BETWEEN : WILLIAMS & HASSALL PTY LTD (ACN 008 679 392)

Appeal against dismissal of summary judgment application

Defendant (Respondent) : Robertson Hayles Lawyers Pty Ltd

Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221

1 SWEENEY DCJ: In 2006, Caratti Holding Co Pty Ltd owned land in Redcliffe. On 1 March 2006, Austpeak Australia Pty Ltd entered into a contract with Caratti Holding to build "the Coventry warehouse", an office and distribution warehouse, on that land in accordance with certain tender drawings and specifications agreed between the parties. Caratti Holding had engaged engineers Cardno Saraceni Pty Ltd to prepare the structural design drawings. The superintendent for the works engaged by Caratti Holding was Meyer Shircore & Associates. Both Saraceni and Meyer Shircore are listed under the heading "Consultants engaged by the Principal or the Superintendent" in the contract. Koltasz Smith was Carratti Holding's project manager.

2 In turn, on 3 March 2006, Austpeak subcontracted Williams & Hassall Pty Ltd, trading as Mills & Hassall, to supply, fabricate and erect the steelworks for the project in accordance with the same drawings. These works included building and erecting an awning. Mills & Hassall in turn subcontracted engineers Carnegie & Associates Pty Ltd as its shop detailer.

3 A problem arose with the awning. It appears from the evidence that Carnegie first raised the issue, asserting that, if constructed in accordance with Saraceni's original drawings, the tie to the canopy would foul the purlins. The purlins themselves could not, apparently, be moved to solve the problem, being already at their maximum spacing.

4 According to Mills & Hassall's statement of claim against Austpeak, Mr Tobias, a director of Austpeak, instructed Carnegie to refer the difficulty to Saraceni. Mr Cordes of Carnegie faxed "Technical Query No 50" to Saraceni on 22 April 2006 raising the problem, offering certain solutions and seeking advice. In the follow-up "Technical Query No 55" of 27 April 2006 Mr Cordes attached a drawing and asked Saraceni to confirm the new method of construction. It matters not for the purpose of this appeal whether Carnegie produced that drawing alone, or in response to suggestions from Saraceni. Mr Tomsett of Saraceni, one of the structural engineers involved in the project, responded by sending the facsimile back with the notation "Looks good". On their face, both facsimiles were copied to Mills & Hassall. The awning was subsequently constructed by Mills & Hassall. It appears uncontroversial that it was constructed in accordance with the new design. On 19 October 2006, it collapsed after some sheeting material was placed on it.

5 Soon after the collapse of the awning, Carratti Holding's superintendent instructed Austpeak to remove it. Austpeak did so, via its subcontractor Mills & Hassall, which claims it did so in return for an agreed figure from Austpeak of $48,400. Mills & Hassall also replaced the awning. It claims it did so for a further agreed figure of $88,132. Austpeak did not pay those sums to Mills & Hassall, which then instituted these proceedings against it, claiming those sums and various other amounts under its contract with Austpeak.

6 Austpeak then issued third party notices against Caratti Holding and Saraceni.

7 In October 2009, Mills & Hassall's claim against Austpeak was settled. Austpeak had by then discontinued its third party proceedings against Saraceni.

8 All that remains, then, is Austpeak's third party proceedings against Caratti Holding. Caratti Holding unsuccessfully applied for summary judgment against Austpeak in July 2008. In June 2009, further materials were discovered by Austpeak (at Carratti Holding's request) which prompted a second application for summary judgment. Summary judgment was again refused. This is now an appeal from that refusal.

9 Being an appeal from a Deputy Registrar of this Court, the matter is a rehearing.

10 The Court may grant summary judgment to a defendant "if satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily or without pleadings": O 16 r 1 Rules of the Supreme Court 1971. The power to order summary judgment must be exercised with great care: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87 at 99. Unless there is no real question to be tried, then the plaintiff should be allowed to present its case at trial.

11 The plaintiff ought not to be denied a hearing at trial unless it clearly has no case. Barwick CJ summarised the position in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, at 129:

"The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'.

At times the test has been put as high as saying that the case must be so plain and obvious that the Court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'; 'so to speak apparent at a glance'."

12 The onus is upon the defendant to prove there is no serious question to be tried.

13 Austpeak disputed Mills & Hassall's claim, but claimed to be entitled to contribution from Caratti Holding and Saraceni in the event that it was held liable to the plaintiff in respect of the removal and replacement of the awning.

14 Austpeak's case is that, by its subcontractor, it constructed the canopy in accordance with the contract and the structural steel design drawings prepared by Saraceni, which canopy then collapsed. Its case is that, following that collapse, the superintendent and the project manager, both engaged by Carratti Holding, instructed Austpeak to remove the canopy and construct a replacement as soon as possible so as to avoid a claim for liquidated damages for delay. Again, by its subcontractor, it did so.

15 Austpeak now claims from Caratti Holding a "reasonable remuneration" for carrying out Caratti Holding's express instruction given via the superintendent and project manager. Alternatively, it claims it is entitled to a reasonable remuneration on the basis that the removal and replacement of the canopy conferred a benefit on Caratti Holding in circumstances where it would be unconscionable for it to keep the benefit of the service without paying for it. The claim then is for payment on a quantum meruit basis, or restitution on the basis of unjust enrichment on the part of Carratti Holding.

16 Pursuant to cl 30.3 of the contract between Caratti Holding and Austpeak:

If the Superintendent discovers material or work provided by the Contractor which is not in accordance with the Contract, the Superintendent may direct the Contractor to -

The Superintendent may direct the times within which the Contractor must commence and complete the removal, demolition, replacement or correction.

If the Contractor fails to comply with a direction issued by the Superintendent pursuant to Clause 30.3 within the time specified by the Superintendent in the direction and provided the Superintendent has given the Contractor notice in writing that after the expiry of 7 days from the date on which the Contractor receives the notice the Principal intends to have the work carried out by other persons, the Principal may have the work of removal, demolition, replacement or correction carried out by other persons and the cost incurred by the Principal in having the work so carried out shall be a debt due from the Contractor to the Principal."

17 Caratti Holding disputes the proposition that it and Austpeak entered into any separate agreement for Austpeak to remove the collapsed canopy and replace it as soon as possible. It disputes that Austpeak is entitled to additional payment and asserts that any instruction by its superintendent to Austpeak to remove and replace the collapsed awning was simply made pursuant to cl 30.3 of the contract by which Austpeak was instructed to remove work not done in accordance with the contract.

18 This argument begs the question however of whether the defective canopy was work not done in accordance with the contract. As I understand the evidence, construction of the canopy in accordance with the original structural drawings would have resulted in defective work. Mr Chris Tobias of Austpeak deposes that the awning which subsequently collapsed was constructed in accordance with the design specified by Saraceni, that is to say, with the new design.

19 Caratti Holding's case is that the new design was not approved in accordance with the contract. Mr Caratti of Caratti Holding has deposed that any modifications to the works needed to be approved by Caratti Holding or the superintendent acting on its behalf. He asserts that Austpeak consulted Saraceni on modifying the fixing detail of the awning, however subsequently carried out such modification without the approval of Caratti Holding or its superintendent.

20 Pursuant to cl 7.2 of the contract between Caratti Holding and Austpeak, Austpeak had to submit all its shop drawer's drawings to the superintendent, for examination, after first satisfying itself that these drawings complied with the contract.

The name of the proposed Shop Drawing Company is to be submitted to the Superintendent for approval prior to work commencing.

The Contractor shall submit to the Superintendent for examination, comprehensive shop and construction drawings with notes and/or specification, (herein after in the Clause called 'the documents' which are necessary for the proper carrying out of the works).

Before submitting these documents to the Superintendent, the Contractor shall satisfy himself that the work covered by these documents complies with the requirements of the contract.

The Contractor shall not manufacture, stockpile, supply or assemble anything affected by these documents until he has received approval from the Superintendent and Engineer.

The Superintendent and Engineer will examine the documents, and examination of these documents indicates the opinion that the Contractor's interpretation of the contract requirements is generally satisfactory. Such examination shall not relieve the Contractor of his contractual obligations nor of his responsibility for ensuring that the works are complete, accurate and correct.

Where amendment to the drawings are necessary, the amendments shall be promptly made, the three copies shall again be submitted by the Contractor to the Superintendent."

22 Mr Caratti asserts that the new drawings given the approval "looks good" by Mr Tomsett of Saraceni were not submitted to the superintendent for approval. That assertion is not contested in the material before me.

23 They were however submitted to the engineer, who, in accordance with cl 7.2, would be one of the two consultants to examine the drawings. Informal approval was given by way of the notation "looks good," but Mr Tomsett, formerly of Saraceni, has deposed that he would have expected to the receive a follow up shop drawing with dimensions on it as the sketch did not have dimensions, welding or bolted connections confirmed.

"From the documents discovered by the parties it does not appear that the Shop drawings prepared by the Plaintiff (Mills & Hassall) were approved by Saraceni prior to the erection of the awning."

25 It appears then that Austpeak accepts that the informal approval to the new design does not amount to approval from the engineer and certainly no approval was given by the superintendent. This raises an issue of whether Austpeak's claim, which is a claim based in restitution, should be entirely defeated on the basis of a failure to comply with cl 7.2 to the letter.

26 A significant aspect of Carratti Holding's argument is the assertion, made in Mr Caratti's affidavit sworn 4 July 2008, that Austpeak engaged Saraceni for design and engineering advice for the works. In other words, the argument is that any approval received from the engineer was nothing more that Austpeak seeking advice from its own consultant and that Saraceni at that time had no contractual relationship with Carrati Holding.

"STRUCTURAL CERTIFICATION

The contractor shall engage Saraceni Engineering Group Pty Ltd consulting engineers to carry out sufficient inspections during the course of construction in order to certify that the building has been constructed in accordance with the structural design. Provide an original copy of the certificate prior to practical completion."

28 Mr Chris Tobias of Austpeak deposes that at no stage did Austpeak contract Saraceni to prepare structural design drawings or to provide design or engineering advice. He asserts that, pursuant to cl 2.10, Austpeak was required to engage Saraceni to carry out inspections only and to certify that the building was constructed in accordance with the structural design and that Austpeak appointed Saraceni solely for that purpose in June 2006. As I understand the parties' submissions, this was largely the basis for the dismissal of the first application for summary judgment in September 2008.

29 Following that dismissal, requests were made by Carratti Holding for further discovery, resulting in further documents being discovered by Austpeak. An email from Saraceni to Austpeak dated 12 June 2006, headed "RE: Certification and accounts", reads:

"We still have not been engaged formally in writing by Austpek to look after the contract administration for the Conventries project. I sent a fax to Chris dated the 27th March 2007 out lining our charge rate but still have not received any formal confirmation that we are to look after the CA work. Contract administration will/should include but not be limited to the following:

(a) Site meetings if we are required to attend;

(b) Structural queries;

(c) Periodic site inspection (see below);

(d) Reviewing shop drawings.

This will be judged as a time charge basis at an hourly rate of $130/hr.

Periodic Site Inspection

(1) Footings and slab - this has already been done.

(2) A number of precast panels - At least one site inspection for standard panel, site supervisor to provide photo's of all panel reinforcement.

(3) Steel work.

(4) Final inspection."

30 The email was copied to Mr Nightingale of Meyer Shircore. By letter dated 13 June 2006 from Mr Tobias of Austpeak to Saraceni, Mr Tobias stated:

"We hereby confirm your appointment as our contract administrator for the Coventry Redcliffe project as detailed out in your email of 12th instant to Jarrad Nightingale."

31 In another email to Saraceni of the same date, Mr Tobias also stated:

"We hereby confirm your appointment as our Structural Checking Engineer for the Coventry Redcliffe Project."

32 It is apparent that Austpeak was contractually bound to engage Saraceni for the purpose of the site inspections to certify the work was in accordance with the structural design. It was not obliged to engage Saraceni for the further work proposed. It did, however, and the explanation may well lie in cl 3 of an addendum to the contract between Carratti Holding and Austpeak which states:

"The Contract Sum is deemed to be a gross maximum price ... The builder acknowledges that the Contract Sum has allowed for all works necessary to complete the project notwithstanding errors and omissions within the Contract Documents. The contract sum can only be varied on an instruction by the Superintendent and Principal for scope changes. The parties acknowledge that no description however meticulous will descend to every detail of building process and it is agreed that an obligation to do the described work imports an obligation to do all the necessary ancillary work or processes, whether described or not, which are needed to achieve the contemplated result."

33 According to Mr Tomsett, formerly of Saraceni, in his affidavit of 10 September 2009, Austpeak in fact engaged Saraceni to carry out both the structural certification and contract administration services from about February 2006.

34 Mr Fitzgerald, formerly of Austpeak, concurs. In his affidavit of 11 September 2009, he deposes that his role as construction manager included letting subcontracts and that, in or about February 2008, Austpeak engaged Saraceni "as the engineers on site" to perform both the structural certificate work and also the contract administration work. He does not state who did that, nor identify the precise scope of the work to be performed.

35 Also attached to Mr Caratti's latest affidavit is a series of invoices from Saraceni to Austpeak covering the total period dated 28 February 2006 through to 10 May 2007, including April 2006, in respect of various jobs, including work described as "contract administration services", "detailed, architecture and builder TQs", and "shop drawing reviews". It is accepted these invoices were paid. That tends to confirm that Saraceni was engaged certainly in some capacity from February 2008.

36 If that is the case, however, the emails of 13 June 2006 are post-contractual documents and not the contract itself reached between Austpeak and Saraceni. Further, none of the invoices give particulars as to what work was performed. None specifically states that it relates to the technical queries that resulted in the new design for the awning.

37 Finally, there is a facsimile transmission from Mr Nightingale of Meyer Shircore to Mr Caratti, dated 25 October 2006 in which Mr Nightingale advised Mr Carratti that, whilst Saraceni was initially engaged by Meyer Shircore for structural design and documentation which was completed prior to construction, once that was complete, Caratti Holding ceased to have any contractual relationship with Saraceni. The document is self-serving and is a legal conclusion offered by a non-lawyer. It also goes no further than to conclude that, since 13 June 2006 when Austpeak formally advised Saraceni of their engagement by Austpeak, all Saraceni invoices for works performed to satisfy compliance with cl 2.10 of the specification were the responsibility of Austpeak, rather than Caratti Holding.

38 Carratti Holding asserts as a result of these documents that, as Carnegie's enquiry of Saraceni concerning the canopy design was headed "technical query", this was within the scope of the work which Saraceni was engaged to perform for Austpeak and therefore any approval given to the modification of the drawings by Saraceni was merely Austpeak's own consultant giving it advice (through Carnegie, the shop drawer, which actually sought the advice).

39 As against this however, Mr Tobias of Austpeak, in his latest affidavit of 21 October 2009, and with notice of these arguments and the affidavits of Messrs Tomsett and Fitzgerald, maintains that Austpeak:

"... had solely contracted Cardno Saraceni to carry out the Certification Work, namely attending site meetings, making periodical site inspections and reviewing shop drawings during the course of construction for the purpose of certifying that the buildings and structures had been constructed in accordance with the structural design. Cardno Saraceni had not been engaged by (Austpeak) to carry out any design or any modification to the design work."

40 Mr Tobias also asserts that Mr Fitzgerald had no authority to engage subcontractors on Austpeak's behalf and that any such contracts had to be approved by himself as director.

41 The "technical queries" concerning the problem with the canopy were sent by Carnegie to Saraceni on 22 and 27 April 2006, well prior to the June 2006 emails confirming Saraceni's appointment by Austpeak. There is no evidence before me as to the progress of work on site and whether it had yet commenced at that point, but I cannot be satisfied at this stage that these queries were not raised in some initial stage of complying with cl 7.2 as part of either submitting the shop drawings or checking that the shop drawings would be in compliance with the contract, or were not, for that matter, a different beast entirely, not specifically contemplated by the contract, whereby construction in accordance with the contract would result in defective work and the shop drawer went direct to the author of the flawed drawing for its correction.

42 Against that, Mr Tomsett of Saraceni asserts that "that fact that the strut fouled the purlin is not an error in the initial design. The structural drawings provided by Saraceni, cannot foresee what issue may occur when fabrication takes place. That is why technical queries are raised to deal with any issue". That evidence will be significant, if accepted, but requires testing.

43 Mr Tobias' assertion that any arrangement between Austpeak and Saraceni did not extend to modification of the original drawings may prove at trial to be unsupportable, but it deserves to be aired and tested. I am not prepared in this appeal to reject it outright.

44 Looking at the matter broadly, it seems somewhat surprising that Austpeak should be obliged to engage Saraceni and pay it to correct defective drawings that were provided to Austpeak by Carratti Holding as part of the original contract.

45 It is at least arguable that this was not a matter of providing some additional detail in original drawings which had not condescended to every detail. As I understand the evidence, the original contract specifications were flawed and construction according to those drawings would have resulted in defective work which may have needed to be remedied.

46 The fact that the request for advice was headed "Technical Query", may not be determinative of the true nature of the request. The queries did occur during a period in which Saraceni had commenced sending invoices to Austpeak but, at this stage of the evidence, I cannot conclude that any particular invoice relates to this specific work. Even if it were the case that one of them related to this work and Saraceni did charge for correcting its own error that, of itself, does not necessarily determine the true nature of the approach to Saraceni.

47 Nor do these documents shed any light on just what occurred and was said at the site meeting of 23 October 2006, following the collapse of the canopy, at which the instruction to Austpeak was given to remove and replace the canopy. Mr Carratti deposes that the instruction by the superintendent to remove and replace the canopy was given pursuant to cl 30.3, but Mr Carratti is not said to have been present at that meeting and says nothing more about than that assertion. Austpeak's claim is not necessarily to be determined by whether any separate contract was reached at that meeting: Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221.

48 I consider it to be arguable that Carnegie's query to Saraceni was not within the scope of cl 2.10 and that Saraceni was, at the time it gave informal approval to the modification to its drawing, still acting in its capacity as the engineer engaged by Carratti Holding and that, the original drawings which formed part of the contract being defective, there is a case to be argued that the instruction to Austpeak to remove and replace the canopy does attract a right based on restitution on a quantum meruit basis or one based on unjust enrichment. The fact that there was a written contract on foot between Austpeak and Carratti Holding may make this an unusual case for an argument based on quantum meruit or unjust enrichment, but I am not satisfied the case is doomed to failure on that basis. Austpeak ought not to be prevented from proceeding to trial and having the evidence tested by cross-examination and its case presented and argued in full.

50 I will add, because it was argued before me, that I give leave for the application for summary judgment to be made a second time. Austpeak argued that there was unexplained delay in lodging the second application and that the additional evidence relied upon was readily available to Carratti Holding at the time of its first application. It was argued I should dismiss the appeal on that basis alone.

51 I accept that there has been delay. I accept also that this material was available to Carratti Holdings had it been sought out. It could have approached Saraceni for its documentation in relation to any contract between itself and Austpeak. There is no reason to think that Saraceni would not have cooperated with such a request, nor that Mr Fitzgerald, formerly of Austpeak, would have been unavailable to Carratti Holding as a witness.

52 The fault lay on both sides however. Patently relevant documents were not initially discovered. Had they been, no doubt these issues would have been argued with the benefit of that additional material at the first application. Had I been minded to allow the appeal on the merits, I would not have denied leave to bring the application on the basis of delay.

Fancourt v Mercantile Credits Ltd

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (78 paragraphs)

WILLIAMS & HASSALL PTY LTD -v- AUSTPEAK AUSTRALIA PTY LTD [2010] WADC 41 (31 March 2010)

Parties

Cases Cited (3)