These civil proceedings, commenced in the Local Court of New South Wales on 1 June 2021, concern an incorporated firm of architects suing for unpaid professional fees due from a property developer in relation to two developments being, firstly, a development at Woolooware and secondly, a development at Sutherland.
The plaintiff relies on two alleged written contracts which it says were entered into with the defendant in or around July 2019.
There is no dispute that the architect's fees remain unpaid. The defendant simply says that it was not the contracting party in respect of either contract.
[2]
The Pleadings
The plaintiff filed a Statement of Claim on 1 June 2021 in which it alleged two agreements for architectural services. The first related to the development of a property at Kingsway, Woolooware (the "Woolooware Agreement") which it was pleaded was entered into in December 2019, the particulars of which specified invoices and bank transactions. The second related to the development of a property on the Old Princes Highway, Sutherland (the "Sutherland Agreement"), the particulars of which specified an agreement entered into in October 2020.
The Statement of Claim was superseded by an Amended Statement of Claim filed on 29 September 2021 in which the two agreements were again pleaded. In this pleading it was alleged that the Woolooware Agreement was entered into in December 2019 but particularised a written agreement dated 9 July 2019. The pleading then alleged that the Sutherland Agreement was entered into in October 2019 but particularised a written agreement dated 18 July 2019.
FUSE ARCHITECTURE PTY LTD v SPECIAL LAND DEVELOPMENT PTY LTD [2022] NSWLC 2 | Case summary | Zoe
The pleading went on to assert a breach of the Building and Construction Industry Security of Payment Act 1999 (the "SOP Act").
The Defence to the Amended Statement of Claim filed on 12 October 2021 simply pleaded that the defendant was not a party to either contract, and the true contracting parties were, in respect to the Woolooware development, Wu and Li Pty Ltd (which is now named SLD Development Five Pty Ltd) and in respect of Sutherland, SLD Development Three Pty Ltd.
There was, the defendant pleaded, therefore no contract with the defendant which could attract the operation of the SOP Act.
[3]
The Relevant Procedural History
Following the close of pleadings the plaintiff filed a Notice of Motion for summary judgment, relying on the SOP Act. This motion was dismissed with costs on 25 November 2021.
At a Directions Hearing on 21 December 2021, filing directions were made and the matter was listed for hearing on 7 July 2022.
At a Review Hearing on 7 June 2022, it was reported that the parties had each filed their evidence and the matter was ready for hearing. The hearing date of 7 July 2022 was confirmed. The matter was listed for hearing before me.
On that day, namely 7 June 2022, the plaintiff's solicitors filed a Notice of Ceasing to Act.
On the day prior to the hearing, that is on 6 July 2022, a director of the plaintiff's company sent an email to the Court enclosing an affidavit seeking an adjournment. That affidavit was brought to my attention and my Associate advised the parties via email that I would not entertain an adjournment application that day, and directed the parties to appear at court today, namely 7 July 2022.
The matter then came on for hearing today, that is 7 July 2022, before me at the Downing Centre Local Court ("DCLC").
Mr A Assoum, a director of the plaintiff company, appeared. No objection was taken to him appearing as the authorised representative of the plaintiff company.
Ms Sarah Woodland of counsel appeared for the defendant instructed by Mr Carl Lee, a solicitor from LM Legal.
The plaintiff did not renew its application for an adjournment and the matter proceeded to hearing.
[4]
The Evidence
The plaintiff relied on the following evidence: An affidavit of Rachid Andary made on 4 November 2021 to which was exhibited exhibit "RA-1", and secondly, an affidavit of Rachid Andary made on 24 November 2021. Both affidavits were read, together with the exhibit, and Mr Andary was not required for cross-examination.
The defendant relied on the following evidence: Three affidavits, being one made by William Lee on 23 November 2021, an affidavit made by Kunjian (John) Cui made on 6 May 2022 and an affidavit by Yi Tong made on 6 May 2022. There were some objections to those affidavits which I refused, and the affidavits were read, together with the various annexures to them. None of those deponents was required for cross-examination.
There was therefore no oral evidence and the hearing comprised solely of the affidavit evidence-in-chief and the documents annexed.
Each party made oral submissions; Ms Woodland provided the Court with an aide memoire headed 'Defendant's Case at a Glance' which I have marked for identification 1 (MFI 1).
[5]
The Relevant Documentation
The documentation relating to the agreements was as follows: so far as the Woolooware Agreement is concerned, that consisted of a written "invitation to quote" sent via an email from Mr Rachid Andary, a director of the plaintiff company, on behalf of the plaintiff dated 10 July 2019 to William Lee (see exhibit "RA-1" at pages 6 to 13). But a signed acceptance by the defendant, or any other company, was not produced by the plaintiff. The front page of that document specifies the client as "Special Land Development Pty Ltd", that is the defendant.
The plaintiff sought therefore to prove the contract by other extrinsic documentation, including invoices and subsequent emails.
The defendant's evidence was that Mr Lee was unable to find the signed acceptance, but his recollection was that he did sign an acceptance, but did so on behalf of Wu and Li Pty Ltd (see paragraph 32 of his affidavit made on 23 November 2021).
Wu and Li Pty Ltd was the entity established for the Woolooware project.
Mr Lee also deposed to the fact that part payments made to the plaintiff were made from a Wu and Li Pty Ltd bank account and annexed bank records to this effect (see page 5 of the annexure to his affidavit).
The documentation relating to the Sutherland Agreement also consisted of a written proposal sent in an email by Mr Rachid Andary on behalf of the plaintiff dated 18 July 2019 to Mr William Lee (see exhibit "RA-1" at pages 28 to 35).
Mr William Lee (@sldsyd.com) sent a reply email dated 24 July 2019 attaching a "signed agreement" consisting of the plaintiff's proposal signed on the final page by Mr Lee on behalf of SLD Development Three Pty Ltd and dated 24 July 2019. SLD Development was the entity established for the Sutherland project.
I interpolate here to note that the plaintiff's pleading particularised a contract dated 18 July 2019 (see "RA-1" at 36 to 43).
That document was addressed to "Special Land Development". Note no Pty Ltd specified (page 37). But it was accepted by "SLD Development Three P/L" (page 43).
The plaintiff relies in addition to that document on subsequent part payment of invoices and emails.
The defendant's evidence is, however, that any payments made or part payments made by SLD Development were made from an SLD Development Three Pty Ltd bank account (see affidavit of Mr Yi Tong made 6 May 2022 at paragraph 9). That evidence was not challenged.
[6]
The Relevant Law
The objective theory of contract is now clearly established in Australian contract law (Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at [4] and [322]. The rights and liabilities of parties to a contract are to be determined according to the principle of objectivity: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [22]. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [40], the High Court said:
"It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction."
The principle of objectivity extends to include the identification of the parties to a contract: Air Tahiti Nui Pty Limited v McKenzie [2009] NSWCA 429. Thus the identity of the parties must be determined objectively from the surrounding circumstances in the context of what was said or done at the time of contracting: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at [322]. The Court of Appeal held that Air Tahiti Nui was liable as Contracting carrier', as defined in the Montreal No 4 and Guadalajara Conventions and incorporated into Australian law under the Civil Aviation (Carriers' Liability) Act 1959 (Cth) because it was the person who as principle made the agreement for carriage. The Court said, relevantly:
"The identity of the contracting party is to be determined looking at the matter objectively, examining and construing any relevant documents in the factual matrix in which they were created and ascertaining between whom the parties objectively intended to contract. This is, to a point, a process of construction similar to the task of identifying whether a clearly contractual document (such as a bill of lading) is made with one party or another (such as a shipowner or time charterer): The Starsin at 770 and the cases considered in Wilford et al Time Charters (5th ED Informa Publishing 2003) Ch 21. Where the documents are silent or ambiguous, but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: see Barroora Pty Ltd v Provincial Insurance Ltd (1992)26 NSWLR 170 at 174; Protean (Holdings) Ltd v American Home Assurance Co (1985) 4 ANZ Ins Cas 60-683 at 74,055-74,056; Coulls v Bagot's Executor and Trustee Co Ltd [1967] HCA 3; 119 CLR 460 at 477 at 478-479 and 486."
[7]
Findings and Conclusion
The agreements in these proceedings are clear and unequivocal. It is clear that the identity of the parties objectively assessed from the documentation and surrounding circumstances does not include the defendant.
I am not satisfied that the defendant was a party merely by reason that the invitations to quote/proposals sent by the plaintiff specified on the cover page the name of the defendant as the "client". What matters here, objectively assessed, is which company committed itself to the contracts. It was not the defendant company in either case.
I am not satisfied on the balance of probabilities that the defendant was a party to either agreement.
The plaintiff's claim must fail. In this regard, there was no contract with the defendant and it follows that the SOP Act has no application here.
[8]
Disposition
I therefore enter a verdict for the defendant and direct the entry of judgment accordingly in favour of the defendant.
[9]
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Decision last updated: 15 September 2022