Manfate Pty Ltd v Krahe & Krahe

Background

1. To understand the nature of the argument, it is important to bear in mind some background facts. Mr Thomas Christopher Murphy, or Tom Murphy as he is generally known, is currently 56 years old. He was born in Tenterfield, grew up in Tenterfield and, as far as I am aware, has spent all of his life in that town. His father was a master builder. Mr Tom Murphy served an apprenticeship with his parents' company. He has three brothers who also are all involved in the building industry. Because of the number of builders in the Murphy family, Mr Tom Murphy did not join his parents' company but branched out on his own at the age of 21. That would have been in 1981.
2. As I have mentioned earlier, Manfate Pty Ltd was later incorporated on 24 February 1995 to continue on his building business. That business is based in Tenterfield and operates in the local area, in a radius of 100 kilometres from the town. The majority of his work is the construction of residences, either brick veneer or HardiePlank clad buildings. He is also a distributor and agent for a shed company which provides sheds and garages in kit form. His work also involves concreting, roofing buildings, the repair of guttering and, no doubt, associated downpipes, and any minor commercial work that he can obtain. He also does insurance claims work mainly in the local area where farmers and graziers can claim for the repair of machinery sheds and barns and similar rural buildings because of storm damage and the like.
3. Mr Tom Murphy's father and Mr Peter Krahe's father were good friends. Like Mr Tom Murphy, Mr Peter Krahe was born in Tenterfield. He is four years younger than Mr Tom Murphy. Mr Tom Murphy's mother, June, is Mr Krahe's godmother. In Mr Krahe's affidavit he deposes to his parents and Tom Murphy's parents being firm friends. Mr Tom Murphy and Mr Peter Krahe went to the same school, although clearly they were not in the same year. Mr Peter Krahe described Mr Tom Murphy as one of his best friends until a relatively recent falling out. It is necessary to recite this background to understand what happened concerning the construction of the restaurant.

Legal principles

1. Before proceeding to analyse the facts, it is important to bear in mind some legal principles. In Monarch Building Systems Pty Ltd v Quinn Villages Pty Ltd [2006] QCA 210, Williams JA with who Jerrard JA and Mullins J concurred said: "[47] The law applicable when the Court is required to determine whether or not there was a contract between the parties is clear: it is sufficient to refer to Alford & Ors v Ebbage & Ors [2004] QCA 283 at paras [118] to [126]; Eastgate Properties P/L v J Hutchinson P/L [2005] QSC 196 at paras [135] to [140]; and Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at 163 4 per Heydon JA. In my view the law was succinctly stated by Bingham J at first instance in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at 611 where he said: 'Where the parties have not reached agreement on terms which they regard as essential to a binding agreement, it naturally follows that there can be no binding agreement until they do agree on those terms: see Rossiter v Miller (1878) 3 App Cas 1124 at 1151 per Lord Blackburn. But just as it is open to parties by their words and conduct to make clear that they do not intend to be bound until certain terms are agreed, even if those terms (objectively viewed) are of relatively minor significance, the converse is also true. The parties may by their words and conduct make it clear that they do intend to be bound, even though there are other terms yet to be agreed, even terms which may often or usually be agreed before a binding contact is made: see Love and Stewart Ltd v S Instone and Co Ltd (1917) 33 TLR 475 per Lord Loreburn LC at p 476.' [48] To similar effect is an observation by Kitto J (with the concurrence of other members of the High Court) in Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597 at 603: 'It is only where future agreement is required in order that the agreed provisions and those to be agreed shall operate together as one contract that the agreed provisions cannot be treated as themselves constituting a contract.'"
2. In Brambles Holdings Ltd v Bathurst City Council Heydon JA (as his Honour then was) said this: "[23] To some extent the defendant's arguments turned on appeals to the conduct of the parties before the contract was made on 12 July 1990, to their conduct after the contract was made on that date, to their subjective beliefs and to submissions about the implication of terms. [24] The first relevant principle of law is that pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 347 352. [25] The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 668, 669, 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9,7011 at 9,149, 9, 154-9,156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9,251 at 9,255. [26] The third relevant principle is that post-contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed. As explained by Priestley JA (Meagher JA agreeing) in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326 330, the status of the relevant High Court authorities is unclear: hence unless it is demonstrated that the later decisions of the Victorian Full Court and Court of Appeal against admissibility, Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 and FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, are clearly wrong or they are overruled, they should be followed in New South Wales. No attempt was made to demonstrate that they are clearly wrong. [27] The fourth relevant principle is that the construction of a contract is an objective question for the Court, and the subjective beliefs of the parties are generally irrelevant in the absence of any argument that a decree of rectification should be ordered or an estoppel by convention found. No argument of these kinds was advanced in this case. [28] The fifth relevant principle is that terms may be implied in one of four ways. The trial judge set out this orthodox classification in his unreported interlocutory judgment in Carlton & United Breweries Ltd v Tooth & Co Ltd [Hodgson J, 11 June 1985, unreported] but summarised at (1985) 6 IPR 319, which was quoted by Young J, the trial judge in that case (Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 605 6): 'A more precise classification of the different types of implied terms was given by Hodgson J in his first interlocutory judgment in the current proceedings. His Honour set out four classes of implied terms, the first two of which are in the class of terms implied in law, the second two the implied terms in fact. His Honour said: "There is a spectrum of different types of implied terms covering, inter alia, the following: (i) Implications contained in the express words of the contract: see Marcus Clarke (Vic) Ltd v Brown [1928] HCA 12; (1928) 40 CLR 540 at 553 4. (ii) Implications from the 'nature of the contract itself' as expressed in the words of the contract: see Liverpool City Council v Irwin [1976] UKHL 1; [1977] AC 239. (iii) Implications from usage (for example, mercantile contracts). (iv) Implications from considerations of business efficacy: see BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1977) 52 ALJR 20 at 26; Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337."'"
3. Much in the present case turns upon the use of the words "quote" and "estimate". In ordinary English usage, those words are synonymous. The 5th edition of the Shorter Oxford English Dictionary provides as the seventh meaning of the word "quote" as a transitive verb this: "State the price of (a stock, commodity, service, etc); state the odds in (a race, bet, etc); Also, give (a person) a quotation for goods, services, etc." The third meaning given by the same work to the word "quote" as a noun is, "a price or amount quoted". The noun "quotation" is given as its fifth meaning this: "The amount stated as the current price of a stock or commodity; a contractor's estimate for a specified job, et cetera." When one reads the transcript, one will see that I was prone to using the word "quote" as synonymous with the word "estimate", but the word can have a more particular meaning in the building industry. However, even learned counsel for the defendants was prone to using the word "quote" as being synonymous with the word "estimate".
4. In Hayward v Timilty [2009] NSWDC 54 Williams DCJ said this at [41]: "In para 4 of the statement of claim the Hayward's say that 'by written quotation bearing date 10/2/04, Timilty gave an estimate of costs in the range of $350 - 375K.' This confuses two terms - a quotation and estimation in the one sentence. The letter in question made no reference to the word 'quote'. The words used were 'my budget estimate for the job is $350 375K.'" At [43] his Honour said this: "An estimate is a calculated guess at how much a job will cost all other things being equal. A quote is a calculation of what price a person is prepared to do a particular job for.'" In the same case his Honour pointed out that the plaintiffs had an estimate, from a builder who drew up the plans for the building in question, of $400,000. Other than the estimate provided by the defendant, the Haywards did not have any other estimate or any quote from any other person. Eventually an "approximation" document came into being providing an approximation figure of $380,000. That was said by the plaintiffs in that case to be a maximum contract price. Eventually, the builder charged $518,658.85.
5. However, there is an earlier decision of the Supreme Court of South Australia which ought be borne in mind. It is Kyren Pty Ltd v Built Projects Pty Ltd [2006] SASC 204, a decision of Layton J. Her Honour said this at 17: "The appellant's first argument challenges the findings made by the Magistrate at [21] - [23] of the reasons for decision, namely that the amount set out in the 7 September 2004 facsimile from Mr Henderson to Mr Samaras was an "estimate", and that the defendant "took a risk" in its engagement of the plaintiff. In summary, counsel for the appellant argued that the facsimile of 7 September 2004 was a fixed quote, and as such, Built Projects had breached its contract with Kyren when it failed to complete the three components of work. A finding that the facsimile was an estimate and not a fixed quote is fatal to the appellant's argument that it should not be required to pay the respondent because the respondent had not completed the work, and that there should be an equitable set off against the respondent's claim. This is because a fixed quote for certain work to be performed at a certain price is a binding contract for that amount for the completion of the entire job. However, an estimate is just that an estimate of the cost of a particular job, to take into account the contingencies of the building trade, the termination of which would not necessarily prevent payment for work performed prior to termination." Her Honour then went on to outline the arguments put before her by the appellant for its contention that what the magistrate found to be an estimate was, in fact, a fixed quote. Her Honour also rehearsed the arguments put by the respondent to the appeal. Her Honour went on to say this at [25]: "Having regard to these arguments, I agree with the approach taken by counsel for the respondent; that this was a written contract and the word 'estimate' was used in its ordinary meaning and there is no reason to go behind that. There is nothing inherently inconsistent with it being an estimate. This in my view is the manner in which a reasonable person in the situation of Mr Samaras would have interpreted the offer. The mere fact that the facsimile is detailed is not a contra indication to it being an estimate and the reason for the detail is well explained by Mr Henderson in his evidence, namely, that it is a matter of good practice and also allows the client to know what 'he was going to be up for'." If litigants and those engaged in the building industry used the words "fixed quote" or "fixed quotation" rather than merely a quotation, much misunderstanding and mischief would be avoided.

The effluxion of time

1. One of the major problems in the current case is the question of the effluxion of time. Mr Tom Murphy swore an affidavit on 12 August 2015. Mr Peter Krahe swore an affidavit on 15 October 2015, as did Mrs Paula Krahe. Mr Tom Murphy swore an affidavit in reply on 9 February 2016. As the case ultimately unfolded, relevant events happened in the last quarter of 2006 and in 2007. At the time of swearing the affidavits, the witnesses were deposing to matters that had occurred eight or nine years ago. At the time of giving sworn evidence in Armidale last week, the witnesses were giving oral evidence about matters that occurred eight and a half years ago and nine and a half years ago. The ability of a human being to recall what he said or what she said eight or nine or more years after the event is almost impossible. Even those of us who were trained to memorise things, not a principle of modern educational practice, would find it extraordinarily difficult to remember any conversation eight or nine years after it occurred. There are, of course, some striking exceptions, where, for example, one might speak to some very important person, in modern life, be it the sovereign, a prime minister, a popstar or a footballer, one might remember certain remarks of the important person a long time later, or where the event was very important in a person's life.
2. However, here Mr Tom Murphy was talking about building work, work which he has been carrying out now for the last 35 years as a builder after completing his apprenticeship. Equally, Mr and Mrs Krahe were dealing with a close personal friend whom they clearly trusted and would have no reason to commit conversations about a building to memory when they trusted Mr Murphy as a friend and as a builder because, as I shall point out, there have been many prior dealings between Mr and Mrs Krahe and Mr Murphy professionally in which Mr Murphy had performed work for Mr and Mrs Krahe and with which they were quite content, and for which they were prepared to pay the sums asked for by Mr Murphy on behalf of his company.
3. In Watson v Foxman (1995) 49 NSWLR 315 McLelland CJ in Eq said, at 318: "Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously describe as 'misleading') within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the Court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were, in fact, misleading in the proved circumstances. In many cases (but not all) the question whether the spoken words were misleading may depend on what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the Court, which means that the Court 'must feel an actual persuasion of its occurrence or existence'. Such satisfaction is 'not...attained or established independently of the nature and consequence of the fact or facts to be proved', including the 'seriousness of the allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding': Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration." Further, on p 319, his Honour said this: "What I have said above as to the cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act) is equally applicable, mutatis mutandis, to causes of action based on contract and on equitable estoppel (with the added requirements in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel, that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee)."
4. May I demonstrate the principle which I have just cited from that judgment of the former Chief Judge in Equity by referring to one statement alleged by Mr Krahe to have been made by Mr Murphy. It is one of the crucial statements the subject of these proceedings. In par 64 of Mr Krahe's affidavit of 15 October 2005, exhibit 5, Mr Krahe deposed to this: "Tom and I had a conversation to the following effect: Tom said: 'If you are going to do what you said you are going to do, that is, pay separately for the things we have already discussed, I can do my part of the work for you for $100,000." If one places a short or even mid-sized word before the words "$100,000", such as "about", "near", "approximately", "around", or the like, one can see that what appears to be a fixed quote is turned into an estimate. In the circumstances, bearing in mind that Mr Krahe says that this piece of conversation occurred in late December 2006 and his affidavit was sworn on October 2015, Mr Krahe is deposing to words to the effect of, not the actual words used, and the dropping out of adjective or adverb may change completely the nature of the statement made. One must be extremely careful.

Further background

1. Earlier in these reasons I pointed out that it was important to bear in mind the background of the parties. I have not given in these reasons part of the relevant background. I have pointed out to the background of Mr Tom Murphy and the nature of the relationship between Mr Tom Murphy and Mr Peter Krahe. Mr Krahe is a contract bookkeeper. He thus described himself in oral evidence on 9 March 2016. In his affidavit of 15 October 2015 he referred to himself as a "small business owner". He may have been referring in that to either being the proprietor of the restaurant or being the proprietor of a contract bookkeeping business. Mrs Paula Krahe has been, it would appear, at all relevant times a revenue officer employed by the Tenterfield Shire Council. In 1992 Mr and Mrs Krahe left Tenterfield to take up in Morrissett, in the Hunter Valley, a TAB agency. They returned to Tenterfield at the end of 1996. In 1993 Mr and Mrs Krahe, together with Mr Krahe's parents, had purchased a property known as 448 Rouse Street, Tenterfield. That property was tenanted from the middle of 1994 until 20 December 1996. Unfortunately, Mr Krahe's mother died on 20 December 1995 and her share in the Rouse Street property was transferred to Mr Krahe's father. Mr Krahe's father transferred his interest in the property to Mr and Mrs Krahe as tenants in common on 15 April 1997. As at that date Mr and Mrs Krahe, the current defendants, became the sole owners of the Rouse Street property.

Prior dealings between the parties

1. According to Mr Krahe, in the middle of April 1997 the Krahes had a conversation with Mr Murphy and asked him if he was able to restump approximately three stumps of the veranda of the Rouse Street property. They asked Mr Murphy if he was interested in doing the job. They, according to Mr Krahe, asked Mr Murphy how much it could cost to do the job. According to Mr Krahe, Mr Murphy had a look under the house and then had a conversation to the effect that this was only a relatively small job and would cost $900. Mr Krahe also states that Mr Murphy told him that he could do the job in one weekend "if you slip me cash as payment". According to Mr Krahe, he accepted the quoted price of $900 for the job. Mr Krahe was able to provide the Court with a copy of a Commonwealth Bank pass-book which shows a withdrawal of $900 in cash on 5 May 1997 beside which have been written the words "Tom Murphy". The interesting thing about this transaction is that according to Mr Murphy at the relevant time the going rate for replacing a stump as the foundation of a house was $100 per stump. Two or three stumps ought to have cost no more than $300 but, in fact, $900 was paid. In the circumstances, there could be no suggestion that the $900 payment was, in fact, some discounted payment. In fact, on what Mr Murphy said, it was three times the going rate. I accept that this job was done and paid for in cash, although Mr Murphy was very coy about admitting to asking for cash payments. He said that that was not his practice, but if that were so, Mr Murphy would not be your average Australian tradesman, of which, in many respects, I thought he was a fine example.
2. Mr Krahe's evidence is that in or around the end of October 1997 the Krahes asked Mr Murphy to do another job. It was having the floor of the shed concreted and also the fitting of a roller door. Again, Mr Murphy is alleged to have offered to do this work if Mr Krahe helped him with the concreting and fitting the roller door over a weekend. If so, it would cost only $1,500 if cash were paid. Again, Mr Krahe was able to put before the Court a copy of a Commonwealth Bank pass-book showing a cash withdrawal on 24 November 1997 which has written next to it the words "Murphy shed". The form of the various bank book pages put before the Court indicates to me that it was the practice of Mr Murphy and/or his wife to put in the bank book an explanation for various payments out.
3. Mr Krahe also deposed to a third job being performed in late 1997. Paragraphs 19 to 21 of Mr Krahe's affidavit are these: "[19] On or around 18 November 1997, when Tom was at our residence to do the concreting job, I had a conversation to the following effect with him. I said: 'Tom, we are looking at getting around the bathtub tiled and up to the picture rail on two walls. Can you have a look and let us know how much it will cost? Tom said: 'Yeah. No worries. I'll have a look and let you know what it's worth'. [20] Tom looked at the bathroom and we had a conversation to the following effect: He said: 'Mate, if you buy the tiles, grout and other material that we will need, I will charge you $400 labour to tile around the bath and up to the picture rails. Can you fix me up in cash?' I said: 'No worries, Tom. I will supply the materials and then pay you cash at the end of the job.' [21] The work was completed on or about 15 December 1997. I withdrew $400 in cash from my bank and gave it to Tom as he requested. A copy of the page in my bank book recording the corresponding cash withdrawal appears at Exhibit PK1 p 6." That exhibit, again, shows a cash withdrawal of $400 on 15 December 1997 beside which has been inserted in handwriting "Tom Murphy tiling". It is clear that that is what actually occurred.
4. This evidence was given by Mr Murphy on 8 March 2016 in cross-examination: "Q. I suggest to you at around - in or about November 1997, you had a conversation with Mr Krahe to the effect as set out in paragraph 19 of his affidavit? Would you accept that? A. I do recall doing some work in their bathroom, yes, your Honour. Q. Would you agree that paragraphs 19 and 20 accurately set out the conversations in that regard? A. I don't believe that discussion would have occurred like that, your Honour. Q. But you have no recollection of the conversation? That's correct, isn't it? A. That is correct, yes. HIS HONOUR Q. Tell me, Mr Murphy, did you do the tiling yourself? A. I don't recall that, your Honour. Q. Do you tile, do you fix tiles? A. Only under pressure. Like, if I cannot get a tiler to do the job in the timeframe that's needed, I have to do it myself, yes, your Honour. Q. So you have the ability to do both floor tiling and wall tiling? A. Wall tiling I'm confident at. Floor tiling, I'm not confident because of the falls and gradients to the floor ways and .. I do have knee problems, your Honour, as well. Q. So it's possible you may have done the tiling yourself? A. Above the .. bathtub, yes, there's a possibility, your Honour. Q. If Mr Krahe provided the tiles and you did the tiling yourself, it is possible that cash changed hands? A. It could be a possibility, your Honour." That is the example of Mr Murphy's being coy about taking cash payments.
5. Sometime in the middle of 2002 the Rouse Street property sustained water damage and a claim was made on an insurance company. The following material appears in Mr Krahe's affidavit: "[22]. On or around 14 August 2002, Paula and I had conversation with Tom to the following effect: I said: 'Tom, we're in a hurry and we would like it if you can give us a quote to have the water damaged ceilings and walls repaired. Can you please have a look at it and let us know how much it would cost to get this done? I will also need a written quote as we will be making a claim on our insurance company for the work.' He said: 'Yeah. I'll have a look at that and get you a quote for your insurance company.' Tom then provided a written quote for this job and we handed it over to our insurers when they came to inspect the damage. This job was quoted by Tom on Quotation No 78 dated 14 August 2002. A copy appears at Exhibit PK1 p 7. [24]. The amount quoted was paid in full at the end of the job by our insurance company on 26 November 2002. A copy appears at Exhibit PK1 p 8." The quotation does appear as described by Mr Krahe. The extent of the work contained in the quotation is this: "Replace damaged (bowed) timber lining boards to ceiling and western/southern walls of lounge room; replace damaged insulation bats to ceiling area of lounge and kitchen; repainting of walls and ceilings to kitchen; lounge room and hallway; repainting external weatherboards to southern veranda of lounge room." The quotation was for $6,622 and the sum of $6,522 appears to have been paid by the insurer. Why there was a $100 difference I do not precisely know but hazard the observation it would be consistent with excess payable to the insurer.
6. There was some disagreement at trial about the extent of the work performed by the plaintiff. Mr Murphy's recollection of the work actually done at this time was not consistent with the extent of the works set out in the written quotation submitted to the insurance company. He gave this evidence: "A. ...the quotation that went to the insurance company was to appease the insurance assessor because they would have come and looked at the...job. If I recall, we removed a wall between the lounge room and the kitchen, put a beam in to make it an open living area, yeah, just cut down and remove partition walls, the lounge/kitchen wall. So this was a different job that was actually for the insurance company, but is carried out at the Krahes' wishes." Besides the quotation submitted to the insurance company, a fair copy of which is on p 7 of the exhibit to Mr Krahe's primary affidavit, a poor copy of the same document is p 13 of the exhibit to Mr Murphy's second affidavit, his affidavit in reply. There was some "to do", if I may use that expression, about the poor copy of quotation 78, and it appears that Mr Murphy may well have misread his poor copy. However, p 14 of the annexure to Mr Murphy's second affidavit is an undated communication addressed to the defendants, which I thought may have been for a different job. The total quotation is for $6,556 inclusive of GST. The scope of the work is somewhat different. Further, in his evidence, Mr Murphy said this: "A. ...the fixed quote was for the insurance company for the job, for the job that they allocated to be repaired, and item 14 of mine is the works that I carried out." After further cross-examination about the same problem or inconsistency, this evidence was given in answer to questions that I posed: "Q. Is it possible that it refers to some job other than the quotation that you now can read legibly as annexure 7 to Mr Krahe's first affidavit? A. I believe it would be the same job, and just thinking back on to that photo, you know, if this was a quotation, and I suspect it was a quotation, because of the way it was broken down, every aspect of the quotation is not accepted. You know, possibly we because if it was a quote to gyprock the lounge room and hallway and they decided, no, I won't allow that. Like, I didn't want to accept that. I just, you know, I can't understand it, your Honour, I'm sorry. Q. I don't want to upset anyone's applecart, but sometimes what one tells the insurance company might be somewhat different to what actually happens? A. Quite correct, your Honour." This is, unfortunately, another aspect common in Australian society, where the insurance company pays for a bit more than it ought. Again, no adverse criticism can be levelled at either the plaintiffs or the defendants in this regard because, to an extent, they are in exactly the same position. However, it is to be noted that a formal written quotation was issued by Mr Murphy on behalf of the plaintiff when he had to deal with an insurance company. Even so although the document is headed "Quotation", before stating the total it says: "Total Estimated Cost (including GST)." Again, an inconsistency in words, in the usage of quotation and then providing an estimate. The document which Mr Murphy described as annexure 14 to his second affidavit does not profess to be either a quotation or an estimate, but merely is a statement on letterhead and allows $2,000 for painting.

Polworth Street Property

1. On 10 August 1998 Mr and Mrs Krahe purchased lots 8 and 9 in Deposited Plan 828197 and also lot 11 in Deposited Plan 832151. Those lots are contiguous and contain land within Tenterfield town. Page 10 of the annexure to Mr Krahe's primary affidavit contains a sketch plan of this land. The three lots combined could be described as a reversed "L" with the top of the "L" being north and the bottom of the "L" going to the west rather than to the east. That piece of land which goes to the west abuts George Street, the northern boundary abuts Cowper Street and the long eastern side of the block abuts Polworth Street. The property is generally known as the Polworth Street property.
2. According to Mr Krahe he and his wife discussed the development of this larger parcel of land with Mr Murphy and his wife, Judy. The idea was to build a maze made from hedges, a shed, a restaurant and a residence. That was the topic of conversation at a number of dinner parties that they had together. In 1998 after a discussion about this development, Mr Murphy drew a plan. The plan can be found on p 9 of the annexure to Mr Krahe's primary affidavit. The plan is not an elaborate one. It shows a building 20 metres long and 10 metres wide with a veranda on the northern side, that is the side facing Cowper Street, 2.5 metres wide extending the length of the building, that is for 20 metres. It shows a fairly basic kitchen on the eastern side and a block of three toilets with an airlock in the south-west corner.
3. This plan was eventually submitted to the Tenterfield Shire Council. It was accompanied by another plan headed, "Proposed Land Development for Manfate Pty Ltd, Corner Cowper and Polworth Streets, Tenterfield". It is dated 27 August 1998 but was not drawn by Mr Murphy. It is likely to have been drawn by Mr and Mrs Krahe or one of them or by someone else on their behalf. It showed a plan with the private residence of the Krahes being built at the southern end of the block and at the northern end of the block a proposed maze of hedges with a building which is now called the restaurant to the southern side of that maze. Entry was to be gained from Polworth Street and on the western side of the restaurant was to be a parking area for motor vehicles.
4. Paragraph 29 of Mr Krahe's primary affidavit is this: "Tom and Judy called to our house for dinner (between 28 August 1998 and 4 September 1998) with the Development Application and the plans to be submitted to Council. The conversation was to the following effect: Tom said: 'Niff [Mr Krahe's nickname], here is the DA application and plans that need to go to Council. Let's get this paperwork sorted out.' Tom, Judy, Paula and myself worked through the application. Tom instructed: 'Put Manfate Pty Ltd as the applicant. Niff, what is the lot and DP number for your block of land over there?' Paula then got the rate notice and the lot and DP number were entered into the Development Application by Paula. I said: 'Which box do we tick here, Tom, for the Proposed Development Type?' Tom said: 'Probably tick the Use of Land, Erection of a Building and Other because the development ticks all those boxes because that is what you are going to use it for.' I said: 'I will put the erection of Maze and Coffee Shop/Restaurant to seek approx. 50 in as the description. Is that okay? What will I put for the estimated cost?' Tom said: 'Yes, that is okay for the description, but keep the figure low at this stage and then you won't have to pay as much Council DA fees. We can amend the figure later when we know exactly what you want. This is how I always do it. Put it in as $50,000.' I said: 'Tom, the question here about the approvals under s 68 Local Govt Act, what do we put here... yes or no?' Tom said: 'Tick No there and also tick no for the next one on integrated planning.' I said: 'What do we put for the construction certificate?' Tom said: 'Tick No for that one. The next question's about the type of consent. Tick that it is a staged development. For the next one tick 3 copies of the plan of land because I give Council 3 copies. Now both of you sign where the crosses are for the consent of owners and, Judy, you sign at the bottom. Can you guys pay the DA fees because you won't need me to do any work on this for a fair while?' I said: 'Yeah, no worries, Paula, you can lodge the application and pay the fees when you go to work.'" I have quoted that in full because it is alleged to have been a conversation conducted between 28 August 1998 and 4 September 1998 being recorded in an affidavit sworn on 15 October 2015, 17 years later. It is implausible in the extreme that anyone could recollect a conversation of that length, of that nature, after such a long period of time.
5. Furthermore, most of it could be constructed from the Development Application itself. For example, the plan not made by Mr Murphy is dated 27 August 1998, that is the first date at the commencement of the quotation I have just mentioned. 4 September 1998, the last date in the range when the conversation is alleged to have occurred, was the date endorsed on the application for the development consent and is shown as the date of receipt of the fee for lodging the development application. Mr and Mrs Krahe have in fact signed the consent to the development application and dated it 3 September 1998 and the document is also signed by Mrs Murphy. There is no dispute that it is Mrs Murphy's signature, although Mr Murphy thought it highly unlikely because it was highly irregular: it was not the practice for Mrs Murphy to sign such documents. However, clearly she did. Most of the rest of the conversation could be reconstructed when one looks at the development application itself. The implausibility of Mr Krahe being able to remember the conversation deposed to in par 29 of his affidavit must give me caution in accepting the accuracy of other conversations recorded in the same affidavit which, although each is said to be words "to the following effect", is then set out as if it was a verbatim transcript of such a conversation.
6. On 6 April 1999 the Tenterfield Shire Council send a letter to the plaintiff company advising it of the Council's formal approval of the development application. The formal approval bears date 25 March 1999. It took the Tenterfield Shire Council approximately seven months to approve this Development Application. It was given the number 31/98. It granted consent subject to a number of conditions. All told there were 17 conditions, a number of which provide for a large number of things themselves. Condition 2 was that no building work was to be undertaken prior to the issuing of a construction certificate for the building. As I understand it the reason for putting in the development application at this time was to enable Mr and Mrs Krahe to go ahead with the construction of the maze, that is to plant the hedges which would eventually form the maze. The idea was clearly to build the restaurant later. According to the approval granted by the Council the consent operated from 25 March 1999 and was to lapse on 25 March 2004. No further work was required by the defendants of the plaintiff or Mr Murphy about the restaurant at this time.
7. Mr Krahe's primary affidavit then sets out another proposed development which he began to discuss with Mr Murphy in June 2003. This is described in Mr Krahe's primary affidavit thus: "[33] On or around the beginning of June 2003, I had a conversation with Tom to the following effect: I said: 'Tom, we are needing a storage shed built on the block so that we don't have to cart our gear over all the time. Can you please give us a quote for a steel framed colorbond shed? I would like a zincalume roof and three roller doors, but no access door. Can we also have an awning out the front? Can you get us a quote on this work please?' Tom said: 'Yeah, sure, Niff, I will give you a written quote.' [34] On 21 June 2003, Tom provided us with Quotation number 31 for this work. A copy appears at Exhibit PK 1 p 20. [35] Paula and I were happy with the quotation and I had a conversation to the following effect with Tom: I said: 'Tom, the price you've quoted for the supply and construction of the shed is OK. Can we please have the 9 m x 7.6 me with the 9 m skillion awning out the front as quoted. Can you please organise to lodge the application with the Council and get the shed built as soon as you can?' Tom said: 'No worries Niff, I will lodge the application with the Council.' [36] On 11 July 2003, Manfate lodged an application for a complying development certificate with the Tenterfield Shire Council for the Shed Works (CDC 2003/20), a copy of which appears at Exhibit PK 1, pp 21 24. The cost of the work associated with the application was listed by Manfate as $6,800. [37] The shed was delivered and the amount quoted was paid in full on 28 July 2003 by cheque number 005 as per Tom's instructions and his invoice number 0116 dated 15 July 2013. A copy of the invoice together with the bank account statement recording the corresponding debit for the cheque appears at Exhibit PK 1 pp 25 26. The amount stated on the invoice correspond exactly with the quotation."
8. Quotation number 31 sets out a large number of variables. A 9 metre Colorbond garage had three roller doors, a 12 metre Colorbond garage had four roller doors and a 15 metre Colorbond garage had five roller doors. No matter what length each of the garages was 2.4 metres high. The quoted cost for a carport, that is a skillion roof added to the front of the garage, was $1,370 for a 9 metre garage, $1,780 for a 12 metre garage and $2,185 for a 15 metre garage. Then the garages had not only a width but a depth, the depth could be either 6 metres, 6.9 metres or 7.6 metres. That of course gave nine permutations. Eventually what was chosen was a 9 metre garage which was 7.6 metres long, the total price for that was $5,260, a Colorbond roof to match that was $310, and the appropriate carport price was the extra $1,370. The same quotation says this: "Approximate price for R/C slab floor and fully erect shed on level site is double shed price (including Council B/A fees)." I infer that R/C is a reference to reinforced concrete and that B/A is a reference to a building application, the former name for what now appears to be a construction certificate or construction certificate application. It is to be noted that by providing an "approximate price" for the slab floor and the erection of the shed on a level site, the plaintiff company was not providing a fixed price quotation but an estimate. Although the total cost of supplying the steel framed Colorbond garage as quoted, with the 9 metre skillion awning as quoted, and the roof as quoted was $6,940, the price actually charged for doing the rest of the work, that is materials and labour to provide the reinforced concrete slab and fully erect the shed as requested, including concrete footings for a retaining wall and the Council's building application was less. It was $6,712. Applying the reasoning adopted by the defendants in these proceedings, that cost should have been not $6,712 but $6,940. Clearly the price for the further work was only an estimate and, when the actual price was ascertained it turned out to be less than the estimate. There can be no suggestion that Mr Murphy was taking advantage of the defendants in any way. Furthermore, to describe this transaction as a fixed price contract is misleading and plainly wrong.
9. During the building of the garage, or as Mr Krahe referred to it, the shed, there was a significant fall of rain which identified a drainage problem, the flooding of the floor of the garage. That was also discussed with Mr Murphy. It was decided to build a besser block retaining wall around the shed. According to Mr Krahe's affidavit, the plaintiff gave a quotation of $2,300 for the labour and the cost of materials for building this wall. However, the footings for the retaining wall were in fact included in the price charged by the plaintiff for the work on the garage or shed and there was a further sum paid for the besser block retaining wall of $2,332 which, of course, is greater than $2,300. Indeed if one takes out of the moneys paid for the garage the cost of the footings and adds it to the cost of the besser block retaining wall, one comes to a figure probably much greater than $2,300. However, there was no cavil raised by the defendants about what might be thought to be overcharging, but bearing in mind at the same time there may have been undercharging, it was probably inopportune to raise any suggestion of overcharging.

The defendants' residence

1. The next construction project on the Polworth Street property was the residence designed by Mr and Mrs Krahe. There are a number of documents prepared by the plaintiff for the defendant in this regard. The first is a "General Housing Specifications" on a form devised by the Housing Industry of Australia. The specifications cover 12 pages together with two covering sheets and were signed by Mr and Mrs Krahe and Mr Murphy on 25 June 2004. There is a Home Building Contract between Mr and Mrs Krahe and the plaintiff company signed on each page on behalf of both and dated 28 June 2004, some three days after the specifications are dated. The Home Building Contract is in the form published by the Department of Fair Trading of this State. It provides a fixed price of $142,000.
2. That contract provides in cl 3 that the building specifications dated 25 June 2004 were contractual documents and that drawings prepared by the plaintiff and bearing date 25 June 2004 were contractual documents and also that there was Australian Home Warranty Insurance and the number of the policy is provided. In the Items Excluded Schedule were "Earthworks and site levelling, provision of water and sewer services, a retaining wall, painting and underground electricity from shed", which I infer meant the leading of electricity underground from the three garage building earlier erected. Clause 4 of the contract required the contractor to commence work within 21 days of the date of the contract, the date of the approval of the local government body, or of the consent of any lending authority. Clause 5 called for completion of the building work within 26 calendar weeks from the date that the work was due to commence as provided for in cl 4. Clause 9 provides for provisional sums. The explanation contained under the heading for the clause is this: "Provisional sums (including GST), are estimates of the cost of items of worth included in the contract for which the contractor cannot give a definite price, for example, unforeseen rock excavation. An estimated cost is provided in the contract price which is adjusted after the work has been done. The contractor should ensure the estimate is realistic. Provisional sums should only be used where the contractor cannot price the work before it is undertaken. If there is any doubt that the owner should ask the contractor to fully explain the reasons why a fixed price cannot be given." Clause 9 provides for a contractor's margin of 5%. However, the schedule of provisional sums states: "Nil anticipated." Clause 10 governs prime cost items, or as they are called PC items. Again, cl 10 allows for a 5% contractor's margin. The prime cost items schedule refers back to specifications. Clause 11 relates to progress payments. The schedule contained in the contract is this: "1. Footings and brick supply $25,000. 2. Frame/roof trusses $35,000. 3. Lock up stage $25,000. 4. Internal lining/fit out $25,000. 5. Kitchen and tiling $30,000. 6. Completion $2,000." Clause 12 relates to variations. Clause 12 commences thus: "The work to be done or materials used under this contract may be varied: at the request of the owner; or at the request of the contractor. If the necessity for the variation is due to the fault of the contractor the owner will not be liable for any increase in the contract price; or due to such other matter that could not reasonably be expected to be necessary for the completion of the work at the date of the contract; or due to a requirement of a council or other statutory body relating to the work, if at the date of this contract such requirement could not reasonably have been foreseen by the contractor." The next section of the clause relates to the procedure for variations. It required that before commencing work on any variation the contractor must have provided to the owner a notice in writing containing a description of the work and the price including GST to the owner of the property. The notice was then to be signed and dated by both the owners and the building contractor to indicate acceptance of the variation. The clause goes on to allow for the adjustment of a the contract price and provides for a builder's margin of 5%.
3. A development application was made to the Tenterfield Shire Council by the plaintiff. It was dated 25 June 2004 and the development fee of $1,500.42 was paid on 29 June 2004. The estimated cost was $142,000 being the same as the quoted price in the building contract. A consent was granted to the development application by the Tenterfield Shire Council on 1 July 2004. The consent operated from that date and was to lapse on 1 July 2009. The consent was given the number 2004/065.
4. The plaintiff in essence said that the written contract was made basically to comply with the law and did not govern the actual relationship between the parties. The principles of construction which I cited towards the beginning of these reasons clearly lead me to reject that assertion because on any objective view of the matter the written contract ought to have governed the relationship between the parties. Nevertheless neither party did as the party was required to do under the written contract.
5. I do not know exactly when the work on the construction of the defendants' dwelling commenced. However, the construction all told took 14 months. That is what Mr Krahe told me in his sworn evidence on 9 March 2016 and can be found at p 188, line 38 of the transcript. During the time that they were kept out of the house under construction, that is during the time they could not reside in it because it hadn't been completed in accordance with the contract, Mr and Mrs Krahe had to reside in a flat above a bank in the main street of Tenterfield. During the evidence of Mrs Krahe I estimated that the cost of extra rent payable by the Krahes because of delay was approximately $10,000, but no claim was ever made by the Krahes for that as a head of damage for breach of contract.
6. The progress payments made were not in accordance with the contract. The progress payments are set out in par 51 of Mr Krahe's primary affidavit. On 30 December 2004 a request for a progress payment was made for $25,000. That was paid on 7 January 2005 by a cheque dated 5 January 2005, the cheque being presented and honoured on 7 January 2005. The next progress payment was for $15,000 by invoice dated 31 January 2005. That was paid for by cheque drawn on 28 January 2005 and honoured on 31 January 2005. It may be that the cheque was drawn in advance of the invoice, because Mr Murphy advised the Krahes that he was about to deliver a further invoice. A third invoice bears date 21 March 2005 and was paid by cheque drawn on 23 March 2005 presented on 24 March 2005. The fourth progress payment demand was made on invoice dated 13 July 2005 for $30,000 which was paid for by a cheque for $19,800 and a further cheque for $10,200. A fifth progress payment request was made on 12 September 2005 by invoice bearing that date. That was for the sum of $30,000. That was paid for by a cheque dated 15 September 2005 presented and honoured on the following day. The sixth progress payment is not evidenced by any invoice. The defendants cashed a cheque for $15,000 and the cash was paid to Mr Murphy. The document showing that is on p 91 of the exhibit to Mr Krahe's primary affidavit which shows a cheque cashed on 16 September 2005 and written next to that was Tom Murphy's name. On the same page of that bank statement is a cheque numbered 11 drawn on 29 September and next to it the owners of the bank statement, Mr and Mrs Krahe, have written in the name of a person providing flooring services.
7. A seventh progress payment was called for by invoice dated 15 December 2005 and was paid for by a cheque drawn on 22 December 2005 and presented on the following day. According to Mr Krahe, an eighth progress payment was made by cash by a withdrawal made on 23 December for $4,000 together with additional cash on hand increasing the total sum paid to $5,000. According to Mr Krahe, a ninth progress payment was by a cash payment of $4,500, evidenced by an entry in a bank statement a copy of which is p 95 to the annexure to his affidavit and where Mr Murphy's name has been written next to withdrawal. According to Mr Krahe's affidavit, there was an additional cash on hand payment added to that sum to increase the amount to $5,000.
8. At par 52 of Mr Krahe's primary affidavit is this: "These amounts differed from payments on p 10 of the Home Building Contract at Tom's request. In relation to each of the cash payments on 16 September 2005, 23 December 2005 and 3 March 2006, Tom and I had a conversation to the following effect: Tom said: 'Can you pay me some cash?' I said: 'Yeah, how much were you after?' Tom then identified the amount." There was much emphasis in Mr Krahe's affidavit to Mr Murphy's asking for cash payments from time to time. I believe that to be highly likely, bearing in mind my knowledge of Australian tradesmen gained over a substantial period of time in our community. However, in my view nothing turns on that. The inference, no doubt, that Mr Krahe wanted me to draw from the fact that cash payments were being sought is that Mr Murphy was in some ways seeking to defraud the revenue. I would draw no such inference at all. Many are the reasons why cash is asked for, it may be to merely cover current exigencies of a personal nature or to cover pressing demand from some creditor. Again, as I said, I draw no adverse inference to Mr Murphy if he did ask for cash. It would be completely wrong to do so when it was never suggested to him in cross-examination that he did so for the purpose of, for example, reducing his liability for income tax or in some other way defrauding the revenue of either the Commonwealth or the State.
9. Before discussing further the construction of the defendant's house, I should state that the defendants, in essence, allege that there was a variation in the contract. Paragraphs 48 and 49 of Mr Krahe's affidavit are these: "[48] In or around July 2005, part way through the construction, Paula and I decided that we would like to have an entertaining area on the western side of the house. We had a conversation to the following effect: I said: 'Tom, I would like to put an entertainment area on the western side of the house. I would like to use this Panel Tech roofing that I saw at my cousin's shop in Rockhampton.' Tom said: 'I am not really keen on using this as I have not used it before and don't know much about it. Can we do a normal timber and iron roof pergola style area.' I said: 'I am not keen on this idea, Tom, because it is a lot more maintenance and upkeep, and does not look as good.' He said: 'I don't know where to get it from. Can you find out where I source it from?' I said: 'Sure, I will contact my cousin in Rockhampton to find out who the supplier is.' [49] I rang and got the details from my cousin and told Tom that the supplier was Panel Tech Industries. Tom then went ahead and got a quote from the supplier and we had a conversation to the following effect: He said: 'Niff, this will cost you $23,000 to construct including piers, a bricklayer, concrete, roofing system and labour.' I said: 'Yep, that's fine, let's go ahead with it.'" There is no documentary evidence about this variation. Clearly, applying the written documents, there was a variation which was required to be in writing. However it is clear that the work was done because annexed to Mr Krahe's affidavit are photographs of the veranda on the western side of the residence which show a very fine structure, if I may be permitted to say so. No-one put before me the original plans to prove that this veranda or entertainment area on the western side of the building was in fact not on the original plans. However, clearly it was, accepting what Mr Krahe says, a relevant variation not evidenced in writing.
10. Mr Murphy's affidavit in reply, sworn on 9 February 2016, exhibit B in these proceedings, states this at par 19: "I refer to paragraph [48]. Mr Krahe refers to a conversation regarding construction of an entertaining area on the western side of the House. I have no independent recollection of this conversation now. I deny that I would have said that I had not used panel tech before. I did have experience with panel tech. At pp 15 17 of TM3 is a copy of quotes and invoices from Metroll Building products dated 17 November 2003 and 13 July 2004. Metroll Building products sells the same product as panel tech, an insulated self-supporting roof. I also deny that I would have suggested using timber to span the patio area. Based on my experience, it would not have been possible to use timber due to the lack of height below the house gutter. Based on my experience and knowledge of the job, the depth of timber required to span the patio area would need to be 300 mm and this would have lowered the roof height to an unacceptable height." There is nothing to gainsay what Mr Murphy deposed to in that part of that affidavit. Indeed, one might wonder whether the order placed on Metroll Building products on 13 July 2004 related to the plaintiff's job but that requires delivery "to Millers Lane job" which is not a proper description for the defendants' address where the building work was being done.
11. As is mostly the position in the current case, Mr Murphy has no recollection or a very vague recollection of many of the conversations which are deposed to at length by Mr Krahe. Quite frankly I would not expect Mr Murphy, given the lapse of time between relevant events and the making of affidavits and the giving of sworn evidence in Court, to have any great recollection of any particular conversation. However, what Mr Murphy does say, which is really not contested, does indicate that what Mr Krahe deposed to in par 48 of his affidavit is not reliable.
12. The significance of a fixed price quotation for $23,000 for this entertainment area on the western side of the house, is that the total price paid by Mr and Mrs Krahe for the erection of the dwelling, was $165,536 which is to be contrasted with the figure given in the building contract of $142,000. Of course $142,000 plus $23,000 comes to $165,000 but clearly Mr Murphy was basing his cost on some basis other than $142,000 plus $23,000 to come to a grand total of $165,536. Furthermore, according to p 154 of the exhibit 2 of Mr Murphy's primary affidavit, that figure included no GST or any labour cost but excluded the cost of any electrical goods and any "kitchen" which may refer to the kitchen fitout.
13. The same exhibit to Mr Murphy's affidavit tells me that the total of the progress payments made amounted to $150,000 so that there was still outstanding when the work was finished $15,536 which Mr Murphy agreed to reduce to $15,000 if cash were paid. The same document tells me that there was a cheque cashed for $15,000 and it is said to be Veridian cheque number 10. The cheque butt for that document was not put before me in the defendants' case and therefore the $15,000 cheque must have been drawn and cashed.
14. To conclude my discussion of the work done by the plaintiff for the defendants in the construction of their home, I should record that an occupation certificate was issued by the Tenterfield Shire Council on 18 September 2006, indicating that at least the work was completed by that time, where, clearly, the contractual time would have expired much earlier, requiring a much earlier date for occupation.
15. As I have earlier indicated, the plaintiff's contention was that the work on the defendants house was being done on a "do and charge" basis. The executed paperwork complying with the law must be applied. I reject that contention. However it is clear that the parties themselves did not adhere to the terms of their concluded contract. This indicates to me a certain informality and flexibility in their arrangements based upon what was obviously good faith, and good will between the parties. Whatever the legal consequences of the contract, it appears to me to be highly likely that at the time the parties were happy dealing with each other on an informal and trusting basis, and, if need be, the work could be changed and the price increased without any formality being attended to at all. Whether the plaintiff company gave a fixed quote price for the "variation" is difficult to ascertain this far back. However, there is an air of implausibility in what Mr Krahe says. Mr Krahe was essentially saying, in par 48, that Mr Murphy was unfamiliar with Panel Tech, had not installed it before and had to be directed to a supplier of it before he could provide a "quotation". One must ask oneself whether a tradesman confronted with a new building medium would be rash enough to provide a fixed price quotation for dealing with materials with which he was unfamiliar. That to me emphasises that the idea of a fixed price quotation for the variation of the contract for the erection of the defendant's house, is implausible.

The driveway

1. There was one further job performed by the plaintiff for the defendants prior to the work that is the subject of the current proceedings. This was the construction of a cement circular driveway for the residence established on the Polworth Street property. Mr and Mrs Krahe had driven around and around the front of their house in an attempt to ascertain the size needed for the circular driveway. They had also practiced reversing from the garage and had laid out the size of the driveway by using garden hoses. They again asked Mr Murphy if he could organise to have the circular driveway that they had laid out in that fashion cemented. According to Mr Krahe, he said words to the following effect: "Tom, we would like it if you could organise to have the circular driveway cemented. We have laid out the size and we would like to know how much it would be to concrete the driveway." Mr Krahe alleges that immediately thereafter Mr Murphy said words to this effect: "I will take a few measurements and then calculate it out for you." After looking at the driveway, Mr Krahe said that Mr Murphy then said words to this effect: "This job you want me to do of constructing the driveway, it will cost you $10,000. I would like it to be a cash job." Mr Krahe says that he answered that remark with this: "Okay, Tom. That sounds reasonable. Can you organise it for me?" Mr Krahe alleges no further conversation leading to the completion of the driveway.
2. On 6 October 2006 Mr Krahe withdrew $10,000 in cash from his bank account and gave it to Mr Murphy as Mr Murphy had requested. Again, Mr Krahe supports his assertion with reference to a bank statement copied on p 98 of the annexure to his primary affidavit which shows a cash withdrawal of $10,000 on 6 October and on which the words "Tom Murphy, driveway" have been written in to the printed word specifying a withdrawal. In his affidavit in reply Mr Murphy generally agreed with Mr Krahes account concerning the "driveway job", but denied that he asked for cash. Nevertheless, it is clear that cash was paid.

Review of past dealings

1. Each party wished me to take into account their dealings with each other concerning building work because each party wished the Court to believe that there had been a distinct pattern to their earlier dealings which, in effect, amounted to a practice. Mr Murphy, on behalf of the plaintiff, wanted me to believe that all the work that he performed for the defendants was on a "do and charge "basis. To the contrary, the defendants asked me to believe that they had always insisted on fixed price contracts and that all the work done for them by the plaintiff was done on a fixed price basis.
2. My analysis of the dealings thus far between the parties is that the relationship was marked by informality, trust and mutual convenience. Legally, the construction of the defendants' residence was governed by their written agreement, but as I pointed out yesterday, in addition to informality and trust, there was also a flexibility in the arrangements that the parties adopted. Even when documents said to be fixed priced quotations were provided, they themselves can be ambiguous. I pointed out yesterday that the "Quotation" addressed to the insurance company provided at the end of it an estimate and one quotation for the garage provided an estimate and the cost of the work came in under the estimate and, therefore, it was hardly a fixed price contract. I can discern in the building arrangements between the parties thus far both informality, flexibility and a mutual trust, that one would do the right thing by the other.

The restaurant

1. This brings me to the work on the restaurant. Again, it is convenient to describe how this work came about. Mr Krahe's affidavit contains this matter: "[61] In late September 2006, Paula and I asked Tom if he was interested in doing the construction of the kiosk/cafe building works. Paula and I had completed some very basic drawings of what we wanted. I had a conversation with Tom to the following effect: I said: 'Tom, Paula and I have done some rough plans for what we want done at the shop. Can you have a look at it one day when you get a chance?' Tom said: 'No worries. I will have a look. I will draw the plans to scale and let you have a look at them before they go to council.' This took several months to complete and comprised of five drawings. Tom gave us these plans and said words to the effect: Tom said: 'What do you think of this?' I replied: 'It looks good. It looks like what we want.' [62] In or around late 2006 [a] discussion took place over who was doing what with the construction of the kiosk/cafe and I recall words to the effect: I said: 'Tom, we want to have the kitchen built as a bare shell so that we can organise the cool room, kitchen appliances and fit out, etc, to suit what we need. We will need to have industrial floor coverings and I will organise Kel to do that.' Tom said: 'That sounds fine. I will build it as a bare shell. What do you want to do in the cafe area? Should I leave it bare so that you can organise a counter area, etc, with John Gray so you can get what you want?' I said: 'Yeah. That sounds good. I'll organise John Gray to do the counter, Max Wiseman, to polish the floors, Adam Bowen to do the tiling, Brownie to do the electrical, and I will do the painting.' Tom said: 'Yeah. Okay. This way you can have what you want for light designs and also have your bar fit out, counter area and kitchen layout the way you want. I will give you the name of a renderer you could use as the blue board is the cheapest way possible and that is what was used at Kurrajong Downs.' I said: 'Tom, that sounds good. I will fix up for the rendering. Can you let us know how much it will cost for you to build it?' He said: 'I will get back to you once I price it up.' [63] Paula and I agreed to pay separately for the kitchen fit out, electrical, cabinet maker who was to make the counter area, tiler, renderer, painter, floor coverings in the kitchen and toilet areas and the floor polisher. In effect, Tom was asked by Paula and I to build a bare shell of a kiosk/cafe which included the plumbing and he agreed to do this. [64] Tom called to our house. Tom and I had a conversation to the following effect: Tom said: 'If you are going to do what you said you were going to do, that is, pay separately for the things we have already discussed, I can do my part of the work for you for $100,000.' I replied: 'Thanks, Tom. That sounds good. I'll organise the kitchen, the counter and the bar area, electricians, tiler, renderer, floor coverings and polishing and I'll do the painting. We will need it finished by the time Karlie finishes school. Can you have the work finished by the end of next year?' Tom said words to the effect: 'Yeah. No worries. I can get it finished by then.' Paula said words to the effect: 'Tom, we definitely need this job done by the end of next year because we want Karlie to be working here with us when she finishes school.' Tom again said: 'Yeah. No worries. I can do it for $100,000 and it will be finished by the time Karlie finishes school...'." I should indicate that the conversation alleged in par 64 of Mr Krahe's primary affidavit was said in oral evidence to have taken place in late December 2006. In essence, Mr Krahe wished me to accept that the conversation recorded in par 64 of his primary affidavit constituted a fixed price quotation for carrying out the work on the restaurant which he accepted. I should point out that if I accept what he says occurred, I would also have to accept that it was an express stipulation or provision of the contract that the work be completed by the end of 2007. It would have been well known to Mr and Mrs Murphy that the defendants' daughter Karlie had Down's syndrome and the idea was that when she finished school at the end of 2007 she could start working in the restaurant so that she had a job immediately after she finished school.
2. On any view of what actually occurred in late December 2006, the contract could only have been provisional. No building could be erected without the express permission and consent of the local authority, that is, Tenterfield Shire Council. The contract had to be conditional upon such approval being granted. Another provisional impediment to the formation of the contract postulated by the defendants is that the plans as drawn by Mr Murphy would be approved without conditions imposed by the Council, without any request for modification or and the like, so that the work which Mr Murphy proposed in the plans which he had drawn up for the Krahes would be the actual work which the Council permitted and was required of the builder. This gives rise to an implausibility, the implausibility that an experienced master builder who at the time of giving evidence in early 2016 had been a builder for 35 years would give a fixed price quotation capable of acceptance orally for a job that might never be performed, or for a job that might need to be the subject of further negotiation because Council made amendments to the plan.
3. Paragraph 65 of Mr Krahe's affidavit I have not quoted because I have just summarised some of the relevant material contained in it; that is, why it was necessary for the job to be completed by the end of 2007. Mr Krahe's primary affidavit then continues thus: "[66] After months had passed, in or around late February [,] early March 2007, with no indication of work commencing or plans even being lodged with the Council, Paula and I had a conversation with Tom in the driveway of our house to the following effect: I said: 'Tom, this building of the shop still has not started and we had wanted it to be in by the end of this year. You know we need this for Karlie when she finishes school. If you are not able to get the work completed by then, we will have to put the job out to tender. Is there a problem with the price or why haven't you submitted the plans and started the job? I know you are busy, but we need the job done by the end of the year.' Tom replied [with] words to the effect: 'No. I can do the job for $100,000 and will have it completed by the end of the year.' I said words to the effect: 'Thanks, Tom. That's good 'cause we need it really for when Karlie finishes school.'" Mr Krahe gave oral evidence that when there was mention of the job of being put out to tender, his facial expression changed, his lips pursed, his head dropped and he frowned. The inference he no doubt asked me to draw from those observations was that Mr Murphy was upset or concerned that the job might be put out to tender and, therefore, that he might lose the job.
4. A curious feature of the conversation alleged in par 66 of Mr Krahe's primary affidavit is that the concern was that the work had not progressed at all and, of course, the work could not progress at all until at least an application had been made for a construction certificate. However, if anyone bothered to look at development application 31/98, one would have observed that it lapsed on 25 March 2004. According to Mr Krahe's oral evidence, he confirmed that the conversation recorded in par 66 of his primary affidavit occurred in probably March or late February 2007. The concern was that the work had not commenced and the major concern was that the job needed to be completed by the end of 2007. If, as Mr Krahe had asked me to believe, he had entered into a fixed price contract for the completion of the work by Mr Murphy, why was it again necessary to raise the question of price in the conversation in February/March 2007? It would appear that the reason for delay known to Mr Krahe was that Mr Murphy was busy with other business. That was confirmed by Mr Murphy himself in his oral evidence. One would have thought that the concern of late February/March 2007 would not have been about price which had already been fixed, but why no application had been made to the Council which would allow the commencement of the work.
5. Adding to this concern about plausibility is the material that is then commenced to be discussed in par 69 of Mr Krahe's primary affidavit. That contains this material: "A couple of weeks later Tom called to the house. Paula and I discussed with Tom what [would] need to be lodged. The conversation was to the following effect: He said: 'I will have to ask the council what sort of application is needed for the modification or can Paula find out about that?' I said: 'Yeah. No worries, I'll ask Paula if she can get the forms or whatever is needed from council.' Tom said: 'I think you should apply to council.' I said: 'We can do that, Tom, but why?' He said words to the effect: 'I think it will be better if you do this as you know I am having the shit fight with the Council at the moment in regards to that land I bought off Una McLean. It might be to your advantage if you lodge it.' I said: 'Yeah, no worries.' Tom said: 'I am not happy with the Council and now that Jamie [Tom's brother] works there, I can't even get him to do any of my inspections. The work has been inspected by persons other than Jamie. Gee Niff, they are making it hard for me. I keep complaining to Council, but nothing is getting done about it. All my work has to be inspected by someone else other than Jamie. It is bullshit. Perhaps you should get Paula to lodge the application as they may be more lenient on you guys.' I said: 'Yeah. No worries, I will get Paula to lodge the application. What does she have to tell them?' Tom said words to the effect: 'Tell them that you are just altering the floor plan, adding the advertising sign and let them know that the value of the works is $100,000 and you should only have to pay fees on the amended part.' [70] On 10 May 2007 a Modification of Consent was lodged by Paula with Tenterfield Shire Council. Paula paid the fees based on the quote of $100,000 that Tom had provided. A copy of this application was given to Tom. A copy appears at Exhibit PK1 p 100 105.'" With the utmost respect to Mr Krahe, some of the matter contained in par 70 is completely erroneous.
6. The form lodged with the Tenterfield Shire Council was an application to modify a consent. It showed as the applicants the defendants. It was signed in two places by Mrs Krahe, once as a signature of the owner and once as a signature of the applicant. It required the applicant to specify the consent previously given. Endorsed on, in answer to that requirement, was DA31/98 of 25 March 1999. The type of modification to be made has been ticked as being minor in accordance with s 96(1) of the Environmental Planning and Assessment Act 1979. The modification has then been written by Mrs Krahe as being an alteration to existing floor plan and a proposed advertising sign. Written below that in another hand, and the inference to be drawn is it may well have been that of a council officer, has been written this matter, "Alteration to existing floor plan and associated signage." Nowhere does the form require one to state the value of the works.
7. On the application has been written on the right hand side notes by a council officer trying to ascertain what the fee should be for the lodging of the application to modify the previous consent. The final notation is this, "However, I'm okay calling it 96A equals 50% of 320 equals $160". In other words, what was being asked as the fee was half of the original fee obtained by the Council and as the original fee was $320, the fee for this application was $160. Learned counsel for the defendants suggested that the fee was based on a value of $100,000, but that is mere speculation. It is evident from the document itself as provided to the Court on subpoena and exhibited by Mr Murphy and the defendants that the council was only asking for half of the original fee for this application.
8. I hazard the observation now, as I hazarded it during the trial, that I find it difficult to accept how one could validly file an application to modify a consent on 27 April 2007, when the document is dated by Mr Krahe, or on 10 May 2007 when the fee was paid, when the original consent had lapsed on 25 March 2004.
9. Section 96(1) of the Environmental Planning Assessment Act 1979 as in force at the relevant time provided this: "A consent authority may, on application being made by the applicant or any other person entitled to act on a consent granted by the consent authority and subject to and in accordance with the regulations, modify a development consent granted by it to correct a minor error, misdescription or miscalculation. Subsections (1A), (2), (3), (5), (6) and (7) do not apply to such a modification." However, it is clear from the notes made by council officer on the document that the council officer also had considered s 96(1A) and s 96(2). Section 96(1A) at the time related to modifications involving minimal environmental impact and s 96(2) concerned other modifications.
10. Lodged with this application were the five plans drawn by Mr Murphy and four plans drawn by Mr and Mrs Krahe, or one of them, showing a north elevation, an east elevation, a west elevation and a south elevation of the proposed kitchen layout. This application was processed by Mr James Murphy as the assessment and regulatory officer of the Tenterfield Shire Council. No doubt since Mr Tom Murphy's name was not on the application to modify a previously given consent, Mr Murphy was allowed to process the application. When the application was finally dealt with, a copy of the modification of consent was given to the plaintiff company by the council, no doubt on the basis that the plaintiff company had been the applicant for the original development application.
11. The council gave its consent to the modified development application subject to certain conditions on 17 July 2007 and that consent was to lapse on 17 July 2012. The modified development consent was posted to the plaintiff company and, presumably, to Mr and Mrs Krahe on the same day, although it is always possible that Mrs Krahe picked her copy up and saved the council the expense of posting the document to her. All told, the council imposed 42 conditions, but most of them required the owner and builder to comply with various regulatory requirements as well as local planning requirements.
12. The modified development consent, however, would not of itself have permitted the erection of the restaurant building. For that, a construction certificate was required. No application for a construction certificate has been put before me. However, on 17 July 2007, the same day as the Council gave its consent to the modified development application, Mr James Murphy on behalf of the Tenterfield Shire Council issued a construction certificate to Manfate Pty Ltd, the present plaintiff, as the applicant.
13. Annexed to the construction certificate were the five drawings made by Mr Murphy for the second version of the restaurant, the four elevations of the kitchen, which I have already mentioned, and a site plan drawn on 27 August 1998, which is different to the site plan, annexed to the original development application number 31/98 but which bears the same date. There is also annexed to it a computer generated plan of the maze, the restaurant, a nearby gazebo, a nearby serpentine hedge feature and a parking area for motor vehicles, both cars and buses. Although that does not appear to me to be Mr Murphy's work, but could well be the work of Mr and Mrs Krahe. Nothing turns on that. There are, however, additional annexures. One is a "Compliance Certificate for Building Design or Specification" pursuant to the Building Act 1975, ss 10 and 50, and the Building Regulation clauses 46 and 48, and the certificate is given on the basis of a soil report numbered W4807 by SoilTech Testing Services Pty Ltd, and also a two pages of what I would call engineering drawings showing the pier layout and veranda slab plan proposed by Osborn Lane Consulting Engineers of Queensland dated 23 May 2007. The last of those documents clearly could not have been put into the Council with the application to modify the development approval already given, which was processed by the Council after paying of the fee on 10 May 2007. I do not know the date of the SoilTech certificate, but p 99 of the exhibit to Mr Krahe's primary affidavit is an account for that certificate addressed by SoilTech Testing Services Pty Ltd of Toowoomba West in the State of Queensland to "Tom Murphy Builder". That invoice bears date 29 March 2007. It is likely, therefore, that that testing certificate was also dated 29 March 2007, but testing would have been done some time shortly prior thereto. How the SoilTech certificate and the Osborn Lane plans and the new site diagrams came before the Council has not been explained.
14. However, I mention these things because they may assist with timing. If one assumes that the SoilTech testing certificate was dated 29 March 2007, the date of the invoice, and that the testing work was carried out shortly prior to the issuing of the certificate, then that would indicate that Mr Murphy started to "move" to get the process underway in March 2007, which is consistent with the conversation about putting the matter out to tender occurring in late February or March 2007. It also indicates that Mr Murphy had taken on the job for the defendants by that time. Clearly applying for a test for which a fee was payable of $440 indicates the plaintiff company undertaking to do something, so as to incur a substantial fee and is in quite a different category to Mr Murphy's plans which he gave to Mr and Mrs Krahe. It seems also likely that it may have been around the same time that Mr Murphy asked for the plans for the pier layout and veranda slab to be drawn by the consulting engineers causing them to issue the plans on 23 May 2007. I know from exhibit 1 that Osborn Lane charged a fee of $495 for doing the work that they did. Accordingly, the soil testing and the engineering drawings caused the outlay of the best part of $1,000 by the plaintiff company and indicate that the plaintiff company/Mr Murphy had taken on the job by March 2007.
15. Mr Murphy's affidavit in reply makes it clear that he does not have any independent recollection of Mrs Krahe being present at particular conversations, but his recollection is that Mrs Krahe was not present during any conversations which took place during the day, that is, during ordinary working hours, as Mrs Krahe was at the council chambers doing her work as a council officer. The affidavit in reply then says this: "[23] I refer to paragraph [62]. I generally agree with the conversation set out except that I deny that I ever said I would price the job up. I did not do a contesting for this job because I was charging on a 'do and charge' basis. There was not enough detail or certainty about the build for me to give a fixed price. The cost would also depend upon how much work Mr Krahe did. I also had to coordinate the works around other contractors which also, in my experience, had the potential to impact upon costs. It was my recollection that Mr Krahe came up with a renderer that he wished to use. [24] I refer to paragraph [63]. It is incorrect to categorise work that Manfate performed as being a 'bare shell'. The work performed included partitioning, disabled access, installation and supply of urinals, installation and supply of door hardware and concrete pathways, walkway access and balconies on verandas. The work performed by me for Manfate also included coordination of different tradespeople. In order to conduct the work efficiently and to minimise costs, it was necessary for me to ensure that the work was carried out in a cost effective manner based upon my experience. Manfate was responsible for the programming of the works by the contractors that were directly engaged by Mr Krahe. [25] I refer to paragraph [64]. I deny that at any stage did I ever provide a fixed price quote. It was not my usual quoting method to provide fixed prices for jobs of this size or complexity. It was my usual practice to carry out a quantity surveying exercise based on my experience after consultation with material suppliers and a detailed estimation of labour costs. It is not possible in the building business to stay viable without carrying out such an exercise as prices fluctuate. Also, in every fixed price contract, it is my usual practice to include an allowance for prime cost items, or PC items. There are a number of items in this job which, based upon my experience, would have been costed in a fixed price contract as PC items because the costs of those items varies according to the type of item that is selected. For instance, the following elements of the kiosk job had the potential to vary in cost depending upon the item that was selected: a. the bricks/besser-blocks - generally it is my experience and my usual practice to include a brick/block allowance in any fixed price contract as selection of bricks/blocks which, as one of the largest materials used in the construction of building, can impact upon the price. Based upon my experience, besser block vary in cost from, approximately, $2.50 for a basic besser block to around $5.50. b. the decks- based upon my experience, the type of decking and what species of timber is used can also have a significant impact on the price. Based upon my experience, some timbers are more expensive than other timbers. For this job the Krahes' selected Merbau timber, which is one of the more expensive timbers, for their decks. Based upon my experience, the hardwood flooring for the timber floor, which is the flooring used in the kiosk restaurant, can also vary in price significantly depending upon which hardwood is selected by the Krahes. Based on my experience, the cost of the hardwood flooring can also vary according to the size of the floorboards and how wide the floorboards are. I cannot now recall what species of hardwood was selected by the Krahes for the restaurant. It is my usual practice to include a PC allowance for flooring and decking in a fixed price contract. c. the hand railing and balustrading the Krahes selected timber handrails and balustrading. Based on my experience, timber is more expensive than steel. It is my usual practice to include a PC allowance for hand railing and balustrading in a fixed price contract. d. the rendering - it is my usual practice to include a rendering allowance as there are different types of rendering with different costs. For instance, one can use a coloured render or one can render and then paint. Based upon my experience, rendering and painting is cheaper than using a coloured render. It is my usual practice to include a PC allowance for rendering in a fixed price contract. [26] I refer to paragraph [66]. I deny that I ever said that I could do the job for $100,000 or that I ever provided any fixed cost for the job. [27] I refer to paragraph [67]. I have a vague recollection that there was a suggestion that the Krahes might put the work out to tender. I do not believe that I would have been offended as Manfate had other jobs and I was not making any profit on the restaurant/kiosk, unlike my other jobs. I could not have built the restaurant/kiosk for the price that it was built had I not had other work which allowed Manfate to make a profit. If Mr Krahe had not been a friend and if I had not undertaken the job in the spirit of 'mates rates', the profit I would have usually charged on any other job for Manfate would have been at least $20,000 and probably in the vicinity of $25,000." One will have noted that I did not cite earlier par 67 of Mr Krahe's primary affidavit. That is because it was struck out. However, par 27 of Mr Murphy's affidavit in reply responds in many respects to par 66 of Mr Krahe's primary affidavit.
16. There is validity in what Mr Murphy states in par 25a, b and c of his affidavit in reply. Without there being any specifications, how could there be a fixed price contract? One would not give a fixed price quote if one did not know, for example, what sort of bricks or blocks were to be used, what sort of timber was to be used for floorboards, what sort of handrails and balustrades were to be used, what sort of timber was to be used on the deck and what sort of window hardware was to be supplied. Furthermore, the arrangement reached between the plaintiff and the defendants was the defendants would provide as much of the work themselves as they could, meaning that Mr Krahe himself would do work such as painting and, perhaps, from time to time as a labourer, as is often the case with an "owner/builder", or that he himself would provide those who, in other circumstances, would be subcontractors to the builder. However, if any of those arrangements fell through, then it would fall to Mr Murphy/the plaintiff as the builder to supply what Mr Krahe could not.
17. For example, according to conversation quoted by Mr Krahe, he asked Mr Murphy to supply to him the name of a renderer he could use, but according to Mr Murphy Mr Krahe ultimately came up with his own renderer. The idea of a fixed price contract in these circumstances is implausible. In fact, the more one considers the matter in detail, the prospect becomes even risible.
18. There is, in my view, a fatal blow to the defendant's contention that this was a fixed price contract. If it were a fixed price contract orally made in either late December 2006 or even orally made at the meeting in late February/March 2007, when there was talk of the matter being put out to tender, that such contract was conditional, but the conditions precedent to the contract being fulfilled, that is, the consent of the Tenterfield Shire Council and no major modification or no substantial modification, the building designs having been fulfilled, then the plaintiff was required to build the restaurant in accordance with the plans for the fixed price. Any other arrangement required a modification of the contract, in essence, the making of a new contract or an agreement to modify the earlier contract. Such modification or alteration required consideration.
19. There is no dispute that there was a relevant alteration or modification to the works to be carried out, but according to the defendants, no discussion about any differing price when it is clear that the alteration caused an increase in the actual costs incurred by the plaintiff. If Mr Murphy had agreed to a fixed-price contract, then, when any modification/alteration/variation was proposed, and that modification/alteration/variation would need to be costed, and a new lump sum figure arrived at. That simply was not done. It is extremely implausible that Mr Murphy, having agreed on a fixed price contract, would modify work at the request of the defendants and increase the work to be done and the cost to be incurred and not raise the question of increased cost at all. In my view, that makes it unlikely that Mr Murphy, on behalf of the plaintiff, put forward a fixed price quotation capable of being accepted and forming a fixed price contract.
20. Paragraph 33 of Mr Murphy's affidavit in reply contains this matter: "[33] […] Whilst the restaurant was constructed broadly in accordance with the plans exhibited at p 101 to 109 of Exhibit PK1, there were a number of variations that were instructed by Mr Krahe. These variations were: a. the installation of three roller doors as opposed to the one roller door shown on p 102 of PK1; b. the deletion of the disabled access ramp shown on p 103 of PK1 and the increasing size of the steps shown on the Western elevation, as well as additional concreting leading to the entry. I observed that I installed, approximately, 30 metres2 of additional concrete; c. at p 104 of PK1 is a drawing depicting piers. At Mr Krahe's instruction, I changed the spanning so that instead of piers, I put in light steel beams to support the floor and load; d. I supplied and installed a grease trap where there was no grease trap shown on the plans." I leave to one side the matter referred to in par 33b of what I have just quoted.
21. The second of the five pages of drawings made by Mr Murphy that formed the basis of the restaurant building show both a northern elevation of the restaurant and a southern elevation of the restaurant. Underneath the southern elevation, beneath the southern veranda, on what would be the eastern side is a space showing where two water tanks stood at ground level but under the balcony. On the western side of those two water tanks is shown a roller door which was 2.4 metres wide. Instead of that one roller door, three were installed. They gave increased access to the undercroft of the restaurant and increased the amount that could be stored there. According to Mr Murphy's oral evidence, that was not only an increase in the cost of providing roller doors, which themselves are relatively modest in cost, but increased the amount of concrete that needed to be laid behind the roller doors and required the removal of piers leading to the insertion of the light steel beams referred to in par 33c of Mr Murphy's affidavit in reply, which I have just quoted. Mr Murphy pointed out in oral evidence that the cost of the light steel beams was much greater than the cost of piers. In that regard he was not challenged.
22. In my view, this was a significant variation of the contract and required, whether the contract was in writing or oral, a express consent to it by Mr Murphy on behalf of the plaintiff, and any resulting obligation on the part of the defendants to pay for the increased costs of this variation. That never occurred and, according to Mr Krahe, was never discussed. As I said, that is extremely implausible. If Mr Murphy had agreed to do the whole of the works for a fixed price, and Mr Krahe was aware of that, if the works were to be altered, the fixed price had to be altered as well. However, Mr Krahe did not even think about that. To me, suggests that in his mind there was no fixed price contract at the time that this variation was requested and acceded to by the plaintiff through Mr Murphy.
23. On 30 December 2007 the plaintiff company delivered to the defendants a tax invoice for "first progress payment on restaurant construction as per contract. Total cost $25,000". A cheque for that sum was drawn on 26 January 2008 and was given to the plaintiff on 29 January 2008. A further tax invoice was delivered by the plaintiff to the defendants bearing the date 28 April 2008. It is stated to be "Stage 2 progress payment on restaurant construction as per contract". That is, again, for $25,000. The defendants drew a cheque on 1 May 2008 for $25,000 and that was presented and honoured on 7 May 2008. The plaintiff presented another invoice to the defendants on 21 July 2008 and a cheque was drawn by the defendants on 20 August 2008 for a further $25,000 and appears to have been presented and honoured on the following day. As I indicated at the commencement of these reasons, with one exception the work required of the plaintiff was completed by 2 December 2008. On 30 December 2008 the plaintiff delivered to the defendants a further tax invoice for "Stage 4 progress payment on restaurant construction" for a further $25,000. On 14 January 2009 the defendants drew a cheque for that sum and it was presented and honoured on 14 January 2009.
24. Interestingly, although the tax invoice of 30 December 2008 claims to be a "progress payment" and not a final payment, there has been written on the cheque stub for cheque 00231 the word "final". The document put before me is merely a photocopy, a photocopy placed upon another photocopy. It is p 148 of the annexure to Mr Krahe's primary affidavit. Mr Krahe has written on that document before the words "shop payment" the word "final", and he said on oath that was written by him on 14 January 2009 and not subsequently, but I had not seen the original cheque stub, and the handwriting to me indicates that the word "final" has been written in subsequently, because it is at an angle to the rest of the writing on the cheque stub. In any event, nothing probably turns on that because any post contractual dealings between the parties cannot be used to interpret what the contract means. Both Mr Murphy in putting "progress payment" on his invoice for 30 December 2008 cannot mean that one would expect a further payment invoice that might be expressed to be final nor can one use the word "final" based on the cheque stub completed on 14 January 2009, an indication that nothing more needed to be paid under the contract by the defendants.
25. Towards the end of Mr Murphy's primary affidavit occurs the following: "[114] Manfate's involvement in the construction of the kiosk/restaurant works ceased in or about November 2008. [115] [Deleted on objection by the defendants]. [116] At this time I recall I had several conversations with the Krahes during which they said words to the following effect: TM: 'My total costs for the kiosk/restaurant works are more than the amounts I had invoiced you.' PK: 'Okay, but we need to open the kiosk/restaurant and start making some money before we can pay you.' [117] So the Krahes could begin to operate and generate income from the kiosk/restaurant, I arranged for an interim occupation certificate to be issued by the Council. I recall that I had several conversations with the Krahes with words to the following effect: PK: 'What do we need to do so that we can open up and start working?' TM: ' You will need an occupation certificate. I can arrange that for you if you need.' PK: 'Yes. Thanks, Tom.' [118] On 2 December 2008 an inspection was carried out and on 3 December 2008 an Interim Occupation certificate was issued...'".
26. The defendants deny that Mr Murphy had any conversation with him in which he advised them that there would be further costs beyond what he had already invoiced them. Mr Murphy clearly believed that this conversation was before the issuing of the interim occupation certificate on 3 December 2008. Nevertheless, it is clear that an invoice was delivered by him on 30 December 2008, almost four weeks later, for a further sum of $25,000 and not for the balance of all work done. Mr Murphy in his oral evidence said that that was because bills come in, in December, which might not be paid until January, and that this is a very busy period of time, which the Court can readily accept in respect of nearly almost any industry, and that includes the law.
27. That there may have been a pressing need to get the premises opened so that income could be derived can be explained by the fact that the defendants were in debt at the time of the first progress payment, 30 December 2007. At the time that the first progress payment cheque was presented and paid, the defendants were in overdraft to the extent of $52,441.44. At the time the fourth instalment payment was actually made, the extent of the overdraft had increased to $195,388.65. That is a substantial of debt for anyone. Mr Krahe said he was not particularly perturbed because he had agreed with his bankers for a higher overdraft than that, but anyone, no matter how high the overdraft approval might have been, would need to try to reduce the amount of indebtedness to the bank.
28. As I mentioned at the commencement of these proceedings, the final occupation certificate was not issued by the Tenterfield Shire Council until 26 November 2010. So it would appear for the best part of the year the restaurant may have been used by the defendants to derive income on an interim occupation.
29. In Mr Murphy's primary affidavit, after telling me what transpired in early December 2008, he next turns to an event that occurred on 20 August 2009, an attempt to recover what he said were outstanding amounts of money. However, a number of things of importance occurred in the interim.
30. The covering letter for the interim occupation certificate, which is also dated 3 December 2008, stipulated that prior to the issue of a final occupation certificate there still needed to be done work complying with consent conditions 2, 3, 7, 9, 11, 18, 40 and 41. Consent condition 2 required the building to be protected from subterranean termites by an approved system as specified in the relevant Australian Standard. As I understand it, that had been done.
31. What was outstanding was the provision of the certificate certifying that the system had been installed. Condition 3 required that the council be provided with certain details concerning the roof frame. Again, as I understand it, the work had been properly done. What had not been done was the submission of the certificates that established what needed to be proved. Condition 7 required the provision of portable fire extinguishers complying with certain requirements of the Building Code of Australia 2007. That, essentially, is a provision of chattels which would not have fallen within the works to be completed by a builder. Condition 9 was this: "Entrance to the proposed development shall be ramped to permit disabled access in accordance with ASI428 2001." That was outstanding at the council inspection on 2 December 2008. Condition 11 related to the proposed advertising sign. Condition 18 related to the lighting of the premises being shielded and directed so as not to cause grievance to the owners or occupiers of adjoining premises or glare to motorists on adjoining or nearby roads. The provision of the lighting system was the defendants' responsibility. Condition 40 related to the proposed car parking and bus parking area. The evidence before me does not permit me to ascertain whether there was the responsibility of the plaintiff under the arrangement struck with the defendants. Condition 41 concerned access to the parcel of land upon which the restaurant was erected and required the issue of a permit by the Director of Engineering Services in accordance with the Roads Act and the Council's Road Network Management Plan.
32. Of the items I have identified, the clear outstanding issue, as far as the builder was concerned, was the disabled access. That is addressed by Mr Krahe in his primary affidavit. It is not clear to me, however, when the disabled access was actually constructed. Mr Krahe in his primary affidavit says this: "[83] At the end of August 2008, council inspector Darryl Reilly, whilst carrying out the final inspection of the wet areas, had a conversation with Tom and I [sic] in relation to the gradient of the disabled access. He said words to the effect: 'The gradient on the plans is not going to work and does not comply with council regulations. There are a few different options on the way you can make this work. You can either start your ramp from the middle of the car park, which isn't ideal, but the gradient will be right, or a series of smaller ramps zig zagging from the car park entrance to the entrance of the shop with the right gradient. This option will take up a bit of room. The other option is to follow the contour of the ground around the garden edge over there and up to the shop with the cement path.' I said to Tom: 'What are we going to do now for the entrance?' He said: 'What about a set of 1200 steps from here?' I said to Tom: 'That would be a bit small what about a deck, some steps and concrete to join the disabled access?' Tom said: 'That will cost you more.' I said: 'How much more?' Tom said: 'I will have to work it out and get back to you.' [84] Tom got back to me a few days later and said: 'That extra work for the disabled access and deck will cost you an additional $10,000.' I said: 'Yeah, we have to do this as we have to have access and the original plan does not comply.'" In his affidavit in reply Mr Murphy said this: "[39] I refer to paragraph [83]. I generally agree with the conversation except my recollection is that I proposed solution for the disabled access. [40] I refer to paragraph [84]. I deny that I ever quoted $10,000 as a fixed price for the disabled access. I have reviewed the business records of Manfate and the actual costs of the disabled access was $4,140. At p 422 of my exhibit TM1 is a document showing a breakdown, including the cost of the disabled access. [41] I refer to paragraph [85]. I deny that I ever provided a fixed price verbal quote of $10,000 for the disabled access. I deny that I ever provided an agreed quote of $100,000 for the restaurant." I have quoted the last of those paragraphs even though par 85 of Mr Krahe's primary affidavit was struck out on objection by learned counsel for the plaintiff.
33. Exhibit 1, which was delivered by Mr Murphy to Mr Krahe in late 2009, clearly shows the cost of the disabled access as being $4,140, but that includes the Colorbond fence at the house which ought to have been excluded. This does suggest that the assertion by Mr Krahe of a fixed price quote of $10,000 for the disabled access is a recent invention because if that had been agreed, why, one wonders, would Mr Murphy have provided to the defendants a breakdown of the cost of the disabled access and fence as being $4,140, considerably less than what Mr Krahe says was agreed, and more than double the actual cost, which, in light of the relationship between the parties existing up until this time, appears to me to be extremely unlikely. When the disabled access was actually completed has not been established, as far as I can ascertain.

Dispute

1. There is no dispute that around the end of July 2009 there was a falling out between Mrs Judy Murphy and the second defendant, Mrs Paula Krahe. That is attested to in Mrs Krahe's affidavit, sworn on 15 October 2015, exhibit 6. That details this dispute: "[88] On or around the end of July 2009, when returning home from work, Judy arrived at our house and we had a conversation to the following effect. She said, 'Paula, what's the problem? You seem distant lately'. I said, 'I think our relationship has deteriorated over the last two to three years for quite a few different reasons. I have become more and more distant from you because of your continued efforts to find out anything that is going on at the council. You are always trying to put me in a position when you ask how much people have paid for their properties and when you know I am not able to discuss this information. I also don't like your continued gossip about people, whether true or not, as it is having a negative impact on my life and you only do it to make yourself look good. One day you will know me down the street and the next day you will look straight through me. It depends on who is around. You are becoming more and more like Mrs Bucket [pronounced Bouquet] out of the ABC series, 'Keeping up Appearances' and it is affecting our relationship. We are all equal and you should remember where you came from.' [89] Judy did not look impressed and she left in haste. [90] I discussed the altercation with Peter when he came home and he said words to the following effect. 'Oh dear, and how did she take that? I think you had better go and see her tomorrow and see if she is okay.' [91] The following day I visited her home to discuss what had happened the previous day, was greeted through an inch gap in the back screen door, and she said words to the following effect: 'You are not welcome here.' [92] I have not spoken Judy since." Thankfully, the issue as who might be to blame or be at fault for this uncharitable behaviour is not before me. Suffice to say that the two ladies remain estranged and this has affected the relationship between the two families, between Mr Tom Murphy's family and Mr Peter Krahe's family, despite the long friendship between those two gentlemen, a friendship that could be described as almost lifelong. This, indeed, is most unfortunate.
2. There is no dispute that on 20 August 2009, Mr Murphy visited Mr Krahe at the restaurant and handed him a list of work which had been done. The original document is exhibit 2. It is addressed to "Peter and Paula" at "Kraze Maze", the name that had been adopted by the defendants for the development of their Polworth Street property, which development included the restaurant. The first thing that the communication lists is payments to December 2008 amounting to $100,000. Then is stated that the "Full Construction" cost of the restaurant, as required, was $190,400. There is then a list of what was included in the total cost. The list is this: "Disabled access $3,186 Wire for balustrade $2,673 Grease Trap $2,500 Water Tanks $3,200 Slab under floor area $1,400 Fence/gate at house $952 Aluminium plant $260 Timber floor $5,870 3 Roller doors $1,260 Patio roofing $10,720 Toilet partitions $3,500 Urinal $1,380 Decking and handrail $4,800 Door closers/handles $980"
3. After reciting his receipt of that communication from Mr Murphy, Mr Krahe, in par 94 of his primary affidavit, attested that at no stage prior to that occasion had Mr Murphy informed him that he believed he was owed anything beyond the payments that had already been made. That is consistent with what he says happened when there was a discussion when Mr Murphy provided him with the final invoice dated 30 September 2008. That discussion, and what was not discussed, is outlined in pars 87A and 88 of Mr Krahe's primary affidavit of which I shall not recite.
4. According to Mr Krahe's affidavit, on the morning of 21 August 2009, Mr Murphy went to his house to discuss the list that he had given to Mr Krahe on the previous day. According to Mr Krahe, this exchange occurred: " I said, 'The only extra money I believe that I owe you is the $10,000 for the disabled access and entrance, as we agreed when you provided us your fixed price. How could you fuck up so much when you only quoted us $100,000?' Tom said: 'I don't know, but I did'. Tom appeared to be lost for words and unable to look me in the eye. He then left."
5. It is common ground that in or around mid-December 2009, Mr Murphy delivered to Mr Krahe what has become exhibit 1, a breakdown of costs for the restaurant construction "as requested" detailing in close typescript over three pages the work done, and annexing to it all copies of invoices and the like which Mr Murphy received in connection with the work at the restaurant. A further copy of exhibit 1, but one bearing the date 19 May 2010, is annexed to Mr Murphy's primary affidavit and is clearly a document which may later have been given to Mr Krahe on or about that date, or it may just represent a dated reprinting of the original which is exhibit 1.
6. Exhibit 2 has been noted in blue ink by one of the defendants. A further copy of exhibit 2 is exhibit 3, on which is additional writing in black ink dated 20 May 2010 by Mr Murphy, and notes in red ink also made by Mr Murphy. There is also some blue ink on the document. Where it comes from, I know not, or from who it comes, I know not. Clearly, the parties were not ad idem as to price and who was liable after the falling out between Mrs Murphy and Mrs Krahe. The defendants say that the demand for further payment by Mr Murphy on 20 August 2009 was a direct consequence of the falling out between the ladies. The plaintiff says that the position adopted by the defendants after the falling out between the ladies, that this was a fixed price contract, was, in essence, a recent intention following upon the falling out of the ladies and taking a stance that nothing further was payable.
7. However, there was one further payment by the defendants. According to Mr Krahe's affidavit, when Mr Murphy delivered to him the documents which are exhibit 1, there was a conversation to this effect: "He said: 'Here is a list of invoices relating to the costs of the cafe.' I said: 'I will pay you the $10,000 as agreed for the disabled access and entrance, but a quote is a quote Tom, and that is all you will be getting.' He said: 'You still owe me $84,712.' I said: 'I am only going to pay you $10,000 because a quote is a quote.' Tom then left." On 16 December 2010, Mr Krahe visited Mr Murphy at Mr Murphy's work site in Manners Street, Tenterfield. He handed over a cheque for $10,000. That cheque was presented on 17 February 2011, and was honoured. There were then further attempts between the parties to try to reach an accommodation as to the outstanding claim made by the plaintiff. Mr Murphy accepted the cheque and said, as one would expect him to say, that although they were in dispute about how much was owing, he would accept any cheque which reduced the indebtedness to the plaintiff. I do not believe I should dwell any further on subsequent dealings between the parties, which were clearly dealings where an issue had been joined between them, and when there were attempts to try and resolve the issue.

Consideration

1. A major problem with the plaintiff's case is the assertion by Mr Murphy that he never quoted a figure of $100,000, which could be accepted to generate a fixed price contract. He says that in circumstances where he has a very vague recollection of conversations. He can, for example, remember there being reference in late February/March 2007 to the matter going out to tender, and he can recall, after the falling out between the ladies, that Mr Krahe was repeating the words, "a quote is a quote". However, in cross-examination, Mr Murphy did make appropriate concessions. In cross-examination on 8 March 2016, Mr Murphy gave this evidence, commencing at p 83 of the transcript: "Q. You would agree then, would you not, if you look at paragraph 62 [of Mr Krahe's primary affidavit], apart from your disagreement with the words "bare shell" that sets out the conversation that you had with the Krahes after you drew the drawings, would you not? A. I don't recall the full conversation, your Honour. Q. But there is nothing there you disagree with, is there? A. I just answered your question about floor polishing. I don't recall Mr Max Wiseman's name being brought up at that stage. That would have been a thing possibly half way through the job, your Honour. Q. You would accept though, wouldn't you, that you were asked by Peter, 'Can you let us know how much it would cost for you to build it?' A. I don't recall that, your Honour. Q. You accept it is possible that he asked you? A. I don't recall that, your Honour. HIS HONOUR: Q. Hang on, but is it possible, you know, I mean you've got no recollection, so something could have happened or it could not have happened, might not have happened? A. Yes, you're correct, your Honour. Q. So you can't exclude the possibility that Mr Krahe might have asked you for a quote? A. There is a possibility then, yes, your Honour." Later this evidence was given, which is recorded on p 86 of the transcript: "Q. Could I ask you to have a look at paragraph 64 of Mr Krahe's affidavit. I suggest to you that what's set out there is an accurate account of conversation that you had with Mr Krahe? That you admitted that? A. No, your Honour, there was never a quote or estimate given. Q. You accepted earlier that it's possible that you were asked to provide a price for work, did you not? A. I don't recall that, your Honour. HIS HONOUR: Q. Earlier today you told me that there's a possible that Mr Krahe may have asked you to give him a quote? A. Yes, well I stand corrected. There is a possibility. REYNOLDS Q. So you would accept that if that occurred you would in fact have given him a quote, would you not? STEELE: I object. It's all hypothetical, the witness hasn't said that it occurred. He said he has no recollection on that basis, he said it was a possibility. He hasn't said that it was a possibility because he had any proper recollection. REYNOLDS: I withdraw the question. HIS HONOUR: Yes, thank you. REYNOLDS Q. Would you agree that the work on the restaurant was a fairly large project for the Krahes would you not? A. Size wise, per square metre it wouldn't be much different than their house construction I suspect. Q. It'd by surprising, was it not, for them to have not asked you for an estimate or quote on amount for the work prior to your doing it, wouldn't it? A. I can't answer on what they would have done themselves, your Honour. Q. Well, you accept, don't you, that they asked you for a price for the restumping and all the other work you did for them up until this point in time you accept that, wouldn't you? A. Yes, your Honour. Q. So it's possible, isn't it, that they asked you for a price and that you gave them an answer and you'll just forgotten? A. It's possible like your Honour said but I don't believe there was ever a quote given." In case one thinks that Mr Murphy was being overly deferential when giving evidence, I should draw to the listener's attention the fact that it appeared that Mr Murphy believed that cross-examining counsel was entitled to be called "your Honour". The last question and answer are, in my view, of moment. The question put was whether it was possible that the Krahes ask for a "price". Mr Murphy replied that it was possible, but he did not believe that there was ever a "quote" given.
2. It is extremely implausible that Mr and Mrs Krahe would have built this restaurant without having some idea of the cost of it. It is highly probable that they did seek "a price" from Mr Murphy as to how much the restaurant might cost. It is possible, indeed probable, that they were given a "price" of $100,000. However, providing a "price" or "estimate" is not the same as making a formal fixed price quotation that can be accepted as constituting a binding agreement. I believe that there would have been some discussion about the probable price of the restaurant and I believe that it is quite possible that Mr Murphy mentioned a sum of $100,000. However, one should observe in what I have just said my avoiding the use of the word "estimate" because ordinary people do not use words the way lawyers do.
3. As I said, I think it is highly plausible that an estimate, in substance, was asked for by the Krahes. Mr Murphy, on behalf of the plaintiff, provided an estimate as a lawyer understands that term, and that the parties proceeded on that basis. I do not accept, however, that there was a formally quoted price of $100,000 that Mr Murphy proposed for which he could do the work. Rather, when one looks at the transaction that did occur, one sees, again, informality and trust.
4. To give the significance of a price estimate given by Mr Murphy, which the defendants says it has, would indicate that significance must also be given to the stipulation that the works be completed by the end of 2007, when it is clear that they probably only commenced in 2007, and, although they may have reached practical completion at the end of 2008, were not formally completed until 2010, yet it is not part of the defendants' case that the term as to when the restaurant was to be completed was a term of the contract, the breach of would might entitle them to damages.
5. On the other hand, it is implausible in the extreme that a person in Mr Murphy's place, bearing in mind his experience, would have quoted a price that could constitute a fixed price contract at the end of 2006 or into February/March 2007 when there was no approval for the work until July 2007 and when no specifications at all had been made for a large number of variables that would affect the price of such a contract. Furthermore, the parties clearly dealt with the matter prior to the disagreement between the ladies as if this were a contract which could be varied at will, where nothing was certain at any particular stage, for example, whether Mr Krahe could obtain a tradesman to do work directly for him, who otherwise might need to be engaged by the defendant as a subcontractor.
6. The evidence of Mr Murphy is, in my view, more plausible than that of the defendant's and the lack of or vague recollection of Mr Murphy as to conversations conducted years ago is more credible than the extensive recollections deposed to by the defendants.
7. It is my view that Mr Murphy undertook to do the work of constructing the restaurant conditionally, probably in late February or early March 2007. He had worked up plans. The Krahes wanted the restaurant built and, spurred on by a conversation in which there was talk the matter being put out to tender, Mr Murphy set in train what needed to be done in order to get both an appropriate development application and an appropriate construction certificate and then to commence the work. That is evidenced by the facts of obtaining the certificate from SoilTech Services Pty Ltd on or about 29 March 2007 and also obtaining by 23 May 2007 the plans from the consulting engineers as to the footing design and subfloor bracing for the proposed restaurant.
8. Thereafter, the work proceeded as Mr Murphy deposed to, in the same physical way, that work had been done on the Krahe's' residence, that work would be done, that Mr Krahe would do what he could, that he would retain his own tradesmen if he could, and that Mr Murphy coordinated their efforts. If it were necessary to change the plans or change the design, that was done and there was no need to provide any revised price at any time. Also, despite the desire that the work be finished by the end of 2007, no exception was taken that the work actually carrying on to the end of 2008. Again, there was the informality and the flexibility in the arrangements for the construction of the restaurant as there were in the construction of the house, and, until the ladies fell out, continued trust and goodwill between the parties.
9. There was no express stipulation in the oral contract as to price. However, in my view the parties proceeded on the same basis on which the house had been constructed, as specified by Mr Murphy in evidence, which I quoted today, it was being done on a "mates rates" basis, where the plaintiff company would not charge any margin or make any profit out of the work, but merely charge the defendants the actual costs incurred by the plaintiff company in the carrying out of the work.
10. I reject the submission that this is a case where there was no consensus ad idem, no contract, and that, therefore, the matter should be approached on the basis of a quantum meruit . There was work done and materials provided because an undertaking by the plaintiff, through Mr Murphy, to do the works which were proposed by of the defendants. There was, as I said, no express term as to price, but, implied through the parties' earlier arrangements, was an understanding that this would be done on a "mates rates" basis.

Quantum

1. I trust that from the submissions of the plaintiff put last Thursday in Armidale, in which Ms Steele and I discussed the appropriate measure of damages, that the damages as specified in the first part of MFI 11, the plaintiff's amended schedule of damages, relates only to the actual costs and charges incurred by the plaintiff company less amounts paid by the defendants and that that amount is $92,142.40.
2. The plaintiff claims interest from 26 May 2011. Why that date was chosen is not clear to me. The defendants submit that the plaintiff should only have interest from the date of the commencement of the proceedings, 6 March 2015. Succinctly put, the defendant's position is that as no "tax invoice" had been rendered, that the appropriate date for making an order for interest is the commencement of the proceedings. In other words, a statement of claim has the same significance as a tax invoice, which, in my view, is a very brave submission. Clearly the parties were not ad idem by August 2009 - when Mr Murphy delivered to Mr and Mrs Krahe, the defendants, exhibit 2, which bears date 20 August 2009. That is not itemised, but exhibit 1 is greatly itemised and it is accompanied by the invoices et cetera that the plaintiff company received for the doing of this work. Left to my own devices, I would have been quite comfortable in ordering interest from 1 January 2010, but as interest is only claimed by the plaintiff in the schedule of damages from 26 May 2011, I am happy to make that order.
3. I have inquired of counsel for the parties whether any further reasons for judgment are required and I am told that none is so required. For those reasons, I give verdict and judgment for the plaintiff against the defendants for $122,335.10.
4. The purpose of an award of damages for breach of contract is usually to place the plaintiff in the position which he would have occupied had the defendant performed the obligation breached. Here the obligation was to pay for the costs of the goods and services provided. The actual cost of goods and services which are unpaid was $92,142.40 to which I have added interest. I believe it to be quite ironical that if I were to award damages on a quantum meruit, the damages would have been $112,477.84 plus interest, which is what was proposed by the plaintiff, if the plaintiff succeeded on the basis quantum meruit. Quantum meruit was formally part of what was called the law of quasi contract. It is now been established by the High Court of Australia that it is a remedy available to prevent unjust enrichment of a defendant to the detriment of a plaintiff. Here the plaintiff wanted to recover for unjust enrichment damages which would have exceeded the quantum of damages if the plaintiff succeeded on a breach of contract. In other words, the remedy for "unjust enrichment" would give, the plaintiff, according to his counsel's submissions, more than he would have received had the contract not been breached. That indicates to me unjust enrichment of the plaintiff. I would not have, had I found that there was no concluded contract, awarded more to the plaintiff than the plaintiff would have recovered had his remedy been for breach of contract.

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: 11 May 2016