Mitchell v Pacific Dawn Pty Ltd

EQUITY - GENERAL PRINCIPLES - UNDUE INFLUENCE AND DURESS - DURESS - where the plaintiff and the defendant entered into a building contract - where a dispute arose between the parties as to the amount owed by the defendant to the plaintiff to settle the contract - where the parties subsequently entered into a settlement agreement - whether settlement agreement entered into under economic duress - whether settlement agreement unenforceable

EQUITY - GENERAL PRINCIPLES - OTHER FORMS OF EQUITABLE FRAUD - where the plaintiff and the defendant entered into a building contract - where a dispute arose between the parties as to the amount owed by the defendant to the plaintiff to settle the contract - where the parties subsequently entered into a settlement agreement - where the plaintiff was under financial and commercial pressure at the time of entering into the settlement agreement - whether plaintiff was under a special disadvantage - whether defendant knew plaintiff was under a special disadvantage - whether settlement agreement obtained by unconscionable conduct - whether settlement agreement unenforceable

ACCC v C G Berbatis Limited [2003] HCA 18; (2003) 214 CLR 51, followed

ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, applied

Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, cited

Crescendo Management Pty Ltd v Westpac ltd (1988) 19 NSWLR 40, applied

D. & C. Builders Ltd v Rees [1965] EWCA Civ 3; [1966] 2 QB 617, distinguished

Denmeade v Stingray Boats [2003] FCAFC 215, followed

Kostopoulos v G E Commerical Finance Australia Pty Ltd [2005] QCA 311, followed

Parkesinclair Chemicals (Aust) Pty Ltd v Asia Associates Inc [2000] VSC 362, applied

Westpac Banking Corporation v Cockerill (1998) 152 ALR 267, cited

[1] The plaintiff, Mr Mitchell, was engaged to build a multi-storey unit development for the defendant, Pacific Dawn Pty Ltd, at 62 High Street, Toowong by a contract dated 2 September 1999. Towards the end of the project controversy arose about the amount said to be owed by Pacific Dawn to Mr Mitchell to finalise the contract. On 22 December 2000 there was a meeting between the parties chaired by the project architect, a Mr Tan, at which Mr Mitchell represented his own interests. Mr Bill Fan and Mrs Carolyn Fan, the directors of Pacific Dawn, represented its interests at the meeting.

[2] In Mrs Fan's words, Mr Fan was handling the business side of the project while she was managing the money.[1] During the meeting Mr Mitchell entered into a settlement agreement partly drawn up by Mr Tan by which he agreed to accept $2,831,387.40 as a final settlement at practical completion. In addition to amounts previously paid and, as found by Ambrose J at an earlier trial, the agreement required a payment of $160,000 on that day, a further payment of $46,799.00 plus GST on or before 22 June 2001 and $66,250.00 from retention funds then being held to cover the costs of rectifying defects. Those payments were made by Pacific Dawn but the settlement agreement was attacked by Mr Mitchell on the ground that it was entered into by him under coercion or economic duress or as a result of unconscionable conduct. A further ground pleaded as an attack on the agreement, that Pacific Dawn had misrepresented its own financial means to him, was not pressed at the hearing.

[3] There is a long procedural history to the case. Two questions had been ordered to be heard separately and were heard by Ambrose J in August and September 2002. The first question was whether a legally binding agreement arose out of the meeting of 22 December 2000 and his Honour decided that one had.[2] His Honour also decided that the agreement was unenforceable because it was arrived at by the application of improper economic duress.[3]

[4] There was an appeal which did not challenge his Honour's finding in respect of the first issue but ordered that his second determination or answer be set aside and determined by another judge on the basis that his Honour had not appropriately analysed or found facts sufficient to enable him to decide whether Mr Mitchell "had been compelled by duress or economic coercion imposed by the defendant to sacrifice a valuable claim for the immediate satisfaction of receiving only a fraction of what was really due to him".[4]

[5] That was partly because of an error by his Honour as to the amount said to be owed by Pacific Dawn to Mr Mitchell by 22 December 2000.[5] After the appeal the matter was not set down for rehearing for nearly six years during which, I gather, there were eventually fruitless negotiations and further contests about the pleadings taking the matter to the Court of Appeal again.[6] The question to be litigated has now been re-formulated to read as follows:

On the assumption that the agreement pleaded in paragraph 22 of the Third Further Amended Statement of Claim and paragraph 23 of the Fourth Further Amended Defence and Counterclaim was entered into, was that agreement arrived at by the application of coercion or duress such as to make it unenforceable as pleaded in paragraphs 18-25 of the Third Further Amended Statement of Claim, or as a result of misrepresentation as alleged in paragraph 24 thereof or as a result of unconscionable conduct as alleged in paragraph 24A thereof, which paragraphs are defended in paragraphs 19-26 of the Fourth Further Amended Defence and Counterclaim, which paragraphs are in turn replied to in paragraphs 23-34 of the Amended Reply and Answer?

[6] In answering that question, and in endeavouring to assess the value of what may have been sacrificed by Mr Mitchell on 22 December 2000, it is useful to go into some detail about the events leading up to that meeting. In carrying out that exercise I have been assisted significantly by the parties' written submissions, especially the defendant's factual summary, which provides much of the material for the next part of these reasons.

[7] In April 1998, Pacific Dawn, through its architect, Mr Tan of HH Tan Architects Pty Ltd, called for tenders for the construction work associated with a mixed commercial and residential development at a property located at 62 High Street Toowong. In July 1998, Mr Mitchell approached Mr Tan and stated that he (Mr Mitchell) could undertake the building works for the project for $2,368,000.[7] At about this time, Mr Mitchell also said to Pacific Dawn that he only looked after one project at a time.[8]

[8] After reconsidering the project, in July 1999 Pacific Dawn called for fresh tenders in relation to the project. Mr Mitchell provided a tender in the sum of $2,484,640 for the works associated with the project.[9] Mr Mitchell also obtained and provided a calculation of costs for the project from Total Estimating Services, which came to $2,809,977 (being $2,613,934 for the works, and a builder's margin calculated at 7.5% being $196,043).[10]

[9] Concerned about the estimated cost, Pacific Dawn decided to call the project off.[11] But in August 1999, Mr Mitchell offered to enter into a lump sum building contract for the project with a guaranteed upper limit of $2,650,000 and stated that the works could be completed by April 2000.[12] Mr Mitchell confirmed this by letter dated 17 August 1999.[13] Relevantly, this was also Mr Mitchell's biggest building project ever, one he described as "a challenge".[14] Subsequently, Pacific Dawn arranged a $2.7 million loan facility through the National Australia Bank.[15] NAB required that any draw down upon the facility be certified by Currie & Brown, quantity surveyors.[16]

[10] On 2 September 1999, Mr Mitchell and Pacific Dawn entered into a lump sum building contract for the project.[17] As had been discussed and agreed, the price of the works under the building contract had a "guaranteed upper limit cost" of $2,650,000.00.[18] By Item B9 of the Appendix, the date for practical completion was 25 April 2000.[19]

[11] Relevant terms of the building contract included the following:

The Proprietor and the Builder expressly agree that the Architect is hereby authorised:

5.2.1 To issue instructions to the Builder where this Agreement so requires or provides;

5.2.2 to supply to the Builder copies of any documents pursuant to clause 2.1 and to furnish setting-out information to the Builder pursuant to clause 6.4; and

6.2.1 The Builder is and shall be responsible for the superintendence of the Works so as to ensure that the Works are executed in accordance with this Agreement and shall for this purpose from time to time as necessary maintain a competent person on the Works.

The Builder shall comply with all statutes, ordinances, regulations and by-laws of any authority having jurisdiction over the Works or with whose systems the same are or will be connected and shall subject to sub-clause 10.7.3 pay all fees and charges legally recoverable in respect of the Works, and:

Any defects, excessive shrinkages and other faults due to materials or workmanship not in accordance with this Agreement, which are apparent and notified in writing by the Architect to the Builder after the Date of Practical Completion and before the end of the Defects Liability Period

The Builder shall be liable for and shall indemnify the Proprietor against any liability, loss, claim or proceeding in respect of any injury, loss or damage whatsoever to any property real or personal insofar as such injury, loss or damage arises out of or in the course of or by reason of the execution of the Works provided always that the same is due to the negligence, act, omission or default of the Builder, the Builder's servants, agents of any sub-contractor, or the sub-contractor's servants or agents and provided further that the indemnity hereby given shall be reduced proportionately to the extent that the negligence, act, omission or default of the Proprietor or any person other than the Builder for whom the Proprietor is responsible may have contributed to such injury, loss or damage.

The Architect shall decide the date when in the Architect's opinion the Works have reached a stage of Practical Completion

9.2.1 Delay shall be notified by the Builder as follows:

.1 Upon it becoming evident to the Builder that progress of the Works is likely to be delayed, the Builder shall notify the Architect stating the nature, cause and if known the extent of the delay;

.2 if the Builder's notice given under 9.2.1.1 does not state the extent of the delay then the Builder, as soon as practicable after becoming aware of the extent of the delay, shall notify the Architect of the extent.

9.2.2 Should progress of the Works be delayed due to causes beyond the control of the Builder, then the Builder shall be entitled to a reasonable extension of time for Practical Completion.

9.2.3 The Architect shall determine whether an extension of time for Practical Completion shall be granted and the extent thereof and shall so notify the Builder in writing within 10 days of receipt of the Builder's notice under sub-clause 9.2.1 or where applicable sub-clause 9.2.1.2.

9.2.4 If the Architect does not notify the Builder in terms of sub-clause 9.2.3 the time for Practical Completion of the Works shall be deemed to be extended by the time stated in the Builder's notice given under sub-clause 9.2.1, or where applicable sub-clause 9.2.1.2.

9.2.5 Notwithstanding the provisions of this clause the Architect may at any time, by notice in writing to the Builder during the currency of this Agreement, extend the time for Practical Completion if in the Architect's opinion the Builder is entitled to such an extension.

At intervals as nominated in Item J of the Appendix (or less at the discretion of the Architect) the Builder may submit to the Architect claims for progress payments, including a statement of the Builder's valuation of work done.

Within 5 days of receiving a progress claim, the Architect shall issue to the Builder a Progress Certificate showing:

10.2.1 The contract value of work done as assessed by the Architect;

10.2.5 any amount which the Proprietor is entitled to deduct pursuant to clause 10.14

If the Builder shall fail to bring the Works to Practical Completion by the Date for Practical Completion then:

10.10.1 The Architect may give notice in writing to the Builder and the Proprietor not later than 20 days after the date of Practical Completion that in the Architect's opinion the Works ought reasonably to have been brought to Practical Completion on some earlier date stated in that notice not being earlier than the Date for Practical Completion.

10.10.2 If such notice is given the Architect using the rate stated in Item P of the Appendix shall calculate and advise the Builder and the Proprietor of the total value of Liquidated and Ascertained Damages. The Proprietor shall then determine and advise the Builder if damages will apply, and the Builder, if so required, shall pay or allow the Proprietor the sum calculated by the Architect.

The Proprietor shall have no right to damages for delay apart from that expressed in this clause."

[12] By cll 10.11 and 10.14 and Items Q and R of the appendix, the builder seems to have been required to provide security or retention monies in the amount of 8% of the contract sum, but neither Mr Mitchell nor Pacific Dawn required the retention amount to be set aside in a separate bank account.

[13] Certain special conditions were also inserted into the building contract by clause 15. These included the minutes of meeting originally dated 13 July 1998 and redated 2 September 1999, which became Appendix 1 to the building contract. Those minutes provided:

"(1) Mitchell Construction would construct the Residential and Commercial Development at 62 High Street for a guaranteed upper limit cost of $2,650,000.00.

(2) All savings would be shared equally between Bruce Mitchell Construction and Pacific Dawn Pty Ltd.

(4) A fee of 7.5% of the construction cost would be paid to Bruce Mitchell Construction at completion of the project.

(5) Bruce Mitchell Construction would be responsible for approving all payments to Sub-contractors and Pacific Dawn will pay sub-contractors through the bank.

(6) A second mortgage on a property located at Coomera would be provided by Bruce Mitchell Construction as security towards satisfactory completion of the project.

(7) Pacific Dawn was responsible for any unforeseen problem with foundation work." (Emphasis added)

[14] Special condition 4, relating to the fee of 7.5% of the construction cost being payable at completion, was referred to in passing in the Court of Appeal by McPherson JA as entitling Mr Mitchell to an additional fee of that percentage above the "guaranteed upper limit cost of $2,650,000.00".[20] I was told that that interpretation was not argued before the Court and the evidence did not suggest that Mr Mitchell acted on the basis before then that the fee of 7.5% was additional to that figure of $2,650,000.00.[21] Mr Bain QC's submission for Pacific Dawn was that it was a fee intended to be incorporated in the overall price. For present purposes the argument has what seems to me to be only marginal relevance in addressing whether there was economic duress or an unconscionable bargain as neither of the parties to the contract seems to have dealt with each other on the basis that such a fee was an additional sum payable to Mr Mitchell. The history of the negotiation of the contract referred to in paras [8] and [9] above also suggests that the "guaranteed upper limit" was intended to include the builder's fee.

[15] Mr Mitchell alleged that in January 2000, the building contract was varied by the parties such that:

(a) the building contract became a "cost plus" contract with a shared savings incentive scheme and a builder's margin of 7.5% on the construction costs;

(b) progress claims were to be submitted by Mr Mitchell to Currie & Brown, quantity surveyors appointed by the NAB;

(c) Pacific Dawn would pay the certified amount of each draw down certificate issued by Currie & Brown by approving payment of that amount by the NAB;

(d) clauses 1, 5 and 6 of Appendix 1 of the building contract were no longer to apply;

(e) otherwise the terms and conditions of the building contract continued to apply.[22]

[16] Pacific Dawn denies that any such variation took place in relation to the building contract.[23]

[17] Mr Mitchell originally contended that the alleged variation took place by way of an oral discussion with Mr Fan shortly after the execution of the building contract,[24] before 7 October 1999.[25] Mr Mitchell subsequently deposed that the alleged variation took place pursuant to an oral discussion with Mr Tan, but in January 2000 rather than before 7 October 1999.[26]

[18] Mr Tan disavows any such conversation but Mr Mitchell relies on a letter of 31 January 2000 in asserting that he confirmed such a variation and argues that his version should be accepted.[27] It is also plain from the terms of the building contract that Mr Tan, as the architect, was not invested with authority to agree to any such variation to the building contract. It was submitted for Pacific Dawn, therefore, that there was no evidence of any conduct on the part of Mr Tan or Pacific Dawn that would clothe Mr Tan with implied or ostensible authority to enter into such a variation with Mr Mitchell.[28] If any such variation was to have occurred, it was submitted that it could, and should, have been raised by Mr Mitchell with Mr Fan during one of the site meetings that took place fortnightly until August 2000.[29]

[19] It was also submitted that, although Mr Mitchell contends that the reference to "Bill Fan" instead of "Tan" in his first affidavit was simply a mistake,[30] that purported explanation simply did not bear scrutiny because Mr Mitchell had to have given the instructions in relation to his first affidavit.[31] Secondly, there was a significant difference both in time as well as the identity of the critical parties. In addition to Mr Mitchell's explanation, ultimately, it was submitted, there was no suggestion by Mr Mitchell that any oral or written discussion took place with any director of Pacific Dawn (or other suitably authorised person) in relation to the alleged variation.[32] Accordingly, Mr Mitchell's assertion that the building contract changed from a lump sum contract to a "cost plus" contract was said to be unsustainable.

[20] That conclusion is likely to be correct in my view although I would be prepared to assume in Mr Mitchell's favour that his reference to "Bill Fan" was mistaken rather than a deliberate falsehood. For present purposes, in any event, whether there had been such a variation was not vital to the issues that were to be decided by me.[33]

[21] Mr Mitchell commenced work on the project in early October 1999.[34] Some rock was encountered during the course of excavation, which gave rise to an accepted variation claim. In the course of excavation, Mr Mitchell caused an adjacent car park to be undermined, causing collapse and property damage. This was Mr Mitchell's responsibility under cl 8.1 of the building contract and, it seems clear, was met by a claim on Mr Mitchell's insurance in relation to the project.[35]

[22] The April 2000 date for practical completion came and went. Mr Mitchell acknowledges that he never made any claim under the building contract for an extension of time.[36] Further, Mr Mitchell indicates that virtually every alleged delay took place in 1999 or early 2000 - in the first 16 weeks of construction.[37] In the main, these appear to relate to excavation in rock and alleged "design changes". As to the former, excavation was complete in January 2000. As to the latter, the engineer in relation to the project himself indicates that no design changes gave rise to any significant delay.[38] Accordingly, there was no significant evidence that would have justified the 30 week delay (upon a 34 week construction program) that endured until practical completion.

[23] As from 1 July 2000, GST legislation affected progress claims made under the building contract. Mr Mitchell simply informed Pacific Dawn that progress claims from July 2000 would include GST, rather than (contrary to his pleading)[39] reaching agreement as to the application of GST to future progress claims.[40]

[24] Notably, Mr Mitchell deposed that under the alleged variation to the building contract in January 2000, the parties also agreed that GST would be applicable to the building contract.[41] At the time of the alleged variation, however, there was no suggestion the works would still be on foot after June 2000, nor was there any evidence beyond Mr Mitchell's assertion about the change to the contract that GST was then discussed.

[25] With a bill facility limit of $2.7 million, Pacific Dawn had little margin to pay for any significant variations that might arise under the building contract. By August 2000, however, variations claimed by Mr Mitchell under the building contract were $196,190.50 taking the adjusted contract sum to almost $2.8 million.[42]

[26] In August 2000, Mrs Fan sold a house owned by her at Sunnybank Hills, in order to meet the variation claims made under the building contract.[43] This gave Pacific Dawn access to (approximately) a further $219,000 to meet the cost of variations for the project.[44] The sale of the house took place at this time, because Mr Mitchell had represented that practical completion would be achieved by September 2000.[45]

[27] Pacific Dawn sourced ceramic tiles that formed part of the works for the project, at a cost of $52,900.57.[46] Pacific Dawn paid for these tiles on 29 September 2000. Mr Mitchell agreed to Pacific Dawn sourcing these tiles, as it was able to do so at a cheaper price than was available to Mr Mitchell.

[28] Notwithstanding that Mr Mitchell did not pay anything for the ceramic tiles, he claimed $33,502 for them in his Progress Claim No.10,[47] increasing to $37,970 in his Progress Claim No.11,[48] and finally $44,670 in Progress Claim No.12, which was Mr Mitchell's "practical completion claim".[49] Accordingly, the cost of the ceramic tiles was a sum that should have been deducted from the guaranteed upper limit under the building contract, and reconciled in relation to any final claim made by Mr Mitchell.

Assessment of Mr Mitchell's progress claims by Currie & Brown

[29] As required by NAB in respect of Pacific Dawn's bill facility, Currie & Brown assessed each of the progress claims made by Mr Mitchell in relation to the project. Currie & Brown did not sight the contract documentation.[50] Likewise, it is not suggested that Currie & Brown was privy to any conversation upon which Mr Mitchell relies in respect of converting the building contract into a "cost plus" contract.

[30] Notwithstanding, Currie & Brown endorsed on their progress certificates that the building contract was a "cost plus" contract. Such an endorsement can only have arisen from representations made by Mr Mitchell to representatives of Currie & Brown.[51] It was submitted that it was equally plain that no such endorsement was binding upon Pacific Dawn.[52]

[31] It is also relevant, however, to note that Currie & Brown described the project as "a 'cost plus' contract with a shared savings incentive scheme" and referred to the "Original Contract Sum" of $2,650,000. Given these parameters, counsel for Pacific Dawn submitted that the contract described by Currie & Brown in fact accorded with the terms of the lump sum building contract; that is, a lump sum contract but that if Mr Mitchell was able to complete the project works for less than the building contract price then any such savings would be shared between Mr Mitchell and Pacific Dawn.[53]

[32] Between October 1999 and October 2000, Mr Tan assessed Mr Mitchell's progress claims and the draw down certificates provided by Currie & Brown and authorised payment of them. It is not suggested that any issue arises in respect of the payment of any of those progress claims.[54] However, it is plain that at no stage did Mr Mitchell provide any documentary records to support the costs actually incurred in respect of the period the subject of the various progress claims. That fact by itself, it was submitted, is antithetical to the notion of a "cost plus" building contract.

[33] On 3 October, Mr Mitchell issued Progress Claim No. 10 (although this was Mr Mitchell's 12th progress claim).[55] In its assessment of Mr Mitchell's claim, Currie & Brown noted:[56]

Based on Mitchell Builders construction value less work completed to-date the cost to complete is $408,917.31.

Refer to attached spreadsheet for further details of work completed.

5. ...Construction did not commence until 9 November 1999. The construction period for this project is 34 weeks which would give a practical completion date of 5 July 2000. Some delay has been experience (sic) due to the large extent of rock excavation required. Additional delays caused by wet weather during the early months of this year have also contributed to delays. We would therefore forecast a completion date at the end of October 2000."

[34] Mr Mitchell does not suggest that any of this information is incorrect, or that he had issued a notice to extend the date for practical completion, or that he had received an extension of the date for practical completion. Similarly, in earlier draw down certificates issued by Currie & Brown the expected date for practical completion is estimated as June 2000, then July 2000, then September 2000. Mr Mitchell acknowledges that Currie & Brown was provided with Mr Mitchell's claim schedules, although Currie & Brown was never given Mr Mitchell's invoices or other paperwork in relation to his claims. However, what is plain is that Currie & Brown obtained information in relation to expected completion dates from Mr Mitchell, and that Pacific Dawn had no input into the information found in Currie & Brown's draw down certificates.

[35] On 2 November 2000, Mr Mitchell issued Progress Claim No. 11 in respect of the project. Under that progress claim, Mr Mitchell claimed payment of $278,959.21, including GST of $25,359.93.

[36] In its draw down certificate, Currie & Brown:

(a) listed variations as totalling $232,837.47 (including an estimated water connection fee of $9,500) with an adjusted contract sum of $2,836,387.47;

(i) construction costs certified to date were $2,652,751.81, with retention of $140,403.00;

(ii) the cost to complete the project was $183,635.66;

(iii) the forecast day for practical completion was late November 2000.

Meeting on 6 November 2000 - Practical Completion Agreement

[37] At a meeting on 6 November 2000, Mr Mitchell said that practical completion would occur by 20 November 2000.[57] By this time, Pacific Dawn's bill facility with the NAB was near exhausted.

[38] Pacific Dawn's argument was that an agreement (which was referred to by it as the practical completion agreement) was made whereby Mr Mitchell, upon the promise to deliver practical completion on 20 November 2000, would receive on that day the retention sum of $140,403 (which, by agreement, had not been paid into a separate bank account), the amount certified under Progress Claim No.11 and the sum of $183,635.66 (the practical completion sum) endorsed on Currie & Brown's draw down certificate in respect of Progress Claim No.11.[58] As noted by Mr Mitchell's letter to Mr Tan dated 13 November 2000, the practical completion agreement still contemplated a retention sum of 2.5% (although Mr Mitchell sought to reduce it to 1% in this and later correspondence).[59]

[39] In return for Mr Mitchell's agreement on these terms, Pacific Dawn would not insist upon viewing all of Mr Mitchell's invoices and other documents he relied on in support of his claims under the building contract. Given the shared savings incentive scheme that applied to the building contract, plainly Mr Mitchell would otherwise have been required to provide his invoices for inspection.[60]

[40] Given that Currie & Brown used information obtained from Mr Mitchell in the course of their preparing information on their draw down certificates,[61] it was submitted for Pacific Dawn that it could hardly be suggested by Mr Mitchell that the practical completion sum was foisted upon him. To the contrary, the practical completion sum was described as a figure that Mr Mitchell had assessed as being accurate at that time.[62]

[41] Although minutes of the meeting on 6 November 2000 were prepared that recorded the building contract as a "cost plus" contract, Mr Fan explains that he saw no reason to argue about this in light of the agreement that Pacific Dawn reached with Mr Mitchell, with practical completion and final payment to Mr Mitchell to occur soon.[63]

[42] Pacific Dawn's argument was that the practical completion agreement continued in force or underpinned the discussions between the parties until 22 December 2000. Mr Mitchell's argument was, however, that the evidence for Pacific Dawn about the terms of this agreement was imprecise and uncertain, particularly in respect of the retention money and the payment of GST, and that the situation was that Pacific Dawn did not pay certificate no 11 on time and that, accordingly, Mr Mitchell was entitled to revert to the earlier agreement and did so. Whether the earlier agreement was the lump sum contract or the cost plus alleged variation was not clear. In arguing that conclusion should be reached Mr Bowden relied on this passage from the reasons of McPherson JA for the Court of Appeal:[64]

"[4] On 6 November, which was the day before certificate no 11 was due for payment, a meeting was convened, which was attended on one side by Mr Fan (who was the principal of the defendant proprietor) and Mr Tan the architect, and on the other side by the plaintiff and his foreman Mr Tones. At the meeting, the defendant agreed to pay certificate no 11 forthwith and also to arrange for release of retention money of $140,403, in return for payment to the plaintiff of a further sum of $183,653.66 to be paid on completion of the works, which was then expected to take place on 15 November 2000. For reasons apparently related to further work that had to be done, the plaintiff later advised that the project would be completed on 25 December 2000. What was more, certificate no 11 was not paid in full at once as promised. Instead an amount of $140,000 was paid on 10 November; a further amount of $60,000 on 1 December; and a third amount of $100,000 on 21 December, taking the total paid to $300,000, which was a little more than the sum of $278,959.21 including GST due under certificate no 11.

[5] As a result of the defendant's failure to pay certificate no 11 on time as promised, the plaintiff treated the variation agreement of 6 November as no longer binding, and reverted to the terms of the contract as it had been before that date. In the meantime, however, the plaintiff was being threatened by unpaid subcontractors one of whom was threatening to enter the site and remove materials which he had placed there. On 22 December a further meeting was arranged between the parties represented as before, at which the compromise agreement was reached that is now the principal subject of this appeal. The agreement, as found by his Honour, was that the plaintiff agreed at that meeting to accept, in full settlement of all his claims under the contract, payment by the defendant of:

(a) $160,000.00 inclusive of GST on 22 December 2000;

(b) $46,799.00 plus GST on or before 22 June 2003 [sic semble 2001]; and

(c) $66,250.00 from retention funds then being held to cover costs of rectifying defects." (Emphasis added.)

[43] Mr Bowden's submission for Mr Mitchell was, therefore, that on any view the commitment made by Pacific Dawn in early November 2000 was to pay to Mr Mitchell a total amount of $602,997.00 by 15 November 2000 or 20 November 2000 (depending upon which version of the agreement is adopted) made up of the amount referred to in progress certificate 11 of $278,959.21, retention money of $140,403.00 and the completion amount of $183,635.00 (with or without GST). In his submission Pacific Dawn's financial position during November 2000 was such that it could never have met that commitment and thus its continued pursuit of this "agreement" lacked candour.

[44] Further, he submitted that, by at least 22 November 2000, the parties had abandoned the "agreement", apparently because of Bill Fan's apparent equivocation about Pacific Dawn's right to insist on production of invoices by Mr Mitchell.[65] That conclusion is not obvious to me. Whether the contract was described as lump sum or cost plus, production of the invoices would have been required because of the profit sharing aspect contained in its terms. It is useful, however, to examine the subsequent series of events, although, in the end, it does not affect my conclusion about the validity of the agreement reached on 22 December 2000.

[45] By letter dated 8 November 2000 addressed to Mr Tan, Mr Mitchell set out some different figures in relation to payment to him to achieve practical completion.[66] In response, by letter dated 9 November 2000 Mr Tan said to Mr Mitchell that agreement had been reached on 6 November 2000 in relation to the payment to Mr Mitchell to achieve practical completion.[67] The critical part of this letter is:

"It was agreed at this meeting [on 6 November 2000] that Claim 11 processed by Currie & Brown be accepted and that the amount of $183,635.66 stated in the Claim will be the amount required to complete the above building. It was agreed that Pacific Dawn will arrange for the release of $140,403.00 retention held by National Bank on confirmation of acceptance of the amount stated in Claim 11 prepared by Currie & Brown.

However, if the amount remains the same as per Claim 11 prepared by Currie & Brown, the retention amount will be released on Friday (10 November 2000), with the balance on completion of the project and the need for presentation of invoices will not be necessary for the release."

[46] Mr Mitchell endorsed that letter as follows:

"I hereby accept this offer within this letter on the clear understanding that I will be paid my final claim within 7 days of the Final Certificate issued by Currie & Brown."

[47] By this endorsement, it was submitted for Pacific Dawn, Mr Mitchell indicated his acceptance of the practical completion sum to be paid to him to bring the project to practical completion.[68] Additionally, it was submitted, notations made by Mr Mitchell on another copy of this letter as to how he calculated the cost to bring the project to practical completion again indicate that the practical completion sum was not foisted upon Mr Mitchell, but was a considered sum that was acceptable to Mr Mitchell.[69]

[48] Pacific Dawn also submitted that it was important to note that there was no suggestion that there would not be a retention sum after payment to Mr Mitchell in accordance with this agreement. Counsel submitted that it was perfectly plain, accordingly, that the release of the "retention sum" was intended as a part payment of Progress Claim No.11, and that the balance of the amount endorsed on Currie & Brown's certificate for Progress Claim No.11, and the practical completion sum, would be paid within 7 days of a certificate issued by Currie & Brown as to Mr Mitchell's practical completion claim.

[49] In accordance with the practical completion agreement, on 10 November 2000 Pacific Dawn paid to Mr Mitchell $140,000 (representing "the retention sum").[70]

[50] Counsel for Pacific Dawn also relied on a letter dated 13 November 2000, [71] in which Mr Mitchell stated that:

"The meeting we had on the 6th November 2000, as described in your letter is accepted as witnessed by all present...."

[51] This statement was submitted to be a clear admission that Mr Mitchell's letter dated 8 November 2000 was an attempt by Mr Mitchell to manipulate, to his advantage, what had previously been agreed. To the contrary, Mr Bowden submitted that Mr Fan had accepted that no final agreement had been reached on 6 November and that Mr Mitchell said he would go away and check his figures, which he did, and so he was entitled to write the letter of 8 November.[72]

[52] Counsel for Pacific Dawn also submitted that it was important to note that, in the letter of 13 November 2000 there was no suggestion that Pacific Dawn had not complied with the practical completion agreement by not, at that stage, paying the balance of Progress Claim No.11 and that Mr Mitchell stated that he hoped to achieve practical completion of the project by 20 November 2000, demonstrating that final payment under the practical completion agreement was expected to be only a short time away.

[53] The practical issue not addressed completely explicitly in these exchanges appears to have been when the balance of Progress Claim No. 11 was to be paid. It may have been overlooked because of the expectation that practical completion was close at hand. Prima facie, it was due to be paid on 7 November but the letter of 9 November speaks of the balance being released on completion of the project. Mr Mitchell, however, acted later on the basis that he should have been paid that balance of the progress claim earlier. That does not seem consistent with his having accepted the terms of the letter of 9 November.

[54] Mr Mitchell also requested that the retention component of the building contract be reduced from 2.5% to 1%.[73] This request was said to confirm that release of the "retention sum" under the practical completion agreement was intended as a part payment of Progress Claim No.11, not as any suggestion that there would be no retention sum after performance of the practical completion agreement.

[55] By letter dated 13 November 2000, Pacific Dawn thanked Mr Mitchell for accepting (in accordance with the practical completion agreement) the final costs to complete the project that had been noted by Currie & Brown in relation to Progress Claim No. 11. It was also noted that final payment would be made to Mr Mitchell on practical completion, in accordance with the practical completion agreement.[74]

[56] On 15 November 2000, Mr Mitchell claimed that further ventilation works were required to the residential portion of the car park.[75] His case was that this was a variation to the work required by the contract because it was ventilation of the residential portion of the car park which was not part of the contract works. In response, Mr Tan wrote to Mr Mitchell referring to an apparent change in opinion by a Mr Fisher in respect of this issue as creating a "huge problem" because Mr Mitchell had agreed "to a nil variation" to bring the project to completion.[76] Further, it was submitted for Pacific Dawn, ventilation works were plainly part of the project works because of a reference in a pre-construction report to allowance being made for mechanical ventilation of the car park.[77] Accordingly, Pacific Dawn did not agree to any variation to the contract price on account of any additional ventilation works required.[78]

Verification of payment of sum under the practical completion agreement

[57] At the request of Mr Mitchell, on 17 November 2000 Bill Fan sent a letter to Mr Mitchell verifying that Pacific Dawn could pay the agreed sum (of $2,836,387.47) to bring the works for the project to practical completion.[79] Mr Mitchell's own inquiries, however, through his bank of Pacific Dawn's bank, referred to in his letter of 16 November 2000, had caused him to believe that Pacific Dawn may not be able to obtain sufficient funds.[80]

Request for further immediate payment by Mr Mitchell

[58] On 18 November 2000 Mr Mitchell issued a letter in which he stated that there were three issues:[81]

[59] In this letter Mr Mitchell claimed that there had been a short payment by Pacific Dawn of $136,959.21 in respect of Progress Claim No.11. It was submitted that this statement, like the references to other amounts said to have been owed attempted by Mr Mitchell in his letter dated 8 November 2000, disregarded the practical completion agreement. There was no suggestion, however, that there had been any alteration to, or any request by Mr Mitchell to alter, the practical completion agreement.[82]

[60] Mr Mitchell also stated in his letter dated 18 November 2000 that he needed $9,500 plus GST to get the water and fire services connected by the council. Like the ceramic tiles, Mr Mitchell was responsible for this cost under the building contract (by cl 6.3). Accordingly, payment of this sum by Pacific Dawn[83] should, as with payment for the ceramic tiles, be deducted from the sum payable to Mr Mitchell under the practical completion agreement, given that this sum had been claimed by Mr Mitchell as one of the variations that formed part of Progress Claim No. 11 and which therefore formed part of the practical completion agreement.[84]

[61] Mr Mitchell also stated in his letter dated 18 November 2000 that it had rained during the previous week and therefore he lost four days, but that practical completion should be reached on Friday or Saturday of that week, which was 24 or 25 November 2000.[85]

[62] By this time, Pacific Dawn was anxious for practical completion to occur, as every passing day was putting financial pressure on Pacific Dawn, because, as it argued:[86]

(a) interest was accruing under Pacific Dawn's loan facility with National Australia Bank;

(b) a number of units in the development had been pre-sold; and

(c) Pacific Dawn was dependent on the receipt of settlement monies from unit sales to repay its facility.

[63] It was submitted on behalf of Mr Mitchell that the sale of units during 2001 proceeded at a leisurely pace and that it was not obvious that the passage of time was putting financial pressure on Pacific Dawn. Mr Bowden also submitted that Pacific Dawn had been slow in meeting payments requested by Mr Mitchell for contractors or outstanding invoices and had also been slow in paying the balance of progress certificate 11 and argued that by the end of November 2000 it was at least $100,000.00 in deficit in addition to a liability to repay a Mr Chang a $100,000.00 loan which was then overdue.[87] He argued that Pacific Dawn was probably then insolvent on a cash flow basis.

[64] On 20 November 2000, a meeting was held between Mr Mitchell, Mr Fan and Mr Tan. At this meeting, Mr Fan rejected Mr Mitchell's suggestion that Pacific Dawn had made any "short payment" of Progress Claim No.11. Further, because Mr Mitchell had not reached practical completion as promised and now required further funds to achieve practical completion, Mr Fan said that Pacific Dawn would pay the council water connection fee provided that Mr Mitchell provided to Pacific Dawn all documents relating to the construction work for the project.[88] Mr Mitchell agreed to this, and also said that he would achieve practical completion before 25 November 2000.[89] Critically, in Pacific Dawn's submission, the minutes of this meeting show that this is all that was discussed and agreed. There is nothing to suggest that at this meeting either party agreed to vary the practical completion agreement in any other respect.

[65] By letter dated 21 November 2000 from Mr Mitchell to Mr Tan, Mr Mitchell again suggested, it was said disingenuously, that Pacific Dawn was withholding part payment in relation to Progress Claim No.11,[90] and "assumed" that the job reverted back to the original "cost plus" contract, a variation Pacific Dawn contended had not occurred as discussed above. Relevantly, however, Mr Mitchell acknowledged that the council fire and water services connection fee of $9,500 formed part of the variations claimed in relation to Progress Claim No.11,[91] and deducted that sum from the amount outstanding in respect of Progress Claim No.11.

[66] In a brief meeting on 22 November 2000, Mr Mitchell provided five hardback folders containing invoices from 1 July 1999 to 30 June 2000, and cash receipt pages 1 to 27.[92] Mr Mitchell also refused a request from Mr Bill Fan to contact Mr Mitchell's suppliers and subcontractors.[93]

[67] Mr Mitchell subsequently wrote a letter dated 22 November 2000 in which he attempted to justify his "assumption" by suggesting that "the job reverts back to Cost Plus", and that the sum he would require at practical completion was approximately $50,000 more than the practical completion sum (mostly due to increased costs associated with ventilation and mechanical louvre costs).[94] Again, Pacific Dawn submitted, there was never any abandonment of the practical completion agreement (or, again, any cogent evidence that the building contract ever became a "cost plus" agreement).[95]

[68] On Friday 24 November 2000, Bill Fan returned the invoice files that Mr Mitchell had by then provided, and said to Mr Mitchell that he wanted practical completion to occur that week. Mr Mitchell again asked for more money to pay outstanding invoices. In response, Bill Fan asked (as he had done in relation to the water and fire services connection fee) to see unpaid invoices before Pacific Dawn would make any further payment to Mr Mitchell.[96]

[69] On 25 November 2000 Mr Mitchell provided invoices for July to August 2000 in relation to the construction work.[97] On 27 November 2000 Bill Fan returned those invoices to Mr Tan's office, and found Mr Tan, Mr Mitchell and Mr Ian Tones, Mr Mitchell's site foreman for the project, in a meeting. At this meeting Bill Fan requested the remaining invoices (both paid and unpaid), and said to Mr Mitchell that, after checking his cash receipts, it appeared that he (Mr Mitchell) should have had enough money to pay all his subcontractors and suppliers. Mr Mitchell did not deny this. Rather, he said that he would gather together his remaining invoices, and would be able to settle the building contract on 29 November 2000 at midday.[98]

[70] Mr Fan's evidence was that Mr Mitchell's cash receipts and invoices indicated that:

(a) the sums that he had paid to subcontractors and suppliers were much less than the amount he claimed in relation to performing the works under the building contract[99] (as to which Mr Mitchell concedes that he did not record every cheque he had written in respect of the project);[100]

(b) numerous invoices allocated to the project appeared to relate to other projects undertaken by Mr Mitchell[101] (a number of which Mr Mitchell subsequently conceded were allocated to the wrong job);[102]

(c) some invoices were the subject of multiple claims by Mr Mitchell[103] (as to which Mr Mitchell subsequently conceded at least one was incorrect);[104]

(d) there were several missing invoices and doubtful claims[105] (as to which, again, Mr Mitchell subsequently conceded at least one was incorrect and another was highly doubtful, and in respect of others Mr Mitchell has simply said "will balance account", indicating further errors);[106] there was doubt over the "savings" claimed by Mr Mitchell;[107] and

(e) contrary to the terms of the building contract (whether or not varied as alleged by Mr Mitchell), he had paid himself in the course of his undertaking the project.[108] This is not denied by Mr Mitchell; rather, by way of explanation he says that the building contract became a "cost plus" contract.[109] However, it is not Mr Mitchell's case that there was any change to the term of the building contract that required Mr Mitchell to receive his builder's margin at the end of the project.[110]

[71] Pacific Dawn argued that Mr Mitchell paid himself earlier than he was entitled to be paid which caused Pacific Dawn to pay more funds to him at an earlier point in time in respect of progress claims made by him, and to incur interest on funds drawn down that would not otherwise have been incurred prior to practical completion of the project. Mr Bowden submitted that there was no evidence that Mr Mitchell was actually receiving his fee during the progress of the project but the invoices and his evidence indicate that he was paying himself for his labour and management during the job. He also submitted, however, that the certified progress claims paid by Pacific Dawn were not assessed by reference to those invoices but by the stage the project had reached.

[72] By letter dated 28 November 2000, Mr Mitchell pushed practical completion back to 30 November 2000.[111] In that letter Mr Mitchell again refers, contentiously, to a "stand-off" with Bill Fan concerning outstanding payment.

[73] A further meeting took place on 29 November 2000, during which:[112]

(a) Bill Fan confirmed that monies outstanding under the contract, in accordance with the practical completion agreement, would be paid in full at practical completion;

(b) Bill Fan agreed that if the council could not give a building certificate due to Pacific Dawn's actions, then Mr Tan would be able to give a certificate of practical completion to Mr Mitchell;

(c) Mr Mitchell supplied October and November 2000 subcontractor invoices that required payment;

(d) Mr Mitchell said that he needed a further $60,000.00 to pay subcontractors, prior to practical completion;

(e) because practical completion was due to occur in the immediate future, Mr Fan agreed (on behalf of Pacific Dawn) to make this requested payment.[113]

[74] Relevantly, Mr Mitchell accepts that his letter dated 29 November 2000 in which the events of this meeting are detailed was consistent with the terms of the practical completion agreement.[114]

[75] On 6 December 2000, Pacific Dawn borrowed $100,000.00 from a family friend of Mr and Mrs Fan. Bill Fan said that was in order to ensure that there would be enough money available for him and his wife to live, and for Pacific Dawn to pay the monies that would be owed to Mr Mitchell upon his achieving practical completion of the project, Mr Tan's architectural fees, interest payments and strata title fees.[115] He agreed, however, that the money was used to repay another loan to a Mr Chang but that if he had not borrowed it he would have been less able to pay the other debts.[116]

[76] Counsel for Pacific Dawn submitted that, plainly, in light of the need to borrow a further $100,000 on top of having sold Mrs Fan's property at Sunnybank Hills, Pacific Dawn and Mr and Mrs Fan were not in any position of economic strength at this time, but were still determined to ensure that Pacific Dawn would fulfil its obligation to pay the sum agreed in the practical completion agreement, less any appropriate deductions.

[77] By letter dated 12 December 2000, Mr Mitchell sent to Currie & Brown his Progress Claim No.12 in respect of the project in the amount of $433,411.15, which Mr Mitchell described as his "practical completion claim".[117] This claim included claims for approximately $92,500 in additional variations (being in fact over $100,000 more than Progress Claim No.11, given that the water and fire services connection fee was removed in the practical completion claim), none of which had been accepted by Pacific Dawn.[118] Relevantly, there is no suggestion that the practical completion claim was ever assessed or approved for payment by Currie & Brown. But, according to the variation to the building contract alleged by Mr Mitchell, progress claims were payable only after they had been assessed by Currie & Brown.[119]

[78] Mr Mitchell also swore a statutory declaration dated 12 December 2000 that he had paid all subcontractors and suppliers except Deve Lifts and Best Kitchens. Counsel for Pacific Dawn submitted that this was false because of Mr Tones' evidence that subcontractors and suppliers were frequently chasing Mr Mitchell in relation to outstanding invoices in relation to the project[120] They submitted that this evidence was more believable because of Mr Tones' subjective inclination to support Mr Mitchell.[121] In relation to one subcontractor, Waco, Mr Mitchell received a reminder notice that demonstrated beyond any doubt that Mr Mitchell was routinely in default of Waco's 30 day trading terms.[122]

[79] Counsel submitted that Mr Mitchell's attempts to explain away the statutory declaration of 12 December 2000[123] and the content of the other statutory declarations he made in the course of the project reflected not only adversely on Mr Mitchell's credit, but evidenced a blame-shifting mentality that pervaded Mr Mitchell's approach to the project.

[80] Prior to a meeting on 14 December 2000, Mr Tan sent an agenda for the final settlement of Mr Mitchell's claim in relation to the project.[124] Mr Mitchell said he did not receive that agenda so that he had no advance warning that Pacific Dawn was attempting to achieve a final settlement of its liability to him and was not on notice that the Defendant was attempting to achieve a final settlement of its liability to him for the building works so that, to that extent, he was taken by surprise at the 22 December meeting.

[81] A meeting was held on 14 December 2000. Mr Mitchell sought payment of his practical completion claim. He also provided his cash receipt pages 28-31, and unpaid invoice files for August to December 2000. Mr Fan maintained that the only sum payable by Pacific Dawn was the sum of $2,836,387.47 that had been agreed under the practical completion agreement.

[82] Relevantly, Mr Tan produced a hand-written three page document entitled "Summary", which recorded relevant events at the meeting. Those notes provide:[125]

2. Final offer from Pacific Dawn $2,836,387.47 (to be paid the balance on Certificate of Practical Completion - 15.12.2000)

________________________________

Major breach (sic) of Contract by both parties are:-

No extension of Time was applied for - within 14 days of occurrence.

1. Builders fee of 7.5% was to be claimed at end of project but was claimed progressively.
2. Presentation of invoices for inspection by Pacific Dawn progressively at every claim was not presented.

I suggest acceptance of the $2,836,387.40 by Mitchell Builders.

I suggest payment of claim with 2.5% retention. Retention should 2.5% of $2.65 mil."

[83] Mr Tones, though stating that his memory of this meeting was somewhat limited, gave evidence that indicated that the notes made by Mr Tan of this meeting reflected the issues raised by him.[126] Likewise, Mr Mitchell acknowledged that in the course of the meeting on 14 December 2000 the issue of liquidated damages for delay was raised, and was a serious issue,[127] and the other matters the subject of Mr Tan's hand-written notes were discussed in the course of the meeting.[128]

[84] After Mr Fan left the meeting, Mr Tan forwarded to him minutes of that meeting. Mr Fan objected to those minutes, as he was not present when they were drafted and signed, and there was no agreement by Pacific Dawn to accept Mr Mitchell's practical completion claim.[129]

[85] Following the meeting on 14 December 2000, Mr Mitchell issued a letter dated 15 December 2000 in which Mr Mitchell expressed surprise that Pacific Dawn sought compensation from Mr Mitchell on account of his delay in bringing the project to practical completion.[130] However, nowhere in this letter did Mr Mitchell refer to any request for an extension of time to bring the project to practical completion, or say that, in the course of the project, he had indicated the extent of any relevant delay as required by the building contract.

[86] Mr Bowden submitted that it seemed that Mr Fan had a change of heart overnight and instructed Mr Tan to write the first letter of 15 December 2000.[131] He submitted that letter itself was equivocal since it did not set out in what respect Mr Fan had objected to the contents of the minutes but on a literal construction provided the Plaintiff with permission to use the minutes to show to subcontractors obviously to ease their minds regarding payment. He pointed out that Mr Tan, in his cross-examination, agreed that the letter did not say that he disagreed with the minutes.[132]

[87] Mr Mitchell also alleged that he had incurred extra expense in relation to borrowed funds. There is, however, no document disclosed by Mr Mitchell to indicate that he had borrowed any funds from his bank in relation to the project. Further, Mr Mitchell again alleged that Pacific Dawn was in breach of the building contract on account of its not having paid the balance of Progress Claim No. 11. Accordingly, Mr Mitchell purported to serve notice under the building contract in respect of Pacific Dawn's alleged default in relation to Progress Claim No.11.

[88] Mr Mitchell's letter dated 15 December 2000 indicates plainly that at the meeting on 14 December 2000 Pacific Dawn had raised its intention to seek liquidated damages against Mr Mitchell on account of delay. Pacific Dawn submitted, in fact, that Mr Mitchell's serving notice under the building contract in respect of Pacific Dawn's alleged default in relation to Progress Claim No.11 appeared to have been a direct response to Pacific Dawn stated intention to seek liquidated damages.

[89] In response to Mr Mitchell's letter dated 15 December 2000 and on the same day Mr Fan said that Mr Tan sent to Mr Mitchell a letter informing Mr Mitchell that:[133]

(a) Pacific Dawn was inspecting the invoices submitted by Mr Mitchell, and that, as agreed, settlement would occur no later than one week after 14 December 2000; and

(i) all outstanding works, including all works listed in the defects list, had been completed;

(ii) a certificate of classification was issued by the Brisbane Certification Group; and

(c) practical completion was due on 25 April 2000 and that Pacific Dawn had a claim for liquidated damages for 32 weeks at $6,000 per week;

(d) Mr Mitchell had determined the building contract.

[90] That was confirmed by Mr Tan in his second affidavit.[134] Until reminded of that Mr Bowden had argued against its reception as evidence showing that Mr Mitchell was given notice that he would be facing a claim for liquidated damages.[135] The document is admissible but, in any event, Mr Mitchell was clearly aware of the issue from the meeting of 14 December 2000 as evidenced by his own letter of 15 December 2000.[136]

[91] Mr Bowden also submitted that there was no written notice from Mr Tan under cl 10.10.1 of the building contract to enliven Pacific Dawn's right to liquidated damages and that in the absence of such a notice it had no valid claim for such damages to bargain away at the meeting of 22 December 2000. By the same token, however, there was no indication on the evidence that Mr Tan would not have issued such a notice if it became necessary and it was capable of being issued no later than 20 days after practical completion.

[92] Mr Mitchell subsequently telephoned Mr Tan on 15 December 2000 and stated that he (Mr Mitchell) was withdrawing his notice to determine the building contract.[137] A certificate of classification also issued in relation to the project on 15 December 2000.[138]

[93] On 21 December 2000 Mr Tan telephoned Bill Fan. Mr Mitchell had informed Mr Tan that he (Mr Mitchell) needed funds immediately, as there were subcontractors on site who were threatening to remove materials. In response, Bill Fan telephoned Mr Mitchell.[139] Notwithstanding the matters left unresolved at the meeting of 14 December 2000, Pacific Dawn transferred $100,000 immediately to Mr Mitchell.

[94] On 21 December 2000, Mr Mitchell also received payment from two other sources, including Mr Tan, such that Mr Mitchell received approximately $207,500 in total on that day. As to the $100,000 paid by Pacific Dawn to Mr Mitchell, only $15,000 was paid immediately by Mr Mitchell to Ian Evans, a subcontractor who had threatened to use a sledgehammer on works undertaken on the project due to his being unpaid for a considerable period of time.[140]

[95] That payment to Mr Evans had been outstanding for such a period as to compel him to take this action was submitted to be plainly contrary to the statutory declaration sworn by Mr Mitchell on 12 December 2000 that all of his subcontractors and suppliers had been paid, except for Deve Lifts and Best Kitchens. Counsel for Pacific Dawn also submitted that, given that Mr Mitchell had already been paid his builder's margin in the course of the project, it was intriguing that Mr Mitchell should have found himself in this position. Mr Mitchell's bank records indicate that he paid out approximately another $26,000 on 21 December 2000.

Monies paid by Pacific Dawn to Mr Mitchell by 21 December 2000

[96] By 21 December 2000 Pacific Dawn had made payments of $310,494.00 to Mr Mitchell in respect of requests for payment since 2 November 2000,[141] being:

(b) $10,494 on 24 November 2000 (being the water connection fee);

[97] The total amount of Progress Claim No.11 was $278,959.21 (including GST of $25,359.93). So it had been paid by 21 December, on the defendant's submission, even if it had been paid late. On no view, counsel for Pacific Dawn submitted, was Mr Mitchell's practical completion claim then due and owing,[142] because:

(a) no certificate in respect of the practical completion claim had been issued by Mr Tan;

(b) it had not been assessed or certified by Currie & Brown (which, as noted above, was a prerequisite according to the practical completion agreement and the variation contended for by Mr Mitchell); and

(i) under the practical completion agreement, 7 days to pay from when Currie & Brown assessed the practical completion claim; and

(ii) by clauses 10.2 and 10.4 of the building contract, a minimum of five days to pay any claim from the date when a certificate was issued by the Architect under the building contract in respect of any progress claim.

[98] Mr Bowden submitted that the question whether or not the Plaintiff's Progress Claim No. 12 was due and owing was a matter of law. The evidence shows that the Plaintiff's Progress Claim No. 12 was copied to Mr Tan on 12 December. He submitted that Mr Tan's notes of the meeting and his signing of the minutes of the meeting of 14 December establish that he accepted the claim as valid and drew attention to his cross examination where he accepted that the variations contained in the variations schedule attached to claim 12 were necessary to finish the job.[143]

[99] He then submitted that Mr Tan had five days to issue a progress certificate showing the various details referred to in cl 10.2 of the contract. A failure to issue or pay the progress certificate put the proprietor in breach of cl 10.5 of the contract and the builder was entitled to interest compounding monthly. He submitted that the plain implication was that the amount claimed was then payable. He conceded that the only thing the clause did not provide for, as occurs in some contracts, is that the builder can commence proceedings for the recovery of the amount as a liquidated debt or demand.[144] However for practical purposes, he concluded, the rights of the builder were limited to the rights to suspend the works and determine his employment as the builder set out in cl 12.7.

[100] The evidence is uncontroversial that at the start of the meeting, Mr Tan said that he was not there to represent Pacific Dawn, and that his role was to facilitate a settlement, and the purpose of the meeting was to resolve all matters between Mr Mitchell and Pacific Dawn on a final basis.[145]

[101] Mr Tan raised the prospect of a claim for liquidated damages for delay by Mr Mitchell, and also tabled a defects list which had been prepared by a Renée Tan and Mr Tones (Mr Mitchell's foreman), and said that a further defects list might be prepared from time to time.[146] Mr Tan also indicated to the parties that "Court is very expensive and takes a long time",[147] something amply justified by the progress of this case.

[102] Mr Tan then asked Mr Mitchell if he would adhere to the practical completion agreement.[148] Bill Fan indicated his insistence on the figure agreed in the practical completion agreement,[149] and also raised:

(a) the direct payments made by Pacific Dawn in relation to the tiles and the water connection fee;[150] and

(b) discrepancies that he had observed in relation to Mr Mitchell's invoices.[151]

[103] In response, Mr Mitchell said "If you want more invoices, I can give you more invoices" and "the tile money and the Brisbane City Council money cannot be adjusted because I have paid extra".[152] As to the last remark, Pacific Dawn submitted, this plainly indicated acceptance by Mr Mitchell that the monies paid directly by Pacific Dawn ought, in the ordinary course, to generate a downward adjustment to Mr Mitchell's claim. Bill Fan then raised the fact that, owing to delays in completion of the project, Pacific Dawn had incurred GST payments,[153] and that Mrs Fan had been required to sell her house at Sunnybank Hills.[154] Mr Mitchell responded that he had achieved savings in the course of the project, which Bill Fan contested.[155]

[104] Mr Tan said to Bill Fan that the meeting was not the forum to become bogged down on arguments about invoice discrepancies,[156] again, it was said, demonstrating that Mr Tan was not acting as agent for Pacific Dawn but was seeking to facilitate a settlement.[157] Mr Tan then asked the parties "Do you agree on the figure?", referring to the sum of $2,836,387.40 that had been agreed in the practical completion agreement.[158] The parties indicated their concurrence.[159]

[105] Mr Tan then asked how much was the final figure owed by Pacific Dawn to Mr Mitchell. In response, Mr Mitchell started writing on a piece of paper some figures, which he provided to Mr Tan. Mr Tan then showed them to Mrs Fan. The top figure was $2,836,387.47, with some other figures below it in relation to the payments totalling $300,000 ($140,000, $60,000 and $100,000) that had already been made to Mr Mitchell, and a balance that Mr Mitchell claimed. Mr Tan then copied these figures onto a piece of paper. Mrs Fan then calculated her own figures at the bottom right hand side of the piece of paper.[160]

[106] Mr Tan began writing what became the settlement agreement, recording the agreed figure of $2,836,387.47. Mrs Fan then insisted that there should be an adjustment because Pacific Dawn had paid the council water connection fee.[161] Mr Mitchell nodded in response, and Mr Tan then wrote the second paragraph that appears on the written settlement agreement reached on 22 December 2000.[162]

[107] Mrs Fan then said that Pacific Dawn had also paid directly for the tile work, and that there were discrepancies in Mr Mitchell's invoices.[163] Mr Mitchell then got quite angry and stood up as if to leave.[164] Mr Tan again said to Mr Mitchell words to the effect: "You need to think twice as court is very expensive".[165] Relevantly, Mr Tones noted that both Mr and Mrs Fan and Mr Mitchell "both had their arguments", and that on more than one occasion Mr Tan sought to settle the parties down.[166] Mr Mitchell also recalls Mr Tan acting in this way.[167] Plainly, it was submitted by counsel for Pacific Dawn, this was a situation of each party believing in the validity of their arguments, and a facilitator working to bring the parties to a settlement.

[108] Bill Fan suggested splitting the water connection fee.[168] In response, Mr Mitchell accepted the figure of $2,831,387.40, on the basis that the cost of the water connection fee would be shared ($5,000 each).[169] Mr Mitchell also insisted that Mrs Fan also sign the settlement agreement, no doubt due to the points that she had raised on behalf of Pacific Dawn in the course of the settlement meeting.

[109] Pacific Dawn's financial situation at this stage was very tight, it having already accessed over $300,000 in funds in addition to the $2.7 million facility from NAB in order to pay variations under the building contract. Although Pacific Dawn had budgeted on paying Mr Mitchell $2,836,387.47, this had included the water connection fee and the monies already paid in relation to the tiles. Most of those sums were foregone by Pacific Dawn in relation to the final settlement figure of $2,831,387.47.

[110] Accordingly, on 22 December 2000 Pacific Dawn was only able to pay $160,000 to Mr Mitchell out of the final payment of $206,799 (plus applicable GST) that was the balance of the sums owing in relation to the agreed figure of $2,831,387.47.[170] Bill Fan said to Mr Mitchell that Pacific Dawn would pay the balance of the amount owing Mr Mitchell within 6 months because Pacific Dawn expected to receive monies from settling pre-sales during that time.[171] The parties signed the settlement agreement and agreed to meet on the site at 1pm, at which time Mr Mitchell would be paid $160,000.00 in exchange for the keys. That subsequently transpired. At the time of payment, Mr Mitchell did not indicate any complaint about the terms of the settlement agreement.[172]

[111] Accordingly, counsel for Pacific Dawn submitted, the settlement agreement resulted in Pacific Dawn giving up its legitimate claims against Mr Mitchell, and Mr Mitchell receiving not the sum of $333,411 that he "expected",[173] but $126,411 less than that sum. And, despite Mr Mitchell's claims of severe distress from creditors, by 17 January 2001 Mr Mitchell had not expended approximately $70,000 of the monies provided by Pacific Dawn on 21 and 22 December 2000 on suppliers and subcontractors for the project.[174]

[112] Mr Bowden submitted, however, that the compromise was all the one way with the Plaintiff giving up his rights and nothing in the agreement to the effect that Pacific Dawn gave up any rights as against the Plaintiff. For example, he submitted, there was no mutual discharge clause.

[113] Mr Bowden's argument was that Mr Mitchell had accepted the terms of Mr Tan's letter of 9 November 2000[175] and anticipated the early payment of the retention money as well the payment of progress payment no. 11 in due course. It seems clear from the letter, however, that the balance of that progress payment was very arguably agreed to be paid on completion and that the time for completion blew out yet again until at least 12 December when the final claim was presented.

[114] By the meeting on 22 December Mr Mitchell was said to have been entitled to the $333,411 then due and owing, of which he lost a substantial part from the bargain entered into then, as well as the additional 7.5% profit component which Mr Bowden estimated at about $225,000. In addition, he argued, Mr Mitchell lost all the money he had spent on the project from Progress Claim No. 12 until 22 December 2000 "which may have included significant further variations."[176]

[115] There are several problems associated with that approach to the case. There was no suggestion at the time that the 7.5% was additional to the contract signed. Rather the parties appear to have assumed that it fell within the lump sum price as I discussed earlier. Further, the reference to the fact that the cost until 22 December 2000 "may have included significant further variations", illustrates the uncertainty associated with any attempt to ascertain the value of the work done by the plaintiff until then caused by his own unreliable bookkeeping referred to earlier.[177] Another problem he faced was the very arguable view of the defendant that he had bound himself to complete the contract for the fixed sum of $183,635.66 and was no longer at liberty to vary that amount.

[116] It was in that context that Mr Bowden submitted that economic pressure may be sufficient to amount to duress if the pressure is illegitimate.[178] He argued that the courts will, therefore, interfere if the defendant's conduct, though lawful, was commercially immoral,[179] and that a threat to break an existing contract can amount to economic duress.[180] The defendant's submissions about the applicable law were similar. This is a case where the factual findings about the nature of the dispute between the parties will determine the issue.

[117] Mr Bowden also argued that the bargain was unconscionable because Mr Mitchell was then, to the knowledge of Mr Bill Fan, in dire need of money to pay his subcontractors and therefore at a special disadvantage.[181]

[118] His submission was that Mr Fan manipulated Mr Mitchell from early November until 22 December 2000 when he delivered the final coup de grâce. The argument was that Mr Mitchell was at a great disadvantage as compared to Mr Fan who had managed to keep his own impecuniosity quiet.

[119] It was the case, however, that Mr Mitchell's bank had informed him at an earlier stage that Pacific Dawn's bank could not confirm its ability to make the final payments. Mr Fan also made it clear on 22 December 2000 that he and the company had no money left, a factual issue that is not now challenged. It was the basis of the plaintiff's pleaded claim that there had been a misrepresentation to him about that issue. It seems to me, therefore, to have been much more likely that both parties were financially stretched and each knew that about the other.

Defendant's submissions on the factual premises of Mr Mitchell's claim

[120] The defendant's submissions canvassed in detail the factual premises of Mr Mitchell's claim in terms which require substantial reproduction in order to appreciate them. Pacific Dawn's approach was to characterise the essential factual allegations underpinning Mr Mitchell's claim as that, on 22 December 2000:

(a) Mr Mitchell owed money to his subcontractors and suppliers;

(b) Mr Mitchell paid the claims of his subcontractors and suppliers from payments made to him by Pacific Dawn pursuant to the building contract (varied as alleged by Mr Mitchell);

(c) Mr Mitchell did not then have sufficient funds to pay his subcontractors and suppliers without "the funding then owing to him by" Pacific Dawn;

(d) a number of Mr Mitchell's subcontractors and suppliers were pressing for immediate payment of their claims for work done;

(e) some subcontractors were threatening to remove materials and dismantle works previously completed by them unless paid on that day;

(f) due to the time of year Mr Mitchell had no means of raising monies to pay his subcontractors and suppliers to whom he owed money;

(g) Mr Mitchell's reputation in the building industry would be adversely affected by his failure to pay his subcontractors and suppliers;

(i) at the settlement meeting, Pacific Dawn, by its agents Mr Tan, Bill Fan and Carolyn Fan, stated to Mr Mitchell that:-

(i) Mr Mitchell had to accept a total payment of $2,836,387.47 for the job because that was all that Pacific Dawn could and would pay;

(ii) Mr Mitchell had to accept a payment that day based on that figure or he would get nothing;

(iii) if Mr Mitchell refused the offer then Pacific Dawn would sue him for damages;

(j) each of the statements in subparagraph (i) were untrue, and the threats in subparagraph (i)(iii) were baseless.

[121] The defendant then submitted that, from those allegations, Mr Mitchell alleged that he was subject to economic duress that rendered the settlement agreement voidable at his election; he entered into the settlement agreement owing to Pacific Dawn's unconscionable conduct by its taking advantage of his position of special disability; and he entered into the settlement agreement in reliance upon a misrepresentation as to Pacific Dawn's financial capacities. This last argument remained true until Mr Bowden said in his submissions that he was no longer relying on the pleaded misrepresentation.

[122] The defendant then proceeded, in its written submissions, to analyse the bases for each of the factual allegations it had identified.

Mr Mitchell owed money to his subcontractors and suppliers

[123] That Mr Mitchell owed monies to his subcontractors and suppliers on 22 December 2000 is not doubted. What Pacific Dawn submitted, however, was that Mr Mitchell was not in dire straits in relation to payments owing to suppliers and subcontractors in respect of the project, given that:

(a) Pacific Dawn had, by 22 December 2000, then paid Mr Mitchell more than he was then due and owing under previous progress claims;[182]

(b) Mr Mitchell had already caused to be paid to himself monies in respect of his builder's margin which were not due to be paid prior to practical completion;[183]

(c) Mr Mitchell had received money from other sources on 21 December 2000;

(d) Mr Mitchell had claimed, by statutory declaration, to have progressively paid all monies owing to subcontractors and suppliers.

Mr Mitchell paid the claims of his subcontractors and suppliers from payments made to him by Pacific Dawn pursuant to the building contract

[124] Pacific Dawn relied on the comments made in the previous paragraph and also argued that it was plain that Mr Mitchell made payments to subcontractors and suppliers in respect of the project from whatever monies were received from whatever jobs he was doing.[184]

Mr Mitchell did not then have sufficient funds to pay his subcontractors and suppliers without "the funding then owing to him by" Pacific Dawn

[125] Again, Pacific Dawn submitted that, on 22 December 2000 there were no funds "then owing" to Mr Mitchell by Pacific Dawn. Equally, any absence of sufficient funds to pay monies then owed by Mr Mitchell to his subcontractors and suppliers did not arise on account of Pacific Dawn's not having paid Mr Mitchell's progress claims monies in accordance with the terms of the building contract. At the time of the settlement meeting, it was simply not the case that Mr Mitchell had been left substantially out of his money for an extended period of time by Pacific Dawn, thereby giving rise to financial distress on the part of Mr Mitchell.

A number of Mr Mitchell's subcontractors and suppliers were pressing for immediate payment of their claims for work done

[126] Again, Pacific Dawn submitted, that if a number of subcontractors and suppliers were pressing for immediate payment of outstanding invoices, this had not arisen due to any action on the part of Pacific Dawn. To the contrary, Pacific Dawn had paid more than Mr Mitchell was then entitled to receive, both in terms of previous progress claims and in relation to payment of his builder's margin.

[127] Further, it submitted that there was nothing to suggest that any pressure that Mr Mitchell was experiencing from his subcontractors was anything outside of the usual pressure for payment of invoices. This was borne out by the fact that Mr Mitchell only part paid a number of his subcontractors, over a period of several weeks after 22 December 2000, from the $160,000 he received immediately under the settlement agreement. That still left the residue of the $100,000 that had been paid to Mr Mitchell on 21 December 2000, of which no more than about $41,000 had been expended by Mr Mitchell on that day in relation to the project.

[128] It seems likely, however, that several other cheques were drawn by Mr Mitchell on that date for payment to his subcontractors and negotiated over the next few days or weeks.[185]

Some subcontractors were threatening to remove materials and dismantle works previously completed by them unless paid on that day

[129] Pacific Dawn submitted that this was not true. When particulars of this allegation were sought, Mr Mitchell was unable to nominate that any of his subcontractors was making any such threat.[186] The only subcontractor who made any such threat was Mr Ian Evans. He was dealt with on 21 December 2000 by Pacific Dawn's immediately transferring $100,000 to Mr Mitchell on that day, and Mr Mitchell's placating him by paying him a portion of his claim ($15,000) on that day.[187]

Due to the time of year Mr Mitchell had no means of raising monies to pay his subcontractors and suppliers to whom he owed money

[130] In arguing that this allegation could not be sustained Pacific Dawn pointed, first, to evidence that Mr Mitchell received approximately $207,500 on 21 December 2000 from a number of sources, including $100,000 from Pacific Dawn.[188]

[131] Secondly, Mr Mitchell had been put on notice since at least 14 December 2000 that Pacific Dawn was seeking to claim liquidated damages against Mr Mitchell owing to delay.[189] Additionally, Mr Mitchell claims that "the pressure started on the 6th of November",[190] and his correspondence in November 2000 indicates his own scepticism in relation to Pacific Dawn's ability to pay Mr Mitchell's practical completion claim.[191] There was, therefore, it was submitted, no excuse for Mr Mitchell failing to anticipate and provide for Pacific Dawn's arguments against the amount of his practical completion claim. The possibility that Pacific Dawn might itself be in a tight financial situation was also said to have been clear.

[132] Thirdly, shortly after he returned from a holiday in Canada on 6 February 2001, Mr Mitchell was able to arrange a loan from an entity that he controlled, via a loan made by Mr Fisher. There is no suggestion, Pacific Dawn submitted, that Mr Fisher could not have loaned those monies at an earlier point in time if Mr Mitchell had approached him.[192]

[133] Fourthly, a company he controlled, Blembrook Pty Ltd, as the trustee of the Chermside Property Trust, had substantial equity in a commercial property located at Samford Road, Enoggera and acquired in about 1991 for $500,000. Mr Mitchell himself contended that this property had, in December 2000, a value of $820,000.[193] A mortgage on the property had a balance of approximately $420,000.[194] Mr Mitchell conceded that he had not approached Blembrook's bank manager about accessing any of the equity in this property. This, Pacific Dawn submitted, was particularly intriguing in light of the fact that Blembrook's financial statements indicate that it owed Mr Mitchell nearly $90,000 as at 30 June 2000.[195]

Mr Mitchell's reputation in the building industry would be adversely affected by his failure to pay his subcontractors and suppliers

[134] There is no doubt, the defendant conceded, that any builder who does not pay subcontractors and suppliers may suffer an adverse reputation. Again, however, it submitted there was simply nothing to indicate that any such failure as at 22 December 2000 arose on account of any previous action by Pacific Dawn that left Mr Mitchell with a cluster of angry subcontractors and suppliers who had not been paid over an extended period of time. Further, it submitted, the plain evidence from Mr Tones,[196] and Mr Mitchell himself,[197] was that Mr Mitchell was a "slow payer". Mr Tones went further and said that Mr Mitchell was administratively disorganised, and frequently under pressure from subcontractors and suppliers on account of his dilatory payment of invoices.[198]

[135] Accordingly, a delay by Mr Mitchell in the payment of his subcontractors and suppliers in December 2000 would not have worsened Mr Mitchell's reputation but would merely have been consistent with it.

Pacific Dawn did not know each of the matters allegedly affecting Mr Mitchell on 22 December 2000

[136] Pacific Dawn conceded that it was true that, on 22 December 2000, it knew that:

(a) Mr Mitchell probably owed money to his subcontractors and suppliers;

(b) Mr Mitchell would seek to pay some of the claims of his subcontractors and suppliers from payments made to him by Pacific Dawn pursuant to the building contract;

(c) Mr Mitchell's reputation in the building industry might be adversely affected by his failure to pay his subcontractors and suppliers.

[137] However, it submitted, each of the facts in the previous subparagraph was essentially self-evident, and reflected the usual commercial pressures and vicissitudes affecting builders. None of these matters had arisen because of any untoward conduct on the part of Pacific Dawn, or represented any special knowledge that would enable Pacific Dawn to gain particular influence or power over Mr Mitchell.

[138] As to Mr Mitchell's capacity to pay his various subcontractors and suppliers, this was not a matter known to Pacific Dawn. The submission was that there was no cogent evidence that Mr Mitchell told Pacific Dawn what his financial position was on 22 December 2000, or what access he had to funds.[199]

[139] As to the allegation that a number of Mr Mitchell's subcontractors and suppliers were pressing for immediate payment of their claims for work done, details of Mr Mitchell's relationship with his subcontractors and suppliers was not a subject that he discussed with Pacific Dawn.[200] Further, it was submitted, Mr and Mrs Fan specifically disavowed that they knew of any particular subcontractors awaiting payment from Mr Mitchell in relation to the project.[201]

[140] As to Pacific Dawn's having knowledge that some subcontractors were threatening to remove materials and dismantle works previously completed, as noted above it was simply not the case that any subcontractor other than Mr Evans had made such a threat.

[141] As to Pacific Dawn's having knowledge that the time of year affected Mr Mitchell's ability to raise funds, the submission was that there was no evidence to suggest that Pacific Dawn had particular knowledge that the week prior to Christmas was a time when financial institutions were inclined to turn off the taps of credit, whether to Mr Mitchell or otherwise. In any event, Mr Mitchell proved able to raise funds at short notice.

Statements allegedly made by Mr Tan, Bill Fan and Carolyn Fan at the settlement meeting

[142] First, it was submitted, there was nothing about Mr Tan's conduct to indicate that he was acting as Pacific Dawn's agent at the meeting. His remarks in the course of the meeting were to the contrary. Further, at that time Mr Tan had been undertaking a private project with Mr Mitchell. There was no reason to believe that Mr Tan approached the meeting other than as a facilitator, and ultimately the evidence of all concerned, including Mr Mitchell and Mr Tones, was that this was exactly the role that Mr Tan fulfilled at the meeting on 22 December 2000.

[143] In respect of the alleged statement that if Mr Mitchell did not accept the offer he would "get nothing", Mr Mitchell's own evidence was said to put this in context. Mr Tan said to Mr Mitchell, when Mr Mitchell was threatening to leave the settlement meeting, "Mr Mitchell, come back because if you leave you'll get nothing. It will be two years before you see any money."[202] This was plainly, it was submitted, the exhortation of a facilitator that an immediate settlement was better than having to litigate, which would be the inevitable outcome if Mr Mitchell left the meeting. It was not, in any sense, a coercive threat.

[144] Although it is plain that Mr Fan said initially that there was no point in discussing any figure other than $2,836,387.47, in actual fact Pacific Dawn softened its stance. Pacific Dawn regarded the figure of $2,836,387.47 as being subject to revision downwards by approximately $55,000 because of the payments made by Pacific Dawn for ceramic tiles and the water and fire services connection fee.[203] The figure Mr Mitchell ultimately accepted - $2,831,387.47 - was approximately $50,000 more than Pacific Dawn's figure.

[145] Accordingly, Pacific Dawn submitted it could not be contended that it refused to negotiate in relation to the monies it would pay to Mr Mitchell. It required additional time to pay the final $46,799 (plus GST), because it had budgeted on having to pay the amount agreed under the practical completion agreement, less adjustments for ceramic tiles and the water and fire services connection fee. The fact that Pacific Dawn needed to settle unit sales in order to be able to pay the final $46,799 (plus GST) was made plain to Mr Mitchell in the course of the meeting.

[146] As to the alleged statement that if Mr Mitchell "refused the offer" then Pacific Dawn would sue him for damages, that was not said. What was said at the settlement meeting was that Pacific Dawn had a claim for liquidated damages, Pacific Dawn's direct payments should be offset from Mr Mitchell's claim and there were a number of discrepancies in Mr Mitchell's records relating to the project.

[147] Such statements, it was submitted, were hardly coercive. At most, these statements indicated that Pacific Dawn reserved its right to exercise whatever legal rights were available to it in the event that a settlement was not reached. In the context of the recent past, it was submitted that this attitude was hardly one-sided. When confronted at the meeting on 14 December 2000 with the reality of a liquidated damages claim on account of his own delay, Mr Mitchell issued correspondence dated 15 December 2000 under which, rather than refuting the basis of the claim against him, he asserted reliance upon legal rights under clause 12 of the building contract.[204]

[148] As to Pacific Dawn's right to pursue Mr Mitchell for liquidated damages, it pointed out that Mr Mitchell stated clearly in evidence that he never sought an extension of time under the building contract.[205] Further, it submitted, there was no evidence to suggest any circumstances that would justify an extension of time of 30 weeks;[206] Mr Mitchell's letter to Mr Tan dated 15 December 2000 did not list the basis of any claim for an extension of time. Plainly, it submitted, Pacific Dawn's claim that it was entitled to seek liquidated damages against Mr Mitchell was anything but baseless even if Mr Mitchell said that he was "confident"[207] that Pacific Dawn would not succeed in its claim for liquidated damages.[208]

[149] In respect of Mr Mitchell's case that he entered into the agreement of 22 December 2000 because of economic duress, counsel for Pacific Dawn submitted that, although it was now a common law doctrine of "respectable pedigree", even in relatively recent times the courts have described the law concerning economic duress as still developing,[209] narrowly confined and not to be found lightly,[210] not least because the courts will be slow to implement their notions of fairness and reasonableness over what commercial people and entities have agreed.[211] They submitted that there were are persuasive comments to the effect that the courts should be slow to provide a remedy outside of circumstances indicative of undue influence or unconscionable conduct (as that phrase is understood in equity).[212] The statements of the law they relied on were essentially the same as those referred to by Mr Bowden.

[150] Establishing a claim for economic duress requires a plaintiff to prove, it was submitted:[213]

(a) pressure amounting to compulsion of the will of the victim (in the sense of absence of choice); and

[151] The caution with which the courts, rightly, approach a claim for economic duress is reflected in the following remarks:

"Pressure will be illegitimate if it consists of unlawful threats or

amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.

In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104, Lord Wilberforce and Lord Simon of Glaisdale pointed out (at 634; 121):

'... in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion.'

In Pao On v Lau Yiu Long [1979] UKPC 2; [1980] AC 614, the Judicial Committee accepted (at 635) that the observations of Lord Wilberforce and Lord Simon in Barton v Armstrong were consistent with the majority judgment in that case and represented the law relating to duress." [214]

[152] More recently, it was submitted, in Denmeade v Stingray Boats[215] the Full Court of the Federal Court considered an appeal by the owner of a boat who felt compelled to agree to pay for work under a contract as "additional" work which the owner felt ought to have been included in the contract itself. Economic duress was argued on the basis that the owner had to make an immediate decision because of the circumstances affecting the owner. The Court held:

"Mr Denmeade was put in a position where he was required to make a decision quickly and he undoubtedly felt pressure for the reasons referred to. The pressure applied by Mr McCourt cannot however be categorised as amounting to duress of the kind discussed. As McHugh JA observed in Crescendo (at 46) even overwhelming pressure may not necessarily constitute economic duress. Much more is required than the demand by Mr McCourt of a promise to pay for what was alleged to be extra work in return for release of the boat, even if that promise also had the effect of negating Mr Denmeade's rights to dispute the alleged extras."[216]

[153] Here, the defendant's case was that there was simply no evidence that any pressure under which Mr Mitchell laboured at the settlement meeting owing to demands from subcontractors and suppliers had arisen due to any conduct on the part of Pacific Dawn. When the settlement meeting occurred, Pacific Dawn had then paid Mr Mitchell in excess of what was owing to him under the building contract. It was submitted that this fact alone was fatal to Mr Mitchell's claim based on economic duress.[217] It was also submitted not to be consistent with an allegation that Pacific Dawn's position was to make threats against Mr Mitchell and to take advantage of any adverse situation affecting him.

[154] As to the statements made on behalf of Pacific Dawn that it had a claim for liquidated damages against Mr Mitchell, it pointed out that Mr Mitchell was confident that there was no basis for Pacific Dawn to claim liquidated damages against him so that such statements should have had no coercive effect upon Mr Mitchell in relation to the amount for which he was prepared to settle. More critically, it submitted, the evidence demonstrated that there was a plain basis for Pacific Dawn to claim liquidated damages against Mr Mitchell. On any view, Mr Mitchell had not made claims for an extension of time under the Contract, and there were no circumstances that would entitle him to extension of 30 weeks.

[155] Further, counsel submitted, that there was no credible evidence to indicate that Mr Mitchell:

(a) was unable to pay his subcontractors and suppliers relating to the project from funds available to him prior to the settlement meeting;

(b) could not have accessed funds at short notice either on or prior to 22 December 2000;

(c) was not aware that Pacific Dawn had not agreed to any of the additional variations that he sought to include in his practical completion claim;

(d) was not aware that Pacific Dawn had made substantial direct payments for the water and fire services connection fee and ceramic tiles;

(e) was not aware that Pacific Dawn had indicated that it was seeking compensation from Mr Mitchell on account of his delay in bringing the project to practical completion.

[156] As to the remainder of the statements made on behalf of Pacific Dawn at the settlement meeting, each of Pacific Dawn's complaints were submitted to have a genuine factual basis that had, at least in substantial part, been admitted by Mr Mitchell. Accordingly, the submission went, it could not be suggested that these statements were in any sense "illegitimate".

[157] In context, the defendant submitted that Mr Mitchell's claim was a rather transparent attempt to bring himself within the four corners of the facts in D. & C. Builders Ltd v Rees.[218] Two critical points of distinction between that case and the present it was submitted were:

(a) the plaintiff's invoice in D. & C. Builders Ltd v Rees was substantially overdue when the defendant made a "take it or leave it" offer that was less than the plaintiff's invoice; [219] and

(b) there was no contention by the defendant that the work had not been done or that the amount endorsed on the invoice was not owed by the defendant to the plaintiff.[220]

[158] As was noted by Denning MR in D. & C. Builders Ltd v Rees, equity will prevent a plaintiff from seeking to resile from a commercial settlement agreement reached that properly represents an accord and satisfaction.[221] Pacific Dawn argued that each of:

(a) the discrepancies in the invoices, relating to apparent overcharging or dubious charging;

(b) the delay in bringing the project to practical completion;

(c) the monies paid directly by Pacific Dawn on account of the ceramic tiles and the water and fire services connection fee;

(d) the amount that Mr Mitchell had agreed, under the practical completion agreement, to accept to bring the project to practical completion;

(e) the fact that Pacific Dawn did not agree to any further variations after the practical completion agreement;

represented a legitimate argument on the part of Pacific Dawn against the amount sought by Mr Mitchell in his practical completion claim.[222] Accordingly, compromising any (and, under the settlement agreement, all) of those arguments meant that the settlement agreement was a genuine compromise on the part of Pacific Dawn.[223]

The defendant's submissions concerning unconscionable conduct

[159] The defendant's submissions concerning the elements of an action premised on the doctrine of unconscionable conduct were that there was a plaintiff labouring under a special disadvantage, the defendant knew of that special disadvantage and there was proof that the defendant took advantage of that special disadvantage. [224] That was not treated as a controversial statement of the law.

[160] The "special disadvantage" must be such as to prevent the plaintiff from making a rational decision so as to properly protect his or her own interests.[225] Common examples are defects of mind, language deficits and illiteracy. None of these elements was said to be present here. Although "poverty or need of any kind" has also been offered as an example of a special disability,[226] in Commercial Bank of Australia Ltd v Amadio[227] Mason J disavowed "any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties". That important point has been more recently emphasised in ACCC v C G Berbatis Limited[228] and Kostopoulos v G E Commerical Finance Australia Pty Ltd.[229]

[161] At the time of the settlement meeting, Mr Mitchell was an experienced builder.[230] The only circumstances, Pacific Dawn submitted, that Mr Mitchell can point to in support of any special disadvantage were alleged pressure from his subcontractors and suppliers and alleged financial strain.

[162] It repeated its submission that the alleged pressure from Mr Mitchell's subcontractors and suppliers was not alleged to have arisen from any conduct on the part of Pacific Dawn, could not be said to have arisen from any conduct on the part of Pacific Dawn and was not shown to be in excess of the usual pressures that a builder would ordinarily face from subcontractors and suppliers.

[163] As to the alleged financial strain, apart from the fact that Pacific Dawn's own financial position was stretched, it submitted that Mr Mitchell was better placed than Pacific Dawn to know his financial situation.[231] In any event, disparity in financial resources does not engage the doctrine of unconscionable conduct.[232]

[164] Counsel for Pacific Dawn also submitted that there was no evidence that it knew that any pressure from Mr Mitchell's subcontractors and suppliers at the time of the settlement meeting was such as to affect his ability to make a rational decision. Certainly, there was nothing from Mr Mitchell's behaviour in the course of the meeting to suggest that Mr Mitchell, then a very experienced builder, was unable to look after his own interests.

[165] Relevantly, at one point, they pointed out that Mr Mitchell decided that he would leave the meeting, and (presumably) deal with the pressures from subcontractors and suppliers without any payment from Pacific Dawn. It was not any statement to the effect that Mr Mitchell "will get nothing" that brought him back to the negotiating table; it was Mr Tan's remark that Mr Mitchell should "think twice".

[166] As to Mr Mitchell's financial circumstances, they repeated their earlier submission that there was no cogent evidence to suggest that Mr Mitchell did not have funds available to him to meet the claims of subcontractors and suppliers. There was also no cogent evidence to show that Pacific Dawn knew that Mr Mitchell was labouring under any financial deficit, particularly given that Pacific Dawn had paid Mr Mitchell more than his then current entitlement.

[167] Accordingly, it was submitted, it could not be maintained that Mr Mitchell laboured under any special disadvantage on account of alleged pressure from Mr Mitchell's subcontractors and suppliers.[233] Again, it was said to be highly relevant that any financial distress on the part of Mr Mitchell as at 22 December 2000 was not caused by any conduct on the part of Pacific Dawn.[234] Further, the fact that Mr Mitchell may have felt constrained by the time of year (although no evidence was adduced to show that this affected Mr Mitchell's financial situation) was said not to demonstrate unconscionable conduct.[235]

[168] Mr Mitchell's credibility was attacked in respect of some of his claims. One example was his evidence in relation to the alleged variation to the building contract to change it from a lump sum contract to a cost plus contract where the defendant argued that the critical events alleged by Mr Mitchell simply did not take place. It is true that there was no evidence of any variation approved by or for the defendant but there was evidence to suggest that there had been some tacit acceptance by Mr Tan of a change in description of the contract at some stage during its progress. That suggests more that Mr Mitchell was an inefficient contract administrator rather than that he was consciously misrepresenting his understanding of the nature of the contract. That inefficiency affected his other dealings also and made it less than clear what the true status of the contractual dealings between him and Pacific Dawn was at particular stages of the project.

[169] The submission for Pacific Dawn was that any pressure under which Mr Mitchell found himself on 22 December 2000 was not shown to be any different from the usual pressures affecting a builder in relation to his subcontractors and suppliers. It argued that no pressure that Mr Mitchell then felt arose on account of any conduct on the part of Pacific Dawn.

[170] It does seem to me to be a case where pressure certainly existed. Much of it with Pacific Dawn seems to have related to the still unexplained extent of the delay in the completion of the building. Although he was an experienced builder, it was still Mr Mitchell's largest project, one beyond the scale of his normal experience. One can expect that could have led to its own pressures on him but those pressures should not be attributed to Pacific Dawn. There is also evidence from Mr Tones that Mr Mitchell "dithered around a fair bit" during the progress of the work in 2000.[236] That too would lead to its own pressures but again not ones attributable to Pacific Dawn.

[171] As to the arguments and complaints raised by Pacific Dawn in the course of the settlement meeting on 22 December 2000, it submitted that there was:

(a) no argument that Mr Mitchell lodged any sufficient extension of time claims under the building contract to avoid liquidated damages when practical completion was actually achieved;

(b) no argument that Pacific Dawn did not have a justifiable claim for liquidated damages;

(c) no dispute that the invoices and records provided by Mr Mitchell to Pacific Dawn in respect of the project contained a number of discrepancies that were adverse to Pacific Dawn;

(d) no dispute that Progress Claims Nos 11 and 12 submitted by Mr Mitchell claimed for ceramic tiles that Pacific Dawn had supplied;[237]

(e) no dispute that that the agreement reached on 6 November 2000 included, in relation to variation claims then accepted in relation to that agreement, the water connection fee that was subsequently paid by Pacific Dawn;[238]

(f) no doubt that none of the additional "variations" submitted by Mr Mitchell in relation to Progress Claim No. 12 were accepted by Pacific Dawn.

[172] Pacific Dawn also submitted that the fact that Mr Mitchell was prepared at one point to leave the meeting was plainly to the contrary of any conclusion that the agreement was brought about by economic duress. Further, it submitted that there could be no doubt that Pacific Dawn's financial resources were then stretched. Even so, Pacific Dawn actually paid more than the $2,836,387.47 that had been agreed under the practical completion agreement. The settlement agreement itself did not involve a "take it or leave it" offer of payment. It involved payment of what Pacific Dawn then had available, with the balance to follow when its circumstances improved.

[173] It also argued that Mr Mitchell's unconscionable conduct claim should be dismissed on account of his delay in bringing it but did not develop that argument to any significant extent.

[174] In my view the discussions before the agreement on 22 December 2000 cannot be characterised as ones where economic duress was brought to bear by the defendant or were such as to allow the resulting agreement to be described as an unconscionable bargain. Both parties had issues with each other about how much should be paid by Pacific Dawn to Mr Mitchell.

[175] Mr Mitchell believed there had been delays in paying him and that he was entitled to more money than he had received. Pacific Dawn's directors believed that they had reached agreement with Mr Mitchell as to the amount he would receive to bring the project to its long delayed completion. They also believed that they had potential claims against him for liquidated damages and in respect of claims for payment by him that were not justifiable on the paperwork he had produced. They were aggrieved by the long delay in the promised completion of the project and its effect on Pacific Dawn's ability to sell units in the building at an earlier stage. Both sides were financially stretched. I do not accept that Mr Mitchell was in any position of special disadvantage as compared to the position of Pacific Dawn.

[176] The amount Mr Mitchell was entitled to on an objective view of the events requires the resolution of a number of contentious issues. It seems to me that the evidence does not support the conclusion that the building contract had been varied to become a "cost plus" agreement in early 2000. There was a good case that the parties had agreed to vary the total amount payable to an adjusted contract sum of $2,836,387.47 between 6 and 9 November 2000. As part of that agreement the cost to complete the project was $183,635.66. It seems most likely to me, on the proper understanding of the letter of 9 November 2000, that the balance of Progress Claim No. 11, $278,959.21 less the advance of $140,000.00 paid on 10 November, was agreed to be paid on practical completion so that Mr Mitchell was not entitled to go back on that agreement as he had purported to do. After 21 December there was nothing still owing for Progress Claim No. 11, taking into account the draw down of the retention sum and the other payments made. Arguably, therefore, he was entitled only to the balance of the cost to complete of $183,635.66 less the sums paid in excess of Progress Claim No. 11 by 21 December 2000 and the amounts paid for the tiles and the water connection by Pacific Dawn. By 21 December $310,494.00 had been paid. The difference between that figure and $278,959.21 is $31,534.79. The amount paid for the ceramic tiles and the water connection by Pacific Dawn totalled $62,400.57. The total of those two amounts is $93,935.36. There is a respectable, and in my view probably successful argument, therefore, that he was only entitled to $183,635.66 less $93,935.36 leaving a sum of $89,700.30 due on practical completion.

[177] His claims to payment on a cost plus basis and for the further variations in his Progress Claim No. 12 were, therefore, probably not maintainable. Even if they were maintainable they faced difficulties because of his inclusion of amounts irrelevant to this contract or which had already been paid by Pacific Dawn or which had been claimed, arguably, by him as his builder's fee earlier than should have been the case. Nor would he have succeeded in a claim for a further 7.5% fee additional to the contract price on the view I take about the proper construction of the contract. He did not contemplate making such a claim until after that possible interpretation of the contract was mentioned in the judgment of the Court of Appeal. Even if the contract lent itself to such an interpretation, there is a strong likelihood that a court would have rectified the agreement to reflect the fact that the parties had agreed that it should have been included in the "guaranteed upper limit" price originally agreed. On this approach to the assessment of the amount to which he was entitled one also has to take into account the prospect of a counterclaim for damages for delay.

[178] Mr Mitchell's expectation was to be paid $333,411.00 on the day. It was not met. He was paid $160,000.00 with the promise of a further payment of $46,799.00 plus GST on or before 22 June 2001, a time when the defendant anticipated it would be in a position to realise some money from unit sales. He was also relieved from a potential claim for about $192,000.00 for liquidated damages for delay and from claims arising from an examination of the accounts he said justified the amount he sought where several of them appeared not to back up his claims and the defendant could argue validly that he was not entitled to the payments he sought.

[179] The defendant was willing to pay the money it offered on the basis that it was all the money it could pay. In the context that does not seem to me to be a threat to breach the contract but rather an expression of its bargaining position given its view of the proper application of the contract, its doubts about the legitimacy of the claims made by Mr Mitchell and its own right to claim damages for the delay. On my view of the probable result of the dispute between the parties Mr Mitchell was paid more than his entitlement.

[180] Although the agreement reached did not contain mutual releases it was clearly one where the parties had compromised competing claims and where the defendant had given away much that it could otherwise have pursued. It has established to my satisfaction that it did not apply economic duress to Mr Mitchell or enter into an unconscionable bargain with him.

[181] The compromise reached on 22 December 2000 was truly that, a compromise of legitimate contending claims and not one that was unconscionable or the product of illegitimate pressure by Pacific Dawn. It is not a case where the defendant was threatening improperly to breach its contract. Rather, the defendant was trying to perform it on its understanding of its proper interpretation. It was also a situation where the defendant was concerned about how the contract had been administered. That led to legitimate questions about the amount Mr Mitchell claimed to be owed. It was not a compromise entered into by Mr Mitchell by compulsion or in circumstances where he had no real choice. His threat to leave the meeting suggested clearly enough that he could have taken a different course.

[182] Even if one assumes there is an onus of proof on the defendant in these circumstances, which I doubt because I am not satisfied that it applied illegitimate pressure, it seems to me that it has been discharged.[239] This is not a case where Mr Mitchell was "compelled by duress or economic coercion imposed by the defendant to sacrifice a valuable claim for the immediate satisfaction of receiving only a fraction of what was really due to him".[240]

[183] Accordingly the answer to the question posed for determination at the beginning of these reasons is:

On the assumption that the agreement pleaded in paragraph 22 of the Third Further Amended Statement of Claim and paragraph 23 of the Fourth Further Amended Defence and Counterclaim was entered into, it was not arrived at by the application of coercion or duress such as to make it unenforceable as pleaded in paragraphs 18-25 of the Third Further Amended Statement of Claim, or as a result of misrepresentation as alleged in paragraph 24 thereof or as a result of unconscionable conduct as alleged in paragraph 24A thereof, which paragraphs are defended in paragraphs 19-26 of the Fourth Further Amended Defence and Counterclaim, which paragraphs are in turn replied to in paragraphs 23-34 of the Amended Reply and Answer.

[184] I shall hear the parties further as to costs.

[2] Mitchell v Pacific Dawn Pty Ltd [2003] QSC 086 at [13]- [21].

[3] Mitchell v Pacific Dawn Pty Ltd [2003] QSC 086 at [71].

[4] Mitchell v Pacific Dawn Pty Ltd [2003] QCA 526 at [10]; see at [10]-[16] in general also.

[5] Mitchell v Pacific Dawn Pty Ltd [2003] QCA 526 at [13].

[6] Mitchell v Pacific Dawn Pty Ltd [2007] QCA 074.

[7] See Bill Fan's affidavit sworn 31 January 2001, paras 4 to 10.

[8] Mitchell's affidavit sworn 13 February 2001, ex "BJM-31"; Transcript, 2-97.20 to 2-97.34 (Mitchell).

[9] Bill Fan's affidavit sworn 31 January 2001, paras 11 to 13, ex. "L"; Mitchell's affidavit sworn 13 February 2001, ex "BJM-32".

[10] Bill Fan's affidavit sworn 31 January 2001, para 15, ex. "M".

[11] Bill Fan's affidavit sworn 31 January 2001, para 17.

[12] Bill Fan's affidavit sworn 31 January 2001, para 18; Transcript, 2-58.14 to 2-58.22.

[13] Bill Fan's affidavit sworn 31 January 2001, ex. "N"; Mitchell's affidavit sworn 13 February 2001, ex "BJM-36"; Transcript, 2-61.16 - 2-61.20

[14] Transcript, 2-56.30 to 2-56.40 (Mitchell).

[15] Bill Fan's affidavit sworn 14 October 2009, ex. "BF13". See also Transcript, 2-56.37, 2-59.41, 2-59.47 (Mitchell).

[16] Bill Fan's affidavit sworn 31 January 2001, para 21; Mitchell's affidavit sworn 13 February 2001, para 20. See also Item K of the Appendix to the Building Contract.

[17] Bill Fan's affidavit sworn 18 January 2001, paras 3, 4; ex. "A"; Mitchell's affidavit sworn 11 November 2001, ex. "BJM-61". See also Bill Fan's affidavit sworn 31 January 2001, para 20; Mitchell's affidavit sworn 13 February 2001, paras 4 - 15.

[18] Appendix 1 to the Contract, para 1; Transcript, 2-60.1 to 2-60.4, 2-61.22 to 2-61.58 (Mitchell).

[19] See also clause 1.3, as to the Builder's obligations.

[20] Mitchell v Pacific Dawn Pty Ltd [2003] QCA 526 at [1].

[23] Fifth Further Amended Defence, para 4.

[24] Mitchell's affidavit sworn 13 February 2001, para 22.

[25] Transcript, 2-72.39 to 2-72.55 (Mitchell).

[26] Mitchell's affidavit sworn 13 February 2001, para 22.

[27] Tan's affidavit sworn 5 September 2002, paras 3, 4; cf para 37 of the plaintiff's supplementary written submissions dated 23 November 2009.

[28] See Bill Fan's affidavit sworn 14 October 2009, para 2; Transcript, 2-62.22 to 2-62.31 (Mitchell).

[29] Tan's affidavit sworn 5 September 2002, ex. "HT1".

[30] Transcript, 2-64.10 to 2-66.31 (Mitchell).

[31] Transcript, 2-68.19 to 2.68.31 (Mitchell).

[32] See Bill Fan's affidavit sworn 15 August 2002, para 18; Tan's affidavit sworn 5 September 2002, paras 5, 6.

[34] Mitchell's affidavit sworn 31 January 2001, para 5.

1. [35] Bill Fan's affidavit sworn 15 August 2002, para 17, ex. "BF12"; Tan's affidavit sworn 5 September 2002, ex. "HT1".

[36] Transcript, 3-61.42 to 3-61.43, 3-61.52 to 3-61.54 (Mitchell).

[37] See Mitchell's affidavit sworn 12 April 2002.

[38] Mitchell's affidavit sworn 12 April 2002, ex. "BJM-67".

[40] Mitchell's affidavit sworn 13 February 2001, para 27, ex. "BJM-47".

[41] Mitchell's affidavit sworn 13 February 2001, para 33.

[42] See Mitchell's affidavit sworn 13 February 2001, ex. "BJM-52", Progress Claim No.9.

[43] 1 Flintstone St. Sunnybank Hills (NBF015).

[44] See Bill Fan's affidavit sworn 14 October 2009, para 4, ex. "BF14".

[45] Bill Fan's affidavit sworn 15 August 2002, ex. "BF11".

[46] Bill Fan's affidavit sworn 27 March 2002, ex. "BF2", "BF3".

[47] See Bill Fan's affidavit sworn 31 January 2001, ex. "O".

[48] See Bill Fan's affidavit sworn 31 January 2001, ex. "P".

[49] See Mitchell's affidavit sworn 31 January 2001, ex. "BJM-20".

[50] Bill Fan's affidavit sworn 14 October 2009, ex. "BF25" (p.22).

[51] Greg Eaton's affidavit sworn on 30 October 2009, paras 5 to 8; Bill Fan's affidavit sworn 15 August 2002, paras 19, 22.

[52] cf. Mitchell's affidavit sworn 13 February 2001, para 26.

[53] See also Tan's affidavit sworn 5 September 2002, para 4.

[54] Transcript, 2-75.26 (Mitchell); see also Bill Fan's affidavit sworn 18 January 2001, para 7; Mitchell's affidavit sworn on 31 January 2001, para 6.

[55] Mitchell's affidavit sworn on 31 January 2001, para 7.

[56] Bill Fan's affidavit sworn on 31 January 2001, ex. "O".

[58] Transcript, 3-10.34 to 3-10.40 (Tones); Transcript, 3-51.39 to 3-51.44, 3-58.23 to 3-58.35, 3-59.34 - 3-59.36, 3-61.11 to 3-61.15 (Mitchell); Bill Fan's affidavit sworn 31 January 2001, paras 27, 28, ex. "P"; Bill Fan's affidavit sworn 14 October 2009, paras 5, 6; Mitchell's affidavit sworn on 31 January 2001, para 8.

[59] Bill Fan's affidavit sworn 14 October 20009, exhibit "BF21".

[60] cf. Central Exchange Limited v Anaconda Nicholl Limited (2002) 26 WAR 33.

[61] Transcript, 3-50.25 to 3-50.53 (Mitchell).

[63] Bill Fan's affidavit sworn 14 October 2009, paras 7, 8.

[64] Mitchell v Pacific Dawn Pty Ltd [2003] QCA 526 at [4]- [5].

[65] See para 9 of the plaintiff's supplementary submissions.

[66] Bill Fan's affidavit sworn 31 January 2001, para 28, ex. "Q"; Bill Fan's affidavit sworn 14 October 2009, para 10, ex. "BF15".

[67] Bill Fan's affidavit sworn 31 January 2001, para 30, ex. "R"; Bill Fan's affidavit sworn 14 October 2009, para 11; ex. "BF17".

[68] Bill Fan's affidavit sworn 31 January 2001, para 32, ex. "R"; Bill Fan's affidavit sworn 14 October 2009, para 12; ex. "BF18".

[69] Bill Fan's affidavit sworn 14 October 2009, para 13; ex. "BF19".

[70] Bill Fan's affidavit sworn 14 October 2009, para 14; ex. "BF18", "BF20".

[71] Bill Fan's affidavit sworn 14 October 2009, para 15; ex. "BF21".

[72] Plaintiff's supplementary submissions para 38.

[74] Bill Fan's affidavit sworn 14 October 2009, para 16; ex. "BF22".

[75] Bill Fan's affidavit sworn 14 October 2009, ex. "BF23".

[76] Bill Fan's affidavit sworn 14 October 2009, ex. "BF24".

[77] Bill Fan's affidavit sworn 14 October 2009, ex. "BF25" (p.20).

[78] Bill Fan's affidavit sworn 14 October 2009, para 18.

[79] Bill Fan's affidavit sworn 14 October 2009, paras 20, 21; "BF27", "BF29".

[81] Bill Fan's affidavit sworn 31 January 2001, ex. "S1"; Bill Fan's affidavit sworn 14 October 2009, para 22; ex. "BF28"; Mitchell's affidavit sworn 11 November 2001, ex. "BJM-56".

[82] Transcript, 3-53.5 to 3-53.17 (Mitchell); Bill Fan's affidavit sworn 14 October 2009, paras 23, 24.

[83] See Bill Fan's affidavit sworn 27 March 2002, ex. "BF5".

[84] Bill Fan's affidavit sworn 18 January 2001, ex. "P"; Bill Fan's affidavit sworn 15 August 2002, para 3.

[85] Bill Fan's affidavit sworn 14 October 2009, para 26.

[86] Bill Fan's affidavit sworn 14 October 2009, para 27.

[87] Plaintiff's supplementary submissions paras 12-20.

[88] Bill Fan's affidavit sworn 27 March 2002, para 5.

[89] Bill Fan's affidavit sworn 14 October 2009, para 31; ex. "BF31".

[90] Bill Fan's affidavit sworn 14 October 2009, para 34.

[91] See also Transcript, 3-52.34 to 3-52.54 (Mitchell).

[92] Bill Fan's affidavit sworn 14 October 2009, ex. "BF32"; Mitchell's affidavit sworn 11 November 2001, ex. "BJM-58".

[93] Bill Fan's affidavit sworn 31 January 2001, para 33; Bill Fan's affidavit sworn 14 October 2009, para 34; ex. "BF33".

[94] Bill Fan's affidavit sworn 14 October 2009, ex. "BF34"; Mitchell's affidavit sworn 11 November 2001, ex. "BJM-59".

[95] Bill Fan's affidavit sworn 14 October 2009, para 35.

[96] Bill Fan's affidavit sworn 14 October 2009, paras 38 to 40.

[97] Bill Fan's affidavit sworn 31 January 2001, para 33.

[98] Bill Fan's affidavit sworn 14 October 2009, para 42; ex. "BF35".

[99] Bill Fan's affidavit sworn 31 January 2001, para 41(a).

[100] Mitchell's affidavit sworn 13 February 2001, para 37(a).

[101] Bill Fan's affidavit sworn 31 January 2001, para 41(b); ex. "X" and "Y". See also exhibit "S1", which refers to a separate job undertaken privately for Tan.

[102] Mitchell's affidavit sworn 13 February 2001, para 37(b), ex. "BJM-53". See also Transcript, 2-88.48 to 2-94.52 (Mitchell); exhibits 16A, 16B, 16C, 16D, 16E.

[103] Bill Fan's affidavit sworn 31 January 2001, para 41(c); ex. "Z".

[104] Mitchell's affidavit sworn 13 February 2001, para 37(d).

[105] Bill Fan's affidavit sworn 31 January 2001, para 41(d), 41(e); ex. "AA" and "BB".

[106] Mitchell's affidavit sworn 13 February 2001, para 37(b), ex. "BJM-54".

[107] Bill Fan's affidavit sworn 31 January 2001, para 41(g).

[108] Transcript, 3-37.52 to 3-44.57 (Mitchell); exhibits 20 to 31; Bill Fan's affidavit sworn 31 January 2001, para 41(f); Bill Fan's affidavit sworn 14 October 2009, para 37. See also Mitchell's affidavit sworn 13 February 2001, ex. "BJM-42".

[109] Mitchell's affidavit sworn 13 February 2001, para 37(f).

[111] Bill Fan's affidavit sworn 14 October 2009, para 42; ex. "BF36".

[112] Bill Fan's affidavit sworn 14 October 2009, para 46; ex. "BF37".

[113] See Bill Fan's affidavit sworn 14 October 2009, para 47; ex. "BF38". See also Bill Fan's affidavit sworn 27 March 2002, para 7.

[114] Transcript, 3-62.6 to 3-62.23 (Mitchell).

[115] Bill Fan's affidavit sworn 14 October 2009, para 48; ex. "BF39".

[117] Mitchell's affidavit sworn 13 February 2001, ex. "BJM-20".

[118] See Bill Fan's affidavit sworn 14 October 2009, para 49; ex. "BF40", "BF41".

[119] Mitchell's affidavit sworn 31 January 2001, para 4. See also Fourth FASOC, para 6.

[120] Transcript, 3-11.48 to 3-11.57, 3-14.6 to 3-14.10 (Tones).

[121] Transcript, 3-5.14 to 3-5.18 (Tones).

[123] Transcript, 3-62.32 to 3-66.3 (Mitchell).

[124] See Bill Fan's affidavit sworn 14 October 2009, para 50; ex. "BF42".

[125] See Bill Fan's affidavit sworn 14 October 2009, para 50; ex. "BF43".

[126] Transcript, 3-16.44 to 3-17.22 (Tones).

[127] Transcript, 3-69.12 to 3-69.47; 3-84.17 - 3-84.33 (Mitchell).

[128] Transcript, 3-72.28 to 3-73.2; 3-74.30 - 3-74.34; 3-74.49 - 3-74.53 (Mitchell).

[129] Bill Fan's affidavit sworn 14 October 2009, para 52; ex. "BF44", "BF45".

[130] Bill Fan's affidavit sworn 14 October 2009, ex. "BF46".

[133] Bill Fan's affidavit sworn 14 October 2009, ex. "BF47".

[134] Mr Tan's affidavit sworn 4 November 2009 para 7.

[135] See paras 25-28 of the plaintiff's supplementary submissions and cf Transcript 5-77.34-44.

[136] Bill Fan's affidavit sworn 14 October 2009, ex. "BF46".

[137] Bill Fan's affidavit sworn 14 October 2009, ex. "BF48".

[138] Bill Fan's affidavit sworn 18 January 2001, ex. "F".

[139] Bill Fan's affidavit sworn 27 March 2002, para 8.

[140] Ian Evans' affidavit, paras 1 to 19.

[141] Bill Fan's affidavit sworn 14 October 2009, para 57; Transcript, 3-69.12 to 3-69.47 (Mitchell).

[142] See Transcript, 3-77.14 - 3-77.56 (Mitchell).

[143] See Transcript, 5-30.10 5-30.40.

[144] See, e.g., Re Concrete Constructions Group Pty Ltd [1997] 1 Qd R 6.

[145] Transcript, 3-17.24 to 3-17.30 (Tones); Transcript, 3-92.2 to 3-92.6, 3-92.21 to 3-92.23 (Mitchell); Bill Fan's affidavit sworn 14 October 2009, para 58; cf. Mitchell's affidavit sworn 31 January 20001, para 39.

[146] Transcript, 3-18.1 to 3-18.6 (Tones); Bill Fan's affidavit sworn 31 January 2001, para 44; ex. "CC".

[147] Transcript, 3-17.32 to 3-17.38 (Tones); Transcript, 3-92.14 to 3-92.15 (Mitchell); Bill Fan's affidavit sworn 27 March 2002, para 11; Carolyn Fan's affidavit sworn 27 March 2002, para 6.

[148] Transcript, 3-19.10 to 3-19.14 (Tones); See Bill Fan's affidavit sworn 27 March 2002, para 12.

[149] Transcript, 3-19.16 to 3-19.19 (Tones).

[150] Transcript, 3-17.26 to 3-17.32; 3-20.20 to 3-20.23 (Tones); Transcript, 3-98.9 to 3-98.57 (Mitchell).

[151] Transcript, 3-19.21 to 3-19.24 (Tones); see also Bill Fan's affidavit sworn 27 March 2002, paras 14, 15. Bill Fan's affidavit sworn 31 January 2001, para 44.

[152] Bill Fan's affidavit sworn 27 March 2002, paras 14 to 16; Transcript, 3-20.25 to 3-20.26 (Tones).

[153] Transcript, 3-20.34 to 3-20.36 (Tones); Transcript, 3-99.3 to 3-99.9 (Mitchell).

[154] Transcript, 3-21.4 to 3-21.7 (Tones); Transcript, 3-99.11 to 3-99.22 (Mitchell).

[155] Transcript, 3-21.9 to 3-21.11 (Tones); Bill Fan's affidavit sworn 27 March 2002, para 16.

[156] Transcript, 3-21.28 to 3-21.32 (Tones); Transcript, 3-99.34 to 3-99.37 (Mitchell); Bill Fan's affidavit sworn 31 January 2001, para 44.

[157] See also Ian Tones' affidavit sworn 1 February 2001, para 4 in relation to Mr Tan's remarks to Mrs Fan.

[158] Transcript, 3-21.34 to 3-21.35 (Tones); Transcript, 3-100.22 to 3-100.33 (Mitchell).

[159] Transcript, 3-21.40 to 3-21.49 (Tones); Bill Fan's affidavit sworn 14 October 2009, paras 60, 61.

[160] Bill Fan's affidavit sworn 14 October 2009, paras 58 to 66; ex. "BF50".

[161] Transcript, 3-23.54 to 3-23.56 (Tones); Transcript, 3-103.23 to 3-103.26 (Mitchell); Carolyn Fan's affidavit sworn 27 March 2002, para 8.

[162] Bill Fan's affidavit sworn 18 January 2001, ex. "B".

[163] Transcript, 3-104.1 to 3-104.5 (Mitchell); Carolyn Fan's affidavit sworn 27 March 2002, para 8.

[164] Transcript, 3-25.56 to 3-25.57 (Tones); Transcript, 3-104.18 to 3-104.23 (Mitchell).

[165] Transcript, 3-26.4 to 3-26.7 (Tones).

[166] Transcript, 3-26.9 to 3-26.41 (Tones).

[167] Transcript, 3-104.1 to 3-104.5 (Mitchell).

[168] Transcript, 3-105.4 to 3-105.7 (Mitchell); Bill Fan's affidavit sworn 27 March 2002, para 18.

[169] Transcript, 3-26.49 to 3-26.56 (Tones); Bill Fan's affidavit sworn 31 January 2001, para 46.

[170] Bill Fan's affidavit sworn 14 October 2009, para 67.

[171] Transcript, 3-27.32 to 3-27.44, 3-28.6 (Tones); Transcript, 3-105.56 to 3-106.2 (Mitchell); Bill Fan's affidavit sworn 14 October 2009, para 68.

[172] Bill Fan's affidavit sworn 14 October 2009, paras 69, 70.

[174] See Further and Better Particulars dated 13 October 2002 (Exhibit 19), para 19.

[176] See ex 50, the plaintiff's submissions at para 29.

[178] See Crescendo Management Pty Ltd v Westpac Bank Ltd (1988) 19 NSWLR 40, 46; Dimska Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152, 165.

[179] See Westpac Banking Corporation v Cockerill (1998) 152 ALR 267, 277, 289.

[180] See Parkesinclair Chemicals(Aust) Pty Ltd v Asia Associates Inc [2000] VSC 362 at [48]; North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 and B & S Contracts & Designs Ltd v Victor Green Publications Ltd [1984] ICR 419 referred to in Mitchell v Pacific Dawn Pty Ltd [2006] QSC 198 at [25]- [26].

[181] See Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 415; Asia Pacific International Pty Ltd v Dalrymple [1999] QSC 204; [2000] 2 Qd R 229.

[182] Transcript, 3-78.35 - 3-78.41 (Mitchell).

[183] This was contested as Mr Mitchell claimed he was entitled to payment for his labouring and managerial work and it was not clear that he had actually paid himself money at this stage as discussed earlier.

[184] Transcript, 3-12.37 to 3.12.39 (Tones).

[185] Transcript of the submissions at 5-94 to 5-96.

[187] See exhibit 11, transactions on 21 December 2000.

[188] See exhibit 11, transactions on 21 December 2000.

[189] Mitchell's affidavit sworn on 31 January 2000, ex. "BJM-24".

[190] Transcript, 3-54.26 to 3-54.30 (Mitchell).

[191] See Mitchell's affidavit sworn on 31 January 2001, para 20.

[195] Ibid, Transcript 2-102.10. Equally intriguing, if not outright confusing, is that Mitchell asserted that Mr Fisher's interests loaned to Blembrook $270,000 of which $250,000 was on-lent to Mitchell in his guise as Mitchell Builders (Transcript 2-111.28, 2.114.43). Yet Blembrook's accounts only seem to reveal a loan of $135,000 from Blembrook to Mitchell Builders over the relevant period (ex 9), although the Bill of Sale (exhibit 8) refers to a loan of $200,000.

[196] Transcript, 3-12.20 to 3-12.24, 3-12.31 (Tones).

[197] Transcript, 2-98.30 to 2-98.56; exhibits 17, 18.

[199] See Bill Fan's affidavit sworn 27 March 2002, paras 5, 8, 21.

[200] See Bill Fan's affidavit sworn 27 March 2002, para 17.

[201] Bill Fan's affidavit sworn 27 March 2002, para 10; Carolyn Fan's affidavit sworn 27 March 2002, para 18.

[202] Transcript, 3-99.54 to 3-99.57, 3-104.33 to 3-104.36 (Mitchell).

[203] See Bill Fan's affidavit sworn 27 March 2002, paras 25 to 31.

[204] Bill Fan's affidavit sworn 14 October 2000, ex. "BF46"; Transcript, 3-88.28 to 3-88.35 (Mitchell).

[205] Transcript, 3-61.42 to 3-61.43, 3-61.52 to 3-61.54 (Mitchell).

[206] See Transcript, 3-80.30 - 3-80.40 (Mitchell).

[207] See Mitchell's affidavit sworn on 13 February 2001, para 39.

[208] cf. Statement of Claim, para 21.

[209] Deemcope Pty Ltd v Cantown Pty Ltd [1994] 2 VR 44, 47.

[210] See Anozira Pty Ltd v Hunt [2002] ACTCA 10 at [31]- [32]; Equiticorp Financial Services Ltd (NSW) v Equiticorp Financial Services Ltd (NZ) (1992) 29 NSWLR 260, 296-297.

[211] Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50, 107, 109 per Kirby P.

[212] Ibid; ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, 167 at [62].

[213] See ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, 162-163 at [48], citing Lord Scarman's judgment in Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366, 400; Equiticorp Financial Services Ltd (NSW) v Equiticorp Financial Services Ltd (NZ) (1992) 29 NSWLR 260, 296; Shivas v Bank of New Zealand [1989] NZHC 862; [1990] 2 NZLR 327, 344; Westpac Banking Corporation v Cockerill (1998) 152 ALR 267.

[214] Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSLWLR 40, 46 per McHugh JA.

[215] [2003] FCAFC 215.

[217] See ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, 171-172 at [95]; Deemcope Pty Ltd v Cantown Pty Ltd [1994] 2 VR 55-56.

[218] [1965] EWCA Civ 3; [1966] 2 QB 617.

[222] See Wigan v Edwards (1973) 1 ALR 497, 499-500.

[223] See Denmeade v Stingray Boats [2003] FCAFC 215, para [20].

[224] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1982-1983) 151 CLR 447, 461 per Mason J; Louth v. Diprose [1992] HCA 61; (1992) 175 CLR 621, 637 per Deane J.

[225] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1982-1983) 151 CLR 447, 462 per Mason J; ACCC v. C G Berbatis Limited [2003] HCA 18; (2003) 214 CLR 51, 64 per Gleeson CJ and 77 per Gummow and Hayne JJ; ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, 166.

[226] Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 405 per Kitto J.

[227] [1983] HCA 14; (1982-1983) 151 CLR 447.

[228] [2003] HCA 18; (2003) 214 CLR 51.

[229] [2005] QCA 311 at [59] per Keane JA.

[230] Mitchell's affidavit sworn on 31 January 2001, para 1; Transcript 2-61.40 (Mitchell).

[231] See ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, 162.

[232] Kostopoulos v G E Commerical Finance Australia Pty Ltd [2005] QCA 311 at [59] per Keane JA.

[233] See ANZ Banking Group Limited v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149, 172 - 173.

[234] See Canon Australia Pty Ltd v Patton [2007] NSWCA 246; (2007) 244 ALR 759 at 772 per Campbell JA.

[235] PMP Print Pty Ltd v Wood [2005] VSC 230 at [84]- [95].

[237] cf. Mitchell's affidavit sworn 12 April 2002, para 5; Transcript 3-98.9 to 3-98.54 (Mitchell).

[238] cf. Mitchell's affidavit sworn 12 April 2002, para 8; Transcript 3-52.54 (Mitchell).

[239] See Parkesinclair Chemicals (Aust) Pty Ltd v Asia Associates Inc [2000] VSC 362 at [47]; Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSLWLR 40, 46; Barton v Armstrong [1976] AC 104, 120B.

[240] Mitchell v Pacific Dawn Pty Ltd [2003] QCA 526 at [10].