Mrocki & Anor v Mountview Prestige Homes Pty Ltd & Anor [2010] VSC 624

Mrocki & Anor v Mountview Prestige Homes Pty Ltd & Anor [2010] VSC 624 - VSC 2010 case summary — Zoe

[27]

Particulars of Contract

Schedule 1

Schedule 2 Prime Cost Items and Provisional Sum Items

Schedule 3 Progress Payments

Attachment 1, Form 1 of the Regulations

Progress Payments

Schedule 4 Cost of the Building Works

Schedule 5 Builder's Fee

Schedule 6 Special Conditions

Schedule 7 Excluded items

Terms and Conditions of Contract

Section A Interpretation

Clause 1 Definitions

Clause 2 Headings, Footnotes Etc

Clause 3 Contract Complete in Itself

Clause 4 Joint and Several Obligations

Clause 5 Assignment and Sub-letting

Clause 6 Notices

Section B Main Obligations of the Parties

Clause 7 Building Act Insurance

Clause 8 Finance

Clause 9 Deposit

Clause 10 Commencement and Building Period

Clause 11 Statutory Warranties

Clause 12 Owner Must Pay the Price of the Building Works

Clause 13 Owner Must Provide Essential Information

Section C Before Work Begins

Clause 14 Owner to Supply Documents

Clause 15 Copyright

Clause 16 Interpretation of Contract Documents

Clause 17 Owner Must Identify the Land

Clause 18 Building Permit Fees

Clause 19 Planning Approvals and Building Permits

Clause 20 Insurance

Section D During Work

Clause 21 Variations to Statutory Laws

Clause 22 Requested Variations

Clause 23 Effect of Variations

Clause. 24 Possession

Clause 25 All Weather Access

Clause 26 Owner Must Not Direct Builder's Workers

Clause. 27 Owner Must Arrange Lending Body Inspections

Clause 28 Builder to Claim Progress Payments

Clause 29 Owner Must Make Progress Payments

Clause 30 Builder's Right to Agreed Damages

Clause. 31 Unfixed Materials on Site

Clause 32 Prime Cost Items and Provisional Sum items

Clause 33 Builder's Right to Extensions of Time

Clause 34 Suspension of Work

Section E Completion of Works

Clause 35 Final Inspection

Clause 36 Listing of Defects and Final Payment

Clause 37 Handover and Final Payment

Clause 38 Defects Within the 3 Month Period

Clause 39 Owner's Claim for Agreed Damages

Clause 40 Ending this Contract- Bankruptcy or Liquidation

Clause 41 Builder's Right to End this Contract

Clause 42 Owner's Right to End this Contract

Clause 43 Subcontracting

Clause 44 No Waiver

Clause 45 Severance

Section F Disputes, Conciliation and Tribunal

Attachment 2 Directors' Guarantee

[116]

The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents' case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.

There are reasons why the law adopts this position. First, it accords with the "general test of objectivity [that] is of pervasive influence in the law of contract". The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.

Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. ... The obligations of written agreements between parties cannot simply be ignored or brushed aside.

The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement), but that has never been the respondents' case. In another case it may leave open the possibility that the contract is partly oral and partly in writing. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each respondent. (citations omitted)

[122]

If the court comes to the conclusion that parties intended to make a contract, it will if possible give effect to their intention no matter what difficulties of construction arise. In Scammell and Nephew Ltd v Ouston (1941) AC at pp 268, 269 Lord Wright said "the object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation ... it is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable the court to give it a practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the parties, that the promises and performances to be rendered by each party are reasonably certain". In Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; (1932) 147 LT 503 at p 512 Lord Tomlin, referring to the words "of fair specification" said "that is something which if the parties fail to agree can be ascertained just as much as the fair value of a property". Lord Thankerton said "I am affected by the consideration that the contract is a commercial one and that the parties undoubtedly thought that they had concluded a contract" (1932) 147 LT at p 513. Lord Wright referred to "the legal implication in contracts of what is reasonable, which runs throughout the whole of modern English law in relation to business contracts ... it is unnecessary, in my judgment, to multiply illustrations of this principle, which goes far beyond matters of price. After all, the parties being business men ought to be left to decide what degree of precision it is essential to express in their contracts, if no legal principle is violated" (1932) 147 LT at p 517. In the present case it is clear that the parties believed that they had made a concluded and enforceable contract and the provisions of the standard conditions are in my opinion sufficiently definite to enable the court to give them a practical meaning.

At a glance

Court

Decision date

Before

Source

Judgment (203 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (13)