Plaintiff v Defendants

Plaintiff v Defendants - [2005] VSC 237 - VSC 2005 case summary — Zoe

[42]

(1) That from the date of execution of the agreement until early October 2000, the defendants represented, promised or conducted themselves in such a way that the defendants would meet their obligations under the agreement;

(2) It would be unconscientious and, thereby, the defendants are estopped from resiling from the representations and promises made as to compliance by them with the agreement by way of reliance upon the effect of ss.15, 16(1) and 33 of the Domestic Building Contracts Act;

(3) If the defendants are entitled to relief under ss.15, 16(1) and 33 of the Domestic Building Contracts Act then the plaintiff is entitled to an order pursuant to s.87 of the Trade Practices Act or s.41 of the Fair Trading Act to vary the terms of the agreement so that it complies with the provisions of the Domestic Building Contracts Act and ss. 15, 16(1) and 33 of that Act;

(4) Relief under s.53(1), (2) (c) and (e) of the Domestic Building Contracts Act;

(5) Pursuant to s.15(2) of the Domestic Building Contracts Act, the provisions of the Act do not apply to the agreement;

(6) Relief in light of exceptional circumstances, significant or exceptional hardship by operation of ss.38 (6)(a) and (b) of the Domestic Building Contracts Act, thereby entitling the plaintiff to recover the price of the variations;

(7) The plaintiff submitted progress claim number 14 in the same form as progress claims 1 to 13 in reliance upon information provided by the superintendent;

(8) In consequence thereof, the defendants are estopped from relying upon the plaintiff's alleged omission to include supporting material in respect of progress claim number 14;

(9) That the final certificate issued by the superintendent was invalid and ineffectual because the superintendent was functus officio and the certificate did not comply with the agreement;

(10) The agreement was in the form of a lump sum contract whereby the defendants were not entitled to adjust the contract sum by reason of an increase or decrease in the actual cost;

(11) The superintendent represented that the variations were authorised;

(12) As a consequence, the defendants are estopped from denying the variations claimed by the plaintiff;

(13) Further, the defendants are estopped from recovering from the plaintiff the sum of any costs saving to the plaintiff which may have arisen by reason of the superintendent requiring or requesting or authorising the variations.

[344]

• location of power boards - this should have been decided by an electrical consultant;

• vanity units - he was told by Sopov to proceed as per the relevant drawings;

• floor wastes - they were not specified in the drawings. Skarajew suggested they were advisable and Sopov instructed Skarjew to provide them;

• vanity benches - Sopov instructed Skarajew that the height should be 900mm;

• toilet pans - Sopov did not agree with Skarajew that the drawings were unclear;

• Irving - Sopov was "furious" about instructions issued in relation to the flashing to the east façade without prior consultation;

• relocation of sewer pipe - Skarajew indicated that this would be part of Kane's variation claim;

• industrial conditions on-site (lock-outs) - Sopov stated that if a lock-out occurred he would sue Kane for interest and damages;

• wall expansion joints - Sopov sought advice from Skarajew as to the appropriateness of their location. Sopov did not want to involve Irving or Jeffery as this would entail a cost;

• variation claims - Skarajew spent two hours with Sopov explaining construction issues. Sopov stated that he was not issuing instructions to Kane because this would provide the basis for a variation claim;

• general construction issues - Skarajew said "a couple of hours" were spent in discussion with Sopov during time that could have been spent managing site activities;

• design issues - one hour on 3 April 2000 was spent discussing this with Sopov;

• discrepancy between units 10 and 13 - Sopov said that he had been forced to reverse verbal instructions issued by him to Kane because he believed Kane was trying to "rip him off". Skarajew could not recall the instructions Sopov was referring to;

• instructions to bricklayer - Sopov was overriding Kane and instructing the bricklayer directly;

• legal dispute - Sopov told Skarajew not to sign any legal documents regarding the dispute between Kane and the principals.

With regard to conversations that Skarajew said that he had with Irving, Skarajew cited the following alleged examples:

• Kane's requests and confirmations - Irving told Skarajew over the phone that these should be submitted to the principals or Jeffery "for legal and political reasons";

• visiting the site - Irving told Skarajew that he had been instructed by Jeffery not to visit the site unless an RFI had been issued by Kane.

In relation to the RFIs, Skarajew suggested that Jeffery's inadequate responses to RFIs created considerable delays in works.

[773]

608 It then transpired that Jeffery was appointed as superintendent to replace Hampton after the latter's resignation. Jeffery was a quantity surveyor by profession. The plaintiff criticised his appointment by the principals, charging that Jeffery failed to undertake the important role of independent certifier, viewing his role as one of performing quantity surveying for the defendants. In his evidence, when questioned about his role and his understanding of it, Jeffery made it apparent that he did not draw a distinction between the role of superintendent on the one hand and the role of quantity surveyor on the other. It was urged for the plaintiff that Jeffery did not appreciate the nature of the independent role that a superintendent was required to maintain. It was further submitted that his conduct reflected his misconception of the independence of the role of the superintendent. Emphasis was placed by the plaintiff upon the preparedness of Jeffery to discuss with Sopov the prospect of finding items of deduction against the builder under the contract price. Jeffery said as much in his evidence. Further, reliance was placed upon the discussions and investigations conducted between Sopov and Jeffery as to the sums that could be deducted from the builder's contract price without communicating the fact of the discussions and the investigations to the plaintiff. The plaintiff described these discussions as "bipartisan" and submitted that they were not the act of an honest, fair, reasonable and independent superintendent who was to ensure that both the principal and the builder had an opportunity to put their position forward in relation to relevant items. Jeffery was criticised by the plaintiff for performing no more than a "rubber stamp" role as to sums of money that the defendants informed he should include in the costs to complete certificate. It was urged that Jeffery breached his duty as independent superintendent to ascertain and determine the cost incurred in completion pursuant to cl.44.6 and was obliged to require substantiation of costs incurred pursuant to cll.41 and 44.6. Ultimately, it was put for the plaintiff that Jeffery was dominated by Sopov and did as the latter directed or, alternatively, was incompetent and misconceived the nature of his role and the duties he was required to discharge under the contract.

[1341]

[30] Ibid. at [84].

[31] All the figures exclude GST.

[32] (2001) NSWLR 705.

[33] (1990) 24 FCR 313.

[34] Makita at 729; Arnotts at 349.

[35] See Appendix D of the Judgment.

[36] Clause 35.6

[37] Clause 35.5.

[38] Plaintiff's closing submission dated 30 October 2003.

[39] See, for example, Allcard v Skinner (1887) 36 Ch D 145; Union Bank of Australia Ltd v Whitelaw [1906] VicLawRp 119; [1906] VLR 711; Commonwealth Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447; Peter Birks and Chin Nyuk, 'On the Nature of Undue Influence' in Jack Beatson and Daniel Friedmann (eds), Good Faith and Fault in Contract Law (1995) 57; N C Seddon and M P Ellinghaus, Cheshire and Fifoot's Law of Contract (8th ed, 2002) Ch 14.

[40] [1969] 2 NSWR 530.

[41] [1988] 13 NSWLR 661.

[42] Ibid at 672.

[43] Ibid.

[44] Citing Spotts v. Baltimore & Ohio Railroad Co. 102 F (2d) 160,162 (1939).

[45] [1989] 1 ACSCR 93.

[46] Ibid. at 110.

[47] See Hudson's Building and Engineering Contracts in Australia: including the duties and liabilities of architects, engineers and surveyors (11th ed., 1995) at 821; also, Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 174 at [89].

[48] Ibid. at 822.

[49] Citing Lord Esher MR in McDonald v Mayor of Workington (1983) 9 TLR 230.

[50] Ibid.

[51] Eg. See John Holland Construction and Engineering Pty Ltd v Majorca Projects Pty Ltd [1996] 13 BCL 235; Hickman v Roberts [1913] AC 229; Multiplex Constructions v SOR Pty Ltd [2001] 17 BCL 174; Baulderstone Hornibook Pty Ltd v Qantas Airways Ltd [2003] FCA 174.

[52] Page v Landaff and Dinas Powis Rural Council [1901], Hudson, Building Contracts (4th ed) , vol. 2, p.316.

[53] Hickman v. Roberts, Ibid. at 233.

[54] Ibid.

[55] Ibid.

[56] Ibid. at 239.

[57] Ibid. at 240.

[58] Ibid. at 233, 238.

[59] Ibid. 238.

[60] Ibid. at 233.

[61] Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd; Ibid. at [97].

[62] Hickman v. Roberts, Ibid at 236.

[63] (2002) 18 BCL 322.

[64] Ibid. at [50].

[65] In their final submissions dated 30 October 2003, Kane said that "the plaintiff accepts that EOT 4 was submitted for 32 days and a contingency of 15 days and does not seek to assert that the claim was submitted for 47 days... However, Tivendale asserts that in reality the Plaintiff was delayed 47 days by the structural steel". I note that in the plaintiff's consolidated particulars dated 9 November 2001, the plaintiff stated that its request for EOT 4 - as made in writing and dated 8 October 1999 - requested a total of 32 days for his EOT, with no mention of the 15 day "contingency" later inserted by Tivendale. Given the plaintiff's vacillation on the point, I have taken their submission to mean that they claimed 32 days and not 47 days overall for EOT 4.

[66] Note that when added up, the various delays claimed for each component of EOT 4 exceed the total claim for 32 days. Whether the breakdown figures given in the plaintiff's submissions were incorrect or whether Kane claimed a lesser amount overall as a result of concurrent delays (or for other reasons), it is unclear.

[67] (2002) 18 BCL 15.

[68] (1992) 58 BLR 1.

[69] Ibid.

[70] McAlpine Humberoak Ltd v McDermott International Inc, Commentary 58 BLR 5.

[71] Ibid.

[72] Ibid.

[73] McAlpine Humberoak Ltd v McDermott International Inc (1990) 51 BLR 34.

[74] (1992) 58 BLR 1, 17.

[75] Woolf and Russell LJJ.

[76] (1992) 58 BLR 1, 28.

[77] Ibid. at 22.

[78] (1902) 86 LT 764.

[79] Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 114; The Cape Hatteras [1982] 1 Lloyd's Rep 518; and SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VicRp 31; [1984] VR 391.

[80] (1992) 58 BLR 1.

[81] (1992) 58 BLR 1, 22.

[82] Ibid. at 35.

[83] Ibid. The court also stated that despite this detail (or perhaps indeed because of it) the pleadings of the plaintiff failed to properly identify cause and effect. With this in mind, Lloyd L.J. made the following comment: "The very fact that the total entitlement claimed by [McAlpine] ... came to [sterling]1m more than their actual costs should surely have put the judge and his assessors on inquiry."

[84] The principles are broadly discussed in Keith Pickavance, Delay and Disruption in Construction Contracts (1st ed,1997) 486.

[85] Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No. 2) [2002] VSCA 189.

[86] For example, breakdowns of claims regarding masonry was given on 20 August 1999; regarding hydraulics and other items on 14 August 2000 and trade finishes on 21 August 2000.

[87] Information was requested regarding hydraulics, Alucobond and resilient finishes on 8 August 2000 and provided on 14 August 2000. There was a further request regarding tiles on 21 August 2000 and it was provided on the same day.

[88] See, eg, Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd (1997) 14 BCL 215, per Rolfe J; Daysea Pty Ltd v Watpac Pty Ltd [2001] QCA 49 at 18-22, per Williams JA.

[89] See, eg, Minson Nacap Pty Ltd v Aquatec-Maxcon Pty Ltd (2001) 17 BCL 269 at [19]-[20] per Byrne J. See generally Adrian Baron, 'Progress claims, payment certificates and legal stability' (2003) 19 Building and Construction Law 271.

[90] Brewarrina Shire Council v Beckhaus Civil Pty Ltd (2003) 19 BCL 177.

[91] Brewarrina Shire Council v Beckhaus Civil Pty Ltd (2003) 19 BCL 177 at [91], citing Federated Seaman's Union of Australasia v Commonwealth Steamship Owners' Association [1922] HCA 7; (1922) 30 CLR 144.

[92] [2004] VSCA 18; (2004) 8 VR 16.

[93] [2001] QCA 49.

[94] See, eg, Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd (1997) 14 BCL 215.

[95] The existence of such a condition precedent was considered by the NSW Court of Appeal in Brewarrina Shire Council v Beckhaus Civil Pty Ltd (2003) 19 BCL 177 and has been approved by the Victorian Court of Appeal in Aquatec-Maxcon Pty Ltd v Minson-Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16; notwithstanding the significant academic discussion that has ensued: see, eg, Adrian Baron, 'Progress claims, payment certificates and legal stability' (2003) 19 Building and Construction Law 271.

[96] [2004] VSCA 18; (2004) 8 VR 16.

[97] See for instance Byrne J's analysis in Zauner Construction Pty Ltd v No 2 Pitt Street Pty Ltd (2001) 17 BCL 357 and the view of the Queensland Court of Appeal in Daysea Pty Ltd v Watpac Pty Ltd [2001] QCA 49.

[98] Aquatec-Maxcon Pty Ltd v Minson-Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16 at [12]- [13].

[99] Ibid. at [26].

[100] Ibid. at [24].

[101] (2001) 17 BCL 357.

[102] [2001] QCA 49.

[103] Blue Chip Pty Ltd v. Concrete Constructions Group Pty Ltd (1966) 13 B.C.L. 31; Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd (1997) BCL 215.

[104] The unauthorised deduction of liquidated damages point in this case is to be distinguished from the liquidated damages argument raised by the defendant contractor in State of Tasmania v Leighton Contractors [2004] TASSC 132. In that case, Cox CJ determined that the liquidated damages clause of the contract was not a genuine pre-estimate of the principal's (i.e. the State government's) damages. Rather, the sums deducted were "extravagant and exorbitant" and amounted to a penalty. The State was therefore ordered to pay back in full the amount of $1,832,000 deducted as liquidated damages.

[105] See Commonwealth v Verwayen (1990) 170 CLR 394 at 444; Walton Stores Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387.

[106] $1,216,546.

[107] $132,618.

[108] $374,618.

[109] The show cause notice was issued on 8 September 2000.

[110] $1,216,546.64

[111] $340,562

[112] Le Hy Ta recorded, for instance, that Jeffery made a request for delivery dockets on 6 September 2000, the day of the site inspection for progress certificate 15. Le Hy Ta also organised for a copy of delivery dockets to be provided to Jeffery on 14 September 2000, the same day the original payment certificate no. 15 was received from Jeffery.

[113] (1940) 3 All E.R. 60 at 71.

[114] (1884) 9 App. Cas. 434, per Lord Selbourne.

[115] Ibid.

[116] [1982] HCA 47; (1982) 149 C.L.R. 620.

[117] Per Gibbs C.J. in Ibid. at 625-6.

[118] Per Deane and Dawson J.J. in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1988) 166 C.L.R. 623 at 658.

[119] Per Lord Mansfield in Boone v. Eyre (1777) 1 H.Bl. 273n; see also D.W. Greig & J.L.R. Davis The Law of Contract (1987) 1201-3.

[120] See Luna Park (NSW) Ltd v. Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 C.L.R. 286 and Federal Commerce and Navigation v. Molena Alpha Inc. [1979] A.C. 757; see also Paterson, Robertson & Heffey in the Principles of Contract Law (2nd ed., 2005) at 371.

[121] Ibid. As examples of cases involving parties attempting to terminate a contract where no such right exists, see Petrie v. Dwyer [1954] HCA 75; (1954) 91 C.L.R. 99; and Ogle v. Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 C.L.R. 444.

[122] [1964] 2 Q.B. 699 at 734; also cited in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 C.L.R.423 at 432.

[123] See DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 C.L.R.423; see also Paterson, Robertson & Heffey in the Principles of Contract Law (2nd ed., 2005) at 371-2.

[124] See for example DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 C.L.R. 423 at 431-3.

[125] Ibid.

[126] [1978] HCA 12; (1978) 138 CLR 423 at 431.

[127] [1995] UKPC 48; [1996] 1 W.L.R. 270 at 276-7.

[128] [1978] HCA 12; (1978) 138 C.L.R. 423.

[129] See McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 C.L.R. 457 at 476-477, per Dixon C.J.

[130] Foran v Wight [1989] HCA 51; [1989] 168 CLR 385, 408; Shevill v Builders Licensing Board [1982] HCA 47; [1982] 149 CLR 620, 625-6; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; [1989] 166 CLR 623, 634.

[131] See also DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; [1978] 138 CLR 423, 431.

[132] There was evidence that the first defendant later settled third party proceedings against the solicitor.

[133] [1906] HCA 67; (1906) 4 CLR 347.

[134] The tables were contained in the final address materials "accompanying folders of materials provided by the defendants in support of their claim".

[135] See Waltons Stores (Interstate) Ltd v. Maher [1988] HCA 7; (1988) 164 C.L.R. 387, 413.

[136] Amended reply and defence to counterclaim.

[137] Certain subcontractors were identified: Custom Chassis, Iser Kitchens, Premium Shower Screens.

At a glance

Court

Decision date

Before

Source

Judgment (1351 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (20)