Plaintiff v First Defendant

Plaintiff v First Defendant - [2014] VSC 596 - VSC 2014 case summary — Zoe

[161]

4.1 Latent Conditions

Latent Conditions (as defined in the Building Contract) have been experienced by the Contractor in performance of the Works (as defined in the Building Contract) under the terms of the Early Works letter prior to execution of this Deed causing a delay of 24 Business Days in the form of delays caused to the ground works by the Citipower Substation. The Contractor has taken steps to seek to mitigate this delay and is presently reasonably confident that all but 5 Business Days of that delay will be mitigated (should the subcontractors perform in accordance with their estimates). The Contractor also presently hopes to mitigate the remainder of that delay during the remainder of the Works (with an emphasis on the superstructure). The parties agree that, as between them, to the extent that this delay is unable to be mitigated, the

Contractor will not be liable for the consequences of such delay and shall be entitled to compensation in the terms set out in the Building Contract for such Latent Conditions.

4.2 Early Works Latent Conditions

The parties agree that the additional Actual Trade Costs previously submitted under the Early Works letter relating to latent conditions (e.g. asbestos removal, existing vestry north wall works, demolition re sequencing around existing substation, and support for adjoining building air conditioner units) are an agreed variation to the Fixed Contract Sum. Such a claim is to be made formally by the Contractor as soon as practicable after the date of this Deed.

4.3 Amendments for Investor

As part of agreeing the final form of the Building Contract with the Investor, the Contractor and the Developer agreed as follows (for so long as they are parties to the Building Contract) and subject to clause 8.1(b):

(a) The Contractor will not be liable for any cost or delay caused by having to commercially agree access to the following adjoining property Certificate of Title Volume 11509 Folio 796 (the site of Georges' apartments) - by reason of agreeing to delete former clause 12.1 (b) of the draft Building Contract. That clause provided as follows:

[210]

In my opinion s 7(2)(c) does not apply to the agreement. This is because the consideration is calculated by reference to the value of the services supplied.

Section 10(2) of the Act provides that related goods and services are to be valued in accordance with the terms of the contract or, if there is no express provision, in accordance with the mechanisms set out in s 10(2)(b). This provision appears in Pt 2 of the Act which deals with the rights to progress payments. Section 7(2)(c) applies to exclude contracts where that mechanism cannot have application; that is where the consideration cannot be determined by reference to the terms of the contract or the mechanisms in s 10(2)(b).

In the present case the agreement provided for a fixed payment of $130,000. That payment was payable by six instalments of $21,666.67 at the time set out in steps 1, 5, 6, 9, 10 and 11. The relevant reference date for those payments are the events specified in each of those steps. The amount payable is the amount calculated in accordance with the terms of the contract (see s 9(a)). For the purpose of s 7(2)(c) these amounts are not calculated other than by reference to the value of the services supplied as they are calculated in accordance with the contract price consistent with s 10(2)(b)(i).

Step 12 of the agreement provides that the bonus payment is payable within seven days of an invoice after direct reconciliation following occupation and/or building completion. Thus, the reference date for the payment of the bonus can be ascertained in accordance with s 8(2)(a) of the Act.

Further, the bonus amount is calculated in accordance with the terms of the contract consistently with s 9(a). For the purposes of s 7(2)(c) and s 10(2)(a), the contract provides how the amount is to be valued, namely 50% of savings below at targeted budget.

Accordingly, s 7(2)(c) does not apply. As I have pointed out, the date of any payment due and its value can be determined in accordance with the contract as required by the Act. It is immaterial in my view that the amount of the bonus payment cannot be calculated until completion of the contract. What is of importance is that the contract provided the mechanism for its calculation at the reference date provided for by s 8(2)(a). The fact that no bonus may be payable when the reconciliation is done is immaterial. The contractor retains $130,000 which has been paid. It simply does not get a bonus.

[229]

(a) clause 4.1(f) of the D&C requires Grocon to:

(i) carry out the works under the D&C so as to enable the Landlord and the Principal to fulfil their respective obligations under the Westpac Agreement for Lease, Wilson Agreement for Lease and the Development Agreement in relation to the Works; and

(ii) not do anything or omit to do anything in carrying out the works under the Contract that will cause the Landlord or the Principal to be in breach of any of their obligations under the Westpac Agreement for Lease, Wilson Agreement for Lease or the Development Agreement in relation to the Works;

(b) GPT Funds Management (GPT) (the Investor under the Development Agreement) has asserted that the curtain wall glazing system as was currently installed 'was not in accordance with the requirements of the Development Agreement' (see letter at Tab 101 of the Adjudication Application);

(c) Westpac (the tenant under the Westpac Agreement for Lease) has:

(i) stated that 'the reflected light colour inconsistency in the glass facade is unacceptable' (see letter at Tab 102 of the Adjudication Application); and

(ii) asserted that 'there are two separate and distinct defects in the façade panels' (see letter at Tab 104 of the Adjudication Application) in noncompliance with the Westpac Agreement for Lease;

(d) given the obligations in the D&C referred to at paragraph 34.4(a) above, it was appropriate to replace the glass to address:

(i) GPT's assertion that the curtain wall glazing system as was currently installed 'was not in accordance with the requirements of the Development Agreement'; and

(ii) Westpac's stated position that 'the reflected light colour inconsistency in the glass facade is unacceptable' under the Westpac Agreement for Lease and its assertion that 'there are two separate and distinct defects in the façade panels' in non-compliance with the Westpac Agreement for Lease; and

(e) given the above, the replacement of the glass constituted 'work undertaken, materials supplied, defects rectified or services provided to or on behalf of the Contractor for the purposes of the Building Contract [the D&C]' within the definition of Actual Trade Costs payable to Grocon.

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Legislation Cited (24)

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